E-DRUG: new study on criminal/civil violations by pharmaceutical industry
Pharmaceutical Industry Is Biggest Defrauder of the Federal Government Under
the False Claims Act, New Public Citizen Study Finds
Civil, Criminal Settlements Have Increased Dramatically; Off-Label Promotion
WASHINGTON, D.C. - The drug industry has now become the biggest defrauder of
the federal government, as determined by payments it has made for violations of
the False Claims Act (FCA), surpassing the defence industry, which had long
been the leader, according to a new Public Citizen study released today.
The study found that pharmaceutical cases accounted for at least 25 percent of
all federal FCA payouts over the past decade, compared with 11 percent by the
The fraud results were a key finding from a Public Citizen analysis of all
major pharmaceutical company civil and criminal settlements on the state and
federal levels since 1991 and found that the frequency with which the
pharmaceutical industry has allegedly violated federal and state laws has
increased at an alarming rate. Of the 165 pharmaceutical industry settlements
comprising $19.8 billion in penalties during the past 20 years, 73 percent of
the settlements (121) and 75 percent of the dollar amount ($14.8 billion) have
occurred during the past five years.
Many of the infractions, and the single largest category of financial
penalties, stemmed from the practice of off-label promotion of pharmaceuticals
- the illegal promotion of a drug for uses not approved by the Food and Drug
Administration (FDA). Off-label promotion can be prosecuted as a criminal
offence because of the potential for serious adverse health consequences to
patients from such promotional activities. Another major category of federal
financial penalties was purposely overcharging for drugs under various federal
programs, which constitutes a violation of the FCA.
On the state level, the largest category of financial penalties has come from
companies deliberately overcharging state health programs, such as Medicaid.
Public Citizen?s study found this to be the most common category of violation
among state settlements.
The increase in payments for fraud is likely attributable to drug companies
engaging in more wrongdoing and better enforcement at the state and federal
level, said Dr. Sidney Wolfe, director of the Health Research Group at Public
?Desperate to maintain their high margin of profit in the face of a dwindling
number of important new drugs, these figures show that the industry has engaged
in such activities as dangerous, illegal promotion for unapproved uses of drugs
and deliberately overcharging vital government health programs, such as
Medicare and Medicaid,? said Wolfe. Wolfe compiled and analysed the data with
physicians from the Johns Hopkins General Preventive Medicine program, Drs.
Sammy Almashat and Charles Preston, as well as Columbia University public
health student Timothy Waterman, all of whom worked at Public Citizen.
Public Citizen?s study also found that more than one-half of the industry?s
fines were paid by just a few companies - GlaxoSmithKline, Pfizer, Eli Lilly
and Schering-Plough. These four companies accounted for more than half of all
financial penalties over the past two decades, paying $10.5 billion in fines
collectively. These pharmaceutical companies were among the largest in the
world. The two largest criminal penalties ever assessed by the U.S. government
against any companies were against Lilly ($515 million) and Pfizer ($1.2
billion), both in 2009.
To conduct the study, Public Citizen created a database of information about
pharmaceutical companies? civil and criminal settlements, including information
about the type of alleged violation and the amount of money paid in
settlements. This study is the first to attempt to document and analyse all
major pharmaceutical company settlements with both federal and state
governments, the authors said.
Nationally, former pharmaceutical company employees and other whistleblowers
have been instrumental in bringing to light the most egregious violations; they
have initiated the largest number of federal settlements in the past decade.
The number of federal settlements arising from whistleblower cases has more
than doubled over the past five years, yielding total payouts more than two and
a half times higher than in the previous 15 years combined.
Needed remedies include imposing steeper financial penalties and criminally
prosecuting company leadership, including jail sentences, if merited.
?The danger to public safety and loss of state and federal dollars that comes
with these violations require a more robust response,? Wolfe said.
To read the full report, visit
Public Citizen is a nonprofit consumer advocacy organization based in
Washington, D.C. For more information, please visit www.citizen.org.
Sidney M. Wolfe MD
Director, Health Research Group at Public Citizen
1600 20th St. NW
Washington, DC 20009
Phone: +1 202 588-7735
Fax: +1 202 588-7796
Web sites: www.worstpills.org