Whenever pharmaceutical companies are found to be engaged in fraudulent activities, they may be held accountable under the False Claims Act for committing Medicare and Medicaid fraud, leading to financial losses for the government. The False Claims Act’s qui tam whistleblower provision enables private individuals like pharmaceutical whistleblowers to take legal action against these companies on behalf of the government. Whistleblower may be entitled to 15 to 30 percent of the total amount recovered by the government.
Types of Pharmaceutical Fraud
Off-label marketing
Pharmaceutical companies may promote their drugs for uses that are not approved by regulatory authorities, known as off-label marketing. If they market drugs for conditions or patient populations that have not been approved, it can constitute fraud.
Why exactly is off label marketing bad?
Off-label marketing can lead to people taking a drug for a purpose it was not intended, potentially resulting in serious side effects and adverse reactions. Furthermore, off-label marketing can also be a way for companies to increase their profits, by promoting a drug for purposes that are not backed up by scientific evidence. As a result, consumers may not be getting the best treatment for their condition and may be taking medications that are ineffective or even potentially dangerous. All in all, off-label marketing can lead to serious health risks and should be avoided.
Kickbacks and Bribery
Companies may offer illegal kickbacks or incentives to healthcare providers, physicians, or other entities in exchange for prescribing their drugs or purchasing their products. These kickbacks can take the form of monetary rewards, expensive gifts, trips, or other improper benefits.
Price Manipulation
Pharmaceutical manufacturers may engage in fraudulent practices related to drug pricing. This can include overcharging government healthcare programs, such as Medicare or Medicaid, by inflating prices or engaging in price fixing with other companies.
False Claims and Billing
Submitting false claims for reimbursement to government healthcare programs is another form of pharmaceutical fraud. This can involve misrepresenting the nature of the services provided, inflating costs, or billing for drugs or treatments that were not actually provided.
Good Manufacturing Practice Violations
Pharmaceutical companies are required to adhere to strict quality standards in manufacturing drugs. Violations of good manufacturing practices (GMP) regulations, such as adulterating or mislabeling drugs, can lead to fraud against the government if these substandard products are supplied to government healthcare programs.
Research Fraud
Fraud can occur in clinical trials or research studies sponsored by pharmaceutical companies. This may involve falsifying data, manipulating results, or withholding information that could impact the safety or efficacy of a drug.
Failure to Disclose Risks
If a pharmaceutical company is aware of potential risks or adverse effects associated with its drugs but fails to disclose this information to regulatory authorities or the government, it can constitute fraud.
Medicaid and Medicare Fraud
Fraudulent activities targeting government healthcare programs, such as Medicaid and Medicare, can occur in various ways within the pharmaceutical industry. This can involve overcharging, billing for unnecessary services or products, or providing false information to qualify for reimbursement.
Which Laws Protect Whistleblowers in the Pharmaceutical Industry?
False Claims Act
One of the primary laws protecting pharmaceutical whistleblowers is the federal False Claims Act (FCA). The FCA prohibits making or causing to be made false or fraudulent records, statements, and/or claims for the purpose of obtaining payment from the federal government. The FCA rewards whistleblowers with a percentage of the government’s recovery, ranging from 15 to 30 percent.
Whistleblower Protection Act (WPA)
The Whistleblower Protection Act (WPA) of 1989 aims to protect federal employees who disclose information about fraud, waste, or abuse of authority. The act shields such employees from retaliation by their employers and allows them to file complaints with the Office of Special Counsel
Sarbanes-Oxley Act of 2002
The Sarbanes-Oxley Act of 2002 also offers whistleblower protection under which public companies must establish procedures to protect whistleblowers from retaliation, and the Dodd-Frank Wall Street Reform and Consumer Protection Act provides additional whistleblower protection and provides incentives for reporting certain securities law violations.
Dodd-Frank Wall Street Reform and Consumer Protection Act
The Dodd-Frank Act provides protections and incentives for individuals who report violations of securities laws, including whistleblowers in the pharmaceutical industry who expose fraudulent practices related to the marketing, sales, or financial reporting of pharmaceutical products.
Food, Drug, and Cosmetic Act (FDCA)
The FDCA is a federal law in the United States that regulates the safety, efficacy, and labeling of pharmaceutical products. It includes provisions protecting employees from retaliation for reporting violations related to the manufacturing, distribution, or marketing of drugs.
Affordable Care Act (ACA)
The ACA includes provisions that strengthen whistleblower protections for individuals who report violations related to healthcare fraud and abuse, including pharmaceutical fraud. It provides safeguards against retaliation and offers financial rewards for successful recoveries.
It is important to note that each jurisdiction may have different laws and protections for whistleblowers in the pharmaceutical industry. That being the case, consulting an attorney or legal professional familiar with the relevant laws and regulations can be helpful.
How do the actions of Pharmacy Benefit Managers (PBMs) potentially give rise to qui tam lawsuits under the False Claims Act?
The actions of Pharmacy Benefit Managers (PBMs) can potentially give rise to qui tam lawsuits under the False Claims Act when they engage in practices that result in false or fraudulent claims being submitted to government healthcare programs like Medicare and Medicaid. Some examples of actions by PBMs that could lead to such lawsuits include:
- Kickbacks: If PBMs give or receive kickbacks for favoring specific drugs on formularies or directing business to certain pharmacies or drug makers, it may violate the False Claims Act.
- Spread Pricing: PBMs may charge health plans more for medications than they pay pharmacies, pocketing the difference as profit. If this margin is not disclosed or is falsely presented to government healthcare programs, it could result in a qui tam lawsuit.
- Drug Switching: If PBMs change patients’ prescriptions to pricier drugs without a valid medical reason just to boost profits, it may be seen as fraudulent under the False Claims Act.
- Not Passing on Rebates: PBMs negotiate rebates with drug manufacturers. If they don’t pass on these savings to government healthcare programs as needed, it could lead to a false claim.
Whistleblowers, often employees or contractors of PBMs who have inside knowledge of these practices, can file qui tam lawsuits on behalf of the government to expose and address this fraud. If the lawsuit is successful, the whistleblower may be entitled to a portion of the recovered funds as a reward for their role in uncovering the fraud.
PRACTICE AREAS
Common TYPES OF Pharmaceutical Fraud
- Off-label Marketing
- Unlawful Kickbacks
- Illegal Drug-Switching
- Compounded Drug Fraud
- 340B Drug Discount Program Fraud by PBMs
- Clinical Trial Manipulation
- Failure to Comply with CGMP Requirements