A CBS News investigation has found American troops and veterans are being prescribed dubious drugs that cost taxpayers hundreds of millions dollars. The growing practice of selling the drugs has caused a big, expensive problem for Major General Richard Thomas, who oversees TRICARE, the military health benefit system.
In the last year, TRICARE spending on compounded prescriptions surged from $42 million a month to more than $300 million.
"We're on track this year to spend over $2 billion unless we get our hands around this," said Thomas. "It's just been astronomical, an explosion of the charges in a relatively short period of time."
Virtually all the spending is for products the DOD believes are of dubious clinical benefit, like pain and scar creams. The cost to taxpayers can be $15,000 for a month supply.
Major Thomas told us he hasn't been able to find anything in the creams that justify their expense. The creams are marketed directly to military personnel at "free lunch" events hosted outside the gates of Fort Sam Houston in San Antonio.
"There's no free lunch here," said Thomas. "These individuals, their patriotism is directly tied to their paycheck. They're not helping these soldiers."
Dozens of websites advertise the creams as custom-made cure-alls for service members' pain and wounds with little or no cost. One company -- www.Healing4Heroes.us -- makes it simple: just fill out an online form and submit your request.
A CBS News producer posing as a potential sales rep met the owner of www.Healing4Heroes.us, Deanna Dutting, at a restaurant in Florida. During the meeting Dutting shared the pitch she makes to service members and veterans.
"Here's these amazing creams, they're completely free. All you got to do is type in your TRICARE number online and submit it," explained Dutting.
Dutting said a doctor then calls the patient and writes a prescription. A one month supply of scar and pain creams, plus a dietary supplement costs taxpayers around $25,000.
"If you want to feel bad or do your own research, you can do just like the rest of us did, but we got over it real quick once we started making our money, you know what I mean?" said Dutting.
Dutting told us she only collects three percent, most of the money goes to Patient Care America, a compounding pharmacy in Florida that makes the creams and supplements. The pharmacy is making millions, according to Deanna.
Patient Care America CEO Patrick Smith declined our request for an interview but provided CBS News with a video statement in which he told us pain creams offer military personnel an alternative to addicting painkillers.
"Compounded pain creams allow these patients to seek relief from their suffering without experiencing the negative and often addictive side effects of these medications," said Smith in the video.
But General Thomas refuted Smith's assertion, saying he doesn't have any evidence to support that claim. Thomas says it's the military's responsibility to ultimately make sure it's not being taken advantage of.
"Compounding itself is a good tool for us to take care of our patients, we don't want to stop it but what we do want to stop is the waste, fraud and abuse that we're seeing," said Thomas.
This week, TRICARE is implementing a new claims screening process to reduce spending on compounded drugs, which now costs the Pentagon roughly $18 million each day.
"The American people have no problem, at all, taking care of these soldiers, these troops, especially the wounded warriors, but they're not paying their taxes for this," said Thomas.
In its statement to CBS News, Patient Care America said they have no financial relationship with www.Healing4Heroes.us, nor have they ever endorsed its actions. And following our meeting, Deanna Dutting told us www.Healing4Heroes.us no longer markets Patient Care America products, but she still has an active website.
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