Report: Feds get big 'bang for the buck' in fighting pharma fraud

The latest report on healthcare fraud settlements is out, this time from Taxpayers Against Fraud (TAF). And this time, as usual, Big Pharma features prominently. The anti-fraud group regularly totes up whistleblower settlements with federal and state governments, and we all know that drugmaker payments account for billions.

This TAF report cites healthcare settlements from 2008 to 2012--a total of $18.3 billion. That amount includes multibillion-dollar settlements with top Big Pharma companies. FiercePharma readers have heard the names and numbers before, but listed all at once, the amounts can be impressive: GlaxoSmithKline ($GSK) and $3 billion, Pfizer ($PFE) and $2.3 billion, Abbott Laboratories ($ABT) and $1.6 billion, Eli Lilly ($LLY) and $1.2 billion. And that doesn't even count Johnson & Johnson ($JNJ), whose still-pending settlement is said to approach $3 billion.

The actual deterrent effect of these settlements is questionable, as Bloomberg notes. Collecting payments isn't enough, Sen. Charles Grassley, who has championed whistleblower claims, told the news service. "Right now, it's a cost of doing business," he told Bloomberg. "When it's a cost of doing business, behavior isn't going to change and criminal prosecution needs to be pursued. When you jail somebody, it makes a bigger point than any fine you're going to get."

TAF's purpose isn't to put the hurt on pharma, however; it's to gauge the government's ROI on prosecutions under the False Claims Act. To get to the most accurate number, collections-wise, TAF rounds up some FCA-related penalties that the Department of Justice tends to leave out of its own accounting, including criminal penalties and state payments.

So, the only pharma settlement TAF highlights specifically is last year's $3 billion deal with Glaxo--and that to break down the payment into its constituent parts. Criminal penalty of $1 billion; $832 million in civil, off-label marketing penalties to the feds; $210 million in similar penalties to the states; $300 million for over-pricing, with $161 to the feds, $119 million to states, and about $20 million to public health groups; and $657 million in Avandia-related false claims. Of all that, the DoJ only put $1.5 billion toward its accounting of FCA payments.

And the feds were pretty happy about their settlement numbers, without including everything that TAF does. They should be even more so now, the group says. As TAF calculates, the DoJ's usual sum represents a 16:1 return on investment, and under its own broader definition, the return is better than 20:1. "It is clear that the federal government is getting a tremendous 'bang for the buck' in its anti-fraud activities in healthcare," the report states. 

- read the TAF report (PDF)
- get more from Bloomberg

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