Senator Grassley Shines Spotlight on Whistleblower Protection in the Pharmaceutical Industry and Seeks Data From Drugmakers on Treatment Of Whistleblowers

Great news Whistleblowers! U.S. Senator Charles Grassley, principal sponsor of the 1986 Amendments to the False Claims Act (FCA), co-sponsor of the Whistleblower Protection Act of 1986, and lead sponsor of the Fraud Enforcement and Recovery Act of 2009, and a personal champion of the effort to eradicate Medicare and Medicaid fraud, has brought renewed attention to how the major players in the pharmaceutical industry educate their employees on their rights under the FCA, including the right to be free from retaliation for initiating a false claims lawsuit, and the avenues available for exercising those rights.

Whistleblowers play the central role in ensuring corporate compliance with their ethical and financial obligations to the government and the American public. As false and fraudulent claims in the pharmaceutical industry continue to eat deeper into Medicare and Medicaid funds and threaten to derail health care funding in the U.S., the crucial role of whistleblowers in exposing health care fraud and abuse is receiving renewed attention from Washington. Recent studies indicate that 90% of health care fraud cases are uncovered and prosecuted by whistleblowers, leading to a recovery of over $ 3 billion from false claims lawsuits in the last three years.

Sen.  Grassley, who has long recognized the role of employees in uncovering enormous health care fraud in the pharmaceutical sector, commenced a laudable effort on June the 28th to verify the compliance of 16 major pharmaceutical companies with laws protecting their direct employees and indirect employees (employees of agents and contractors) and other whistleblowers from retaliation for exposing fraud on the government and taxpayers.  Sen. Grassley’s letters to the 16 pharmaceutical companies request updated data on their compliance with the law requiring a written FCA policy and employee training and education on the FCA, including the whistleblower provisions and anti-retaliation protections of the FCA, as well as State civil or criminal laws on exposing health care fraud and protecting the whistleblower.

Sen. Grassley’s efforts are meant to make it easier for individuals with knowledge or evidence of fraud to come forward without risking their career in the process, as well as to ensure that corporate policies have been updated to reflect changes in the law, and truly further the goals of the FCA by educating employees on the FCA and encouraging them to expose health care fraud. According to the senator, “drugmakers have a public responsibility to safeguard the tax dollars that pay for their products,” and to promote “a culture where those who speak up about possible fraud are rewarded rather than retaliated against.”

The 16 pharmaceutical companies targeted by the Senator are:

• Abb0tt Laboratories
• AstraZeneca Pharmaceuticals LP
• Amgen Inc.
• Boehringer Ingelheim Corporation
• Bristol-Myers Squibb Company
• Eisai Corporation of North America
• Eli Lilly and Company
• Forest Laboratories, Inc.
• GlaxoSmithKline
• Johnson & Johnson
• Hoffmann-La Roche, Inc.
• Merck & Co., Inc.
• Novartis P Corporation
• Pfizer, Inc.
• Sanofi-Aventis, and
• Takeda Pharmaceuticals North America, Inc.

They are expected to respond by the 20th of July with specific information on:

• Changes or updates to corporate policy on educating employees about the FCA
• Employee education on the whistleblower anti-retaliation provisions of the FCA, including avenues for filing false claim lawsuits
• Corporate process for handling employee complaints about possible FCA violations
• Performance of the corporate FCA compliance program in encouraging employees to come forward with allegations of possible FCA violations
• Corporate policies to ensure fair treatment of employee complaints of possible FCA violations
• Any complaints of unfair treatment or retaliation made by whistleblowers
• Any modification of FCA compliance policy in light of the extension of whistleblower protections to contractors and agents.

If you are seeing fraud on the government, contact us by calling 800-377-1812 for strictly confidential advice from experienced counsel, with no fee obligation.

Relevant Links:

Bloomberg News July 1, 2010 report
Press release from Senator Grassley’s office on the letters

Pennsylvania Judges Imprisoned For Kickback Scheme

Two judges have each agreed to plead guilty and serve more than seven years in prison for receiving kickbacks from a private juvenile detention facility. Judges Mark Ciavarella and Michael Conahan, both of the Luzerne County Common Pleas Court of Pennsylvania, were alleged to have received over $2.6 million for decisions from the bench that benefitted the construction, expansion and operation of a private juvenile detention center and also to the placement of juveniles in those facilities. In one case in 2004, it is alleged that an agreement resulted in the placement of juvenile offenders worth $58 million.

The judges have been formally charged with “engaging in a scheme to defraud the public of their honest services, and with conspiring to defraud the Internal Revenue Service, in connection with a multi-million dollar honest services fraud scheme involving the placement of juveniles in juvenile detention facilities.”

If you are seeing fraud on the government, contact us by calling 800-377-1812 for strictly confidential advice from experienced counsel, with no fee obligation.

Eli Lilly Settles For Largest Criminal Fine in US History

On January 15, 2009, the Department of Justice reported that Eli Lilly and Company has agreed to plead guilty and pay $1.415 billion to resolve civil and criminal allegations.  The resolution includes a criminal fine of $515 million, the largest criminal fine ever imposed on an individual corporation in a United States criminal prosecution. The pharmaceutical giant will also pay as much as $800 million in a civil settlement with the federal government and multiple states.

Eli Lilly has agreed to the resolution in order to resolve allegations that it promoted its drug, Zyprexa, for uses not approved by the Food and Drug Administration. The Food, Drug, and Cosmetic Act (FDCA) mandates that companies specify the planned uses of a product in its “new drug” application to the FDA. The FDA then determines whether or not the drug is safe and effective for its intended use. After its approval, a drug may not be marketed or promoted for non-specified, or off-label, uses.

