Drug Diversion and Abuse: Rx Diversion Costing Health Insurers

Author: Cmdr John Burke


John Burke, commander of the Warren County, Ohio, drug task force and retired commander of the Cincinnati Police Pharmaceutical Diversion Squad, is a 40-year veteran of law enforcement. Cmdr Burke also is the current president of the National Association of Drug Diversion Investigators. For information, he can be reached by e-mail at , via the Web site www.rxdiversion.com, or by phone at 513-336-0070.


My friend Bill Mahon recently authored an excellent report, entitled "Prescription for Peril," in the December 2007 Coalition Against Insurance Fraud Insight series. This detailed report explains the problem of drug diversion that has cost health care insurers and ultimately the general public billions of dollars.

The report cites a 2005 edition of the Journal of Managed Care Pharmacy that indicated that opioid abusers had health care costs that were roughly 8 times higher than those of nonabusers. Per-patient costs of opioid abusers were $15,884 per year, compared with only $1830 for nonabusers. These statistics were compiled from data of insured members of 16 large self-insured employers in a variety of industries.

Although prescription drugs are the goal of abusers, they represent only a relatively small percentage of the cost associated with drug diverters. Enormous costs associated with physician visits, procedures, x-rays, and hospital and emergency department visits far outweigh the mere costs of the pharmaceuticals obtained.

Notably, some of these people are uninsured, but many continue to soak up the public?s resources by using Medicaid, Workers? Compensation, and Veterans? Hospitals. In fact, private insurers are the victims in about one third of abuse cases.

One estimate is that drug diversion costs all insurers about $72.5 billion each year. Of course, as health care costs increase, this figure also is likely to increase. Remember that this study involves only opioids, not other abused pharmaceuticals, such as stimulants, benzodiazepines, and steroids.

My experience over the years in drug diversion work is that, with a few notable exceptions, private health insurers have been slow to respond to this decade-long problem of prescription drug abuse. This phenomenon has always been perplexing to me because it obviously affects the private health insurers? bottom line.

From our readers...

The January 2008 edition of this column, "Drug Diversion and Abuse: ?Do Not Fill Until...,'" generated some interest in the question of whether the Drug Enforcement Administration (DEA) ruling (in the Federal Register, stating that prescribers could write prescriptions for CII controlled substances for up to a 90-day supply) would also extend to stimulant medications, as used for the treatment of attention-deficit/hyperactivity disorder. After verifying with the DEA and his state pharmacy board (Ohio), the author reports that both organizations agree that the rule encompasses all CII drugs, including stimulants like methylphenidate. There is no reason that prescribers cannot write under the same rules as discussed for analgesics. Thank you very much for your feedback!

According to Mahon?s report, the cost of drug diversion to private health insurers is close to $25 billion per year! This is no small amount of money in any insurer?s eyes and a definite influence on the health care insurance premiums we all pay.

State Medicaid and Workers? Compensation enforcement efforts have been more diligent than those of their private-insurance peers, in my experience. Although oftentimes operating with less than adequate staffing and limited funding, most seem to do the best they can in this seemingly neverending battle to identify abusers and try to bring them to justice. Good health care insurance-fraud investigators will save their companies or public agencies many times their individual salaries, to say nothing of the prevention effects generated by a few wellplaced press releases on arrests.

Mahon offers one method of identifying and ultimately reducing this crime problem: prescription-monitoring programs. I have written and testified multiple times on the fact that effective prescription-monitoring programs more than pay for themselves in the reduction of health care fraud for the states. It would be money and time well spent for private insurers to lobby for these programs and to step up to provide funding to ensure that these programs work. The return on investment for these for-profit companies would be huge.

The programs need to be law enforcement friendly—meaning easy, legal access to the information without a subpoena or a search warrant. This may require some legislative changes, but a model exists in my home state of Ohio that covers all controlled-substance prescriptions, with easy and quick access by law enforcement.

I applaud the efforts of Mahon and this revealing report. He urges a consolidated effort by all of the parties concerned to make a significant reduction in health care fraud caused by drug diversion.