An Update on the False Claims Act and the Opioid Crisis
In 2018, there were 46,802 deaths attributed to opioid overdoses. That number nearly doubled to 80,816 overdose deaths involving opioids by 2021.
The Department of Justice (DOJ) has been actively pursuing opioid-related fraud schemes for years, with significant dedication of resources and attention. In 2017, the DOJ formed the Opioid Fraud and Abuse Detection Unit (OFADU) to combat the effects of the opioid epidemic. Despite these efforts and several high-profile prosecutions and civil settlements, the opioid crisis remains a serious issue nationwide.
In 2019 alone, CNN Reports over 10 million Americans misused opioids, and there were 70,630 overdose deaths nationwide. The crisis has only worsened during the COVID-19 pandemic. The CDC estimates that there were 93,000 overdose deaths from opioids in 2020, a 29% increase compared to the previous year. With the opioid epidemic worsening, the Justice Department has responded by increasing its efforts to investigate and prosecute the individuals and organizations that have contributed to the crisis.
The False Claims Act (FCA) is one of the DOJ’s best tools for holding individuals and organizations accountable for activities that have contributed to the opioid epidemic. The FCA is a federal law that combats fraud against the government by allowing private citizens, known in the cases as "relators," to sue individuals or businesses who defraud the government through submitting false claims. Under the FCA’s qui tam provision, these relators, or whistleblowers, can be entitled to receive up to 15-30% of the government’s recovery in a successful case.
How the False Claims Act Targets Opioid-Related Fraud
The False Claims Act is relevant to the opioid epidemic because it is a powerful tool against illegal kickback programs and off-label marketing, both of which have contributed to the proliferation of opioids and opioid-related health consequences in the U.S., including deaths.
When a healthcare association like a pharmaceutical company offers illegal financial incentives to doctors in exchange for referring Medicare or Medicaid patients to the services or products of the organization offering the incentive, this constitutes an illegal kickback scheme that the FCA, and a separate federal law known as the Anti-Kickback Statute, were designed to address. For example, an opioid-related kickback scheme might involve a drug company illicitly paying doctors to prescribe their opioid-containing drug. This would incentivize doctors to overprescribe an incredibly dangerous drug to patients who do not medically require it, thus contributing to the national opioid crisis. To the extent that a state or federal government health program like Medicare or Medicaid paid for a drug prescribed pursuant to or as a result of an illegal kickback, the FCA offers the government, and relators acting on its behalf, to pursue damages and penalties against those involved in the scheme. The claims made for reimbursement from federally or state-funded healthcare programs each constitute a false claim and are therefore actionable under the FCA.
Off-label marketing occurs when a pharmaceutical company encourages or incentivizes a doctor to prescribe a drug for a purpose that has not been approved by the U.S. Food and Drug Administration (FDA). Because doctors and patients charge government healthcare programs for drug costs, if a pharmaceutical company misrepresents how a medication can safely be used, it can be a violation of the FCA if it induces a prescription for that use. Again, to the extent that government health programs bear the cost of prescriptions for off-label use, the FCA provides a means of recovering that money and imposing penalties for each false claim.
For example, an FCA lawsuit forced Cephalon Inc. to pay $425 million after it engaged in a scheme to market its Gabitril, Actiq and Provigil for unapproved uses in violation of the Food, Drug and Cosmetic Act, which requires a company to specify the intended uses of a product in its new drug application to the FDA. Once approved, the drug may not be marketed or promoted for so-called "off label" uses - any use not specified in an application and approved by FDA. Yet as a result of Cephalon’s off-label marketing campaign, false claims for payment were able to be submitted to federal insurance programs such as Medicaid and the Federal Employee Health Benefits Program which would not knowingly provide coverage for such off-label uses. That is the allure of off-label marketing: opening more revenue streams for the same product. As opioids may have once had a more narrow label for narrower uses, it is obvious why pharmaceutical companies felt the need to campaign opioids into far more pervasive uses despite the confines of their labels.
Read more about how the False Claims Act is used as a tool to target activities illegal activities that have contributed to the opioid epidemic here.
False Claims Act Successes Combatting the Opioid Crisis
Insys: $225 Million Settlement
In 2019, Insys Therapeutics founder, John Kapoor, was found guilty of racketeering. A federal investigation revealed that Insys was engaging in an illegal kickback program that entailed bribing doctors to prescribe Insys’s opioid product to their patients, many of whom did not even need it. This continued until Maria Guzman, a former sales representative at Insys, blew the whistle and reported the illegal practices.
