The pharmaceutical industry develops, produces, and markets drugs to treat disease. The economic impact of the American pharmaceutical industry is vast. In 2018, the United States spent $335 billion on prescription drugs. On average, nearly half of all Americans have taken at least one prescription drug within any 30 day period. Pharmaceutical whistleblowers perform a crucial service on behalf of public health and taxpayers when they report or oppose violations of safety laws and fraud.
The primary law used by pharmaceutical whistleblowers is the False Claims Act. The False Claims Act (FCA) prohibits false or fraudulent records, statements, and/or claims for the purpose of obtaining payment from the federal government. Pharmaceutical whistleblowers often fall under the protections of the FCA because of government involvement through Medicare and/or Medicaid.
Some of the most common ways in which pharmaceutical companies violate the FCA:
- Kickbacks – the FCA prohibits pharmaceutical companies from paying physicians to recommend specific drugs. The prohibitions are not limited to outright bribes or rebate programs but also include price concessions on one drug in order to induce the purchase of a different drug.
- Upcoding – the FCA prohibits healthcare providers from submitting bills for unnecessary services. When healthcare providers submit claims for goods or services beyond what is medical necessary, they are “upcoding.”
- Off-label marketing – the FCA prohibits pharmaceutical companies from marketing drugs beyond the specific use approved by the Food and Drug Administration (FDA). The FDA does not approve a drug for treatment of sickness in general. Instead, a drug is approved for treatment of a specific condition for which the drug has been tested in patients. When a pharmaceutical company markets or promotes a drug beyond its approved use, the company is engaging in “off-label marketing.”
The FCA enables a whistleblower to step into the shoes of the government to sue on its behalf to recover fraudulently obtained funds. Under the False Claims Act, whistleblowers are entitled to 15% to 30% of the money recovered from the lawsuit. In many cases, recovery may be substantial:
In the healthcare industry alone, the Department of Justice recovered over $1 billion under FCA whistleblower lawsuits every year since 2005.
 NHE Fact Sheet. Centers for Medicare & Medicaid Services (Mar. 24, 2020). Available at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NHE-Fact-Sheet#:~:text=Prescription%20drug%20spending%20increased%202.5,the%20households%20(28.4%20percent).
 Martin, Crescent et al. Prescription Drug Use in the United States. NCHS Data Brief No. 334. U.S. Dep’t of Health and Human Services (May 2019). Available at https://www.cdc.gov/nchs/data/databriefs/db334-h.pdf.
 Thomas, Katie and Schmidt, Michael. Glaxo Agrees to Pay $3 Billion in Fraud Settlement. New York Times (July 2, 2012). Available at https://www.nytimes.com/2012/07/03/business/glaxosmithkline-agrees-to-pay-3-billion-in-fraud-settlement.html.
 Gardiner, Harris. Pfizer Pays $2.3 Billion to Settle Marketing Case. New York Times (Sept. 2, 2009). Available at https://www.nytimes.com/2009/09/03/business/03health.html.
 Dennis, Brady. Johnson & Johnson Agrees to Pay $2.2 Billion in Drug-Marketing Settlement. Washington Post (Nov. 4, 2013). Available at https://www.washingtonpost.com/national/health-science/johnson-and-johnson-agrees-to-pay-22-billion-in-drug-marketing-settlement/2013/11/04/a7092342-456a-11e3-b6f8-3782ff6cb769_story.html.
 U.S. Dep’t of Justice, Fraud Statistics – Overview (2019), U.S. Dep’t of Justice. Available at https://www.justice.gov/opa/press-release/file/1233201/download.