From Wikipedia, the free encyclopedia
Pharmaceutical fraud involves activities that result in false claims to insurers or programs such as
Medicare
in the United States or equivalent state programs for financial gain to
a pharmaceutical company. There are several different schemes
[1] used to defraud the
health care system
which are particular to the pharmaceutical industry. These include:
Good Manufacturing Practice (GMP) Violations, Off Label Marketing, Best
Price Fraud, CME Fraud, Medicaid Price Reporting, and Manufactured
Compound Drugs. The
Federal Bureau of Investigation (FBI) estimates that
health care fraud costs American taxpayers $60 billion a year.
[2] Of this amount $2.5 billion was recovered through
False Claims Act cases in FY 2010. Examples of fraud cases include the
GlaxoSmithKline $3 billion settlement,
Pfizer $2.3 billion settlement, and
Merck $650 million settlement. Damages from fraud can be recovered by use of the
False Claims Act, most commonly under the
qui tam provisions which rewards an individual for being a "
whistleblower", or
relator (law).
[3]
Estimates
The
Federal Bureau of Investigation (FBI) estimates that
health care fraud costs American taxpayers $60 billion a year.
[2] Of this amount $2.5 billion was recovered through
False Claims Act cases in FY 2010. Most of these cases were filed under
qui tam provisions.
Some examples of
False Claims Act settlements in the pharmaceutical industry include:
Types of fraud
There are several different schemes
[1] used to defraud the
health care system which are particular to the pharmaceutical industry.
- Good Manufacturing Practice (GMP) Violations
- Off Label Marketing
- Best Price Fraud
- CME Fraud
- Medicaid Price Reporting
- Manufactured Compound Drugs
GMP violations
Involve fraud with the Good Manufacturing Practice (GMP) Regulations
which require manufacturers to have adequately equipped manufacturing
facilities, adequately trained personnel, stringent control over the
manufacturing process, appropriate laboratory controls, complete and
accurate records, reports, appropriate finished product examination, and
so on. Certain violations of the Good Manufacturing Practice
Regulations may be the basis for a False Claims Act lawsuit.
[4][5]
Off-label marketing
Though physicians may prescribe drugs for off-label usage known as off-label marketing, the
Food and Drug Administration
(FDA) prohibits drug manufacturers from marketing or promoting a drug
for a use that the FDA has not approved. A manufacturer illegally
“misbrands” a drug if the drug’s labeling includes information about its
unapproved uses. A drug is deemed misbranded unless its labeling bears
adequate directions for use. The courts have agreed with the FDA that
the
Food, Drug, and Cosmetic Act
(FDCA) requires information not only on how a product is to be used
(e.g., dosage and administration), but also on all the intended uses of
the product. In 2004, whistleblower
David Franklin prevailed in a suit under the
False Claims Act against
Warner-Lambert, resulting in a $430 million settlement in the
Franklin v. Parke-Davis case. It was the
first off-label promotion case
successfully brought under the False Claims Act in U.S. history. Oral
statements and materials presented at industry-support scientific and
educational activities may provide evidence of a product’s intended use.
If these statements or materials promote a use that is inconsistent
with the product’s approved labeling, the product is misbranded under
the FDCA for failure to bear labeling with adequate directions for all
intended uses.
[5][6]
Best price fraud
A figure reported by the manufacturer to CMS in quarterly reports
under the Medicaid Rebate Program, it is used to calculate the Medicaid
reimbursement rate. It is defined as the lowest price available to any
wholesaler, retailer, provider, health maintenance organization (HMO),
nonprofit entity, or the government. BP excludes prices to the Indian
Health Service (IHS), Department of Veterans Affairs (DVA), Department
of Defense (DOD), the Public Health Service (PHS), 340B covered
entities, Federal Supply Schedule (FSS), state pharmaceutical assistance
programs, depot prices, and nominal pricing. BP includes cash discounts
and free goods that are contingent upon purchase, volume discounts, and
rebates. The fraud occurs as the manufacturer falsely self-reports its
Best Price.
[5][7]
CME fraud
The dissemination of “scientific and educational” literature. In the
past a legitimate expense, they can be a tool for improper off-label
marketing if they are designed and carried out under the control of a
manufacturer’s influence and bias. Neither the presentations nor the
literature are truly independent or non-promotional industry-supported
educational activities.
[5]
Medicaid price reporting
In order to decrease the amounts owed to the states, some companies
misrepresented material facts regarding the regulatory origin/status of
their brand name drugs, the AMP, and/or the best price. Despite the
Government’s good faith reliance to charge manufacturers a unit rebate
amount based upon the manufacturer’s own representation of drug status,
and price, some manufacturers have deceptively and fraudulently,
breached their duty to deal honestly with the Government.
