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Transcript for audio podcast: Fraud and Abuse with HIV Drugs

From the Office of Inspector General of Department of Health and Human Services

[Jodi Nudelman] I'm Jodi Nudelman, Regional Inspector General in the Office of Evaluation and Inspections in New York City. Today, I am here with Tom O'Donnell and Miriam Anderson. Tom is a Special Agent in Charge in our Office of Investigations. Miriam is a team leader in our Office of Evaluation and Inspections. They have both worked extensively on an emerging problem: fraud and abuse with drugs that treat HIV.

Let's start with Tom. Can you tell us more about why the OIG is interested in HIV drugs?

[Tom O'Donnell] Sure. The OIG has two main interests. The first is the cost to the taxpayers. And the second is the risk to beneficiaries. HIV drugs are expensive. One common HIV drug is called Atripla, and it can cost Medicare $1,700 for a single month's supply. These expensive drugs can be sold on the black market, or exchanged for narcotics, and we've seen a combination of both. Many of these drugs are being paid for by Medicare and Medicaid, and the OIG has a responsibility to protect the Medicare and Medicaid programs.

[Jodi Nudelman] And what about the risk to beneficiaries?

[Tom O'Donnell] There is a very strong risk to the beneficiaries. It's important that HIV drugs be used appropriately. It's dangerous when patients who don't need the drugs get them. It is also very dangerous when patients who do need the drugs get more than what's required.

[Jodi Nudelman] So tell us about the types of schemes tied to the HIV drugs.

[Tom O'Donnell] In New York, we've seen generally two kinds of schemes. In one scheme, people exchanged HIV drug prescriptions for cash or other drugs. Then, the pharmacy bills the patient's insurance, sometimes Medicare or Medicaid, for the HIV drugs without actually filling the prescriptions. The fraudulent pharmacy also bills for the prescribed refills without actually dispensing the drugs.

In the second scheme, the pharmacy dispenses the HIV drugs to the patient, who then sells them to a runner. The runner takes the drugs to a stash house, pharmacy or a fraudulent wholesaler. We've seen a number of these stash houses which are usually just broken-down apartments filled with bags and bags of drugs - a lot of times, HIV medications.

[Jodi Nudelman] So who actually buys these drugs on the black market?

[Tom O'Donnell] Some of the drugs are shipped out of the country, and sold sometimes to uninsured people in the U.S., throughout the U.S. Some corrupt pharmacies buy these drugs off the black market for a cheaper rate than they get from wholesalers. Then the pharmacies re-package and dispense the drugs to unsuspecting HIV patients, which is quite dangerous.

[Jodi Nudelman] So how can they harm patients?

[Tom O'Donnell] Well the black market for HIV medications is unregulated. If it's unregulated it's therefore highly dangerous. Because illegally diverted drugs may have been improperly handled or stored, patients could receive adulterated drugs instead of pure medications from the legitimate supply chain. This is a real problem.

[Jodi Nudelman] So Miriam, can you tell us about what OIG found in the billing data?

[Miriam Anderson] Of course. We analyzed the Medicare Part D billing data for HIV drugs. We saw red flags in the data for about 1,600 Medicare beneficiaries. When we see this, it may mean that the beneficiaries received unnecessary drugs which they could then sell on the black market. Or, a pharmacy may have billed for a drugs that the beneficiary never received. Another possibility is that someone stole the beneficiary's Medicare ID number.

[Jodi Nudelman] So do all these red flags mean fraud?

[Miriam Anderson] Not necessarily, but the OIG is very concerned that Medicare may be paying for expensive drugs that beneficiaries do not need, do not receive, or may even harm them.

[Jodi Nudelman] Can you give us an example of a beneficiary with questionable patterns?

[Miriam Anderson] Sure. In one year, Medicare paid almost $350,000 for HIV drugs for just one beneficiary. He received prescriptions from 32 doctors which were filled at 20 different pharmacies.

[Jodi Nudelman] Wow - that's a lot of doctors and pharmacies in just one year. How does he compare to the average person?

[Miriam Anderson] Most Medicare beneficiaries receive prescriptions for HIV drugs from just one or two doctors and fill these prescriptions at just one pharmacy. This beneficiary could be doctor shopping, which is going to multiple doctors to get more drugs than he needs.

[Jodi Nudelman] That sounds like a real problem. So what can be done to stop this?

[Miriam] Our report makes a number of recommendations to the Centers for Medicare & Medicaid Services, or CMS. For example, we recommend that CMS limit the number of pharmacies or prescribers for certain beneficiaries. CMS says that it is open to this change, but that Congress needs to pass new laws to make it happen. We've also given some of this information to our law enforcement partners.

[Jodi Nudelman] So Tom, can you tell us about any arrests involving HIV drug fraud?

[Tom O'Donnell] Sure. The most recent investigation we had involved a patient named Baron Jacobs. Over a 6 year period, Jacobs received about 375 prescriptions from 25 doctors for HIV medications. Those prescriptions cost more than $435,000, and Medicare paid for the vast majority of that. Jacobs was HIV positive, and sold many of his drugs to runners in the Brooklyn area. Jacobs was arrested, he was sentenced to 15 months in jail, three years' probation, and he was ordered to pay the full restitution, $435,000 dollars.

In another case, the NYPD contacted us, and they discovered a stash house in the Bronx area. It was filled with garbage bags of medications. Many of these were HIV drugs, and many of these prescriptions on the labels came back to a certain doctor. We arrested the doctor, who is awaiting trial. We also arrested 25 Medicaid recipients. Those recipients pled guilty to various grand larceny charges, related to health care fraud, and they also admitted that they were selling the drugs to runners, and that they were guided to see this doctor. The recipients also were not HIV-positive, but they would tell the doctor that they were exposed to HIV.

[Jodi Nudelman] Well, thank you Tom, and thank you Miriam for sharing this important work on HIV drugs.


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