Over the phone in August, he talked about coming from a family of doctors, and also of once working at a Jack in the Box. He described himself as a “small guy” fighting the influence and power of the major pharmaceutical companies. He also gabbed about spending time with big shots like DreamWorks’ Jeffrey Katzenberg, the director Steven Spielberg, and the Democratic political operative Paul Begala at a function in Beverly Hills, and arranging for Begala to treat a leg injury with compound drugs. (Begala confirmed the gist of Ahmed’s story in an email, and said that the treatment “seemed to help.”)
After spending more than two decades in workers’ compensation-related fields — “small stuff,” Ahmed called it — he hit upon the idea for Landmark Medical Management, which was formed in 2007, and which has quickly grown to 180 employees. Landmark occupies a suite in a building called The Inland Atrium in Ontario, a sprawling city of subdivisions, office parks, mini-malls, and chain restaurants an hour’s drive east of Los Angeles. Other tenants in The Inland Atrium include a law office, a physical therapy office, and a company called Pac-Bridge Merchandise, Inc. (When I visited, a Landmark employee told me the company soon planned to move to a different building in town.) In two years, Ahmed hopes to take Landmark public.
“And then I’ll be able to take on the pharmaceutical giants head on,” he said.
Landmark purchases account receivables from medical providers who prescribe compound topical analgesics — pain creams — to workers’ compensation patients, and makes its money by collecting from the insurance companies who owed on those accounts. The workers’ compensation system in California is so choked up with payment disputes that it can take months for a provider to be reimbursed by insurance companies for a service. The way Ahmed sees it, his company creates “liquidity” in the system by purchasing account receivables from doctors and getting them paid quicker. By his own account, he has also taken on a role promoting the medical practices he profits from.
Ahmed was reluctant to discuss the specifics of his business, particularly when it comes to the activities of his non-Landmark companies. There are at least six companies tied to Ahmed that are registered to various suites in the same building as Landmark: HNW Consulting Inc., Healthcare Finance Management LLC, Med-Rx Funding LLC, Physician Funding Solutions LLC, Pharmafinance LLC, and RX Funding Solutions LLC. The functions of these companies are unclear. All were formed since 2005, and not one currently has a website (neither does Landmark). Landmark is the only one of Ahmed’s companies that appears on the The Inland Atrium’s wall directory. A former Landmark executive suggested to me that several of the companies are used as holding companies for liability and tax reasons.
“My problem is, I don’t want competition,” Ahmed said. “I like to have a private life. I don’t want people to copy my business model, which I have wasted millions on, with legal opinion letters, from whatever, perfecting it over years. I don’t want people to take it for free, and start giving me competition. I’m a businessman, too. That is why I’m hesitant on answering all these things, because you’re going to expose my entire business model, and everyone’s going to say, ‘Oh, thank you, Mr. Lach, now let’s go compete, and give Mr. Ahmed and Landmark competition.’ I don’t want that.”
On the other hand, Ahmed told me that he would “love” me if my article could “get a point across that, why does everybody fight against compounds?”
“Forget about me for a moment, man,” Ahmed said. “You’re obligated, now that you know about it, and you’re a reporter, I think that you have every obligation in humanity to do that, to save millions of lives around the country. Let people know what compounding really is.”
At their most basic, compound drugs are those where ingredients have been combined, mixed, or altered by a pharmacist to meet the particular needs of an individual patient. If, for example, a patient is allergic to an ingredient in a commercially available drug, a pharmacist can compound a similar drug without the offending ingredient. According to the International Academy of Compounding Pharmacists, an industry group that promotes the practice, compound drugs now make up between one and three percent of the nation’s $300 billion prescription drug market, and the practice occurs in some form in many pharmacies and hospitals. Compound drugs are not FDA-regulated. And pharmacies are not required to report adverse events associated with compound drugs to the federal agency. Instead, regulation of compound drugs falls to each state’s pharmacy board.
The compound drugs promoted by Ahmed are topical analgesics. Whereas the idea behind pharmacy compounding is to tailor drugs to a patient’s particular needs, Ahmed argues that creams are, in general, preferable to pills for treating pain, because creams avoid the side effects associated with orally taken opioids, non-steroidal anti-inflammatories (like ibuprofen), and other common pain drugs.
“I’m saving lives, by promoting compounds,” Ahmed said. “[I’m] telling doctors, ‘Look, why are you killing people with morphine and OxyContin and narcotics? Come on, go easy on the patients.’”
Ahmed, though not a doctor himself, said that he came to the conclusion that compounds save lives because there are “millions of studies” on the topic.
California’s Division of Workers’ Compensation guidelines, though, state that (PDF) topical analgesics are “largely experimental in use with few randomized trials to determine efficacy or safety.” The guidelines add that for many commonly compounded ingredients, there is “little to no research to support the use of many of these agents.”
The FDA, too, has raised concerns in the past about pharmacy compounding. In 2007, a consumer update from the agency titled “The Special Risks of Pharmacy Compounding” said the practice was coming under scrutiny. Asked for comment on topical analgesics, an FDA spokesperson pointed to the agency’s general guidelines concerning compound drugs, which state that while the FDA “will continue to defer to state authorities regarding less significant violations” related to compound drugs, the agency “believes that an increasing number of establishments with retail pharmacy licenses are engaged in manufacturing and distributing unapproved new drugs for human use in a manner that is clearly outside the bounds of traditional pharmacy practice.”
Meanwhile, people who know the workers’ compensation system best in California argue that compound drugs became popular only after a profit opportunity was identified.
“[Landmark is] just one of a big chunk of operations that find manipulable loopholes,” Mark Rakich, a staff member for the California Assembly Insurance Committee, said in an interview. “One could debate whether some of the arrangements violate existing provisions of law.”
Several years ago, the workers’ compensation system in California experienced a sharp increase in the amount of compound drugs, primarily topical analgesics, prescribed to injured workers. In 2010, the California Workers’ Compensation Institute, an insurance-industry-backed group, published a study (PDF) looking at the period between 2006 and 2009. The study found that over that period, the percentage of California workers’ compensation prescription dollars that paid for the drugs associated with compounding rose from 0.8 percent to 6.4 percent. The State Compensation Insurance Fund, a quasi-governmental body and a big player in the system, saw billings for a range of items that were rarely billed before 2007 — including compound drugs — reach $58 million in a 16-month period. It was during this period that Landmark was founded.
“Unfortunately, a certain percentage of physicians are actively willing to enter into clever arrangements with various kinds of service providers for things that are just more expensive than they need to be to effectively treat injured workers,” Rakich said.
Ahmed said that Landmark was not involved with some of the marked-up products associated with the compound drug surge in California that have been of most concern to officials. Still, he did acknowledge that compound pain creams, on the whole, are more expensive than more commonly-prescribed pain drugs.
“Yes, they’re expensive, of course, because you’re curing people, and it can’t be done on a mass scale, because the FDA does not approve of that,” Ahmed said.
Eric Lach is a reporter for TPM. From 2010 to 2011, he was a news writer in charge of the website’s front page. He has previously written for The Daily, NewYorker.com, GlobalPost and other publications. He can be reached at ericl(at)talkingpointsmemo.com