Exposing Fraud and Corruption in Drug Industry
Taking a look at the biggest fraud cases of all time, and you're left with just one question: What's wrong with the pharmaceutical industry?
Every single one of the top 20 biggest False Claims Act lawsuit settlements has been health care related.
These are the biggest settlements under the law:
Top Three Whistleblower Settlements
- Pfizer $2.3 Billion
- Tenet $900 Million
- GlaxoSmithKline $750 Million
So is the drug industry just more corrupt than other areas of corporate America? Tony West, the Assistant Attorney General in the Department of Justice's Civil Division, says, "I think most companies are trying to do the right thing.”
He added, “The fact is though that this is and area of high profit margins. And when you have any situation where you have very high profit at stake, and a situation where you have a very rapid payment system as you do in the Medicare system there is a potential for fraud."
The drug industry says it's doing everything it can to root out fraud.
In a statement to CNBC, Diane Bieri, General Counsel of the industry trade association PhRMA said, “PhRMA continues to believe that compliance with health care fraud laws is critically important. Our member companies devote significant resources to internal compliance programs and thorough investigations of any reported misconduct—activities that complement the government's enforcement efforts. While we can't speculate on trends in 'qui tam' actions, we continue to advocate for balance between appropriate enforcement and preventing unnecessary litigation that provides no new information to the government."
It could be that whistleblowers inside the industry simply have learned how to bring their cases more effectively.
But the plethora of pharmaceutical cases is one reason why some veterans of the whistleblower wars tell me they think the first wave of Wall Street whistleblower cases will be cases accusing drug company managers of insider trading ahead of merger and acquisition announcements.
Watch Eamon Javers' special series, "Bounty Hunters," all week on CNBC. On Tuesday, February 8 and Wednesday, February 9, he will report on "Squawk Box", "Squawk On The Street", and "Power Lunch. On Thursday, February 10 and Friday, February 11, he will report on "Squawk Box" and "Squawk On The Street."