My presentation for the 2010 International Syposium on Safe Medicine.

1. retail pharmacy drug diversion:
issues and countermeasures
October 2010

2. about




 Disclosure: I am NOT an RPh, MD or attorney. Contents of this
presentation are not intended to constitute legal or medical advice.
BS Accounting, MBA Concentration Economic Crime, CFE Licensure
Data analyst specializing in pharmacy forensics and the integration of
business intelligence with traditional security strategies
Spent 7 years working for a large retail pharmacy chain managing
pharmacy loss forensics program and designing a data led countermeasure
model and training pharmacy operators on application and awareness
Currently employed as a consultant providing profit improvement and
fraud detection technology integration business services.
October 2010

3. agenda
overview of diversion impact on retail pharmacy
retail Rx diversion countermeasure strategies
case reviews
October 2010

4. retail pharmacy supply chain
physician
trading
partners
manufacturers
counterfeiters/
diverters
secondary
wholesalers
legitimate
non wholesale
sources
retail pharmacy
patient
parallel imports
October 2010

5. key issues
counterfeits
manufacturer/wholesale level diversion
facility theft
cargo theft
internal theft
retail level diversion
Vendor theft
Robbery/burglary
Internal theft
retail level frauds
internal frauds – script, co-pay, billing, identity theft
patient/physician level frauds
doctor shopping
pad/physician identity theft
script alteration
October 2010

6. counterfeits
Counterfeits
worldwide counterfeit market penetration difficult to gauge
<1% of US market estimated as counterfeit
90% of the US market supply is sourced from the “big three”
primary wholesalers – Cardinal, McKesson and Amerisource
Bergen
6% of the US market is sourced from secondary wholesalers
1
2
3
4
Counterfeit video 1
October 2010

7. counterfeits
primary wholesaler risk
purchases from secondary market
secondary wholesaler risk
drug pedigree and wholesale license assurance
potential counterfeit point of entry
potential parallel import point of entry
Counterfeit Video 1
Counterfeit Video 2
October 2010

8. counterfeits
primary wholesaler risk countermeasures
<2% combined (‘big 3’) purchases from secondary market
Exclusive direct manufacture purchase
For ‘product safety list’ items
Except where manufacturers require use of exclusive distributor
Except in cases of purchases from long standing key alternate source
vendors with strong background check and receiving due diligence
practices 5 6 7
secondary wholesaler risk countermeasures
Prescription Drug Marketing Act (PDMA) updates
Places pedigree requirements on small to mid sized wholesalers.
RFID, ePedigree and mass serialization technologies
867, 844 & 852 manufacturer data analysis & manufacturer investigations
Internet pharmacy note: internet pharmacies are also a potential source of counterfeits in the US
market with their own unique set of risks and countermeasures
October 2010

9. manufacturer/wholesaler level diversion
facility/cargo theft risk
For the first 6 months of 2009 pharmaceutical cargo theft
incidents declined 44% from 25 reported incidents in 2009 to 14
for the same period in 2008
The average reported pharmaceutical cargo theft was valued at
a loss of over $6 million dollars vs. an 08’ average of approx
$700K
Diverted US product destinations:
8
overseas black markets
back into legitimate US market via secondary market entry
Consider this: “Oxycontin has a street value between $40 and
80 per pill and Purdue Pharma typically ships 50 - 100 DRUMS
worth on a single tractor trailer load.” – Chuck Forsaith, New Hampshire State Police
9
Facility Theft Video
October 2010

10. manufacturer/wholesaler level diversion
Countermeasures
Physical security measures
11
Site design
Physical barriers (fences, doors)
Entry control (access authorization, locks)
Intrusion detection (alarms)
Lighting
Surveillance (video, human security personnel)
Redundant systems etc.
Delivery/Shipping controls
Controlled areas
Pick integrity measures
Personnel screening
Technology based cargo tracking solutions
October 2010

11. retail pharmacy level diversion
vendor/distribution theft
 Drivers, couriers, outside vendors facility vendors
robbery/burglary
 External incident
internal theft
 Pharmacy employee diversion
 Unlike counterfeits and large scale wholesale/manufacturer
thefts retail level diversions are generally undertaken for
personal use/abuse or “streel level” small quantity resales.
October 2010

12. drugs of diversion interest
high abuse items
 hydrocodone, soma, xanax, viagra etc.
high resale value items
 high cost/specialty items
 i.e. Serostim, Xenical, Phentermine
 high turn “blockbusters” or maintenance items
 i.e. Lipitor
12
October 2010

