Company aims to stop prescription fraud

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Michael Feinstein holds the Nocopi tamper-resistant prescription pad designed to prevent fraud.

New federal rules to limit fraud in doctor prescriptions are creating an opportunity for Nocopi Technologies Inc., of West Conshohocken.

The small, publicly traded firm is perhaps best known for products that children use to "rub and reveal," adding colors by rubbing their fingers in a specially treated coloring book or on a place mat.

But the firm, led by Philadelphia obstetrician-gynecologist Michael A. Feinstein, also runs an ink-security business that creates tamper-resistant receipts for big retailers and now prescription pads for doctors.

Nocopi ventured into scripts this month, when the federal government began requiring doctors to use prescription pads with at least one antifraud feature for fee-for-service Medicaid patients. The federal standards will tighten further Oct. 1, requiring pads to have three safety features to limit Medicaid fraud.

That could give a big boost to pad-makers, though it is not guaranteed.

"It's a bit of a fragmented marketplace," Matt Soccorsi, executive vice president of Triple-I in Yardley, which supplies pads and other practice-related items to more than 200,000 doctors.

For example, most Medicaid recipients in the Philadelphia area will be unaffected initially because they get their care through HMOs, which are exempted from the rules.

New Jersey and nine other states, including New York, already require tamper-resistant forms for some prescriptions.

Prescription fraud can lead to abuse and endanger patients. Retail pharmacies dispensed about 3.4 billion prescriptions in 2006, according to the National Association of Chain Drug Stores. Some patients try to alter prescriptions to increase the number of pills or even change the medication.

In New York, an official form for all written prescriptions has saved $60 million in Medicaid billings in six months, according to the state health department.

New forms, of course, are not a cure-all in the era of Internet pharmacies, where more patients are expected to get their medicines. In a 2007 review of 187 Internet sites selling prescription drugs, 84 percent did not even require a prescription, said Susan E. Foster, director of policy research at The National Center on Addiction and Substance Abuse at Columbia University.

"There really needs to be a really comprehensive approach," Foster said.

The most common antifraud technology for paper - "Void Pantograph" - creates a copy-protection feature with a hidden message, such as the word void or unauthorized that appears when it is copied. The technology is being defeated by ever-improving printers at reduced prices, said Terry W. Stovold, Nocopi's director of worldwide technical sales.

Nocopi hopes to gain a beachhead with its "secured rub prescription paper technology." It comes with a scratch feature - scratch it, and blue ink appears - which copiers cannot duplicate. If someone tries to erase a number, the background turns blue, or a whole area will be removed if it is rubbed hard enough, signaling a problem.

Patients still can add a zero to the number of pills, Stovold said, but the ink and handwriting must match the doctor's.

E-prescribing, used by less than 10 percent of doctors, could make the printing technology obsolete if current trends continue. But Nocopi is betting that printed scripts will hang on, just as have paper bank checks.

Nocopi itself used to be on life support. Starting in 2000, the firm was embroiled in a legal fight with its French subsidiary that lasted three years and strangled its development.

Feinstein, an investor at the time, was drafted as part-time CEO - he maintains an OB-GYN practice across from Pennsylvania Hospital - and a settlement eventually was struck. Insiders also put up short-term loans that have been repaid, while more investors were brought in.

The company got a break when it struck a licensing deal with Berwind Group's Elmer's Products Inc., the owner of Elmer's glue, which revived the company. Nocopi now has rising sales and a portfolio of new products, including "scratch-it pads," which enable someone to write notes with his fingertips.

Nocopi turned its first profitable year in 2007, netting $386,000 on sales of $1.4 million, Feinstein said. Those sales were nearly double revenue of $766,500 in 2006, when the firm lost $190,000.

Nocopi's shares remain well below $1, trading this week near the low end of its 32-to-80-cent range on the Over the Counter's Bulletin Board. Feinstein said no bad financial news drove down the stock. "The whole market got hit," he said, adding "we intend to grow."


Contact staff writer Karl Stark at 215-854-5363 or kstark@phillynews.com.