Drug Kickbacks: Caught on camera – The Fifth Estate


[♪♪] -[ Mark ] Sometimes,
in an effort to break stubborn stories,
you have to get creative. So, in order to take you inside
the murky world of illegal pharmacy kickbacks,
we had to do something we’ve
never done before. Hello.
How are you? -[ Mark ] We created
a fake company. We fired off some
fancy business cards. We developed an extensive
generic drug product listing to offer pharmacists. And then our awesome CBC
graphics team created our company website, and that’s how
Dari Pharmaceuticals was born. Google it yourself,
it’s pretty convincing. And though the company is fake,
the problem of illegal kickbacks inflating your drug
prices is very real. -Darren.
How are you? Good thank-you. From Dari Pharmaceuticals. -[ Mark ] It all began last
spring, when we were tipped off to this kickback
scheme by an inside source. A Fifth Estate investigation
revealed retail giant Costco was demanding kickbacks from
a generic drug manufacturer. Industry insiders call these
payments rebates or in Costco’s case,
support. -[ Mark ] The shakedown
caught on secretly recorded phone calls.
It was big news at the time. Costco’s share
price even took a dip. But we wanted to know, was it
just Costco demanding kickbacks? Then we got an email. This from someone anonymous
but apparently in the know. Now if he’s right, it means
every pharmacy in Ontario could be breaking a provincial
law that bans rebates. It’s everybody. Everyone that sells
pharmaceuticals is doing this. -[ Mark ] We tracked
down the mystery man behind the email. We’ve agreed to hide his
identity because he still works in sales for another company.
We’re calling him Darren. Darren tell me, when you
were working in the game, how did the rebate system
work where the company you were working with? For the safety of
the pharmacy owner, because it’s an illegal
act to give rebates back, we would pay them back from
one of the other companies for a marketing fee. So really all we have to do is
put a display in their store. We didn’t care if you sold
anything off that display, it was really just a display in
the store so if anything ever came back, we say, “No,
that’s our display in the store. “We’re paying them a monthly
marketing fee for that space.” But the whole scheme was
set up to disguise rebates, to hide these rebates,
because they were illegal. Oh, absolutely.
Absolutely. -[ Mark ] Got it? Okay, let’s hit pause for a
second and explain how these rebates or kickbacks work. A drug rep shows up at a
pharmacy and asks the pharmacist to stock their
pills in the store. Often pharmacists will ask
for a rebate or a kickback. They won’t sell the
product unless the drug rep gives them a cut. That’s illegal in Ontario,
restricted in Quebec, but allowed in some form
in the rest of Canada. So how do we prove kickbacks
are being paid in Ontario? Darren says that’s easy. I’m interested to know why you
wanted to help us out on this, with this story. I think it’s what I’ve said
from all along is that it’s just not fair. It’s driving the prices of
medication up for the customer, for the end-user. I’ll offer more points than
the next guy that just came in before me. And that’s driving the
cost of the pills up. Okay, so Darren, you
know what you need here. Here’s our product
listing, business cards, business phone. You got everything you
need to be a sales rep. Excellent. -[ Mark ] We sent
Darren out with one of our producers and a couple
of hidden cameras. Surely it takes more than a firm
handshake and a fake business card before a pharmacist will openly ask about an
illegal kickback? -[ Mark ] Apparently not. -[ Mark ] Our instructions
to Darren were clear. Let the pharmacist
raise the issue of these illegal payments first. Which they did.
Time and time again. That’s not a problem. -[ Mark ] So how
much of a kickback? Well this pharmacist
starts big, and goes bigger. -[ Mark ] 70%, and
he’s not the only pharmacist to
mention that number. -[ Mark ] All right,
let’s hit pause again. Rebates as high as 70% means
if you pay 10 bucks for some generic pills, the pharmacy
would get a seven dollar kickback from the drug company. That means drug companies could
sell these meds for way less. A huge savings for consumers. Instead that money
goes to the pharmacy. Watch as this next
owner gets specific. He wants to know when and
how he’s going to get paid. -[ Mark ] We learned
we weren’t the only ones onto this. Seems a retired cop was calling
for a police investigation into rebates way back in 2009. So we decided to pay
Paul Bailey a visit. -[ Mark ] And show
him some of our undercover footage. Greed.
That’s all I see. It’s pretty sad. All they wanted was money.
They had their hand out. And there is a law in place
that’s supposed to say that rebates are no longer legal
in the province of Ontario. Not directly or indirectly. That’s the wording
in the legislation. Is that what your concern is?
What you’re seeing here? Well, I would, if I
was still a detective, and somebody presented
that to me I would investigate it as a fraud. But you know, the other thing is
you’re taking on city hall when you go after these guys. -[ Mark ] But we’re
not done yet. It’s day three of our
hidden camera investigation. Once again, we’re asked
how much our rebate will be. -[ Mark ] But then
we’re offered a peek inside how this
owner currently gets paid. The rebate flowing through a
middle company called a banner. -[ Mark ] Our next stop
reveals even more insight. This pharmacist has what he
calls a marketing agreement to justify his current
50% kickback. [ ♪♪ ] -[ Mark ] Over three days, we
visited 17 pharmacies. We spoke to nine owners who
wanted to buy our product. All but one openly asked us
about rebates and none of them seemed the least bit
worried about asking. And neither did Darren
when he was in the game. At any point were you concerned
that there was somebody looking over your shoulder,
