1991-2010 Enormous Scale of Pharma Criminal Fraud Settlements

Alliance for Human Research Protection

Friday, 24 December 2010

From 1991-2000 qui tam law suits accounted for only 9% of settlements with the government. But from 2001-2010, qui tam settlements comprised 67% of the billions in payouts

A report by Public Citizen documents the enormous scale of pharmaceutical industry lawless activities during the past two decades–crimes that resulted in a minimum of $1 million in penalties paid to the government.

Between 1991-2010 there were 165 criminal and/or civil settlements by major pharmaceutical companies comprising of $19.8 billion in penalties.

Four of the world’s largest drug companies–GlaxoSmithKline, Pfizer, Eli Lilly, and Schering-Plough–accounted for 53% ($10.5 billion) of penalties during these two decades.

If that isn’t shocking enough, during the past five years, Big Pharma has been engaged in a veritable crime spree:

73%  of these settlements (121) and 75% of the penalties ($14.8 billion) occurred between 2006-2010.

“While the defense industry used to be the biggest defrauder of the federal government under the False Claims Act (FCA), a law enacted in 1863 to prevent defense contractor fraud, the pharmaceutical industry has greatly overtaken the defense industry in recent years.  The pharmaceutical industry now tops not only the defense industry, but all other industries in the total amount of fraud payments for actions taken against the federal government under the False Claims Act.”

Former company employees who filed qui tam (whistleblower) suits were the most instrumental in bringing to light the evidence that resulted in the largest number of federal settlements over the past 10 years.

From 1991-2000 qui tam law suits accounted for only 9% of settlements with the government. But from 2001-2010, qui tam settlements comprised 67% of the billions in payouts.

The federal government levied the largest financial penalties for the illegal off-label promotion of drugs and state governments levied the largest penalties for deliberate overcharging of Medicaid–both crimes yielded pharmaceutical companies with huge profits. Public Citizen found that state Medicaid programs were paying as much as 12 times the actual cost of a drug.

Additional unlawful practices by pharmaceutical companies include: unlawful monopoly practices to extend patent pricing or collusion with other companies, kickbacks to providers, hospitals, doctors; concealing negative study findings;  poor manufacturing practices and selling contaminated products; environmental violations; accounting or tax fraud and insider trading; illegal distribution of unapproved pharmaceutical products.

Thus, the size of the financial penalties levied paled when compared with the profits from illegal practices–which is why this industry has escalated its criminal marketing modus operandi.

We wholeheartedly agree with the assessment of Public Citizen: “Clearly, the continuing increase in violations by pharmaceutical companies–despite the large financial settlements– demonstrates that the current enforcement system is not working. The lack of criminal prosecution that would result in jailing of company executives has been cited as a major reason for the continuing large-scale fraud, in addition to the fact that current settlement payouts may not be a sufficient deterrent.”

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