By Chuck Strouse
By Scott Fishman
By Terrence McCoy
By Ryan Yousefi
By Ciara LaVelle, Kat Bein, Carolina Del Busto, and Liz Tracy
By Pepe Billete
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The basic routine, as described by investigators and participants, is pretty much the same regardless of the type of medication. Middlemen or brokers buy medicines from patients for about a tenth to a seventh the drugs' retail value. The brokers then sell the medications, this time for 20 to 25 cents on the dollar, to another broker or to a pharmaceutical wholesaler, who will charge a pharmacist 35 to 45 cents on the dollar, still a much cheaper rate than obtaining the drugs through legitimate wholesalers. Whether the pharmacist eventually sells the repackaged medications at retail price or provides them to customers with insurance and then bills the insurance company or Medicaid, he makes a huge profit.
In another scenario a patient or a broker simply sells prescriptions to a pharmacist, who then bills Medicaid at a much higher rate, as if he had actually filled the prescription for a customer. There are many instances of "pharmacies" existing only as post office boxes, while the owners submit legitimate prescriptions to Medicaid for reimbursement but never incur the cost of purchasing medicines. This scheme, though, has become riskier than operating a real pharmacy with real medicine, because state auditors can easily compare Medicaid billings with actual drug purchases. In one segment of last month's Medicaid fraud sweep, 56 people were arrested for involvement in an operation by one pharmacy that billed Medicaid for three million dollars in prescriptions that were never filled.
Some of those involved in prescription fraud are or were traditional illicit drug dealers, investigators say, but most are just enterprising working people. "In some areas we've seen old dope dealers, some really bad guys," De Leo says, "but overall most of the [alleged Medicaid defrauders] went into a business legitimately and found so many ways to make easy money." Among those apprehended in the September roundups were the owners of a barbershop, a fruit stand, and a calling-card enterprise -- all of whom allegedly used those shops as fronts for their more lucrative prescription-brokering businesses. One broker, whose name can't be revealed because it would endanger his life, never even bothered to establish a legitimate front business, yet he owns two cars and a four-bedroom home with a swimming pool. He's never paid tax on his broker income, receives food stamps, and has already put his children through college. That broker was arrested several months ago, after which he agreed to cooperate with investigators.
The AIDS patients working the next level down, the ones who supply the brokers, make a lot less money. If they had to purchase their medications, most would have to pay at least $1000 per month; more often the total would be in the $7000 to $10,000 range. Yet an AIDS patient who pockets a mere $500 per month for selling those medications is doing well. For example, a 60-tablet bottle of Combivir, a popular new protease inhibitor patients say they sell on the street for $15 to $25 per bottle (on rare occasions as much as $50), carries a wholesale price of $470 and retails for $565.
Joe, a young, round-faced man wearing a black knit cap and sweating rivulets in the heat of the day, is pacing in front of the Metro-Dade clinic. Glancing back and forth, he begins a monologue on the subject of AIDS medications. "All you gotta do is ask [a doctor] for Combivir and you good to go," he allows. "They're buying all the AIDS drugs now. It's like that now. It's a black market. Some places on the street, they give you like twenty dollars for some Combivir. Ten for Viramune. Some places you bust fifty dollars [for a bottle of Combivir]. Then you outta your medicine for the whole month. What you need it for? You gonna get high." Joe's tongue, visible when he speaks, is chalk-white, and his eyes roll every few minutes as though he's dizzy.
As Troy, a lean man of about 40, leaves the clinic, he stops to converse with Joe. "It's all according to who you know, who's paying how much for what," Troy says, explaining the AIDS-meds pricing system on the street. "These days there are quite a few middlemen. They're all around town; they're everywhere. It didn't used to be like that. There's so much money in it now. You can get about the same for Crixivan as you can for Combivir, but [Crixivan] is not that popular lately. Sustiva is; it's the same [price] as Combivir. The thing is, the middleman, he's getting paid a lot more than you are."
Joe interjects: "[The middlemen] are selling back to the pharmacies. It's fucked up. If I knew the top man I'd go to him. But no, I sure don't...."
Troy, bumming a cigarette from a passing woman, nods slowly. He lights up, takes a deep drag, and stares out at the street with a resigned expression. "Most people don't know where the middleman sells to. He ain't gonna let you know. He's gonna protect himself good. And hey, [here Troy pounds his T-shirted chest with his fist, then lets his arm drop to his side] them boys is living large."
Joe ambles west on 54th Street toward Seventeenth Avenue, where in about a half-hour he'll catch a jitney back home to Tenth Street in Overtown. He passes an abandoned house next door to the clinic where another patient, a tall older man who is so skinny he looks withered, is standing in the yard at the side of the house, smoking crack. "Hey, don't mess with that!" Joe calls jokingly.