Since 2010, States Net $10.2 Billion From Settlements With Pharmaceutical Companies

The September 27, 2012, report catalogs the cases in which the state and federal governments have settled or obtained judgments against pharmaceutical manufacturers.
The report follows up a 2010 report, also by Public Citizen. The earlier report looked at settlements and judgments going back to 1991, and found that governments had recovered $20,000,000, for allegations ranging from off-label marketing to intentionally overcharging Medicare or Medicaid. Almost all – in fact 75% — of those dollars had been recovered between 2005 and 2010.

Intrigued by the way the recoveries were trending upward, Public Citizen updated its report with data through the first half of 2012. The new study also looked at state settlements that were achieved independently of the federal government.

Indeed, the trend Public Citizen had noted earlier has continued unabated. Since 1991, the governments have recovered a total of $30.2 billion – and $10.2 billion, or a full third of that amount, has been collected in just the past year and a half.

Public Citizen found 3/5 – 59%– of the settlements had been single-state settlements, meaning that the suit involved one state against a pharmaceutical company, without the involvement of the federal government or any other state. The percentage of recoveries in single-state settlements showed a huge uptick, up from 25% in the first study.

Seventeen of the 27 states with at least one single-state settlement since 1991 have attained a return on investment of $1 or greater for every dollar spent on enforcement of all (both pharmaceutical-related and non-pharmaceutical) Medicaid fraud.

Twenty-seven states were in on the act, making at least one single-state settlement against a Pharma company. Kentucky led the pack with 17 single-state settlements since 1991.

Six of the single-state actions in Texas were the result of actions filed by whistleblowers.
I was particularly interested in this statistic, since I represent whistleblowers who bring qui tam lawsuits on behalf of the government in order to recover money taken from it by fraud. The Texas False Claims Act statute has clearly been very effective in recovering money wrongfully obtained from the Texas government.

The study also found that the federal government has greatly increased its recoveries in the past few years. The federal government’s recoveries from 2009 through mid-2012 nearly equal the amount it received during the entire period between 1991 and 2009. During the period from 2009-mid-2012, 75% of the settlements were a result of suits filed by a whistleblower. The proportion should remain that high or even increase as the years pass, because Congress has recently strengthened the False Claims Act. Congress made a number of amendments to the False Claims Act in order to encourage qui tam relators to come forward with information about the ways that the federal government is being ripped off by fraud, whether by Big Pharma or by defense contractors, hospitals, medical providers, or any of the other myriad entities that contract and interact with the federal government on a regular basis.