Another Major Settlement in a Pharmaceutical Industry Health Care Fraud Case

We can tell you that the False Claims Act is a powerful tool for fighting the growing epidemic of health care fraud in the United States.  We prefer, however, to show you by citing some of the biggest verdicts and settlements in the field.  This week, we highlight a settlement involving allegations of Medicaid fraud in the pharmaceutical industry.  As a Medicare and Medicaid fraud whistleblowers’ law firm, we help honest witnesses bring lawsuits in cases like this one to fight back against pharmaceutical company fraud and other cases of fraud against government health care programs.

Drug Company to Pay $784.6 Million to Settle Claims It Failed to Report Accurate Pricing Data and Underpaid Medicaid Drug Rebates

On April 27, the Department of Justice (“DOJ”) issued a press release announcing that Wyeth and Pfizer (Pfizer acquired Wyeth after the alleged conduct ended; defendants referred to collectively as “Wyeth”) have agreed to pay $784.6 million to settle a False Claims Act suit alleging Wyeth committed Medicaid fraud by reporting false prices on pill$two of its medications.  The complaint alleged that Wyeth gave thousands of hospitals deep discounts on two protein pump inhibitor drugs but failed to report these lower prices to the government.  Allegedly, Wyeth used a bundled sales agreement to induce hospitals to purchase two of its drugs and place them on hospital formularies.  The government believes Wyeth sought to control the hospital market in part because patients often stay on the drugs for a long time after discharge and payers, including Medicaid, would then end up paying nearly full price for the medications.

Medicaid rules require companies to report to the government the lowest prices offered to other customers on name brand medications.  These best prices are used to calculate rebates that the companies must pay Medicaid’s state programs to ensure Medicaid effectively receives the benefits of the same discounts offered to other large purchasers such as hospitals.  Wyeth reportedly hid the bundling discounts and thus avoided paying hundreds of millions of dollars in Medicaid rebates between 2001 and 2006.

The settlement resolves False Claims Act allegations brought by a former hospital sales representative for another drug company along with a practicing physician.  Wyeth did not deny the allegations as part of the settlement agreement.  Wyeth has agreed to pay $413,248,820 to the federal government and an additional $371,351,180 to state programs to settle these claims.  The whistleblowers will receive $98,058,190 from these proceeds as compensation for their efforts.  Principal Deputy Assistant Attorney General Benjamin C. Mizer commented, ““This settlement demonstrates our unwavering commitment to hold pharmaceutical companies responsible for pursuing pricing schemes that attempt to manipulate and overcharge federal health care programs – programs that protect the poor and disabled – for drugs sold to commercial customers at much lower prices.”

The Success of the False Claims Act in the Fight Against Health Care Fraud

According to the DOJ’s yearly report on the progress of the False Claims Act, in Fiscal Year 2015 the government recovered more than $3.5 billion pursuant to the Act, including $1.9 billion from the health care industry.  Notably, this figure only includes recoveries by the federal government.  As a joint federal-and-state program, Medicaid fraud cases like that discussed above often involve recoveries by state governments as well.  In some instances, those cases are pursued under both the federal False Claims Act and its state equivalents or even solely under the state laws.  Thus, the true amount recovered in health care fraud cases is even greater than the annual report suggests.

The Role of Whistleblowers and Our False Claims Act Law Firm in Combatting Health Care Fraud

Whistleblowers are key to the success of health care fraud cases.  It often takes someone on the inside, someone willing to speak up about a wrong, to bring these cases to light and to help uncover the evidence necessary for a successful prosecution.  The law recognizes the importance of these whistleblowers, protecting them from retaliation and compensating them when their claims lead to a recovery of funds by the government.

If you have witnessed Medicaid fraud, Medicare fraud, or another form of fraud on the government, please come forward and join our fight.  Our health care fraud whistleblowers’ law firm welcomes your call and would be honored to be your teammate in this important battle.  Health care fraud will only end if honest private citizens help.  Please call to learn more.

See Related Blog Posts:

Looking at the State Side of Government Fraud Claims: Washington Examines its Medicaid Fraud False Claims Act

Major Ruling on Medicaid Overpayments is a Victory in the Fight Against Health Care Fraud

Medicaid Fraud: Health Care Fraud Targeting Another Government Program

(Image by Bill David Brooks)


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