Ed Silverman - Pharma Fraud Continues To Fill The US Treasury

PHARMALOT

By Ed Silverman // December 19th, 2011 

http://www.pharmalot.com/2011/12/pharma-fraud-continues-to-fill-the-us-treasury/

Boasting about recovering lots of money from prosecuting health care fraud has become an annual pasttime at the US Department of Justice. In general, fraud is a hot topic. Why? For the second consecutive fiscal year, the feds recovered more than $3 billion under the False Claims Act, and the total since January 2009 was $8.7 billion.

Of the $3 billion recovered this past fiscal year, which ended September 30, $2.4 billion in recoveries involving fraud committed against federal health care programs, nearly matching the $2.5 billion recovered in the previous fiscal year (see here). And of the $3 billion, whistleblower cases filed under the False Claims Act accounted for $2.8 billion.

As for drugmakers, the feds say that enforcement actions involving the pharmaceutical industry were, once again, the source of the largest recoveries this year. In all, the Justice Department recovered nearly $2.2 billion in civil claims against drugmakers last fiscal year, including $1.76 billion in federal recoveries and $421 million in state Medicaid recoveries (here is the Justice Department statement).

These cases included $900 million from eight drugmakers to resolve allegations they undertook illegal pricing to increase profits. Among the violators were Merck Serono and Novo Nordisk. Another $750 million was paid by GlaxoSmithKline to resolve criminal and civil charges that led to federal healthcare programs paying for adulterated drugs (back story).

For all the headlines grabbed by large fines, the settlements continue to be controversial, since payouts are often described off-the-record by industry execs as a cost of doing business. In any event, they also maintain that many cases reflect years-old practices that have since changed. But one expert on whistleblower cases say drugmakers remain very much in the crosshairs.

“As has been the case in recent years, pharmaceutical companies are expected to be the big payers, which is only fair since they have been the big players as far as fraud is concerned,” writes Patrick Burns of Taxpayers Against Fraud, a non-profit that supports whistleblower lawsuits, in an email. “We are not seeing a decline in pharmaceutical fraud cases. Instead we are seeing the addition of other fraud streams, such as medical devices and pension fraud.”

He also notes that some individual states may get more assertive about joining whistleblower cases. Some cash-starved states have recently taken notice that, if they pass a False Claims statute, they would be able to collect a bigger payday each time they choose to participate in a whistleblower settlement