Axios Pro: Health Tech Deals
May 04, 2022
Axios Pro Exclusive Content

🐪 It's hump day, Health Techies.

Situational awareness: Cerebral CEO Kyle Robertson told staff in an email this week the company will pause prescribing controlled substances for ADHD starting Monday, the WSJ reports.

  • The news comes after a former Cerebral VP claimed in a lawsuit the company "egregiously put profits and growth before patient safety," including overprescribing ADHD medications, and after a WSJ report that major pharmacies had been blocking or delaying prescriptions from Cerebral providers for the past year.

1 big thing: Over-billing said to be widely known at Amazon Pharmacy

Illustration of a gavel made of a pill bottle, touching a gavel rest made of a white pill.
Illustration: Shoshana Gordon/Axios

On the heels of the news that Amazon subsidiary PillPack is paying $5.79 million to the U.S. and various states for fraudulently over-billing for insulin and over-dispensing the drug, three sources, including former and current Amazon Pharmacy employees, tell Axios the practice was widely acknowledged and that higher-ups dismissed staff concerns about the matter, Erin writes.

Why it matters: Amazon is a stalwart in the health tech sector, with sprawling efforts across virtual and in-person care, medical supplies, diagnostics and pharmacy.

  • Amazon Pharmacy formally launched in 2020 after the tech giant bought specialty medication startup PillPack for $750 million.

Flashback: Amazon Pharmacy leaders TJ Parker and Elliot Cohen — the co-founders of PillPack — were quietly demoted to roles as consultants for the company in December, two sources told Axios at the time.

  • Parker and Cohen had steered Amazon Pharmacy since PillPack was acquired in 2018.
  • Also in December of last year, Neil Lindsay, the former head of Amazon Prime, stepped in to oversee Pharmacy.

Details: As part of the settlement, PillPack admitted and accepted responsibility for regularly giving patients a full carton of insulin pens rather than the appropriate amount — a practice that clearly exceeded the limits imposed by Medicare and Medicaid — and then falsely under-reporting it to avoid penalties.

What they're saying: The former and current employees tell Axios there was wide awareness of the practices at the company, but when they raised them to managers, they were brushed off.

  • "The response was always something like, 'Thanks, we’ll look into it.' But the problems continued," one former employee said.
  • A current employee added that while the concerns have been raised repeatedly over several years, "any attempt" to address them has been stopped, including retaliation against employees to the point where they leave the company.
  • One former employee said they initially thought the issues were honest mistakes. "That was an excuse that to me could work for a year, maybe even two. But there are multiple, experienced pharmacists involved in each of these multiple processes," they said.
  • In response to those allegations, an Amazon spokesperson said that due to the nature of insulin medication, "it was common practice among pharmacies to not open pre-packaged boxes of insulin pens and instead dispense the pre-packaged box of insulin pens as an unbreakable unit."
  • The spokesperson also said Parker and Cohen remain employees, not consultants.

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