Amazon Subsidiary Reaches $5.79 Million Settlement Over Insulin Dispensing Practices

Recently, the Department of Justice (DOJ) announced a $5.79 million settlement with PillPack, an Amazon subsidiary, in a fraud lawsuit for over-dispensing insulin. The settlement covers allegations that PillPack improperly billed government-operated healthcare programs (GHPs) – including Medicare and Medicaid – for more insulin pens than patients needed according to the prescriptions and also underreported how many days of supply of insulin were dispensed.

As part of the settlement, PillPack also admitted and accepted responsibility for certain conduct the Government alleged in its Complaint, including that it dispensed insulin pens that exceeded days-of-supply limits imposed by GHPs.

Background

Manufacturers often distribute insulin pens in five-pen cartons, and each pen usually contains 300 units (3 mL) of insulin solution. In order to dispense an insulin pen to a patient, pharmacies need a valid prescription from a licensed prescriber, including the “directions for use,” which typically designate both how much insulin to administer and the frequency and/or timing of when to administer it.

When the pharmacy requests reimbursement from a GHP, it needs to provide the quantity of drug dispensed and the days of supply. Typically, to calculate the days of supply, a pharmacist divides the total quantity of medication being dispensed by that patient’s daily dose. GHPs have dispensing limits for prescription drugs – including insulin pens – in terms of both quantity and days of supply. If the reported days of supply exceeds the limits allowed by the GHP, it will often automate the denial of such a claim.

The government alleged that from April 2014 through November 2019, PillPack’s practice was to dispense insulin pens to patients using full cartons. Despite the fact that PillPack would dispense and bill for the full carton, it would falsely under report the days of supply so that the the dispensing would not violate the program’s days of supply limit.

By under-reporting days of supply, PillPack also often wound up dispensing premature refills to program beneficiaries. This is because when PillPack recorded in its internal system the inaccurate lower days of supply that were submitted to conform with the GHP’s days of supply limit, the system would automatically calculate a premature refill due date. This meant that PillPack pharmacists regularly dispensed insulin pen refills days or weeks before patients actually needed them.

DOJ Response

U.S. Attorney Damian Williams said, “Pharmacies are trusted to provide accurate information to Government healthcare programs and to prevent waste when dispensing medications to patients.  PillPack abused this trust by dispensing insulin refills long before patients needed them and by falsely reporting the days-of-supply of insulin actually dispensed to prevent its claims for reimbursement from being denied.  This Office will continue to hold pharmacies accountable when they submit false information and waste taxpayer dollars.”

PillPack Admissions

In addition to the $5.79 million settlement (with $5.616 million going to the United States and $172,522 going to the states), PillPack did make several admissions.

First, PillPack admitted that its insulin pen dispensing practice was to supply patients with a full carton of insulin pen, which often resulted in exceeding the GHP’s days of supply limit. PillPack also admitted that instead of accurately reporting the days of supply, PillPack would reduce the days of supply reported to GHP to conform with its requirements.

PillPack also admitted that prior to April 2019, its prescription management and dispensing software determined refill dates based on the reported days o fsupply, which led to inaccurate data that generated premature refill due dates.

PillPack further admitted that during the covered period, PillPack received audit reports from PBMs acting on behalf of GHPs, requesting that PillPack repay overpayments it had received for insulin pen prescription claims due to the inaccurate days of supply reporting.