Pharmaceutical Kickbacks Cause Providers to Gamble with Healthcare Dollars and Patient Safety

Oftentimes, healthcare providers will claim that they are not influenced by payments received from pharmaceutical companies. They will assert that their medical judgment is not clouded by the various honoraria, grants, and other payments received from various industry players. However, the results of a study published in 2013 in the Social Science Research Network confirmed the obvious, that pharmaceutical kickbacks skew the medical judgment of health care providers.

The purpose of the study was to assess whether a healthcare provider who is paid by a specific pharmaceutical firm is more likely to prescribe that pharmaceutical firm’s drugs. To empirically answer this question, the authors used Pro Publica’s “Dollars for Docs” and “Prescriber Checkup” databases to conduct a cross-sectional regression analysis of physician prescribing habits. Because of the availability of prescription-level data, the authors were able to quantify the impact of payments on prescribers.

The authors concluded, “A payment from a pharmaceutical company corresponds to, on average, an additional 29 Medicare prescriptions per year and this number rises to nearly 100 prescriptions if the payment is at least $1000.” As the authors stressed, the payment-for-prescription effect continues to scale with increasing payments.

This type of Healthcare Fraud is a violation of the False Claims Act and Anti-Kickback Laws. In fact, numerous False Claims Act qui tam actions have been filed and settled over the years, predicated on violations of the Anti-kickback laws.

Some in the industry have discounted the monetary impact, arguing that an extra 100 prescriptions has a minimal impact on government healthcare programs. However, with many orphan drugs costing the government over $100,000 per year per patient, this dollar impact easily runs into the millions for each prescriber.

Moreover, the impact involves potential patient harm. Namely, when a healthcare provider selects a drug based on financial greed, as opposed to patient need, patient oftentimes receive an inferior drug. For this reason, in 2010, Congress clarified that violations of the federal Anti-kickback Act are per se violations of the False Claims Act. In effect, Congress offered whistleblowers a sizeable bounty to identify pharmaceutical kickbacks schemes that drain government funds and place patients’ lives at risk.

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