According to the qui tam complaint, several pharmaceutical companies, including Ethex Corporation, had, time and time again, deceived the government by falsely certifying that their unapproved drugs had passed the requisite FDA tests for safety and effectiveness, or otherwise met with the statutory definition of a Covered Outpatient Drug. These false certifications allowed the drug companies to peddle their unapproved products to physicians of Medicaid patients and to wrongfully receive payments from Government Health Care Programs.

This settlement quieted allegations that Ethex continued to market and receive government health care dollars for two medications that had lost FDA approval. The two medications, Nitroglycerin Extended Release Capsules and Hyoscyamine Sulfate Extended Release Capsules, lost their approvals in April of 1999 and March of 1997, respectively. The company is alleged to have intentionally failed to notify the Centers for Medicare & Medicaid Services(CMS) that these medications were no longer a covered outpatient drug.

Under the federal Food, Drug & Cosmetic Act, 21 U.S.C. § 301 et seq., every drug must be approved by the FDA for safety and effectiveness before it can be marketed to the public. These drugs were not. Ultimately, the FDA determines whether the drug is safe and effective in its proposed use(s), whether the benefits of the drug outweigh the risks, and whether the methods used in manufacturing the drug and the controls used to maintain the drug’s quality are adequate to preserve the drug’s identity, strength, quality, and purity.

Nolan & Auerbach, P.A. has taken on the responsibility of prosecuting the remaining defendants identified in this qui tam action under the civil False Claims Act.

For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, P.A.

In recent years, however, pharma companies have become increasingly clever in disguising illegal kickbacks. Most prominent are massive speaker bureaus, speaker programs, and advisory boards, all in an attempt to disguise excessive payments as fees for “speaking engagements,” “consulting services” or “training sessions.” Typically, instead of recruiting speakers and consultants based on their experience or credentials, dishonest companies will target physicians based on their potential prescription-writing volume. Furthermore, once physicians are accepted into their programs, the companies will unofficially require speakers to meet minimum prescription levels.  Payment for “Research” and the collection of data are other techniques still used by wayward pharmaceutical companies.

The AKA is violated when a person or entity makes or accepts payment for referring, recommending or arranging for federally-funded medical items or services, including items or services provided under the Medicare, Medicaid, and TRICARE programs. Violations of the AKA are per se violations of the federal False Claims Act, the government’s primary pharmaceutical fraud-fighting weapon.

Pharmaceutical companies conduct extensive return-on-investment analysis in devising and implementing sophisticated marketing schemes and programs. Dishonest pharmaceutical companies will skirt the AKA, knowing their bribes will influence prescribing habits and, in turn, result in the provision of goods and services that are more expensive and/or medically unnecessary or even harmful to a vulnerable patient population.  Over the last fifteen years, dozens of pharmaceutical companies have shelled out multimillion dollar settlement checks to quiet allegations that they showered doctors with illegal kickbacks. Up to several years ago many kickbacks were blatant bribes, including outright “grants,” tickets to sporting events, and other gifts and benefits.

Most illegal kickbacks to doctors are thinly-veiled incentives for off-label prescriptions, for uses that do not work. These business practices cause federal and state government health care programs to pay millions of dollars for prescriptions which are ineligible for payment. Notably, while a physician may prescribe a drug off-label, the law prohibits the provider from inking a kickback-tainted prescription for a Government Health Care Program beneficiary.

The government simply doesn’t have the resources to unravel these schemes, unless pharmaceutical employees and health care providers courageously provide the necessary inside information. For those who do take this stand, the rewards are potentially worth millions.

For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, P.A.

“There’s been a change of paradigm,” Pfizer scientist James Christensen told the Wall Street Journal. “The new school of thought is, ‘If you find the patients that the drug will work in, and if you see enough benefit, we will find a way to get this to market.’”

These “targeted drugs” or “niche drugs” are oftentimes accompanied by a hefty price tag. For example, in the case of Xalkori, a year’s supply will run over $115,000. Similar sticker shock is tied to Roche’s melanoma drug Zelboraf (vemurafenib), which is priced at $56,400 for 6 months of treatment.

While there is nothing nefarious about a drug company reaping the monetary benefits of the economic supply and demand curve, there is heightened potential for fraud with hyper-specific FDA drug labels. Specifically, a narrow FDA-approved label provides drug companies with the proverbial “camel’s nose in the tent.” In other words, once a drug has been blessed by the FDA for a subset of the patient population, wayward drug companies will, inevitably and illegally, expand their marketing efforts to capture the rest of the patient population. This scenario has multiple off-label case recoveries over the past decade.

For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, P.A.

According to one news source, government investigators are especially interested in “uncompleted clinical studies that may be used to support off-label use,” and, in particular, “documents pertaining to a clinical study being conducted by to Mathias Rummel, who is the head of hematology at the University Hospital in Giessen, Germany.” This comes on the heels of recent announcements that the U.S. Justice Department is looking to expand its investigations into overseas pharmaceutical research studies, in order to uncover clinical trial fraud.

