Recently, the United States Department of Justice announced the settlement of the first False Claims Act qui tam case predicated on current Good Manufacturing Practice (cGMP) violations. In this settlement, GlaxoSmithKline pled guilty and agreed to pay $750 million to resolve criminal and civil liability regarding manufacturing deficiencies at its Puerto Rico plant. According to the government, the company’s manufacturing operations failed to ensure that its drugs were free of contamination from microorganisms. Moreover, the government alleged that the company’s manufacturing process caused one of its two-layer tablet products to split, causing the potential distribution of tablets that did not have any therapeutic effect. Lastly, the government alleged that the plant was riddled with longstanding problems of product mix-ups, which caused tablets of one drug type and strength to be commingled with tablets of another drug type and/or strength in the same bottle.

While this is the first False Claims Act qui tam settlement involving cGMP violations, this application of the FCA has been on the radar screen of leading FCA practitioners for years. (For example, in 2004, Kenneth Nolan, founding partner of the national whistleblower firm of Nolan & Auerbach, P.A., penned a 2004 article and a 2008 book chapter on this very topic.) Indeed, similar qui tam actions have been filed and are currently working their way through the Justice Department’s litigative pipeline. 

The FCA has implications for cGMP violations because the federal government (funding as it does the Medicare program, the majority of state Medicaid programs, the Veterans Administration, the TRICARE program, and others) is the world’s largest purchaser of prescription medications. Because the FCA imposes liability on any government contractor that knowingly submits false claims to the government or that uses false documents to get a false claim paid, a drug company which knew or was recklessly indifferent to the fact that the manufacturing process was compromised by cGMP violations is in violation of the FCA. The basis of liability under the FCA is that false records have been generated which caused (false) claims for drugs to be paid by the government. The monetary damages result because the government is potentially paying for substandard drugs due to the cGMP violations – later covered up by false statements in documents required to be completed under the cGMP.

With that being said, the government is just now dipping its toes into these FCA waters, so only the most egregious violations will likely rise to the top. When assessing whether a violation meets this high hurdle, one must determine whether the violation is severe enough such that the drug product that finally reaches the public is foreseeably substantially less safe or less effective than if the cGMPs were not violated. If the answer is yes, then for the sake of patient safety, potential whistleblowers are strongly encouraged to contact experienced False Claims Act attorneys who are familiar with the cGMP.

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