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Drug Prohibition and Third-Party Payers Created the “Pill Mills”

August 20, 2018 in Economics

By Jeffrey A. Singer

Jeffrey A. Singer

A cornerstone of governments’ approach to the opioid
overdose crisis has been monitoring and restricting prescriptions
of opioids to patients in pain. Restrictionists point to the
so-called “pill mills” rampant in the earlier years of
this century, particularly in South Florida, and the Appalachian region, that
churned out hundreds of millions of prescription painkillers. The
pill mills weren’t indicative of how the overwhelming
majority of doctors practice pain management.

While they are largely gone now, pill mills are an example of
what happens when drug prohibition intersects with the third-party
payment system.

The opioid crisis was
never a result of doctors treating patients. It was always about
non-medical users seeking drugs in the black market, and the
financial incentives that market offers to dealers.

Drug prohibition creates lucrative black market opportunities
for people willing to sell drugs illegally. In 2011 federal law
enforcement reported the street price of OxyContin was $50
to $100, compared to the legal price of roughly $6 at the pharmacy.
In fact, when Florida clamped down on its pill mills the street
price of a single OxyContin pill rose from $8 to $15. This lure of easy money tempts corrupt
doctors and pharmacists to leverage their degrees to nefarious
ends, especially because they can use the third party payment
system to “double-dip:” they get paid by drug dealer
middlemen for churning out and filling prescriptions which then get
sold on the black market, and at the same time get reimbursed for
their “services” by Medicare, Medicaid, and insurance

Some doctors operated alone, like Dr. Alvin Yee, the Orange
County doctor who met “patients” at Starbucks and
essentially sold prescriptions of OxyContin, Vicodin, and Xanax,
for as much as $600 per meeting. He was sentenced to 11 years in prison in 2013. But
oftentimes it was more elaborate and involved a team of players. An
example is the Florida scheme where drug dealers paid professional
“patients” $600 to visit a set of South Florida pain
clinics where they would receive narcotics prescriptions from the
doctors even though they didn’t need them, and then fill the
prescriptions at one of four Robert’s Pharmacies. They then
gave the filled prescriptions to the dealers who sold them on the
black market while the pain clinics, doctors, and pharmacies billed
Medicare, Medicaid, or private insurers for the services

This team approach became so well-organized in Florida that
addicts from around the country were recruited to visit these pain
clinics, often with added perks like gift cards, plane tickets, and
trips to strip clubs and casinos. So many flocked …read more

Source: OP-EDS

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