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False Claims Act Update & Alert |
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Taxpayers
Against Fraud Education Fund | Washington, D.C. |
WWW.TAF.ORG |
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$704
Million Serono Settlement Largest Civil Drug Settlement to Date Taxpayers Against Fraud applauds the recent settlement of the largest civil False Claims Act drug case to date. The $704 million settlement against Swiss-based Serono was the result of whistleblower lawsuits filed under the False Claims Act. Since 1986, the False Claims Act has returned over $15 billion to the U.S. Treasury. In the Serono lawsuits the drug manufacturer was charged with illegally marketing Serostim, an anti-wasting growth hormone sold to AIDS patients but also used illegally by body builders. The whistleblower complaints charged that the company was paying massive kickbacks to doctors in order to get them to prescribe Serostim, which costs over $20,000 for a three-month regime. In addition to kickbacks, whistleblower complaints allege that:
One New York doctor, Mikhail Makhlin, for example, illegally prescribed over $11.5 million worth of the drug, which was paid for by Medicaid. At the height of the Serostim scam, New York State alone was spending over $50 million a year for the growth hormone, much of which was being illegally diverted to the body-building market. Unlike steroids, Serostim cannot be detected by sports groups' blood tests "This scam was costing U.S. taxpayers scores of millions of dollars a year," said James Moorman, President of Taxpayers Against Fraud, which serves as a clearinghouse for lawyers and whistleblowers using the False Claims Act to ferret out fraud. "Bringing it to justice was a public-private partnership made possible only because of the courage of whistleblowers who were willing to stand up, speak up and risk all." For their bravery, the four whistleblowers in this case will receive an award of approximately $51 million to be split between the whistleblowers, several law firms, and the federal government to whom taxes must be paid. For its part, Federal and State governments will collect $567 million to repay money stolen from Medicaid. Serono will also pay a $136.9 million criminal fine. Notes Moorman, "Money stolen from Medicaid is money that should be going to America's poorest and sickest. What Serono was doing was gaming a system at the expense of Americans at the very bottom of the economic system. This was premeditated fraud." The Serono case is just one of many large pharmaceutical fraud cases now in the works. Taxpayers Against Fraud notes that more than 500 drugs are now under investigation for fraud right now. The first 11 prescription drug manufacturers cases were settled for a combined total of $2.55 billion and, notes Moorman, "Based on the size of this case, it does not appear they are getting smaller." Moorman expressed concern, however, that only one False Claims Act pharmaceutical fraud case was settled last Fiscal Year by the U.S. Department of Justice. "There are a lot of cases on the docket right now," he said, " and we think the DoJ needs to be given the resources to resolve them. The False Claims Act has been returning $13 for every dollar invested in health care investigations and prosecutions. We need to ramp up investigations to discourage fraud, recover America's stolen billons, and discourage the rampant price-gouging and kickbacks that appear to be so pervasive in the drug marketing arena. With the new Medicare prescription drug benefit about to come on line, we cannot afford to be unprepared for the flood of pharmaceutical fraud that is likely to follow." n ___________________
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