Audit finds abuse of drug program
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OCTOBER 11, 2000

A federal audit completed in August found that the Mashantucket Pequot Tribal Nation distributed $5.8 million in discount prescription drugs to ineligible non-Indian employees of its Foxwoods Resort Casino in Connecticut.

The audit, conducted by the Department of Health and Human Service's Office of Inspector General, found that 82 percent of the tribe's $7.1 million in drug purchases for the years 1998 and 1999 went to ineligible employees. An additional 11 percent went to other tribes, some of whom dispensed drugs to ineligible employees.

Only about 7 percent went to tribal members and their families, the report said.

But the tribe is disputing the audit's findings. In a prepared statement, the tribe says its employees are members of the community and should receive discounted drugs.

"The tribal government considers tribal employees and their families to be members of the tribal community for purposes of health care," said the statement. "Employees have been included as participants in the tribe's Indian Health Service (IHS) contracts - as authorized by federal law - so that they might enjoy the benefits of obtaining pharmaceuticals at the lowest possible price."

The drug program, known as the Pequot Pharmaceutical Network (PRxN), was hailed as a profitable side business for the tribe. The network was established a year before their successful casino and even drew the attention of the state, who at one time considered forming a partnership with the tribe.

But that changed when the Department of Veterans Affairs (VA) questioned whether the tribe's program was dispensing drugs to non-Indians. They were prompted in part by a Washington, DC, law firm who questioned the state's proposed partnership on behalf of drug companies.

Under the Indian Self-Determination and Education Assistance Act of 1975, the tribe is eligible to purchase deeply discounted drugs through the VA. Normally, the drugs are available only to tribal members and other Indians.

Non-Indians are eligible only if there are no "reasonable alternative services," according to federal guidelines.

In July 1999, George T. Patterson, executive director of the VA Acquisition Center, asked the tribe to clarify its program. In response, Chairman Kenneth Reels assured Patterson the network was operating under the law.

The audit appears to have found otherwise, however. In addition to finding the network dispensed drugs to ineligible participants, the audit says the tribe's assertion that it can provide drugs to all of its employees is not valid.

"Because [the tribe] is located within an area serviced by reasonable alternatives. . .we believe the tribe would not be able to satisfy the eligibility requirements for non-Indian employees," states the report. "Therefore, to preserve the integrity of these vital programs, it is imperative that IHS ensure that [the tribe] and other tribes do not dispense drugs. . .to ineligible non-Indian employees."

In 1999, a group of 11 tribes in Michigan and Wisconsin had asked the IHS if they could dispense drugs to non-Indian employees. As of the audit's release in August, IHS had not yet responded to their query.

The audit says the IHS has agreed to review all other tribal self-determination contracts to remove any indication that tribes can provide drugs to non-Indian employees without first making a determination on other alternatives. As of Tuesday, the IHS was unable to comment on this aspect of the report.

Read the Report:
Audit of the Mashantucket Pequot Tribal Nation's Use of Federal Discount Drug Programs (Dept. of Health and Human Services. A-01-99-01502. August 2000)

Relevant Links:
The Indian Health Service -
The Office of Pharmacy Affairs, Health Resources and Services Administration -
The Department of Veterans Affairs -