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25 Years of Criminal Enforcement of the Pharmaceutical Industry ...

Source: www.choate.com
Topic: Pharmaceutical Industry

Sort Desciption: Pharmaceutical Industry: Increasing Scrutiny and. Shifting Theories. An edited version of this article appeared in the August 2006 issue of Pharmaceutical ...

Content Inside: 25 Years of Criminal Enforcement of the Pharmaceutical Industry: Increasing Scrutiny and Shifting Theories An edited version of this article appeared in the August 2006 issue of Pharmaceutical Executive. by Jack Cinquegrana, Partner and Chair of the Government Enforcement Group, Diana K. Lloyd, Partner in the Government Enforcement and Healthcare Groups and Russell Edelstein, Associate in the Litigation and Healthcare Groups. During the past 25 years, criminal law enforcement in the health care industry has become a fact of life. In recent years, pharmaceutical companies have been a particular target of federal prosecutors. There are many reasons why criminal investigations have become such a major component of federal regulation in the pharmaceutical industry and it is interesting to look at where the industry has been and where it is headed. Follow the Money The numbers say it all. In 1981, federal health care program expenditures accounted for just $83.1 billion of the $295.3 billion spent on all U.S. health care expenditures. By 2004, the government spent more than seven times that amount – with over $600 billion expended on federal health care programs. These expenditures accounted for 9.4% of the Gross Domestic Product (GDP) in 1981 and 16% by 2004. The False Claims Act Amendments of 1986 Opens the Floodgates for Whistleblowers Congress amended the False Claims Act (FCA) in 1986, adding new power to a dormant statute by making it easier to prove liability and adding stiffer penalties. In 1987, only 12% of FCA cases involved health care fraud. By 2005, nearly 90% of all FCA cases were in the health care industry. As of January 2006, six of the top 13 FCA civil awards were against pharmaceutical companies. Whistleblower claims often spur criminal investigations, which are conducted in parallel with civil FCA proceedings. FCA “relators” actively seek the government’s intervention, bringing detailed disclosure statements to prosecutor ...

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