Zyprexa, originally approved in 1996 as a treatment for manifestations of psychotic disorders and in 2000 for the short-term treatment of schizophrenia, was promoted by Eli Lilly for unapproved uses included the treatment for dementia, including Alzheimer’s dementia, in elderly people. The information contained in the agreements the Eli Lilly has signed allege that the company knowingly promoted Zyprexa for off-label uses, and trained its sales force to disregard the law. It also claims that Eli Lilly marketed Zyprexa to primary care physicians, despite Zyprexa having virtually no approved use in the primary care market. Through false marketing, Eli Lilly caused false claims for payment to be submitted to Medicaid, TRICARE, and the Federal Employee Health Benefits Program, none of which provide coverage for off-label uses.

“Off-label promotion of pharmaceutical drugs is a serious crime because it undermines the FDA’s role in protecting the American public by determining that a drug is safe and effective for a particular use before it is marketed,” said Gregory G. Katsas, Assistant Attorney General for the Civil Division. “This settlement demonstrates the Department’s ongoing diligence in prosecuting cases involving violations of the Food, Drug, and Cosmetic Act, and recovering taxpayer dollars used to pay for drugs sold as a result of off-label marketing campaigns.”

“The illegal scheme used by Eli Lilly significantly impacted the integrity of TRICARE, the Department of Defense’s healthcare system,” said Ed Bradley, Special Agent-in-Charge, Defense Criminal Investigative Service. “This illegal activity increases patients’ costs, threatens their safety and negatively affects the delivery of healthcare services to the over nine million military members, retirees and their families who rely on this system. Today’s charges and settlement demonstrate the ongoing commitment of the Defense Criminal Investigative Service and its partners in law enforcement to investigate and prosecute those that abuse the government’s healthcare programs at the expense of the taxpayers and patients.”

The global resolution includes the following agreements:

A plea agreement signed by Eli Lilly admitting guilt to the criminal charge of misbranding. Specifically, Eli Lilly admits that between Sept. 1999 and March 31, 2001, the company promoted Zyprexa in elderly populations as treatment for dementia, including Alzheimer’s dementia. Eli Lilly has agreed to pay a $515 million criminal fine and to forfeit an additional $100 million in assets.

A civil settlement between Eli Lilly, the United States and various States, in which Eli Lilly will pay up to $800 million to the federal government and the states to resolve False Claims Act claims and related state claims by Medicaid and other federal programs and agencies including TRICARE, the Federal Employees Health Benefits Program, Department of Veterans Affairs, Bureau of Prisons and the Public Health Service Entities. The federal government will receive $438,171,544 from the civil settlement. The state Medicaid programs and the District of Columbia will share up to $361,828,456 of the civil settlement, depending on the number of states that participate in the settlement.

The qui tam relators will receive $78,870,877 from the federal share of the settlement amount.

A Corporate Integrity Agreement (CIA) between Eli Lilly and the Office of Inspector General of the Department of Health and Human Services. The five-year CIA requires, among other things, that a Board of Directors committee annually review the company’s compliance program and certify its effectiveness; that certain managers annually certify that their departments or functional areas are compliant; that Eli Lilly send doctors a letter notifying them about the global settlement; and that the company post on its website information about payments to doctors, such as honoraria, travel or lodging. Eli Lilly is subject to exclusion from Federal health care programs, including Medicare and Medicaid, for a material breach of the CIA and subject to monetary penalties for less significant breaches.

If you are seeing fraud on the government, contact us by calling 800-377-1812 for strictly confidential advice from experienced counsel, with no fee obligation.

Yale Mismanaged Research Grants; Will Pay $7.6 Million

On December 23, 2008, the District of Connecticut United States Attorney’s Office released a settlement by Yale University to pay $7.6 million to resolve False Claims Act and common law allegations.  The school allegedly mismanaged federally funded research grants it was awarded between January 2000 and December 2006 by approximately 30 federal agencies and entities.  $3.8 million of the total comprises actual damages for the false claims, and the other half was assessed as penalties.

The investigation resulted from Yale’s violations of the principle that federal grant recipients are only allowed to charge “allocable” costs, or those that relate to the specific objectives of the project, to each grant.  Allegations involving two types of mischarges arose from this violation.  The first, that some researchers at Yale improperly transferred charges to a federal grant account to which the charges were not allocable.  These fraudulent transfers were allegedly committed in order to spend remaining grant funds before their expiration date.  Federal regulations demand that unspent funds be restored to the government.

The second allegation involved some Yale researchers submitting time and effort reports for summer salary paid for by grants whose objectives were unrelated to the research.  It was found that these researchers were motivated to commit the wrongful salary charges because their academic-year salary is not paid during the summer, so the only salary received is that which they charge to federal grants.

Because of the settlement, in which Yale University cooperated fully, no lawsuit will be filed regarding the more than 6,000 grants contained in the agreement.  By entering into the settlement, the press release states, Yale did not admit liability and the agreement indicates that the parties settled the matter to avoid delay, uncertainty, and expense of litigation.  Yale has taken measures to enhance the management of its federal grants, upgrading its accounting and reporting systems in the last two years, and creating the Office of Research Administration, which oversees mandatory training programs for staff and faculty.

If you are seeing fraud on the government, contact us by calling 800-377-1812 for strictly confidential advice from experienced counsel, with no fee obligation.

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