A.G. Schneiderman Announces $1.2 Million Settlement With NYC Pharmacist Who Sold Black Market Medications

Pharmacist Purchased Medications Out Of Suppliers’ Cars, Illegally Billed Medicaid

Schneiderman: We Will Protect Patients And Taxpayers From Dangerous Schemes To Resell Unregulated Drugs


NEW YORK – Attorney General Eric T. Schneiderman today announced that his office secured a settlement of more than $1.2 million to resolve claims that a Brooklyn pharmacist defrauded Medicaid by improperly billing for prescription medications that he purchased on the street. In addition to repaying the New York State Medicaid Program, Rao Veeramachaneni, of Brooklyn, agreed to surrender his pharmacist’s license and withdraw from the Medicaid program. In addition, he agreed to a ban from working in the pharmaceutical or health care 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. 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,” Attorney General Schneiderman said. “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.”

From 2004 to 2009, Veeramachaneni owned two pharmacies, 1951 Pharmacy, located at 1951 Flatbush Avenue, Brooklyn, and Positive Care Pharmacy, located at 502A East Tremont Avenue in the Bronx. Both locations predominantly served Medicaid recipients. Veeramachaneni admitted that he bought medications, including diabetic and HIV/AIDS drugs, on the black market, including out of his suppliers’ vehicles. He then brought the diverted drugs into his pharmacies and dispensed them to patients without disclosing their true nature.

Between January 1, 2006 and January 1, 2008, Veeramachaneni submitted claims to the Medicaid program and received over $1.2 million dollars for black market medication that he dispensed to his patients.

To ensure the quality of prescription drugs that are dispensed to the public, New York State only permits pharmacies to purchase medication from authorized wholesalers. None of Veeramachaneni’s suppliers were registered wholesalers in New York State, and the source of the diverted medication is unknown. Diverted pharmaceuticals typically consist of unused medications and drugs stolen from manufacturers. Medications that have been diverted from the normal stream of commerce may be improperly labeled or expired, posing additional risks to patients.

The Attorney General thanked the New York State Office of the Medicaid Inspector General for referring this case.

The case was handled by Special Assistant Attorney General Larissa Payne, under the supervision of Medicaid Fraud Control Unit Deputy Regional Director Christopher M. Shaw, and Special Deputy Attorney General Monica Hickey-Martin. The investigation was conducted by Senior Special Investigator Joseph Deserio, under the supervision of Deputy Chief Investigator Thaddeus Fischer, and by Special Auditor Investigator Nicholas Thottam under the supervision of MFCU New York City Regional Chief Auditor Thomasina Piccolo-Smith. 

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