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Tuesday, April 20, 2021
Memorandum of Understanding Addressing Certain Distributions of Compounded Drugs
FDA announced in October 2020 the standard Memorandum of Understanding Addressing Certain Distributions of Compounded Human Drug Products became available for signature by the states. This MOU is an agreement between state boards of pharmacy or other state agencies and FDA. The MOU addresses interstate distribution of inordinate amounts of compounded drugs and complaint investigation by a state regulator relating to compounded drugs distributed outside the state.
FDA developed the MOU in consultation with the National Association of Boards of Pharmacy (NABP), as described in section 503A of the Federal Food, Drug, and Cosmetic Act (FD&C Act). The MOU is a key public health protection in the law and is anticipated to help enhance communication and maximize federal and state resources for oversight of compounded drugs produced by traditional pharmacies.
See compounding MOUs for a list of signed MOUs.
Reducing the risks associated with compounded drugs
States, along with FDA, play a vital role in helping to reduce the risks associated with compounded drugs, while preserving appropriate patient access. For example, if a compounder distributes compounded drugs to multiple states, it can be difficult to gather information about adverse drug experiences and quality issues associated with those drugs, connect them to the compounder and take coordinated action to address a potentially serious public health problem. Close collaboration among states, and between states and the federal government may help prevent serious and widespread problems by helping to better identify adverse drug experiences and drug quality concerns across the country.
Information sharing network
FDA has entered into a cooperative agreement with NABP to establish an information sharing network available to the states. Through this network, FDA expects that states will have the option to collect, assess and review information about pharmacies in their states and share information with FDA as outlined in the MOU.
This tool is intended to provide an option for states and potentially reduce the resource burden of reporting under the MOU for states that choose to use it.
Expected benefits of the information sharing network:
- Information access: facilitate information sharing between state regulators and FDA on the distribution of compounded drugs interstate and complaints related to drugs compounded in the state and distributed outside the state
- Facilitate collaboration: enhance state and federal oversight and help regulators focus limited resources on compounders that present the greatest risk
- Streamlined identification: enable state regulators to identify pharmacies that distribute an inordinate amount of compounded drugs interstate and report that information to FDA
Complaint investigations
Under the MOU, states agree to investigate complaints about adverse drug experiences and drug quality issues related to drugs compounded at pharmacies within the state and distributed outside the state. States then notify FDA about adverse drug experience and drug quality issues relating to a drug compounded at a pharmacy, if serious, or by a physician as soon as possible, but no later than five business days after the state receives the complaint. This timeframe will facilitate collaboration between states and FDA on serious issues that have the potential to affect patients in multiple states.
Inordinate amounts and the 50% threshold for information sharing
Under the MOU, states agree to share certain information with FDA about pharmacies that distribute more than 50% of their compounded drug prescription orders interstate (see III.b.1 of MOU). The MOU, however, does not place a limit on the distribution of compounded drugs interstate by a pharmacy located in a state that has signed the MOU.
States that sign the MOU also agree to report to FDA if they become aware of a physician who is distributing compounded drugs interstate.
5% statutory limit on distributing compounded drugs out of the state
Section 503A of the FD&C Act limits distribution of compounded drugs outside the state by a licensed pharmacist, pharmacy or physician located in a state that has not signed the MOU to 5% of its total prescription orders dispensed or distributed.
Timeframe for signature
States may sign the MOU at any time. FDA is providing a period of one year, which concludes on October 27, 2021, for states to consider signing the MOU before it intends to enforce the 5% limit in section 503A of the FD&C Act in states that have not signed the MOU. This timeframe should correspond to a full legislative cycle for most states and allows time for states to modify their laws and regulations, if necessary.
Products not covered by the MOU
Products not covered by the MOU include:
- drugs intended for veterinary use
- repackaged drug products
- radiopharmaceuticals
- biological products subject to licensure under section 351 of the Public Health Service Act
- drugs compounded by outsourcing facilities under section 503B of the FD&C Act
Questions
See Memorandum of Understanding Addressing Certain Distributions of Compounded Drugs Questions and Answers for more information. Please email questions regarding the MOU to compounding@fda.hhs.gov.
