Health Care Fraud Liability for Pharmaceutical Manufacturers

Abstract

Fraud is an increasingly expensive cost to the health care industry, and the regulatory and prosecutorial focus during the fast few decades have focused on health care fraud by pharmaceutical manufacturers. This paper provides an overview of the current statutory and judicial environment. First, it examines some of the industry practices for which pharmaceutical companies may be held liable for fraud (as well as some of the reasons these practices are problematic). It then gives an overview of the dual regime of the Medicare and Medicaid Anti-Kickback Statute and the False Claims Act (“FCA”), as well as some of the other guidance documents available to pharmaceutical manufacturers. It also explores the relevant case history that has shaped liability—for health care providers and suppliers in general and for drug companies in particular—under the Anti-Kickback Statute and the FCA. The 2009 settlement between Pfizer and the government provides a useful example of the present state of affairs for pharmaceutical companies. Finally, the paper concludes with a brief overview of the Medicare Part D prescription drug benefit (and the newly implemented coverage gap discount program), which may result in increasing liability for pharmaceutical manufacturers in the future.