Health Care Fraud Blog

The Governor of Montana, following a line of other politicians over the years, is promoting the idea of that state purchasing drugs for publicly run health care programs from Canada . However, for a number of reasons, such ideas have never gained any traction.

The position of the FDA has been rather clear, Canadian drugs are not US NDC (National Drug Code) products, and therefore are adulterated versions of the drugs they purport to be. Since the source of the drugs is not the US regulatory system, the drugs are "potentially" dangerous. As we pointed out on a previous posts (click: here and here), the actual danger was largely caused by Canadian and US drug officials themselves.

In reality, though, the name brand drugs being used by Canadians are in fact the very same drug as are offered in the United States , only in Canada the drugs are cheaper due not only market forces, but also government price controls. Americans pay more for drugs because the United States does not have any government restrictions on prices. Intellectual property rights in Canada and the US protect the right of one manufacturer to control the price of a name brand drug, therefore the price is what the market will bear; and Americans are generally willing to pay more for their name brand drugs than to allow the government to regulate commerce in the way Canada does.

The same is not true with respect to generic drugs. Generic drugs are name brand drugs whose intellectual property rights have expired, allowing any manufacturer to make and sell the drugs. The price of generic drugs in Canada is the same or more expensive than generic drugs in the United States because the prices of generic drugs are controlled solely by the market, since there are multiple manufacturers.

Typically, the only generic drugs that people attempt to import into the United States tends to be controlled substances. This is not due not to government pricing restrictions, but government availability restrictions. When the DEA began aggressively pursuing internet pharmacies in 2002 and pain management now, one aspect of that enforcement was to warn manufacturers and distributors that they would hold them accountable for the distribution of too many of their drugs and particularly to suspect providers, warning that their DEA registrations were at issue. In one instance, the DEA certificate for a major wholesaler was suspended for its Florida location because the supplier distributed too many controlled substances to suspect providers. This led many internet pharmacies to move off shore and some suppliers to illegally import controlled substances.

For more, click: here.

When it comes to chronic pain, the current DEA war on pain management leads to a question: How much authority should the DEA have over the treatment of patients? According to the Association of American Physicians and Surgeons, “If you’re thinking about getting into pain management using opioids as appropriate: DON’T. Forget what you learned in medical school – drug agents [from the DEA] now set medical standards.” For more on this click: here.

Chronic pain, pain that lasts longer than 24 hours, affects approximately 25 percent of the U.S. population, that is 76 million people, according to the National Centers For Health Statisitics. Of those that reported chronic pain, 43% reported that pain has persisted longer than a year. More than 26 million people report having persistent back pain. Ouch! (To read more on this, click: here).

The treatment options, depending on the cause of the pain involve invasive measures such as surgery and injections, however such results can be short lived. Also, physicians who practice interventional pain find it difficult to get privileges to perform services at hospitals and have very high malpractice insurance premiums. Chiropractic adjustment and physical therapy are less invasive and less expensive, but for chronic pain are also considered by many patients to be of limited use.

What is left is treatment through combinations of other therapies and prescription drugs. The problem for physicians is that pain medications are being prescribed to help a person get through their day, not to solve the underlying medical issue that causes the pain. Therefore, the analysis is very subjective, a combination of the condition causing the pain, the patient’s history of previous treatment, and the amount of prescription drugs that currently work to ease that patient’s suffering. The challenge to the physician prescribing drugs designed to treat chronic pain, opioids, is to discern how much should be prescribed and when and if a patient should be cut off due to potential abuse.

Here is where the war on drugs encounters the reality of medical practice and pain management. As the advice of the AAPS makes clear, doctors are advised to and many doctors stay away from treating pain with narcotics because they are at risk of prosecution or discipline for doing so even when it is a necessary and valid treatment. Accordingly, there is a narrower and narrower pool of physicians willing to treat pain and do so largely in pain management practices. The result is that such physicians prescribe much more pain medications than ordinary physicians, because those are the only patients they see, those physicians will also likely be more liberal in the prescribing of those medications simply because they are so used to seeing chronic pain.

