The pharmaceutical industry has zoomed by the defense industry to become the biggest defrauder of the federal governement based on payments obtained under the federal False Claims Act, according to an analysis by the group Public Citizen.
Since 1991, there have been 165 major settlements of civil and criminal cases resulting in fines and payments totaling nearly $20 billion, the organization reported.
About 75% of those settlements have occured in just the last five years, a period in which consumer spending on prescription drugs increased dramatically, totaling $234 million in 2008.
That raises the question of whether the payments are considered just a cost of doing business.
Public Citizen said stricter measures, including bigger fines and more criminal prosecution of drug company executives, including jail, may be needed.
"Desperate to maintain their high margin of profit in the face of a dwindling number of important new drugs, these figures show that the industry has engaged in such activities as dangerous, illegal promotion for unapproved uses of drugs and deliberately overcharging vital government health programs, such as Medicare and Medicaid," said Sidney Wolfe, director of the Health Research Group at Public Citizen.
At the state level, most of the fines and the most common violation involved companies deliberately overcharging state health programs, such as Medicaid, the group said.
Four big firms - GlaxoSmithKline, Pfizer, Eli Lilly, and Schering-Plough - accounted for 53%, or $10.5 billion, of all financial penalties imposed since 1991.
Over the last decade, pharmaceutical cases in total accounted for at least 25% of all federal False Claims Act payments, compared with 11% by the defense industry, the group said.
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