Call it Notorious Big Pharma. According to a new report, drugmakers defraud the federal government more than any other business. Even more than the defense industry, which for decades had been the poster child for government fraud. As the New York Times reports, four drugmakers accounted for more than half of the fraud settlements paid to the feds and state governments over the past 20 years.
You could say that pharma tops the list of fraudsters simply because governments have been aggressively investigating and prosecuting the industry. The feds have had new-and-improved help from whistleblowers, who, under the 1986 revisions to the False Claims Act, gained additional incentives to sue, and it's these FCA settlements that Public Citizen enumerates in its fraud report. Plus, three-fourths of these settlements wrapped up within the past five years, indicating that governments have stepped up their efforts.
Still, for government investigators to find misbehavior, it had to be there in the first place. We're all familiar with pharma's violations: chiefly off-label marketing, but also Medicaid overbilling and shoddy manufacturing. Settlements by Pfizer, GlaxoSmithKline, Eli Lilly and Merck's Schering-Plough unit alone amount to $10.5 billion (although some companies have not admitted wrongdoing as part of those settlement deals).
The NYT's sources have a few additional theories about pharma's ascendance on the fraud table. Healthcare spending has mushroomed, for one thing, so it accounts for a larger share of federal spending. For another, intense pressure to boost sales has inspired some sales managers and reps to resort to off-label promotions.