Canada-based pharmaceutical ingredients provider Medisca has reached a settlement with the US Department of Justice (DOJ) to resolve a civil investigation that began nine years ago.
Medisca has agreed to pay $21.75m to settle the allegations of false and inflated Average Wholesale Prices (AWPs) for two ingredients used in compound prescriptions.
The company was found inflating the AWPs for resveratrol and mometasone furoate, allowing its pharmacy customers receive more reimbursement from the federal healthcare programmes.
According to the DOJ report, Medisca’s pricing scheme led pharmacies that purchased the two ingredients to submit false prescription claims to the Defense Health Agency.
The agency administers the TRICARE Program for the Department of Defense and the Department of Labor’s Office of Workers’ Compensation Programmes.
Justice Department civil division head, principal deputy assistant attorney General Brian Boynton said: “We will not tolerate fraudulent pricing schemes targeting health care programs that support veterans and other federal beneficiaries.
“As today’s settlement demonstrates, we will hold accountable not just those who submit false claims, but all who participate in schemes designed to defraud the American taxpayers.”
Medisca acquired resveratrol from manufacturers for around $0.37 per gram, and repackaged and sold the drug for less than $2 per gram.
However, the company reported an AWP of $777 per gram, indicating an artificial markup more than $775 per gram for a pharmacy customer in a compound prescription in reimbursement.
The inflated spread affected pharmacy customers using resveratrol in compound prescriptions reimbursed by federal healthcare programmes.
Medisca acquired mometasone furoate from manufacturers for under $8 per gram and sold the ingredient to compound pharmacies for more than $1,000 per gram.
The Canadian company reported an AWP of more than $7,300 per gram for mometasone furoate, which is around $6,300 excess for each gram of the ingredient.
Through the settlement, Medisca will resolve claims brought under the whistleblower provisions of the Financial Conduct Authority (FCA) by Doug McMakin against the company.
McMakin is a pharmacist who owned and operated a compounding pharmacy, and will receive $3.4m from the proceeds of the settlement.
Medisca in its statement said: “The practices that were the focus of the DOJ investigation have been obsolete for several years, since Medisca no longer provides AWPs to pricing listing agencies, and TRICARE has not used AWPs as the basis to reimburse pharmacies for prescription claims since 2016.
“This matter was an investigation only, and its resolution involves no admission by Medisca Inc. nor findings of any wrongdoing whatsoever.
“This settlement resolves the matter without the business uncertainty, additional cost, and distraction of any possible conversion of the investigation into a formal complaint, legal proceeding or protracted litigation in the future.”
