Cedar Grove man admits role in $5.3M compounded prescription drug scheme

NEWARK, NJ — On July 29, an employee of a public university in New Jersey admitted his role in a scheme to defraud public and private health benefits programs of at least $5.3 million for the billing of medically unnecessary compounded prescriptions, U.S. Attorney Craig Carpenito announced.

John Cuffari, 58, of Cedar Grove, pleaded guilty by videoconference before U.S. District Judge John Michael Vazquez to an information charging him with conspiracy to commit health care fraud.

According to documents filed in this case and statements made in court, compounded medications are specialty medications mixed by a pharmacist to meet the specific medical needs of an individual patient. Although compounded drugs are not approved by the Food and Drug Administration, they are properly prescribed when a physician determines that an FDA-approved medication does not meet the health needs of a particular patient, such as if a patient is allergic to a dye or other ingredients in the prescription.

Between November 2014 and July 2016, Cuffari participated in a conspiracy that involved the submission of fraudulent prescriptions for compounded medications to public and private insurance plans. The scheme centered on the discovery that certain insurance plans paid for prescription compounded medications — including scar creams, wound creams, and metabolic supplements and vitamins — at exorbitant reimbursement rates.

Cuffari exploited this opportunity through working as a sales representative for several compounding pharmacies. In order to profit as a sales representative, Cuffari targeted individuals who had insurance plans that covered compounded medications and then convinced those individuals to obtain prescriptions for compounded medications, regardless of medical necessity, often by providing them with cash payments. In order to obtain prescriptions for compounded medications for some of the recruited individuals, Cuffari caused payments to be made to a New Jersey–based physician.

Once the prescriptions were written, they were filled by the compounding pharmacies with which Cuffari worked. The compounding pharmacies would then receive reimbursement from the insurance plans, and would pay Cuffari a percentage of the reimbursement amount.

As part of his plea agreement, Cuffari must forfeit $539,580 in criminal proceeds he received for his role in the scheme and pay restitution of at least $5,392,214. He faces a statutory maximum of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for Dec. 9.

  Fraud, U.S. Attorney’s Office