Pharma Fines Are Filling The Treasury

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fraud.jpgDrugmakers aren’t the only ones, of course. But the Justice Department says it obtained $2 billion in settlements in fraud cases during fiscal year 2007, with most of the recoveries resulting from whistleblower lawsuits, the Associated Press reports.

Approximately $1.45 billion of the settlements resulted from whistleblower lawsuits in fiscal year 2007, which ended Sept. 30, the department said. The individuals who filed suit were awarded $177 million. Under the False Claims Act, whistleblowers can sue companies or individuals that they believe have filed fraudulent claims with the federal government and, if successful, they can receive from 15 percent to 30 percent of the proceeds, the AP notes. Health care fraud accounted for most of the settlements, with $1.54 billion stemming from cases involving programs such as Medicare and Medicaid.

As we know, the department is cracking down on various practices by drugmakers, such as inflating the price of drugs that are reimbursed by federal programs, paying kickbacks to docs and pharmacists to induce drug purchases and for off-label promotion. In one of the largest settlements, Bristol-Myers Squibb and one of its former subsidiaries agreed in late September to pay $515 million to settle federal and state allegations that it illegally promoted its anti-psychotic drug Abilify for several off-label uses.

In other settlements, oil and gas company ConocoPhillips’ Burlington Resources subsidiary paid the federal government $105.3 million in August to settle claims that it failed to pay sufficient natural gas royalties, the department said. ConocoPhillips bought Burlington Resources last year. Meanwhile, the big software company, Oracle, paid $98.5 million early in fiscal 2007 to resolve allegations that PeopleSoft, which it acquired in 2005, had overcharged the government on numerous contracts.

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  1. Jack (PharmaGossip.com) states: most doctors deny that receiving free lunches, subsidised trips or other gifts from pharmaceutical companies has any effect on their practices, “research has shown that physician–industry relationships do influence prescribing behaviour”. If they did not, “companies wouldn’t spend $19 billion each year establishing and maintaining them”

    You (Ed) reveal that pharma lays out almost $2 billion in settlements/fines to the government for bad behavior.

    Doesn’t anyone find it significant that $21 billion a year is just considered the cost of doing business? Meanwhile, pharma continues to defend the high cost of their drugs as being tied to the huge R&D costs????

    While pharma continually directs public attention to the high costs of R&D, they have succeeded in diverting attention from the fact that much groundwork for new drug compounds is derived from the ongoing work of scientists at state-supported universities and research institutions. While I’m sure pharma adds the dollars expended in these venues to inflate THEIR R&D costs, they fail to acknowledge that taxpayers are funding some (much) of the work. (Interesting article from NYU Dr. Vanderburg at http://www.gooznews.com/archives/000854.html provides a non-pharma view).

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