Most Americans would be shocked if they knew that the politically powerful pharmaceutical industry has seen almost all of its companies accused of fraud at some point in time by both the federal and state governments. Hopefully, that message is beginning to be conveyed to the public. Much of the fraud has involved the Medicare and Medicaid programs. Many of the companies, when accused of fraud, simply agree to a corporate integrity agreement with the government and then pay a fine to avoid being excluded from doing business with the specific federal program that was cheated. More effective measures are badly needed to make the drug companies follow the law.
We know from having litigated cases against the drug companies in several states, including Alabama, that the nation’s largest drug manufacturers have committed wholesale fraud in government programs. It was reported by USA Today recently that the drug companies have paid at least $8 billion in fines for repeatedly defrauding Medicare and Medicaid over the past decade. But the very same companies continue to do business with the federal government, even though many are repeat offenders. It was stated in the USA Today story that this is because the drug companies are often the sole suppliers of critical products. While that may be a reason, I am convinced the political power and influence of the drug industry are also major factors. In fact, that may well be the real reason the companies are able to stay in the government programs after repeat offenses.
Instead of exclusion, it’s quite obvious that the government has resorted to the use of corporate integrity agreements. But the penalties associated with these agreements haven’t been enough to stop the companies from continuing to cheat the government. In reality the companies make much more in profits than they lose in fines. The government – including the Justice Department and the FDA – must be given the tools necessary to stop the companies from committing fraud in government programs. It is costing the taxpayers huge sums each year since they pick up the tab when the drug companies cheat the government.
Many of the fraud cases involving the drug industry involve off-label marketing of prescription medications. For example, Pfizer was accused of marketing Bextra, a painkiller, for uses other than the actual uses the FDA had approved. A prime example of how the system works involves Pfizer, which has paid almost $3 billion in fines since 2002, and has entered into three corporate integrity agreements with the Department of Health and Human Services aimed at preventing future fraud. Some may be shocked to learn that Pfizer is still doing business with the government in spite of its record of fraudulent conduct.
According to USA Today, Merck, another pharmaceutical giant, has paid $1.6 billion in fines since 2008, to resolve claims that it was not paying proper rebates to the government. Merck’s 2008 settlement involved claims that the company paid illegal kickbacks to health care providers in exchange for prescribing its drugs.
Pfizer, Merck, and other companies are currently fighting attempts by Congress to exclude them from government business because of their history of having committed fraud against the government. Gregory Demske, assistant inspector general for legal affairs for Health and Human Services, had this to say:
We’re seeing some of the big companies a second and third time. The corporate integrity agreement is not sufficient to deter further misconduct.
The fraudulent conduct involved with off-label use of drugs by the industry is widespread. Such uses constitute fraud because they take government money for purposes the FDA has not approved. Instead of excluding a company from doing business with the government, the government could at least exclude the drug from being marketed off-label.
We know firsthand that litigating cases against drug companies is labor- and cost-intensive because the companies fight, often for years, to avoid an exclusion. In an effort to change that trend in 2010, the government announced that, rather than exclude an entire company, investigators would go after individuals within a company. The Justice Department and the Food and Drug Administration have come up with some concepts to use within the scope of the rules — such as taking away a company’s patent rights as a condition of a settlement – but it doesn’t appear that has been used very often – and I doubt that this concept will be used more frequently in the future.
Sen. Chuck Grassley, R-Iowa, introduced a bipartisan bill that would make it easier for the government to find a middle ground, saying the law now forces “the inspector general to use all-or-nothing, mandatory exclusion penalties against corporations that have committed fraud.” His bill, if passed, would allow the exclusion of individuals from working with the government even after they have left the company where the fraud occurred. A major aspect of the fraud involves the AWP litigation. Drug prices are fraudulently increased, costing taxpayers millions of dollars. Our firm has been heavily involved in this litigation.
Pharmaceutical companies spent more than $200 million lobbying Congress in 2011, including $12 million spent by Pfizer alone. According to USA Today, at least 12 pharmaceutical and medical device companies are lobbying specifically against a House bill (HR 675) that complements Grassley’s Senate bill. The industry’s trade group, the Pharmaceutical Research and Manufacturers of America, says excluding an individual should occur only when there is “significant wrongdoing” that the individual knew about and did nothing to stop. Hopefully, Congress will give the FDA and the Justice Department the authority to adequately regulate the pharmaceutical industry and to punish the companies when they lie, cheat and steal.
Source: USA Today
Contact us today for a free legal consultation with an experienced attorney.
Fields marked *may be required for submission.
If you would like to subscribe to the Jere Beasley Report digital edition, simply visit our Subscriptions page and provide the necessary information or call us at 800-898-2034.
Attorney Advertising - Prior results do not guarantee a similar outcome.