Rewards for Reporting Fraud

Pharmaceutical Fraud

One of the hottest areas of fraud today is by pharmaceutical companies. In fact, DOJ has created a Pharmaceutical Fraud Team, which Mr. Hesch was a member prior to leaving DOJ. Here are some common schemes:

Medicaid Rebate Statute Fraud

Drug companies must report to the government each quarter the best price the company sells each of its drugs to its best customer and then pay Medicaid the difference between that price and the price it had charged Medicaid for the drug. The rebates due from pharmaceutical companies are generally millions of dollars a quarter. Some companies lie or disguise the true lowest price charged, and thus cheat Medicaid out of millions of dollars in overpriced drugs. Other drug companies lie about the average wholesale price (AWP) or average manufacturer price (AMP), which affects the amount of rebates due to the government under the Medicaid Rebate Statute. The government has paid hundreds of millions in rewards to citizens who reported this type of fraud.

Off Label Promotion

Drug companies are not allowed to promote an "off label" use of its drugs. For instance, if the Food and Drug Administration (FDA) for approval of a certain use of a drug, a pharmaceutical drug company cannot promote another unapproved use. An example would be where the FDA approves drug XYZ to be used to treat epilepsy. Once receiving FDA approval, however, the drug company starts contacting psychiatrists to promote the potential benefits of using drug XYZ for treating depression. The drug company seeks to reap large profits by only asking the FDA to test and approve the drug for a limited area, but then sell millions of pills to doctors to prescribe for other untested uses.

DOJ has reached settlements in the hundreds of millions of dollars against leading pharmaceutical companies for promoting an off label use of drugs, and this area is ripe for rewards if you can show that a drug company is intentionally promoting off label uses.

Adulterated Drugs

An emerging area of pharmaceutical fraud is in the area of adulterated products. This is not limited to using ingredients that are dangerous. The FDA has strict rules and requirements that apply to every drug manufacturer. Before a drug is approved, the pharmaceutical company must not only test the drug and prove its effectiveness, but it must establish tight manufacturing procedures and controls. Once approved, the company may not deviate from that strict process. Any changes must be pre approved by the FDA.

If a company skips steps or does not conduct each required manufacturing test and protocol, the drug is technically altered or adulterated. In other words, if a company tells the FDA that it will use sterile labs or use certain processes, but then chooses not to use them because they are expensive, the drugs are non conforming. The FDA treats them as adulterated. Medicare and Medicaid have rules that prohibit paying for adulterated products. Therefore, if a manufacturer significantly deviates from the approved process, he is not eligible to sell the drugs to the government.

Kickbacks

Kickbacks are more common than you might think. In fact, there have been many mega cases against pharmaceutical companies paying hospitals or doctors kickbacks for prescribing their drugs. Drug companies know that paying kickbacks is illegal, and therefore they often try to disquise the kickbacks by referring to them as consulting fees or training programs. If you can help the government prove that the payments were really based upon the amount of prescriptions, you might be eligible for a very large reward.