INDIAN ISLAND, Maine – The Penobscot Indian Nation’s now- defunct mail order pharmacy was slapped with a $500,000 penalty in May for the illegal activities of former employees surrounding sales of illegal Internet prescriptions.
After a series of hearings, the Maine Board of Pharmacy found PIN Rx, and two of its pharmacists – Reginald Gracie Jr. and Susan Tringale – guilty of a several violations in connection with filling approximately 185,000 illegal Internet prescriptions worth around $3 million.
PIN Rx was formed in 2005 as a tribal/state partnership to provide economic development for the tribe and savings for the state on MaineCare, its Medicaid program.
But the business was failing even before Gracie’s illegal activities were discovered earlier this year, Penobscot Chief Kirk Francis said.
The tribe put up $1.6 million and received around $1 million in start-up grants, but now feels abandoned by the state and left holding the bag for illegal activities that were beyond its knowledge or control.
”Our position is not to throw anybody under the bus here, but just to say what the roles were,” Francis said. ”It was a partnership, and for the state to leave us standing here with a $750,000 debt from this project plus the $500,000 fine, plus the loss of jobs and, especially, the nightmare to the tribe in general. … Tribal members have a real sense of being ashamed of something. Our tribe really took this thing personally and it’s been tough around here. The atmosphere is really down. People really felt like we were being called drug dealers, and nothing could be further from the truth.”
The pharmacy board will finalize its decision in June, but it is not clear who is expected to pay the $500,000 fine since PIN Rx folded in April.
”The tribe and the corporation are two separate things, and as far as we’re concerned that was a corporate responsibility and it’s a corporate fine. Now the corporation no longer exists, so I guess that leaves an interesting situation,” Francis said.
Gracie, the former CEO and chief pharmacist, received a letter of reprimand, license revocation and fines totaling about $303,704. He was found guilty of receiving more than $120,000 in kickbacks from Internet companies placing orders with PIN Rx and an additional $1 for each of the approximately 185,000 illegally-filled prescriptions.
Tringale received a letter of warning, one month license suspension and a fine of about $5,000.
Gracie, who had total control of the company, began selling controlled substances through the Internet in the spring of 2006 without the tribe’s knowledge, acting against a standing directive by the PIN Rx board not to do that, Francis said.
At the hearing in May, Gracie invoked his Fifth Amendment right against self incrimination and refused to answer questions.
Francis declined to participate in the hearings and raised the issue of a perceived conflict of interest on the pharmacy board.
”I don’t buy into conspiracy theories, but as soon as PIN Rx opened, it was a public relations nightmare – the state got attacked for subsidizing a private business and for driving retail pharmacies out of business, and yet the board we were to sit in front of was made up of those very same people from retail pharmacies,” Francis said.
The state took a predominant role in every aspect of decision making, including developing the business plan, and recommending Gracie, Francis said.
”We really relied on their expertise because no one from the tribe had experience in this business. We couldn’t foresee this was a losing proposition. There wasn’t enough of a gross profit margin in the prescriptions and PIN Rx captured only one percent of the six percent of MaineCare patients the business plan was based on. From the very start, we began losing around $100,000 a month,” Francis said.
The tribe’s loss was the state’s gain.
The state saved between $500,000 to $600,000 during that time, Trish Riley, director of the Governor’s Office of Health Policy and Finance, said.
But neither Riley nor other state officials could say why PIN Rx is being fined for the illegal activities of an employee.
”I don’t know. I don’t want to go there. Our business with PIN Rx was MaineCare and as far as we know, they did that work well and effectively. The rest of the issues surrounding them are, I think, certainly beyond our understanding or even awareness,” Riley said.
A spokesman at the attorney general’s office would neither confirm nor deny if a criminal investigation into Gracie’s activities is under way.
The tribe put up $1.6 million against property worth $2.6 million to start the business, and still owes $750,000 on the loan, Francis said.
”Oh, absolutely we’re in danger of losing that land. If you’re talking about three-quarters of a million to a casino tribe, it’s not a big deal; but that’s devastation to us. We’re going to have to deal with it. We’re going to stand up and do what we have to do to get through this,” Francis said.
