The Whistleblower – Pharmaceutical Fraud

In September of 2007, Bristol-Myers Squibb Company and its wholly owned subsidiary, Apothecon, Inc. agreed to pay over $515 million to resolve a broad array of civil allegations involving their drug marketing and pricing practices.  In December 2007 the Corporate Crime Reporter reported Merick to pay $670 million to settle federal and state charges that it violated the False Claims Act by engaging in nominal pricing fraud.  In 1986, more than $20 billion was paid out in fraud lawsuits brought by whistleblowers.


Pharmaceutical fraud cases represent the largest percentage of False Claims Act recoveries by the United, and qui tam relator whistleblower lawsuits.  The False Claims Act Is a federal whistleblower law which has its roots in the civil war era and allows private citizens to file actions against federal contractors and corporations who conduct fraud against the government and the public.  It is the United States’ most powerful tool for rooting out fraudulent government contracts.  With the advent of the Medicare prescription plan, even more federal tax dollars will flow into the pockets of large ruling companies illegally and in violation of current law.  In an industry with great power and profitability, there are lots of pressures upon companies to ignore federal laws designed to prevent fraud and curb costs.


Pharmaceutical fraud can take a variety of forms and involve complex issues.  The following are some example:


  • Charging the government for drugs not used and returned to pharmacy providers;
  • Marketing, promoting, and selling drugs for use other than those approved by the FDA;
  • Paying kickbacks and inducements to physicians, hospitals and pharmacists to prescribe or otherwise favor a drug;
  • Engaging in off-label marketing; and
  • Providing false data to the FDA or withholding negative data from FDA about the efficacy of a pharmaceutical drug or medical device in clinical research trials to get approval to sell and market the pharmaceutical drug or medical device.

Currently, the United States Government, along with the governments of 15 states and the District of Columbia, have joined with two whistleblowers who allege that drug manufacturer Wyeth defrauded U.S. taxpayers out of hundreds of millions of dollars.  According to the Wall Street Journal, Wyeth is accused of overcharging Medicare and Medicaid programs nationwide for purchases of it’s acid-reflux drug Protonix.  Under federal law, drug companies are required to offer prescriptions to federal aid programs at the lowest possible price.  The Wyeth suit alleges that Wyeth was offering Protonix at a 90% discount to a private hospital, while charging the federal government much higher rates.


Other drug companies that have settled qui tam lawsuits include Pfizer, TAP Pharmaceuticals, Bayer, and Schering-Plough Corp.  A federal official recently said the government has approximately 150 pharmaceutical fraud cases pending involving over 500 different drugs.


Pharmacy benefits management companies have also come under increasing scrutiny as a result of the False Claims Act.  In one of the most prominent whistleblower cases reported, Phillips & Cohen represented two whistleblowers whose qui tam lawsuits resulted in a settlement of $875 million to settle the lawsuits and related criminal charges.


If you believe you have discovered fraud, you should try to assess the magnitude of the fraud and gather whatever documentary or electronic evidence is lawfully available.  Be sure you do not violate the law or the terms of your employment agreement.  Write down the details of any meetings or events where fraud was discussed, who was present and what documents may exist that memorialize the event.  This documentation should be given to your attorney.


Keep in mind, you cannot recover in a qui tam action if another whistleblower has already filed an action based on the same documentation and information.

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