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‘Greed is a powerful weapon’: Are illegal kickbacks in Ontario driving up the cost of your generic drugs?

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A hidden camera investigation and confidential documents obtained by CBC’s The Fifth Estate raise questions about whether Canada’s largest pharmaceutical distributor is profiting from illegal kickbacks on sales of generic drugs in Ontario.

Studies have shown this practice drives up the cost of generic drugs for all Canadians.

McKesson Canada, which distributes pharmaceutical drugs to more than 8,000 pharmacies in this country and recently purchased more than 400 Rexall pharmacies, denies the allegation.

The Canadian company is a subsidiary of the San Francisco-based McKesson Corporation, which is No. 6 on the Fortune 500 and the largest pharmaceutical distributor in North America, delivering one-third of all medications used every day, according to its website.

AFifth Estate hidden camera investigation captured conversations with three independent pharmacists at two pharmacies who suggest McKesson is breaking the law in Ontario, where kickbacks on generic drugs are illegal.

“[McKesson] gives the numbers to [our buying group], they consolidate the numbers and give me 50 per cent back,” one Ontario-based pharmacist told a generic drug salesperson working undercover for The Fifth Estate.

The conversation raises the question of whether this pharmacist is getting a 50 per cent kickback from McKesson Canada.

In other words, for every $10 in drugs this pharmacist sells, he would be able to put $5 in his pocket. In exchange, the pharmacist or his buying group would agree to stock the generic drugs McKesson distributes, giving the company sales ahead of a competitor.

McKesson Canada is a subsidiary of the U.S. McKesson Corporation, which is No. 6 on the Fortune 500 and the largest pharmaceutical distributor in North America. (John Badcock/CBC)

It’s a practice that studies have shown dramatically inflates the prices of generic drugs for Canadians, who pay some of the highest generic drug prices in the world.

“Greed is a powerful weapon,” said Paul Bailey, president of the Police Pensioners Association of Ontario, a group with many members who live on tight budgets with small police pensions.

He reviewed hidden camera footage captured by The Fifth Estate that also showed several pharmacists in Ontario asking for kickbacks.

“Once again, the taxpayer takes it on the chin,” he said.

Banned in 2013

The practice of paying or receiving rebates or kickbacks in exchange for stocking a particular brand of generic drug was regulated in Ontario starting in 2006 as part of efforts to reduce the price of generic drugs.

A full ban on rebates — direct or indirect — in the province came into effect in 2013. Quebec is the only other province or territory in the country that has restrictions on rebates.

Generic prices have come down since 2006, but Canadians are still paying the second-highest amount among OECD countries for their generic drugs, according to a recent government report.

Along with conducting the hidden camera investigation, The Fifth Estate obtained an internal McKesson presentation given to its employees, as well as a confidential document filed in a hearing at the Ontario College of Pharmacists.

Both documents raise the same question: Is McKesson Canada profiting from illegal kickbacks in Ontario?  

Are they giving kickbacks to independent pharmacists in Ontario in order to secure sales or collecting kickbacks from generic drugs manufacturers in exchange for stocking a particular brand in their own Ontario stores?

“People don’t know they’re getting ripped off and the reason they’re paying the high drug costs,” said Bailey.

McKesson Canada denies allegations

The Police Pensioners Association of Ontario first became interested in rebates in 2009 when several generic drug makers, wholesalers and a pharmacy were caught in a rebate scheme.

Bailey, a former police detective, called for a criminal investigation at the time. He’s now more convinced than ever that drastic action is required.

Paul Bailey, a former police detective and current president of the Police Pensioners Association of Ontario, says a public inquiry is needed into pharmaceutical rebates. (John Badcock/CBC)

“The only way we’re ever going to get to the bottom of this is to have a public inquiry.”

The Fifth Estaterequested an interview with McKesson Canada president Paula Keays, but she would only provide a written statement.

Keays acknowledged the company makes payments to the pharmacies it supplies with generic drugs, but denied they are illegal kickbacks or rebates.

McKesson Canada president Paula Keays acknowledged in a written statement that the company makes payments to the pharmacies it supplies with generic drugs, but denied they are illegal kickbacks or rebates. (McKesson Canada)

“McKesson Canada does not pay rebates in Ontario and any assertion to the contrary is blatantly false,” she said in the statement.

