Office of Statewide Prosecution


Case No: SC 02-2645

I. Introduction

In our last report we detailed how corrupt drug wholesalers were marketing adulterated pharmaceutical products in Florida and throughout the United States. We noted there that the wholesalers had a variety of illicit sources but did not delve into great detail. Instead we focused on the illegal distribution of the drugs by wholesalers and what we felt were lax laws and oversight that allowed the wholesalers to thrive. Today, we turn our attention to one of the ways that illegal wholesalers acquire adulterated products - the diversion of tens of millions of dollars worth of drugs by large numbers of recipients of the Medicaid program.

Over the last year, the Grand Jury has heard from investigators and regulators from the Bureau of Pharmacy Services, the Florida Department of Law Enforcement, the Medicaid Fraud Control Unit, Medicaid Program Integrity and the Department of Health. We have also taken testimony from representatives of private industry, and from the Federal government. Finally, we took testimony from some Medicaid recipients who were directly involved in this fraud.

We have found that there are few, if any, consequences to Medicaid recipients who sell their expensive medications to wholesalers. One reason is that Florida has a patchwork of agencies, each with limited authority to address issues concerning fraud by recipients. We found that where there is authority, there appears to be a reluctance to aggressively pursue the issue of recipient eligibility. Efforts to deal with the problem of recipient fraud have been hampered by a lack of effective state statutes, federal limitations that restrict Florida’s attempts to control this fraud, and a lack of awareness by some state and federal officials of the extent of the problem of recipient fraud. The result is the waste of hundreds of millions of dollars, exploitation of Medicaid recipients, and the tainting of our supply of critical lifesaving medication. While Florida has taken some positive steps recently, our efforts pale compared to what other states are doing and, in some cases, have been doing for a long time.

For the full report in adobe acrobat format (.pdf) click here.