Information & Insight On Qui Tam Lawsuits Based Upon Unlawful Kickbacks, Marketing & Pricing Conduct.

According to a recent report from HHS-OIG, pharmaceutical manufacturers are playing games with the FDA when it comes to providing information about how patients and prescribers are using some of the riskiest drugs on the market. Adding insult to injury, there is nothing the FDA can do about it.

The report was done to assess how the FDA is handling so-called “Risk Evaluation and Mitigation Strategies” (REMS), which are supposed to check on whether potentially-dangerous drugs are actually doing what they are supposed to do after the FDA approves them. The REMS can include checking on results, producing brochures to warn patients about side effects, limit which hospitals and pharmacies get especially dangerous drugs and special training for doctors.

However, the entire REMS process seems to operate on an honor-code system, with drugmakers self-assessing and self-reporting. Needless to say, some companies have been slow to report adverse events, especially with revenue numbers climbing in the void of safety concerns.

HHS-OIG noted, “The FDA does not have the authority to take enforcement actions against sponsors [drug companies] that do not include all information requested in FDA assessment plans.” HHS-OIG, in turn, begs Congress to fix this problem during the current legislative session.

If, however, Congress turns a blind eye to the problem, drugmakers undoubtedly, will continue to slow-walk problems to the FDA. Until then, the FDA will need to rely on whistleblowers to report known safety problems that are jeopardizing patients’ lives.

More information for whistleblowers is located at the Nolan Auerbach website.

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By its very nature, health care fraud thrives in the dark. Thus, the drafters of the Affordable Care Act tried to shine a light on health care kickbacks by including a so-called “Sunshine” provision into the law. Just last week, CMS released a final rule implementing this legislation, which will require manufacturers of drugs, devices, and other medical supplies to report certain payments provided to physicians or teaching hospitals. In addition, manufacturers and group purchasing organizations (GPOs) will have to disclose to CMS physician ownership or investment interests.

To give applicable manufacturers and GPOs sufficient time to prepare, CMS said data collection will begin August 1, 2013, and the reporting period will run through December 2013. Data are due to be reported to CMS by March 31, 2014, and CMS said it will release the data on a public website by September 30, 2014.

Undoubtedly, this information will increase public awareness of financial relationships between drug and device manufacturers and certain health care providers.

More information for whistleblowers is located at the Nolan Auerbach website.

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In 2002, after several member-pharmaceutical companies paid out substantial fines for violating the federal Anti-kickback Statute, the industry trade association Pharmaceutical Research and Manufacturers of America (PhRMA) adopted a new marketing code for its members to aspire to abide.

While the kickback reigns may have been pulled back within some companies, there are pharmaceutical companies that still may be deploying the kickback schemes of the 1990s. Oftentimes, these schemes are developed from senior management, who are pressured to buy their way into a market that has been dominated by an established pharmaceutical company.

Such tactics may have played a role in a recent $11.4 million False Claims Act settlement involving specialty pharmaceutical company Victory Pharma, Inc. In this intervened False Claims Act qui tam action, the company allegedly engaged in a scheme to promote its drugs by paying physicians blatant kickbacks to switch from competitor products. The company’s alleged kickbacks included tickets to professional and collegiate sporting events; tickets to concerts and plays; spa outings; golf and ski outings; dinners at expensive restaurants; and numerous other out-of-office events.

When sales representatives raised questions about the legality of such promotions, senior management allegedly declared that only PhRMA companies were bound by the Code against kickbacks. Moreover, company officials allegedly touted this freedom from constraints as an advantage over PhRMA competitors.

More information for whistleblowers is located at the Nolan Auerbach website.

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Actress Mae West said, “If a little is great, and a lot is better, then way too much is just about right!” Some pharmaceutical company executives have apparently bought into this view, for recent False Claims Act cases and settlements have detailed off-label promotions that touted higher, unapproved dosages of drugs. To further seduce prescribers, these promotions have regularly “marketed the spread,” spotlighting the profit margins between what health care providers paid for drugs and what Medicare paid in reimbursement. The end result has been escalating average dosage levels for high-priced drugs, oftentimes at the expense of government health care programs and patient safety.

Recently, a Washington Post article explained how Amgen and Johnson & Johnson drove sales for their multibillion-dollar anemia drugs, Epogen, Procrit and Aranesp, while questions emerged about the products’ safety and efficacy. Generating more than $8 billion a year for the two companies, these products were approved by the FDA, primarily for patients undergoing dialysis treatment. Over the course of twenty years, however, the products’ FDA-approved label expanded and the prescribers started using the products at higher and higher off-label dosage levels, oftentimes well above FDA-approved levels.

