U.S. Drugmakers Have Paid $8 Billion in Fraud Fines

(March 15, 2012) The nation’s largest pharmaceutical companies have paid at least $8 billion in fines for repeatedly defrauding Medicare and Medicaid for the past ten years. However, due to the fact that these pharmaceutical companies are the sole suppliers of critically needed medications, the federal government is faced with a conundrum.

 

Records show that Pfizer has paid over $3 billion in fines since 2002 and entered into three corporate integrity agreements with the Department of Health and Human Services, which are aimed at preventing future fraud. Pfizer and other companies are fighting Congress’ attempts to exclude them from future government business because of their history of fraud.

 

Merck, another pharmaceutical giant, has paid $1.6 billion in fines since 2008 to resolve claims that stated it was not paying proper rebates to the government, as indicated by Medicare and Justice Department records.  

 

Pfizer’s settlement was for improperly promoting the use of the drugs for purposes other than those which had government approval. Merck’s 2008 settlement involved claims that the company was paying illegal “kickbacks” to health care providers, in exchange for them prescribing their drugs to patients.

 

Most of the cases come from off-label marketing of prescription medications. For example, Pfizer was accused of marketing Bextra, a painkiller, for uses other than what the FDA had approved. Such uses constitute fraud because they take government money for purposes not approved by the FDA.

 

The problem the government is faced with is that, if a company is excluded from doing business with the government, the medications that only those companies produce will not be available to beneficiaries.

 

Another option is that the government can fine the companies, and force them to enter into corporate integrity agreements that require the government to watch over them, with a promise that they will not defraud the government again…this is a promise that is rarely kept.

 

Assistant inspector general for legal affairs for Health and Human Services mentioned that some of these companies have violated these terms two or three times. He stated that the “corporate integrity agreement is not sufficient to deter further misconduct.”  Another problem is that these fights can go on for years, which are “labor and cost-intensive.”

 

In 2010, the government announced a great idea: rather than exclude an entire company, investigators would go after individuals within a company. The Justice Department and the FDA came up with suggestions within the scope of the rules, such as taking away a company’s patent rights as a condition of the settlement. This investigation could begin immediately.

 

A senator from Iowa introduced a bill in order to make it easier for the government to find a middle ground.  The current law now forced “the inspector general to use all-or-nothing, mandatory exclusion penalties against corporations that have committed fraud.” The bill would now allow the exclusion of individuals from working with the government even after they have left the company where the fraud had occurred.

 

In the past year, pharmaceutical companies have spent more than $200 million lobbying Congress, ($12 million spent alone by Pfizer).

 

It has been suggested that if the government targeted individuals more aggressively, it could send a more powerful message to drug companies.  Jail time sends a stronger message than any fine possibly can as a deterrent.  If these big pharmaceutical companies continue to get by with a slap on their hands, they will continue to rip off the government.

 

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