Intensified Investigations and Prosecutions Against Pharmacies for Alleged Inventory Shortages

In a recent trend, the government is increasing investigations and prosecutions of pharmacies alleging health care fraud and False Claims Act (“FCA”) violations based on inventory shortages. Multiple governmental offices, including the Department of Justice (“DOJ”) and the U.S. Department of Health and Human Services, Office of Inspector General (“OIG”) have expressed heightened interest in continuing this trend. An inventory shortage occurs when a pharmacy does not have purchases of a particular medication to support its claims billed for that medication. The government oftentimes, when noting an inventory shortage, will take the position that the pharmacy has requested reimbursement for a medication that it did not actually dispense. The government frequently relies on pharmacy benefit manager (“PBM”) audits of the pharmacy’s inventory (conducted by examining the pharmacy’s purchases versus its claims submitted to that particular PBM) during a prescribed period of time, which may establish that the pharmacy did not have sufficient medications to support claims billed. Therefore, PBM audits may trigger government investigations. Because inventory shortages can trigger violations of both health care fraud statutes and the FCA, claims submitted requesting reimbursement from both government and private/commercial payors are relevant.
How Frier Levitt Can Help
While an inventory shortage is often scrutinized by the government as an indicia of fraudulent or abusive behavior, there may be acceptable reasons why this type of discrepancy might exist. Frier Levitt has successfully defended pharmacies who have experienced an inventory shortage. It is important that you take action once you become aware of any PBM (or internal, or other) audit revealing an inventory shortage. If you have recently found or been notified that you do not have inventory sufficient to support claims billed, contact us today.