Whistleblowers Help Protect Government From Fraudulent Drug Manufacturers

False Claims Act Recovers Over $2.4 Billion in Medicare and Medicaid Fraud by Drug Companies

A new study from the Taxpayers Against Fraud Education Fund reports that over $2.4 billion has been recovered from drug manufacturers engaged in fraud against the U.S. Government and the 50 states .

"This is just the tip of the iceberg," notes James Moorman, President of the consumer group.

"The Assistant Attorney General for the Civil Division of the U.S. Department of Justice reports that over 500 drugs are under investigation right now, and we believe some of the biggest fraud cases are still under seal."

In the TAF Education Fund report, Medicaid expert Andy Schneider finds that whistleblowers have been essential to the ability of the Federal Government and the states to uncover drug manufacturer fraud against Medicare and Medicaid.

"The marketing and pricing schemes in these cases were complex and sophisticated; despite the large amount of government funds at risk, these schemes would have been almost impossible for the government to detect without the help of whistleblowers," Schneider said.

"These are not accidental frauds," notes Moorman. "Many of these are business plan frauds that involve inflating prices, paying kickbacks to doctors, and violating federal rules and regulations in order to overbill Medicare, Medicaid and other federal health care programs."

Click on above cover to read complete study (PDF).

Moorman notes that some drug companies have already shelled out hundreds of millions of dollars and are still embroiled in major litigation. TAP Pharmaceuticals, for example, paid $875 million to the Federal Government to resolve criminal charges and civil liabilities in connection with fraudulent pricing of the cancer drug Lupron. Last week the company agreed to pay an additional $150 million to settle insurance company and patient lawsuits related to the pricing and marketing of the same cancer drug.

TAP’s troubles are hardly over, however.

A False Claims Act lawsuit by a Louisiana doctor charges the company with misrepresenting the pricing of Prevacid — a drug with four times the sales volume of Lupron.

TAP is not alone. In June 2003, AstraZeneca Pharmaceuticals paid $355 million to resolve criminal charges and civil liabilities in connection with the pricing and marketing of the cancer drug Zoladex. Now the same company is again under fire from two U.S. Attorneys. The U.S. Attorney’s Office for the Eastern District of Pennsylvania is seeking documents related to the formulary status of AstraZeneca’s Prilosec and Nexium ulcer pills. AstraZeneca has also received a subpoena from the U.S. Attorney’s Office in Boston seeking documents related to possible kickbacks paid to physicians at large regional clinics in northeastern Massachusetts.

Schneider notes that most drug-fraud cases are brought to the attention of the Justice Department by whistleblowers, as was a case against Schering-Plough involving a generic version of asthma inhalant albuterol. That case settled claims against the Texas Medicaid program, but the Attorneys General of Florida, California and Ohio have joined similar cases, and a large Federal case is believed to be under seal.

Schneider notes that last year the fraud recoveries against prescription drug manufacturers totaled more than $802 million - a sum in excess of what the Federal Government spent on the AIDS Drug Assistance Program (ADAP). "The $802 million came from just 3 cases, and there are about 100 cases pending. If some of those cases settle, and if last year’s cases are at all representative, Medicare and Medicaid could be receiving many hundreds of millions in paybacks from drug manufacturers over the next few years." n