Pharma fraud fills feds' coffers

The Justice Department says it secured more than $3 billion in settlements and judgments in civil cases involving fraud against the government in the fiscal year that ended Sept. 30--and the bulk of that money came from the pharma industry.

The $3 billion figure includes a record $2.8 billion in recoveries under the whistle-blower provisions of the False Claims Act, which is used to redress false claims for federal money or property, such as Medicare benefits, payments on military contracts, and federal subsidies and loans, the DoJ notes in a statement. This marks the second year in a row that the department has recovered more than $3 billion under the FCA, bringing the total since January 2009 to $8.7 billion.

In its statement, the department highlights the enforcement actions against pharma that have netted almost $2.2 billion in civil claims, including $1.76 billion in federal recoveries and $421 million in state Medicaid recoveries. These cases included $900 million from 8 drug manufacturers to resolve allegations that they had engaged in unlawful pricing to pump up their profits. GlaxoSmithKline ($GSK) alone has forked over $750 million to resolve criminal and civil allegations that it submitted false claims to government health care programs, leading the programs to pay for adulterated drugs.

According to Assistant Attorney General Tony West, 28% of the recoveries in the last 25 years were obtained since President Barack Obama took office, thus reflecting the administration's interest in stamping out this kind of fraud.

Even though the huge fines levied against drugmakers have captured headlines, industry execs have (off-the-record) described them as a cost of doing business. But, as one expert tells Pharmalot, the continued success of whistle-blower cases may keep drugmakers in the spotlight.

"As has been the case in recent years, pharmaceutical companies are expected to be the big payers, which is only fair since they have been the big players as far as fraud is concerned," writes Patrick Burns of the nonprofit Taxpayers Against Fraud, in an email to Pharmalot. "We are not seeing a decline in pharmaceutical fraud cases. Instead we are seeing the addition of other fraud streams, such as medical devices and pension fraud."

- see the DoJ statement
- get more from Pharmalot

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