In comes law enforcement, curiously timing high profile raids on pain clinics smack dab in the middle of the Florida legislative session which ends in several weeks while two competing pain management bills are debated. (To read the proposed legislation, click here and here). Reporters, as they do with every law enforcement crime du jour, breathlessly report about how dangerous and prolific “pill mills” are, never once addressing any reason for the need or treatment of pain. Law enforcement describes how oxycontin pills sold to patients in Florida for $5 end up being sold in Kentucky for $20 on the street, without examining whether those people paying those premiums are merely drug addicts, or patients who cannot get pain treatment in Kentucky due to fearful physicians there.

The DEA, using only the vaguest of regulations, declares that physicians treating pain are criminals, dispensing excessive amounts of medications. The DEA does so without legislating, regulating or providing any guidance on the limitations of such dispensing. For example, if the DEA believes no patient should receive more than a certain amount of oxycontin in a prescription, create and publicly debate such a measure.

There is certainly much that can be debated in the treatment of pain and the prescribing of narcotics, but it is rarely debated, often with the words “pill mill” substituting for actual analysis of a much larger and complex issue. Tragically, many of those issues find their way into criminal courts, with jurors instead of health care officials, debating the medical validity of prescription medication dispensing.

In case where it appears the governments of the Untied States and Canada to stop a practice they disfavored, created a worse problem, the originator of the Canadian internet pharmacy business model gave up his license to practice pharmacy in Manitoba, Canada after it was alleged he had been selling misbranded and counterfeit prescription drugs. The story is somewhat more complicated than that.

Prior to the passage of the Medicare Part D prescription drug act, the purchase of name brand prescription drugs from Canada was becoming a significant business. Canada has price controls on prescription drugs and a name brand medication can be purchased in Canada for a significant discount over those purchased in the United States. Seniors and uninsureds looking for cheaper drugs found access to Canadian drugs either through storefront brokers in the United States or over the internet. However, since Canadian pharmacies could not accept US physician prescriptions directly, Canadian internet pharmacies came up with a system whereby a US citizen would fax their prescription to the pharmacy, a Canadian physician working with the pharmacy would write a prescription for the same drug and the Canadian pharmacy would fill it.

One of the originators of the internet Canadian pharmacy business was Andrew Strempler, who created Mediplan Pharmacy in Canada to service US customers and Mediplan did very well for a while. However, the FDA alleged that since the drugs did not come through the US system, the purchases were unlawful and moved with varying success against the US based companies involved in the business but were unable to move against the Canadian pharmacies that were following Canadian law.

However, the industry in the US and Canada was dealt more severe blows by Medicare Part D, which took away a large part of the seniors market. Also, the Canadian government, feeling pressure from manufacturers, enabled Canadian branches of US manufacturers to place limits on the number of name brand drugs a Canadian pharmacy could order and receive. To get around these limitations, it was alleged that Mediplan and other pharmacies began dispensing prescription drugs purchased from countries outside of Canada to get around the limits the Canadian government and manufacturers placed on purchases. The FDA seized several shipments form Mediplan to US customers and alleged the drugs shipped were not Canadian drugs, but were drugs purchased from 27 different countries and were therefore misbranded and counterfeit.

While the FDA claimed this proved they were right all along about the purported safety of Canadian pharmacy purchases, the system actually was much safer before the manufacturers, US and Canadian government got involved to try and solve a problem, drug safety, they wound up creating.

To read more, click: here.

The FY 2011 Budget requests a $234.6 million increase, including 708 new positions (143 agents and 157 attorneys), to restore confidence in U.S.markets, protect the federal treasury and defend the interests of the U.S. Government.

