Following an investigation that began in 2013, Douglas M. Pick, the former President and CEO of Nebraska-based pharmaceutical benefits manager (PBM) Pharmaceutical Technologies, Inc., (PTI) has pleaded guilty to engaging in an illegal kickback scheme. Pick's sentencing has not yet been scheduled, but he faces up to three years in prison for his role in facilitating the scheme that resulted in illegal payments to several individuals that totaled over $3.5 million.

The kickback plan, which dates back to 2001 and only ended with the onset of the investigation in 2013, involved Pick and several others, known as "Producers." The Producers were all individuals with direct business ties to employee health benefit plans that required administrative services for the delivery of pharmacy benefits. In exchange for channeling the plans to PTI for management of their pharmacy benefits, the Producers were provided with kickbacks arranged by Pick. The kickbacks were paid out based on the volume of business in the form of a per-prescription administrative fee. According to information presented at court, the Producers collectively received illegal payments of over $3.5 million over the lifetime of the scheme,

As we have noted in other alerts over the past year, the government is not only pursuing companies that are involved in fraudulent activities and schemes to benefit themselves at the expense of U.S. taxpayers, [1] but is also meting out punishment to corporate executives, and Pick's case provides yet another cautionary tale. Executives who engage in or facilitate actions that defraud government programs are now specifically targeted for fines and jail time, whereas in years past the government was often content to fine the companies involved, while declining to pursue and prosecute corporate executives at those same companies. It should also come as no surprise that the business entity involved in this case is a PBM. We've provided many examples of the often shady operations of these entities and their negative impacts on access to and the cost of pharmaceuticals in the U.S. and the Pick/PTI matter is yet another illustration of the point.