Former Pharmacy Chief Financial Officer and Former Pharmacy President Admit Roles in $33 Million Pharmacy Compounded Medication Scheme

NEWARK, N.J. - Two individuals have admitted their respective roles in a multimillion dollar compounded medication kickback scheme that they and others ran out of a pharmacy in Clifton, New Jersey, U.S. Attorney Philip R. Sellinger announced.

Jeffrey Andrews, 73, pleaded guilty on Sept. 24, 2024, before U.S. District Judge Madeline Cox Arleo in Newark federal court to one count of an indictment charging him with conspiracy to violate the Anti-Kickback Statute.

Adam Brosius, 59, pleaded guilty before U.S. Magistrate Judge Michael A. Hammer in Newark federal court on Sept. 23, 2024, to two counts of an indictment charging him with conspiracy to commit health care fraud and conspiracy to violate the Anti-Kickback Statute.

According to documents filed in this case and statements made in court:

From 2014 through 2016, Andrews, Brosius and others used Main Avenue Pharmacy, a mail-order pharmacy with a storefront in Clifton, New Jersey, to run an illegal kickback scheme involving compounded drugs including scar creams, pain creams, migraine mediation, and vitamins. Andrews worked as the Chief Financial Officer for Main Avenue. Brosius worked as Main Avenue's director of business development, and later as its president.

The scheme identified compounded drugs that would yield exorbitant reimbursements from health insurers, including both federal and commercial payers. Once Main Avenue identified lucrative formulas for compounds, it would create large prescription pads with those formulas on it and distribute the pads to marketers across the country with whom it had contractual relationships. The marketing companies would in turn distribute the prescription pad to telemedicine companies and doctors with whom they had a financial arrangement.

After filling prescriptions, Main Avenue submitted claims to health care benefit programs for reimbursement, including Medicare, Tricare, and commercial payers in New Jersey and elsewhere. After Main Avenue obtained reimbursement, it paid kickbacks to marketers who had generated the prescriptions. Main Avenue signed contracts with many of the marketers, which detailed the illicit kickback arrangement, which called for Main Avenue to pay each marketer money based on the volume of referrals of compounded prescriptions and the reimbursement amount that Main Avenue received. Main Avenue received approximately $33 million in reimbursements for compounded medications alone from health care benefit programs. Over $5.8 million of that amount was paid by TRICARE, a federal payer.

The count of conspiracy to commit health care fraud is punishable by a maximum penalty of 10 years in prison. The count of conspiracy to violate the Anti-Kickback Statute is punishable by a maximum penalty of five years in prison. Both counts are also punishable by a fine of $250,000 fine, or twice the gross gain or loss from the offense, whichever is greatest. Sentencing is scheduled for Brosius is scheduled for Feb. 20, 2025, and for Andrews, Feb. 18, 2025.

Charges remain pending against Chad Beene, 52, of Philadelphia, Pennsylvania. The charges and allegations against Beene are merely accusations and he is presumed innocent unless and until proven guilty. Robert Schneiderman, 81, of Langhorne, Pennsylvania, previously pleaded guilty to two counts of the Indictment.

U.S. Attorney Sellinger credited special agents of the FBI, under the direction of Acting Special Agent in Charge Nelson I. Delgado in Newark; the Department of Health and Human Services-Office of Inspector General, under the direction of Acting Special Agent in Charge Naomi Gruchacz; the U.S. Department of Defense, Office of the Inspector General, Defense Criminal Investigative Service, under the direction of Special Agent in Charge Patrick J. Hegarty; and the U.S. Department of Veterans Affairs Office of Inspector General, under the direction of Special Agent in Charge Christopher F. Algieri with the investigation leading to the guilty plea.

The government is represented by Assistant U.S. Attorneys Katherine M. Romano of the Health Care Fraud Unit and Matthew Specht of the Special Prosecutions Division.