Incident 40500

The United States filed a civil lawsuit against Lancaster County-based McElroy Pharmacy, Inc. and Jeffrey Eshelman alleging a years-long practice of illegally dispensing opioids and other controlled substances, and billing Medicare for drugs that were not actually dispensed to beneficiaries. At the same time the civil suit was filed, the United States also filed a proposed consent judgment that, subject to the court’s approval, would resolve the lawsuit. The consent judgment would require McElroy Pharmacy and Eshelman to pay $2.9 million in civil penalties and damages under the Controlled Substances Act and False Claims Act, and would permanently prohibit them from dispensing controlled substances or obtaining another controlled substance registration in the future.

The civil lawsuit alleges that McElroy Pharmacy, which operated as a retail pharmacy in Lititz, PA, and its co-owner and pharmacist, Jeffrey Eshelman, on many occasions illegally dispensed hydrocodone and other controlled substances without requiring any prescription. As alleged in the complaint, McElroy and Eshelman did so with the knowledge that the individual to whom they dispensed hydrocodone, in one particular case, had a substance use disorder. Nonetheless, for years, they allegedly continued to dispense the opioids without any prescription. Eshelman was charged by state authorities and pled guilty to state charges in the Lancaster County Court of Common Pleas earlier this year relating to some of the conduct alleged in the federal complaint.

In addition to dispensing controlled substances without a prescription, the complaint alleges that McElroy Pharmacy and Jeffrey Eshelman submitted false billings to Medicare by billing for more expensive, brand-name medications, while dispensing the less expensive generic versions to patients. The complaint also alleges that McElroy was unable to account for tens of thousands of pills of controlled substances in an audit conducted by the Drug Enforcement Administration (DEA).

McElroy has already surrendered its pharmacy registration to the DEA. McElroy Pharmacy and Eshelman further agreed to resolve their civil liability under terms outlined in the proposed consent judgment, if accepted by the court. Among other things, McElroy and Eshelman would pay $2.9 million in civil penalties and damages under the Controlled Substances Act and False Claims Act. The proposed resolution would also permanently prevent Eshelman from distributing or dispensing any controlled substances in the future and prevent McElroy Pharmacy from ever applying for a new controlled substance registration from the DEA. Eshelman also agreed to be excluded from Medicare, Medicaid, and all other Federal healthcare programs for nine years.

“The opioid epidemic has devastated the lives of so many families and individuals across our country and this District. When healthcare providers such as pharmacists engage in illegal conduct that feeds the epidemic, our office will act,” said Acting U.S. Attorney Williams. “This civil suit and consent judgment make clear that pharmacists who engage in illegal dispensing of opioids and healthcare fraud will be held accountable.”

“Eshelman and McElroy Pharmacy are accused of gross violations of the Controlled Substances Act through their alleged distribution of powerful opioid painkillers without requiring any prescription at all,” said Jonathan A. Wilson, Special Agent in Charge of the Drug Enforcement Administration’s (DEA) Philadelphia Field Division. “In addition to the consent judgment, the permanent surrender of their DEA registration will ensure that Eshelman and McElroy Pharmacy can no longer handle or dispense controlled substances in the future.”

“Pharmacies are expected to submit claims to the Medicare program for the actual products they provide to patients,” said Maureen R. Dixon, Special Agent in Charge for the U.S. Department of Health and Human Services, Office of the Inspector General. “These civil actions demonstrate HHS-OIG and our law enforcement partners’ long-standing commitment to ensuring the integrity of the Medicare program by holding those who choose to engage in healthcare fraud and drug diversion accountable.”

The case was investigated by the Philadelphia Field Division of the Drug Enforcement Administration and the U.S. Department of Health and Human Services, Office of Inspector General. The civil investigation, litigation, and resolution are being handled by Assistant United States Attorney Anthony D. Scicchitano.

The complaint contains allegations only and does not contain any admissions, other than those made in the state criminal case. The proposed consent judgment would resolve any alleged civil liability.