Insys paid a $30 billion settlement to resolve the criminal allegations. Additionally, Insys resolved its civil liability for its violations of the False Claims Act with a $195 million settlement. Ms. Guzman was awarded a substantial share of this settlement because she brought the activity to the government's attention through her FCA case, allowing the government to effectively put an end Insys’s kickback program. Learn more about Insys’s illicit activities and John Kapoor’s racketeering trial here.
Reckitt Benckiser and Indivior: $2 Billion Settlement
In another successful application of the FCA, the United States recovered a total of $2 billion dollars in criminal and civil penalties from pharmaceutical manufacturers Reckitt Benckiser and its affiliate Indivior in 2019, putting an end to their illegal off-label marketing scheme. Several Reckitt Benckiser employees and other relators reported the illegal activity, earning FCA shares in the award.
The case involved Indivior’s drug, "Suboxone Film," an opioid-containing sublingual medication meant to treat opioid-addicted patients during recovery programs. Indivior illegally marketed Suboxone Film as a safer alternative to the tablet form without FDA approval or any scientific data to support their claims.
Moreover, Indivior created a telephone and internet program called "Here to Help" which was marketed to refer patients to doctors for treatment of opioid addiction. However, Indivior used the program to refer patients to doctors they knew prescribed their drug, boosting their profits. It also referred patients to doctors who had a known history of overprescribing opioids. Although the drug was supposed to help people suffering from opioid addiction, prescribing it improperly or without medical necessity not only risked patients’ health but also wasted government money that may have been spent fighting the opioid epidemic in other ways. Read more about the details of Indivior’s illegal activities here.
Purdue Pharma: $2.8 Billion Settlement
Perhaps the Justice Department’s greatest success in its efforts to curb the opioid epidemic through FCA litigation and other law enforcement was its 2019 settlement with Purdue Pharma, which agreed to pay more than $8 billion overall in criminal and civil resolutions. As part of the overall settlement, Purdue paid $2.8 billion specifically to settle False Claims Act allegations.
According to DOJ, Purdue engaged in both illegal kickback programs and off-label marketing schemes relating to its opioid drug OxyContin. Purdue aggressively marketed to doctors who were prescribing OxyContin for medically unnecessary reasons in exchange for kickbacks, falsely claiming that the drug was less addictive than competing drugs. Even more shocking were the allegations that representatives were trained to tell doctors that the symptoms of addiction their patients were exhibiting were actually symptoms of pain and an indication that they required more opioids.
Thankfully, former sales representative Carol Panara exposed Purdue’s illegal and dangerous activities and was rewarded a share of the $2.8 billion FCA settlement. The money the government recovered from the Purdue settlement will be allocated for opioid treatment and abatement programs.
The Increasing Complexity of False Claims Act and Opioid Cases
As the opioid crisis continues and in some respects worsens, investigating and discovering the fraud contributing to the crisis is becoming increasingly complicated and technologically involved.
In 2020, one of the Justice Department’s largest opioid-related recoveries was from an information technology company rather than a drug manufacturer. Practice Fusion, Inc. is a health information technology developer which Purdue Pharma had illegally paid to design their electronic health records (EHR) software to increase the number of OxyContin clinical decision support alerts in an attempt to increase OxyContin sales. In other words, Practice Fusion was alleged to have made their computer program, which doctors use for diagnostic support, continually recommend that doctors prescribe a dangerous opioid even when it was unnecessary.
Although Practice Fusion was caught and paid a $145 million settlement, cases like this are representative of the growing complexity of opioid fraud schemes. Whistleblowers, in their capacity as insiders, are more important than ever in understanding and exposing frauds. Filing a FCA case often provides the ideal vehicle to bring these frauds to the government's attention so as to put an end to the schemes, and offers brave whistleblowers the potential to share in the government's recovery.
Know of Opioid Fraud? Contact the Whistleblower Attorneys of Goldberg Kohn
If you are aware of fraud against the government, whether or not it relates to the opioid crisis, you may be eligible to blow the whistle in a False Claims Act lawsuit. For more information, either call Goldberg Kohn at 312-284-3258 or contact us online for a free, confidential consultation. Read about our successes pursuing False Claims Act cases.