Justice Department investigates pain compounding cream for $500M potential fraud: 5 things to know

Practice Management

Compounding creams to treat pain are the target of a new big Justice Department investigation after allegations emerged that companies sent out more product than was ordered, overbilled and automatically refilled prescriptions without being asked. And, to some of the creams reportedly have little or no medical value, according to a report in Nasdaq.

The compounding cream sales surged in recent months after endorsements from professional athletes, including former NFL quarterback Brett Favre, were peppered across the companies' marketing campaigns. Elderly pain patients, athletes and veterans are among the targeted groups for these creams. Some of the creams cost $10,000 per tube.


Here are five key notes on the investigation:


1. The Justice Department reported potentially $500 million in healthcare fraud is linked to the compounding creams for pain, with Tricare as the biggest victim. Tricare paid $1.75 billion for compounding drugs, including these creams, during the 2015 fiscal year. Last year's payment was 18 times more than the amount paid for the three prior years.


2. Companies such as World Health Industries, which also does business as Aspire Rx, are under FBI investigation. Mr. Favre reportedly is an investor in WHI and created a business along with others associated with WHI called 3B Medical Group in 2013. WHI founders also founded Opus Rx, an additional company under investigation.


3. Opus and at least six others associated with the investigation filed chapter 11 bankruptcy protection in the past few months.


4. WHI and Opus are based in Mississippi, and the U.S. attorney for the Southern District of Mississippi is overseeing the probe. Various agencies have raided pharmacy businesses around Jackson, Miss., as well as Florida, Utah and Alabama locations. Authorities have also seized $15 million in property as well as several vehicles from 80 bank accounts due to suspected fraud.


5. The FDA doesn't approve compounded creams due to limited amounts distributed, and compounding pharmacies are primarily state-regulated. Mississippi investigators believe some creams sold don't have medical value, according to the report. Many were marketed and sold online.


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