Prosecuting healthcare fraud
Assistant Attorney General
U.S. Department of Justice
No one has spoken more Big Pharma names at press conferences than Tony West. The assistant attorney general, appointed by President Obama, has been aggressively prosecuting healthcare fraud, wielding the False Claims Act against a variety of drugmakers. For two years in a row--2010 and 2011--the Department of Justice racked up record volumes of FCA settlements, most of them with pharmaceutical companies. In 2010, $2.5 billion of the $3 billion in FCA deals came from Big Pharma, and in 2011, drugmakers accounted for $2.2 billion of the $3 billion total.
That focus isn't going to shift anytime soon, either, In November, West told the Pharmaceutical Regulatory and Compliance Congress that healthcare fraud in the pharmaceutical industry is the DoJ's "most significant enforcement work, both civilly and criminally." He mentioned the department's $422 million settlement with Novartis, which involved off-label marketing of the epilepsy drug Trileptal, and the $2.3 billion drug-marketing deal with Pfizer and its subsidiary Pharmacia & Upjohn, which pleaded guilty to a felony charge.
But marketing violations are not West's only preferred targets. He's also going after drug-manufacturing failures: Consider the $3 billion GlaxoSmithKline settlement, which involved marketing violations and manufacturing shortfalls; or Ranbaxy Laboratories' recent deal, a "groundbreaking" arrangement with sanctions that transcended international borders. And West is still threatening action against individual drug-company executives under the Park doctrine, which allows responsible corporate officers to be held liable for their companies' misbehavior.
The U.S. government's stepped-up scrutiny has triggered some changes. Companies say they've revamped their sales and marketing strategies, moving away from the hard sell to a more consultative approach. GSK has overhauled its sales-rep compensation and evaluations in the U.S. to move away from quotas and sales-based compensation. Some pharma CEOs have said they're looking over their shoulders more often these days, expecting investigators to be watching.
As some companies' DoJ settlements required them to disclose financial relationships with doctors, others voluntarily opened up their records on physician payments, including speakers' fees and consulting arrangements. Eli Lilly, Merck, GSK, AstraZeneca and others posted the numbers on their websites. (Now, the Affordable Care Act requires disclosures industrywide.)
Whether West's continued focus on pharma will actually stop off-label marketing is open to debate. Some cynics say settlements in the hundreds of millions--even billions--aren't enough to offset the financial gains of marketing products for unapproved uses.
West has said himself that prosecuting individuals, rather than fining companies, would be a more effective deterrent. At the compliance congress, he promised that his DoJ division "will always seek to disprove the ill-advised notion that healthcare fraud enforcement is simply the cost of doing business by insisting on judgments, convictions, settlements, penalties and fines that eliminate any benefit that may be obtained from engaging in unlawful conduct in the first place." So, pharma execs have yet another reason to keep an eye out for the assistant AG.