13. drug street prices
 hydromorphone (dilaudid®4mg) $60
 hydrocodone (vicodin®, lortab®, lorcet® $6 –$8
 oxycodone (percodan®, percocet®)
$6 -$8
 oxycontin® $ .50 -$1/mg
 roxicodone 30mg $20+
 fentanyl patches from $25 to $100 for 25mcg/hr to 100mcg
hr for brand, generics $15 -$40 $15 -$40
 actiq®
$8
 methadone wafers$6 -$10, $40 in some areas
 APAP w/codeine (tylenol® #3/#4) $3 -$5
 propoxyphene (darvocet®N-100) $2 -$4
 serostim $1000 - $2000 per week supply
13
October 2010

14. robbery/burglary
The National Community Pharmacists
Association noted a rise in incidents in 2008.
The target of pharmacy robberies generally
appears to be primarily drugs of abuse
A comprehensive database of pharmacy
robberies does not exist
12
14
13
 A private voluntary database, Rx Patrol www.rxpatrol.com
collects incident information for use by pharmacy staff and
law enforcement as well as prevention resources
October 2010

15. Internal theft
self medication
 according to the National Institute on Drug abuse 11-15%
of pharmacists will confront alcohol or drug dependency
problems at some time in their career
 in 1982 the American Pharmacists Association established
the Pharmacy Recovery Network to assist those in the
pharmacy profession with substance abuse intervention
and treatment
 approximately two thirds of impaired pharmacists in
recovery treatment programs were discovered by their
local state board of pharmacy, a peer, or another health
care professional.
10
15
October 2010

16. anatomy of a self medication case
16
October 2010

17. retail level frauds
billing fraud
 brand “swapping”
 fictitious billing
co-pay theft
 medicaid co-pay waivers
 register cash thefts
medical identity theft
 insurance “borrowing”
internal prescription fraud
 Fictitious or altered employee scripts
17
October 2010

18. patient/physician level frauds
doctor shopping
 Seeking prescriptions from multiple physicians for the
same complaint or fictitious complaints without their
knowledge of concurrent treatments
pad/physician identity theft
 Creation of fraudulent prescriptions using a legitimate
physicians prescribing credentials
 “How to Get Arrested” – You Tube video
script alteration
18
 Changes to a legitimate script typically to increase
dosage quantity
Doctor Shopping Video
October 2010

19. countermeasures
physical security
system controls & integration
SOP and process controls
vulnerability aligned audit process
pre-employment screening
pharmacy theft specific training programs




19
recognizing signs of abuse
robbery incident management training
recognizing suspicious prescriptions
comprehensive data analysis
October 2010

20. pre-employment screening
drug testing for Rx employees (at minimum)
background checks
participation in ESTEEM
license validation
20
October 2010

21. physical security
security inventory
pharmacy area enclosure/locks
camera coverage
 Bench, Drive-thru, Waiting Bin, C2 safe, POS
 Blind spots notation
 Covert placement availability
cII storage
 Type and key policy
pharmacy specific alarms
21
October 2010

22. physical security
22
October 2010

23. system control and integration
unique user identification for inventory,
dispensing and POS transactions
transaction thresholds
systems integration
23
October 2010

24. SOP and process controls
 receiving/reverse distribution


Who is doing the receiving?
What is the level of check in?
 inventory


Who is conducting counts?
How are they audited?
 ordering/on hand management



Who is responsible for ordering?
Who can make adjustments?
How are adjustments monitored?
 dispensing


What is the partial fill process?
What is the NDC integrity check process?
 POS


24
What is the medicaid co-pay waiver process?
What are the SRA management thresholds?
October 2010

25. aligned audit process
content
 Does it fully capture system and process vulnerabilities?
trigger
 What is the process for initiating an audit?
accountability
 What is the process for managing audit failures?
analysis
 Are results being monitored to improve results and
addressed specific overall areas of weakness?
25
October 2010

26. Training programs
 HIPAA
 CPhT
 regulatory training
 compliance, DEA forms, biennials etc.
 Altered/fake script/doctor shopping awareness training
 www.naddi.org
 dispensing system training
 in house Rx technician training
 Rx specific data analysis training
 Rx specific interview/investigation training
 effective audit count practices & synergistic drug
combinations
26
October 2010

27. script awareness training
Pharmacists
15





Confirm unusual Rx’s with physician
Seize Rx (where allowable by law)
Notify applicable LE prior to fill
Do not write on Rx
Obtain license number and vehicle description (where
possible)
 Copy photo ID
 Write down physical description
 Clothing, speech, tattoos, glasses, hair style
 Do not fill Rx’s improperly written
 Notify prescribing physician/LE
October 2010

28. script awareness training
Physicians – pad/identity theft
15





Store Controlled Substance blanks in secure location.
Inventory and number blanks. (Theft issues)
Do not have DEA #’s preprinted.
Write Rx’s with unique pen (color or tip).
DO NOT WRITE “Rx ONLY” MEDS ON CONTROLLED
SUBSTANCE BLANKS.
 CONTROLLED SUBSTANCE BLANK = ANY DRUG OF CHOICE
FOR ADDICT.
October 2010

