I-Team: Florida loophole allows 400 to 600 percent markup for some prescription drugs

TAMPA - For all the talk about containing the soaring costs of health care, the I-Team has uncovered a loophole in state law allowing doctors and so called "drug re-packagers" to make astronomical profits on prescription medications.

Beall's Department Store has almost 9000 employees at 295 locations in the Tampa Bay area and around the state.  But the Bradenton-based company says it could very well give jobs to more Florida residents if not for the exorbitant amount of money it spends on prescription drugs in workers compensation cases.

"Everything we are seeing that we are paying on an increased scale is having an impact on whether you can hire somebody," said Vincent Foderingham, Vice-President of Risk Management at Beall's.

Because of a loophole in Florida law, doctors are allowed to give prescription medicine to workers comp patients right out of their office. 

It doesn't cost the patient a dime.  But it costs companies and us taxpayers millions of dollars more than it would if those same workers just went to their corner pharmacy.

So called "drug re-packagers," like Ohio-based Med X Sales are pitching their services to doctors like this.

"You can substantially increase your revenues without having to see patients with Med X Sales simple and easy and highly profitable mail-order drug dispensing solutions," says a narrator in video sales pitch posted on You Tube.

While Florida limits what pharmacies can charge for prescription drugs, no limits are placed on re-packagers.

"They charge $860 for a package of Lyrica.  We charge about $280," said Steve MacDonald, CEO of My Matrixx.

MacDonald's Tampa-based business assists companies with managing their benefits programs.  And he said, "By virtue of taking the pills out of the big bottle and putting them into a new bottle, what companies end up doing is inflating the price of those drugs by as much as 600- to 700-percent."

In another example, "This is another drug, Maloxicam.  We charge $40 for it.  They charge about $280," said MacDonald.

The Workers Compensation Research Institute says the loophole allowing re-packagers to do this costs Florida businesses an estimated $34 million a year. 

So why doesn't the legislature simply close the loophole?  The answer one expert says, is money.

Joe Paduda writes a well-known web blog dealing with managed-care issues and says "What they have done is they have so much money that they are able to use that in lobbying and in supporting different politicians."

For example, from 2005 to 2011 Miramar-based Automated Healthcare Solutions contributed over $3 million to Florida politicians, including former Governor Charlie Crist. 

Crist vetoed legislation just before leaving office that would have closed the loophole.  He did not return repeated calls for comment.

As for Automated Health Care Solutions, the company referred us to testimony this week of Dr. Gary Kelman before a legislative committee considering a new bill to cap the profits.

"It's not about doctors making money or gouging the system.  We don't make money like pharmacists.  We make money by treating patients and getting good outcomes," Kelman testified.

Florida is one of 13 states that allows physician dispensing.   Joe Paduda says it's a questionable practice at a time when so many are concerned about the ever-increasing cost of health care.

"Nobody begrudges anyone else making money, but one has to understand where that money is coming from.  If it wasn't going to those entities, it would be going to hiring more teachers, reducing people's taxes, and hiring more workers," Paduda says.

As for the latest attempt to limit the astronomical mark-ups on these drugs, the bill that would do so made it out of committee. 

But when we asked governor's office whether he would sign it, they couldn't even tell us whether he supports the idea of capping the sky-high profits on physician-dispensed drugs.

Print this article Back to Top