Can’t Do That, California Tells Pharmacies

SAN DIEGO (CN) - A pharmacy chain gave Medi-Cal recipients free cell phones for moving their HIV/AIDS prescriptions to its drug stores, which is illegal, the California attorney general claims in court.

Allion Healthcare and its subsidiaries also handed out cell phone airtime for keeping subscriptions there, which also is illegally, Attorney General Kamala Harris claims in Superior Court.

Also sued are Allion subsidiaries Mom's Pharmacy, Medicine Made Easy, Priority Pharmacy and Whittier Goodrich Pharmacy.

The state says the pharmacies violated California's unfair business practice laws.

Government involvement in HIV/AIDS management programs means the cost of medicines to treat the disease is often reimbursed by Medi-Cal, the state says.

This makes such medicines "particularly susceptible to fraud and/or kickbacks since a pharmacy was able to maximize its monetary gains using a smaller number of claims, as opposed to other reimbursable Medi-Cal prescriptions that carried a smaller profit margin," according to the complaint.

"The People are informed and believe, and thereon allege, that at all relevant times material to this action, pharmacies inclined to take advantage of the higher reimbursement rates for AIDS/HIV prescription medications would often offer enticements of 'free' items to Medi-Cal recipients, such as bus passes, gym memberships, and even cell phones and cell phone minutes ('airtime'), in exchange for transferring the patients' AIDS/HIV prescriptions from another competing pharmacy to their pharmacy," the complaint states.

That violates Medi-Cal policy, which prohibits providers from offering incentives, rebates, discounts or refunds to customers: an agreement which a representative from the pharmacies signed in 2003, Harris says.

Allion and its pharmacies supplied free cell phones to HIV/AIDS patients who transferred their prescriptions from other pharmacies, the state says. The pharmacies added airtime minutes to the free cell phones each time a patient refilled a prescription, according to the complaint.

The state says the defendants "systematically breached the Medi-Cal Provider Agreement, which prohibited gratuitous consideration in connection with the rendering of health care services to any Medi-Cal beneficiary. Moreover, defendants systematically violated Allion's very own corporate compliance plan - code of conduct, which also expressly prohibited, among other things, the payment of gifts or other favors which may tend to influence or compromise independent judgment."

The state seeks restitution of Medi-Cal money, civil penalties and an injunction.

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