Fraud, Waste, and Abuse in Prescription Drug Benefits

Fraud, waste and abuse are problems that plague almost every sector of health care in the United States. The Centers for Medicare and Medicaid Services (CMS) estimates that fraud, waste and abuse cost taxpayers billions of dollars annually within Medicare and Medicaid alone. Although the actual amount of money lost to fraud is unknown, the estimates range from as much as 3 percent to 10 percent of all health care expenditures.¹ Private payers, including managed care organizations (MCOs) and self-insured companies, also struggle to reduce the incidence of inappropriate spending. Fraud, waste, and abuse are three distinct problems that require different policy approaches. This statement discusses ways that fraud, waste and abuse can affect prescription drug benefits in both commercial and public settings.

Fraud 
Fraudulent activity² within pharmacy benefits can take many forms, including patients acquiring prescriptions under false pretenses, providers writing illegitimate prescriptions and pharmacies processing phantom claims. AMCP supports efforts by both federal and state governments that enhance law enforcement’s ability to combat the actions of individuals who falsify prescription information or providers who write prescriptions for patients who intend to abuse the drugs. AMCP also supports efforts to encourage the adoption of electronic prescribing systems, which help reduce the incidence of fraud at the pharmacy point-of-sale. 

Health plans and pharmacy benefit managers (PBMs) can also help combat fraud through their pharmacy networks. By having the flexibility to only contract with pharmacy providers that can be verified as legitimate, health plans and PBMs can reduce fraudulent payments, instead of relying on a “pay and chase” system where they attempt to recover payments from liable third parties. To this end, AMCP is opposed to requirements that MCOs contract with any pharmacy willing to meet the terms and conditions of an organization’s contract, also known as “any willing provider” requirements.²  

Requirements stipulating that all “clean” claims be paid within a certain time frame also reduce a health plan or PBMs ability to combat suspected fraud. Frequently, these laws require payment within a time frame that is inadequate for a payer to conduct a thorough investigation into suspected fraudulent activity. AMCP supports exemptions from these laws that would allow a health plan or PBM to suspend payment when there is credible evidence of fraud. This solution would allow plans to combat suspected fraud before payments are made, instead of attempting to recover payments after the fact. The CMS Center for Program Integrity is responsible for identifying and prosecuting suspected instances of fraud within the Medicare and Medicaid programs and is currently underfunded. AMCP believes that adequate Congressional appropriations would allow the division to continue combatting fraud, waste, and abuse in the Medicare and Medicaid programs, saving the taxpayers millions of dollars on an annual basis. 

Waste
Pharmaceutical waste can take several forms. Oftentimes, waste refers to prescription drugs that are made available to a patient but are not administered to or taken by the patient. 

This would include prescriptions that are picked up by a patient, but for whatever reason are not taken as directed, either due to side effects, lack of perceived benefit or other medication adherence issues. It can also include instances wherein a prescriber discontinues a prescription, leaving a supply of medicine unused, or during transitions of care, when a patient may be transferred between medical facilities and unused medication may be thrown away or when a patient passes away. When any of these situations occur, prescription drugs are not only wasted, but patient outcomes could be compromised as well. A well-designed pharmacy benefit will include programs to support patient adherence and compliance with their drug therapy and will improve outcomes and decrease waste. Examples of such programs could include trial periods for maintenance medication before longer-term prescriptions are filled or drug therapy management programs that include patient outreach by pharmacists or other health care professionals to help ensure compliance and manage any side effects a patient may experience that could cause them to discontinue, or otherwise alter treatment. 

Waste also encompasses patient medications that are inappropriate, ineffective or have an alternative that is less expensive, but just as effective. For example, dispensing a brand-name version of a drug that has a generic counterpart when there is no legitimate medical reason to do so can unnecessarily increase costs to patients as well as payers. Similarly, it is not uncommon for multiple therapeutic alternatives to exist for a single condition or disease state, and the cost of each treatment option can vary widely. AMCP supports efforts to simplify the generic substitution process for pharmacists and prescribers and opposes regulations that would unnecessarily place a burden on either party in order to make a substitution. AMCP also supports allowing MCOs the flexibility to design pharmacy benefits that encourage the use of therapeutic treatment options that are most appropriate in terms of both patient outcomes and costs to the patient and payer.

