2 Comments

1. 

   Jackie on May 31, 2012 at 12:24 am

   This post has been very helpful and informative. I may not having to do with the subject matter but it enlightened me on the facts and details laid out.

2. 

   Ronald Eheman on May 29, 2012 at 3:23 am

   False Claims Act

   Under the Food, Drug and Cosmetic Act (FDCA), a manufacturer is required to submit a New Drug Application (NDA) to the Food and Drug Administration (FDA) and obtain the agency’s approval before distributing a “new drug” in interstate commerce. In this NDA, the manufacturer is required to set forth information concerning the manufacturing processes and composition of the drug, and provide sufficient data generated in adequate and well-controlled clinical investigations to demonstrate that the drug is safe and effective for its specified use. After the FDA approves the product as safe and effective for a specified use, any promotion by the manufacturer for other uses – known as “off label” uses – renders the product misbranded.

   Interstate Commerce and Import of Unapproved Drugs

   Pursuant to 21 U .S.C. § 355, “No person shall introduce or deliver for introduction into interstate commerce any new drug, unless an approval of [a new drug application] is effective with respect to such drug.”

   21 U.S.C. § 33 1 (a) prohibits the introduction or delivery for introduction into interstate commerce of any drug that is misbranded.
   21 U.S.C. § 331(c) prohibits the receipt in interstate commerce of any drug that is misbranded and the delivery or proffered delivery thereof for pay or otherwise.
   introduction into interstate commerce of unapproved new drugs, in violation of 21 U.S.C. §331(d).

   The causing of both of these acts is also prohibited under 21 U.S.C. § 331.

   18 U.S.C. § 1001 – False Statements

   Good Manufacturing Practice (GMP) Violations

   GMP regulations for drugs and biological products contain certain minimum requirements that must be met for the methods, facilities, and controls used in manufacturing, processing, and packaging.
   As the world’s largest purchaser of prescription drugs under Medicare, Medicaid, the Veterans Administration, Tricare and other government healthcare programs, the United States government has a vested interest in ensuring that prescription drugs are safe and effective. Good Manufacturing Practices (GMP) regulations are already in place for public safety reasons, requiring that all prescription medications are manufactured in a way that meets FDA standards for safety, identity, strength, and purity under the Federal Food, Drug, and Cosmetic Act. While the FDA already enforces these standards, a pharmaceutical company that is aware of or is indifferent to GMP violations in the manufacturing of drugs purchased by the government may be held to have made a false claim under the False Claims Act.
   The basis for holding a pharmaceutical company liable under the False Claims Act is that in knowingly covering up GMP violations in written records already required under GMP standards, the manufacturer has generated false records. These false GMP records are required for the government to purchase their drugs. Therefore, hiding GMP violations in those records resulted in the government paying a false claim when purchasing those drugs, resulting in pharmaceutical fraud.

   Because there are alternative strategies for the U.S. government to pursue legal action against GMP violators, the federal government has not yet sought to recover damages for GMP violations under the False ClaimsAct. However, the legal rationale for bringing a False Claims Act case stands and has been the basis already for qui tam whistleblower lawsuits.

   DESI Drugs
   The 1938 Federal Food, Drug, and Cosmetic Act gave authority to the Food and Drug Administration to regulate prescription drugs and to prohibit the sale of drugs not determined to be safe. However, in 1962, Congress amended this law to require all new drugs to be certified by the FDA as both “safe and effective” after review of valid scientific studies. Drugs which had been previously approved as “safe” prior to 1962 were required to be studied for effectiveness by the Drug Effectiveness Study Implementation program (DESI).
   If DESI does not find substantive evidence that a drug is effective for each labeled indication, it is considered “less-than-effective” and recommended for removal from the market by the FDA. However, FDA also releases a Notice of Opportunity for a hearing to prove the drug’s effectiveness along with any drugs “identical, related, or similar” (IRS) to the drug in question. If the original or “identical, related, or similar” drugs are then determined by the FDA to be effective, the manufacturer must still submit a New Drug Application (NDA) for final approval.
   With very few exceptions, any DESI drug (including identical, related, or similar drugs) that has not been approved after submission of an NDA is still considered “less-than-effective” and subject to FDA enforcement action at any time. Even if the FDA’s hearing judgment affirms a DESI drug’s effectiveness, marketing of that drug or its IRS counterparts remains illegal until an NDA is submitted and approved.
   DESI Drugs and Medicaid Fraud
   Marketing of DESI drugs and their IRS counterparts without final FDA approval is illegal, but because the FDA’s resources are limited, some unapproved DESI drugs remain on the market. Because these drugs are not approved by the FDA, they are not considered Covered Outpatient Drugs by Medicaid and are not eligible for government reimbursement claims. Thus, the marketing of unapproved DESI drugs that end up being paid for by Medicaid is considered pharmaceutical fraud under the False Claims Act.

   Pharmaceutical Fraud
   The vast majority of pharmaceutical fraud cases involve off-label marketing and pharmaceutical kickbacks. Off-label marketing refers to the practice of marketing a drug as being usable for purposes not approved by the FDA. These uses are not reimbursable through government programs such as Medicare or Medicaid. When the government subsidizes drugs due to their promotion for off-label uses, the pharmaceutical companies have committed fraud and can be held liable for these subsidies.
   Pharmaceutical kickbacks are prohibited by federal law due to the risk that these kickbacks may compel a physician to prescribe a drug that will pad his bank account instead of a different drug which may be more effective for the patient.

   When physicians prescribe drugs for these off-label indications for Medicare and Medicaid patients, FDA is then able to bring suit under the FCA. Failing to advise the Centers for Medicare and Medicaid Services that the drug no longer qualified for coverage by government health care programs, thereby causing false claims to be submitted to those programs.

   National Association of Medicaid Fraud Control Units (NAMFCU)

   Founded in 1978, the National Association of Medicaid Fraud Control Units (NAMFCU) has played a pivotal role in providing the Medicaid Fraud Control Units (MFCUs) with a national presence. The MFCUs, created by Congress in 1977, are federal and state-funded law enforcement entities that investigate and prosecute provider fraud and violations of state law pertaining to fraud in the administration of the Medicaid program.

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