08/14/2013 // Whistleblower Law Firm // Keller Grover LLP // (press release)
Medicaid and Medicare fraud comes in many forms — each a troubling drain on the U.S. treasury. In recent years, wrongdoing by pharmaceutical companies has been a particular problem spot, but high-profile cases — and settlements — have highlighted one bright spot on the fraud landscape: The power of whistleblower lawsuits. Brought under the federal False Claims Act (and similar state laws), these suits have been able to right some serious wrongs — spurring recoveries that have at times measured in the billions of dollars.
“The False Claims Act is one of the most potent weapons we have in the fight against fraud,” says Jeffrey F. Keller, a founding partner at Keller Grover, a nationally recognized labor and employment law firm, and a veteran whistleblower lawyer. “It enables whistleblowers to receive a substantial share of any ultimate recovery, which incentivizes those with inside knowledge of wrongdoing to speak up — and speak out.”
Since it was substantially modified in the mid 1980s, the False Claims Act — a statute dating back to the Civil War era — has led to the recovery of more than $33 billion for the U.S. government and its taxpayers. Massive amounts of this recovery have come in False Claims Act cases involving the pharmaceutical industry. For whistleblower lawyers, that has not come as a surprise because of the billions in sales of pharmaceutical products each year.
“One can make the case that the pharmaceutical industry has been perhaps the biggest perpetrator of health care fraud against the government,” says Keller, whose firm has offices in San Francisco and Los Angeles. “They have huge contracts with the government’s health care programs every year.”
While there have been hundreds of cases against pharmaceutical companies brought under the False Claims Act, Keller notes they have tended to fall into one of the following five categories:
Off Label Marketing: The U.S. Food and Drug Administration prohibits drug makers from marketing or promoting a drug for uses that the FDA has not authorized. Unfortunately, pharmaceutical companies do not always comply with this prohibition and use off-label marketing to encourage doctors to prescribe a drug, and thereby increase sales.
Kickbacks: These come in many forms — cash payments, funding for research and other projects, so-called ‘performance-based rebates’ or lavish meals, free gifts and trips to exotic destinations packaged as “continuing medical education” (CME) courses for doctors — but they all have one thing in common: pharmaceutical companies improperly rewarding doctors, pharmacies, and other suppliers to favor their drug over a competitor’s to increase sales.
Good Manufacturing Practice (GMP) Violations: GMP regulations require drug manufacturers to follow certain quality, safety, and reporting guidelines. When a manufacturer fails to follow cGMP, it may result in adulterated or misbranded drugs. A pharmaceutical company is prohibited from selling any adulterated or misbranded product.
Fraudulent Drug Price Reporting to Medicaid and Medicare: In layman’s terms, the government requires that it be given the best available price for the pharmaceutical products it buys through its healthcare programs. While a seemingly simple concept, it involves complex calculations involving the average manufacturer price for each product sold. Like any other complex financial fraud, manipulation of either best available price or average manufacturer price can lead to the government paying significantly more than it bargained for.
Pharmaceutical companies including GlaxoSmithKline, Novartis, Merck, Pfizer, Amgen, Aventis Pharmaceutical, Ranbaxy and AstraZeneca, to name just a few, have collectively repaid billions to the federal government and the states to settle claims involving these kinds of violations for drugs that the Medicare and Medicaid programs ultimately paid to provide to the programs’ beneficiaries – American consumers.
“While we can see in retrospect the variety of ways pharmaceutical companies have defrauded taxpayers, we’ve only been successful in fighting back because of whistleblowers who came forward to explain what was happening,” says Keller. “And make no mistake about it. These are not the only ways that a pharmaceutical company can engage in fraud. If we are going to continue to be successful in combatting pharma fraud, we need whistleblowers to sound the alarm when these companies pull these known kinds of fraud – and when they develop new ways to bilk the system. Whistleblowers are the first responders for fraud and they send a message that wrongdoing won’t be tolerated — that there will be, quite literally, payback.”
“The False Claims Act is designed to encourage those with inside knowledge of wrongdoing to speak out. Whistleblowers are awarded a share of any recovery the government ultimately obtains, and the statute provides powerful protections against retaliation by their employer — such as demotion or even termination,” says Keller, whose firm has offices in Los Angeles and san Francisco, California.
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