Pharmaceutical Fraud

Pharmaceutical fraud is among the most pervasive -- and expensive -- of all the frauds uncovered by whistleblowers over the past twenty years. There have been a number of high profile cases that have focused public, prosecutorial and Congressional attention on fraud in the pharmaceutical industry. It is apparent from recent settlements that this scrutiny, pharmaceutical fraud continues to be a problem today and experts agree that the cases settled to date reflect only a small percentage of the fraud.

Pharmaceutical fraud strikes at the very core of our social values, as the payment of kickbacks for prescriptions means that doctors will make prescribing decisions not based upon what is best for the patient, but what is best for their pocketbooks. And, to the extent that physicians recommend drugs that are not proven to be safe and effective for the patient’s medical condition, patients may be exposed unnecessarily to danger, pay more for drugs that they do not need and/or be deprived of drugs that are most likely to help them. As a whistleblower you can help prevent these adverse consequences.

Payment of Kickbacks to Physicians and Other Providers.

The Antikickback Statute (“AKS”), which is incorporated into the False Claims prohibits pharmaceutical companies from paying physicians to prescribe their drugs. Any payment by a pharmaceutical company to a doctor or other provider (such as a Physician’s Assistant or Nurse Practitioner who has prescribing authority under state law) must fit within a safe harbor under the AKS. Safe harbors generally permit payments that are at Fair Market Value, for a legitimate and necessary business purpose.

Kickbacks paid by pharmaceutical companies can take a variety of forms, including all-expense paid trips to resorts to attend “conferences” that are really extended sales pitches, highly paid consulting gigs to talk up a company’s drugs to other doctors and payment for doctors to enroll their patients in clinical research studies. But the AKS prohibits the payment of anything of value, so that kickbacks may also be disguised in the provision of goods and services to a physician or other provider at no cost, or below cost, to induce the physician to prescribe the company’s drugs. Any benefit to a provider which reduces or eliminates a cost to his practice, whether in cash or in kind, can be a kickback. To read more about Healthcare Law Group founder Jamie Bennett’s investigation of pharmaceutical company kickbacks to physicians, click here.

For example, a pharmaceutical company may provide a physician with billing services at no cost, or below cost, or may donate expensive testing equipment to a doctor, or rent it to the provider at less than the usual cost. While these kickbacks are not as obvious as those described above – the costly boondoggle to a lavish resort or the payment for the doctor to talk about the company’s drugs at an expensive restaurant – they still violate the law. Giving goods or services to a physician at no or below cost does not fit within any of the AKS safe harbors, which ties payments to Fair Market Value.

Off-Label Marketing.

Whistleblowers have also been instrumental in shedding sunlight on the practice of off-label marketing by pharmaceutical companies. False claims that a drug is safe and effective for treatment of a condition that is not on the drug’s FDA approved label are obviously prohibited under the False Claims Act. Such claims may be supported by clinical research studies designed by pharmaceutical companies to generate a particular result, a result that the company can then use to tout the drug for off-label indications. If the pharmaceutical company knows that its claims of safety and efficacy are based upon studies that are skewed, or generate false results, then the promotion of these drugs for this use violates the FCA. In addition to off-label promotion, which has garnered much of the attention in this area of pharmaceutical fraud, drug companies may be liable under the False Claims Act for making false claims that their drugs are superior to other drugs in the same class. To read more about Healthcare Fraud Law Group founder Jamie Bennett’s work on an investigation leading to the settlement of an off-label marketing case, click here.

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