New Texas law targets physician relationship with compounding pharmacies

Across the country, investigators are continuing their pursuit of compounding pharmacies that are suspected of submitting fraudulent claims to the government's military healthcare program.

In Texas, a law that took effect in September is providing state regulators with a new avenue to root out illegal kickbacks between compounding pharmacies and physicians, according to The Dallas Morning News.

The law permits the Texas State Board of Pharmacy to examine the financial records of a pharmacy that is under investigation, information that was previously inaccessible to investigators. Republican state Sen. Charles Schwertner sponsored the bill last year citing concerns that compounding pharmacies were reaching out to physicians as investors, and creating a creative ownership structure to skirt kickback laws. In some cases, pharmacies are paying physician owners to write unnecessary prescriptions for compounded creams.

One Fort Worth company, RXpress Pharmacy, is currently under investigation for fraudulently billing Tricare. Should the case move forward, a court will have to decide whether the ownership arrangement classifies as a Stark law violation.

Meanwhile, four physicians and two compounding pharmacies in Florida entered into a $10 million settlement with the feds to resolve false claims allegations, according to the U.S. Attorney's Office for the Middle District of Florida. Prosecutors alleged  that four physicians--Manish Bansal, Mehul Parekh, Marisol Arcila and Syed Asad--and a pharmacist from the WELLHealth created Tropical Specialists, but the company was unable to secure contracts with government health programs. Instead, the physicians wrote hundreds of expensive prescriptions for pain and scar creams, many of which went unused, that were billed to Tricare through WELLHealth.

Investigators determined both pharmacies were making up to 90 percent profit on compounding creams. Approximately 40 percent of the prescriptions submitted were written by the four physicians, who recruited other physicians with promises of revenue sharing.

According to the announcement, the Middle District of Florida has collected more than $50 million from compounding pharmacies in less than a year.

Last year, Tricare officials linked compounded drugs to a $300 million spike in monthly spending on prescription medications. Since then, federal investigators have begun targeting compounding pharmacies across the country. A recent raid included nine pharmacies in Mississippi and several others in Alabama, Florida, and Utah. A week later, Department of Justice investigators said compounding creams are the source of half a billion dollars in healthcare fraud.

To learn more:
- read The Dallas Morning News article
- here's the U.S. Attorney's Office announcement