Saturday, December 23, 2023

Former Owner of New Jersey Marketing Company Sentenced to 15 Months in Prison for Role in $6 Million Compounded Prescription Drug Scheme


Former Owner of New Jersey Marketing Company Sentenced to 15 Months in Prison for Role in $6 Million Compounded Prescription Drug Scheme

For Immediate Release
U.S. Attorney's Office, District of New Jersey

NEWARK, N.J. – The former owner of a New Jersey marketing company was sentenced today to 15 months in prison for his role in a scheme to defraud public and private health benefits programs of over $6 million for the billing of medically unnecessary compounded prescriptions, U.S. Attorney Philip R. Sellinger announced today. 

Michael Drobish, 46, of Cedar Grove, New Jersey, previously pleaded guilty by videoconference before U.S. District Judge John Michael Vazquez to an information charging him with conspiracy to commit health care fraud. U.S. District Judge Katharine S. Hayden imposed the sentence today in Newark federal court.

“This defendant exploited the health care system by taking advantage of reimbursements for compounded medications that were enormously expensive but medically unnecessary. This defendant has now been held accountable for his role in the criminal conspiracy. These compounding fraud schemes cause millions in losses to the health care system with zero benefit to beneficiaries. We will continue to combat this kind of health care fraud with our law enforcement partners.”

U.S. Attorney Philip R. Sellinger

“The sentencing announced today demonstrate our commitment to investigate individuals who defraud TRICARE, the healthcare system for military members and their families,” Special Agent in Charge Patrick J. Hegarty in the Northeast Field Office of the Defense Criminal Investigative Service, the law enforcement arm of the Department of Defense Office of Inspector General, said. “Schemes to bill TRICARE for medically unnecessary services put our beneficiaries at risk and burden the TRICARE program. We will continue to partner with the U.S. Attorney’s Office and the FBI to protect the integrity of the TRICARE system.”

According to documents filed in this case and statements made in court:

Compounding is a practice in which a pharmacist or physician combines, mixes, or alters ingredients of a drug to create a medication tailored to the needs of an individual patient. The Food and Drug Administration does not approve compounded drugs and thus does not verify the safety, potency, effectiveness, or manufacturing quality of compounded drugs. Generally, a physician may prescribe compounded drugs when an FDA-approved drug does not meet the health needs of a particular patient.

From April 2014 to January 2017, Drobish conspired with others to submit fraudulent prescriptions for compounded medications to public and private insurance plans. The scheme centered on the discovery that certain insurance plans paid for prescription compounded medications – including scar creams, wound creams, and metabolic supplements/vitamins – at exorbitant reimbursement rates.

Drobish hired sales representatives through his marketing company to target individuals who had insurance plans that covered compounded medications. The sales representatives then convinced those individuals to obtain prescriptions for compounded medications, regardless of medical necessity, often by providing them with cash payments. The individuals were then directed to certain telemedicine companies, which the marketing company or its affiliates paid to issue the prescriptions. The prescribing physicians at the telemedicine companies would then write the prescriptions without performing any examination or after deliberately conducting cursory examinations that were insufficient to legitimately deem a compounded drug medically necessary. 

Once the prescriptions were written, they were filled by certain compounding pharmacies with which Drobish conspired. The compounding pharmacies would then receive reimbursement from the insurance plans, and would pay Drobish’s marketing company a percentage of the reimbursement amount. Drobish would retain a portion of the payment and provide a “commission” payment to the relevant sales representative.

In addition to the prison term, Judge Hayden sentenced Drobish to three years of supervised release. As part of his plea agreement, Drobish must forfeit $532,650 in criminal proceeds and pay restitution of approximately $6.1 million.

U.S. Attorney Sellinger credited special agents of the FBI, under the direction of Special Agent in Charge James E. Dennehy in Newark, and the U.S. Department of Defense Office of Inspector General, Defense Criminal Investigative Service, under the direction of Special Agent in Charge Hegarty, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Jordann Conaboy of the Opioid Abuse and Prevention Unit in Newark.

Updated December 5, 2023

Press Release Number: 23-359

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