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New York pharmacy owner Purna Chandra Aramalla sentenced to 3 years in prison, fined over $7 million

Aramalla defrauded Medicaid, Medicare and ADAP.

AB Wire

NEW YORK: A New York-based Indian American pharmacist and business owner Purna Chandra Aramalla, 67, of Port Washington, was sentenced to three years in prison, and ordered to pay over $7 million in restitution, for conducting a scheme to defraud Medicaid, Medicare, and the New York State-funded AIDS Drug Assistance Program (ADAP) through the purchase and sale of illegally diverted prescription drugs, including HIV medication.

Aramalla was also sentenced for tax evasion. He was sentenced by U.S. District Judge Paul A. Crotty, last week, according to the Justice Department.

Manhattan U.S. Attorney Preet Bharara said in a statement: “Purna Aramalla’s prescription drug diversion scheme defrauded millions of dollars from programs established to provide health care assistance for the elderly and indigent. The scheme also jeopardized the health of anyone induced to sell his or her prescription or medication, and anyone who unwittingly purchased repackaged drugs.”

Aramalla owned and operated A Fair Deal Pharmacy Inc. in Queens, New York, and Quality Drug Inc. in the Bronx, New York. Using these pharmacies, he carried out a multimillion-dollar scheme to defraud the New York State Medicaid, Medicare, and ADAP programs through the sale of diverted prescription drugs, that is, drugs not obtained from legitimate sources.

As part of the scheme, Aramalla purchased prescription drugs, including high-cost medications used to treat HIV, that were obtained from patients who sold the drugs rather than use them to treat their illnesses.

Aramalla then repackaged and resold those prescription drugs to his customers, as if they were new drugs obtained from legitimate sources. He requested and received reimbursement from Medicaid, Medicare, and ADAP in connection with these sales, even though these programs would not have been willing to reimburse the cost of second-hand drugs.

In addition, in some cases, these programs had already paid for the prescription drugs when they were initially dispensed. In order to make the diverted drugs appear to be new drugs from legitimate sources, Aramalla and his co-conspirators used lighter fluid and other means to dissolve the adhesive on the patient labels on prescription bottles so that they could be removed and replaced with new labels.

Aramalla also sought and obtained reimbursement for prescription drugs that were never actually dispensed to patients. Instead, customers with prescriptions for drugs essentially “sold” their prescriptions to Aramalla, agreeing not to take delivery of the drugs in exchange for a share of the reimbursed proceeds.

From January 2010 to September 2013, Aramalla’s pharmacies received more than $10 million in reimbursements from Medicaid, Medicare, and ADAP that cannot be accounted for by his purchases from legitimate wholesalers.

In addition to his prison term, Aramalla was ordered to forfeit $7,503,605, pay restitution to his victims in the same amount, file amended tax returns for the years 2010 through 2012, and pay back taxes and applicable penalties.

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