Medisca Inc. to pay $21.75 million to resolve inflated price allegations

The Justice Department is instructing Medisca Inc. to pay $21.75 million to resolve allegations that it established false and inflated Average Wholesale Prices (AWPs) for two ingredients used in compound prescriptions.

The company’s prescription ingredients ordering system reportedly contained false pricing. This resulted in pharmacies unknowingly submitting prescription claims to the Defense Health Agency.

The agency administers the TRICARE Program for the Departments of Defense and Labor’s federal health care programs.

“When federal healthcare programs are defrauded, it hurts all Americans,” said U.S. Attorney Jaime Esparza for the Western District of Texas. “Taxpayers deserve honest pricing and assurances that the government is never overcharged.”

Medisca Inc. to pay the price for inflated price allegations

Those with specialty prescription needs are referred to compounding pharmacies. They create bespoke prescriptions and orders to suit the needs of the patient. Medisca acted as a supplier to these specialist pharmacies that cannot procure ingredients on the generic marketplace.

The allegations brought forth to Medisca said that the company knowingly “inflated the AWPs for resveratrol (NDC No. 38779-2863) and mometasone furoate (NDC No. 38779-2413) in order to increase the reimbursement that its pharmacy customers received from the federal healthcare programs.”

The Justice Department report revealed that Medisca picked up ingredients like resveratrol for $0.37 per gram but reported the AWP for resveratrol at $777 per gram, creating a “spread of over $775 for each gram of resveratrol used by a pharmacy customer in a compound prescription reimbursed by the federal healthcare programs.”

The supplier carried out a similar process for mometasone furoate. It picked up the ingredients from manufacturers for under “$8 per gram. It repackaged and sold that ingredient to compound pharmacies for over $1,000 per gram. Medisca reported an AWP for mometasone furoate at over $7,300 per gram, thereby creating a spread of approximately $6,300 for each gram of the ingredient used by a pharmacy customer in a compound prescription reimbursed by the federal healthcare programs.”

Medisca vastly exacerbated the prices involved in the supply chain of these ingredients and will now pay $21.75 million to resolve these allegations. The Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Offices for the Eastern District of Texas and the Western District of Texas achieved the resolution.

“The systems establishing federal reimbursements for compounded pharmaceuticals should not be viewed by companies as an opportunity to artificially inflate reimbursements from federal payors such as TRICARE,” said U.S. Attorney Damien M. Diggs for the Eastern District of Texas.

Image: BD Morgan Pixlr.

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