The ABA National Institute for health care fraud was another great event this year. Andrew S. Feldman of the Feldman Firm was honored to moderate a panel on compounding pharmacy fraud which included an all-star line-up of panelists (Department of Justice, defense attorneys, and regulatory attorneys). The conference continues to attract some of the premier defense attorneys, relators’ attorneys, and government attorneys from across the United States and is one of the few national conferences which high level government regulators attend annually.
Our panel, Enforcement Actions and Compounding Pharmacies, was the third year that the conference has included a live panel with the simultaneous webinar of the panel. The panelists focused on, among other things, the recent fraud schemes and prosecutions involving compounding pharmacies and how the TriCare program was essentially shut down due to the level and severity of the fraud related to compounded pain, scar, and wrinkle cream medications. Panelists also addressed the use of data mining in compounding prosecutions, the use of the advice of counsel defense in compounding investigations and prosecutions, the criterion used by different US Attorneys’ offices in deciding whether or not, or if, a compounding pharmacy case implicating violations of health care fraud and abuse laws, including the Anti-Kickback statute, may convert into a criminal, health care fraud or Anti-Kickback indictment. This is an open question. At times, the answer to why the Government pursues a False Claims Act as opposed to a health care fraud indictment can seem unpersuasive. Although there is no “one size fits all” approach, a recurring theme (except in worthless services fraud cases) is that where there is patient harm there may be an indictment. To the contrary, in most cases, where the violation or purported fraud amounts to a violation that DOJ might pursue via an “adequate non-criminal alternative” such as a civil monetary penalty or even exclusion, a criminal prosecution would appear heavy handed and inconsistent with DOJ’s Federal Principles of Prosecution. Further, in the compounding pharmacy context, if the government and defense find themselves reviewing HHS OIG advisory opinions, absent additional more egregious facts, a criminal prosecution, again, for health care fraud may seem unwarranted. 
Importantly, the panelists also focused on the devastating consequences of any compounding pharmacy investigation which leads to a civil or criminal prosecution, including prison, treble damages, loss of licensure, exclusion from federal, state and private plans, loss of hospital privileges and/or termination of employment, reputational damage, and other severe consequences of government action in compounding pharmacy cases.
Panelists also predicted that fraud with respect to compounding pharmacies will not end anytime soon and may possibly migrate into other government programs and/or impact other government payers. There are, for example, several compounding pharmacy prosecutions pending trial throughout the United States. It is anticipated that those prosecutions will be closely monitored, especially any cases which proceed to trial.
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