Pharmaceutical Prescription Fraud takes many forms. The obvious examples include when physicians write prescriptions for drugs that are not medically necessary, when prescriptions are sold, when drugs are dispensed without a valid prescription, and when physicians sign blank prescription forms that are then filled out by a nurse or staff member who is not authorized to prescribe drugs.
Some of the largest whistleblower rewards, however, have been awarded for coming forward with evidence of much more sophisticated schemes. These fraudulent schemes are often perpetrated by large pharmaceutical companies, hospitals, and nursing homes that bill Medicare and Medicaid for tens of millions, and often hundreds of millions of dollars.
The two most lucrative categories of pharmaceutical prescription fraud whistleblower rewards are:
These types of schemes are often difficult to prove because they require insiders to disclose confidential information that cannot be discovered by outsiders. Once an insider comes forward with evidence, however, these schemes are often easy to prove and result in multi-million-dollar whistleblower rewards. This is because a claim that is submitted to Medicare or Medicaid in violation of the Anti-Kickback Law or the Stark Law is considered a “false claim,” even if the prescription was otherwise medically necessary and legitimate.
Keep reading to learn about the different types of pharmaceutical prescription fraud and how ordinary employees have earned millions of dollars in whistleblower rewards by helping the government stop it.
Paying Kickbacks to Write Prescriptions
A former Abbott Laboratories employee earned a $1 million whistleblower reward for reporting kickbacks between the pharmaceutical giant and the second largest nursing home consulting pharmacy in the country. The whistleblower alleged that Abbott Laboratories paid kickbacks that were disguised as rebates, educational grants, and other financial support. In exchange, the pharmacy allegedly promoted the company’s prescription drug Depakote for nursing home patients.
In another case, a former pharmaceutical sales representative earned a $1.7 million whistleblower reward after Victory Pharma Inc., a specialty pharmaceutical company, agreed to pay $11.4 million to settle claims that it paid kickbacks to doctors to induce them to write prescriptions for Victory’s products including Naprelan, Xodol, Fexmid and Dolgic. The kickbacks included tickets to sporting events, concerts and plays; spa, golf and ski outings; dinners at expensive restaurants; and numerous other out-of-office events.
The amount of money involved in pharmaceutical kickback cases is extraordinary. For example, Teva Pharmaceuticals agreed to pay $27.6 million to settle claims that it paid kickbacks to induce a physician to write more prescriptions for generic clozapine, an anti-psychotic medication. The complaint alleged that the kickbacks were disguised as compensation under a consulting agreement that paid the doctor $50,000 per year and other benefits to induce him to switch his patients to generic clozapine. After entering into the consulting agreement, the doctor quickly became the largest prescriber of generic clozapine in the United States.
The Anti-Kickback Statute prohibits paying anything of value in return for patient referrals or prescriptions. The law is designed to ensure that patients are prescribed drugs based solely on their medical needs, not because the doctor or pharmacist is being paid by the pharmaceutical company to prescribe a particular drug. In addition, the law seeks to prevent claims for reimbursement from Medicare and Medicaid for prescriptions that are not medically necessary.
It does not matter if the patient actually needed the prescription. Once a prescription is tainted by a kickback, a claim submitted to Medicare or Medicaid for that prescription is considered a “false claim.” In other words, the claim is false and fraudulent, even if the prescription was otherwise legitimate and the patient truly needed it.
Stark Law or Physician Self-Referral Violations
Elin Baklid-Kunz earned a $20.8 million whistleblower reward after Halifax Hospital Medical Center agreed to pay $85 million to settle claims that it violated the physician self-referral provisions of the Stark Law. The whistleblower alleged that contracts between Halifax and six medical oncologists provided an incentive bonus based on the value of prescription drugs and tests that the oncologists ordered and the hospital then billed to Medicare.
The Stark Law, also known as the physician self-referral law, prohibits a hospital, nursing home, or other facility from billing Medicare or Medicaid for certain services that are referred by physicians with whom they have a financial relationship. The financial relationship may take the form of an ownership interest in the facility, salaries, benefits, consulting contracts, or office space.
The Stark Law is designed to ensure that physicians make decisions based solely on their professional judgment and the best interests of the patient, without regard to improper financial incentives. The law punishes both those who provide the incentives for referrals and those who receive the benefit of those incentives.