Login
Subscribe
As white collar (or in this case, white coat) scams go, it was one of the most brazen. A drug company provides an expensive, potentially life-saving drug free of charge to doctors, who promptly turn around and bill the government and private insurers at the exorbitant rate usually charged by the company. The profits go straight into the pockets of the doctors.
And who foots the bill? You, through your taxes and co-payments to reimburse doctors for their grossly inflated charges to the...
As white collar (or in this case, white coat) scams go, it was one of the most brazen. A drug company provides an expensive, potentially life-saving drug free of charge to doctors, who promptly turn around and bill the government and private insurers at the exorbitant rate usually charged by the company. The profits go straight into the pockets of the doctors.
And who foots the bill? You, through your taxes and co-payments to reimburse doctors for their grossly inflated charges to the Medicare program. And you, through higher premiums in private insurance schemes.
Like so many crooked schemes in U.S. health care, this one has its roots in one of the greatest social frauds of our time-the failure of the government to provide universal health insurance. Even the Medicare program for seniors, which in some ways resembles a national health insurance system, has enormous gaps, not the least of which is the failure to cover almost all outpatient drugs.
But there is one exception to this lack of Medicare reimbursement-and it was this exception that was exploited by Lupron's manufacturers, Abbott Laboratories and Takeda Chemical Industries, organized together as TAP Pharmaceuticals. The government does reimburse for outpatient drugs if they are administered by a physician. Lupron, which is a treatment for prostate cancer that must be administered by injection, conveniently fits the bill. The manufacturer establishes a price for the physician to charge, and the government obligingly pays 80 percent of that, with patients picking up the rest.
But what if doctors received the drug for free or at a deep discount? First, they would be able to pocket the entire manufacturer's price or a tidy fraction of it. Second, they would be more likely to prescribe Lupron, rather than its less expensive competitor Zoladex. To use a hackneyed phrase, it's a "win-win" situation-unless you happen to be a patient or a taxpayer.
But the companies didn't stop there. Just in case the bilking of hundreds of cancer patients wasn't enough to induce doctors to prescribe Lupron, the company also offered a doctor $65,000 in an "educational grant" if he would reverse his decision to recommend only Zoladex at his HMO. And it feted doctors with junkets to expensive golf and ski resorts and by picking up cocktail party bar tabs.
All this levity and high jinks came to a crashing end this October, when the Justice Department revealed the details of the scams and the terms of its settlements with the companies. Abbott and Takeda agreed to pay $875 million to settle fraud charges stemming from the kickback schemes-the largest health care fraud settlement in U.S. history. One physician and six company employees were indicted, adding to the four urologists who had pleaded guilty previously.
Acting rapidly to erase the stain on its members, the American Urological Association, with 9,000 members, has announced a campaign to ensure that urologists do not run afoul of federal billing standards again. There's only one hitch: the campaign is partially underwritten by a $1 million grant from Pharmacia, another drug company.
