Nothing Generic about Generic Pharma Fraud
October 5, 2021. Three pharmaceutical manufacturers executed both civil False Claims Act and criminal deferred prosecution agreements for a generic drug price-fixing scheme. The pharmaceutical companies paid $447.2 million to resolve alleged False Claims Act violations and $424 million for related criminal charges, for almost $900 million in damages, penalties, and fines.
According to the allegations, the generic pharmaceutical manufacturers Taro Pharmaceuticals U.S.A., Inc., Sandoz Inc., and Apotex Corporation conspired to control the market for certain generic medications, resulting in government-funded healthcare programs paying improper prices for certain medications. Additionally, the pharmaceutical companies paid each other in exchange for their “alleged arrangements on price, supply, and allocation of customers” in violation of the Anti-Kickback Statute. In other words, the three companies allegedly traded insider information regarding and controlled the supply of the generic medications they manufactured. Between 2013 and 2015, these companies attempted to manipulate the markets for generic hypertension medication, skin condition drugs, an anti-inflammatory, and a cholesterol-lowering drug. Compounding the alleged price-fixing, claims were submitted to Medicare, Medicaid, TRICARE, and other government-funded health care programs for these medications, thus causing the government to pay fraudulent prices for these medications.
Choosing generics instead of brand-name drugs is one of the easiest and lowest-cost ways to save on medication, especially for beneficiaries of government-funded health care programs. Pharmaceutical manufacturers who seek to make a profit by manipulating the generic drug market are hurting vulnerable, ill patients who may not be able to afford artificially inflated medications. When care and medication costs rise, insurers respond by raising premiums and deductibles, and taxpayers pay more for government-funded health care programs. These pharmaceutical companies’ collusion not only harms patients trying to fill medications at pharmacies but also ultimately impacts taxpayers.
Each of these pharmaceutical manufacturers is now subject to a five-year corporate integrity agreement (CIA) with Office of the Inspector General, Department of Health and Human Services (HHS-OIG), requiring the companies to institute compliance and risk assessment programs, as well as price transparency practices. A whistleblower could have called out these anticompetitive conspiracies. A whistleblower is entitled to receive 15-25% of the government’s recovery for reporting a False Claims Act violation.
The Department of Justice needs whistleblowers to report federal health care program-related kickbacks and price fixing schemes.