MEET THE AUTHOR – Robert Nelson Young
I was born six months before Pearl Harbor when Modern Medicine started, as Congress had passed the Social Security Act and founded the FDA in 1938 to ensure safety in our Food and Drugs. I’ve watched drugs develop and change ever since, while consumer safety first improved but recently got worse!
Drugs were first regulated by Federal and State governments a century ago, as national tragedies harmed citizens, but regulating drugs never made them safe. My father was a straight commission wholesale drug salesman and operations manager for McKesson’s Pittsburgh branch before drugs came in tablets or capsules or had Identification codes on their labels.
Sales of Top 200 products then as now are 80% of sales, and sold directly to all customers by manufacturers at 21% lower prices with 30 days to pay. So wholesaler sales were the 20% of sales of less popular drugs and strengths and any “shorted or omitted” from direct orders. The numerous drug wholesalers had to inventory all products, vying for the business. My fathers’ success was from his exceptional memory skills as he became his customers “inventory system”, making sure none of them ever ran out of product, “borrowing” from others he knew had extra when needed. When I was in high school the drug industry was one of the first to computerize, and I learn about computers in 1958.
50 years ago, during the Vietnam conflict, I was in the Navy on the USS Charles H. Roan, (DD-853) as the Federal Government, took over healthcare and increased costs in passing Medicaid and Medicare. Most then believed citizens could never live much longer than 65 years, be poor for long periods, or chose to “live on entitlements and charity”. The method of payment for these then small entitlements, was taken in taxes from every paycheck, which accumulated in large amounts; taxpayers were told would remain untouched in a “lock box” and would grow from investments. But as Social Security amounts and government grew big; politicians couldn’t resist “borrowing”, leaving worthless IOU’s in a empty box!
10 years later, 40 years ago, “Fraud in Government” reported large and growing fraud, 40% in the Military, but 60% in Social Security, Medicare and Medicaid programs. Nobody in government thought people would lie on applications, but found government was signing up and paying lots of people who lied on federal and state applications. Today they do this on computers or Smart Phones, seeing nobody face to face, getting free stuff, using computers and smartphones to defraud billions in taxpayer funds. Congress amended the False Claims Act in 1986, which was too little too late, as Corporations were by then known to be the largest source of huge amounts of taxpayer fraud.
After service, I became Purchasing Director for Mercy and West Penn Hospital in Pittsburgh and saw the need for computerized inventory. I attended meetings of the Hospital Council of Western Pennsylvania Group Purchasing committees that developed supply contracts to reduce costs and moved to R.I. in 1971 as Purchasing Manager for Rhode Island Hospital the only Hospital with computerized inventory, the same rudimentary system I worked on with my father in 1958. I represented 17 RI Hospitals at the New England Hospital Council, Group Purchasing, and helped start a program for Hospital Association of Rhode Island with Hospital Bureau, which had started Coordinated Group Purchasing joint ventures with Hospital Associations and Metropolitan Hospital councils. I soon became the Group Purchasing Coordinator, for Nassau-Suffolk Hospital Council, Syosset, NY; New Jersey Hospital Association, Princeton, NJ., and in 1978 I moved to Richmond, VA to coordinate purchasing for the 100 non-profit members of the Virginia Hospital Association. In 1980, I established an interactive computerized purchasing system for all hospital products, I now describe as a hospital version of Amazon.com, which started 15 years later. I first used it to competitively bid all hospital drugs, to buy at low bid prices from manufacturers but requiring sales to all be made daily through drug wholesalers that hospitals chose called the “Wholesale Drug Depot System” . By 1987 I had done the same for Virginia independent retail pharmacies, fulfilling my “Father’s dream” while lowering drug prices significantly.
From 1982 IBM’s PC had computerized retail pharmacy and brand drug manufacturers started selling large quantities of Top 200 drugs to chains, who repackaged them to increase profit selling them using the original manufacturers FDA assigned “unique” National Drug Codes [NDC’s]. The independent pharmacies weren’t “grouped” to compete and didn’t have enough volume to make buying the largest commercial sizes economically viable. In 1990 when Medicaid started the Medicaid Prescription Drug Rebate Program requiring 15% or “Best Price” rebates, I knew brand manufacturers wouldn’t pay them for to do so would deplete any profit of repackaged drugs on Medicaid sales. Brand manufacturers agreed to pay rebates on their NDC’s while the largest wholesalers and chains numbering a dozen of wholesalers didn’t sign agreements but repackaged hundreds of the Top 200 drugs greatly increasing retail profits by using the same NDC’s on a hundreds of different products without signing a Medicaid rebate agreement! Medicaid drugs sales are 20% of the entire market and I collected all government drug rebate documents consisting of Drugs Utilization, which reported each pill and prescription, and Medicaid Financial Management Reports. In 1999 I calculated at least $3 billion in Medicaid rebates wasn’t paid. I reported this to the FDA and HCFA [predecessor to Center of Medicaid Services] who ran Medicaid and the Rebate program, and the National Boards of Pharmacy who did nothing about mislabeled drugs, while billions in taxpayer’s funds were being stolen by drug manufacturers!
I filed a “qui tam” case under the False Claims Act, enacted by Abraham Lincoln during Our Civil War, as amended in 1986, after reading about the 1st pharmacy fraud case in 1996, to recover the frauds disclosed in the “Fraud In Government” 10 years earlier. It takes that long now to fix any problem. The False Claims Act enables the Justice Department and 35 states Attorney Generals to recover defrauded taxpayers funds at double or triple the amounts of fraud, in Federal Court, which has never been done because the biggest offenders are corporations! My case was kept under Federal Court seal first in Tampa from 1998 and then was moved to Philadelphia from 2002 to 2012 as my 10 attorneys, Medicaid Fraud Control Units of CA, DC, DE, FL, IL, HI, LA, MA, NV, TN, TX, and VA as well as the U.S. Attorney’s Office in Philadelphia did no investigation to recover $1 billion from just 2 of the 46 brand manufacturers who disputed $57 billion in Medicaid drug rebates, still owed.
In 2013, 10 years after my case against Pfizer was unsealed, my attorneys settled an anti-trust case against Pfizer in New York and then withdrew representing me which Eastern Pennsylvania Federal Judge J. Curtis Joyner allowed as shown on Public Access to Court Electronic Records [PACER] case 02-2704. I “set aside” 43 other defendants, shown on PACER Docket in my case, who along with Pfizer I calculated owe $57 billion in Medicaid Drug Rebates that no federal or states enforcement officials or Politicians wanted investigated even though $57 billion is the largest Medicaid case ever filed, that indicts the entire industry based on an audit of state Medicaid data, in just principle amounts. It also is larger than all recovered Medicaid fraud case amounts since 1987, which are half of the total $48 billion in recoveries! We know $1 of every $3 spent on health care is fraud, which is 20% of our GDP and employs 10% of our citizens. Yet we pay twice what other countries do for drugs made mostly in India and China, uninspected by the FDA as now many of our most needed drugs are increasingly hard to obtain! Does anyone care?