The companies allegedly mounted an aggressive “marketing the spread” marketing campaign that spotlighted the tremendous profits available to health care providers. It was apparently an easy sale, for the profits were quite substantial. In fact, according to the Medicare Payment Advisory Commission, the markup that doctors, clinics and hospitals received on the drugs given to Medicare patients reached as high as 30 percent. As an added incentive, the companies reportedly offered discounts to practices that dispensed the drugs in big volumes. Furthermore, according to publicly disclosed qui tam actions, the companies also overfilled vials, adding as much as 25 percent extra, allowing health care providers to further widen profit margins.

Moreover, the companies allegedly encouraged physicians to turn a blind eye to the FDA-approved dosage levels for their products. Indeed, their sales forces were allegedly singing Mae West’s tune that “If a little is good, more is better,” according to Steven Bander, formerly chief medical officer with Gambro, one of the nation’s largest dialysis clinics. Subsequently, the average dosage for anemia drugs skyrocketed, doubling in just a few years.

Recently, however, it was discovered that the higher dosage levels posed serious safety risks to patients, and that the products offered no or limited benefits to patients. To make matters worse, there was evidence that the companies knew about the safety and efficacy problems for years.

Qui tam whistleblowers appear to have alerted the government to these concerns years ago, potentially derailing these practices before additional lives were lost. Indeed, according to recent public reports, Amgen has set aside $780 million to settle whistleblower lawsuits alleging that the company engaged in illegal sales tactics. If true, these cases could encourage other insiders to take a courageous stand against similar illegal marketing practices.

More information for whistleblowers is located at the Nolan & Auerbach, P.A. website.

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It has been announced today that a record $3 billion settlement has been reached between GlaxoSmithKline (GSK), a London-based pharmaceutical company, and the United States government regarding the resolution of several investigations into GSK’s unlawful marketing and pricing tactics.  GSK has agreed to pay $3 billion to resolve criminal and civil liability arising from the company’s unlawful promotion of certain prescription drugs, its failure to report certain safety data, and its civil liability for alleged false price reporting practices.

GSK has agreed to pay a $956.8 million criminal fine and plead guilty to a three-count criminal information, including two counts of introducing misbranded drugs, Paxil and Wellbutrin, into interstate commerce and one count of failing to report safety data about the drug Avandia to the Food and Drug Administration (FDA).

In addition, GSK has agreed to pay $2 billion to quiet allegations raised in False Claims Act qui tam actions, detailing GSK’s off-label promotions of various products, as well as pricing fraud allegations. Specifically, the whistleblowers revealed that GSK was (1) promoting the drugs Paxil, Wellbutrin, Advair, Lamictal and Zofran for off-label, non-covered uses and paying kickbacks to physicians to prescribe those drugs as well as the drugs Imitrex, Lotronex, Flovent and Valtrex; (2) making false and misleading statements concerning the safety of Avandia; and (3) reporting false best prices and underpaying rebates owed under the Medicaid Drug Rebate Program.

Back on November 3, 2011, GSK announced that a settlement in principle had been reached with the Government.  The initial investigation began by the United States Attorney’s Office in the District of Colorado and was later spearheaded by the United States Attorney’s Office in the District of Massachusetts.

The relators alleged that from the late 1990s until the filing of the complaint, GSK was falsely and fraudulently engaged in illegal and fraudulent marketing practices resulting in GSK profiting to the tune of billions of dollars.  The submissions of false claims were the result of off-label uses (label uses not indicated and approved by the FDA) and illegal kickbacks that included illegal remuneration to physicians.  These unlawful payments included payments for unrestricted grants,  participation in speaker’s bureaus, advisory boards, preceptorships and lavish dinners and entertainment events; all to induce physicians and other health care providers to prescribe GSK medications in violation of the federal and state anti-kickback laws.

Nolan & Auerbach believes that this record payment signifies that pharmaceutical fraud continues to drain funds from Medicare and Medicaid at an alarming rate.  Otherwise unchecked, the Government relies on courageous whistleblowers to come forward and report wrongdoing.  The monies otherwise lost would have been staggering in this case.

More information for whistleblowers is located at the Nolan & Auerbach, P.A. website.

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