The pharmaceutical industry manufactures products that millions of people rely on to manage acute and chronic illness, and to prevent premature death. Through government spending by Medicare and Medicaid programs, the economic impact of this field is vast. Whistleblowers in pharmaceuticals perform a crucial service on behalf of public health and taxpayers when they report or oppose violations of safety laws and fraud.
In response to the COVID-19 pandemic, the federal government initiated Operation Warp Speed (OWS), an effort to coordinate the research, development and manufacturing of COVID-19 vaccinations among private pharmaceutical companies and a variety of U.S. government agencies. OWS has awarded more than $12 billion in government contracts and has a budget as large as $18 billion. The accelerated timeline of OWS was necessary to save lives and recover from the COVID-19 pandemic as quickly as possible. Unfortunately, due to the large amount of money being awarded and the temporary discarding of bureaucratic guardrails, there is a high potential for fraud and abuse.
What Laws Protect Pharmaceutical Whistleblowers?
Employees in the pharmaceutical industry are protected from retaliation by a network of federal and state whistleblower-protection laws. The primary law protecting pharmaceutical whistleblowers is the federal False Claims Act (“FCA”), which prohibits making or causing to be made false or fraudulent records, statements and/or claims for the purpose of obtaining payment from the federal government. See 31 U.S.C. § 3729(a)(1). Under the federal FCA, whistleblowers who file “qui tam” lawsuits to recover moneys the taxpayers have lost to such fraudulent practices may be entitled to 15 to 30 percent of any government recovery resulting from their lawsuits.
The FCA also contains an anti-retaliation provision in 31 U.S.C. § 3730(h), which protects an employee from being “discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment by his or her employer” because the employee has sought to stop an employer from engaging in any of the acts that would violate 31 U.S.C. § 3729(a)(1).
In the pharmaceutical industry, “false claims” typically arise because the offending company is receiving federal funds, usually in the form of Medicare and/or Medicaid reimbursement for drugs. Companies receiving funding from federal healthcare programs such as Medicare and Medicaid are required to comply with federal statutes like the Food, Drug and Cosmetics Act (FDCA) and the regulations set forth by the Food and Drug Administration (FDA). A failure to comply with these statutes and regulations while receiving federal funds often constitutes a violation of the FCA. See also the Westlaw Journal, February 2017, Volume 22, Issue 8: Blowing the Whistle on Fraud in the Health Care Industry.
Below are examples of some of the most common ways in which pharmaceutical companies violate FDA regulations and other federal statutes and therefore open themselves up to suits under the FCA:
Failure to Comply with cGMPs
Current Good Manufacturing Practices (“cGMPs”) are meant to serve as baseline regulations to ensure proper design, monitoring, and control of manufacturing processes and facilities of pharmaceutical companies. Failure to adhere to cGMPs constitutes a violation of FDA regulations and can expose a company to a lawsuit under the FCA.
Approval of a drug by the FDA is the final stage of a multi-year process of study and testing. The FDA does not approve a drug for treatment of sickness in general. Instead, a drug is approved for treatment of a specific condition for which the drug has been tested in patients. The law prohibits drug manufacturers from marketing or promoting a drug for a use that the FDA has not approved. A company found to have engaged in off-label marketing while receiving funding from federal healthcare programs is in violation of the FCA.
The federal healthcare Anti-Kickback statute broadly prohibits drug companies from offering or paying any remuneration, in cash or kind, directly or indirectly, to induce physicians or others to order or recommend drugs that may be paid for by a federal healthcare program. The prohibitions are not limited to outright bribes or rebate programs for a particular drug. The Anti-Kickback statute also prohibits the so-called “tying” of products, i.e., giving a price concession on one drug in order to induce the purchase of a different drug. A company found to have violated the Anti-Kickback statute while receiving funding from federal healthcare programs is in violation of the FCA.
Providers seeking reimbursement for drug sales from federally funded health insurance programs must submit supporting documentation for these prescriptions. The condition for which the drug is indicated is set forth on a claim form. Providers may not prescribe more of a drug than is medically necessary or for uses other than those approved by the FDA. Instances where providers submit claim forms for goods and services beyond what is medically necessary are considered “upcoding.” Upcoding violates FDA regulations and therefore violates the FCA.
In addition to the federal FCA, there are a number of other federal and state laws which protect pharmaceutical employees who blow the whistle on their company’s wrongdoing. Many states, for instance, have their own state versions of the FCA that have also been violated when a company has fallen into non-compliance. Additionally, many states have statutes protecting employees from “wrongful termination in violation of public policy,” which may protect employees from retaliation for behavior such as refusing to participate in illegal conduct or participating in other activities for which there exists a substantial public interest.
Why Hire Our Firm for Your Pharmaceutical Whistleblower Case?
At Katz Banks Kumin, we have experience with state and federal anti-fraud incentive programs, such as the FCA, as well as extensive experience handling retaliation claims under state and federal law. Our nationally-recognized attorneys have successfully represented dozens of pharmaceutical employees working in a variety of different capacities at some of the nation’s largest pharmaceutical companies. Drawing on years of experience in employment negotiation and litigation, we strive for resolution of our clients’ retaliation claims that brings closure to a stressful ordeal and, where possible, allows for positive movement forward in their careers.
If you are a pharmaceutical employee who is considering blowing the whistle or have already done so and are experiencing retaliation, contact the experienced lawyers at Katz Banks Kumin. Your communications with us are confidential, and without charge or further obligation.