The payments its company makes, she said, are “fully in line with all current provincial regulations and [are] one of the ways independent pharmacies operate and improve services for patients, like installing blood pressure monitoring stations, introducing new technologies and automating services to allow for patient counselling. These are standard business agreements and are entirely appropriate.”

Going undercover

A Fifth Estate investigation in March 2018 revealed that Costco was demanding millions of dollars in illegal rebates from a generic drug manufacturer.

After that story aired, The Fifth Estate received an email from someone with many years of experience in pharmaceutical sales suggesting the problem goes far beyond Costco:

“It’s not just Costco…. Every single pharmacy across the country takes kickbacks in a monetary form still to this day. I am a former rep and can definitely say that this happens. It is still happening and will continue to happen.”

In order to test whether pharmacists in Ontario would ask for illegal kickbacks or disclose if they are receiving kickbacks, the insider agreed to help The Fifth Estate and go undercover as a salesperson. Because he still works in the industry, The Fifth Estate agreed to protect his identity.

CBC’s graphics department created a fake drug company website for The Fifth Estate’s hidden camera investigation. (David Abrahams/CBC)

“The problem is, everyone’s driving these rebates up. It’s a competition,” he told The Fifth Estate in an interview.

“Basically it’s a race to the bottom, if you will. You know, 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. It’s just not fair.”

The Fifth Estate created a fake generic drug company called Dari Pharmaceuticals and made business cards, a product list and a website.

Over three days, The Fifth Estate visited 17 independent pharmacies in Kitchener, Cambridge and Hamilton and spoke to nine pharmacy owners who were interested in buying generic drugs. All but one asked if the fake company paid illegal rebates.

‘Incentives to move their stuff’

Several pharmacists also openly discussed their current arrangement, claiming they received illegal kickbacks from large companies.

“Let’s say if you buy 1,000, for example, there is a rebate of 50 per cent,” one pharmacist told The Fifth Estate‘s undercover salesperson, referring to his current arrangement with McKesson Canada.

“[Other companies] go higher [than 50 per cent] to give incentives to move their stuff,” said another pharmacist. “Some days they go to 60 [per cent], some days they go to 70 [per cent].”

Some pharmacists wanted to know how The Fifth Estate‘s fake company would deliver its kickbacks while others talked about technical wording that could be used to hide a kickback and get around the law in Ontario.

So basically [a middle company] cuts us a cheque every month and it’s … not technically a rebate, it’s more … for professional services and what have you, right,” another pharmacist said. “That’s how most people are wording it nowadays.”   

Business cards and a product list were created for the fake generic drug company called Dari Pharmaceuticals. (CBC)

An internal McKesson Canada document obtained by The Fifth Estate suggests the company also uses a variety of terms to describe payments it makes to pharmacists.

The PowerPoint presentation from 2017 instructs employees to remove the word “rebate” from their “vocabularies,” while other terms like “professional allowances” should be “used with caution.”

The presentation does say rebates are illegal in Ontario but goes on to say the pharmacy brands McKesson owns, like Guardian or IDA, make payments to pharmacies under a variety of circumstances.

“All four main McKesson banners make payments to its pharmacies, but for different things, under different names and under different circumstances. Sometimes we use the same words to mean different things.”

CBC asked McKesson about the presentation and the company denied the document suggests it’s paying kickbacks or rebates that are illegal in Ontario.

“As could be expected, our various retail banners compensated their respective members for different things, under various names, prior to their acquisitions by McKesson Canada,” the company said in a statement.

“Accordingly, a main driver of the project reflected in the presentation was to ensure McKesson Canada’s rigorous corporate practices are mirrored across all McKesson Canada banner operations. The references to Ontario throughout the document reinforce the fact that rebates are illegal, and McKesson Canada does not pay them.”

A senior pharmacy insider interviewed by The Fifth Estate doesn’t buy it.

“You have to have so many terms because you want to complicate it,” the former executive said. The Fifth Estate agreed to protect his identity because he still works in the industry.

