On November 8, the Department of Justice filed a complaint against Professional Compounding Centers of America Inc. (PCCA), a Texas pharmaceutical company, for falsely reporting prices of certain ingredients above market value.
The DOJ’s complaint, filed under the False Claims Act, says that the company fraudulently inflated the “Average Wholesale Prices” (AWP) of ingredients as much as 400 times higher than the actual sale cost.
PCCA said that the chemical Resveratrol had an AWP of approximately $818 per gram; however, the drug was sold to customers for only $2 per gram.
Deputy Assistant Attorney General Michael D. Granston of the Justice Department’s Commercial Litigation Branch in the Civil Division said, “The fraudulent reporting and marketing of drug prices to solicit business will not be tolerated. We will continue to hold accountable those who take improper advantage of federal health care programs.”
U.S. Attorney Ashley Hoff for the Western District of Texas said, “We diligently investigate fraud on the federal healthcare system, especially where it impacts our veterans and their families. We will continue to guard the system, so patients receive the care they deserve and federal taxpayer dollars are not wasted.”
Acting U.S. Attorney Karin Hoppmann for the Middle District of Florida said, “The practices we confront in this case created a major threat to the viability of the TRICARE program, a critically important public healthcare program that serves the needs of our military.”
“This effort demonstrates our district’s resolve in the struggle against fraud schemes that prey on the nation’s military personnel and their families.”
The alleged fraud included the sale of fluticasone propionate for approximately $135 to $197 per gram and reporting it to the AWP for the ingredient for $3,630.90 per gram.
The falsely reported prices were aimed at securing a higher payout from TRICARE, a federal healthcare program that provides veterans and active-duty military insurance.
Special Agent in Charge Michael C. Mentavlos of the DCIS Southwest Field Office said, “As the investigative arm of the Department of Defense Office of the Inspector General, the Defense Criminal Investigative Service (DCIS) will aggressively pursue all allegations of fraud perpetrated against the Department of Defense.”
“DCIS will continue to partner with the Defense Health Agency and the Department of Justice to hold companies like PCCA accountable for their actions, protect the TRICARE program and recover valuable taxpayer resources.”
TRICARE can determine how much to reimburse for drugs based partially on the AWPs. The inflated AWPs allegedly cost the TRICARE program millions of taxpayer dollars in false reimbursements.
The complaint also claims that the company handed out “all-inclusive travel packages” to people who agreed to buy ingredients from them.