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Compounding pharmacies investigated for possible fraud tied to pain creams

Business sold the creams, including one marketed by former Green Bay Packers quarterback Brett Favre, that had little medicinal value, feds say.

Jeff Lagasse, Associate Editor

The U.S. Department of Justice is investigating potential fraudulent claims and billing linked to specialty creams, including one marketed by former Green Bay Packers quarterback Brett Favre, that claimed to treat pain symptoms.

The creams, manufactured by compounding pharmacies, were part of a marketing push in several states.

Compounding pharmacies typically specialize in the creation of special creams that may include pain relievers such as ketamine, or even antidepressants, muscle relaxants and anti-inflammatory medications which have been converted from their original forms, be it tablets, liquids or powders.

Because they offer customized versions of drugs, compounding pharmacies are traditionally reimbursed by third-party payers.

Published reports say investigators have claimed many of these specialty creams have little or no medicinal value. Tricare, a military health insurance program that covers more than 9 million veterans of the U.S. armed forces, was also victimized by the alleged false claims.

Other private insurers were also billed through Medicare and Medicaid.

Michael Weinstein, current chair of Cole Schotz's White Collar Defense and Investigations Department, and a former trial attorney with the Justice Department, said the issue is with the alleged false claims, not the compounds themselves; those, by law, don't need approval from the Food and Drug Administration before being sold.

[Also: Running list of notable 2016 healthcare frauds]

"If they're using any regulated drug, then obviously the FDA would have previously examined the drug for its effectiveness and things like that," said Weinstein. "But the FDA does not have to give approval to each and every compound.

"It's part of a larger issue of healthcare fraud," he said. "All these people submitting claims … for drugs that have absolutely no effectiveness. Are they doing it with knowledge, and seeking reimbursement for it? It's the modern day snake oil salesman."

Federal prosecutors in four states claim that pharmaceutical companies such as Rx Remedies delivered more of the cream than had been ordered, automatically refilled patients' prescriptions without first notifying them, and overbilled clients -- some, according to Fortune, charging more than $10,000 for a single tube.

Another pharmacy, World Health Industries, is being investigated by the FBI over it's Rx Pro cream, which Favre frequently pitched in advertisements, according to reports.

Weinstein, who has been involved in a number of state and federal cases involving healthcare fraud, said there are two avenues in which the government may proceed -- civil or criminal. The bar for proving criminal fraud claims is higher, he said, because it must be shown that there was a deliberate intent to deceive.

"If it passes the criminal test, they'll go for that, because it's a bigger hammer," he said.

In a statement, the International Academy of Compounding Pharmacies said the creams in question "benefit people and are non-addictive."

No charges have been filed.

Twitter: @JELagasse