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January 28, 2011

Pharmaceutical Companies Are Responsible for the Most Federal Fraud Lawsuits Filed in the U.S.

Q: What Industry do you think is the leader in Federal Fraud Lawsuits in the United States?
A: Pharmaceutical Industries.


Photo credit: mconnors from morguefile.com

According to a report released by False Claims Act comes from pharmaceutical companies. The report shows that Drug Companies are the leader in Federal Fraud Lawsuits. Defense Companies accounted for 11% of fraud settlements, this makes them the second highest in federal fraud lawsuits, in the United States.

Public Citizen was founded in 1971 and serves as the people's voice in the nations capital. It is a nonprofit organization responsible for being the voice of many in all aspects of the government. They go before Congress, the executive branch agencies and the court systems. They challenge various agencies, such as pharmaceutical, nuclear and automotive industries.

The report analyzed civil and criminal settlements under the False Claims Act at the state and federal levels since 1991 in order to determine the leaders in federal fraud suits.

The False Claims Act is a law that allows people who are not affiliated with the government to file actions against federal contractors they accuse of committing claims fraud against the government. People who file under the Act stand to receive a portion of any recovered damages. This act provides a legal tool to counteract fraudulent billings turned in to the federal government. The original False Claims Act was passed in 1863 and it has since been revised. The last revision was in 1986 and since then almost $22 billion has been recovered by the federal government.

Out of the almost $22 billion recovered since 1986, 75% of the money and 73% of the cases happened in the last 5 years. The U.S. Department of Justice (DOJ) files most of these fraud cases that are brought against the pharmaceutical companies. Most of these cases are for attempting to market medications that have not yet been approved by the U.S. Food and Drug Administration (FDA). It is illegal under federal drug regulations for a company to promote their products that have not been approved by the FDA.

In 2009, Pfizer was fined $1.2 billion for illegally marketing the painkiller Bextra. This is currently the largest criminal fraud fine in history. The second highest was Elan Pharmaceuticals. It was fined $203 million for illegally marketing the epilepsy drug Zonegram.