The US Securities and Exchange Commission has charged a company that some say has been exploiting anxieties about health care for about a decade with fraud. But the origins of the scheme are embedded in one of the most-used internet words to describe Republicans in recent years.

The scheme that the government says was led by the company 47 Dollar Pharmaceuticals targets older consumers with a well-tested marketing technique, which allows drug companies to keep prices high and pass along big profits. The strategy: offer low-cost medicines, some of which are only available through insurance, to cut out the middleman who often has to pay for the drug itself. The government filing says 47 Dollar Pharmaceuticals targeted older, self-employed Americans with the hope that they would give up their health insurance, saving the company money on drug cost.

But rather than capitalizing on a problem with health care—patients struggling to pay for their medications, as insurance companies try to cover the costs—47 Dollar Pharmaceuticals and its partner simply created one to blame. Instead of providing insurance, say, the brand tried to mimic insurance by claiming that the prescription had to be purchased through a Medicare plan. Through a middleman network—”retail partners” such as Walgreens, where drugs are bought, and independent pharmacies—47 Dollar Pharmaceuticals pressured older Americans to drop their insurance, according to the complaint.

Drug price inflation has become such a hot political topic that two Republican senators are sponsoring a bill to limit the price increase for 10 drugs. But the government case against 47 Dollar Pharmaceuticals says it “instigated[s] a conspiracy with individuals and others to create fictitious savings for the financial benefit of the Retail Partners.”

I’ve written before about 562 Inc., another marketing and advertising company accused of using Facebook for fraud. 57-story skyscraper > coupon > company logo > pharmaceutical logo

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