The Seattle Stateside Dispatch stated that hundreds of billions of dollars were wasted in fraud including physicians referring patients to their own facilities. The U.S. Government Accounting Office [GAO] reported that, in 2003, there were identified 114 unauthorized entities selling bogus insurance to 15,000 employers which–after massive legal processes–left $252 million in unpaid claims as a result of frauds. It 2005, U.S. sales of counterfeit drugs were $39 billion. Estimated bogus drug sales were $75 billion in 2010, and the cost rises annually. Counterfeit versions are often deficient in the important ingredients, and worse, actually dangerous. Every year those numbers increase at an alarming rate.
There is a mistaken belief that healthcare fraud is a victimless crime. On the contrary, that type of fraud is the second largest white-collar crime in the United States. Everyone in the U.S. is affected. Fraud causes insurance premiums and taxes to rise across the board; victims are put through unnecessary or unsafe procedures; and many become victims of identity theft and find that their insurance information has been used to submit false claims.
Pharmaceutical fraud whistleblowers have exposed a vast amount of pharmaceutical criminal activity. Several hundred pharmaceutical fraud cases covering more than 500 drugs are currently under investigation by the U.S. Department of Justice under the False Claims Act. Settlement of the first sixteen pharmaceutical fraud cases–including kickbacks, Medicaid rebate fraud, and best price violations–brought by whistleblowers has returned over $10 billion to the U.S.. Federal law prohibits the fraud of pharmaceutical kickbacks because it colors the judgment of the physician, i.e. the physician will prescribe a prescription drug based not on what is best for the patient, but based upon what prescription drug product most increases the physician’s bottom line. Other examples of kickbacks include: offering pharmaceutical kickbacks to physicians in the form of phony drug studies–the “research” performed has no legitimate value, and is merely a pretext for payments for referrals; phony speaker fees paid for by honoraria–some pharmaceutical companies have used “honorarium” fees or “speaker” fees for physician marketing. They are ostensibly compensation to physicians for agreeing to speak at a true educational event; phony grants–pharmaceutical sales representatives have been allowed by certain companies to give “grants” to physicians, physician groups, and other healthcare providers, ostensibly for an educational program or research program; phony investigator meetings–in some pharmaceutical companies, investigator meetings are ostensibly called for physicians to talk about potential non-indicated uses of drugs. Sales representatives are allowed and instructed to spend lavishly on all physicians, both the speakers and invitees. It has been typical for investigator meetings to last only two hours, yet pharmaceutical companies paid for the physicians’ airfare, hotel, golf, spa treatments, etc. at luxury hotels around the country; advisory board and other meetings–these meetings are typically for the ostensible purpose of getting input/feedback from physicians on drug performance, how they treat disease states, etc. During advisory board meetings, honoraria, lavish entertainment and expenses for physicians are paid for by the pharmaceutical companies.
Clinical trial fraud is another source of ill-gotten gains for pharmaceutical companies and unscrupulous providers and of unwarranted cost to insurance companies and consumers. Clinical trials sponsored by pharmaceutical companies often do not produce the same results as those conducted by the government and other public entities acting objectively. For example, in an analysis published in the American Journal of Psychiatry, it was found that in every publicly available trial funded by the companies that compared five new antipsychotic drugs against each other, the results of 9 out of 10 studies concluded that the best drug was the one manufactured by the pharmaceutical company sponsoring the study.
GMP [Current Good Manufacturing Practice Guidelines] fraud is a practice that frustrates the scientific process, jeopardizes the integrity of the drug product, and creates fraudulent extra costs along with decreased efficacy and safety of drugs. GMP regulations stem from Congressional concern over the danger that impure and otherwise adulterated drugs may escape detection under a system predicated only on seizure of drugs shown to be in fact adulterated. Violations of the GMP regulations have been the basis for qui tam–False Claims Act–lawsuits. The costly and dangerous violations include: off-label marketing; best price fraud; CME fraud–the use of Continuing Medical Education by pharmaceutical companies as a means to influence and induce physicians improperly to prescribe their products, usually newer and more expensive, but not necessarily better medications–unapproved drugs; long term care pharmacy fraud—fraudulent practices in which drugs are adulterated or repackaged in violation of the False Claims Act; and PBM [Pharmacy Benefit Managers] fraud—illegal relationships between pharmaceutical companies and PBMs violate the False Claims Act.
In the next, and final blogpost in this series, fraud perpetrated against the U.S. federal government—and therefore against We the People—will be examined in greater depth.