Pharmacy Executives Plead Guilty in Multimillion-Dollar Compound Medication Scheme

Two pharmacy executives pleaded guilty to their roles in a multimillion-dollar compound medication kickback scheme that they and others ran out of a pharmacy in Clifton, New Jersey,

Jeffrey Andrews pleaded guilty in Newark, New Jersey federal court to one count of conspiracy to violate the Anti-Kickback Statute. Adam Brosius pleaded guilty to conspiracy to commit healthcare fraud and conspiracy to violate the Anti-Kickback Statute.

The Compound Pharmacy Kickback Scheme Indictment

According to the indictment filed in New Jersey, Andrews was chief financial officer of Main Avenue Pharmacy in Clifton, N.J., as well as its parent company ScripsAmerica, of which Main Avenue was a subsidiary. Brosius owned and operated Pharma Sales, a marketing company in Langhorne, Pennsylvania.

The parent company, which was publicly traded, received its revenue mainly from Main Avenue Pharmacy from about 2014 to about 2016. It was alleged that Main Avenue worked with several marketing companies, three of which were in South Florida and a fourth in Arizona.

Andrews and Brosius were among four men indicted in July 2020 for their roles in what prosecutors said was a $35 million compound pharmacy fraud scheme.

How the Pharmacy Kickback Scheme Worked

The compound medication fraud scheme worked like this: Main Avenue Pharmacy would identify compounded drugs that would yield exorbitant reimbursements from health insurers, including federal and commercial payers. Once identified Main Avenue would create large prescription pads with those formulas on it. The prescription pad was extremely easy to use – it included check boxes for doctors to select a particular compounded formula. This increased the likelihood that the doctor would not change the high-paying formula for a less expensive one. There also was a place to select up to a dozen refills and a box authorizing the pharmacy to alter the ingredients in case an insurer wasn’t covering a particular compounded medication.

Main Avenue Pharmacy then would disseminate the prescription pads it to its stable of marketers across the country, with whom it had contractual relationships. The marketing companies would, in turn, distribute the prescription pad to telemedicine companies and doctors with whom they had a financial arrangement.

How Doctors Became Involved

Doctors who signed prescriptions for compounded medications that were filled at Main Avenue Pharmacy often had never even spoken to the patient, let alone examined them. Once the prescriptions were signed, they would be returned to Main Avenue Pharmacy. Main Avenue would then fill the prescription regardless of whether it was medically necessary and then submit claims to insurers for reimbursement.

After Main Avenue was reimbursed, marketers who had generated the prescriptions based on the overall adjudication amount were paid kickbacks. Main Avenue signed contracts with many of the marketers, which spelled out the kickback arrangement. The arrangement called for Main Avenue to pay each marketer based on the volume of referrals of compounded prescriptions and the reimbursement amount that Main Avenue received.

Sweetening the Pot

To further enhance this compound medication scheme, Main Avenue Pharmacy would routinely waive patient co-payments to whom they were sending multiple prescriptions in hopes that the patients would keep the medications regardless of whether the patient wanted them.

In some cases, Main Avenue paid the co-payments on behalf of the patients, and falsified money orders from the patients to Main Avenue to make it appear that the patients had paid their co-payments, when they had not.

Main Avenue received approximately $33 million in reimbursements for compounded medications alone. More than $5.8 million of that was paid by TRICARE, a federal healthcare program for members of the military and their families.

Others Involved in the Scheme

In March, 2022, another man, Robert Schneiderman, pleaded guilty to one count of conspiracy to commit healthcare fraud and one count of conspiracy to violate the Anti-Kickback Statute. He was president of Main Avenue Pharmacy and a founder and CEO of its corporate parent. Schneiderman earned over $400,000 through the course of the compound medication scheme.

The case against the fourth person, Chad Beene, is pending.

How We Can Help

The Health Law Offices of Anthony C. Vitale has been representing clients under investigation for more than three decades. If you or your company is being investigated for healthcare fraud, now is the time to consult an experienced criminal healthcare fraud attorney.

Don’t wait until it’s too late. Every minute you delay could increase your legal exposure. Our firm specializes in defending clients involved in complex healthcare fraud cases, including violations of the Anti-Kickback Statute and compound medication fraud. With federal prosecutors working aggressively on these cases, you need a legal team that understands the intricacies of healthcare law and can mount a strong defense.

Take action now to protect your rights, your career, and your freedom. Call us at 305-358-4500 or email info@vitalehealthlaw.com to schedule your confidential consultation.