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National Insurance Crime Bureau

Ongoing Federal investigation into prescription drug fraud

Prosecutors have said the illegal scheme centers on the billing of the state’s public employee health benefits plans for medically unnecessary compounded drugs, with payouts from prescription reimbursements going to line the pockets of all participants.

Drug compounding is a process in which a pharmacist mixes ingredients to a drug customized for a specific application, concentration or ingredient. While the process is legal, it’s not regulated by the U.S. Food and Drug Administration. The drug mixtures are expensive, with a tube of cream costing thousands of dollars each, and health insurance companies provide large reimbursements to pharmacies for filling these prescriptions. Recent federal prosecutions have uncovered massive abuse in similar investigations across the country.

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