that that you were, you know, you were
being monitored, or this law was
actually going to be enforced? No. No, I just went out, did
my job as a sales rep. Did what I was told to do. Like everyone else is doing. Exactly. Every month I walked around
with a binder full of cheques. Like, at some point
you get so big that that’s really all you’re doing. You really become… You’re handing out cheques. That’s the price
of doing business. Exactly. What would happen if you
didn’t pay the rebates? You would not get your
subsequent order for the next month. Okay, we’re gonna get started. -[ Mark ] Well it seems our
investigation lit a fire under retired cop Paul Bailey. We’re paying one of the highest
costs for generic drugs in the developed world, here in
Ontario and in Canada and part of it is because
there was rebates. -[ Mark ] He’s the head of the
Police Pensioners Association of Ontario. Paul, what I’ve just heard
you talk about today I find extremely disturbing. This is an outrage when there’s
unnecessary expenses being put on which is creating
an extra cost to those of us who need these drugs. -[ Mark ] Now the association
wants the Ontario government to hold an inquiry into
these kickbacks. So far, we’ve been focussing on
independent pharmacies, but what about those
big national chains? Well, you’re about to hear
another industry insider spill their secrets. So everybody is
getting in on this? Yes. No manufacturer could be
successful in Ontario if they don’t pay a rebate. -[ Mark ] And then we go
looking for answers. Good morning.
My name’s Mark Kelley. I’m with the CBC program,
The Fifth Estate. [ ♪♪ ] [ Chanting ]
Stop the cuts, stop the cuts! -[ Mark ] It’s not often you see
protesters wearing lab coats but this was the case, outside
the legislature in Ontario back in 2010. [ Chanting “Stop the cuts” ] -[ Mark ] These pharmacists
were fighting to stop sweeping reforms
including a rebate ban. The white coats said that would
cost them $750 million a year. [ Chanting “Stop the cuts” ] -[ Mark ] The predictions
were dire. Stores would close,
services slashed. Lives put at risk. It could be you coming in
with an ailing parent who’s very confused with her
medication and I’m spending time with you to make sure that
your parent is safe and taking his medication
appropriately. Those are the services that
we’re talking about that is at risk. -[ Mark ] The province was
in their crosshairs, but it wasn’t just Ontario
pushing for reforms, the federal government launched
its own investigation led by this guy. So at that point in time the
generic manufacturers were competing against each other. The beneficiary
was the pharmacies. They were getting the money. But that– there’s no benefit
for the consumer then in terms of actually reducing
the cost which it could. No, no. -[ Mark ] Mark Ronayne
worked with the Competition
Bureau of Canada. 10 years ago, he co-authored
a study that revealed, “the rebates paid to the
pharmacies have accounted “for a large portion of
payers’ generic drug costs, “40% or more of
generic drug expenditures.” The reports made headlines. Reforms, including
eliminating rebates, would save hundreds
of millions of dollars. With your studies that you’re
doing with Competition Bureau, you had recommendations. What happened? Not much. Why? I’m not going to answer that
question…because if I told the truth… Why not? Stop. What can you answer? -[ Mark ] Ronayne gathered his
thoughts and put it this way. It’s going to take some work;
it’s going to take a lot of will. Political side, dealing with
some quite powerful interests. -[ Mark ] We showed Ronayne our
undercover footage and the name of one powerful
interest popped up. -[ Mark ] A 50% rebate from a
company called McKesson? Then we hear it again. -[ Mark ] McKesson is one of the
biggest fish in the health care pond. 78,000 employees in
almost 2 dozen countries, ranked sixth on the Fortune 500
list of companies. It now owns more than
400 pharmacies in Canada. Edmonton’s Katz
group is selling Rexall drug stores for $3 billion. San Francisco based
health care company, McKesson, is buying all of
Rexall’s 470 pharmacies. -[ Mark ] But more than that,
McKesson is also the biggest drug
supplier in Canada. Stocking the shelves of more
than 8000 pharmacies in Canada. And our pharmacists,
caught on camera, seem to suggest McKesson is
paying them illegal rebates to buy their product. So we asked for an interview
with Paula Keays, the president of McKesson Canada, and we
received a brief response. “I don’t believe an in-person
interview will be possible.” -[ Mark ] Well, if McKesson
won’t do an interview with us, we went looking for an
industry insider who would. Tell me about McKesson. McKesson is probably the biggest
company no one would recognize. -[ Mark ] This executive worked
for some of the biggest names in drugs,
including McKesson. We agreed to conceal his
identity to protect his current job. He agreed to talk
to us about rebates. Every time a government agency
would start looking at McKesson, uh, McKesson would come with
their lawyers and present to McKesson employees
what not to say. And was one of
those words rebate? Absolutely. The Fifth Estate has
obtained this internal McKesson presentation from 2017
that deals with rebates. The document explicitly
instructs its employees to “remove” the word “rebates”
from their “vocabularies”. While other terms, such as
“professional allowances” should be “used with caution”. Now, it does say, rebates are
illegal in Ontario but goes on to say, “all four main
McKesson banners make payments to its pharmacies,
but for different things, under different names and
under different circumstances.” Our question? If McKesson isn’t
profiting from rebates, why even mention
them in this document? Why do you have to
have so many terms? You have to have so
many terms because you want to complicate it. Because you don’t want
people to follow the money. You don’t want, in
