Annual HCFAC Report Highlights Need for Pharmaceutical Fraud Whistleblowers

In fiscal year 2015, healthcare anti-fraud programs operated by the Justice Department and HHS recovered $2.4 billion, a decrease from 2014 of over 37%. This single-year drop in healthcare fraud recoveries was one of the largest year-over-year decreases in the history of the programs. So what happened in FY 2015?

FY 2015 was a victim of bad timing. A vast percentage of these recoveries were from large False Claims Act qui tam settlements, so a single qui tam recovery can greatly boost the annual tally. For example, in fiscal year 2014, $2.2 billion was recovered in a criminal and civil recovery from a single defendant, Johnson & Johnson. Needless to say, without this sizeable recovery in FY 2014, the storyline would have been different.

Government shifted its focus in pharmaceutical cases. Every single year since 2001, the government has received substantial recoveries from False Claims Act qui tam actions alleging off-label pharmaceutical promotions. That streak came to an end in FY 2015. Some believe that the Second Circuit’s Caronia decision caused the Justice Department to shy away from off-label marketing cases. Others have argued that the FDA’s interest in these matters has cooled in recent months.

Sequestration hamstrung the government’s anti-fraud efforts. According to the most recent annual HCFAC Report, the Sequestration took a sizeable bite out of the enforcement budget in FY 2015. Specifically, in fiscal year 2015, over $22 million was sequestered, leaving fewer resources for DOJ, FBI, HHS, and HHS-OIG to fight Medicare fraud, Medicaid fraud, and other healthcare fraud.

Whatever the reason for the decrease in healthcare recoveries, it should be a clarion call to potential pharmaceutical fraud whistleblowers: Now, more than ever, the government needs private citizens and their counsel to supplement its limited fraud-fighting resources.