Of the $2 billion recovered by the Justice Department for fraud in 2007, $1.45 billion was associated with suits initiated by whistleblowers under the False Claims Act’s qui tam provisions.
These whistleblower provisions authorize individuals, known as "relators" to file suit on behalf of the United States against those who have falsely or fraudulently claimed federal funds. Such cases run the gamut of federally funded programs from Medicare and Medicaid to defense procurement contracts, disaster assistance loans, and agricultural subsidies. Persons who knowingly make false claims for federal funds are liable for three times the government’s loss plus a civil penalty of $5,500 to $11,000 for each claim. Relators recover 15 to 25 percent of the proceeds of a successful suit if the United States intervenes in the qui tam action, and up to 30 percent if the United States declines and the relator pursues the action alone. In fiscal year 2007, whistleblowers were awarded $177 million. (This figure does not include relator shares for fiscal year 2007 which have not yet been awarded or were awarded after September 30, 2007.)
The largest health care recoveries came from pharmaceutical companies and related entities. Settlements with Bristol-Myers Squibb Co., Aventis Pharmaceuticals, Inc., Medco Health Solutions, Inc., Purdue Pharma L.P. and Purdue Frederick Co., and InterMune, Inc. accounted for more than $800 million of the $1.5 billion. In addition to federal recoveries, pharmaceutical fraud cases returned $264 million to state Medicaid programs.
Among the Department’s most significant settlements and judgments in fiscal year 2007 were these five against Pharmaceutical Companies:
$328 million from Bristol-Myers Squibb Company (BMS) and its generic division, Apothecon, to resolve a broad array of allegations involving illegal drug pricing and marketing activities. BMS and Apothecon paid an additional $187 million to state Medicaid programs based on the same allegations. The civil settlement arises from seven qui tam actions and resolves allegations that (1) BMS and Apothecon set and maintained inflated prices knowing that federal health care programs used these prices for reimbursement, and then marketed the “spread”–the difference between the reported price and cost–to induce sales by increasing providers’ profits; (2) BMS paid kickbacks to doctors in the form of bogus consulting fees to induce them to purchase BMS’s drugs; (3) BMS paid kickbacks to wholesalers and retail pharmacies to induce purchases of generic products; (4) BMS promoted its atypical antipsychotic drug, Abilify, for juvenile use and to treat dementia related psychosis–uses that were not approved by the Food and Drug Administration; and (5) BMS violated the Medicaid Drug Rebate Act, 42 U.S.C. § 1396r-8, by reporting false "best prices" to the government for its drug Serzone, which resulted in BMS underpaying quarterly rebates owed to the Medicaid program. The six relators will share a $52 million award plus additional amounts from the states.
Read the original press release here.
$180 million from Aventis Pharmaceuticals, Inc. to resolve allegations that the company engaged in a scheme (1) to set and maintain fraudulent and inflated prices for its drug, Anzemet, knowing that federal health care programs established reimbursement rates based on those prices, and (2) to use the difference between the inflated prices reported and the actual prices charged to its customers to market, promote, and sell the drug. In addition, Aventis paid $10 million to several state governments based on the same allegations. The relators shared a $33 million award.
Read the original press release.
$155 million from Medco Health Solutions, Inc. to settle allegations that Medco submitted false claims in connection with the mail order prescription drug benefit offered under the Federal Employee Health Benefits Program. The government alleged that Medco cancelled prescriptions it could not fill timely to avoid late penalties, shorted pills, and billed for pharmacy services it didn’t provide. The government also alleged that Medco solicited kickbacks from pharmaceutical manufacturers to favor their drugs on Medco’s formulary, and paid kickbacks to health plans to obtain business. The settlement resolved two qui tam lawsuits and a separate federal investigation prompted by Medco’s disclosure to the government concerning billing problems for diabetic supplies. The relators received $23.9 million as their award. Medco also entered into a corporate compliance agreement with the Department of Health and Human Services and the Office of Personnel Management.
Read the original press release here.
These whistleblower provisions authorize individuals, known as "relators" to file suit on behalf of the United States against those who have falsely or fraudulently claimed federal funds. Such cases run the gamut of federally funded programs from Medicare and Medicaid to defense procurement contracts, disaster assistance loans, and agricultural subsidies. Persons who knowingly make false claims for federal funds are liable for three times the government’s loss plus a civil penalty of $5,500 to $11,000 for each claim. Relators recover 15 to 25 percent of the proceeds of a successful suit if the United States intervenes in the qui tam action, and up to 30 percent if the United States declines and the relator pursues the action alone. In fiscal year 2007, whistleblowers were awarded $177 million. (This figure does not include relator shares for fiscal year 2007 which have not yet been awarded or were awarded after September 30, 2007.)
The largest health care recoveries came from pharmaceutical companies and related entities. Settlements with Bristol-Myers Squibb Co., Aventis Pharmaceuticals, Inc., Medco Health Solutions, Inc., Purdue Pharma L.P. and Purdue Frederick Co., and InterMune, Inc. accounted for more than $800 million of the $1.5 billion. In addition to federal recoveries, pharmaceutical fraud cases returned $264 million to state Medicaid programs.