a zero rebate land, in Ontario, to show that you’re
paying a certain percentage for a certain dollar value. This internal McKesson document
goes on to say the company needs to “minimize the number of
payment models” it uses for “reputational, regulatory
and legal reasons”. So, seven years after rebates
became illegal in Ontario, it appears McKesson admits
it still needs to change the way it moves money so it’s
following the law. -[ Mark ] Okay, so
let’s pause again. These rebates, or
disguised rebates, are only illegal in Ontario. Quebec has put a cap on them
but everywhere else in Canada, they’re considered
perfectly legal. Great for business, not
so good for consumers. This, in many instances, ends
up as pure corporate profit? Corporate profit at the
manufacturer level and corporate profit at the
pharmacy and chain level. So, great deal
for the pharmacies, great deal for the manufacturer. Not such a great
deal for the consumer. Correct. -[ Mark ] So is McKesson
profiting from rebates? We sent a second email
asking for an interview. In a response, the company’s
spokesperson told us, “McKesson Canada does not pay
rebates where prohibited and our business activities are
in compliance with the law and regulatory requirements of
the markets where we operate.” But once again, no
interview with the president. So our quest for answers
headed in a new direction. When Costco was caught
red-handed demanding kickbacks by the Ontario College
of Pharmacists, the college heard allegations
other companies were doing the same thing. So our lawyers filed a motion
to make the documents from the college’s investigation
public, which Costco opposed. But guess what? We won! So, which chains were
alleged to have had a similar rebate scheme? Well, Guardian, one of
McKesson’s independent pharmacy banners and Rexall, owned
and operated by McKesson. We wanted to see
if this was true, but this time, we didn’t
bother emailing McKesson, we just showed up at the
Montréal head office for an unscheduled interview with
company president Paula Keays. -Mrs Keays, good morning.
-Hi, good morning. My name is Mark Kelly. I’m with the CBC
program The Fifth Estate. -How are you?
-Good, but I’m late for the gym. We are doing a program about
illegal rebates that are being paid in pharmacies, in–
-No comment. We’re trying to contact
your company, ma’am, because the name McKesson
keeps coming up time and time again. Pharmacists who say they are
doing business with McKesson and getting illegal rebates. I don’t think you can walk away
from these questions, ma’am. They are in the
serious public interest. Speak to our
to communications. We’ve tried to talk to
your communications. No Comment. -[ Mark ] Okay, we
didn’t get answers. But we did get their attention. This is the head
of communications. -[ Mark ] Minutes later,
McKesson’s communications rep calls us. -[ Mark ] And within days, we
get a response from company president Paula Keays. “McKesson Canada does not
pay rebates in Ontario, “and any assertion to the
contrary is blatantly false. “McKesson Canada compensates
the independent pharmacy “owner for things like banner
advertising in the store, “promotion of new
over-the-counter products “and health care services,
and providing health care “information to patients.” -[ Mark ] But our pharma
insider says terms like these could be used to mask how
rebates are paid. He says it would take a
forensic investigation to follow the money. When I talk to
people in the industry, they’ll say, “Well, we
don’t take a rebate, it’s a professional allowance.” If it’s not a
professional allowance, it’s something else. But no matter what you
call it, money is going from the manufacturer to the
pharmacy, at the end of the day, is a rebate. Call it what you want,
it’s a rebate. Disguise it how you want,
it’s a rebate. -[ Mark ] So we wondered, would
Ontario’s new health minister Christine Elliott, lead an
investigation into allegations of rebates? Then we were reviewing the
tape of that lab coat protest in 2010, and we noticed one
politician shoulder to shoulder with
the pharmacists. [ Chanting ] Thank you! -[ Mark ] That was then
conservative health critic, Christine Elliott. Stop the cuts! -[ Mark ] Back then, she made no
bones about which side of the rebate debate she was on. The McGuinty Liberals
are vilifying pharmacists. -[ Mark ] But that was then. With all the questions
raised in our investigation, we wondered, what does
the Minister think now? Then retired cop Paul Bailey
called us to let us know he got a meeting with her,
to discuss rebates. We tagged along and minutes
after Bailey’s meeting was over, we asked to meet with her too. -Hi, how are you?
-Good. Mark Kelley from CBC television. Ah, we’re not doing
any interviews. The Minister has left, I guess
through a back entrance. They did not appreciate the fact
that the camera was here for an interview for Paul’s
meeting with the Minister that they are unaware of that. They will watch our program when
it airs and we can organize some sort of meeting at
Queens Park afterwards. Okay. -[ Mark ] So who is going to
crack down on the pharmacists asking for illegal kickbacks and
the companies who pay them? Bailey says while the Ford
government didn’t write the law banning rebates, it’s
their job to enforce it. So, we’re holding
their foot to the flame. But when you look at
the landscape here, especially as a
former police officer, I mean who’s the bad guy here? Is it the government? Is it the generic
drug companies? Is it the pharmacies for
asking and taking these rebates? Well, I think
they’re all culpable. -[ Mark ] And he says until
someone fights for the consumer, nothing will change. Greed is a powerful weapon. And who’s paying
the price for this? Taxpayers. Yup. So, time will tell. Maybe if this makes it onto,
makes enough noise out there, maybe the Prime Minister or the
Premier will call for a public inquiry because that’s
what I’m calling for. [ ♪♪ ]