“Oftentimes enticed by lowered regulatory hurdles, pharmaceutical companies are increasingly flocking to foreign researchers to study the unapproved uses of their products,” said Nolan & Auerbach partner and former Taxpayers Against Fraud president Jeb White. “When beneficial preliminary data emerges from these studies, the results seep their way into paid speaker presentations and the promotional arsenals of pharmaceutical sales representatives. The end result is that off-label data is promoted to health care providers, outside the watchful eye of the U.S. Food & Drug Administration.”

Only time will tell if Cephalon was engaged in this international end run around the FDA. However, the message should be clear to the pharmaceutical industry that illegal off-label promotions, wherever their origin, will not be tolerated in the United States. Nolan & Auerbach, P.A. partner Ken Nolan wrote about Pharmaceutical Research Subcontractors in the October 2003 issue of Contract Pharma.

For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, P.A.

Some of the kickbacks were not in the form of direct cash, but rather indirectly paid, such as inappropriate travel with lavish dinners and gifts, and the use of fake civil contracts, slush funds, and off-shore companies.

The methods used to break the law are great and will always vary. When the bottom line takes greater precedence than the care of the patient, companies will always seek a way to circumvent the system. Nolan & Auerbach, P.A. encourages individuals that may have witnessed fraud, and have evidence of this fraud to step forward. The actions of these brave individuals keep our healthcare system safe and honest.

For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, P.A.

The added governmental exposure has shed the light on a number of problems, likely encouraging a weekly parade of drug recalls from pharmaceutical companies. For some companies, they have led the parade of FDA warnings and recalls on a number of occasions. For example, Johnson & Johnson has repeatedly tangled with the FDA, most recently when it was warned by the FDA about problems at its Cordis stent facility. Last year, this same company temporarily closed a large Pennsylvania facility and recalled an estimated 136 million bottles of liquid children’s Tylenol and other pediatric products, after quality controls failed.

However, the real driving force behind this surge of pharmaceutical mea culpas probably has less to do with federal investigators and more to do with pharmaceutical industry’s concerns about potential False Claims Act qui tam actions. The simple fact is that drug makers are now on notice that employees can bring successful whistleblower suits involving current Good Manufacturing Practices (cGMP) violations.

The extended reach of whistleblowers was made crystal clear last year, when the U.S. Department of Justice joined in a whistleblower action against GlaxoSmithKline, exposing systemic manufacturing deficiencies at the company’s Puerto Rico facility. Ultimately, the company settled the action for $750 million, and the whistleblower was handsomely rewarded to the tune of $96 million.

In a very real sense, the GlaxoSmithKline settlement has encouraged other potential whistleblowers to step forward and uncover other instances of cGMP violations. More importantly, because the False Claims Act provides incentives and protections for these whistleblowers, drug companies cannot simply disregard their concerns. The lasting impact is that, whether through recalls or False Claims Act settlements, drug companies are forced to fess up to fraud and unsafe manufacturing practices.

For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, P.A.

For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, P.A.

In this pharmaceutical fraud scheme known as “marketing the spread,” the drug companies fraudulently created a large incentive for providers to prescribe their drugs. This “spread” is the difference between the resulting inflated government payments and the actual price paid by health care providers for a drug.  The larger the “spread” on a particular drug, the larger the profit for the provider or pharmacist. In turn, because payment from the Medicare and Medicaid programs was based on the false inflated prices, the government alleged that the defendants caused false claims to be submitted to government health care programs, and as a result, the government paid millions of claims for far greater amounts than it would have if the defendant companies had reported truthful prices.

For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, P.A.

The price tag to settle the civil allegations was $38 million. The criminal settlement required Kos Pharmaceuticals to ink a $3 million check, to enter into a deferred prosecution agreement, and to agree to the filing of a criminal information charging the company with one count of conspiracy to violate the anti-kickback statute.

Noticeably, the doctors who accepted the bribes were not held accountable. “As long as dishonest doctors are willing to be bought, drug companies will be able to bribe their way into America’s medicine cabinets,” said Nolan & Auerbach partner Jeb White. “We need to recognize that it takes two to tango in the underworld of pharmaceutical kickback schemes.”

For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, PA.

The whistleblower alleged that every day, Remedi would typically pick up twenty or more tote bags of unused medicine from long-term care facilities, ostensibly destined for disposal. However, instead of properly disposing the medication, the pharmacy would allegedly recycle the drugs, by removing pills and tablets from their packaging in unsterile environments, sorting the drugs into unsanitary bins, and inserting the medicine into new packaging. According to the whistleblower, the sorting process regularly comingled drugs with different expiration dates, lot numbers, and potency. These alleged practices caused federal and state government health care programs to pay for adulterated drugs.

To ramp up these operations, the pharmacy supposedly hired outside “efficiency experts,” who made recommendations on how the pharmacy could further streamline its recycling scheme. By repackaging everything from blisterpacks to bulk syringes, the pharmacy was able to pocket funds that would have been spent on new medications.

The Food and Drug Administration is the agency responsible for protecting the health and safety of the American public by ensuring, among other things, that pharmaceuticals designed for use in humans are safe and effective for their intended uses and are labeled accurately and in compliance with the law. The federal law imposes numerous requires on the distribution of prescription drugs, including that the drugs are not misbranded or adulterated.

For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, PA.