Government Vows To Crack Down On Best-Price Fraud

One of Big Pharma's biggest, easiest and most lucrative schemes is to cheat the Federal Government's "Best Price" law, whereby they are required to offer the lowest price possible for patients receiving government aid.

Because of the vast quantity of pharmaceuticals distributed throughout the country, and the complicated way in which their prices are determined, the job of determining the lowest price has widely been left in the hands of the drug companies themselves. In order to make an extra buck, many of these companies will either raise this price in order to receive higher medicare rebates or work out deals with private employers to lower the price in order to make purchasing their own drugs (versus those of others) more attractive.

The U.S. Government has announced that it is taking new steps to crack down on this industry-wide problem by taking some of this responsibility out of the hands of these companies. According to a recent announcement by the Department of Health and Human Services, the government will begin fining companies as much as $10,000 a day for failing to comply with price-reporting obligations through a law that has been in place since 1990 but, up until this time, has never been enforced.

This is a positive first step toward taming the wild landscape that is the pharmaceutical industry. Beyond saving money by curbing these abuses, the government sends a clear message that it is watching for this law and will treat offenders harshly.

Indeed, shortly after the government released the statement, numerous companies reported that they "may" have found pricing irregularities. Surprising? Not much.


Novartis Pleads Guilty To Illegal Marketing Of Drugs, Illegal Kickbacks To Doctors

Since its $2.3 billion mega-settlement against Pfizer in 2009, the U.S. Department of Justice has continued to shine the spotlight on Big Pharma and punish the cheaters pervasive in the entire industry.

In a rare turn for Big Pharma court cases, Novartis AG agreed to plead guilty to end criminial and civil investigations that it was off-label marketing its epilepsy drug Trileptal and paying illegal kickbacks to doctors who prescribed or touted Diovan, Exforge, Sandostatin, Tekturna and Zelnorm. Novartis AG agreed to an astonishing $422.5 million charge for its actions.

A U.S. district attorney's office charged Novartis with promoting Trileptal for neuropathic pain and bipolar while also targeting physicians who never qualified to be prescribe the drug.

Prosecutors also alleged that the company engaged in numerous shady practices concerning its partnership with doctors who helped promote their drugs. According to the lawsuit: Many of the doctors touting the drugs had difficulty speaking English; there were almost 2,000 speakers for Diovan, which means that any doctor who wanted to could become a speaker and earn more; the consultants earned much more than the "fair market value" for doctors performing a similar role; addtionally, doctors were only allowed to be speakers if they prescribed the drugs to a certain number of patients, meaning that extra pay for "non-bias" consultancy work was pegged to how many people the doctor put on the drug.

The document is worth taking a look at - it is packed full of details about the ethically questionable dealings that often underline the business of Big Pharma and its search for blockbuster drugs. Indeed, there are very few blockbuster drugs on the market that haven't been accompanied with questionable marketing practices. In the end, a pharmaceutical company must compete and turn a profit, even if it means pushing the boundaries of what constitutes safe and fair business practices.

The United States Government cleared the $1 billion mark in False Claims Acts for the month of September following its previous $313 million settlement with Forest Laboratories over its decision to issue a drug before the time allowed by the FDA and its $600 million settlement with Allergan Inc. over its marketing of Botox.


Medical Advocacy Groups Receiving More Than $100 Million A Year From Big Pharma

A recent blog post from Pharmalot writer Ed Silverman highlights just how much dirty money circulates throughout the medical industry yet, at the same time, how difficult it is to track the extent and intent of the funds. In December of 2009, Senator Charles Grassley sent letters to 33 medical advocacy groups (such as the American Heart Association and the American Medical Association) requesting information about the money they and their board members received from corporate sponsors from 2006 to 2009. One of the 33 organizations that was forced to come clean was the National Alliance on Mental Illness, who was discovered by investigators to have accepted large donations from big pharma companies while lobbying for legislation that would benefit their benefactors.

Others have resisted the pressure to open up their books, saying privacy concerns. “You have to preserve the confidentiality of donors and respect donors’ rights,” says Paulette V. Maehara, president of the Association of Fundraising Professionals. “Donors do have rights regardless of what Senator Grassley might think.”

However, as the NAMI example illustrates, this lack of transparency paints the entire industry in an unflattering light. With millions of dollars being thrown at these advocacy groups, who seem to be quite eager in doing the bidding of these corporations, can one really claim that they are still independent organizations? How are they any different than a masked marketing agent, which actually markets better than the corporations themselves because they can put on the cloak of independence and trustworthiness?