Michael Martin

59 Responses

  1. This episode was already uploaded 3 weeks ago…. Love the fifth estate but you guys don't upload enough episodes fast enough, and when you do you upload repeated videos…. Please fix this ASAP

  2. Re Upload??? Come on the only thing that came of this was a Corporation being charged… NONE OF THE SMALL PHARMACISTS….

  3. i think i know a pharmacy doing this in the US. they forcefully switched brands on us and refused to give us another brand. they said if it wasnt working we needed to get a different medication. it was a pain medication from china and was like taking a placebo for a real pain condition. It was a Rite Aid in North Carolina by the way.

  4. This story is missing some vital information. Please read letter below sent by a pharmacist.

    Dear Mr Kelly,
    I would like to congratulate you on this episode of Fifth Estate that was aired on Jan 13, 2019. However, it was missing an important element which is to interview a pharmacist. I believe that it is not fair for pharmacist to be attacked by you for the sake of making noise and news without interviewing one of them. Although you did a good job on showing greedy they are when asking for money, you wouldnt be any better than them if you dont show the whole picture of the business and why pharmacists are after these rebates. I will be more than happy to give you a clear picture on how the pharmacy operates in relation to suppliers and third party payers. I am a licensed pharmacist in Ontario 1999. Best Regards.

    He replied

    Hi,
    We appreciate getting feedback and story ideas from our viewers and our team of journalists reads every email that comes to our show. Unfortunately due to volume of email we recieve we are unable to individually reply.

    This is sensationalist media for you.

  5. The Fifth Estate is clearly running out of ideas and still wants our tax payer money to fund these stories. Wow.

  6. Also the $7 kickback shown in the video is a joke. Why does the Fifth Estate not do proper research? That's sensationalist media for you.

