Doctors, pharmacies, and pharmaceutical companies can make millions of dollars through prescription drug fraud. These schemes cost the taxpayers money because many drugs are paid for by government programs like Medicare or Medicaid and can hurt people everywhere by making insurance and health care more expensive for everyone. Whistleblowers are key to fighting these practices because they can provide direct information about how the scheme works and who is involved.
Here are five common ways that doctors and pharmacies rip off the government and private insurers.
Prescription Drug Fraud
Pharmacies sometimes allow patients to have their prescriptions automatically refilled, especially for medications that treat chronic conditions.
Sometimes pharmacies will refill these prescriptions even after a patient has stopped taking the drug. The pharmacies can then bill the government or private insurance for the cost of the medicine and then turn around and sell the medication to make an extra profit. The pharmacy can repeat this scheme until the maximum number of refills is met or the prescription expires.
Off-Label Marketing of Drugs
The Food and Drug Administration (“FDA”) approves drugs for specific intended uses, called a drug’s “label.” While pharmaceutical companies can only market or promote drugs for the specific uses approved by the FDA, doctors can prescribe medications for “off-label” uses not approved by the FDA. Studies have found that up to 20% of drugs are prescribed off-label, and the percentage increases significantly for certain types of medication.
One way that pharmaceutical companies get around the marketing restriction is to market drugs for off-label uses directly to doctors, instead of consumers. Pharmaceutical companies can be liable under the False Claims Act for marketing drugs to a doctor for off-label use if the doctor prescribes the drug to a Medicare or Medicaid patient.
Whistleblowers have been responsible for huge recoveries against pharmaceutical companies for off-label marketing, including:
- A 2009 Pfizer settlement for $2.3 billion related to the off-label promotion of Bextra, Geodon, Lyrica and Zyvox;
- A 2010 AstraZeneca settlement for $520 million related to the off-label promotion of Seroquel;
- A 2012 GlaxoSmithKline settlement for $3 billion related to the off-label promotion of Paxil, Wellbutrin, Avandia and other drugs;
- A 2012 Amgen settlement for $762 million related to kickbacks and the off-label promotion of Aranesp
Rebate Pricing Fraud
To keep costs down, drug manufacturers have to give rebates to Medicare and Medicaid. The rebates are based on the Average Manufacturer Price (“AMP”) of their drugs, which is usually the average price that wholesale buyers pay for those drugs, and the “best price” offered to any purchaser. Pharmaceutical manufacturers are required to include discounts and coupons offered to wholesalers, pharmacies, and other purchasers in calculating the “best price” figures.
Pharmaceutical manufacturers can cheat the rebate programs and commit fraud by manipulating the AMP in order to reduce Medicaid and Medicare rebates. State Medicaid programs are especially vulnerable to AMP and “best price” fraud because the data is confidential and not shared with state governments.
Drug switching fraud happens when pharmacies fill a prescription with a different drug than the one prescribed. For example, pharmacies might profit from drug switching by filling a patient’s prescription with a less expensive drug than the one prescribed, and then submitting a claim to Medicare or Medicaid for the price of the more expensive drug.
Pharmaceutical companies can’t give doctors or pharmacists money or other rewards to proscribe or fill their drugs. For example, it would be illegal for a pharmaceutical company might offer golf outings to doctors who prescribe the company’s brand of medication.
Illegal kickbacks can also be combined with other kinds of fraud. For example, a pharmacy engaged in drug switching could offer kickbacks such as store discounts, gift cards, or merchandise to patients in order to persuade them to accept the switched drugs.
Health Care Whistleblowers Needed to Fight Fraud
Whistleblowers are the most effective way to fight health-care fraud because they are on the ground and witness fraudulent practices by providers first-hand. Additionally, California has specific protections for health-care workers who speak up about patient safety issues.
In order to encourage whistleblowers to come forward and do the right thing, the False Claims Act provides that people who blow the whistle on Medicare fraud can receive up to 30% of the amount of money recovered by the government as a reward. Whistleblower rewards have entered the tens of millions of dollars in some cases.
If You See Prescription Drug Fraud, Talk to An Experienced Whistleblower and Employment Attorney
Our experienced whistleblower attorneys can help you navigate False Claims Act cases and other complex whistleblower laws. Before working at King & Siegel, our attorneys did white collar criminal defense and saw firsthand how these types of cruel, abusive, and inhumane schemes work. We know that these cases are time- and resource-intensive and will devote the necessary resources to help you.