Another Example of a Federal Prosecution Involving Compounded Drugs

Former Vice-President Of Pharmacutical Company Pleads Guilty To FDA Violations And Health Care Fraud

– Company received more than $2 million in payments from Medicare for misbranded, adulterated and contaminated inhalation medications

February 7, 2012

LOUISVILLE, KY – The former vice-president of National Respiratory Services, LLC (NRS) has pled guilty in United States District Court before Chief Judge Joseph H. McKinley, Jr., to charges of misbranding and altering drugs and to committing health care fraud announced David J. Hale, United States Attorney for the Western District of Kentucky.
Johnny Perry, age 62, of Mt. Washington, Kentucky, was indicted by a federal grand jury in Louisville on August 3, 2011. The five count indictment alleged that between June of 2006 and June of 2008, Perry, as vice-president of NRS, provided compounded medications to patients, but led both Medicare and the patients’ doctors to believe that the pharmaceutical company was providing non-compounded medications (FDA approved-commercially manufactured). Compounded medications are not FDA approved, but FDA regulations permit pharmacists to make compounded drugs, including prescription drugs, in limited amounts and under narrow circumstances, for particular patients, and at the direction of a physician when other available drugs cannot be prescribed.
The defendant, through the NRS Corporation submitted false and fraudulent claims to Medicare for the cost of FDA-approved, commercially manufactured, prescription inhalation drugs, when they were not. As a result of this conduct, NRS received approximately $2,030,343 in payments from Medicare to which they were not legally entitled.

It is further alleged that Ms. Perry, aided and abetted by others, from November 2006 through June 2008, misbranded inhalation drugs in that they contained false and misleading labeling that misrepresented the strength and potency of their active ingredients or the type of drug actually provided. During the same period it is alleged that Perry, aided and abetted by others, adulterated inhalation drugs in that the strength differed from what it was purported or represented to possess and that the drugs were contaminated and non-sterile.
“This case should send a clear message that offenses endangering public health will be vigorously prosecuted,” stated U.S. Attorney David J. Hale. “Misrepresenting the strength and potency of a prescribed medication and delivering contaminated products to patients are unconscionable crimes.”
“The Office of Inspector General is committed to protecting the health of patients covered by Medicare and Medicaid,” said Derrick L. Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services in Atlanta, Georgia, “This company billed for medications that never should have been dispensed in the first place which created serious quality of care concerns.”
The maximum potential penalties are 46 years in prison, a $770,000 fine, and supervised release for a period of 3 years.
The case is being prosecuted by Assistant United States Attorney Lettricea Jefferson-Webb and Assistant United States Attorney James Lesousky, and it was investigated by the Food and Drug Administration, Health and Human Services Office of Inspector General, United States Postal Inspection Service, and the Federal Bureau of Investigation.

Press Release Found here.