[Congressional Record Volume 161, Number 126 (Wednesday, August 5, 2015)]
[Senate]
[Pages S6366-S6367]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        COMPOUNDED PHARMACEUTICALS IN THE DEPARTMENT OF DEFENSE

  Mr. DURBIN. Mr. President, we all know the Department of Defense's 
record with bungled acquisitions that led to $500 hammers and $7,000 
coffee makers. The Pentagon has a tough time keeping up with 
unscrupulous contractors who have figured out how to get rich on the 
taxpayer's dime, and unfortunately I have learned of yet another 
example of this.
  Several dozen pharmacies around the country specialize in compound 
pharmaceuticals. These are drugs that are combinations of two or more 
prescription medications. Many of these pharmacies are on the up-and-
up, helping people, and our servicemembers, recover from illnesses or 
wounds. But a good number of these compounding pharmacies have linked 
up with high-pressure salesmen and disreputable physicians to scam the 
Department of Defense out of as much as $1.2 billion in taxpayer money 
in this year alone.
  The sales pitch went like this. A U.S. servicemember, a military 
retiree, or their spouse might get a phone call at home asking whether 
a TRICARE beneficiary is suffering from pain. The telemarketer might 
ask a few simple questions, get a little bit of personal information, 
and suddenly, weeks later, prescription creams would start showing up 
in the mail. In other cases, a food truck may pull up in front of a 
military base. If a servicemember wanted a hot dog, he or she could 
listen to a pitch about compounded pharmaceuticals and sign a piece of 
paper. In many cases, that servicemember had no idea they were signing 
up for an expensive prescription that might have no medical value. 
These sneaky marketers would pass personal information on to doctors, 
often hundreds or thousands of miles away, who would then write 
prescription after prescription, never having seen the patient.
  These ointments and creams were then custom made by a compounding 
pharmacy, and the bill was sent to the Department of Defense. According 
to health officials in the Department of Defense, one of these pain 
creams had a value of about $150 each. But the Defense Health Program 
was billed more than $9,000 each. This scam has added up to big 
dollars. In 2004, the Department of Defense spent just $5 million on 
compound pharmaceuticals. By 2014, as these efforts began to ramp up, 
the total rose to $514 million. In April of 2015, just 1 month alone, 
the bill to the Pentagon was nearly $500 million. DOD says the total 
cost of compound pharmaceuticals for this fiscal year could be as much 
as $1.2 billion.
  What is tragic about this waste of money is that it could have been 
prevented. In 2013, the Pentagon considered policy changes it could 
make to the approval process for compound pharmaceuticals. DOD 
officials came under heavy pressure, both from Members of Congress and 
from some of these companies, not to move forward.

[[Page S6367]]

This pressure continued right up through March of this year.
  Finally, in May, the Department of Defense was able to institute a 
screening procedure to get at this problem. And the costs charged to 
TRICARE have dropped dramatically--down to $10 million per month.
  Let me repeat that. The Department paid $500 million for compound 
drugs in April. The Department changed its approval process, and it now 
pays $10 million a month for compound drugs. I met with Assistant 
Secretary for Health Affairs Dr. Jonathan Woodson about this. He is 
confident that this safeguard--and others--will protect the taxpayer in 
the future. Regrettably, in this case, the horse ran out of the barn 
and cost the American taxpayer $1.2 billion before anyone could stop 
these scams. But no one can escape the long arm of the law forever. The 
Department of Justice has opened more than 100 criminal investigations, 
and $60 million has been recovered so far. The DOD has suspended 26 
providers for wrongdoing, and identified 71 individuals or entities who 
are believed to be associated with these scheme.
  As vice chairman of the Defense Appropriations Subcommittee, working 
with Chairman Cochran, we have the responsibility to look after how the 
Pentagon is spending its funds. I bring this episode to light because 
there are many lessons to be learned about the need to demand a 
bureaucracy agile enough to catch profiteers and about the ways that 
congressional oversight can hamper enforcement rather than encourage 
it. I hope my colleagues takes those lesson to heart.
  I will also say that Thad Cochran and I will continue to root out 
these incidents wherever they occur and work in partnership with the 
department to provide for our servicemembers in ways faithful to the 
taxpayer.

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