(9/24/2009) “There’s no reason to believe that the pharmaceutical industry employs more ‘ethically-challenged’ individuals than any other industry!” Perhaps the only remarkable thing about this otherwise unremarkable observation is the person who voiced it: the acting U.S. attorney for the District of Massachusetts Michael Loucks, who served as chief prosecutor for the Department of Justice (DoJ) on many of the most celebrated (or infamous!) cases of pharma wrongdoing in recent years, obtaining settlements netting tens of millions of dollars in rewards for industry “whistleblowers,” and billions in restitution and fines for government.

In a luncheon address at FDLI’s 21^st Annual Advertising and Promotion Conference 9/22, Loucks said that next year, as the first of the “baby boomers” reach 65 years-of-age, the costs for Medicare/Medicaid will begin a dramatic rise, continuing over the next 15 years before tapering off. “In a bad economy, health care expenditures will begin to look like the watering hole in a dry savanna, attracting everyone, including the hyenas,” he said. “As expenditures for health care grow, we can expect an increase — perhaps a geometric increase — in fraud.”

Although health care costs attributable to drugs represent only 15% of overall Medicare/Medicaid expenditures, legal proceedings against drug companies have yielded 40% of all monies recovered in rewards, restitution and fines, totaling more than $20 billion since 1991, Loucks said. In contrast, he pointed out fraud recoveries from hospitals, clinics, nursing homes, physical therapy centers, physicians and other players in the health care field, represent only 0.5 % of this total. He suggested that this disparity does not mean that the pharmaceutical sector is more fraud-prone than others in the health field, but only that there are a “vast number” of un-addressed fraud cases in other areas.

This anomaly was explained by Loucks as being due to the fact that a very large proportion of fraud cases are brought to the attention of DoJ by individuals reporting illegality in their own work environments, and that the very size of settlements against drug companies (including large rewards for “whistleblowers”) serves as incentive to do so. “A potential $100,000 reward for reporting fraud by an ambulance provider pales in comparison to the several millions that might be awarded to a whistleblower in a case against a pharmaceutical company,” Loucks said.

Moreover, he said many drug companies may be conducting similar unlawful practices and that, when a successful case is brought against one company, employees in other companies often come forward to claim rewards as well (“It’s like playing the game, ‘Who Wants To Be A Millionaire?’”). On a personal note, Loucks said that, while large rewards to whistleblowers are justified (“After all, they’ll never work in the industry again.”), he nevertheless believes there should be a cap — perhaps $10million — on total rewards.

Following Loucks’ presentation, the assistant U.S. Attorney and chief of affirmative litigation for DoJ’s Massachusetts district, Sara Bloom, and senior counsel in the HHS Inspector General’s office, Mary Riordan, provided an update on evolving DoJ/HHS policies regarding legal settlements.

According to Bloom, issues relating to off-label promotions have grown much more complex in recent years, with seemingly many “alternate ways” for going off-label. She said what is most surprising is the number of investigations that have been undertaken of companies that have excellent compliance programs — on paper. “There is often a large gap between what compliance officers at corporate headquarters know, and what actually happens in field marketing,” she said. “There may be patterns of illegal conduct of which headquarters is unaware, but the company is still held responsible.” Bloom said when attention is called to an infraction, compliance managers should not simply fix the immediate problem, but should go further to institute changes and strategies that will prevent similar recurrences.

Among persistent issues related to off-label promotions, Bloom cited “ghostwriting” (in which medical writers are engaged to write and publish, under their own names, articles promoting off-label uses); the indiscriminate use of samples (i.e., provision of excessive numbers of samples, particularly to physicians whose practice does not call for their use, regarded as evidence of inducement for use off-label); and payments to physicians to promote off-label uses at continuing medical education (CME) sessions.

A major trend in crafting corporate integrity agreements (CIAs), as part of legal settlements, was discussed by Riordan. She indicated that whereas corporate compliance officers formerly were held responsible for executing mitigation plans, CIAs now often specify that corporate board members must now legally sign-off, periodically certifying that corporate mitigation plans are being observed and that compliance has been achieved. “There’s nothing like signing your name to a document to get your attention,” she said.