Outrage: The Great Pill-Switching Scheme

Tablets or capsules? The distinction between the two can be worth a bundle in profit for some pharmacies that switch from one form to the other when filling a prescription. And it’s the taxpayers who foot the bill for the difference in cost.

The U.S. government and various states set the price on what Medicaid—the joint federal and state health program for low-income people—pays pharmacies for certain generic drugs. For example, ranitidine, the generic version of Zantac, is available in both tablets and capsules. Most prescriptions for the drug specify tablets. But if the same drug is prescribed in capsules, it costs much more. For example, Florida Medicaid pays about 34 cents a tablet, compared to $1.25 per capsule for ranitidine.

It appears the management at Walgreens, CVS and Omnicare realized the money to be made by swapping pills. As early as 2001, the companies allegedly filled nearly all prescriptions for ranitidine with the more expensive capsules, no matter what the doctor prescribed. They did the same thing with other popular drugs.

That is until Bernard Lisitza, a pharmacist at Omnicare, noticed what was going on. He questioned the practice and ultimately was fired. When he found temporary work at smaller pharmacies, he noticed that prescriptions transferred from Walgreens and CVS used the practices he had red-flagged at Omnicare.

“The drug switching programs he observed were schemes to increase pharmacy profits at taxpayers’ expense,” says Lisitza’s attorney, Michael Behn. “As a professional who has filled prescriptions for decades, Bernie saw no medical benefit for the drug switching. All patients should be sure that they get what the doctor ordered.”

Lisitza filed whistleblower suits, which the federal government joined, that recently resulted in settlements with Walgreens, CVS and Omnicare totaling more than $120 million. “We believe the government recouped double what the pharmacies allegedly swindled,” Behn says.

Despite the settlement agreements, all three pharmacy chains insist that they did nothing wrong.

Michelle Diament, who frequently writes for the Bulletin’s In the News section, lives in Memphis, Tenn.