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Pharmaceutical fraud comes in all shapes and sizes. Some pharmaceutical companies have been accused of dangerously cutting corners in drug production; conducting illegal off-label marketing—that is, soliciting physicians to prescribe drugs for unapproved uses; and overcharging government healthcare programs such as Medicaid and Medicare (Medicaid and Medicare fraud). The FBI estimates that health care fraud costs American taxpayers $60 billion a year. Responsible citizens using the False Claims Act have helped the government recover billions that would have been lost to fraud.

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Between January of 2011 and January of 2012, five employees at a major pharmaceutical company —including a former senior marketing development manager for the company and a regional vice president—filed lawsuits against the company under the False Claims Act.

The suits alleged that for years, the company had engaged in a number of improper practices that put profits before the law and public safety. According to court documents, the company had bribed doctors with hunting trips, spa treatments, and vacations to the Caribbean. The company had failed to report, or misrepresented, clinical trial data to the FDA for a number of widely-used drugs. Worse yet, the company’s policies at the time rewarded sales representatives for the number of drug prescriptions sold, encouraging illegal off-label marketing practices for some drugs. The suits also alleged the pharmaceutical company had consistently overcharged the government for its drugs.

In 2012, the federal government concluded its investigation and intervened in all four of the cases. Five months later, the company settled the whistleblowers’ suits and other false claims that were discovered during the government’s investigation for $2 billion, the largest civil False Claims Act settlement to-date. The investigation also resulted in criminal charges that carried $1 billion in penalties. In all, the $3 billion settlement made the case the largest healthcare fraud case in U.S. history. Further, the settlement included an agreement by the company to withdraw bonuses from top executives if they engaged in or supervised illegal behavior.

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Key takeaways:

  • Cases filed under the False Claims Act can result in investigations that uncover all kinds of corporate malfeasance in the pharmaceutical industry, saving lives and recouping billions in taxpayer dollars.
  • False Claims Act cases are most rewarding when they result in institutional changes in company’s culture, such as the agreement by this company that executives implicated in improper behavior must forfeit bonuses. Mehri & Skalet, PLLC, frequently pushes for and achieves such institutional changes in its cases.
  • There are time limits for filing claims – and only the first person or group to file suit is usually eligible for rewards. If you have information you believe would help prove fraud against the government, now is the time to act. See the For Whistleblowers page for more details.