Cerebral is under federal investigation

Cerebral, the digital mental health ‘unicorn’, said on Saturday May 7, it was under investigation by the federal government for “possible violations of the Controlled Substances Act.”  

The company said it received a grand jury subpoena from the U.S. Attorney’s Office for the Eastern District on May 4.

In a statement to Digital Health Business & Technology, Cerebral said at this time no regulatory, or law enforcement authority has accused Cerebral of violating any law. Cerebral said it will cooperate with the investigation.

Business Insider reported on May 4 that the Drug Enforcement Agency was investigating Cerebral and speaking with former employees over the way it has prescribed controlled substances for attention deficit hyperactivity disorder (ADHD). At the time, Cerebral said, “We don’t speak for the DEA but are unaware of anything other than normal course interactions in the ordinary course of our business.”

The company’s ADHD medication policy sparked a lawsuit two weeks ago. In the complaint, Matt Truebe, former Cerebral vice president of product and engineering, alleges the company aimed to increase customer retention by prescribing ADHD stimulants for to 100% of its patients. The lawsuit also alleges that Cerebral had 2,000 duplicate shipping addresses, which suggested patients were setting up multiple accounts to obtain additional medication from prescribers.

Cerebral has denied the allegations.

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Previously, The Wall Street Journal reported national pharmacy chains were probing the prescription practices at Cerebral and another company, Done Health. The story alleged CVS Health, Walmart and Walgreens reportedly blocked and delayed some Cerebral and Done Health prescriptions due to Adderall over-prescribing concerns. Online pharmacy, TruePill confirmed to the Journal that it paused Adderall and other controlled substances prescription fulfillment.

Cerebral and Done Health separately disputed the report and said delays in prescription happen for administrative reasons involving insurance companies and availability of medicine. During the public health emergency, the Drug Enforcement Agency waived prior in-person evaluation requirements for controlled substance prescriptions via telehealth.

Cerebral received a $300 million funding round in December and is valued at nearly $5 billion.

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