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Without accountability, pharma will happily keep dishing out kickback settlements


Evan SweeneyOne recent Friday night, I desperately searched for a parking spot in one of San Diego's busier neighborhoods. The dinner rush was on. I circled several city blocks at an increasingly wider radius from the restaurant. For the better part of 20 minutes, I intermittently pumped the breaks at the slightest sign of an empty parking space, only to be tricked by another Prius tucked behind a pickup truck.

Eventually I found a spot--or I thought I did. It was officially designated as a "commercial loading zone," the curb vaguely colored with white (not red!) that seemed to say, "You probably shouldn't park here, but I guess we can't really stop you."

I looked around for any lurking meter maids and walked away with a sound bit of logic: Paid parking would cost me close to $20, while a parking ticket was somewhere around $30. It was worth the risk. 

If you're wondering how this mundane parking story could relate in any way to healthcare fraud, stay with me. That quick risk calculation that I made is not all that different than the way pharmaceutical industry approaches fraud settlements--just on a larger, much more heinous scale, and with tangible impacts on public health.

The most recent settlement in a veritable sea of false claims and kickback litigation occurred last week, when AstraZeneca paid the federal government $7.9 million to resolve allegations that it paid kickbacks to a pharmacy benefit manager. The pharmaceutical giant allegedly paid millions in exchange for "sole and exclusive" status of the heartburn medication, Nexium, on the benefit manager's list of drugs covered by government plans, according to a Department of Justice release.

Of course, this was mere pocket change compared to the $39 million paid by Daiichi Sankyo Inc. in January to settle claims that it paid kickbacks to doctors in the form of speaking fees and lavish dinners. But it's not as though AstraZeneca is a first time offender. In 2010, the company settled for an astounding $520 million related to allegations that it paid kickbacks to market the schizophrenia drug, Seroquel. In 2003, the company paid $355 million to settle felony fraud charges, allegedly persuading doctors to prescribe the prostate cancer drug Zoladex.

I only pick on AstraZeneca because it just happens to be the most recent example of a false claims settlement. In truth, you could substitute the name of any number of top pharmaceutical companies. GlaxoSmithKline, Pfizer, Abbot Laboratories and Eli Lilly have all settled false claims cases for more than a billion dollars. Take a quick glance at ProPublica's list of the pharmaceutical industry's largest settlements; just about all of them include some form of kickbacks or false claims violations.

Two weeks ago, this issue was incredulously and hilariously mocked by HBO's "Last Week Tonight with John Oliver," a show that is increasingly becoming equal parts dark comedy and investigative journalism given its unfettered attack on just about any institution. It's worth watching the full 17-minute clip (which features a brief reference to this FiercePharma report on pharmaceutical marketing), particularly for the startling ways in which drug companies market to physicians. By the end, you get the feeling that the pharmaceutical industry lacks even a morsel of decency or self-restraint when it comes to drug marketing, kickbacks and false claims.

At one point, Oliver points to a 2013 lawsuit brought against Novartis for alleged kickbacks related to speaker fees and lavish meals. (Or not so lavish, when you see that, strangley, some of those meals included wings at Hooters.) Novartis has denied wrongdoing, claiming that speaker programs and dinners are common in the industry. "Which is kind of the whole point," Oliver says with a sly grin.

That leads us to the convenient little caveat that accompanies these settlements, no matter how large or small. You'll find it tucked at the bottom of the DOJ release announcing AstraZeneca's most recent settlement: "The claims settled by this agreement are allegations only; there has been no determination of liability."

Therein lies the problem. The pharmaceutical industry operates with absolute impunity. As Sen. Elizabeth Warren (D-Mass.) pointed out recently in her proposal to make pharmaceutical companies pay into a swear jar, physician offices that commit fraud are expelled from Medicare, whereas drug companies simply throw money at the problem until it goes away and then shrug as if to say, "Who? Us?" If you think a $7.9 million payment serves as a warning shot, you might think differently when you look at the $26 billion AstraZeneca earned in revenue last year.

It wouldn't be a stretch to say drug companies view fraud settlements merely as an operating expense. Spend a little in settlements in exchange for skyrocketing profits.

And the government plays along: "You probably shouldn't do that," it says, slipping a ticket onto the windshield. "But I guess we can't really stop you." - Evan (@HealthPayer)

Related Articles:
Elizabeth Warren's 'swear jar' might even playing field for pharmaceutical fraud

Pharma-doc relationships show need for compliance programs
AstraZeneca $7.9M kickback settlement shows risk of payer discounting
Daiichi Sankyo to pay $39M to settle DOJ claims it paid kickbacks to docs
New numbers back old meme: Pharma does spend more on marketing than R&D