Distributor charged in $100M counterfeit drug scheme

A Utah-based pharmaceutical wholesaler has been charged for his role in a complex fraud scheme in which he is accused of reselling medications purchased on the black market, triggering tens of millions of illegitimate charges to Medicaid, according to the Department of Justice (DOJ). 

Randy Crowell, who owned a wholesale distribution company in Utah, is accused of purchasing more than $100 million worth of prescription drugs on the black market, many of which had been prescribed to Medicaid beneficiaries. Crowell and a network of co-conspirators allegedly targeted Medicaid beneficiaries who were willing to hand over high-priced HIV/AIDS medications in exchange for $40 or $50. Lower-level "collectors" would pay beneficiaries and remove the prescription labels with lighter fluid before delivering the drugs to higher-level "aggregators," according to the DOJ. Aggregators would sell the medication to wholesale pharmaceutical distributors, like Crowell, at a marked down price. Crowell would then allegedly resell the drugs to pharmacies at full price.

To convince pharmacies to purchase the medication, Crowell is also accused of forging "pedigrees," or documents that falsely claimed the medication came from a legitimate manufacturer. As a result, programs like Medicaid paid full price for second-hand drugs.

Drug distribution fraud has been high on the Office of Inspector General's priority list, particularly high-priced drugs used to treat HIV. The OIG estimated that the Medicare Part D program paid $32 million in 2012 for unnecessary HIV medication. Some oncologists have also been caught prescribing cancer medications purchased on the black market, leading to millions in fraudulent charges.

For more:
- read the DOJ announcement