Bryan Cohen Oct. 18, 2012, 7:29pm

NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman announced a $1.2 million settlement on Tuesday with a Brooklyn pharmacist to resolve allegations that he defrauded Medicaid.

Rao Veeramachaneni allegedly billed Medicaid for prescription medications that he bought on the street. Under the terms of the settlement, Veeramachaneni must surrender his pharmacist's license, withdraw from the Medicaid program, and agree to a ban from working in the health care or pharmaceutical industry in the future.

"Patients should be able to trust that the medications they buy at a pharmacy are obtained only through properly regulated channels - not out of suppliers' cars," Schneiderman said. "As a result of our office's investigation, this settlement holds accountable a pharmacist who put the public at risk and ripped off New York taxpayers just to make a quick buck. We will continue to bring to justice those who endanger consumers and defraud taxpayers by obtaining prescription drugs off the black market and then selling them to vulnerable patients."

Between 2004 and 2009, Veeramachaneni owned two pharmacies, 1951 Pharmacy and Positive Care Pharmacy. Both pharmacies predominantly served recipients of Medicaid. Veeramachaneni allegedly bought medications on the black market, including out of the vehicles of his suppliers. The pharmacist then allegedly diverted the drugs into his pharmacies and dispensed them to patients without disclosing their origin.

Between Jan. 1, 2006, and Jan. 1, 2008, Veeramachaneni submitted claims to Medicaid and allegedly received more than $1.2 million for black market medications he dispensed to patients.

The state of New York requires that pharmacies purchase medication from authorized wholesalers to ensure the quality of the drugs. Schneiderman alleged that none of Veeramachaneni's supplies were registered wholesalers and that the source of the diverted medication is not known.

Medications diverted from the normal stream of commerce could be expired or improperly labeled, posing added risks to patients.

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