Additional information
quoted from Memorandum of Understanding Addressing Certain Distributions of Compounded Drugs | FDA on April 20, 2021
| 04/20/2021 | 03/24/2021 | Sky Global Food Inc | Division of West Coast Imports | Foreign Supplier Verification Program (FSVP) | ||
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| 04/16/2021 | 04/16/2021 | Lucky's Vape Lounge LLC | Center for Tobacco Products | Family Smoking Prevention and Tobacco Control Act/Adulterated/Misbranded | ||
| 04/16/2021 | 04/16/2021 | Lucky's Convenience & Tobacco, LLC dba Lucky's Vape & Smoke Shop | Center for Tobacco Products | Family Smoking Prevention and Tobacco Control Act/Adulterated/Misbranded | ||
| 04/16/2021 | 04/16/2021 | Luckys Vape & Smoke II | Center for Tobacco Products | Family Smoking Prevention and Tobacco Control Act/Adulterated/Misbranded | ||
| 04/15/2021 | 03/18/2021 | Block Scientific | Center for Devices and Radiological Health | Adulterated and Misbranded Products Related to Coronavirus Disease 2019 (COVID-19) | ||
| 04/15/2021 | 03/24/2021 | Tresmonet Technologies, Inc., TM Testing, Inc. dba TM Technologies, Inc./TM Labs | Center for Devices and Radiological Health | Adulterated and Misbranded Products Related to Coronavirus Disease 2019 (COVID-19) | ||
| 04/15/2021 | 03/25/2021 | Ikcon Investments, Inc dba Ikcon Medical | Center for Devices and Radiological Health | Adulterated and Misbranded Products Related to Coronavirus Disease 2019 (COVID-19) | ||
| 04/15/2021 | 03/26/2021 | Fast Masks USA LLC | Center for Devices and Radiological Health | Adulterated and Misbranded Products Related to Coronavirus Disease 2019 (COVID-19) | ||
| 04/15/2021 | 04/06/2021 | Sethi Laboratories | Center for Devices and Radiological Health | Adulterated and Misbranded Products Related to Coronavirus Disease 2019 (COVID-19) |
Friday, April 16, 2021
Six Individuals Sentenced for Nearly $8 Million Health Care Fraud Involving Northern Virginia Pharmacies
Department of Justice
U.S. Attorney’s Office
Eastern District of Virginia
FOR IMMEDIATE RELEASE
Friday, April 16, 2021
Six Individuals Sentenced for Nearly $8 Million Health Care Fraud Involving Northern Virginia Pharmacies
ALEXANDRIA, Va. – The last of six defendants were sentenced today for participating in multiple health care fraud conspiracies involving kickbacks and fraudulent billings that resulted in nearly $8 million in losses to federal, state, and private health care benefit programs.
“Health insurance programs, and the American public, rely on pharmacy professionals to safeguard the system from harmful kickback schemes, and to make truthful representations about the services they provide,” said Raj Parekh, Acting U.S. Attorney for the Eastern District of Virginia. “The defendants betrayed their duties as health care professionals, performed illegal kickbacks, and defrauded essential benefit programs out of millions of dollars. EDVA is committed to prosecuting those who exploit taxpayers and engage in the unacceptable fleecing of these important public institutions and programs.”
According to court documents, Mohamed Abdalla, 48, of Allendale, New Jersey, owned multiple pharmacies in northern Virginia, including Medex Health Pharmacy in Falls Church and Royal Care Pharmacy in Fairfax. As the owner of these pharmacies, Abdalla oversaw and executed two related schemes to defraud health care benefit programs. One scheme involved the payment or receipt of unlawful kickbacks for expensive drugs and devices in violation of the federal Anti-Kickback Statute. Another scheme involved billing federal, state, and private health care benefit programs for numerous expensive drugs and devices that were not medically necessary, not prescribed by a physician, or were not received by a beneficiary.
“Health care professionals who use fraud and deceit to steal funds and scam the system will be held accountable for their actions,” said James A. Dawson, Special Agent in Charge of the FBI Washington Field Office Criminal Division. “These individuals, who are supposed to be trusted by the American public, were fueled by greed and their own interests to exploit their profession and pad their pockets. The FBI and our law enforcement partners will continue to root out fraud in the health care industry and protect the public from their illegal schemes.”
From at least January 2014 through at least the end of 2018, Abdalla participated in several schemes to pay kickbacks for the referral of prescriptions for compound medications and for an expensive naloxone auto-injector device used to treat opioid emergencies. Abdalla and his conspirators then billed federal health care benefit programs, including Medicare and TRICARE, which is the Department of Defense’s health care program, in violation of the Anti-Kickback Statute. Abdalla obtained over $2 million from these schemes.
“This investigation is a prime example of how kickback schemes undermine the integrity of the U.S. military healthcare system, and degrade the acquisition process,” said Christopher Dillard, Special Agent in Charge of the DCIS Mid-Atlantic Field Office. “These sentencings should send a clear warning that DCIS and its investigative partners will vigorously pursue fraudsters intent on lining their pockets with tax dollars earmarked for the care of our Warfighters.”
In addition, Abdalla and employees at his pharmacies conspired to defraud federal, state, and private health care benefit programs by engaging in numerous other schemes, including billing for prescriptions in the names of themselves, family members, and other pharmacy employees that were not medically necessary and/or not prescribed by a licensed physician, and billing for prescriptions for pharmacy customers that were never filled. These additional schemes resulted in a loss to these health care benefit programs of approximately $6,216,434.39.
