What is Pharmaceutical Fraud under the False Claims Act?

Companies engaged in pharmaceutical fraud may be liable under the False Claims Act for Medicare and Medicaid fraud in any case where the government loses money directly or indirectly. The False Claims Act’s “qui tam” whistleblower provision gives private citizens (such as pharmaceutical whistleblowers) the power to sue companies on behalf of the government.

Examples of pharmaceutical fraud reported by whistleblowers include:

  • paying kickbacks and inducements to physicians, hospitals and pharmacists to prescribe or otherwise favor their drugs;
  • engaging in off-label marketing;
  • misreporting the “best price,” the “federal ceiling price” or other benchmark prices that pharmaceutical companies report to the Medicare and Medicaid programs;
  • overcharging for “340B” program drugs;
  • manufacturing or diverting substandard or tainted drugs.
  • providing false data to the Food and Drug Administration or withholding negative data from the FDA about the efficacy of a pharmaceutical drug or medical device in clinical research trials to get FDA approval to sell and market the pharmaceutical drug or medical device.
  • manufacturing, selling or distributing adulterated drugs — meaning those processes didn’t meet the required standards to ensure the safety, quality, purity, and correct strength of the drug.
  • patient assistance foundations conspiring with drug manufacturers from whom they accept donations, then using that money to steer patients to buy the donors’ drugs.

Pharmacy benefits management companies also have come under increasing scrutiny for pharmaceutical fraud as a result of qui tam lawsuits.

Phillips & Cohen has brought “qui tam” whistleblower cases alleging pharmaceutical fraud in a variety of ways, including off-label marketing, kickback schemes, and other Medicare and Medicaid fraud practices.

Those pharmaceutical whistleblower cases – such as our record-setting cases against GlaxoSmithKline and Pfizer Inc. — have stopped illegal and improper marketing and sales practices that were harmful to patients’ health and possibly their lives. Pharma companies paid huge sums to settle those cases, and our clients received hefty whistleblower rewards for exposing and helping to stop those harmful practices.

What is the process for a whistleblower to report pharmaceutical fraud under the False Claims Act?

While this process can vary depending on the specifics of the case and jurisdiction, here are some general steps a whistleblower might expect:

  • Compile Evidence: Gather evidence of the fraud or misconduct.
  • Consult an Attorney: Consult with an attorney experienced in whistleblower cases.
  • File a Qui Tam Lawsuit: File a sealed qui tam lawsuit in federal court, with the assistance of your attorney.
  • Government Investigation: The government reviews the case in secret and decides whether to intervene (take over the case) or decline.
  • Maintain Confidentiality: The lawsuit remains confidential while under seal.
  • Case Unsealed: If the government intervenes, the case is unsealed, and the legal process continues.
  • Potential Rewards: If successful, the whistleblower may receive a portion of any recovered funds as a whistleblower reward.

How do pharmaceutical fraud whistleblower cases benefit the public?

Pharmaceutical fraud whistleblower cases benefit the public by recovering taxpayer funds, promoting drug safety, and holding companies accountable for misconduct. They also enhance transparency and encourage ethical industry practices, ultimately safeguarding public health and resources.

Why have pharmaceutical whistleblower cases become more significant in recent years?

Pharmaceutical whistleblower cases have gained significance in recent years due to heightened public scrutiny of the industry, increased regulation, and the potential for substantial financial recoveries. Concerns about drug pricing, safety, and the misuse of public funds have contributed to a greater focus on exposing pharmaceutical misconduct. Additionally, whistleblower programs and legal protections have improved, making it safer and more rewarding for individuals to come forward with information about fraud and wrongdoing in the industry.

Phillips & Cohen’s top pharmaceutical fraud whistleblower cases:

  • GlaxoSmithKline paid $3 billion to settle a number of qui tam cases, including an off-label marketing case brought by Phillips & Cohen that resulted in the government recovering more than $1.5 billion out of the total settlement. It was the largest healthcare fraud settlement ever.
  • Pfizer paid $1.8 billion to settle a qui tam case and a related criminal fine involving the off-label marketing of Bextra, a prescription painkiller. Pfizer settled other whistleblower cases at the same time, pushing the total settlement to $2.3 billion. The Pfizer settlement set a record at the time as the largest healthcare fraud settlement and now is second only to the Glaxo settlement.
  • TAP Pharmaceuticals paid $875 million to settle a qui tam case we brought, a separate qui tam lawsuit and a related criminal charge involving illegal kickbacks to doctors.
  • Cephalon Inc paid $425 million to settle a criminal charge and qui tam lawsuits filed by Phillips & Cohen and two other pharmaceutical whistleblowers involving the off-label marketing of Actiq, Gabitril, and Provigil.

We also have had successful qui tam whistleblower cases against other pharma companies such as Omnicare Inc., Alpharma Inc., Jazz Pharmaceuticals Inc. and Ortho-McNeil-Janssen Pharmaceuticals Inc.


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