Medicaid Drug Fraud

Medicaid prescription fraud is widespread in the United States, contributing significantly to the government's $5.5 billion tab for prescription drugs in 1991. For example, some pharmacists routinely pad customer prescriptions, keeping the extra drugs to sell or use themselves. Clinics inappropriately give Medicaid recipients completed prescription forms that are then traded for merchandise from local pharmacies or sold on the street to the highest bidder; some pills costing 50 cents at the pharmacy have been resold for as much as $85. A common scheme is the so-called "pill mill," in which doctors, clinic owners, and pharmacists conspire to defraud Medicaid by prescribing drugs solely to obtain government reimbursement. Patients are often in on the scam, allowing the use of their Medicaid numbers in exchange for kickbacks of cash or drugs. This organized network of physicians, patient brokers, and assorted middlemen frequently transferred money overseas via the notorious Bank of Credit and Commerce International. Recent initiatives in several states have shown signs of stemming these financial losses, but federal leadership and support is needed to ensure broader implementation of these initiatives.