Pharma 101 - Pharmaceutical Fraud

Big Pharma Pays $13.6 million for Price Inflation

U.S. District Court Judge Patti Saris has ordered drug companies AstraZeneca and Bristol-Myers Squib to pay a total of $13.6 million in a Masachusetts case that alleged that they inflated the average wholesale price (AWP) of expensive and in some cases, life-saving drugs.  Judge Saris also found that the companies “unfairly and deceptively caused to be published false” average wholesale prices of drugs and thus caused “real injuries to the insurers and the patients who were paying grossly inflated prices for critically important, often life-sustaining drugs.”  Judge Saris said that she decided to double the assessed damages because the conduct was willful on the part of the companies. Judge Saris further stated that “The Defendants well understood the devastating impact the mega-spreads had on old and sick patients required to make co-payments they could ill afford.”  

Bristol-Myers is maintaining that their pricing was fair and that they intend to appeal this decision. 

Of note is the fact that Judge Saris remarked and doubled the damages due to the wilfulness on the part of the defendants.  Further, this can expand to a nationwide class action lawsuit.   

To read more click on:  http://www.boston.com/news/local/massachusetts/articles/2007/11/02/drugs_companies_ordered_to_pay_136_million_for_inflating_prices/  or to read more about pharmaceutical fraud go to www.whistleblowerfirm.com/pharmaceuticalfraud 

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FDA Issues a draft Guidance for Dissemination of Information on Unapproved Uses of Medical Products

The U.S. Food and Drug Administration (FDA) last Friday issued a draft guidance on “Good Reprint Practices” for regarding the distribution of medical or scientific journal articles and reference publications that involve unapproved uses of FDA-approved drugs and medical devices. Draft guidances are often put into final form with substantially the same wording.

“Articles that discuss unapproved uses of FDA-approved drugs and devices can contribute to the practice of medicine and may even constitute a medically recognized standard of care,” said Randall Lutter, FDA deputy commissioner for policy. “This guidance also safeguards against off-label promotion.”

Previously, Section 401 of the Food and Drug Administration Modernization Act set out guidelines that allowed the dissemination of information on unapproved uses of FDA-approved products. As long as the guidelines were met by the manufacturers, the dissemination of such materials was not viewed by the FDA as evidence of an intent to promote the product for an “off-label” use. However, Section 401 expired on Sept. 30, 2006.

The FDA’s “Good Reprint Practices” draft guidance recommends principles manufacturers should follow when they distribute scientific or medical journal reprints, articles, or reference publications.

Publications that the medical community rely on should be independent. Accordingly, some of the principles include ensuring that the article or reference be published by an organization that has an editorial board. The organization also should fully disclose any conflicts of interest or biases for all authors, contributors or editors associated with the journal article. Articles should be peer-reviewed and published in accordance with specific procedures.

Not surprisingly, the draft guidance also recommends against distribution of special supplements or publications that have been funded by one or more of the manufacturers of the product in the article, and further, (stating the obvious), that articles that are not supported by credible medical evidence are considered false and misleading and should not be distributed.

FDA Needs Help

The rise in Qui Tam cases that we and other qui tam law firms have experienced is no doubt a result of the lax enforcement that has occurred over the years-as fraud has been allowed to increase.This month, consistent with the notion that the FDA has been under-resourced from a regulatory enforcement standpoint, the FDA’s Subcommittee on Science and Technology issued a report which concluded, in part, that:

Off Label Marketing Costs Jazz Pharmaceuticals $20 Million

Jazz Pharmaceuticals, Inc. (”Jazz”) has agreed to pay $20 million in order to resolve both criminal and civil investigations which were conducted by the United States Attorney’s Office for the Eastern District of New York. Specifically, Jazz Subsidiary Orphan Medical, Inc. plead guilty to the off label, illegal marketing of Xyrum (also known as “GHB”) and agreed to pay $17.2 Million in restitution and penalties. Both Jazz and Orphan were also to pay an additional $2.8 Million through a Civil Settlement Agreement.

Federal Judge Rules Drug Companies Engaged in Drug Price Deception

In a class action lawsuit that claims drug companies unfairly adjusted prices of medication, the plaintiffs scored a major victory when Judge Saris found that defendants “unfairly and deceptively caused false AWPs to be published knowing that payers and the government did not understand the truth and the severity of the markups.”  The named defendants are AstraZeneca, Schering-Plough and Bristol-Myers Squib. 

In her opinion dated June 21, 2007, Judge Saris wrote that “Unscrupulously taking advantage of the flawed AWP system … by establishing secret mega-spreads far beyond the standard industry markup was unethical and oppressive.” She also wrote that such practices, “caused real injuries to the insurers and patients” who paid inflated prices for life-sustaining drugs. Such drug pricing fraud is part of a broad category of pharmaceutical fraud.

AWP is Average Wholesale Price, the measure by which drugs were generally paid for by healthcare payors in years past. Medicare now pays for drugs on an Average Sales Price basis, which is an actual price and less likely to be manipulated.   

To read more of the story look here. 

Clinical investigator indicted for fraud in pharmaceutical trials of blockbuster drug

NEW ORLEANS — Dr. Maria Carmen Palazzo was indicted by a federal grand jury on 55 counts of health care fraud and false documentation in connection with a clinical trial of Paxil in children and adolescents, U.S. Attorney Jim Letten said on Thursday.

One area of charges involves clinical trial fraud. According to the indictment, Palazzo, as a clinical investigator for SmithKline Beecham doing business as GlaxoSmithKline, fraudulently failed to maintain and prepare records required by the FDA for evaluation the drug’s safety and effectiveness in children and adolescents.

During approximately a five-year period, Palazzo also defrauded Medicare in connection with services she claimed to have rendered to patients in a Psychiatric Partial Hospitalization Program at Touro Infirmary , according to the indictment.

The indictment also charges that Palazzo defrauded Medicare by submitting fraudulent invoices to Touro for consulting and medical director services. The indictment says because of that Medicare paid Palazzo over $653,000 she was not entitled to receive. (Consulting and Medical director costs of hospitals are passed on to Medicare in part, under the cost report system).

See the full story here. 

Purdue Pharma Agrees to $19.5 Million Settlement Over Off Label Marketing of OxyContin

Eli Lilly and Company in More Hot Water

FDA Launches Draft Guidelines On Financial Ties With Drug Companies