Tuesday, October 29, 2013

The downside of being a nation of law

On the whole, businesses prefer to operate under a system of law. While this can have some disadvantages for a business, the upside is that everyone works under a predictable environment, and an even playing field.

But some instances make you wonder if the laws should be changed.

Take this example, where the Federal Bureau of Investigation sentenced one person and imposed other penalties on two other people for something described as "prescription fraud."

A Florida man has been sentenced to prison for his role in importing cancer drugs manufactured overseas and then illegally selling them to doctors in the U.S.—and two doctors who bought the deeply discounted medicines have been held accountable as well.

Martin Paul Bean pled guilty to selling unapproved and misbranded drugs, conspiracy to commit wire fraud, mail fraud, and other federal violations and was sentenced recently to two years in prison....

Two doctors have admitted knowingly buying the foreign drugs. One of them, a Pennsylvania oncologist whose practice purchased nearly $1 million worth of the misbranded drugs, was recently fined $100,000 and ordered to place ads in two medical journals warning of the dangers of unapproved drugs....

In its article, the FBI explained the economic motivations for breaking the law.

Cancer medicine is expensive, [Special Agent Brad] Godshall explained. “A single course of chemotherapy can cost hundreds of thousands of dollars.” At the same time, many cancer patients being treated by oncologists are eligible for Medicare, and reimbursements to doctors from Medicare have been cut, providing further incentive for physicians to buy non-approved discounted drugs. “All those factors added to Bean being able to successfully carry on his fraud for so long,” Godshall said.

But then, buried in the middle of the FBI's article, you can find this little tidbit.

The drugs Bean fraudulently sold turned out to be the foreign equivalents of the same drugs manufactured for the U.S. market.

While Godshall notes that the drugs easily could have been counterfeit, the fact remains that in THIS particular case, patients were given lower-cost drugs that were equivalent to the higher-cost legal drugs. So the patients were not harmed by the "fraudulent" drugs that they received, and in fact benefited from them because they were obtained at lower cost.

So who was harmed by this fradulent activity, if the patients were not? Actually, there were people who were harmed: the Food and Drug Administration (whose rules were flouted), the pharmaceutical companies (who received less net revenue than they would have otherwise), the stockholders of those pharmaceutical companies (whose return on investment was similarly depressed), and the doctors who obeyed the law (who lost patients to the doctors who obtained the discounted drugs).

But a question could be asked - does this particular law hurt the patients that it was intended to protect?
blog comments powered by Disqus