This research examines the characteristics, consequences, and potential factors impacting the prevalence of prescription fraud committed by pharmacy employees. Using standard thematic content analysis, 292 cases prosecuted by Medicaid Fraud Control Units throughout the nation are analyzed. Preliminary results reveal that certain kinds of fraud (generic substitution, short-counting, and filling prescriptions without a refill) are committed more regularly, or at least detected more readily than other kinds of fraud Most of the prosecutions involved pharmacists accused of fraud and many of the offenses were committed in groups. Implications for future research and policy are provided.
Pharmacists are responsible for filling 1.6 billion prescriptions annually in the United States. (Wivell and Wilson 1994). Although the majority of these prescriptions are filled legally, recent investigations suggest that some pharmacists use various methods to illegally tamper with the prescriptions that they fill. Despite the fact that these illicit behaviors can and do result in significant financial and physical harm to both the health care system and the individual medical consumer, the American public has largely ignored this lucrative white-collar crime (Taylor 1992). This lack of concern is somewhat understandable given the fact that the American public has historically maintained a high degree of trust in pharmacists and other health care professionals (Ford 1992; Pontell et al. 1982; Sutherland 1949; Wilson et al.1985). For example, for 10 years public opinion research has rated pharmacy as the most honest and ethical occupation (McAneny and Moore, 1994). Building on these data, Wivell and Wilson (1994:38) point out that pharmacists "[garner] higher marks for honesty and ethical standards than the clergy."
Despite this high degree of public confidence, there is reason to believe some pharmacists regularly defraud the Medicaid system. These acts are commonly classified as prescription fraud. Recent research on this topic (Taylor 1992) outlines a variety of innovative ways in which pharmacists are able to defraud the Medicaid system. For instance, upcoding refers to situations wherein a pharmacist fills a prescription with a cheaper generic drug but bills Medicaid for the originally prescribed, more expensive brand-name drug.1 Phantom billing is a term used to describe scenarios in which a pharmacist bills Medicaid for prescriptions not provided to the recipient. Double billing refers to situations wherein more than one insurance company is billed for a single set of prescriptions. The practice of kickbacks involves situations where pharmacists receive or provide funds to or from other health care providers in exchange for referrals. As subsequent discussion will demonstrate, these and other innovative schemes represent a serious threat to the health care delivery system in this country.
Medicaid Fraud Control Units (MFCUs) are given the responsibility of detecting, investigating, and prosecuting Medicaid fraud (Bailey 1991); therefore, Medicaid prescription fraud falls under their jurisdiction. Interestingly, it was not until the 1980s that MFCUs began to uncover the various illicit prescription schemes being used to defraud the Medicaid system. Subsequent investigations have revealed that prescription fraud is a profitable and prevalent offense.
Given the illusive nature of these acts, the precise amount of prescription fraud occurring is unknown. Instead, we must rely on estimates to gauge the seriousness of this problem. The available estimates indicate that 10% of all funds spent on health care is lost to fraud and abuse in the health care arena (Ford 1992:2). Note that these estimates translate into losses of $50 to $80 billion a year (Taylor 1992:17). According to Ford (1992:2) such losses will contribute, along with other factors, to an increase in spending in health care. Specifically, Ford predicts that costs will increase from $280 billion in 1982 to $2 trillion by the year 2000. …