Pharma companies paid big bucks in Tennessee for bad drug deals
Schemes plotted behind closed doors. Government agents out to foil them. Inside sources spilling the beans. Bad guys brought to justice.
It's the plot of thousands of books, movies and television shows.
And it's a reality in Tennessee that has raked millions of dollars into the state coffers over the past few years. But it's not the high-flying, ticking-time-bomb stuff. Instead, preventing Medicaid fraud in pharmaceuticals is more often done with computers, health care claims data and spreadsheets.
Big pharmaceutical companies have paid out nearly $22 million to the state this year as part of multistate agreements to settle allegations that they broke the law.
In July, McKesson Corp. paid the state $2 million, the amount TennCare was deliberately overcharged by the company because it sold its drugs to the state at inflated prices.
GlaxoSmithKline — the maker of Tums, Poligrip, Flonase and more — paid Tennessee $13.5 million in a landmark $3 billion settlement that involved the federal government and several other states. The agreement settled claims that the company marketed numerous drugs for uses not approved by the government.
For example, it marketed the adult depression drug Paxil for children and adolescents and another depression drug, Wellbutrin, for weight loss and sexual dysfunction.
Whistleblowers are telling on their drug companies at higher rate, according to new figures from consumer advocate Public Citizen, in a trend that began in 2008. Most of them want to do the right thing, state officials said, but it also doesn't hurt that these company insiders get a percentage of the overall settlement, which can reach millions of dollars.
"There is more scrutiny now because every employee is a potential whistleblower," said Peter Coughlan, deputy of the Medicaid Fraud and Integrity Division in the Tennessee Attorney General's Office. "These companies have to remember that now every marketing manager, every sales person — that's a potential plaintiff against them."
Coughlan's division was created 18 months ago and
now works with TennCare, the Office of Inspector General and the Tennessee Bureau of Investigation's Medicaid Fraud Control Unit in the TennCare provider Fraud Task Force. Together, the groups find health care fraud that rips off the taxpayer-funded TennCare program, recoups the money for the health insurance program and the rest of the funds go back to the state.
Should TennCare officials find an anomaly in some of their records, they hand it off to the TBI for further investigation. The agency has 20 Medicaid fraud investigators across the state with five in the Western Division, two of those in Memphis.
These agents must take further training in insurance claims data analysis. It's the inner-workings of government health insurance programs, including the galaxy of acronyms associated with it, said Norman Tidwell, special agent in charge of TBI's Medicaid Fraud Control Unit.
Tidwell said most crimes by pharmaceutical companies deal with either overpricing of off-label marketing like the McKesson and Glaxo-SmithKline cases this year, but said the circumstances are different each time.
"Some of it, historically, has been their (sales representatives) acting inappropriately and the company may or may not have had direct knowledge about it," Tidwell said. "Each situation has to stand on its own and we have to weigh those allegations when they come in to determine whether or not there has been a crime."
PhRMA, the pharmaceutical industry's advocacy group, said complying with federal rules is "critically important" for its industry.
"We believe that robust compliance programs will best ensure adherence to these standards and will serve the best interest of physicians and the patients they serve," said PhRMA spokesman Matthew Bennett. "Government enforcement efforts should be focused on those companies and individuals who knowingly and intentionally operate outside the law."
Tennessee's Coughlan and Tidwell agreed that more whistleblowers are making it harder for companies to carry out these schemes but that the fight against Medicaid fraud is far from over.
From 1991 to December 2010, Public Citizen reported financial settlements and court judgments from pharmaceutical companies of about $20 billion. In the past one-and-a-half years alone, the group reported 74 new settlements totaling $10.2 billion.