Blowing the Whistle on the Pharmaceutical Industry
Healthcare reform - depending on your point of view or even your political affiliation - is either a long-overdue step to insure our nation’s health, or the first step on a slippery slope of socialized healthcare.
Regardless of your view, we spend about $8,000 for every man, woman and child in our country, gobbling up nearly 18 percent of our gross national product. By contrast, we spend twice as much as many western nations, but still have higher rates of infant mortality and lower life expectancies.
One thing we can agree on is the idea that waste, greed, and corruption hamper our current healthcare system. High on that list of bad actors is the pharmaceutical industry. It seems there isn’t a week that passes without a story of a drug company stacking the deck with bogus studies, pushing products for off-label uses, or attempting to rig the pricing systems to boost the bottom line.
Today I want to talk about an oddly named legal principle that, in many respects, is one of our biggest tools in reigning in these abuses. The principle is called Qui tam, which is short for the Latin phrase, "qui tam pro domino rege quam pro se ipso in hac parte sequitur." The phrase translates to "he who brings a case on behalf of our lord the King, as well as for himself."
Most people know the concept by its more common term – whistleblower. While some might think the term comes with negative baggage, I can say that in my years of practicing law, whistleblowers have been some of the most potent, positive forces in bringing positive change. More on that later.
First, though, what is the role of a whistleblower? It’s no secret the government is short-handed. There are never enough people to police every business, every transaction and every industry in this country. Private litigators help fulfill that role to some degree, investigating bad practices, and pursuing legal action when needed.
Both private litigators and the government also rely on one more source – you, the people inside these companies. Employees serve as the eyes and ears in identifying corrupt practices, and over the years have helped taxpayers and the government recoup significant amounts of money wrongfully obtained by pharmaceutical companies.
The role of a whistleblower is pretty simple – if you are aware of corrupt practices within an organization, step forward and help the government investigate if an issue is worth litigation. If a case develops and reaches a settlement or verdict, whistleblowers can keep as much as 30 percent of the amount of the fraud uncovered.
Here are a few examples to help paint a broader picture of what this means:
From Nov. 2001 through April 2004, Medicis sales reps targeted pediatricians in an effort to sell a topical skin ointment, Loprox, as a treatment for diaper rash. The problem: the Food & Drug Administration did not approve Loprox for use on children under the age of 10. This was an instance of off-label marketing.
Employees stepped forward and helped the government pursue legal action against Medicis for off-label marketing.
The company settled at $9.8 million. Through Medicaid, the government paid millions of dollars for Loprox prescriptions that would not have been reimbursed if government authorities had known that prescriptions resulted from the company’s off-labeling marketing campaign.
The employees in this case recouped a percentage of the millions lost by the government and helped stopped the wrongful use of a prescription ointment on young children.
Jazz Pharmaceuticals - $20 million settlement
In another case involving off-label marketing, Jazz Pharmaceuticals agreed to a $20 million settlement after a sales representative for the company filed a lawsuit on behalf of the U.S.
The lawsuit claimed the company wrongly marketed and sold the drug Xyrem for unapproved uses. The company promoted the drug for fatigue, insomnia, chronic pain, depression, bipolar disorder and weight loss when the FDA had only approved it for narcolepsy.
The drug’s active ingredient, GHB, also known as a “date rape” drug, was sold as safe to use on children and the elderly and a compensated psychiatrist advised doctors on how to conceal the off-label prescriptions to ensure insurers would pay them.
The company also admitted that it relied on a psychiatrist to give talks around the country promoting the unapproved uses, while paying him tens of thousands of dollars for speaking engagements.
In both cases, off-label marketing was the issue and foundation for litigation. Drug companies desperate to make sales and increase market share succumbed to marketing unapproved uses of drugs to do so.
These are instances where sales representatives and insiders at these companies had everything at their fingertips and knew what they were doing was not only morally wrong, but illegal and hurting patients and federal programs.
Employees have the power to speak up when they know there is corruption within their company. Blowing the whistle on fraud in the pharmaceutical industry is necessary to instigate change and hold big corporations accountable to the public.
If you’re interested in learning more, visit our Web site, www.hbsslaw.com/service/practices/whistleblower-litigation.
If you’re looking to speak to someone about questionable practices you’ve seen or experienced, contact our attorneys for advice on next steps and involvement at (206) 623-7292, or fill out our report a fraud form.
