A Galloway Township pharmaceutical representative pleaded guilty man Monday to being part of a prescription fraud scheme that cost state health benefits programs millions.
Andrew Gerstel, 39, must forfeit $184,389.05 in money he received as his part in the conspiracy. He also must pay restitution of $483,946.72, acting U.S. Attorney William Fitzpatrick and state Attorney General Christopher Porrino said.
From January 2015 through April 2016, Gerstel admitted he recruited individuals to obtain very expensive and medically unnecessary compounded medications from an out-of-state pharmacy, identified in the information as the “Compounding Pharmacy.”
The conspirators learned that certain compound medication prescriptions – including pain, scar, antifungal, and libido creams, as well as vitamin combinations – were reimbursed for thousands of dollars for a one-month supply.
The conspirators also learned that some New Jersey state and local government and education employees, including teachers, firefighters, municipal police officers, and state troopers, had insurance coverage for these particular compound medications. An entity referred to in the information as the “Pharmacy Benefits Administrator” provided pharmacy benefit management services for the State Health Benefits Program, which covers qualified state and local government employees, retirees, and eligible dependents, and the School Employees’ Health Benefits Program, which covers qualified local education employees, retirees, and eligible dependents. The Pharmacy Benefits Administrator would pay prescription drug claims and then bill the State of New Jersey for the amounts paid.
Gerstel recruited public employees and other individuals covered by the Pharmacy Benefits Administrator to fraudulently obtain compounded medications that were reimbursed for the highest amounts, without regard to their medical necessity. The prescriptions were then faxed to Compounding Pharmacy, which filled the prescriptions and billed the Pharmacy Benefits Administrator.
The pharmacy paid one of Gerstel’s conspirators a percentage of each prescription filled and paid by the Pharmacy Benefits Administrator, which was then distributed to Gerstel and other members of the conspiracy. Gerstel paid recruiters under him and individuals with insurance coverage to reward them for obtaining the prescriptions.
According to the information, the Pharmacy Benefits Administrator paid Compounding Pharmacy over $50 million for compounded medications mailed to individuals in New Jersey.
Gerstel faces a maximum penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense.
Ten other conspirators, including an Atlantic City firefighter and teachers, have pleaded guilty to their roles in the scheme and await sentencing.
