In a resurgence of the previous audit trends, ESI and Medco appear to be reviving the practice of investigating compounding pharmacies for fraud, waste and abuse through purchase history verifications. While termed an “investigation,” ESI/Medco are essentially conducting what appears to be a run-of-the-mill audit, focusing on a purchase history verification. With similar “investigations” in the past, ESI/Medco have attempted to argue that a pharmacy is committing fraud by billing full AWP for certain NDC numbers, arguing there is no relationship between amounts billed and actual acquisition cost.
Frier Levitt is in the process of litigating multiple cases from ESI/Medco’s earlier wave of this trend, and has seen ESI/Medco attempt to impose enormous recoupments on pharmacies over these issues.
Therefore, it is important for pharmacies to contact competent counsel immediately, as soon as they receive a purchase history “investigation” notice. There may be several defenses and necessary responses that should be raised by the pharmacy at the outset in order to prevent adverse consequences, including recoupment or network termination.
