{"id":9771,"date":"2021-08-05T09:23:12","date_gmt":"2021-08-05T09:23:12","guid":{"rendered":"https:\/\/crigroup.com\/?p=9771"},"modified":"2024-01-23T12:38:53","modified_gmt":"2024-01-23T12:38:53","slug":"pharmaceutical-industry-fraud","status":"publish","type":"post","link":"https:\/\/crigroup.com\/ar\/pharmaceutical-industry-fraud\/","title":{"rendered":"Common Fraud in the Pharmaceutical Industry Reported by Whistleblowers"},"content":{"rendered":"<h2><strong>Pharmaceutical Fraud<\/strong><\/h2>\n<p><span data-preserver-spaces=\"true\">Pharmaceutical fraud involves activities that result in false claims to insurers or programs such as Medicare in the US or equivalent state programs for financial gain to a pharmaceutical company. Several different schemes are <sup id=\"cite_ref-FBIFraudTypes_1-0\" class=\"reference\"><\/sup>used to defraud the health care system, which is particular to the <a href=\"https:\/\/crigroup.com\/ar\/industry\/pharmaceutical-healthcare\/\">pharmaceutical industry<\/a>. These include: <\/span><\/p>\n<ul>\n<li><span data-preserver-spaces=\"true\">Good Manufacturing Practice (GMP) Violations, <\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Off Label Marketing, <\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Best Price Fraud, <\/span><\/li>\n<li><span data-preserver-spaces=\"true\">CME Fraud, <\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Medicaid Price Reporting, and <\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Manufactured Compound Drugs. <\/span><\/li>\n<\/ul>\n<p><span data-preserver-spaces=\"true\">The pharmaceutical industry is regularly found to be engaging in fraud of many types, and it appears as though each year, the number of pharmaceutical fraud is on the rise. Each year big pharma giants end up spending billions of dollars in paying for fraud, misrepresentation of data and other such corruption allegations levelled out against them. In the last years, global pharma giants have paid fines to the tune of $11 billion for criminal wrongdoing, including withholding safety data and promoting drugs for use, beyond any licensed condition; <a title=\"GlaxoSmithKline\" href=\"https:\/\/en.wikipedia.org\/wiki\/GlaxoSmithKline\" rel=\"nofollow noreferrer\">GlaxoSmithKline<\/a> paid a $3 billion settlement,\u00a0<a title=\"Pfizer\" href=\"https:\/\/en.wikipedia.org\/wiki\/Pfizer\" rel=\"nofollow noreferrer\">Pfizer<\/a>\u00a0$2.3 billion settlement, and\u00a0<a title=\"Merck &amp; Co.\" href=\"https:\/\/en.wikipedia.org\/wiki\/Merck_%26_Co.\" rel=\"nofollow noreferrer\">Merck<\/a> $650 million settlement. Damages from fraud can be recovered using the\u00a0<a title=\"False Claims Act\" href=\"https:\/\/en.wikipedia.org\/wiki\/False_Claims_Act\" rel=\"nofollow noreferrer\">False Claims Act<\/a>, most commonly under the\u00a0<i><a title=\"Qui tam\" href=\"https:\/\/en.wikipedia.org\/wiki\/Qui_tam\" rel=\"nofollow noreferrer\">qui tam<\/a><\/i> provisions, which rewards an individual for being a &#8220;<a title=\"Whistleblower\" href=\"https:\/\/en.wikipedia.org\/wiki\/Whistleblower\" rel=\"nofollow noreferrer\">whistleblower<\/a>&#8221; or <a title=\"Relator (law)\" href=\"https:\/\/en.wikipedia.org\/wiki\/Relator_(law)\" rel=\"nofollow noreferrer\">relator (law)<\/a>.<\/span><\/p>\n<p>July of 2021 saw Bolton pharmacist David &#8220;Jason&#8221; Rutland pleading guilty to <a href=\"https:\/\/www.wdam.com\/2021\/07\/21\/mississippi-pharmacist-pleads-guilty-conspiracy-fraud-scheme\/\" rel=\"nofollow noreferrer\">conspiracy to solicit and pay kickbacks and bribes<\/a> in a $182.5m fraud case in which Rutland himself pocketed $13.3m. This conspiracy is noted as the state&#8217;s largest health care\/pharmaceutical fraud to date. It is estimated that more than $515 million in fraudulent prescription billings were made to TRICARE, Medicare, Medicaid, and private health care benefit providers in Mississippi.<\/p>\n<p><span data-preserver-spaces=\"true\"> In the US, whistleblowers are uniquely positioned to report this fraud to the government under the <\/span><a class=\"editor-rtfLink broken_link\" href=\"https:\/\/constantinecannon.com\/practice\/whistleblower\/whistleblower-types\/whistleblower-reward-laws\/fca\/\" target=\"_blank\" rel=\"nofollow noopener noreferrer\"><span data-preserver-spaces=\"true\">False Claims Act<\/span><\/a><span data-preserver-spaces=\"true\">.