  7. Rockefeller medicine at its finest. People pay them for drugs that make them sicker to fight the diseases, viruses and deformities they gave them in the first place.

  8. If you are a pharmacist and reading this please write to the CBC Ombudsman and tell them your side of the story. The average person is going to think pharmacists get a $7 kickback which is misinformation. Pharmacists need to stand together and speak up because the media is trying to portray you as greedy beings. It is irresponsible journalism to leave out what thousands of pharmacists have to say. A pharmacists declining wages should be reason enough for you to speak up.

  9. Question?? Was there any white pharmacists scamming us Canadians??? Or did they just miss showing us there faces????

  10. I have a question…
    Why cant the consumers pay the rebate? That way…the big pharmaceutical companies would have to legemitaly compete with one another . .and eventually drive the market down far enough so that the consumers could then afford their medication!
    And also….it would drop the price of medical insurance!
    Can anyone tell me whats wrong with that picture?

  11. As if these guys don't get paid enough for counting pills and labelling a bottle. Obviously rebates increase profits for both drug manufacturers and pharmacies

  12. I feel sorry for the pharmacists nobody deserves to be treated by the media this way. The Fifth Estate never covered how the prices of several generic drugs were reduced last year.

  13. It pains me to watch this. Drug companies making billions off the back of the tax payer. I agree with 'undercover' call it what you want…if you follow the money it's still a rebate. Government won't do anything about it because they are likely also getting kickbacks in one form or another and t do so would probably be political suicide. So who's to blame?….you have to point the finger at the pharmacists. They've identified a way to make extra cash and the drug companies are only too happy to oblige. A simple solution. Call in the forensic accountants to audit the pharmacy and 'strike off' pharmacists caught breaking the law. There are more than enough young people happy to take the job. It kickbacks like this should be illegal in Canada. Its getting more and more like the US, and that's not a direction to be going in.

  14. Usually drug reps are "dressed to the nines"…."Darren", looks a little sloppy?? I wouldn't have believed he was for real….just saying

  15. People complain about "too much regulation" and governments "squeezing the life out of businesses". These things (and a whole lot of other things) are happening "with" regulation. Now, imagine what it would look like if there were less or no regulation… Businesses would be "squeezing the life" out of you!

  16. The pharmacies in Van were paying cash kickbacks to Methadone and suboxone patients for referrals of other addicts.

  17. So big pharma wants to mass sell their products and the little pharmacy is trying to get rich. Knowingly breaking the law and are so corrupted by money. This is just as bad as prostitution in my eyes.

  18. Canada has crooks in everything from politics to pharmacy to wrongful death benefits amd my favorite… Food.. .thats just a shame

  19. This is pretty simple. They are doing this to remove all accountability and cook their books. That why they plead the fifth.

  20. This happened even in hospitals. 2 pharmacists from Thunder Bays hospital were fired when they got caught doing it and putting the money in their own pockets.

  21. This was the reason for price disclosure in Australia which drove down prices yet pharmacies still get a "rebate" of 85% on some lines. I worked as a pharmacist at a place charging people $71.70 for a set of 3 scripts that cost a combined $7. That pharmacy did up to 300 scripts a day. Yet pharmacist wages have been stagnant for nearly 20 years. Owners greed through the 90s and early 2000's has killed our reputation. Professional standards and integrity in this industry are non-existent.

  22. Gods son Christ Jesus died on the cross for our sins so that by believing in him we can have life…belief in Christ Jesus be a free gift from the father, given to them [ through thee hearing of heth words ] whom he hath chosen for salvation

  23. this is why they need to automate pharmacies. Robot dispensers of medication. The doctor just writes the prescription and you go to the kiosk and it dispenses drugs, and you pay with your credit card. The future is automation for prescription drugs. It can save billions of dollars to public healthcare.

  24. Services are at risk ´cause we if we don’t fraud, we won’t spend time to explain your old confuse parents their medication..

  25. what if we give them cancer screening drugs that also cause cancer but we stole them and then we should pretend to be the doctors

  26. This is what happens when you have regulation in all aspects of your life. This is a direct result of government.

  27. You think it's bad in Canada? Come to the US. Big pharma has a death grip on pharma in the US. It's crazy expensive and criminal, yet none of our politicians do nothing about it because they are all bankrolled by big pharma as well. The US is the only country that doesn't set price ceilings. It's time to stand up against big pharma.

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