February 16, 2011—Last year, the federal government won or negotiated a record $2.5 billion in health care fraud judgments and settlements, with much of that amount coming from pharmaceutical manufacturers.
Now, with the Obama administration seeking $581 million for health care fraud and abuse control in fiscal 2012—nearly double the current amount—and with nearly 200 active whistleblower cases alleging drug pricing fraud against Medicare and Medicaid, the industry could find itself under even more intense scrutiny in the years ahead.
In addition to his more than half-billion-dollar 2012 budget request for the Department of Health and Human Services’ (HHS) Health Care Fraud and Abuse Control Program (HCFAC), President Obama separately requested $303 million to help the HHS Office of Inspector General (OIG) work with the Department of Justice (DoJ) to root out fraud in Medicare and Medicaid, including off-label marketing and other types of pharmaceutical fraud.
180 Drug Whistleblower Cases
The president’s budget request came just days after HHS and DoJ reported to U.S. Sen. Charles Grassley (R-Iowa) that there are 885 active whistleblower cases involving potential false claims to Medicare or Medicaid. Of those, 180 allege pharmaceutical pricing fraud, often by multiple manufacturers, the two departments said. Federal prosecutors have yet to decide whether to intervene in any of these actions.
Shortly before the letter to Senator Grassley came to light, the two departments released their HCFAC program’s annual report. In addition to their record-setting year for new health care fraud judgments and settlements, the departments announced that they collected $4 billion during fiscal 2010 from new and prior civil and criminal health care actions.
Most of the prescription drug-related judgments and settlements that the departments cited in their report involved allegations of prohibited off-label marketing and promotion, including $600 million in penalties by Allergan, $520 million by AstraZeneca, $422 million by Novartis, $313 million by Forest Laboratories, and $81 million by Johnson & Johnson.
340B covered entities did not share in any of those recoveries. They did, however, benefit from another that the departments cited, Mylan Pharmaceuticals’ October 2009 settlement over allegations that it misclassified authorized generic drugs between 2000 and 2004 for purposes of Medicaid rebates and 340B drug discounts. The company began mailing settlement checks totaling $7.3 million to affected covered entities in December.