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Specialty drugs will continue to hike up spending. Photograph by Simon Dawson — Bloomberg via Getty Images

U.S. Is Probing a Possible Half-Billion Dollar Health-Care Fraud

Feb 07, 2016

The FBI is reportedly investigating a half-billion dollar health-care fraud scheme involving pain-management creams

The specialty compounding creams are mainly marketed at athletes and the elderly as a way to quickly alleviate pain and cramping. According to the Wall Street Journal, sales have risen lately following a marketing blitz that included ads featuring former NFL quarterback Brett Favre. Investigators are looking into claims that some of the creams have no medical value, pharmacies have overbilled, sent patients more than they ordered, or refilled prescriptions without being asked. Some companies have charged over $10,000 for a single tube of the ointment.

The fraud has supposedly affected private insurance companies, Medicare, and Medicaid. The biggest alleged victim is a health insurance program for military personnel and veterans. Investigations are still in their early stages, and no charges have been filed.

There is very little regulation of compounding creams. Because there are so many variations, it's inefficient for the FDA to screen them all and so they don't require approval from the agency. The International Academy of Compounding Pharmacists told the Journal that legitimate creams can really benefit people, particularly since they're non-addictive, and health care payers should take "aggressive action against any health care provider that has allegedly broken the law."

A pharmacy manager at Rx Remedies said he thinks investigators will conclude that they haven't done anything wrong. "It's not like we're selling drugs out the back door," he told the Journal. "This isn't Pablo Escobar's house; this is a medical profession, for crying out loud."

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