Pharmaceutical Rebate Agreement misconduct

Did you know that you are a shareholder in the world’s largest purchaser of prescription drugs?  Well, the United States Government and the States, under Medicaid, buy more prescription drugs than anybody.  Not surprisingly, Congress decided that the government should get the best price of anybody.  But that’s not good enough for some drug companies, which want to make special deals for special friends and gouge the taxpayers (like you).  In lawyerspeak, the Medicaid Rebate Statue requires each pharmaceutical manufacturer who wants its drugs to be eligible for Medicaid reimbursement to file a Rebate Agreement which includes “Best Price” information.  These prices are used to calculate a rebate that the manufacturer then has to pay to the state Medicaid programs.  The net effect is that the government is supposed to get the lowest price.

 

“Best Price” fraud uncovered by qui tam whistleblowers has resulted in the recovery by Medicaid of a couple of billion dollars, plus or minus, in the last couple of years.  Hallmarks of this kind of fraud are supersweet deals between the pharmaceutical companies and “special” customers, such as HMO formularies, chain drug stores, and the like, including those who repackage prescription drugs as house brands.

 

Off-label marketing misconduct

The Food and Drug Administration, or “FDA,” approves prescription drugs, medical devices such as implants, artificial organs, and devices used in the health care system such as syringes or sterilizers, as being safe and effective for use in humans. Doctors are free to prescribe drugs for purposes for which they have not been approved. However, the theory is that the doctors do so because they have learned about the off-label use from appropriate sources, such as studies or word of mouth at medical conferences. Thus, it is illegal for Pharmaceutical manufacturers to market drugs for off-label uses, and it is illegal for Medicaid programs to reimburse for off-label prescriptions unless the use is well-documented as being safe and effective. Nonetheless, many drug companies send out cadres of marketing representatives to convince doctors to use drugs for unapproved purposes, often coupled with gifts and cash payments to the physicians. False Claims Act cases involving illegal off-label marketing have resulted in return of billions to the Treasury and large awards to relators.

 

FDA New Drug Application misconduct

Pharmaceutical companies and others whose conduct is regulated by the FDA sometimes provide misleading information to the agency in order to get a drug approved under false pretenses. Under certain circumstances, this can rise to such a level that the resulting prescription payments violate the False Claims Act. These cases are sometimes referred to as “fraud on the FDA.”

 

CgMP misconduct

Pharmaceutical manufacturers are required to adhere to strict quality-assurance requirements.  It’s not a violation of the False Claims Act not to do this, but we think it is a violation to knowingly or recklessly put drugs into the marketplace which were manufactured in violation of CgMP requirements.