One area where our nation's lawmakers can start is establishing a clear set of guidelines for the release of donor information, especially in cases where egregious conflicts of interest are rife in the system. According to a new study by The Chronicle of Philanthropy, medical groups in the Senate investigation differly widely on how specific their donor information is, with some detailing the amount and purpose of each charge, while others offering only basic information. Though the impact of these donations on these organizations varies because of their size (American Cancer Society's $10 million in 2009 is only 1.2 percent of its overall budget, versus a smaller organization like Mental Health America, which received 78% of its $3.2 million revenue from corporations), it is still imperative that all organizations are subject to the same rules. Only then can patients and doctors have access to the information necessary when making a decision about which organizations to work with, and whether they could be guilty of a conflict of interest. Until then, many of these medical organizations will continue to pose as unbiased institutions when, in fact, many of them may be pushing products or procedures on the public that are unsafe or being advocated for off-label uses.


More Cases Of Illegal Marketing Of Anti-Depressants To Children

One of the most controversial issues in medicine over the past twenty years has been the use of anti-depressants in children. Drug companies have paid millions, and some billions, over the past three years to settle charges of illegally marketing them to children when the F.D.A. has clearly stated that the scientific evidence surrounding their usage is unsound. Famous doctors, such as Dr. Joseph Biederman from Harvard medical school, were caught accepting millions from pharmaceutical companies while making controversial statements about the effectiveness of these drugs. Other companies, such as GlaxoSmithKline, lied about their clinical trials in order to push the drugs on greater numbers of children.

The controversy between these drugs and their effects on children, such as the two individuals responsible for the Columbine shootings, is as heated as it was ten years ago. Unlike ten years ago, however, these pharmaceutical companies could hide behind their science and plead innocence. Not so much anymore. In the last few years, Pfizer has paid $2.3 billion, Lilly $1.4 billion and Bristol-Myers Squibb $515 million to settle charges of off-label marketing.

Whatever the details of the case, it is certainly an odd coincidence that, in such a relatively short time span, these various cases involved: (1) the country’s biggest drug companies paying out some of the biggest settlements in their histories, (2) the same type of drugs, namely anti-depressants, and (3) the illegal marketing of these anti-depressants to children.

Now, another culprit has been dragged to court and forced to pay for the illegal marketing of its drugs.  A unit of Forest Laboratories, Forest Pharmaceuticals, agreed to a $313 million settlement over charges that it marketed Celexa, only approved to treat adult depression, on children and adolescents. Moreover, the prosecution further claimed that Forest had skewed its test results in order to make Celexa look more effective. Sound familiar?

“Forest Pharmaceuticals deliberately chose to pursue corporate profits over its obligations to the F.D.A. and the American public,” Carmen Ortiz, the United States attorney for the District of Massachusetts, said in a statement Wednesday.

Among other charges, Forest sales representatives were accused of giving sports tickets, gourmet meals and fishing trips to doctors in exchange for consulting and promotions services. Though the deny these allegations, Forest did agree to plead guilty to two misdemeanors, one of which covers its marketing of Celexa to children from 1998 to 2002.


Drug Company Sued for Threatening, Monopolistic Behavior

Another lawsuit from a hospital claiming that a pharmaceutical company was trying, unsurprisingly, to take out the competition and force hospitals to pay unnecessarily higher prices:

Florida-based Lakeland Regional Medical Center recently sued Astellas Pharma on charges that it was coercing hospitals to use a higher cost drug by withholding services unless they signed licensing agreements guaranteeing the purchase and use of Adenoscan, a drug given to individuals unable to run on treadmills during cardiac stress tests. Astellas has a monopoly on the drug (60% of the market), that allows it to control price and exclude competition.

According to the lawsuit, a July 2008 letter mailed to Lakeland and signed by Catherine B. Levitt, Associate General Counsel of Astellas US, LLC, claimed that "Astellas is the only party that can authorize the patented use of adenosine infusion for MPI studies." However, it would only do these patented tests if Lakeland purchased its brand-name drugs which, at at $8.05 per millileter versus the generic $1.76 per millileter, is a 450% price increase.

Lakeland responded with claims that these threats: "[make] clear that defendant Astellas is condition, or leveraging, the grant of a license to use its patente process for administering adenosine in MPI to the purchase of adenosine, itself, from the defendant, at a 450% higher price than the market price."

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