October 03, 2018

Beware Billing Medicare for Non-Approved Imported Drugs

Dr. Mark Fleckner, a board-certified New York ophthalmologist, will pay almost $7 million to settle civil fraud claims arising from giving patients imported macular degeneration drugs that had not been evaluated or approved by the Food and Drug Administration (FDA), then accepting payment from Medicare for them. The settlement represents both a flash point in the debate over importing prescription drugs and a cautionary tale for physicians who may underestimate the risks they take on in utilizing imported drugs.

Case Background

From June 2014 to June 2017, Fleckner purchased the drugs Eylea and Lucentis from overseas to administer to his patients. Similar drugs are approved by the FDA for the treatment of eye diseases, but the unapproved drugs Fleckner imported were cheaper than the FDA-approved drugs. The Medicare program reimbursed him at the same rate as if he were giving his patients FDA-approved drugs. Fleckner profited from the difference between the cost of the unapproved drugs he provided his patients and Medicare’s reimbursement rate, which is based on the average sales price of the approved drugs. The Department of Justice alleged this submission of charges to Medicare for unapproved drugs violated the False Claims Act, because the unapproved drugs were not eligible for reimbursement by Medicare.

This settlement comes at a time when prescription drug importation is a hot topic in politics. For decades, politicians have called for a policy to allow Americans to buy unapproved drugs from foreign sources as a means of lowering the costs of medicine. Many are making the same argument today in response to growing concern about the cost of prescription drugs. In July, the U.S. Department of Health and Human Services Secretary Alex Azar announced that FDA will establish a working group on drug importation for off-patent products that have seen a price spike. Various federal bills have been introduced that would authorize drug importation, though none has passed, and seven states sought similar provisions during 2018 legislative sessions.

However, drug safety experts have spoken out against such importation, citing health and safety data. Four former FDA commissioners raised concerns about the safety of importing prescription drugs to Congress in 2017. Adding to this consensus, the National Association of Boards of Pharmacy, American Pharmacists Association, U.S. Pharmacopeia and the Pew Charitable Trusts (among others) have weighed in against importation. Aside from the safety questions, academics and coalitions have questioned the underlying theory that foreign imports will result in cost savings.

The Bottom Line? Better Safe Than Sorry

Importing prescription drugs is a contested territory in the health care policy debate. Given this context, physicians may wonder if utilizing imported drugs is permissible. While the terms of the settlement are confidential, this case illustrates several risks associated with utilizing imported drugs:

  • There are numerous dangers in the unauthorized importation of drugs.
  • Individual health care providers can mistakenly believe that the latitude they may have in the practice of medicine will shield them from enforcement.
  • Enforcement reaches individual health care providers and can include damages calculated at three times the amounts of sales, plus thousands of dollars in fines per transaction.
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