Attorney General Ken Paxton's Medicaid Fraud Control Unit has played a crucial role in a significant federal investigation. This effort led to the prosecution of nine individuals, including pharmaceutical distributor executives, sales representatives, and brokers. They were involved in the illegal distribution of nearly 70 million opioid pills and over 30 million doses of prescription drugs. These substances, valued at over $1.3 billion on the black market, were distributed to pill-mill pharmacies in the Houston area, contributing to the national opioid crisis.
The accused included five pharmaceutical distributor executives and five sales representatives and brokers. They allegedly managed the sale of high-potency opioids like oxycodone, hydrocodone, and hydromorphone to these pharmacies. The drugs were often sold at inflated prices with additional prescription drug potentiators such as alprazolam, carisoprodol, and promethazine provided to enhance their effects. To avoid detection by regulatory authorities like the DEA, sham compliance measures were reportedly used by distributors. Nine out of ten defendants have pled guilty and are awaiting sentencing.
The investigation was led by Sergeant Mike Price, Captain Stacey Overbay, and Investigative Auditor Kalpana Patel from the Medicaid Fraud Control Unit (MFCU). It was a multi-agency effort involving entities such as the DEA, HHS-OIG, FBI, USPS-OIG, and FDA-OCI. Assistant Attorney General Abdul Farukhi also played an important role in prosecuting this case.
Attorney General Paxton stated: “This landmark case demonstrates our tenacity and resolve in the fight against prescription drug rings that have worsened the deadly opioid crisis facing our country.” He further emphasized his office's commitment to pursuing those who exploit healthcare systems for profit.
Since 2021, MFCU has recovered more than $612 million through settlements and restitution for Texas taxpayers. The unit receives 75 percent of its funding from a U.S. Department of Health and Human Services grant totaling $20,944,200 for fiscal year 2023. The remaining 25 percent is funded by Texas state funds amounting to $6,981,395. Over three years, for every dollar spent by Texas on state funding for MFCU operations, more than 49 dollars have been recovered for taxpayers.