<\/span><\/p>\n<h3><strong>Common Fraud in the Pharmaceutical Industry Includes:<\/strong><\/h3>\n<ul>\n<li><span data-preserver-spaces=\"true\">Unlawful Kickbacks<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Clinical trials manipulation\/fraud against the Food and Drug Administration (FDA)<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Off-label marketing\/Food Drug and Cosmetic Act (FDCA) violation<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Failure to comply with Current Good Manufacturing Practices (CGMP) requirements<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Compounded drug fraud<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Illegal drug-switching<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Misuse of the 340B drug discount program<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Medicaid best price fraud<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Medicare Part D Fraud<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Fraud by Pharmacy Benefit Managers (PBMs)<\/span><\/li>\n<\/ul>\n<h3><strong>Understanding the Most Common Types of Pharmaceutical Industry Fraud Reported by Whistleblowers<\/strong><\/h3>\n<h4><span data-preserver-spaces=\"true\">Unlawful Kickbacks<\/span><\/h4>\n<p><span data-preserver-spaces=\"true\">The pharmaceutical industry\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.madinamerica.com\/2015\/02\/big-pharma-ama-respond-john-oliver\/\" target=\"_blank\" rel=\"nofollow noopener noreferrer\"><span data-preserver-spaces=\"true\">influences<\/span><\/a><span data-preserver-spaces=\"true\"> doctors\u2019 prescribing habits, especially in the US. Drug manufacturers and distributors may pay <\/span><a class=\"editor-rtfLink broken_link\" href=\"https:\/\/constantinecannon.com\/practice\/whistleblower\/whistleblower-types\/healthcare-fraud\/anti-kickback-stark\/\" target=\"_blank\" rel=\"nofollow noopener noreferrer\"><span data-preserver-spaces=\"true\">unlawful kickbacks<\/span><\/a><span data-preserver-spaces=\"true\"> to physicians or others in the form of sham \u201cconsulting fees,\u201d luxury vacations, and expensive meals in exchange for increased prescriptions of the company\u2019s drugs.<\/span><\/p>\n<h4><span data-preserver-spaces=\"true\">Clinical Trials Manipulation\/fraud Against the Food and Drug Administration (FDA)<\/span><\/h4>\n<p><span data-preserver-spaces=\"true\">Drug manufacturers must obtain FDA approval before marketing a new drug. The FDA approves new drugs proven safe, effective, and properly labelled following extensive preclinical and clinical testing and analysis, which results in a wealth of data regarding the drug\u2019s safety, efficacy, pharmacology and toxicology. The FDA relies on the accuracy of the data that drug manufacturers submit in New Drug Applications (NDAs). Pharmaceutical companies that make false statements to the FDA, omit relevant data in NDAs, or otherwise misrepresent the safety or efficacy of drugs in clinical trials can be subject to False Claims Act (FCA) liability. The same is true of drug companies that pay researchers to falsify clinical trial data.<\/span><\/p>\n<h4><span data-preserver-spaces=\"true\">Off-label Marketing\/Food Drug and Cosmetic Act (FDCA) Violation<\/span><\/h4>\n<p><span data-preserver-spaces=\"true\">Pharmaceutical companies may not promote their drugs for uses, doses, or populations not specifically approved by the FDA as safe and effective. Such \u201coff-label\u201d marketing and promotion violates the FCA. This could include, for example, if a drug is approved for use in treating severe psychiatric disorders, and the drug company\u2019s sales representatives promote it for widespread use in calming elderly patients in nursing homes.