Pharmacy ‘mogul’ sentenced over multimillion-dollar fraud scheme

A co-owner of numerous compounding pharmacies has been sentenced to 18 years in prison for conspiracy to commit healthcare fraud and money laundering

Wade Ashley Walters, 54, from Mississippi, US, was sentenced on Friday for his role in a scheme to defraud healthcare benefit programs over US$287 million (AUD$374 million) and ordered to pay the money back.

Mr Walters is a co-owner of numerous compounding pharmacies and pharmaceutical distributors but is not believed to be a licensed pharmacist. Unlike in Australia, most US states allow non pharmacists to own pharmacies.

Between 2012 and 2016, Mr Walters orchestrated a scheme to defraud TRICARE – the healthcare benefit program that serves the US military, veterans and their respective family members – as well as private healthcare benefit programs, by distributing compounded medications that were not medically necessary.

As part of the scheme, Mr Walters and his co-conspirators were found to have adjusted prescription formulas to ensure the highest reimbursement without regard to efficacy, the US District Court for the Southern District of Mississippi found.

They also solicited recruiters to procure prescriptions for high-margin compounded medications and paid those recruiters commissions based on the percentage of the reimbursements paid by pharmacy benefit managers and health care benefit programs, including commissions on claims reimbursed by TRICARE.

The court found Mr Walters and his co-conspirators solicited and at times paid kickbacks to practitioners to authorise prescriptions for high-margin compounded medications.

They routinely and systematically waived and/or reduced co-payments to be paid by beneficiaries and members, including utilising a purported co-payment assistance program to falsely make it appear as if the pharmacies were collecting co-payments.

Furthermore, they conspired to launder the proceeds by engaging in monetary transactions using proceeds from the fraud scheme.

“The fraud committed by Walters and others in this investigation wasted hundreds of millions of taxpayer dollars and deprived individuals of needed medical care,” said David P Burns, Acting Assistant Attorney General of the Justice Department’s Criminal Division.

Mr Walters pleaded guilty to one count of conspiracy to commit healthcare fraud and one count of conspiracy to commit money laundering, according to the US Department of Justice.

He was ordered to serve a total of 18 years in prison and to pay US$287,659,569 (AUD$374 million) in restitution.

Mr Walters was further ordered to forfeit US$56,565,963 (AU$73.5 million), representing the proceeds he personally derived from the fraud scheme.

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