Are Senior Pharma Executives Racing to File Qui Tam Actions?

Over the years, several high-ranking DOJ officials have stated that they will hold pharmaceutical fraud masterminds accountable for their actions. Their words have remained unfulfilled promises, prompting some experts to plea for criminal liability for individual pharmaceutical executives. For example, in Nature Medicine, Nolan Auerbach & White partner Jeb White penned the article “Masterminds behind Pharmaceutical Fraud Deserve Prison Time.” Similar arguments have been raised in the halls of Congress and in courtrooms across the country.

Recently, Deputy Attorney General Sally Yates became the latest DOJ official to sing from the “individual accountability for corporate wrongdoing” hymnal. In a tough-sounding memo to all Assistant Attorney Generals and United States Attorneys, Yates stressed that the Justice Department should “fully leverage its resources to identify culpable individuals at all levels in corporate cases.” With an eye toward bring criminal actions against individual planners and schemers, the memo further stated, “Both criminal and civil investigations should focus on individuals from the inception of the investigation.”

The Yates memo made for a good read for the healthcare fraud-fighting community, but most dismissed the substance as pure rhetoric. However, based on recent developments, this dismissive view might have been a mistake.

Most notably, in late October, the FBI arrested the former president of pharmaceutical company Warner Chilcott, after a federal grand jury indicted him on charges of conspiracy to violate the federal Anti-kickback Statute. This arrest comes on the heels of a global settlement, in which Warner Chilcott agreed to plead guilty to healthcare fraud and paid $125 million to resolve criminal and civil liability arising from illegal promotion of several drugs.

The reaction on the social web portal was immediate. Many chimed in that other executives should face jail time. Others opined that “everybody is doing it,” so why should the Justice Department pick on this lone individual. Many defense law firms spread news of the arrest to their client pharmaceutical manufacturers.

By following through on its long-standing promise, DOJ drastically changed the personal calculus for some individuals occupying the highest rungs of the pharma org charts. Many of these individuals are now looking around at their colleagues wondering if they should break the corporate ranks and file a False Claims Act qui tam action. There is no guarantee that such action would shield them from future criminal and civil actions; however, whistleblowers tend to fare better than individuals who just go along with the fraud.

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