The False Claims Act is a federal law that makes it a crime for an individual or organization to knowingly make a false record or file a false claim regarding any government health care program, which includes programs or plans that provide health benefits which is funded in part or in whole by the United States government.
A False Claim means that someone or some entity is cheating the government out of its money. There are different scenarios this can possibly occur, however, False Claims Act are increasingly becoming prevalent in the healthcare field.
And pharma companies are no strangers not only with drug pricing schemes, but also with lawsuits caused by their problematic marketing strategies. For instance, Johnson & Johnson and its subsidiary, Janssen, were investigated by the Department of Justice for the illegal marketing of their antipsychotic drug, Risperdal.
They marketed it to elderly patients, even though they are fully aware of the medication’s risks to the elderly. They were ordered to pay billions in criminal allegations in 2013. Long after, however, people are still filing a Risperdal lawsuit in order to make the company accountable for the damages that the plaintiffs have suffered because of the drug’s devastating side effects.
Drug Pricing Schemes
One possible use of the act is to keep pharmaceutical companies and pharmacy benefit managers (PBMs) from unnecessarily putting high prices on medications. Skyrocketing drug prices caused by schemes put together by major figures in the health care industry are always passed down to federal programs that provide health benefits such as Medicaid, Medicare, and TRICARE for military families, among others. In the end, the taxpayers pay the price, literally and figuratively, as the programs designed to take care of them are in jeopardy.
A kind of scheme that involves artificially inflating drug prices comes in the form of kickbacks given to PBMs by pharma companies. In a closely similar scenario, distributors of EpiPen products filed antitrust claims on behalf of itself and a class of distributors. Although these are filed under the antitrust claims, they also bear a resemblance with cases filed under the False Claims Act.
Epinephrine in the form of an EpiPen, which is manufactured by Mylan, is a rather expensive drug used to treat severe allergic reactions. As such, it is often seen as a life-saver. Most individuals prescribed with EpiPen even need to bring it with them all the time.
The complaint filed alleges that Mylan paid higher Medicaid rebates to pharmacy benefit managers in exchange for kickbacks. With that, it guarantees that PBMs will overlook any soar in Mylan’s medication prices. The PBMs included on the suit were Express Scripts, OptumRx, and CVS Caremark.
According to the suit, Mylan is aware that it has put patients in a helpless position by putting high prices on the life-saving drug, knowing very well that they will purchase the life-saving drug no matter the price.
The district court recently denied a motion to dismiss the complaint. The supposed scheme involves Mylan working with PBMs to manipulate the system for their mutual financial gains.
A Dangerous Conspiracy
The dangerous combination of pharmaceutical companies and PBMs working together to fraudulently induce swelling of drug prices especially in life-saving medications like the EpiPen has devastating consequences.
As proven by the lawsuit, everyone involved pays the price when major players in the pharmaceutical industry prioritize profit over patients’ health and safety. A significant increase in drug prices harm Medicaid and Medicare beneficiaries and taxpayers alike.
Experts expect that cases to be filed under the False Claims Act will continue to surge in the years to come as the biggest public health emergency yet made the government enact stimulus packages amounting to almost $4 trillion in relief funds.
Moreover, a huge portion of that fund was dedicated to health care and other health care-related fields, where FCA claims mostly occur.