A Rockland pharmacy allegedly tricked drugmaker Sandoz Inc. into paying nearly $1.9 million in phony refunds for expired drugs, according to a lawsuit.
Sandoz Inc. accused Medwiz Solutions LLC of Bardonia of racketeering in U.S. District Court, White Plains.
“We vehemently deny the allegations and claims,” Medwiz CEO Eric Newhouse said in a brief telephone interview. “We look forward to presenting our defenses in this case and we are confident we will be successful.”
Sandoz, a subsidiary of the Swiss pharmaceutical company Novartis, makes and sells generic drugs and other products. It is based in Princeton, New Jersey.
Medwiz is a family-owned pharmacy that serves assisted living and long-term care facilities in the Northeast and Kentucky. It is based in Bardonia and has a retail store in Spring Valley.
Sandoz claims that Medwiz exploited its procedures for claiming refunds for expired drugs from 2015 to 2017.
The drug-maker allows customers who buy from authorized wholesalers to return drugs for a refund within six months of the expiration date and up to a year after expiration.
But periodically, Sandoz sells “short-dated” drugs that are within a year of their expiration date, at significantly discounted prices, to customers who are not authorized wholesalers. Such sales are considered final, are not eligible for refunds and may not be returned for credit.
Returned drugs must include a debit memo that names the authorized wholesaler and provides details about the products. Sandoz relies on the memos to determine whether the returns are eligible for credit.
Medwiz bought discounted drugs, knowing that they were nonrefundable, Sandoz claims, and then quickly returned them. The memos allegedly represented that the drugs were bought from authorized wholesalers.
Sandoz said it discovered the scheme when it became “suspicious of defendants”™ increasingly larger volume of returns.”
Medwiz never intended to sell or distribute the drugs, the complaint states. Instead, the pharmacy returned thousands of units of hundreds of Sandoz products, submitted 78 debit memos “and reaped a windfall of $1,880,533.”
Medwiz, for example, identified Kinray Inc. as the authorized servicing wholesaler and McKesson Pharmaceutical as the primary wholesaler, the complaint states, “knowing that they had not purchased such products from Kinray or McKesson.”
The debit memos identified “Blanche Reiss” and “Batya Gorelick” as the Medwiz contacts. Reiss, the clinical director, and Batya Gorelick, former vice president of administrative services, are named as defendants in the lawsuit.
Newhouse said they should not have been named because their duties were clerical. Gorelick has since left the company.
He depicted the lawsuit as “an attempt to claw back money.”
“I don”™t want to get into the merits,” he said, “but we”™re very confident we will be successful.”
In addition to racketeering, Sandoz accused the defendants of fraud, interstate transportation of stolen money, misrepresentation and unjust enrichment.
Sandoz is represented by Princeton attorney Linda Wong.