[5][8]
Manufactured compound drugs
FDA guidelines authorize pharmacists to “compound” or mix medications
only in response to a physician’s valid prescription. This assumes, of
course, that the physician intends that the medication be compounded.
The regulations further require that the mixed or compounded medications
are medically necessary and not commercially available. Illegal
compounding includes compounding of ingredients such that the compounded
drug is tantamount to commercially available medications, involving
mass manufacturing of drugs under the guise of compounding.
Federal law, including the Centers for Medicare and Medicaid Services
(CMS) guidelines and the regulations of other Government Healthcare
Programs, prohibit coverage of claims for “compounded” medications when
the claims are submitted by a company that is mass manufacturing large
amounts of unapproved drugs in violation of the Federal Food, Drug and
Cosmetic Act (FFDCA), under the guise of “compounding.”
[5][9]
Kickbacks
Kickbacks
are rewards such as cash, jewelry, free vacations, corporate sponsored
retreats, or other lavish gifts used to entice medical professionals
into using specific medical services. This could be a small cash
kickback for the use of an MRI when not required, or a lavish
doctor/patient retreat that is funded by a pharmaceutical company to
entice the prescription and use of a particular drug.
[1]
People engaging in this type of fraud are also subject to the federal Anti-Kickback statute.
Examples of fraud cases
- $3 billion GSK settlement. On 2 July 2012, GlaxoSmithKline
pleaded guilty to criminal charges and agreed to a $3 billion
settlement of the largest health-care fraud case in the U.S. and the largest payment by a drug company.[10] The settlement is related to the company's illegal promotion of prescription drugs, its failure to report safety data,[11] bribing doctors, and promoting medicines for uses for which they were not licensed. The drugs involved were Paxil, Wellbutrin, Advair, Lamictal, and Zofran for off-label, non-covered uses. Those and the drugs Imitrex, Lotronex, Flovent, and Valtrex were involved in the kickback scheme.[12][13][14]
The government investigation of GSK was launched largely on the basis
of information provided by four whistleblowers who filed two qui tam
(whistleblower) lawsuits against the company under the False Claims
Act. GSK settled the whistleblowers’ lawsuits for a total of $1.017
billion out of the $3 billion settlement, the largest civil False Claims
Act settlement to date.[15]
- Pfizer $2.3 billion settlement: Pfizer settled multiple civil and criminal allegations for $2.3 billion in the largest case of pharmaceutical and health care fraud in US history. The drugs involved were Bextra (an anti-inflammatory drug), Geodon (an anti-psychotic drug), Lipitor (a cholesterol drug), Norvasc (anti-hypertensive drug), Viagra (erectile dysfunction), Zithromax (antibiotic), Zyrtec (antihistamine), Zyvox (an antibiotic), Lyrica (an anti-epileptic drug), Relpax (anti-migraine drug), Celebrex (anti-inflammatory drug), and Depo-provera (birth control).[16]
- Merck $650 million settlement: Merck settled a nominal
pricing fraud case in which the company was accused of taking kickbacks
and violating Medicaid best price regulations for various drugs."Huge Percentage of Financial Fraud Against U.S. Government Comes From Healthcare Industry". Deep Harm. 2009-09-02.</ref>"Top 20 Cases". Taxpayers Against Fraud. 2011-06-01.</ref>
- United States et al., ex rel. Jim Conrad and Constance Conrad v. Forest Pharmaceuticals, Inc, et al.
involved a drug manufacturer selling a drug, Levothroid, that had never
been approved by the FDA. These allegations settled for $42.5 million
due to multiple whistleblowers stepping forward to provide detailed
information on the alleged fraud. The collective reward to the relators
in this case was over $14.6 million.[17][18]
Reporting fraud
There are many ways to report cases of fraud. If a patient or health
care provider believes they have witnessed Health Care Fraud, they are
encouraged to contact the FBI via either their local office, telephone,
or the online tips form.
If, however, they want to ensure the government actively investigates
the alleged fraud, they are encouraged to contact legal counsel from an
experienced firm that specializes in
qui tam litigation under
the False Claims Act. A good legal team can advise potential
whistleblowers of their rights, protections, and what evidence is
necessary to solidify a case against the group leading the fraud.
See also
References
External links and resources
- Masterminds Behind Pharmaceutical Fraud Deserve Prison Time
- The Future of the False Claims Act
- CGMP Violations may be the Basis for Qui Tam
- Blowing the Whistle on Health Care Fraud
- Health Care Fraud Prevention
- FBI Tips Online
