Kusserow’s Corner: America’s Other Drug Problem

The Centers for Disease Control and Prevention (CDC) have formally labeled prescription drug fraud, diversion and abuse as an “epidemic” that is creating one of our nation’s fastest growing public health problems.  The HHS Office of Inspector General (OIG) has cited the fact that the Congressional Budget Office reported the Federal Government spent $62 billion on prescription drugs in 2010.  A significant portion of that involved drug diversion or the redirection of prescription drugs for illegitimate purposes.

Last month, everyone was reminded that in addition to illicit drug trafficking of legal drugs like heroin and crack cocaine, there is a huge problem of prescription drug fraud and abuse.  This was the subject of two major Department of Justice (DOJ) enforcement actions, as well as the subject of a hearing before the Senate Committee on Homeland Security where the HHS OIG testified on “Curbing Prescription Drug Abuse.”   The first of the two major DOJ actions, in June, involved the largest settlement in the Drug Enforcement Administration’s (DEA’s) history.  It was for $80 million levied against Walgreens to resolve allegations that one of its distribution centers and six retail pharmacies violated the Controlled Substances Act in negligently allowing controlled substances, such as oxycodone and other prescription pain killers, to be diverted for abuse and illegal black market sales.   This action was followed in a matter of days by the DOJ filing suit on behalf of the FDA against Sage Pharmaceuticals, Inc. and individual officers for manufacturing and distributing unapproved and misbranded drug products.  

The OIG hearing later in the month focused on the Medicare Part D drug benefits program, which has over 37 million beneficiaries enrolled and involves approximately $67 billion in expenditures.  The OIG described the prescription drug diversion problem and explained how it was working with other agencies on the problem, including the DEA, Medicaid Agencies, and state and local law enforcement. It cited findings from its reviews of extreme prescribing patterns involving hundreds of physicians and questionable billing by thousands of pharmacies.  It reviewed the Part D program in 10 states and found tens of millions of dollars expended to pay for prescriptions order by counselors, social workers, chiropractors, nurses, physical therapists, occupational therapists, and speech language pathologists.   It also found tens of thousands of improper prescriptions for controlled substances.

The OIG has made it a point to make it clear that the problem of drug diversion is complex, and schemes often involve multiple parties. First, there are drug-seeking beneficiaries posing as legitimate patients that visit doctor after doctor to obtain prescription drugs for themselves or to sell for a profit.  There are also the drug providers, such as physicians or pharmacists, who participate in drug diversion schemes. Some of these providers have written hundreds or thousands of unlawful, medically unnecessary prescriptions which were then billed to Medicare. In some cases, these providers billed from facilities that are nothing more than store fronts or “pill mills” providing no legitimate care. The providers might even be addicted to the drugs themselves and may steal them for their own use or to sell on the streets.

The OIG’s work on prescribers also identified hundreds of individuals without authority who prescribed tens of thousands of controlled substance prescriptions paid by Medicare. It also found thousands of retail pharmacies that had extremely high billing for abusable drugs at costs of billion dollars a year.

The OIG reported that drug diversion often involves criminal enterprises and networks. In addition to patients, providers, and pharmacies, these networks may include patient recruiters, money launderers, and street dealers and gangs. Some of these culprits have violent criminal histories, increasing the challenges and risks to law enforcement agents investigating these cases.

The question of what providers can do to reduce drug diversion and abuse  in their environment will be the subject of future blog articles.

Richard P. Kusserow served as DHHS Inspector General for 11 years.  He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters.  The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2013 Strategic Management Services, LLC.  Published with permission.