Consumer Law

The New #1 - Drug Industry Fraud

By Joe Consumer

Did you ever notice how Americans have this obsessive need to be Number 1 all the time?  This fact once made for a very amusing ?New Rule? on HBO?s "Real Time with Bill Maher," called  America Isn't #1 (see clip below).  Said Maher,  ?So many people talk like it?s 1955 and we?re still number 1 in everything.  We?re not!?  Well, better tell that to the drug companies. 

On Monday, the group Taxpayers Against Fraud released a new report that found, ?All of the top ten federal False Claims Act settlements in FY 2010 involved health care, with eight involving fraud committed by pharmaceutical companies.?  Or as the Associated Press put it, ?In the 1990s, the pharmaceutical industry repeatedly was named the most profitable industry in the world.  More than a decade later, the industry tops a more dubious list: the No. 1 source of fraud-related settlements with the Department of Justice.?  AP reports, 

Topping the list was specialty drugmaker Allergan Inc. which paid out $600 million to settle allegations that it marketed the anti-wrinkle injection Botox for unapproved uses. Trailing just behind was AstraZeneca, which paid $520 million over allegations it inappropriately marketed its psychiatric drug Seroquel. Other companies in the top 10 include Novartis Pharmaceuticals, Forest Laboratories and Teva Pharmaceuticals.

Overall, the group estimates that in the fiscal year that ended Sept. 1, government prosecutors collected $3.1 billion under the False Claims Act, which allows the government to collect damages reported by private citizens.  In many cases, the alleged fraud is reported by company whistleblowers, who are eligible to receive between 15 percent and 30 percent of the total sum collected by the government.  The group advocates for whistleblowers and their attorneys who report fraud to the federal government.

Keep in mind, though, that not are drug companies are U.S.-based, especially when reading today?s big story:  the agreement by GlaxoSmithKline, which is British, to pay $750 million to settle criminal and civil complaints stemming from a suit first filed by whistleblower, Cheryl D. Eckard.  Seems like for years, GlaxoSmithKline knowingly sold 20 drugs manufactured at its contaminated plant in Puerto Rico (since shut down).  The drugs include, ?Paxil, an antidepressant; Bactroban, an ointment; Avandia, a troubled diabetes drug; Coreg, a heart drug; and Tagamet, an acid reflux drug." More prosecutions may be following. 

The Wall Street Journal blog does a pretty good job explaining the basis for the lawsuit:  

Eckard?s lawsuit was filed under a provision of the False Claims Act designed to encourage people with suspected knowledge of false government claims submission to step forward. The incentive: a cut of any resulting monetary recoveries. The lawsuits are usually filed confidentially and on behalf of the U.S. The Justice Department then has the option of taking the lead in the case, using information provided in the lawsuit, which it did in Eckard?s case.

Eckard told reporters after a Boston press conference that she took no joy in knowing it took such a case to bring the company around, but that she felt it was necessary because of the patient-safety implications. ?It has been a very difficult eight years for me and my family and I?m glad and relieved that it?s over.?

A study published in the New England Journal of Medicine in May concluded that the median whistleblower recovery was about $3 million. While you might think that would explain why people step forward, the whistleblowers surveyed by the researchers said they didn?t do it for the money, and that they suffered personally for their actions. Personal integrity and public-health concerns were the main reported motivations.

As we noted just yesterday, people sue for many reasons and very often safety - not money - is the goal. 

Full post as published by ThePopTort on October 27, 2010 (boomark / email).