Four Indicted in Compound Pain Cream Scam
/By Pat Anson, PNN Editor
Greed and fraud have gone hand-in-hand in the opioid crisis, with drug and genetic test companies, pain clinics, spine surgeons, information technology vendors, addiction treatment doctors and even patient advocacy groups profiting from opioid hysteria or pushing bogus treatments.
You can add to the list pharmacies making compound pain creams.
A federal grand jury has indicted four people in Southern California for healthcare fraud, mail fraud, illegal kickbacks and money laundering as part of a scheme that defrauded two insurers into paying $22 million for medically unnecessary compound pain creams. Some of the creams cost as much as $15,000 per tube.
The fraudulent bills were sent to the U.S. military’s TRICARE health plan and the International Longshore and Warehouse Union’s Pacific Maritime Association Welfare Plan.
Prosecutors say the Orange County-based Professional Compounding Pharmacy (PCP) paid marketers about half of the payments it received from insurers as an incentive to recruit doctors and patients willing to write or accept pain cream prescriptions.
Patients were given $200 each to receive treatment at two bogus pain clinics and to participate in “sham clinical pain studies” on the effectiveness of compound creams as an alternative to opioids.
Among those arrested were James Bell, the owner of PCP and two medical marketing companies, and Dr. Michael Edwards, a Huntington Beach physician who allegedly set up the phony clinics.
Prosecutors say TRICARE was defrauded out of $19 million and the ILWU Plan lost $3 million. The scheme peaked in the first half 2015 and continued into 2016. The fraudulent billings dropped significantly in the second half of 2015, when the insurers reduced their reimbursement rates for compound creams.
This isn’t the first time compound creams have caught the attention of federal investigators. A 2018 report from the Office of Inspector General for the Department of Health and Human Services found over 500 pharmacies had suspiciously high costs for compound creams and other topical medications billed to Medicare.
Medicare spending for topical medications has skyrocketed, rising from $13.2 million in 2010 to $323.5 million in 2016. Most were prescribed for pain, using ingredients such as lidocaine, a non-opioid anesthetic, or diclofenac, an anti-inflammatory drug.
Do compound pain creams work? A 2019 study at Walter Reed National Military Medical Center concluded the creams should not be used to treat chronic pain. One month after treatment began, researchers found no significant differences in the pain scores of patients who used compound creams and those who used placebo creams.
