Rampant Canadian pharmacy fraud sign of a broken system, expert says

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One pharmacist cheated British Columbia taxpayers out of $471,000 in an elaborate methadone billing scheme.

An Ontario regulatory body proclaimed itself "almost speechless" at the extent to which it found another pharmacist had "milked" the provincial drug plan.

And more than a dozen pharmacists in Saskatchewan billed the province for one drug but dispensed an alternative in exchange for rebates and other discounts from the manufacturer.

Aside from their fraudulent billing schemes, these pharmacists have two other things in common: Each was disciplined by his or her respective regulatory body and each was given another chance to practice pharmacy.

At a time when pharmacists face heightened scrutiny of their billing practices and drug costs are growing, the cases illustrate how few pharmacists who commit fraud in Canada are permanently stripped of their licences.

Licence revocations are extremely rare in all matters of discipline involving pharmacists. Of the 334 publicly disclosed discipline cases adjudicated by provincial pharmacy boards across Canada in the past 10 years, just 22 of them resulted in a licence being permanently revoked, an investigation by The Globe and Mail reveals. (Disclosure is erratic, with Quebec putting only a small number of cases on the CanLII legal website and New Brunswick nothing at all.) Most of the revocations involved serial offenders, who had been punished multiple times before losing their licences for good.

The cases expose deep flaws in the way the health-care system deals with fraud – and the conflicting responses these cases are getting from premiers. Much of the fraud goes undetected because the pharmacy sector largely polices itself and private-sector managers of drug benefits plans are not doing enough to catch questionable billings. What's at stake, say health-care experts, is not only the costly drain on the health-care system but the public's trust in the pharmacy profession and the safety of patients who depend on receiving the proper medication.

"The system is certainly broken," said Glen Randall, associate professor of health policy and management at McMaster University's DeGroote School of Business.

Second Chances

Pharmacists, like other health professionals in Canada, are regulated by boards, often called colleges, which are dominated by their peers and governed by a patchwork of provincial laws.

Dr. Randall said the dual role of colleges to protect the public and support their profession is a delicate balancing act that often results in light punishment for wrongdoers. While lay people are required by law to sit on college discipline panels, he said, they frequently defer decisions on penalties to their professional counterparts.

The laws governing colleges outline the process for handling complaints about pharmacists and disciplining them, but they do not set standards for punishment. Left to their own devices, college discipline panels rely on the precedents they set.

When it comes to fraud, the precedent is often a second chance.

Take the case of David Rands. The former Vancouver pharmacist spent four months in jail after pleading guilty in 2005 to defrauding the B.C. government's drug program of $471,000. A disciplinary panel at the College of Pharmacists of B.C. said Mr. Rands "grossly" overcharged the province for methadone, but suspended his licence for 12 months after considering mitigating factors, including his guilty plea and "unblemished" record with the college.

Trevor Wrightman, a Toronto pharmacist, met a similar fate, even though his fraud left the discipline committee of the Ontario College of Pharmacists "almost speechless" in 2010.

Six years earlier, the same panel found Mr. Wrightman guilty of over-billing the Ontario drug plan by dispensing smaller quantities of medicine than what had been prescribed, a scheme that allowed him to more frequently claim dispensing fees. The panel suspended Mr. Wrightman for two months.

Yet in 2010 he was found guilty of the same practice, after the province estimated his pharmacy had been paid $420,000 in excessive fees in 2006 and suspected him of filing $268,240 in invalid claims over just three months in 2007. Still, the panel never revoked Mr. Wrightman's licence. It barred him from owning a pharmacy for five years and suspended his licence for 18 months. He has since resigned from the college.

"We would have supported a much longer suspension," the committee's decision read. "However, we recognize that anyone reading this decision will appreciate that 18 months is a severe punishment."

In Saskatchewan, the College of Pharmacists recently adjudicated a rash of so-called "DIN spinning" cases by handing down punishments consisting of fines and investigation costs. Some 17 pharmacies received payments for drugs they never dispensed and otherwise would not have been entitled to collect.

The scheme worked like this: A pharmacist would be asked to fill a prescription for a popular generic drug that treats high blood pressure. Although the provincial drug plan required Brand X of the drug be dispensed, the pharmacist would dispense Brand Y but submit a claim to the province using the drug identification number, or DIN, of Brand X.

In exchange, the pharmacist might have received "significant consideration" in the form of free pills, rebates and other discounts from the maker of Brand Y. As a result, the pharmacies not only got paid by the province for drugs that were not dispensed, they potentially compromised patient safety by fudging computerized records of prescription histories that other health-care professionals rely on to treat patients.

"We knew it was wrong," Robin Sander, a Saskatoon pharmacist, said of himself and former colleagues who last year acknowledged engaging in the practice.

'We know it's rampant'

Much public attention has been paid to the self-regulating colleges that oversee doctors. But pharmacists have largely fallen under the public radar, despite having access to massive quantities of narcotics and the ability to bill taxpayers for prescriptions through a virtual honour system.

Canadian governments spent just over $12-billion on prescription drugs last year, according to the Canadian Institute of Health Information. In the United States, the National Health Care Anti-Fraud Association estimates about 1 per cent of prescription drug costs are fraudulent. There are no similar figures for Canada, but observers say the problem here is more prevalent than the handful of discipline cases suggests.

"We know it's rampant," said Yafa Sakkejha, general manager of the Beneplan Co-operative, a buying group for private insurance.

Shelly Selinger, a senior manager in health claims at Co-operators Life Insurance Co., said much of the fraudulent activity involves street drugs, such as oxycodone. "We have seen that type of abuse rather consistently over the last few years," she said.

Provincial governments entrust self-regulating colleges with protecting patients. But critics charge that colleges are often more interested in protecting their members.

In British Columbia, the college of pharmacists routinely takes advantage of a provision in the province's Health Professions Act that permits colleges to forgo public discipline hearings and settle complaints against members by private consent agreements.

While pharmacy colleges in other large provinces, such as Alberta and Ontario, have disposed of hundreds of disciplinary matters in public hearings in the past 10 years, only eight cases were aired in public in B.C.

Stephen May, a spokesman for the B.C. Ministry of Health, defended the process, saying, the number of formal hearings is not by itself a "meaningful indicator of how well a college is doing its job."

More scrutiny

Amid these gaps, some provincial governments are more aggressively scrutinizing pharmacists. In Ontario, for example, the Ministry of Health has stripped three dozen pharmacists of their ability to bill and receive payment from the provincial drug program after audits revealed a pattern of invalid claims. Twenty-five of them lost their billing privileges over the past two years alone.

Every pharmacy in the province was required to sign a new agreement with the ministry in 2008, giving it the explicit authority to terminate billing privileges. The government introduced the measures after the provincial auditor criticized it in 2007 for not doing enough to detect unusual dispensing activity.

But much of the burden for chasing fraud at the ministry falls on the shoulders of seven inspectors who audit about 100 of the province's 4,000 pharmacies a year. At that rate, the odds of an inspector showing up at a pharmacy's door are once every four decades.

Joel Alleyne, executive director of the Canadian Health Care Anti-fraud Association, said insurance companies in Canada are also taking fraud more seriously today than they did a decade ago. Critics say the private sector is not doing enough to catch questionable drug billings despite the fact that the sector's benefits plans account for roughly two-thirds of drug spending in Ontario.

Ontario Health Minister Deb Matthews said she would welcome help from the private sector. "The more eyes on it the better," Ms. Matthews told The Globe. "Our focus is very much on protecting taxpayers' dollars."