Medifraud: Available at a Pharmacy Near You

By Art Levine, The American Prospect. Posted November 2, 2007.

We're hearing those phrases again," declared Law and Order district attorney, former Republican senator, and presidential candidate Fred Thompson in a July 26 ABC podcast. "National health care, universal health care, socialized medicine. We're being told that government bureaucrats can take over our entire medical industry -- which, by the way, is the best and most complex in the world -- and make it better."

Ah yes, the bureaucrats. As if the problem with our current medical system is too much oversight by meddling government agents. In truth, while conservatives rail against government-run health care, our limited versions of that -- Medicaid and Medicare -- have been exploited as boondoggles by the same drug companies that have, since 2000, spent nearly $1 billion on federal and state lobbying drives as well as campaign donations given overwhelmingly to Republicans, according to the Center for Public Integrity. In return, the corporate drug dealers have gotten their money's worth: unbridled profits and lax regulation of both corporate fraud and drug safety.

And despite periodic hearings and investigative stories, the hard-sell marketing to doctors continues virtually unabated, with increasingly worrying effects. A recent study in The New England Journal of Medicine found that 94 percent of physicians had some type of explicit relationship with the pharmaceutical industry. In fact, a government report done in Vermont found that in 2006 drug companies gave the average psychiatrist with high drug-company earnings a bit more than $45,000 in assorted honoraria and travel expenses. The report also found that physicians who took the most payments tended, more often than other doctors, to prescribe to children "atypical antipsychotics" -- a new class of powerful medications -- although none of these drugs have FDA approval for use with kids.

The problems go far beyond aggressively peddling new drugs to doctors. If they can't widen their market legally, pharmaceutical companies are proving quite capable of defrauding government health programs by using a myriad of clever pricing and marketing scams, federal and state prosecutors have found. But the federal officials who are supposed to be fighting health scams, including the Justice Department and the lead health-care program agency, the Centers for Medicare and Medicaid Services (CMS), have traditionally been underfunded and outgunned by the drug companies. And despite public assertions by Bush administration officials that fighting pharmaceutical fraud is a top priority, a knowledgeable Justice Department official privately told The American Prospect, "I believe that starting in 2002 there was a conscious decision that the pendulum had swung too far towards health-care fraud enforcement. The investigative and regulatory agencies are less supportive of making the cases and more supportive of drug industry arguments."

It turns out there are good reasons we are "hearing those phrases again" from Democrats seeking to expand health-care coverage. Just as conservatives constantly demand to know whether Americans really want civil servants administering Medicare (it turns out, they do), it's time Democrats began asking -- through more hearings and in the presidential campaign -- whether Americans really want the pharmaceutical industry calling the shots.

Let's start with the easy part: pharmaceutical companies make money by selling pharmaceuticals. To make more money, they must either increase prices or increase volume, or both. And one major way drug firms increase volume is by promoting drugs for off-label use.

That's where things get complicated. While doctors are generally free to prescribe medicines for unapproved uses, companies are barred by law from promoting their drugs for such unproven purposes. But they do anyway, sometimes in completely fraudulent scams. In the last few months, fresh signs have emerged that corporate drug fraud is proliferating. Whistleblowers have come forward with new internal documents aimed at exposing alleged illegal marketing schemes by Pfizer and AstraZeneca, two companies that have previously paid nearly $900 million in whistleblower-based cases.

In 2003, AstraZeneca pled guilty to falsifying claims for the injectable prostate cancer drug Zoladex, and paid $355 million to settle charges that it defrauded Medicare and Medicaid. Among other practices, the government charged that AstraZeneca lured doctors to use the drug in the form of free Zoladex for which the doctors then billed the government. As with most pharmaceutical fraud cases, the information first emerged from tips provided by a drug-industry insider.

See more stories tagged with: health care fraud, drug industry, medical fraud, drug companies, big pharma, pharmaceuticals

Liked this story? Get top stories in your inbox each week from Health and Wellness! Sign up now »