This includes an additional $96.8 million for economic fraud enforcement, which is a 23 percent increase over the FY 2010 level. This increase will continue the department’s efforts to aggressively pursue traditional law enforcement and litigation activities ranging from mortgage fraud, corporate fraud and other economic crimes, to other mission-critical activities that support the overall functioning and efficiency of the department.

The Department of Health and Human Services’ (HHS) budget requests a $60.2 million increase specifically for DOJ components involved in the investigation and litigation of health care fraud cases. This increase will further the efforts of the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced last year by Attorney General Holder and HHS Secretary Kathleen Sebelius.

DOJ's efforts to combat health care fraud are funded almost exclusively through reimbursements from the Health Care Fraud and Abuse Control (HCFAC) account administered by the Department of Health and Human Services (HHS). In FY 2010, the HCFAC account provided $211.4 million in mandatory and discretionary funding for the DOJ litigating components and the FBI which are engaged in combating health care fraud. The increased funding will permit DOJ to expand Medicare Fraud Strike Force operations in order to target agents and attorneys to the criminal hubs where health care fraud activities occur. In addition, these funds will be used for civil enforcement efforts, including alleged fraud by pharmaceutical and medical device manufacturers. These anti-fraud efforts have the potential to save $2.7 billion over five years by improving oversight and stopping fraud in the Medicare and Medicaid programs.

For more information, click here to view the Restore Confidence in our Markets, Protect the Federal Fisc, and Defend the Interests of the United States Fact Sheet.

HHS held a National Summit on Health Care Fraud in late January. The purpose was to bring together "leaders from the public and private sectors to identify and discuss innovative ways to eliminate fraud, waste and abuse in the U.S. health care system." However, groups representing providers who were initially approached about participation are angry at being shut out after being told that the meeting was for law enforcement and insurance company investigators. The providers have a point. If the government truly wants to know about waste in the system, shouldn’t they be seeking input from people in the system? The providers are angry, calling the exclusion a demonstration of government incompetence.

For more, click:here.

To read the transcript of the speech made by Attorney General Eric Holder at the Summit on Health Care Fraud click: here.

By Benson Weintraub, Esq.

FORT LAUDERDALE, FL (October 25, 2008) My interest in health care fraud originated as a white collar criminal defense lawyer in the federal courts with an abiding commitment to academic excellence, particularly in the criminal justice environment.

But when the proportion of health care fraud cases in which I participated increased so significantly, this did not occur in a vacuum. So, too, was the proliferation of this type of fraud increasing in prosecution at an incalculable rate.

As a scholar in sentencing law and policy, individual and corporate, I intuitively search for explanatory reasons for trends in criminality and reactive public policy on a federal, state, and local level.

An holistic approach to fluctuating crime rates, detection and prosecution, sentencing, imprisonment, all require the analyst to address the interplay of predominating political, economic, and social priorities established by governments at every level. Sometimes, this permits a remedial integration of resources to conserve capital outlay and expenditures. In other cases, however, the aggregation of social, economic, and legal policies which governments face must be driven by a maximization and continuity of provider-type services.

Continue reading "Healthcare in America: Guns or Butter?" »

By Benson Weintraub, Esq.

FORT LAUDERDALE, FL (October 19, 2008) Economic prognosticators theorized a maximization of wealth through a combination of largely unregulated commercial notes and instruments including sub-prime mortgages secured or subject to credit default swaps or government backed securities; irrespective, the taxpayers were ultimately left holding the billion dollar bag while the investment banks and financial institutions profited by a billion-dollar is the federal government’s subsidies and bailout.

The global financial exchanges each sustained similarly devastating losses created by the integral linkage between foreign banks, especially the of Chinese banks and American institutions which ripped through Freddy and Fannie, largely because of a variant of [unregulated] “insurance,” e.g., credit default swaps in which the notes or “policies” were transferred anonymously connecting other holders, these institutions spiral downward when the underlying note is due or ripe for foreclosure.

Continue reading "Collapse of Financial Markets and Its Impact Upon National Health Care Priorities " »