A recent interview with former US Attorney Michael K. Loucks noted that although “The Era of Big Pharma Fraud Cases Is Ending,” it “May Go Out With A Bang.” During The RPM Report interview, Mr. Loucks said that the pace of whistleblower cases and investigations against Big Pharma companies are winding down. We previously wrote about a book that discussed such cases, Three Felonies a Day.
Although recent headlines suggest that many cases are still pending and may dominate headlines for months or even years to come, the change is happening for one reason: “Big Pharma is finally coming into compliance.” He told The RPM Report, that companies are “now getting closer to compliance and their compliance programs are working better.”
Michael K. Loucks
Although he stepped down from his post in late 2009, Mr. Loucks “has been at the center of many of the largest settlements involving pharmaceutical manufacturers, up to and including the record-setting $2.3 billion settlement with Pfizer Inc. in 2009.” He worked his way up from an assistant US Attorney in Boston to acting US Attorney, where he led many of the big pharma cases.
Mr. Louck however believes that the pressure to bring more cases “won’t do anything in the absence of new resources.” In fact, since 2003, he has seen the number of full-time equivalents devoted to health care cases drop from 180 to 160 over that period. As a result, “the number of prosecutorial full time equivalents dropped.” Moreover, he believes that the $100 million from the health care bill to fight fraud would amount to “a drop in the bucket” by time the funds are divvied up among all the agencies involved.
Consequently, this situation leads to “the odds of being investigated as likely as being struck by lightning.” While cases are still occurring, most arise from “lawyers who specialize in qui tam cases, who have been providing a steady flow of pharma cases that merit investigation.”
Compliance
The public should be confident in noting that “pharmaceutical companies are getting their houses in order,” according to Loucks, and “they are stopping some of the conduct that they may have been incenting with some of their compensation programs.” This kind of progress is extremely important for companies, patients and physicians because it recognizes that “there are a lot of people who work very hard in compliance programs who are trying to make sure that their company follows the rules.” In other words, companies “are trying hard on their own right to make sure they are following the rules,” and as a result, Mr. Loucks sees that “their compliance programs are working better.”
Big Bang
In addition to these changes, Mr. Loucks believes the era could go out with a bang because there “is significant pressure that some major corporation get excluded from doing business with Medicare and Medicaid,” also known as debarment. In other words, he noted that “If you are going to exclude the business, then you should exclude the business that engaged in the activity.”
He predicts that in the future we “may see a corporation that is just a sales company” excluded. For example, “There are some drug and device companies that don’t actually do their own development. They are joint ventures with the actual developer of the product to sell a product. So you might see a company like that that doesn’t have a research arm that will get excluded.”
Future
Mr. Loucks noted that the next cases to be resolved are certain to receive higher profile treatment given the emphasis on fraud and abuse recoveries atop the Obama Administration. Fortunately, it seems that companies are learning from the past and installing compliance requirements to keep patients safe and to continue their trust in the integrity of physicians. Accordingly, “for the rest of the industry … the best news of all may be that there is an end in sight.”