“Health care providers are trusted to recommend and provide prescription medications that their patients need,” said Maureen R. Dixon, Special Agent in Charge, HHS Office of Inspector General, Philadelphia Regional Office. “Today’s sentencing shows individuals who commit fraud and pay kickbacks will be held responsible for their illegal actions. HHS-OIG and our law enforcement partners will continue to work together to investigate allegations of health care fraud and ensure the integrity of Federal programs.”
On March 19, Abdalla was sentenced to four years in prison for his role in the conspiracies. Five additional defendants have pleaded guilty and been sentenced for their respective roles in conspiring to pay kickbacks and defraud health insurance providers:
Onkur Lal, 30, of Alexandria, worked for Abdalla as a pharmacy technician and pharmacy intern before ultimately working as a licensed pharmacist. From approximately January 2014 to April 2019, Lal engaged in numerous health care fraud schemes resulting in millions of dollars in losses. At times, Lal used his specialized knowledge to circumvent audits and investigations by third parties, who were investigating fraud on behalf of health benefit programs. On March 5, Lal was sentenced to three years in prison.
Mohammed Tariq Amin, 35, of Fairfax, worked for Abdalla as a pharmacy technician and was the general manager of Royal Care for almost two years. From approximately January 2015 to November 2018, Amin conspired with Abdalla and others to pay kickbacks for the referral of prescriptions of an expensive naloxone auto-injector device. He also engaged in numerous other schemes that defrauded health care benefit programs and used his specialized knowledge to circumvent audits and investigations. Amin was sentenced today to two years in prison.
Daniel Tyler Walker, 51, of Lewes, Delaware, worked as a pharmaceutical sales specialist for a pharmaceutical company and was responsible for marketing an expensive naloxone auto-injector device used to treat opioid emergencies. From approximately August 2015 to April 2017, Walker accepted kickbacks from Abdalla and Amin for the referral of prescriptions for this device, which were then billed to federal health care programs. Walker was sentenced today to 15 months in prison.
Seth Michael Myers, 53, of Crystal Lake, Illinois, from approximately spring of 2013 to mid-2016, conspired with Abdalla, another individual who was a licensed physician, and others to accept kickbacks for the referral of expensive compound medications that were billed to federal health care benefit programs. A company that was created by Myers and the licensed physician was paid over $2.5 million during the scheme. On March 19, Myers was sentenced to two years in prison.
Michael Beatty, 53, of Finksburg, Maryland, worked as a licensed pharmacist at Fallston Pharmacy in Fallston, Maryland. From approximately the summer of 2013 to the fall of 2014, Beatty conspired with Myers and a licensed physician to pay kickbacks for the referral of expensive compound medications, which were billed to federal health care benefit programs. On March 5, Beatty was sentenced to one year and one day in prison.
Raj Parekh, Acting U.S. Attorney for the Eastern District of Virginia; James A. Dawson, Special Agent in Charge of the FBI’s Washington Field Office Criminal Division; Chris Dillard, Special Agent in Charge for the Defense Criminal Investigative Service’s Mid-Atlantic Field Office; Maureen R. Dixon, Special Agent in Charge, HHS Office of Inspector General, Philadelphia Regional Office; Patrick E. McFarland, Inspector General of the U.S. Office of Personnel Management; and Mark S. McCormack, Special Agent in Charge, FDA Office of Criminal Investigations, Metro Washington Field Office, made the announcement after sentencing by Senior U.S. District Judge Claude M. Hilton.
Assistant U.S. Attorneys Monika Moore, Carina Cuellar, and Jamar Walker prosecuted the cases.
A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information are located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:20-cr-250.
Topic(s):
Health Care Fraud
Component(s):
Contact:
Press Office
USAVAE.Press@usdoj.gov
Updated April 16, 2021
New Hampshire enters MOU with FDA regarding inordinate amounts of Compounded human drug products shipped interstate
| MOU No. | Purpose | Parties | FDA Lead Center or Office/Contact | Effective Date | Expiration Date | Last Revision Date |
|---|---|---|---|---|---|---|
| 225-21-008 | This MOU establishes an agreement with the New Hampshire Office of Professional Licensure and Certification regarding the distribution of inordinate amounts of compounded human drug products interstate and the appropriate investigation by the New Hampshire Office of Professional Licensure and Certification of complaints relating to human drug products compounded in New Hampshire and distributed outside the state. | New Hampshire Office of Professional Licensure and Certification (OPLC) | CDER / Office of Compliance / Office of Compounding Quality and Compliance F. Gail Bormel, Director |
- As part of the FDA’s effort to protect consumers, the agency issued a warning letter jointly with the Federal Trade Commission to Trinity Natural Health & Pain Management, Inc. for selling an unapproved product with fraudulent COVID-19 claims. The company sells “COVID-19 Formula” and misleadingly represents that it can mitigate, prevent, treat, diagnose or cure COVID-19 in people. The FDA requested that Trinity Natural Health & Pain Management, Inc. take immediate action to cease the sale of any unapproved and unauthorized products for the treatment or prevention of COVID-19. Consumers concerned about COVID-19 should consult with their health care provider.
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