Wednesday, September 21, 2005

More Drug Pricing Fraud Allegations

From the Philadelphia Inquirer, a story that GlaxoSmithKline has settled for $150.8 million US Department of Justice charges that the company fraudulantly overbilled Medicare and Medicaid. The alleged scheme involved inflating average wholesale prices for Zofran and Kytril used to set reimbursement rates. The settlement is unrelated to another lawsuit brought by consumer groups, health plans, insurers, and state attorneys general that contends GlaxoSmithKline inflated prices for other drugs which is pending in US District Court in Boston. The Inquirer noted that GlaxoSmithKline settled another suit in April 2003 which had alleged violations of the federal Medicaid rebate law.
Lest anyone think that this is an issue exclusive to the US, last week the London Times reported that the UK government has charged executives of six UK based generic drug companies of conspiring to defraud the UK National Health Service (NHS). Allegations involve price-fixing for some widely used drugs, such as penicillin based antibiotics and warfarin. The defendants worked for Kent Pharmaceuticals, Norton Healthcare, the Goldshield Group, Generics UK, Ranbaxy Laboratories UK Unit and Regent-GM Laboratories Ltd. Two firms, Generics UK and Ranbaxy, have already settled.
This is just the latest of many stories about bad behavior by leadership of pharmaceutical companies. (This is not to say that we haven't also seen many stories about bad behavior by leadership of biotechnology and device companies, managed care organizations and insurers, and hospitals, academic medical centers, and medical schools.) Nonetheless, stories like this should be contrasted with the the laissez faire attitude some physicians' assocations (see posts here and here) and medical schools and academic health centers (see post here) have about taking pharmaceutical companies' money. Bernard Carroll's proposal that physicians' associations should apply ethical standards when deciding which drug companies' money they should accept deserves serious consideration.

1 comment:

Anonymous said...

Crime and Punishment: Enough for Corporate Wrongdoing?

Corporate crime should not be a new concept to many. However, it has evolved into more troubling ways- not only in regards to its severity, but the methods of deterrence now being implemented against corporations. So it may be becoming progressively worse for U.S. citizens as a result.

Rather than speak of all corporations, what will be discussed is government health care fraud. Fraud basically is deception with the potential to harm others. In the case of pharma companies, this may include improper promotion and marketing, meaning that such tactics are or may be deceptive misconduct that may be illegal. In addition, there are the crimes of kickbacks and lesser crimes of misbranding products. Probably more methods of wrongdoing as well do in fact exist and happen. Yet the point is that drug companies should not engage in such wrongdoing to enrich their faceless existence with profiting off those who are ill in illegal ways.

How is such conduct discovered? Typically by whistleblowers who worked for the described pharma company, and such people are rare for a number of reasons. The whistleblower then seeks legal agents and files what is called a qui tam false claims act with a district attorney’s office (Boston or Philadelphia, if you want prosecutors to take you seriously). After the case is filed, the whistleblower verbally acknowledges the charges and evidence to the chosen prosecutors and others.

Such cases usually take years for unclear reasons, yet in the past two years, the settlements from such cases has approached 2 billion dollars after investigations ended that took years, which is tax dollars returned to the American public with these settlements.
So, what has been happening once a pharma company is busted. Criminal indictment by the district prosecutor? Hardly, yet appropriate. Usually, the prosecutor’s objective is to dismiss the case, but give the impression that such activities will not be tolerated by our government. So Corporate Integrity Agreements are mandated to the pharma company, but not really taken seriously, as some have more than one of these agreements active still. It’s an invisible ankle bracelet. A pharma company can and have committed equal or worse crimes while under such an agreement. This Agreement is issued after the deferred or non prosecution agreement is sentenced to the law-breaking corporation, which basically is a pre-trial diversion. Essentialy, it’s just parole, which is supported by the DOJ and the administration. The criminals admit wrongdoing, but not guilt. And they pay a settlement in the neighborhood of hundreds of millions of dollars. Not that shocking, if you consider the income of big pharma companies. These agreements are relatively new and partially a result of suggestions from what was known as a Thompson memo, which basically was created by a DOJ guy as commandments for prosecuting corporations and variables to consider when doing so, which ultimately offered responses as to why a greater degree of punishment was not enforced.

We are one of three countries in the world with the most prisoners behind bars, yet those that do similar if not greater harm to others get out of jail free. Double standard, I would say. Is this behavior by our legal system towards corporations an effective deterrent? Most think not. It rather seems like tacit approval of their conduct. And health care fraud may be more damaging than other types in other industries, yet lack of regulation allows such crimes to continue.

Citizens should make the laws in our country. Justice would then finally exist.

“Corporations cannot commit treason, nor be outlawed, nor excommunicated, for they have no souls.”
---- Edward Coke

Dan Abshear