Pharma 101 - Pharmaceutical Fraud

Archive for the 'Medicare' Category

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).

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Congress now has the power to shake up the FDA

With the new Democratic-controlled Congress, how the FDA accomplishes enforcement will likely change, which may in turn effect the level of resources devoted to the investigation of qui tam complaint allegations. In June 2006, a government report was issued entitled “Prescription for Harm: The Decline in FDA Enforcement Activity”, as a result of the House Committee on Government Reform having commissioned an investigation to evaluate the FDA enforcement activities related to the pharmaceutical industry under the Bush administration. The Report did not present a well-oiled enforcement machine.

To see the full report, click here.

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Pharma Group Says “No” To Expensive Gifts to Doctors Which Could Influence Their Drug Choices

The International Federation of Pharmaceutical Manufacturers and Associations (IFPMA), a worldwide trade group said that under their revised ethics code that as of January 1, 2007, they were no longer permitted to provide expensive gifts to doctors. This change to the ethics code was the first in the past 10 years. Members of this trade group are no longer permitted to give physicians money or expensive gifts such as stays in luxury hotels or trips to golf resorts that might influence their prescription drug selections. IFPMA members include Pfizer, GlaxoSmithKline, Sanofi-Aventis, Eli Lilly, AstraZeneca, Merck and Novartis. Here’s to more reform!

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Justice Department Gears Up For Health Care Fraud Litigation

Though whistleblower lawsuits are filed under seal, many industry lawyers estimate about 450 suits exist, and they expect that number to increase significantly now that the Medicare Part D drug benefit is in effect.

In response to questions from Sen. Charles Grassley (R-IA) on his nomination to be permanent deputy attorney general, McNulty writes that the Justice Department has joined over 150 drug-pricing whistleblower, or qui tam, cases. Dozens of attorneys have been assigned to the cases, most of which are still under investigation. Also, the department is developing databases accessible by government personnel working on the cases.

“Indeed, the Civil Division has hosted two conferences (and is currently planning a third conference) for its attorneys, assistant United States attorneys from around the country, FDA personnel, state representatives and HHS attorneys and investigators to coordinate and move these cases along,” McNulty writes.

Of the $1.4 billion recovered in fiscal year 2005 from False Claims Act settlements and judgments, health care fraud accounted for $1.1 billion, according to the Justice Department.HHS reaped the biggest recoveries, which was largely attributed to its Medicare and Medicaid Programs. The Justice Department has recovered $500 million so far in this fiscal year.

Companies have been settling suits out of court for hundreds of millions of dollars because losing a criminal case against the government would mean being excluded from participating in Medicare. Industry lawyers say federal prosecutors are targeting drug companies primarily because they have lots of money.

Medicare is expensive and most of the money recovered from going after drug companies goes right back into the program. If the government intervenes in a qui tam action, the person who filed the suit can recover between 15 to 25 percent of any settlement or judgment attributable to the fraud identified by the whistleblower, according to the Justice Department. The whistleblower’s share is 30 percent if the government does not intervene. In fiscal year 2005, whistleblowers were awarded $166 million.

However, whistleblowers historically have had little success without the government joining their cases, according to Laurence Freedman of Patton Boggs. Freedman says the government picks the good cases so those it passes over may not be as strong. Even if some passed-over cases do have merit, judges may be predisposed to thinking they are not important because the government is not involved.

Also, health care fraud cases are complex and expensive to litigate, according to James Sheehan, associate U.S. attorney for the Eastern District of Pennsylvania. Federal prosecutors now have a lot of experience with such cases and the government has deep pockets to pay for the expert witnesses who explain such complicated matters as pharmaceutical science and the inner workings of FDA.