False Claims Can Occur When Compounding Pharmacies are Manufacturing Compounds: How many whistleblower claims are currently sealed regarding this type of activity? How many more could be filed?

Mass Manufacturing of Compounded Asthma Drugs

Respiratory inhalation therapy involves medicines that are delivered by a nebulizer. These types of medicines are used to treat diseases including asthma, emphysema, bronchitis, cystic fibrosis and other respiratory diseases.
While there are numerous safe and effective inhalation drugs that have been approved by the Food and Drug Administration (”FDA”) for use in nebulizers, mass manufacturing operations (under the guise of compounding) have been dispensing substitute formulations, typically containing the same active ingredients, and then submitting claims to Medicare, Medicaid, TRICARE and other federal government funded healthcare programs. All of the inhalation drugs approved by FDA are formulated in aqueous-based liquids. The aqueous-based drugs for inhalation approved by FDA are limited to the following active ingredients: albuterol sulfate, cromolyn sodium, levalbuterol hydrochloride, ipatropium bromide, albuterol/ipratropium, terbutaline sulfate, acetylcysteine, budesonide, metaproterenol sulfate, and tobramycin sulfate.
FDA guidelines, however, authorize pharmacists to “compound” or mix medications only in response to a physician’s valid prescription. This assumes, of course, that the physician intends that the medication be compounded. The regulations further require that the mixed or compounded medications are medically necessary and not commercially available. Illegal compounding includes compounding of ingredients such that the compounded drug is tantamount to commercially available medications, involving mass manufacturing of drugs under the guise of compounding.
Federal law, including the Centers for Medicare and Medicaid Services (CMS) guidelines and the regulations of other Government Healthcare Programs, prohibit coverage of claims for “compounded” medications when the claims are submitted by a company that is mass manufacturing large amounts of unapproved drugs in violation of the Federal Food, Drug and Cosmetic Act (”FFDCA”), under the guise of “compounding.”
Responding to an ever-growing problem in recent years, the FDA has issued multiple warning letters against nationwide pharmacies that have been mass manufacturing “compounded” drugs in violation of the FDCA. In addition, the FDA, together with the Department of Justice, have pursued criminal and civil prosecutions against entities and individuals involved in harmful mass-production of compounded drugs.
Unscrupulous companies are able to gain patients in multiple ways, including from patients themselves, physicians, and hospital discharge planners. Once on board, their customer representatives obtain the necessary medical and insurance information in order to coordinate and deliver the medical supplies or equipment. The prescribed therapy is then delivered by a representative, where instruction and training are given to the customer and his or her family regarding appropriate equipment use and/or drug use. Mail delivery is also used. Following the initial setup, the service representatives and/or clinicians make periodic visits to the patient’s home.
Such patients are at the mercy of the company; they are often sick, and many are too feeble to direct their own care or make medication choices. They and their family care givers have no reason to doubt that the company would, without their informed consent, replace their FDA-approved nebulizer medications with unapproved, unlawfully mass manufactured medications.
Patients and physicians are generally not aware that compounded medications are not FDA-approved. Unlike legitimate compounding pharmacies, the unscrupulous ones dispense compounds by obtaining prescriptions from physicians by misleading them and their patients. They deceive physicians into believing that they were ordering FDA-approved drugs when their patients were receiving mass manufactured compounded drugs. The Medicare Carriers Manual (MCM), section 2049.4(E) states the basic payment requirements for compounded drugs. When the section cites, “By compounding drugs on a large scale, a company may be operating as a drug manufacturer within the meaning of the Federal Food and Drug Act (FFDA), without complying with the requirements of that law,” CMS is not indicating that such large scale compounding “MAY” be acceptable. Rather, it is not acceptable – a correct interpretation of the law.
quoted from here