Among the Department’s most significant settlements and judgments in fiscal year 2007 were these five against Pharmaceutical Companies:
$328 million from Bristol-Myers Squibb Company (BMS) and its generic division, Apothecon, to resolve a broad array of allegations involving illegal drug pricing and marketing activities. BMS and Apothecon paid an additional $187 million to state Medicaid programs based on the same allegations. The civil settlement arises from seven qui tam actions and resolves allegations that (1) BMS and Apothecon set and maintained inflated prices knowing that federal health care programs used these prices for reimbursement, and then marketed the “spread”–the difference between the reported price and cost–to induce sales by increasing providers’ profits; (2) BMS paid kickbacks to doctors in the form of bogus consulting fees to induce them to purchase BMS’s drugs; (3) BMS paid kickbacks to wholesalers and retail pharmacies to induce purchases of generic products; (4) BMS promoted its atypical antipsychotic drug, Abilify, for juvenile use and to treat dementia related psychosis–uses that were not approved by the Food and Drug Administration; and (5) BMS violated the Medicaid Drug Rebate Act, 42 U.S.C. § 1396r-8, by reporting false "best prices" to the government for its drug Serzone, which resulted in BMS underpaying quarterly rebates owed to the Medicaid program. The six relators will share a $52 million award plus additional amounts from the states.
Read the original press release here.
$180 million from Aventis Pharmaceuticals, Inc. to resolve allegations that the company engaged in a scheme (1) to set and maintain fraudulent and inflated prices for its drug, Anzemet, knowing that federal health care programs established reimbursement rates based on those prices, and (2) to use the difference between the inflated prices reported and the actual prices charged to its customers to market, promote, and sell the drug. In addition, Aventis paid $10 million to several state governments based on the same allegations. The relators shared a $33 million award.
Read the original press release.
$155 million from Medco Health Solutions, Inc. to settle allegations that Medco submitted false claims in connection with the mail order prescription drug benefit offered under the Federal Employee Health Benefits Program. The government alleged that Medco cancelled prescriptions it could not fill timely to avoid late penalties, shorted pills, and billed for pharmacy services it didn’t provide. The government also alleged that Medco solicited kickbacks from pharmaceutical manufacturers to favor their drugs on Medco’s formulary, and paid kickbacks to health plans to obtain business. The settlement resolved two qui tam lawsuits and a separate federal investigation prompted by Medco’s disclosure to the government concerning billing problems for diabetic supplies. The relators received $23.9 million as their award. Medco also entered into a corporate compliance agreement with the Department of Health and Human Services and the Office of Personnel Management.
Read the original press release here.
$100.6 million ($109 million including interest) from Purdue Pharma L.P. and Purdue Frederick Company, Inc. to settle allegations of fraud against Medicaid and other federal health care programs. The government alleged that Purdue fraudulently misbranded OxyContin as being less addictive and less subject to abuse and diversion than other pain medications. The civil settlement resolved allegations that, based on these misleading marketing claims, Purdue knowingly caused the submission of false claims for OxyContin that were not eligible for federal reimbursement. In addition, Purdue paid $60 million to state Medicaid programs, forfeited $276 million to the United States, set aside $130 million to resolve private civil claims (with unclaimed amounts to revert to the United States), paid $5.3 million to the Virginia Attorney General’s Medicaid Fraud Control Unit to fund future health care fraud investigations, and paid $20 million to fund the Virginia Prescription Monitoring Program. Finally, Purdue paid $500,000 in criminal fines–the maximum allowed under the statute.
Read the original press release here.
$30.2 million from InterMune, Inc. to resolve allegations that InterMune marketed its drug, Actimmune, for uses not approved by the Food and Drug Administration resulting in federal health program losses. The government alleged that InterMune marketed Actimmune for idiopathic pulmonary fibrosis (IPF), a fatal disease that causes scarring of lung tissue. Although the company had failed to demonstrate Actimmune’s efficacy for IPF, it nevertheless misled physicians and the public to believe that the drug trial had been successful. The relator received $5.7 million as her share of the recovery. InterMune paid an additional $6.7 million to state Medicaid programs.
Read the original press release here.
Read the original press release here.
$30.2 million from InterMune, Inc. to resolve allegations that InterMune marketed its drug, Actimmune, for uses not approved by the Food and Drug Administration resulting in federal health program losses. The government alleged that InterMune marketed Actimmune for idiopathic pulmonary fibrosis (IPF), a fatal disease that causes scarring of lung tissue. Although the company had failed to demonstrate Actimmune’s efficacy for IPF, it nevertheless misled physicians and the public to believe that the drug trial had been successful. The relator received $5.7 million as her share of the recovery. InterMune paid an additional $6.7 million to state Medicaid programs.
Read the original press release here.
