Drug Makers Top List of Federal Whistleblower Lawsuits

Drug manufacturers were the key payers in government fraud settlements under the False Claims Act, a important whistleblower law, according to an emerging report, wrote Fair Warning.

Advocacy group, Taxpayers Against Fraud Education Fund revealed that eight out of the 10 largest settlements under the Act in federal fiscal year ended September 30, 2010, were from Big Pharma, with the remaining two in the health care field, added Fair Warning.

Allergan, for paying out $600 million for its off-label marketing practices related to Botox, led the list, said Fair Warning. AstraZeneca, paid $520 million for an illegally marketed antipsychotic; Novartis paid over $422.5 million for illegally marketing Trileptal, wrote Fair Warning.

The False Claims Act, passed during the Lincoln administration provided a way in which third parties—so-called whistleblowers—could sue contractors for perpetrating fraud against the government, explained Fair Warning. Today, the law is used against defense contracting fraud, but drug companies have made their way onto the list, said Fair Warning, which noted that, sadly, as horrendous as this year’s figures are, they are an improvement over the prior year. In fiscal year 2009, Pfizer paid a massive $2.3 billion and Eli Lilly paid $1.4 billion.

Fiscal year 2011 has started badly, however, with GlaxoSmithKline last week agreeing to pay $750 million over criminal and civil charges that the drug giant “knowingly” sold tainted medications, according to Fair Warning.

Taxpayers Against Fraud reported that the U.S. Department of Justice recovered over $3.1 billion in stolen money in fiscal year 2010 following whistleblowers reports and noted that most—over 80 percent—of all successful False Claims Act recoveries are due to whistleblower reports. Under the Act, triple damages and statutory fines—up to $11,000 per claim—are provided; whistleblowers can receive 15-to-30 percent of recovered amounts, Taxpayers Against Fraud noted.

Most fraud recoveries under the Act take place in the health care sector; however fraud is also common in defense, education, transportation, and oil and gas, said Taxpayers Against Fraud, which added that the Act returns over $15 to Americans for each dollar invested in health care investigation and prosecutions, with large Medicaid recoveries returning millions in stolen money back to individual states.

In addition to state False Claims Acts, an IRS Whistleblower Office and SEC Whistleblower Office have been implemented and have been responsible for large financial recoveries, said Taxpayers Against Fraud.

Fair Warning posted the top ten payouts, as follows:

• Allergan: $600 million
• AstraZeneca: $520 million
• Novartis Pharmaceuticals: $422.5 million
• Forest Laboratories: $313 million
• Elan Corporation: $203.5 million
• Teva Pharmaceuticals: $169 million
• WellCare Health Plans: $137.5 million
• Mylan, AstraZeneca, and Ortho-McNeil: $124 million
• Omnicare and IVAX Pharmaceuticals: $112 million
• Health Alliance of Greater Cincinnati and Christ Hospital: $108 million

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