“You don’t want people to follow the money. No matter what you call it,” he said, “money that is going from the manufacturer to the pharmacy at the end of the day is a rebate.”

Rebates disguised as advertising?

When Costco was caught demanding kickbacks, a document filed at a hearing of the Ontario College of Pharmacists alleged that other pharmacy chains were also potentially breaking the law.

The Fifth Estate filed a motion to see exhibits filed at the hearing and after many months received most of the documents.

A letter from Costco’s lawyer to the investigator for the college said: “It should be noted that advertising in the form challenged by the complainant are common for pharmacies in the industry generally.”

The lawyer goes on to allege that four other large pharmacy chains that operate in Ontario pay potentially illegal rebates disguised as advertising fees, including Guardian and Rexall.

Guardian is one of McKesson’s independent retail pharmacy banners and Rexall is fully owned and operated by McKesson.

CBC was unable to confirm the allegations, so approached McKesson for an explanation. Again, McKesson Canada said it’s not doing anything to break the law in Ontario.

“To be abundantly clear: McKesson Canada does not pay prohibited rebates in the province of Ontario,” the company added in its statement. “Any reporting otherwise would be false and inaccurate.”

Millions could be saved

Canadians have for decades paid some of the highest prices for generic drugs in the world. In the mid-2000s, the Competition Bureau of Canada was one of the first to take a detailed look at why.

“Lots of people had theories but we wanted to clarify how the generic market was working and functioning and how it was broken,” said lead investigator Mark Ronayne.

Two reports, one in 2007 and another in 2008, determined the practice of paying kickbacks was widespread in Canada and was costing Canadians hundreds of millions of dollars every year.

“The rebates paid to the pharmacies have accounted for a large portion of payers’ generic drug costs, 40 per cent or more of generic drug expenditures,” the reports concluded.  

Mark Ronayne was the lead investigator on two reports for the Competition Bureau of Canada in the mid-2000s that looked at competition practices in the Canadian generic drug sector and made recommendations for changes. (John Badcock/CBC)

“Canadian taxpayers, consumers and businesses could save up to $800 million a year if changes are made to the way private plans and provinces pay for generic drugs. The potential savings could climb to over $1 billion per year in coming years, as several blockbuster brand name drugs lose patent protection.”

Ronayne believes “powerful interests” blocked change in Canada, which is why the practice of paying kickbacks continues to this day.

“If there’s money to be made by providing a lower price somehow to pharmacies to somehow get your product on the shelf, then companies will look for some way to do that,” said Ronayne.  

“Maybe not necessarily consistent with legislation or could be consistent with legislation but they’re going to try to do it. And they’ve been doing that for a long time and if they are continuing to do that, I wouldn’t be terribly surprised.”

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Health Ranger posts new microscopy photos of covid swabs, covid masks and mysterious red and blue fibers

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(Natural News) What follows is a series of microscopy photos of covid swabs (a synthetic swab, then a cotton swab), a covid mask and some zoomed-in photos of mysterious red and blue fibers found in the masks.

The magnification range for these photos is 50X to 200X. Most were taken with white light, but several (as indicated) were taken with UV light.

The images shown here are 600 pixels wide. We have higher resolution images available to researchers and indy media journalists; contact us for those hi-res images.

More microscopy investigations are under way, and new images will be posted as they are finalized.

First, this series shows the carbon fiber layer of a covid mask, illuminated with UV light:

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5,800 test positive, 74 die of coronavirus at least 14 days after getting fully vaccinated

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(Natural News) The Centers for Disease Control and Prevention (CDC) on Thursday, April 15, confirmed some 5,800 breakthrough coronavirus (COVID-19) cases in the U.S.

A breakthrough COVID-19 case is defined as someone who has detectable levels of SARS-CoV-2 – the virus that causes COVID-19 – at least 14 days after getting fully vaccinated against the disease.

Nearly 400 breakthrough cases required treatment at hospitals and 74 died. A little over 40 percent of the infections were in people 60 years and above and 65 percent were female. About 29 percent of the vaccine breakthrough infections were reportedly asymptomatic. The figures were for cases through April 13.