<\/span><\/p>\n<h4><span data-preserver-spaces=\"true\">Failure to Comply with Current Good Manufacturing Practices (CGMP) Requirements<\/span><\/h4>\n<p><span data-preserver-spaces=\"true\">Drug and medical device manufacturers are subject to strict FDA manufacturing rules known as the Current Good Manufacturing Practice (CGMP) regulations. The CGMP exists to ensure manufactured drugs&#8217; identity, strength, quality, and purity and protect consumers from tainted, ineffective, and harmful drugs. Government-funded healthcare programs pay for prescription drugs on the premise that CGMP regulations have manufactured the drugs. If they are not, it can be a violation of the False Claims Act. This could include, for example, a pharmaceutical company\u2019s manufacturing facility using dirty equipment to make drugs, or using equipment that does not accurately measure the type or amount of the active ingredients incorporated into a drug, and then selling these tainted drugs to patients covered by Government-funded health care programs.<\/span><\/p>\n<h4><span data-preserver-spaces=\"true\">Compounded Drug Fraud<\/span><\/h4>\n<p><span data-preserver-spaces=\"true\">Compounding pharmacies prepare medications tailored to meet the needs of individual patients by mixing drugs or changing the route of administration. Compounding pharmacies can violate the FCA by making large batches of drugs\u2014known as mass-compounding\u2014rather than providing the required individualised service, \u201ccompounding\u201d drugs that are already commercially available, or inflating the number of particular medications used in the mixture to increase the cost. Compounded drugs are primarily regulated by the states, meaning efficacy and safety need not be proven to the FDA.<\/span><\/p>\n<h4><span data-preserver-spaces=\"true\">Illegal Drug-switching<\/span><\/h4>\n<p><span data-preserver-spaces=\"true\">As a general rule, pharmacies must fill patients\u2019 prescriptions as written by the ordering physician. Putting aside situations where a generic drug may be substituted for a name-brand drug, pharmacists may not simply replace one drug for another or dispense a liquid form of a drug when a pill or tablet was prescribed. Billing government insurers for medications that have been so manipulated can violate the False Claims Act.<\/span><\/p>\n<h4><span data-preserver-spaces=\"true\">Misuse of the 340B Drug Discount Program<\/span><\/h4>\n<p><span data-preserver-spaces=\"true\">The federally mandated 340B drug discount program requires most drug companies to provide hefty discounts \u2014 typically 20 to 50 per cent \u2014 to hospitals and clinics that treat low-income and uninsured patients. Pharmaceutical companies are required to cap outpatient drug prices at a statutorily defined \u201cceiling price\u201d equal to the Average Manufacturer Price (AMP) reduced by the rebate percentage or Unit Rebate Amount (URA). Manufacturers submit both the AMP and URA to the Centers for Medicare and Medicaid Services (CMS) quarterly and can defraud the government by misrepresenting these figures, overcharging 340B entities, and\/or not providing rebates to which 340B entities are entitled.<\/span><\/p>\n<h4><span data-preserver-spaces=\"true\">Medicaid best Price Fraud<\/span><\/h4>\n<p><span data-preserver-spaces=\"true\">To obtain Medicaid coverage of their drugs, pharmaceutical companies generally must promise to give state Medicaid programs the lowest price made available to almost any buyer of the drug. To provide this price, pharmaceutical companies report their \u201cbest price\u201d on a drug\u2014often calculated based on the drug\u2019s \u201caverage wholesale price\u201d or \u201caverage manufacturer price\u201d\u2014and payback to Medicaid in rebates any amount the programs paid more than this price. Pharmaceutical companies can defraud Medicaid and violate the False Claims Act by manipulating their \u201cbest price\u201d to reduce the amount of money they must return to state Medicaid programs.