Pharmacist and two pharmacies agree to resolve allegations of false claims for anti-overdose drug

Massachusetts

BOSTON (USDOJ) – A Michigan pharmacist and two pharmacies agreed to pay $1 million to resolve allegations that they submitted false claims to Medicare for a drug used in rapid reversal of opioid overdoses.

Riad “Ray” Zahr, of Dearborn, Mich. and two specialty pharmacies that Zahr formerly owned and operated have agreed to resolve allegations that they submitted false claims for the drug Evzio. Evzio was a naloxone hydrochloride product used for the rapid reversal of an opioid overdose. Evzio was the highest-priced version of naloxone on the market and insurers frequently required the submission of prior authorization requests before they would approve coverage for Evzio.

The United States contends that, between Aug. 1, 2017 and June 30, 2019, Plymouth Towne Care Pharmacy, Inc. d/b/a People’s Drug Store (People’s Drug Store) and Shaska Pharmacy LLC d/b/a Ray’s Drugs (Ray’s Drugs) submitted false claims for Evzio to Medicare. In particular, the government alleges that People’s Drug Store and Ray’s Drugs submitted false and misleading prior authorization requests for Evzio that contained clinical assertions for which the pharmacies lacked any factual basis. At times, Zahr and the pharmacies initiated Evzio prescriptions based on rudimentary patient lists with only basic biographical details. In the prior authorization requests, Zahr and the pharmacies also included assertions about the comparative effectiveness of Evzio purportedly authored by prescribing physicians but that Zahr and the pharmacies actually wrote. The prescribing physicians did not review, sign, or submit the prior authorizations at issue.

The settlement also resolves allegations that Zahr, People’s Drug Store and Ray’s Drugs dispensed Evzio prescriptions to Medicare beneficiaries at times without collecting or attempting to collect co-payment obligations for Evzio, in violation of the Anti-Kickback Statute.

“Taxpayers pay a huge amount of money for federal health care programs, and they expect that money will be spent honestly and effectively – especially when it comes to expensive therapies,” said Acting United States Attorney Nathaniel R. Mendell. “Our job is to find and stop misconduct like this, which hurts those programs and cheats us all.”

“We expect the submission of truthful and non-misleading documentation by all those involved in the delivery of health care goods or services, including pharmacies that submit claims for pharmaceutical products,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “This settlement demonstrates the department’s continuing commitment to preventing fraud in Medicare and other taxpayer-funded health care programs.”

“When healthcare providers put their own financial gain above honest billing of Medicare, they violate the basic trust the public extends to healthcare professionals,” said Phillip M. Coyne, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of the Inspector General. “Our agency, working with our law enforcement partners, will continue to root out all forms of waste, fraud and abuse in our federal health care programs.”

“Pharmacies that take shortcuts to increase their profits by submitting false claims for expensive drugs increase medical costs for all of us,” said Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division. “Today’s settlement should deter anyone thinking about abusing our federal health care programs that so many rely on for their health care needs.”

Under the terms of the settlement agreement, Zahr, People’s Drug Store, and Ray’s Drugs will pay the government $1 million. The civil settlement includes the resolution of claims brought in a lawsuit filed by a whistleblower under the qui tam provisions of the False Claims Act, which allow private parties, known as relators, to bring suit on behalf of the government and to share in any recovery. 

Acting U.S. Attorney Mendell; AAG Boynton; HHS OIG SAC Coyne; and FBI SAC Bonavolonta made the announcement today. Assistant U.S. Attorneys David J. Derusha and Abraham R. George of Mendell’s office and Trial Attorney Sarah Arni of the Justice Department’s Civil Division handled the matter.

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