KHN Morning Briefing

Summaries of health policy coverage from major news organizations

Senator Grassley Issues Warning about ‘Phantom Pharmacies’ While Tampa Officials Arrest Pharmacists On Fraud Charges

Senator Charles Grassley, R-Iowa, wrote a letter to Department of Health and Human Services Secretary Kathleen Sebelius this week saying federal officials have failed to stop the growing trend of "phantom pharmacies" that bill millions to Medicare in prescription drug costs then disappear, ABC News reports.

"'In recent months, one private insurer approached my office with concerns over the lack of responsiveness by HHS when presented with credible evidence that fraudulent pharmacies were defrauding Medicare,' Grassley wrote. 'These pharmacies included empty store fronts, apparently without customers, that nonetheless billed millions of dollars to private insurers.'" Many of the operations are based in Florida or California, Grassley said (Mosk, 4/5).

The Tampa Tribune: Meanwhile, in Tampa, five have been arrested on charges of "what authorities say is an emerging type of fraud – using fabricated prescriptions to steal from government health insurance programs. Targeted by a regional Medicare Fraud task force, the pharmacists are accused of stealing more than $1.5 million from government insurance programs by submitting hundreds of false prescription claims between 2006 and 2008." The fraud, which involves using "prescription billing to defraud the government is becoming pervasive, especially since the enactment of Medicare Part D, the prescription drug program created in 2006, authorities said" (Silvestrini, 4/5).

San Diego Business Journal: "With all the increased attention on drug costs, there's one area health policy experts and law enforcement officials say is being overlooked: the trafficking of prescription drugs. The illegal activity ... has emerged as a major source of wasted Medicare spending, according to speakers at the Sixth Annual San Diego Health Policy Conference." The criminals obtain drugs "either by stealing shipments or burglarizing pharmacies and clinics, through illegal imports or Medicare patients - and re-label and repackage the drug to avoid calling attention to previously dispensed products. Sometimes the labels appear legitimate, although the product has been tainted or tampered with. … Law enforcement officials said they consider South Florida the epicenter of the illegal pharmaceutical drug trade" (Chambers, 4/5).
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