CDC Director Rochelle Walensky told a congressional hearing on Thursday that the causes of the breakthrough cases are being probed. “Some of these breakthroughs are, of course, failure of an immune response in the host. And then some of them we worry might be related to a variant that is circulating. So we’re looking at both,” she said.

The CDC is monitoring reported cases “for clustering by patient demographics, geographic location, time since vaccination, vaccine type or lot number, and SARS-CoV-2 lineage.” It has created a national COVID-19 vaccine breakthrough database, where state health departments can enter, store and manage data for cases in their region.

Where available, respiratory specimens that tested positive for COVID-19 will be collected for genomic sequencing “to identify the virus lineage that caused the infection.”

Positive test less than two weeks after getting fully vaccinated is not a breakthrough case

The number of cases the CDC has identified does not include people who contracted COVID-19 less than two weeks after their final dose. The two-week marker is important, said infectious disease expert Dr. Amesh Adalja, senior scholar at the Johns Hopkins Center for Health Security.

A human body should have enough time to develop antibodies to SARS-CoV-2 after that timeframe. Before then, a person won’t necessarily have the built-up immunity needed to fight off an infection. According to Dr. Adalja, cases that occur before the two-week mark are not considered breakthrough cases.

Dr. Adalja also noted that more research is needed to determine if highly infectious variants of the virus are behind the breakthrough cases. “It is crucial to study breakthrough cases to understand their severity, their contagiousness and what role variants may be playing,” Dr. Adalja said.

More than 78 million people have been fully vaccinated against COVID-19 in the U.S. as of April 15.

“To date, no unexpected patterns have been identified in case demographics or vaccine characteristics,” the CDC said in a statement. “COVID-19 vaccines are effective and are a critical tool to bring the pandemic under control.”

But the CDC conceded that “thousands of vaccine breakthrough cases will occur even though the vaccine is working as expected.”

Dr. William Schaffner, an infectious disease specialist and professor at the Vanderbilt University School of Medicine, agreed with the CDC. “These vaccines that we’re using are fabulous but they’re not perfect,” he said. “At best, they’re 95 percent effective in preventing serious illness, but minor illnesses can occur.”

According to U.S. drug regulators, Pfizer’s COVID-19 vaccine is 95 percent effective in preventing infection. Moderna’s was shown in a clinical trial to be 94.1 percent effective while Johnson & Johnson’s was 66.9 percent effective. Only Johnson & Johnson vaccine, which received its emergency use authorization from the Food and Drug Administration (FDA) on Feb. 27, was tested when variants were circulating.

The percentages are based on results from vaccine recipients two weeks after the final vaccination.

Dr. Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases, stated in a briefing last week that the breakthrough cases are not a cause for concern.

“I think the important thing is to look at what the denominator of vaccinated people is. Because it is very likely that the number of breakthrough cases is not at all incompatible with the 90-plus percent vaccine efficacy,” he said. “So I don’t think that there needs to be concern about any shift or change in the efficacy of the vaccine.”

More info needed before drawing conclusions from breakthrough cases

The percentage of vaccine breakthroughs in a population depends on multiple factors, including vaccine efficacy, the amount of virus circulating and the length of time since vaccination, according to Natalie Dean, an assistant professor of biostatistics at the University of Florida.

“I love to see small numbers as much as anyone, but know that numbers like this cannot be directly interpreted as a measure of vaccine efficacy (although I have a feeling they will be). We can only interpret them against a background rate in unvaccinated people,” Dean wrote on Twitter.

“Similarly, ‘most breakthroughs have been in elderly adults’ should not be read as the vaccine is less effective in elderly adults. The majority of vaccinations (and the longest amount of follow-up time) have been in elderly adults. Again, we need more info to interpret.”

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More people died from fentanyl overdose than coronavirus in San Francisco last year

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(Natural News) More people died from fentanyl overdose than coronavirus (COVID-19) in San Francisco last year, a microcosm of a larger nationwide problem coinciding with the pandemic.

Data from San Francisco’s Office of the Chief Medical Examiner shows that 708 people were killed by fentanyl in 2020, an astonishing 118 times more since the introduction of the drug in the city just five years earlier.