29. script awareness training
Physicians – doctor shopping
15
 PMP
 38 states and counting have PMP programs
 Patient contract
 NADDI membership excellent resource for effective contract
examples/experiences
 Chart documentation
October 2010

30. data analytics
 technology integration
 Critical transactions electronic or paper based
 data capture
 Multi source database
 POS
 Rx Dispensing
 Inventory Transactions
 Case management
 HR
 User interface/accessibility
 key KPI monitoring
 trend analyses
 predictive modeling
30
October 2010

31. recognizing signs of abuse
 personality changes or mood swings
 frequent absences from work
 volunteering to check in narcotics or do inventory on them
 long or frequent disappearances from the work station
 increase in medication errors
 changes in physical appearance (eg, weight loss or poor
hygiene)
 showing signs of forgetfulness, irritability, and tardiness
 decrease in work performance
 excessive ordering of certain drugs
 overreaction to criticism
 increased complaints from patients
10
31
October 2010

32. robbery incident mgmt training
staff cooperation
observation
 Physical characteristics
 Tatoos
 Birthmarks
 Height/weight
 Hair/eye color
 clothing
reporting
Rx Patrol
32
October 2010

33. data analytics case review
the following case was presented to NADDI in
2009.
there are three key take-aways
 it is an example of successful loss prevention & regulatory
collaboration
 it is an example of street level distribution of prescription
drugs diverted from retail pharmacies
 it is an example of effective retail pharmacy trend analysis
of data to identify potential diversion issues
33
October 2010

34. data analytics case review
columbus, OH
 3 retail pharmacy locations involved
October 2010

35. data analytics case review
4 employees were involved
 3 females, 1 male
 3 <1 year of employment, 1 <2 years
 All 4 were Pharmacy Technicians
 Stolen drugs were being re-sold
 Stolen drugs were in the hydrocodone family
October 2010

36. case initiation
1st case was initiated by the pharmacy
Loss Prevention department using a data
analysis model)
 This model tracked all methods of obtaining inventory
above “suggested” levels.
 It also tracked overall estimated “in stock” position
based on shipments vs. sales
October 2010

37. example data model
October 2010

38. case investigation
2nd case was initiated from information
from the 1st case and was confirmed with
LP data.
 1st Subject in 2nd case discussed her “surprise” to
another employee that a friend of hers (subject from
1st case) had been termed for drug theft
 LP received a tip that 2nd subject in 2nd case was
selling drugs that 1st and 2nd subject were stealing
 data was consistent with estimated loss
October 2010

39. case investigation
3rd case was initiated from information
from the 2nd case “backed up” by LP data
 PIC in 2nd case store advised LP that 2nd subject in
2nd case had a cousin (subject in 3rd case) in 3rd case
store
 data also reflected potential loss in 3rd store within the
same timeframe
October 2010

40. distribution channel
Courtney
Sunny
Chris
Rx Tech
Rx Tech
Rx Tech
Store #2
Store #3
Store #2
Heather’s friend
Chris’s Cousin
Heather
Rx Tech
Store #1
Billy
Outside seller
Outside seller
Heather’s Cousin
40
Jason
Courtney’s BF
October 2010

41. Questions
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
October 2010

42. footnotes
1. http://www.who.int/mediacentre/factsheets/fs275/en/index.html
2. http://www.who.int/mediacentre/factsheets/fs275/en/index.html
3. http://www.kff.org/rxdrugs/upload/Follow-The-Pill-Understanding-the-U-S-Commercial-Pharmaceutical-Supply-Chain-Report.pdf
5
4. http://www.integrichain.com/documents/whitepaper_secondarymarket.pdf
5. http://logisticstoday.com/operations_strategy/outlog_story_6299/
6. http://www.thestreet.com/story/10244388/amerisourcebergen-dims-gray-market-for-drugs.html
7. http://findarticles.com/p/articles/mi_qn4180/is_20061228/ai_n17078016/?tag=content;col1
8. http://securepharmachain.blogspot.com/2009/07/bi-annual-cargo-theft-report-value-of.html
9. http://blog.fleetowner.com/trucks_at_work/2009/10/21/cargo-theft-and-trucking/
10. http://www.pharmacytimes.com/issue/pharmacy/2006/2006-11/2006-11-6061
11. “Physical Security 101”, Presented at ASIS International Conference, June 30th, 2010, James Greer & David Brandt
12. http://drugtopics.modernmedicine.com/drugtopics/Modern+Medicine+Now/Pharmacy-robberies-force-new-focus-onprevention/ArticleStandard/Article/detail/585677
13. http://www.cdc.gov/niosh/blog/nsb021709_pharm.html
14. http://www.justice.gov/ndic/pubs/651/related.htm
15. http://associationdatabase.com/aws/NADDI/asset_manager/get_file/6898/street_issues_with_doctor_shoppers.pdf
October 2010