The Common Good
January-February 2003

Shaking Up the Drug Industry

by David Batstone | January-February 2003

Zachary Bentley says he's no Ralph Nader.

Zachary Bentley says he's no Ralph Nader. The business manager and corporate officer of a drug infusion service, Ven-A-Care, based in Key West, Florida, is shaking up the pharmaceutical industry all the same.

It's true; Bentley never planned to lead a crusade for corporate reform. In 1990 he simply was sitting at his desk wading through paperwork when he noticed something amiss with a Medicare payment. He received a $56 reimbursement for a pharmaceutical that had cost his company only $10. In theory, 80 percent of the drug was to be paid for by Medicare and 20 percent by the beneficiary. Bentley did some quick math and figured that the beneficiary's co-payment alone surpassed the actual cost of the drug. Convinced that the Florida Medicare carrier had erred, he tore up the check and asked the agency to reprocess the reimbursement.

Days later, the carrier got back to him and informed him that there was no mistake. Puzzled, Bentley searched for answers. What he found shocked him. More than a few doctors and clinics are billing Medicare based on "wholesale" prices that pharmaceutical companies give the government program. The pharmaceutical companies then sell the drugs to the health care providers at a much lower cost. The providers reap exorbitant profits and, because the windfall operates like a government-funded kickback, pharmaceutical companies also come out big winners.

Bentley reported his discovery to federal and state agencies, yet was troubled by their muted response. He knew intimately the impact of skyrocketing drug costs on people suffering from debilitating illness. At the time, Ven-A-Care primarily delivered intravenous drug care to clients in their homes as an alternative to visiting a hospital. Most of its business was AIDS-related, and Ven-A-Care gained local acclaim for extending treatment to patients even after their health insurance ran out.

IN AN IRONIC twist of fate, the kickback program would threaten the survival of Ven-A-Care a year later. It all started when National Medical Care, a leading kidney-dialysis chain then owned by W.R. Grace & Co., invited Ven-A-Care to join in a new business venture in 1991. The proposal included doctors who were in a position to prescribe expensive infusion drugs to AIDS patients. "They promised us that we would become wealthy if we shared drug revenues with the physicians because they would order large amounts of drugs that cost far less than the prices reported to Medicare," recalls Bentley. The scheme already had paid off handsomely for National Medical Care in the kidney-dialysis business, he alleges, and they saw an opportunity to expand the model to AIDS treatment.

When Bentley and his partners declined to join the venture, National Medical Care went to Plan B. The corporation enticed several Key West physicians who up to that point had referred their clients almost exclusively to Ven-A-Care to order drugs directly through its system. In several cases, National Medical Care employees went into the doctors' offices and took over their billing practice. Ven-A-Care's business took a serious hit; the owners cut salaries and took out loans to keep the company afloat.

Convinced that it could not operate with integrity in its drug infusion practice, Ven-A-Care turned into a full-time whistleblower. "We were fed up, and decided to shine the light of day on these shady practices," says Bentley. His company has since been party to several lawsuits against major drug companies.

Rising healthcare costs in the United States have stabilized in the last few years with one exception, the price of prescription drugs. But Bentley clarifies that he is not fighting the escalating cost of drugs itself. He has a much more modest goal of demanding that drug companies practice transparency in pricing. Once fair representation is achieved, he argues, government and health insurance groups can make informed decisions about what they can afford to pay for.

Bentley points to the state of Missouri, where funding for school transportation and special education had to be cut, a decision state officials directly attribute to rising Medicaid drug costs. "The health insurance system is going to be like a dog chasing its tail until there's some transparency in pricing," Bentley says. "When you have seniors out there eating dog food because they can't afford the price of their drugs, that's a sad state of affairs."

David Batstone, executive editor of Sojourners, is author of the forthcoming book Saving the Corporate Soul & (Who Knows?) Maybe Your Own (Jossey-Bass).

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