That figure nearly tripled the 254 COVID-19 deaths recorded in the city for the whole of last year. More than 8 in 10 deaths were male, and just under half were white. People aged 55 to 64 made up nearly a quarter of the fatalities. Nearly 40 percent of the deaths occurred in open-air drug markets such as the Tenderloin and South of Market.

The number of overdose deaths in the city could have been far worse as more than 3,000 addicts suffering from an overdose were administered with naloxone, the lifesaving medication that reverses overdoses.

San Francisco’s death rate from fentanyl overdose continues to rise this year as 135 died by overdose in January and February, putting the city on pace for more than 800 deaths by the end of the year.

The city has become a significant part of a larger trend. The Centers for Disease Control and Prevention (CDC) released data on Wednesday, April 14, showing that more than 87,000 Americans died from drug overdose over the 12-month period that ended in September last year – the highest since the opioid epidemic began in the 1990s.

Lockdowns lead to more cases of drug overdose

The surge represents an increasingly urgent public health crisis that may be correlated to the government’s monotonous battle plan against the COVID-19 pandemic.

On March 19 last year, California became the first state in the U.S. to implement a stay-at-home order. It subsequently endured the longest lockdown of any state in the country.

The pandemic and accompanying lockdowns are believed to be partly responsible for the soaring number of drug deaths for obvious reasons. Lockdowns have badly disrupted the social services in the city, including drug addiction treatment. Drug experts say the isolation of the past 12 months is causing vulnerable residents to turn to opioids.

“We see the death and devastation getting worse right in front of us,” said Matt Haney, San Francisco Board of Supervisors member. “It’s an unprecedented spiraling, directly connected to the introduction of fentanyl in our city.”

Fentanyl first appeared on the streets of San Francisco in 2015. There were just six deaths from the synthetic opioid that year, 12 deaths in 2016 and 37 deaths in 2017. The figure skyrocketed when the drugs became widely available in the city in 2018.

Kristen Marshall, manager of the national drug harm reduction DOPE Project, noted the grim irony that while social isolation could save lives from COVID-19, it had undoubtedly contributed to the number of overdose deaths.

“Isolation is also the thing that puts people at the absolute highest risk of overdose death,” she said.

Pandemic exacerbates rise in deaths from drug overdose

The number of deaths from drug overdose started rising in the months leading up to the coronavirus pandemic, making it hard to gauge how closely the two phenomena are linked. But the pandemic unquestionably exacerbated the trend. The biggest jump in overdose deaths took place in April and May when fear and stress were rampant, job losses were multiplying and the strictest lockdown measures were in effect.

Many treatment programs closed during that time while drop-in centers, which provide support, clean syringes and naloxone, cut back services.

The data released by the CDC shows a 29 percent rise in overdose deaths from October 2019 through September 2020 compared with the previous 12-month period. Illicitly manufactured fentanyl and other synthetic opioids were the primary drivers, although many fatal overdoses have also involved stimulant drugs like methamphetamine.

Unlike in the early years of the opioid epidemic, when deaths were largely among white Americans in rural and suburban areas, the current crisis is affecting Black Americans disproportionately.

“The highest increase in mortality from opioids, predominantly driven by fentanyl, is now among Black Americans,” Dr. Nora Volkow, the director of the National Institute on Drug Abuse, said at a national addiction conference last week.

“And when you look at mortality from methamphetamine, it’s chilling to realize that the risk of dying from methamphetamine overdose is 12-fold higher among American Indians and Alaskan Natives than other groups.”

Dr. Volkow added that more deaths than ever involved drug combinations, typically of fentanyl or heroin with stimulants.

“Dealers are lacing these non-opioid drugs with cheaper, yet potent, opioids to make a larger profit,” she said. “Someone who’s addicted to a stimulant drug like cocaine or methamphetamine is not tolerant to opioids, which means they are going to be at high risk of overdose if they get a stimulant drug that’s laced with an opioid like fentanyl.”

The Drug Enforcement Administration (DEA) supported Dr. Volkow’s claim, saying that transnational criminal organizations cause a spike in overdoses by mixing fentanyl into illicit narcotics.

According to the DEA, Mexican cartels often purchase the drug components in China and use human mules to smuggle the narcotics to lucrative drug markets north of the border.

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