At 17, I worked on a 10-digit wholesale drug computerized inventory system, which in 1967 became
the pricing system for drugs as Congress needed a pricing system to pay for Medicare drugs in
hospitals and renamed them as National Drug Codes. [NDC’s]
They were placed with the FDA who used this wholesale identity and pricing listing, to regulate
drugs bought by anyone. These numbers the FDA calls “unique”, are bar-coded on bottle labels but
FDA rules allow multiple “repackagers” to use identical NDC’s or none. Thousand of other non-drug
hospital items also received and used NDC’s to get paid.
In 1990 Congress passed the Medicaid Drug Rebate Program, to allow continued use of much higher
priced brand drugs by Medicaid in exchange for a 15% rebate, and additional inflation and a “Best
Price” rebate. All brand drugs are sold to Government agencies at 50% to 60% less than list price,
and the “average brand rebate’” should have been 45% but was half that, until 2009.
Since 1980 chain Drug Stores and wholesale drug “repackagers” [registered as manufacturers by the
FDA] were given NDC’s they never used. They bought the Top 200 most popular drugs that are 80% of
sales, in large amounts at high discounts, repackaged them into smaller higher priced units placing
the brand-named drug NDC’s for the highest price on the labels. Consumers were unaware of this as
they never see the bottles from which the drugs were dispensed. But I informed both the FDA and
Medicaid of this fraud decades ago. An additional 20% profit on 80% of sales for any retailer is
huge, and while not all Medicaid sales were repackaged drugs, large amounts were and the Medicaid
rebates were disputed and not paid. All Medicaid sales and rebate records are kept; and sales of
Top 200 drugs are shown in SEC reports, both in sales dollars and prescriptions, by the industry
“accountant” IMS. What caught Bernie Madoff, work’s here too.
I couldn’t get the FDA or HCFA, now CMS, to disallow the repackaged drugs use for Medicaid
prescriptions, whose discontinuation would have saved $200 billion over 20 years for all other
consumers, while overcharging Medicaid $57 billion. In 1998, I filled a False Claims Act qui tam in
Tampa Florida, Case No: 8:98-cv-992-T-26F. The Tampa, U.S. Attorney Office, reviewed it and 3 FBI
Special Agents interviewed me and sent it to Main Justice, who quickly reported the FDA “allows
repackagers to use the same brand-named NDC’s”. So, neither consumers nor Medicaid knew they were
being overcharged by use of “false NDC’s”, until I told all government offices and officials about
it in 2000. None did anything; making all these drugs unsafe, and all Medicaid Drug Rebate Program
rebates specific to a “unique NDC” were disputed so taxpayers paid full retail prices for them, on
Medicaid and personal purchases!
So, now the question is: after disputing $57 billion in Medicaid rebates, $30 billion due to CMS
and $27 billion to states, does HHS, CMS or any states care that their citizens were defrauded?
Repackagers didn’t have Medicaid agreements and never priced their products, so since the
manufactures allowed them to use their NDC’s and disputed rebates on repacks sold to Medicaid under
their brand-named drug NDC’s and hen dispute them; responsible? I refiled in Philadelphia in 2002
Case No. 02-2704, but found no brotherly love there!
Medicaid keeps records showing all “units”, prescriptions and amounts spent by each NDC, which I
collected and advised HHS and CMS years ago weren’t paid. HHS has Drug Rebate Dispute Coordinators
in all their 10 Regional Offices, office, to whom I sent my “unpaid drug rebate analysis” showing
$57 billion in unpaid rebates by state and HHS Region by amounts still owed CMS and State Medicaid
Programs, with no response, to me or millions of taxpayers!
14 years after I filed my first case, my attorneys settled another case with Pfizer for anti-trust
issues that also covered my case as it was with the same 3 brand drug Manufacturers of the 46 in my
case. And tried to force me to give up my case “with prejudice” only to discover they control
the Federal court system as well as Congress!