There is certainly room for serious debate over what has caused the extremely high costs of healthcare in this country. We hear the cry each year for limits on the rights of individuals to recover damages in a courtroom when they are injured or damaged. The claim is that frivolous lawsuits and large verdicts increase the cost of our healthcare. That is simply not true and there can be little doubt about it. These claims are a fraud on the public and are designed so that insurance companies and those in the medical field can simply retain more of the money they receive. And the money involved – in so-called defensive medicine typically a few million dollars – is nothing compared to the cots of the massive frauds by pharmaceutical companies who scam the public in various ways for billions of dollars each year. Some of the schemes that pharmaceutical companies have commonly used, which may well be violations of Federal and State False Claims Acts, include:
• Off-Label Marketing of Drugs: One common scheme by pharmaceutical manufacturers has been to market or promote their drugs to physicians for an off-label or unapproved use. Although physicians may prescribe a drug for an off-label use, pharmaceutical companies violate federal law, including the False Claims Act, when they market, promote or encourage physicians to use their drugs in an off-label or non-FDA approved manner.
• Illegal Kickbacks: One common scheme has been for pharmaceutical companies to provide payments or other financial incentives to hospitals and/or physicians in order to induce them to prescribe their drugs to patients. Such payments or financial inducements can come in many forms, including:
o Bonus payments to physicians and hospitals;
o Lavish dinners and lunches;
o Tickets to sporting events, other forms of entertainment and golf outings;
o Payments for attending conferences, lectures or other meetings;
o Payments for serving on “advisory boards” which are excessive compared to the work being performed;
o Research funding and unrestricted educational grants;
o Phony or sham drug trials; and
o Free samples of drugs, which physicians then sell to patients.
These and other financial inducements can be a violation of the Federal Anti-Kickback statute, 42 U.S.C. §1328-7b(b), the Federal False Claims Act, as well as various other federal and state laws and regulations.
• Inflating the Price of Pharmaceuticals: Medicare and many State Medicaid programs determine the amount they will pay for drugs based upon a figure known as the Average Wholesale Price (AWP) for that drug. The AWP is determined by information reported by pharmaceutical manufacturers. One common type of fraud has been for pharmaceutical manufacturers to inflate the AWP of their drugs and to use that inflated cost to provide a financial inducement for pharmacists, Pharmacy Benefits Managers; Insurers; and Group Purchasing Organizations to prescribe their drugs. Such inducements violate the Federal Anti-Kickback statute, the Federal and State False Claims Acts, as well as various other federal and state laws and regulations. It also constitutes common law fraud because false prices are reported by the drug manufacturers.
• Best Price Fraud: In order for a pharmaceutical manufacturer to sell its drugs to the Medicaid Program, it must agree to charge the program the lowest price at which the manufacturer sells to drug wholesalers, pharmacists, HMOs, Group Purchasing Organizations, and other private sector customers. In order to induce these private insurers, wholesalers, pharmacists and businesses to purchase and prescribe their drugs, and to include them on their preferred formularies, pharmaceutical manufacturers have offered their drugs at prices below the best price offered to Medicaid. Many times these discounted or nominal prices are concealed from the government through other agreements between the pharmaceutical companies and the private insurers, wholesalers, pharmacists and businesses. The pharmaceutical companies conceal these discounts so as to avoid having to provide rebates to Medicaid to match the discounted price they are providing to private insurers, wholesalers, pharmacists and businesses. This violation of the Medicaid Best Price requirement can be a violation of Federal and State False Claims Acts.
Lawsuits have been filed to recover billions of dollars from pharmaceutical companies for these practices. However, it’s widely believed that billions of dollars in false and fraudulent claims and practices by pharmaceutical companies remain undetected. A combination of confidentiality rules in place and lack of staffing both at the federal and state levels, the drug manufacturers have been able to get away with cheating governments for years.
Source: Pertragolio Gordon website
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