For the past several years news of multi-million dollar settlements between pharmaceutical companies and the U.S. government have frequently made front-page news. A new report by a consumer watchdog group, Public Citizen, breaks down the data concerning such settlements, revealing interesting facts about how the cases are handled and resolved.
The group analyzed settlements that were reached since its last report was issued in late 2010. They found that since 2010 there were an additional 74 settlements totaling $10.2 billion. The first half of 2012 alone saw a record amount of federal and state recoveries: $5 billion and $1.6 billion, respectively. The numbers from such settlements are especially shocking if you take a few steps back. When you combine the results of both reports, there have been 239 settlements with drug makers worth $30.2 billion since 1991.
However, the bulk of these settlements have been confined to the last few years. The report revealed that since 2009 states have settled more than twice as many cases for more than six times the amount of money as they did in the previous 18 years.
The reason given is that state attorneys general are taking the idea of prosecuting those engaged in fraud seriously. Given recently tight budgets, states have found that rooting out the fraud responsible for many of their rising Medicaid costs has paid dividends, often finding out that the enforcement efforts pay for themselves. According to the Public Citizen report, 17 states recouped the equivalent or more of their entire Medicaid fraud enforcement budgets with money pocketed from settlements. Arkansas, South Carolina, Alabama and Hawaii had the highest return on their investment, earning as much as $84 for every dollar spent on Medicaid fraud enforcement.
The data showed that since 1991, Kentucky has resolved the most cases. Another group of Southern states, Arkansas, Louisiana, South Carolina and Texas, together recovered a total of $2.3 billion in penalties, representing more than two-thirds of the financial penalties recovered in single-state settlements over the past two decades.
One bit of especially good news for concerned citizens is that the report showed that these investigations were initiated largely thanks to the efforts of whistleblowers. Fully 75% of federal settlements were the result of investigations prompted by whistleblowers. The report says that whistleblower provisions contained in the False Claims Act were the biggest reason for these settlements. Whistleblowers helped lead to 21 settlements totaling $6 billion in fines under the False Claims Act.
Key West Pharmacy Top Whistle-Blower by John Dorschner, published at MiamiHerald.com, September 27, 2012.
Pharma Settlements Pay Off For US States by Ed Silverman, published at PharmaLot.com, September 27, 2012.