Pharma 101 - Pharmaceutical Fraud

Archive for August, 2006

Schering Agrees to Pay $435 Million to Resolve Criminal and Civil Liabilities for Medicare and Medicaid Fraud

Schering-Plough and its subsidiary Schering Sales Corporation agreed to pay $435,000,000 to resolve both criminal and civil liabilities for illegal sales and marketing programs for certain of its drugs.  This includes Temodar, a drug used to treat brain tumors and Intron A for treatment of bladder cancer and hepatitis C. To read more click here.

Overcharging by State Pharmaceutical Distributor Leads to Charges

On August 16, 2006, the Michigan Attorney General charged the President of Specialized Pharmacy Services with defrauding Michigan Medicaid of over $5 million. The Michigan Attorney General said the investigation is continuing. Specialized Pharmacy is Michigan’s largest distributor of prescription drugs to its long-term care locations. Specialized Pharmacy is a subsidiary of Omnicare, the largest distributor of drugs in the United States to long-term care facilities. Omnicare reaps more than $6 billion annually. For more information click here.

NDC Directory is Incomplete and Unpoliced

According to a report released this month by the IG of HHS, FDA’s National Drug Code Directory listed 123,856 prescription drug products as of Feb. 2005, yet the Directory did not include  approximately 9,200 prescription drugs on the market, the IG estimated.   Manufacturers and labelers have a legal duty to register their prescription drugs under the Drug Listing Act, and it is a felony not to do so.  Thousands of prescription drugs have not been listed, although listing simply requires the completion of a short form . Notwithstanding the fact that they are not listed, some of the drugs are also unapproved, illegally marketed prescription drugs, that have not undergone the FDA approval processs as required by law-could this be part of the problem why there are so many illegal unapproved prescription drugs on the market and in pharmacies today? The FDA has had no way of identifying all of the prescription drugs, illegal and legal, on the market. In a reply to the IG Report, the FDA admitted that it is working to fix the problems that the  Report identified.

A Common Industry Practice — False Average Wholesale Price (AWP)?

GlaxoSmithKline agreed to pay $70 million to settle state Medicaid claims involving Zofran and Kytril, drugs used for the treatment of cancer.  In what a Glaxo spokesperson claimed was a common practice, the allegations included claims that the prices set for these drugs were based on fraudulent inflated figures provided by Glaxo, resulting in increased reimbursement from government programs. For more information, click here.

$30 Million Off-Label Case

The State of Mississipi has filed a sweeping lawsuit against the pharmaceutical company Eli Lilly (see www.lilly.com) alleging the pharmaceutical compay illegally marketed Zyprexa (an antipsychotic drug) for off label uses, thereby defrauding the state of Mississippi in excess of $30 million. For more information, click here.

Qui Tam Lawsuits Stike Hard at Healthcare Fraud

A new Taxpayers Against Fraud Report confirms the success of the Qui Tam provisions of the False Claims Act in fighting health care fraud. To see the full Report, click here.