Amazon subsidiary PillPack reaches a settlement with US government and will have to shell out over $5.6M
Amazon’s online pharmacy has settled a lawsuit in New York after allegations of overbilling for the lifesaving drug insulin.
The settlement resolves allegations that the pharmacy, known as PillPack, improperly billed government healthcare programs like Medicare and Medicaid for more insulin pens than patients needed according to their prescriptions, and for falsely under-reporting the days insulin supplies were dispensed.
Under the settlement, PillPack has agreed to pay approximately $5.6 million to the US government and over $175,000 to other states that were fraudulently overbilled for insulin. As a part of the settlement, PillPack has also admitted and accepted responsibility for certain conduct, including that it dispensed insulin pens that exceeded imposed days-of-supply limits.
“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,” US attorney Damian Williams said in a statement.
According to the government, PillPack sought reimbursement for insulin pens, but it was required to report the quantity dispensed and the days of supply.
Instead of accurately reporting the days of supply and contacting the Centers for Medicare and Medicaid Services, the government alleged that PillPack would dispense and bill for the full carton and reduce the days of supply reported to the government program to conform to the limit. As a result, for those claims, PillPack reported days-of-supply data to GHPs that were different from, and lower than, the days-of-supply that should have been reported.
From April 2014 through Nov. 2019, PillPack’s general practice was to dispense insulin pens to patients using full cartons. PillPack would dispense and bill for the full carton and falsely underreport the days of supply to make it appear that the dispensing did not violate the program’s days-of-supply limit.
This practice of under-reporting also led PillPack to dispense premature refills to program beneficiaries, which led to frequently dispensed insulin pen refills days or weeks before patients needed them according to their prescriptions.
PillPack, which was acquired by Amazon in 2018, was brought under Jeff Bezos’ fold during a time when he, Berkshire Hathaway and JP Morgan were trying to think up ways to disrupt the US healthcare system. While PillPack was not a part of that venture, Amazon inherited PillPack’s pharmacy licenses in all 50 states, becoming a player in the pharmacy delivery service.
However, PillPack’s settlement also comes at a time when the average retail price for insulin has risen dramatically over the years, over 54% from 2014 to 2019, according to GoodRx.