<\/span><\/p>\n<h4><span data-preserver-spaces=\"true\">Medicare Part D Fraud<\/span><\/h4>\n<p><span data-preserver-spaces=\"true\">Implemented in 2006, Medicare Part D, also referred to as the Medicare Prescription Drug Program, provides drug coverage for tens of millions of elderly and disabled Americans. Under the program, private insurance companies\u2014referred to as Part D Sponsors\u2014offer prescription drugs to eligible beneficiaries directly or through pharmacy benefit managers (so-called \u201cPBMs\u201d) and then submit claims to Medicare for the drugs\u2019 cost. Fraud can occur under Medicare Part D in many ways, including:<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Some of the more common types of fraud occurring under the Medicare Part D program include:<\/span><\/p>\n<ul>\n<li><span data-preserver-spaces=\"true\">Billing for drugs not provided.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Billing for drugs not covered by Medicare.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Billing for brand name drugs when generic drugs are provided instead.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Billing for drugs\u2014especially opioids and other controlled substances\u2014diverted for illegitimate purposes.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Billing for expired drugs.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Billing for drugs dispensed without a prescription or with a falsified prescription.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Billing for drugs dispensed with prescriptions from unauthorized, excluded, or non-existent healthcare providers.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Billing for drugs provided in quantities that exceed approved limits.<\/span><\/li>\n<\/ul>\n<h3><span data-preserver-spaces=\"true\">Fraud by Pharmacy Benefit Managers (PBMs)<\/span><\/h3>\n<p><span data-preserver-spaces=\"true\">PBMs are an increasingly common target of fraud investigations. PBMs are third-party administrators of prescription drug programs for, among others, Medicare Part D plans. PBMs contract with health plans to provide pharmaceuticals at low prices, which PBMs keep low through negotiation, generic substitution, manufacturer rebates, cost-sharing, formularies, and other methods. PBMs commit fraud by failing to pass savings from rebate arrangements and subsidies to clients, developing forms that favour more expensive drugs, and improperly switching drugs to generic or different brand name drugs instead of prescribed drugs. Drug manufacturers commit fraud by, for example, providing price concessions on certain drugs in exchange for a PBM\u2019s favourable coverage of the manufacturer\u2019s drug.<\/span><\/p>","protected":false},"excerpt":{"rendered":"<p>Pharmaceutical Fraud Pharmaceutical fraud involves activities that result in false claims to insurers or programs such as Medicare in the US or equivalent state programs for financial gain to a pharmaceutical company. Several different schemes are used to defraud the health care system, which is particular to the pharmaceutical industry. These include: Good Manufacturing Practice [&hellip;]<\/p>","protected":false},"author":1,"featured_media":9775,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24,18,144,36,146],"tags":[],"class_list":["post-9771","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-regions","category-all-solutions","category-global","category-pharmaceutical-healthcare","category-resources"],"gutentor_comment":0,"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v16.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<meta name=\"description\" content=\"The pharmaceutical industry is regularly found to be engaging in fraud of many types, and the number of pharmaceutical fraud is on the rise each year.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/crigroup.com\/ar\/pharmaceutical-industry-fraud\/\" \/>\n<meta property=\"og:locale\" content=\"ar_AR\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Pharmaceutical Industry Frauds - Reported by Whistleblowers\" \/>\n<meta property=\"og:description\" content=\"The pharmaceutical industry is regularly found to be engaging in fraud of many types, and the number of pharmaceutical fraud is on the rise each year.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/crigroup.com\/ar\/pharmaceutical-industry-fraud\/\" \/>\n<meta property=\"og:site_name\" content=\"Corporate Research &amp; 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