The $400 million fraud that PBMs call 'business'

A pharmacist got slapped with 17 years in prison, $115 million in restitution, and $400 million in asset forfeiture earlier this year.^[] Why? He paid doctors to prescribe compounded creams reimbursed at $16,000 a pop—despite costing him just $15 to make.

If you’re thinking, “Of course that’s illegal,” you’re right. Kickbacks are a clear violation of federal law. The moment prescribers are incentivized by anything other than clinical need, the system breaks.

This case is a textbook example of fraud and abuse—and it’s why many physicians tread carefully when it comes to any sort of financial relationship tied to prescribing.

Here's the twist: PBMs can do it legally

While this pharmacist sits in a federal prison, the broader system is running a disturbingly similar play—legally.

Let’s talk about PBMs. Pharmacy benefit managers were supposed to control drug costs. Instead, they’ve become notorious for opaque pricing, murky rebate structures, and questionably aligned incentives.

And yes—PBMs are legally allowed to receive “rebates” from manufacturers, which can look a lot like kickbacks in disguise.

When the incentive loops back to itself

So when CVS—America’s largest pharmacy—buys a PBM (Caremark), then buys an insurer (Aetna), you’ve got what’s called vertical integration.

He got a prison sentence. They get federal contracts.

Why this matters for physicians

For doctors, this case isn’t just a cautionary tale about kickbacks—it’s a reminder to look upstream. The most egregious forms of financial manipulation in healthcare aren’t just happening in backroom deals or bad actors gaming compounding pharmacies. They’re embedded in the very architecture of our system.

So the next time a formulary suddenly favors a drug that’s not clinically superior—or your patient’s co-pay inexplicably triples—remember: The difference between fraud and business-as-usual might just be who’s holding the pen.