Fines And The Cost of Health Care

I was sure that the pharmacist had made an error when he charged me over $200 for those few pills. Perhaps he had inadvertently added a zero to the bill. But he double-checked and insisted that the price was accurate.

Wondering how the cost of medicine had gotten so high, I remembered a recent case  involving a particular pharmacy chain. The Drug Enforcement Agency alleges that this company “lost” 37,000 hydrocodone pills. The street value of the pills is $370,000.00. But the lost profits on the drugs are the least of the chain’s worries. It also faces fines of $29 million for violations of federal controlled substance laws. In addition the state Board of Pharmacy is taking action against it. This makes the $169,000 that OSHA wants from the chain for safety hazards in a separate case look like chump change.

This pharmacy chain seems to repeatedly run into problems with governmental agencies. Just last year it paid $11 million in connection with another DEA investigation. In that case, the pharmacy’s employees created fake DEA numbers on dispensing records, filled prescriptions for unlicensed doctors, and improperly labeled medications. In another case, it paid $658,000 for failing to offer patients consultations regarding their medications. The company also saw a $57,305.50 fine for price scanner inaccuracies, a $650,000 fine for dispensing the wrong medications to patients, and a $250,000 fine for selling out-of-date products and violating patient privacy.  OSHA leveled a $40,000 fine against it for lack of an emergency action plan.  One thing this chain certainly needs is an emergency action plan. 

2012 was another landmark year for this company. It paid $77.6 million for failing to monitor sales of pseudoephedrine. In another case, the federal government called two of the company’s Florida pharmacies an “imminent danger” to the public. It banned the stores from selling controlled substances.

In 2010 this company paid $13.75 million to resolve illegal hazardous waste disposal charges. 2009 brought more fines. The company paid $2.5 million in connection with throwing patient records in dumpsters and $2.8 million for making “unsubstantiated” claims regarding a product that allegedly boosted the immune system.

The above fines total almost $139 million. This does not include the costs of attorney fees, investigation expenses, and employees’ lost time. Moreover, I’m sure this is not a complete list of the fines assessed by state and local governments against this pharmacy chain over the past few years.  Also, it doesn't include the thousands of cases filed by state Pharmacy Boards.

The litany of government actions against this one pharmacy chain raises three important questions. First, isn’t the company simply passing these fines on to the consumer by raising the cost of medications? Second, are these fines having any impact on this company? And third, if the fines are not protecting the public and are increasing the cost of health care, should the government consider other options?

I guess I was lucky that the price of the pills was a mere $200.00. If these fines keep on coming, that price will probably soon double.  Like many people, I can no longer afford to get sick.