The Public Citizens Health Group recently reported U.S. spending on prescription drugs has increased from $40 billion in 1990 to $234 billion in 2008. During this period, escalating drug costs have contributed to such inflated spending that illegal pharmaceutical company activities are finally beginning to attract media attention.
Reported in major publications, recent billion-dollar settlements with two of the largest pharmaceutical companies in the world, Eli Lilly and Pfizer, demonstrate the enormous scale of this wrongdoing. However, according to The Public Citizen’s Health Group, the extent, size, and potential impact of these illegal and dangerous activities have not been previously analyzed.
Their study examined trends from 1991 to the present in federal and state criminal and civil actions against pharmaceutical companies by compiling a comprehensive database to identify all settlements of at least $1 million during the past 20 years.
Of the 165 settlements comprising $19.8 billion in penalties during this 20-year interval, 73 percent of the settlements (121) and 75 percent of the penalties ($14.8 billion) have occurred in just the past five years (2006-2010). Four companies, among the largest in the world, (GlaxoSmithKline, Pfizer, Eli Lilly, and Schering-Plough) accounted for more than half (53 percent or $10.5 billion) of all financial penalties imposed over the past two decades.
“While the defense industry used to be the biggest defrauder of the federal government under the False Claims Act (FCA), … the pharmaceutical industry has greatly overtaken the defense industry in recent years. The pharmaceutical industry now tops not only the defense industry, but all other industries in the total amount of fraud payments for actions against the federal government under the False Claims Act.”
The practice of illegal off-label promotion of pharmaceuticals has been responsible for the largest amount of financial penalties levied by the federal government over the past 20 years. This practice can be prosecuted as a criminal offense because of the potential for serious adverse health effects. Medicaid fraud, has been the most common violation against state governments and is responsible for the largest amount of financial penalties levied by these governments.
The rapidly rising number of criminal and civil penalties against Big Pharm in recent years have been described as a “veritable crime spree.”