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Massive Prescription Drug Scheme Uncovered

On July 17, 2012 the United States Attorney’s Office for the Southern District of New York issued a press release announcing the arrest of 48 individuals in what the release calls the largest single prescription drug diversion scheme ever charged at one time. The result of an organized effort by nearly a dozen state and federal agencies, the government has charged the defendants with operating a massive fraud scheme which diverted half a billion dollars’ worth of prescription drugs dispensed to Medicaid patients in the New York City area.

The government alleges the defendants participated in a scheme to buy prescription drugs from patients, to whom the drugs were legitimately dispensed, and then sell them up a chain of buyers where the drugs eventually ended up in the hands of large scale wholesalers. The defendants are alleged to have fraudulently repackaged and labeled the diverted drugs to make them appear as if they were new, before they sold them to unwitting end-users.. In some cases these diverted prescriptions included HIV/AIDS drugs that were expired and potentially no longer medically effective, yet were still dispensed to unknowing patients.

Because many of the patients who sold the drugs received them through a Medicare or Medicaid benefit, and many of the patients who received the drugs from illegal wholesalers used Medicare or Medicaid benefits to obtain the drugs, the press release is calling the alleged fraudulent scheme a double fraud on the health care system. Medicare and Medicaid essentially paid for these drugs twice, once for the legitimate patient who sold their medication, and then once for the end-user, who obtained the drugs from the wholesalers.

If you have any questions about prescription drug regulations, or Medicare or Medicaid compliance, please contact an experienced healthcare attorney at Wachler & Associates at 248-544-0888.