By Jonathan Stempel
(Reuters) - The founder and the top doctor of a San Francisco-based telehealth startup were charged by the U.S. Department of Justice on Thursday with running a fraudulent $100 million scheme to distribute Adderall and other stimulants online.
Done Global founder Ruthia He and clinical president David Brody are the first to be federally prosecuted in connection with alleged illegal drug distribution related to a telehealth company.
Both defendants were arrested on Thursday, and could face decades in prison if convicted. Their lawyers did not immediately respond to requests for comment. Done was not charged, and did not immediately respond to similar requests.
Authorities said Done arranged for prescriptions of more than 40 million pills including Adderall, which treats attention deficit hyperactivity disorder, or ADHD, by using social media to attract "drug seekers" willing to pay monthly subscription fees for ready access.
Many prescriptions were not medically necessary, and allegedly exacerbated a nationwide Adderall shortage announced in October 2022, hurting patients with legitimate medical needs.
He and Brody were also accused of conspiring to defraud Medicare and Medicaid by making false claims about Done's prescription practices to pharmacies, resulting in more than $14 million of payouts by those programs and insurers.
"These defendants exploited the COVID-19 pandemic to develop and carry out a $100 million scheme to defraud taxpayers and provide easy access to Adderall and other stimulants for no legitimate medical purpose," Attorney General Merrick Garland said in a statement.
Founded in 2019, Done says on its website that its mission is to "provide awareness and education for people to learn more, private and accurate medical diagnosis through telehealth, and actionable ways to receive immediate treatment."
Tuesday's charges follow reporting in 2022 by the Wall Street Journal that some telehealth companies saw opportunities to satisfy growing patient demand for controlled substances, with some clinicians feeling pressure to write prescriptions.
The government classifies Adderall as a Schedule II controlled substance because of its high potential for abuse and dependence. Cocaine, methamphetamine and the opioid OxyContin are among other products in that group.