Federal prosecutors charged 48 people in a massive Medicaid fraud that allegedly bought HIV medications and other prescription drugs from Medicaid recipients and sold them to unsuspecting buyers.

The scheme cost taxpayers $500 million, prosecutors said Tuesday.

According to prosecutors, the fraud was perpetrated as follows: Medicaid beneficiaries in New York, including AIDS patients and others suffering from illnesses requiring expensive drugs, sold their prescriptions to some of the defendants for cash instead of using them for treatment. Once Medicaid beneficiaries sold the drugs to other buyers, the buyers marketed the pills to pharmacies and other wholesale prescription drug companies in New York, New Jersey, Pennsylvania, Florida, Texas, Massachusetts, Utah, Nevada, Louisiana and Alabama, according to authorities.

The scheme targeted expensive medications — some at a cost of more than $1,000 a bottle — for illnesses such as asthma and HIV, authorities said. According to prosecutors, the defendants ran a black market in prescription pills involving a gigantic double-dip fraud. In other words, the defendants defrauded Medicaid, in some cases, two times over – a fraud on pharmaceutical companies, a fraud on legitimate pharmacies, and a fraud on patients who unwittingly bought second-hand drugs.

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