Pharmacy owner charged in multimillion dollar prescription drugs fraud case in NY

December 19, 2013

Purna Chandra Aramalla faces 20 years in prison.

By Deepak Chitnis

WASHINGTON, DC: A large-scale fraud involving prescription drugs being sold illegally in New York City was shut down on December 13, its perpetrators arrested and brought to justice in part by US Attorney for the Southern District of New York Preet Bharara.

Purna Chandra Aramalla, 65, was arrested and charged for defrauding Medicare and Medicaid by selling “illegally diverted prescription drugs.” Bharara deplored Aramalla’s action, saying that they “threaten the health of those induced to sell their medication rather than take it [and] he health of those who unwittingly purchase the repackaged drugs believing them to be factory-fresh.”

Aramalla operated two pharmacies in New York City: A Fair Deal Pharmacy Inc. in Queens, and Quality Health Drug Inc. in the Bronx. Both, as it turns out, were fronts for illicit prescription drug sales that netted Aramalla millions of dollars in profits.

The scheme involved purchasing pharmaceuticals, specifically those used by sufferers of HIV, from other patients rather than directly from the suppliers and manufacturers. Patients who bought the drugs for themselves often found themselves not using everything that they ordered, so would sell them to Aramalla for a lower price.

Aramalla then repackaged those drugs to make them look like they were brand-new, and sold them, receiving reimbursements from Medicare and Medicaid in doing so. The only problem is that both of those federal programs do not honor the sale of second-hand medicine, so Aramalla should not have received any money from them at all.

He and his co-conspirators also struck deals with the patients they bought drugs from to basically order pharmaceuticals specifically for the scam, which led to several Medicare and Medicaid beneficiaries ordering medicine they never really needed or intended to use, and passing them along straight to Aramalla in exchange for a cut of the profits.

Part of the fraud lasted from October 2010 to August 2012, during which time he purchased $1.7 million worth of HIV medications from legitimate suppliers, but was reimbursed by Medicare and Medicaid in the amount of $4.7 million, which is far more than what he should have received.

A resident of Port Washington, New York, Aramalla is now facing charges of conspiracy to commit health care fraud and wire fraud, and a charge of conspiracy to commit money laundering. The fraud charges carry a maximum sentence of 20 years, while the latter carries the same maximum penalty.

Aramalla is currently being held on a $2 million personal recognizance bond.

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