Sunday, February 10, 2008

Not just whistleblowing Dixie

Guambat recently posted about that monstrously large "settlement" that Merck coughed up to avoid testing in court its claims that it did nothing wrong in its sales of certain drugs to the government. See, Meanwhile, down on the pharm.

In that post, Guambat asked, where did all that money from the settlement go?

Well, it appears some of the money has gone to someone who blew the whistle on that little trade.

The WSJ reported, in Merck to Pay Over $650 Million To Settle Pricing Suits, that
H. Dean Steinke, a former Merck district sales manager for a region including Michigan and Wisconsin, filed a so-called whistleblower suit under the False Claims Act in U.S. District Court for the eastern district of Pennsylvania in 2000, which concluded with yesterday's settlement announced in Philadelphia. That suit alleged both pricing and kickback schemes detailed in the settlement. Mr. Steinke, who left Merck in 2001, filed a separate suit in Nevada in 2005. He will receive $44.7 million from the federal share of that settlement and $23.5 million from the states' share.

William St. John LaCourt filed the Louisiana suit in 1999, a False Claims Act case concerning Pepcid price discounts to hospitals. While his exact payout remains to be finalized by the court, it will likely range from $27 million to $32 million, with the portions from the federal and state governments subject to review, based on estimates from Dr. LaCourt's lawyer and Merck.

AP adds a bit more to this part of the story in Merck Whistleblower Wins $68M Award:
Steinke believed that Merck, as it introduced the much-anticipated painkiller Vioxx and tried to ward off competition for Zocor, an anti-cholesterol drug, had crossed the line when it came to inducements to physicians.

The government investigated his sealed lawsuit, which also alleged that Merck overcharged government health plans, under the Federal False Claims Act.

Prosecutors ultimately alleged that Merck paid physicians, hospitals and others excess fees to run supposed educational programs, from lunches to speaking engagements to visiting professorships, in hopes they would favor their products.

Prosecutors also accused Merck of giving doctors and hospitals steep volume-based discounts on Vioxx, Zocor and Pepcid, in the hope that patients would come to rely on them. The company failed to offer Medicare and other government agencies the same price, as required by law, they said.

"It's heroin-dealer economics. Your first shot of dope is free and then it's more expensive," said Pat Burns, a spokesman for the whistleblower group Taxpayers Against Fraud.

As part of the agreement, Merck denied any wrongdoing.

The US Government Accountability Office, in a detailed description of the False Claim Act and its basis and statistics, has said of the False Claims Act:
The False Claims Act (FCA) is one of the government’s primary weapons to fight fraud against the government. The Act, as amended in 1986, provides for penalties and triple damages for anyone who knowingly submits or causes the submission of false or fraudulent claims to the United States for government funds or property.

Under the FCA’s qui tam provisions, a person with evidence of fraud, also known as a whistle blower or relator, is authorized to file a case in federal court and sue, on behalf of the government, persons engaged in the fraud and to share in any money the government may recover.

The Department of Justice (DOJ) has the responsibility to decide on behalf of the government whether to join the whistle blower in prosecuting these cases.
From fiscal years 1987 through 2005, settlements and judgments for the federal government in FCA cases have exceeded $15 billion, of which $9.6 billion, or 64 percent, was for cases filed by whistle blowers under FCA’s qui tam provisions. The whistle blowers share of the qui tam settlements and judgments was over $1.6 billion during this period.

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