Blowing the Whistle on Compounding Pharmacy Fraud

Is your pharmacy or other healthcare organization engaged in illegal practices involving pharmaceuticals compounds? If so, you may be needed to serve as a whistleblower. Your action may prevent patients from being harmed or the public from being defrauded.  

Whistleblowers play an essential role in bringing these cases to the attention of investigators. These types of claims are typically involved public programs and may be covered by the False Claims Act (FCA). 

In addition to providing enhanced penalties for fraud, this act allows some whistleblowers to serve as “relators.” Relators sue on the government’s behalf and may be allowed to collect a portion of the funds that are recovered. In some cases, this portion amount to millions of dollars.

It’s wise to speak to a lawyer before you blow the whistle on pharmacy practices. The information below can help you understand what issues may be involved with compounding pharmacy fraud cases.

Whistleblower’s Guide to Medicare Part D Fraud

Have you witnessed your employer participating in Medicare Part D fraud? If so, you may be needed to serve as a whistleblower. Whistleblowers play a crucial role in protecting both patients and taxpayers from the consequences of fraud. They may be very well compensated for their participation.

Medicare Part D Fraud is covered by the False Claims Act (FCA). This legislation was passed to prevent fraud against the government. One of its key mechanisms for discovering fraud is a qui tam provision that rewards whistleblowers with a portion of the funds that are recovered.

Before you blow the whistle, you should consider speaking to a lawyer. A lawyer can help you understand whether the activity you’ve witnessed is considered fraud and how to move forward.

Before you speak to a lawyer, it may help you to understand Medicare Part D fraud better. Below, you can learn what Medicare Part D is, what activity is criminal fraud, and what real-life examples exist of this fraud

Pharmaceutical Fraud

Pharmaceutical Fraud encompasses many types of fraud that may involve the manufacture, distribution, marketing, pricing, sale or prescription of drugs. Pharmaceutical fraud may include a wide variety of schemes set in place by drug manufacturers, pharmacies, or health care providers. Examples of pharmaceutical fraud schemes or activities may include marketing drugs for uses other than those approved by the FDA, providing kickbacks to physicians for promoting certain drugs over others, arbitrarily inflating the price of prescription drugs, falsifying drug manufacturing research or even funneling prescription drugs to an illegal market.

When this type of fraud results in false claims to Medicare, Medicaid, or other taxpayer funded programs the False Claims Act may be used by whistleblowers to recover damages on behalf of the government.

The False Claims Act, a federal statute, 31 U.S.C. §§ 3729-3733, provides that any person who knowingly submits a false claim to the government is liable for the government’s damages, as well as additional monetary penalties.  The statute was originally enacted  during the Civil War in response to widespread defense contractor fraud.  

The FCA allows the government to pursue perpetrators of fraud on its own, as well as allowing private citizens to act as whistleblowers in suing the perpetrators of fraud on behalf of the United States government.  Cases in which private citizens bring fraud actions on behalf of the government are called qui tam actions.  In these cases the private citizen plaintiff is referred to as the “relator.”  The act has been strengthened by Congress a number of times to encourage citizens to bring lawsuits on behalf of the United States government by increasing the amount of money the whistleblowers, or relators, can recover in False Claims Act lawsuits. 

When pharmaceutical fraud involves the misuse of public funds, private citizens can bring False Claims Act lawsuits on behalf of the United States government and receive a portion of the damages. Damages in these cases typically result in treble damages, three times the amount of money expended for each prescription, as well as civil penalties for each prescription. Whistleblowers who bring such claims on behalf of the government are entitled to thirty percent of the settlement funds.  

The majority of these settlements have included significant monetary payouts along with the institution of Corporate Integrity Agreements.  Under a Corporate Integrity Agreement the pharmaceutical company agrees to comply with certain obligations to the Office of Inspector General in exchange for being allowed to continue to participate in Medicare, Medicaid or other Federal healthcare programs.  In addition to monetaries damages, penalties and Corporate Integrity Agreements, the Office of Inspector General plans to be more aggressive in the coming years in imposing different remedies including banning fraudulent drug companies and individuals from participation in Federal health care programs. 

In 2019 the Department of Justice recovered over $3 billion in fraud and False Claims Act cases.  Pharmaceutical companies were at the center of some of the largest health care related settlements.