The Wall Street Journal on July 17, 2012 released the following:
“By Chad Bray
Four dozen people have been charged in a scheme to illegally resell expensive prescription drugs obtained by Medicaid recipients in New York City to pharmacies nationwide.
Federal prosecutors in Manhattan said that people involved in the alleged scheme obtained hundreds of millions of dollars worth of prescription drugs from low-income and other Medicaid recipients — who would get them at a steep discount or for free — and then resold the drugs through a network of corrupt wholesale distribution companies.
The drugs, which are costly when purchased legitimately, included treatments for HIV, schizophrenia and asthma. For example, the defendants allegedly targeted HIV drugs Atripla and Truvada and schizophrenia treatment Zyprexa, all of which retail for more than $1,000 a bottle.
Prosecutors have charged 48 people in total in the case, ranging from persons who allegedly bought the drugs on the street to persons who allegedly resold them to wholesale distribution channels. The charges include: conspiracy to commit mail fraud, wire fraud and healthcare fraud; conspiracy to misbrand and unlawfully distribute prescription drugs; conspiracy to traffic in counterfeit goods; and engaging in a narcotics conspiracy.
The Federal Bureau of Investigation had taken 35 people into custody across the country on Tuesday morning, including more than a dozen in New York and New Jersey, said spokesman Peter Donald.
FBI officials are expected to join Preet Bharara, the U.S. attorney in Manhattan, and New York City Police Commissioner Raymond Kelly at a 1 p.m. press conference Tuesday to discuss the case.
The investigation is the latest in an ongoing effort to crack down on fraud within government health-care programs, which costs the U.S. billions of dollars each year.
In February, the U.S. Department of Justice and the Department of Health and Human Services said efforts to prevent and combat fraud had resulted in the recovery of nearly $4.1 billion in taxpayer dollars in fiscal year 2011. In May, doctors and nurses were among 107 people arrested nationwide in a coordinated sweep related to some $452 million in bogus claims to Medicare, which provides health insurance to the elderly and the disabled.
In the latest case, the Medicaid recipients allegedly sold their drugs for cash on street corners and in bodegas in New York City, including in the Washington Heights neighborhood of Manhattan and the Bronx, prosecutors said. Those drugs then pass up a chain of persons, known as “collectors” and “aggregators,” who then sell the second-hand drugs into corrupt distribution channels that resell the drugs to pharmacies.
Prosecutors said that members of the scheme used lighter fluid and other potentially hazardous chemicals to remove the original patient labels from the drug bottles, which include information about the patient, the original pharmacy where it was purchased and dosage instructions, prosecutors said. Other times, they replaced the original manufacturers’ labels with counterfeit ones when the drugs have expired or are close to their expiration dates.”
Douglas McNabb – McNabb Associates, P.C.’s
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