Abuse
From 1999 to 2020, prescription opioid-related deaths increased from 3,442 to 16,416 annually.³ Studies reveal that the drugs are being prescribed more widely for chronic non-cancer pain and that safety measures are needed to ensure proper prescribing. MCOs must carefully balance the unique and varied needs of patients who are taking these medications against the probability of abuse. Likewise, pharmacists and prescribers have an obligation to assure that prescriptions are dispensed for legitimate medical conditions. Patients should be provided appropriate pain care. At the same time, AMCP supports measures to prevent abuse of prescription drugs as well as prescription drug benefit plans. 

Additionally, AMCP supports programs that gather dispensing information about controlled substances so that the pharmacist has a resource for checking “pharmacy and doctor shopping” patterns.⁴ These behaviors have been identified by the U.S. Drug Enforcement Administration as the most frequent way for individuals to secure access to prescription opioids, the most commonly abused class of prescription drugs.⁵ 

MCOs can play a role in the detection and prevention of prescription drug abuse by providing information on patient utilization to prescribers as well as pharmacists filling prescriptions at the point of sale. It is incumbent upon prescribers to ensure that patients are not receiving prescriptions for the same medication from multiple sources, and for them to act on any information communicated by an MCO regarding patient utilization patterns. Pharmacy edit messages sent to pharmacists at the point of sale that detect early refills for controlled substances in particular should include the entire patient profile when available, regardless of the dispensing pharmacy. Warning messages that alert pharmacists to patterns of drug-seeking behavior should not be ignored or overridden by the pharmacist until the pharmacist has been satisfied that the patient is not using the drug benefit as a means of funding inappropriate drug use. 

In the commercial and Medicaid managed care markets, MCOs have successfully implemented several innovative programs that seek a balance between patient access and abuse prevention and that build on the prescription drug monitoring programs in the states.⁶ One such method is restricting, or locking-in, patients suspected of abuse to receiving medications from one prescriber and one pharmacy or chain of pharmacies. Due to the demonstrated success of these programs, AMCP opposes legislation and regulations that restrict MCOs’ flexibility to design practical abuse prevention tools. Drug management programs with tightly mandated parameters are administratively burdensome, and they limit plan sponsors’ ability to innovate effective drug monitoring programs unique to their specific plan. While CMS has implemented provisions for pharmacy and provider lock-in to manage opioid abuse within the Medicare prescription drug benefit, Part D plans remain prohibited from denying payment to pharmacies suspected of aiding and abetting drug abuse, and they remain barred from communicating information about suspected beneficiaries with other Part D sponsors.   

See also:

AMCP Where We Stand series: https://www.amcp.org/policy-advocacy/policy-advocacy-focus-areas/where-we-stand-position-statements

Revised by the AMCP Board of Directors February 2023

Revised by the AMCP Board of Directors April 2015 

Approved by the AMCP Board of Directors October 2011 

¹ The National Health Care Anti-Fraud Association (NHCCA), 2021. https://www.nhcaa.org/tools-insights/about-health-care-fraud/the-challenge-of-health-care-fraud/  

² See also AMCP’s Where We Stand on Any Willing Provider Legislation. June 2019. https://www.amcp.org/policy-advocacy/policy-advocacy-focus-areas/where-we-stand-position-statements/any-willing-provider-legislation 

³  NIH, National Institute on Drug Abuse, Prescription Drug Abuse. June 2020. Available online: https://nida.nih.gov/publications/research-reports/misuse-prescription-drugs/overview 

⁴ NIH, National Institute on Drug Abuse, Prescription Drug Abuse. June 2020. Available online: https://nida.nih.gov/publications/research-reports/misuse-prescription-drugs/how-can-prescription-drug-misuse-be-prevented. 

⁵ DEA, National Drug Threat Assessment 2020. March 2021. Available online: https://www.dea.gov/sites/default/files/2021-02/DIR-008-21%202020%20National%20Drug%20Threat%20Assessment_WEB.pdf.

⁶ GAO, Prescription Drug Monitoring Programs: Views on Usefulness and Challenges of Programs. October 2020. Available online: https://www.gao.gov/assets/gao-21-22.pdf .