Compound Supplier Medisca Pays $21.75 Million Over Inflated AWPs
The Department of Justice recently announced that Medisca Inc. will pay $21.75 million to settle allegations of fraud involving inflated Average Wholesale Prices (AWPs) for two ingredients used in compound prescriptions – resveratrol and mometasone furoate. The government alleges that the scheme caused pharmacies to submit false claims to federal healthcare programs, including TRICARE and the Department of Labor’s Office of Workers’ Compensation Programs.
Medisca reported highly inflated AWPs to price listing agencies, increasing reimbursements for its customers and creating massive profit spreads. For example:
- Resveratrol: Purchased at $0.37/gram, sold under $2/gram, but reported an AWP of $777/gram.
- Mometasone furoate: Purchased for less than $8/gram, sold for over $1,000/gram, but reported an AWP over $7,300/gram.
These inflated prices incentivized pharmacies to use Medisca’s ingredients, over competitor products, leading to fraudulent billing that overcharged federal programs by thousands per prescription.
The case was brought under the False Claims Act (FCA) by a qui tam relator (a Texas pharmacist) who will receive $3.4 million of the settlement. The settlement underscores the government’s commitment to combating healthcare fraud and protecting taxpayer funds.
The investigation involved collaboration between the Justice Department’s Civil Division, U.S. Attorneys’ Offices in Texas, and federal investigative agencies such as the Defense Criminal Investigative Service (DCIS) and U.S. Postal Service Office of Inspector General.
The government filed similar complaints against other compound ingredient suppliers in 2019 and 2021.
PAAS Tips:
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- While pharmacies have no control over AWP list prices, dispensing compounds with these types of ingredients will dramatically increase audit risk and PBMs look for any reason to recoup payments
- Pharmacies have a corresponding responsibility to detect fraud, waste, and abuse, which includes contracted business associates.
I obtained my PharmD from the University of Wisconsin-Madison School of Pharmacy and worked for a major chain as well as various LTC and independent pharmacies, before coming to PAAS.
I am passionate about learning and teaching. I strive to learn something new about PBM audits every day, so that PAAS can be more knowledgeable to better serve our members! In 2018, I started traveling to state pharmacy conferences to present audit seminars and meet our wonderful members in person.
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