Over the past two years, the Department of Justice has collected over $2 billion from big pharmaceutical companies in fines, damages and civil penalties for defrauding Medicare and other health care programs funded with tax payer dollars.  Most of these cases were brought by corporate whistleblowers - insiders who came forward with information and allegations of kickbacks and off-label marketing schemes designed to increase sales and bilk the Medicare system out of hundreds of millions of dollars.  But are these settlements having any deterrent effect?  Or have the pharmecutical companies decided that the reward of big profits and higher stock prices is simply greater than the risk and dollars extracted by the Government when the company gets caught with its hand in the U.S. Treasury cookie jar?

Anectdotal evidence suggests that the pharmaceutical companies are simply willing to run the risk of getting caught and pay up if and when they do get turned in.  In the first five months of 2010, the United States Department of Justic has announced more than $1.134 billion of civil and criminal settlements with pharmaceutical companies including: Novartis; Alpha-pharma; Astrazeneca; Schwartz Pharma; and Ortho-McNeil.  The Department has also joined a whistleblower off-label marketing suit against Johnson & Johnson.  This latest wave of suits and settlements comes more than seven years after such suits became prominent news and eight years after the 2002 self-imposed Pharma Code of Interaction with Health Care Professionals (revised in 2008).  As a lawyer who represents whistleblowers in these types of cases, I am certain that there are more big settlements to follow.  Thus, it appears big Pharma has decided to continue with business as usual and pay the settlements along the way.  After all, if an off-label marketing scheme brings in profits of $3 billion and the company can settle the False Claims Act whistleblower case with the Department of Justice for $1 billion, the company is $2 billion in the black and the U.S. taxpayer is $2 billion in the red.

Do we need a change in the law to address this?  No.  The False Claims Act has an existing mechanism, often referred to as "the hammer," if the Department of Justice chooses to use it.  Under the False Claims Act, a defendant can be penalized up to $10,000 for each false claim for payment.  If the Department of Justice were to use this tool, it could extract a $10,000 penalty for each prescription originating as a result of an off-label marketing scheme.  Such severe penalties would prevent the pharmaceutical companies from reaping profits generated by their illegal schemes.  If a self-imposed code and billions of dollars in settlements won't make big Pharma change its ways, perhaps it is time for the Department of Justice to yield the hammer provided to it by the False Claims Act.