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1 9 - 0 7 - 2 0 0 5 New York Medicaid Fraud May Reach Into Billions
July 18, 2005 It was created 40 years ago to provide health care for the poorest New Yorkers, offering a lifeline to those who could not afford to have a baby or a heart attack. But in the decades since, New York State's Medicaid program has also become a $44.5 billion target for the unscrupulous and the opportunistic. The AIDS Drug The woman said her name was Pamela Borden, but it was not. She told the doctor that she had AIDS and had been losing weight rapidly, but she did not have AIDS and was overweight. Yet when she walked out of Dr. Mikhail Makhlin's Brooklyn office in February 2002, she was clutching a prescription for a very expensive synthetic growth hormone intended to treat wasting syndrome, a side effect of AIDS. The cost of the drug, entirely borne by taxpayers, was $6,400 a month. The woman's real intention for the synthetic hormone, Serostim, had nothing to do with AIDS. Serostim is highly sought in a thriving black market among bodybuilders, who use it like a steroid to bulk up. And Dr. Makhlin wrote far more prescriptions for Serostim than any other Medicaid doctor in the state, more than even prominent AIDS specialists with large practices. From 2000 to 2003, Dr. Makhlin prescribed 12 percent of all the Serostim purchased by New York Medicaid, costing the program $11.5 million, according to the Times analysis of Medicaid billings. Medical records and interviews with state officials suggest that the woman's visit was part of an elaborate series of scams involving Serostim that stole tens of millions of dollars from New York Medicaid, long after other states realized what was going on. In 2000, New York Medicaid paid $7 million for Serostim, but the following year, after the schemes took off, the state spent $50 million on the drug. The money was spent despite national publicity that had led other states to realize that Serostim was being abused, and to begin reining in their spending on the drug. Florida, for example, put restrictions on Medicaid payments for Serostim in 1997. The same year, federal officials broke up a Medicaid fraud ring that recruited people from Washington Square Park and paid them $20 to $50 to get Serostim illegally. At the Health Department, Dennis P. Whalen, executive deputy commissioner, and his aides described the department's handling of the drug as a success. They said they had detected the increase in Serostim prescriptions and required doctors to get special approval to prescribe the drug after January 2002. But billing records show that Dr. Makhlin wrote 80 percent of his Serostim prescriptions after the restrictions were adopted. Serostim was approved in the mid-1990's to treat wasting syndrome, a side effect of AIDS. It is injected under the skin and causes a significant increase in lean body mass and weight. The drug's manufacturer, Serono Laboratories, is the subject of an extensive federal criminal investigation into whether its executives paid kickbacks to doctors to prescribe Serostim. The company said it was cooperating with the inquiry. Federal authorities would not say whether Dr. Makhlin had been questioned in the federal inquiry. What is clear is that Dr. Makhlin played a pivotal role in the epidemic of Serostim abuse on the East Coast. Even now, he retains his Medicaid privileges and medical license, and has not been a subject of a state criminal inquiry. Dr. Makhlin, who was educated in Russia and arrived in New York in 1989, maintains that he was unwittingly duped by a parade of patients he tried to help, and that he received no benefit for prescribing a drug he considered necessary. But he and his lawyer, Nathan Dembin, will not explain how he ended up prescribing far more Serostim under Medicaid than any other doctor in the state. Thirty of his patients each received more than $100,000 worth of the drug. The State Department of Health did not try to discipline Dr. Makhlin until late 2003, seeking to suspend him from the program for five years and fine him $164,000. But Dr. Makhlin has successfully fought the penalties, and retains his Medicaid privileges while an administrative law judge in the department weighs his case. "I did not intentionally or knowingly violate any Medicaid regulations," Dr. Makhlin said in court papers. "I was simply exercising my best medical, professional judgment." It was not until 2004 that the amount of Serostim purchased by New York Medicaid returned to where it was before the spike. The true identity of the woman who received the prescriptions from him in February 2002 will probably never be known. The real Pamela Borden was found in Brooklyn and said her Medicaid card had been stolen in late 2001. She said no one from the state had contacted her about Dr. Makhlin. 1 8 - 1 0 - 2 0 0 5 $704m penalty for drug maker
Improper efforts to build demand
By Ross Kerber and Charlie Savage Swiss drugmaker Serono SA has agreed to pay $704 million to settle criminal and civil charges that it illegally promoted its AIDS drug, prosecutors said yesterday, in one of the biggest sums collected in the government's growing scrutiny of pharmaceutical firms. The company's Serono Labs unit of Rockland agreed to plead guilty to charges it conspired to market Serostim by supplying doctors diagnostic software that was not fully approved by the Food and Drug Administration. The software, prosecutors said, led to an increase in demand for the drug prescribed to treat wasting in AIDS patients. The company also agreed to plead guilty to offering doctors all-expense-paid trips to a medical conference in Cannes, France, in return for writing prescriptions of Serostim, an arrangement that US Attorney General Alberto R. Gonzales blasted as ''The 'Cannes Kickback' campaign." In all, prosecutors said, nearly 85 percent of the prescriptions written for Serono's growth hormone Serostim weren't necessary. Some excess demand came from