This Month, the Department of Justice brought charges against two California telemedicine company executives related to their alleged $100 million healthcare scheme involving the illegal sale of Adderall and other stimulants through deceptive advertising. These charges are the Justice Department’s first criminal drug distribution prosecutions related to telemedicine prescribing through a digital health company.
As part of the healthcare scheme, the government alleges that defendant executives operated a telehealth platform where Adderall and other stimulants were prescribed and sold to patients (often where not medically necessary). Notably, many of these patients were introduced to the telehealth company though targeted social media marketing. The telehealth platform was allegedly designed in such a manner that limited prescribers’ access to information regarding the patients they were prescribing to, and the prescribers were directed to prescribe Adderall even where it was not medically indicated and/or the patient did not qualify for such prescriptions. Additionally, one major feature of the telehealth platform was the “auto-refill function,” which sent automatic messages prompting physicians to authorize refills every month while also discouraging follow-up medical care regarding these refill prescriptions. The platform further incentivized prescribers from providing ongoing medical care to patients through the platform’s compensation structure, which refused to compensate prescribers for medical visits and related time spent with patients after the prescriber’s initial, thirty-minute patient encounter.
The government also alleged that the two executives defrauded government and commercial insurers. The executives and others made false and fraudulent representations about the telehealth company’s prescription policies and practices, which ultimately caused Medicare, Medicaid, and commercial insurers to pay in excess of $14 million related to the dispensing of the stimulant prescriptions.
These charges should serve as a reminder to stakeholders participating in telehealth arrangements to ensure the regulatory compliance of their model, especially where controlled substances are being ordered and prescribed. Importantly, prescribing of controlled substances via telehealth will be in flux as we approach the end of the year pending DEA’s final rule on remote prescribing. Moreover, where a telehealth platform engages in marketing, these ads must be reviewed prior to publication to ensure that ads comport with FTC, FDA and DEA rules regarding the marketing of controlled substances, as well as state Board of Pharmacy limitations. Additionally, participating in and structuring telehealth models improperly may implicate federal and state fraud, waste, and abuse laws, including the Anti-Kickback Statute, False Claims Act, Controlled Substances Act.
Contact Frier Levitt to speak to an experienced regulatory attorney who can review proposed or current telehealth and marketing models to assess compliance with federal and state law.
