U.S. Intervenes in False Claims Suits Against Pharmaceutical Companies

Posted: 06/16/2019  browse the blog archive
U.S. Intervenes in False Claims Suits Against Pharmaceutical Companies

The Department of Justice announced last week that the United States has filed a complaint in intervention against Smart Pharmacy Inc., and SP2 LLC, two compounding pharmacies located in Jacksonville, Florida. The complaint alleges that the pharmacies improperly included the drug aripiprazole, an atypical antipsychotic drug, in compounded pain creams in order to boost the pharmacies’ reimbursement for the prescriptions and that the pharmacies routinely waived patient copayment obligations. The government has also brought claims against Gregory Balotin, a co-owner of the pharmacies, for his involvement in the alleged schemes. 

Aripiprazole, which is sold under the brand names Abilify, Abilify Maintena, and Aristada, is approved by the U.S. Food and Drug Administration to treat a number of psychological conditions such as schizophrenia, Tourette’s disorder, irritability associated with autistic disorder, and manic and mixed episodes associated with Bipolar I. The complaint alleges that the defendants crushed pills of aripiprazole and included them in compounded creams used topically for pain treatment while knowing that there was not an adequate clinical basis for adding aripiprazole to the compound. The complaint alleges that, by including the drug in the pain creams, the defendants substantially increased their reimbursement for prescriptions for the creams from Medicare Part D and TRICARE, the federal health care program for active duty military personnel, retirees, and their families.

The government’s complaint also alleges that the defendants improperly waived patient copayments. While copayments may be waived in certain unique circumstances, such as on the basis of financial hardship of the patient, the defendants are alleged to have routinely waived patient copayments without regard for whether a waiver was warranted.

The lawsuits, United States ex rel. Sanchez v. Smart Pharmacy, Inc., et al., No. 14-cv-1453 (M.D. Fla.), and United States ex rel. Kohli v. Smart Pharmacy, Inc., et al., No. 16-cv-387 (M.D. Fla.), were originally filed in the U.S. District Court for the Middle District of Florida by Amy Sanchez and Ashok Kohli, two former employees of Smart Pharmacy. The lawsuits were filed under the qui tam or whistleblower provisions of the False Claims Act, which permit private parties to sue on behalf of the United States for false claims and to receive a share of any recovery. The Act permits the United States to intervene in such lawsuits, as the United States has done in these cases. 

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.