bodybuilders who, like AIDS patients, wanted to gain weight and bulk up. Serono violated federal laws that prohibit companies from making false claims about their products and from offering bribes to win government business such as drugs sales whose costs are covered by the federal Medicare program. Last spring Serono publicly released the outline of the deal it had reached with state and federal prosecutors. The company has already taken a $725 million charge to cover the costs. It said its larger business of selling treatments for infertility and multiple sclerosis wouldn't be affected because they are sold by other divisions. ''We are pleased to put the matter behind us," said Thomas G. Gunning, the company's general counsel. ''The activities described in the settlement were confined to one unit in our US operations and cover a very brief period in our history." Like many other cases against drug companies, the charges stem from complaints first brought to the government's attention by company employees. Under federal antifraud rules that provide incentives for employees to report company violations, five former employees, including one in Massachusetts and one in Connecticut, and a clinic operator will split $75 million from the settlement. Serono will pay a $136.9 million criminal fine and $567 million to settle civil liabilities, of which $305 million will go to federal agencies that were billed for unnecessary prescriptions, and about $262 million to state Medicare programs. Prosecutors said the terms were equal to the amount of revenue and profit the company made from Serostim since it came onto the market in 1996. Some conservative and business groups have been critical of the large payments to individuals allowed under whistleblower cases. Yet the Justice Department, which like the FDA has been under pressure to rein in questionable drug marketing practices, trumpeted the agreement. ''The pharmaceutical industry will not be allowed to benefit from the criminal misconduct such as that in which Serono engaged, putting patients' best interests second to profit," said Michael J. Sullivan, US attorney for Massachusetts, at a press conference in Washington yesterday morning. Attorneys general from other states were also involved in the investigation, including Thomas F. Reilly of Massachusetts, who recovered $1.1 million for the state's Medicare program. The settlement could have been much worse for Serono, whose shares fell just 2 percent in trading in New York yesterday. The agreement bars the Serono Labs unit in Rockland from doing business with all federal healthcare programs for five years. But other Serono units that sell drugs like Rebif for MS won't be affected, and Gunning said control of Serostim itself has been transferred to Serono Inc., a different unit also of Rockland. Supplies of the drug will not be affected; the company noted that the FDA re-affirmed the efficacy of the treatment in 2003. Explaining why prosecutors didn't seek to restrict more of the company's sales, Mary Beth Carmody, assistant US attorney who helped handle the case, said ''public health was one of the key concerns here." The company also did not acknowledge several broader contentions by the government, such as the idea the company marketed Serostim for a condition for which it wasn't approved, lipodystrophy, often characterized by weight loss in the limbs. Federal prosecutors spelled out some details of the case against Serono last spring when they filed criminal charges against four individual executives they held responsible as well. All four have denied wrongdoing. Still, the documents filed as part of yesterday's plea agreement provide the greatest detail yet about the investigation that has dogged Serono for years. Serostim was first approved to help AIDS patients fight the life-endangering weight loss that characterized the disease. But late in the decade the rise of cocktails of protease inhibitors made Serostim less important in AIDS treatment. According to the government, Serono began in 1997 to ''redefine AIDS wasting" in a way that would boost Serostim sales. One method was to train its sales representatives to tell doctors that ''body cell mass" was a key metabolic measurement. Serono then worked with another company, RJL Sciences Inc., which made machines commonly used to measure body fat and body mass, to help diagnose patients in need of the drug. But the software for the machines never got certain FDA approvals, a violation of federal medical device rules. In April, RJL and its president, Rudolph J. Liedtke, pled guilty to conspiracy charges and are awaiting sentencing. The second set of charges relates to trips in 1999 to a French medical conference that Serono offered doctors in return for prescribing set amounts of Serostim. Court filings don't identify any Massachusetts doctors who received the trips. Prosecutors wouldn't elaborate beyond the filings. Some of these sales practices raised red flags internally, and court filings yesterday named five former employees who first alerted the government about the wrongdoing. They include former sales representatives Christine Driscoll of Massachusetts and Frank Garcia, 41, of Connecticut, and three people from Maryland including Kimberly Jackson, a former Serono regional director. The AIDS Healthcare Foundation, a California-based health clinic operator, also filed a complaint with the government and will receive a share of the payout through the former employees. Garcia's attorney, Robert Thomas of Boston, described him as pleased with the settlement. ''He filed this case at great personal risk to himself and his career, and is enormously gratified to see that his actions have helped make the industry's practices better." He expects to receive more than $10 million in the settlement, Thomas said. |
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[Definitie:] "An ergogenic aid is any substance or phenomenon that enhances performance."
(Wilmore and Costill) 
