Pharmaceutical Fraud

Pharmaceutical Fraud

Pharmaceutical fraud involves activities that result in fraudulent claims to healthcare programs like Medicare by pharmaceutical (or drug) companies.  They typically involve a drug company billing the government for mislabeled, ineffective or dangerous drugs.

Whistleblower cases brought under the False Claims Act have been especially effective in ferreting out pharmaceutical fraud.  Since 1991, False Claims Act settlements involving pharmaceutical fraud have totaled more than $10 billion.  Whistleblowers are critical to exposing such fraud, bringing pharmaceutical companies to justice, and recovering substantial funds owed by pharmaceutical companies to taxpayers.

Common Types of Pharmaceutical Fraud

Pharmaceutical fraud can take many forms, but it typically involves one of these scenarios:

Government regulations require drug manufacturers to have adequately equipped facilities, properly trained personnel, stringent control over the manufacturing process, appropriate laboratory controls, complete and accurate records, reports, appropriate finished product examination, and so on.  Violating these regulations may lead to False Claims Act liability. 

Though physicians may prescribe drugs for off-label usage known as off-label marketing, the Food and Drug Administration (FDA) prohibits drug manufacturers from marketing or promoting a drug for a use that the FDA has not approved.  A manufacturer illegally “misbrands” a drug if the drug’s labeling includes information about its unapproved uses. A drug is deemed misbranded unless its labeling bears adequate directions for use.  If these statements or materials promote a use that is inconsistent with the product’s approved labeling, the product is misbranded and there is a potential False Claims Act violation.

Drug manufacturers must report to the government (the Centers for Medicare and Medicaid Services, or CMS) its “best price,” which is defined as the lowest price available to any wholesaler, retailer, provider, health maintenance organization (HMO), nonprofit entity or the government.  The government requires accurate information about “best price” because that is the price it uses to reimburse pharmaceutical companies for the price of the drugs.  There is potential False Claims Act liability if the pharmaceutical company falsely self-reports its “best price.” 

One common scheme has been for pharmaceutical companies to provide “kickbacks” to hospitals and/or physicians in order to induce them to prescribe their drugs to patients. Kickbacks are rewards such as cash, jewelry, free vacations, corporate sponsored retreats or other lavish gifts used to entice medical professionals to favor one particular drug over another.  Providing and/or accepting such kickbacks is a violation of the False Claims Act (among other federal statutes). 

These are examples of some of the most common types of pharmaceutical fraud and this list is by no means exhaustive.  Because the pharmaceutical industry involves so many players and moving parts (e.g., drug companies, pharmaceutical representatives, prescription benefits managers, pharmacists, compounders, etc.), the types of potential fraudulent activity is nearly limitless.  If you suspect that the government in any way has been improperly billed for a drug, or that a drug has been improperly used or marketed, then it should be a sign to you that there is potential False Claims Act liability. 

Pharmaceutical Fraud Attorneys

Robbins Geller Rudman & Dowd LLP is committed to fighting for our whistleblower clients in their courageous efforts to combat fraud.  If you are aware of an instance where a government contractor is committing, or has committed, fraud on the government and are thinking of blowing the whistle, please contact Jonah H. Goldstein or James E. Barz.  We can help you understand how to file a claim, what compensation you may be entitled to for your effort, and what protections you are afforded as a whistleblower, and can answer any other questions you may have concerning the False Claims Act.