The False Claims Act: A Review and Policy Recommendations

Purpose The False Claims Act (FCA) has been applied against pharmaceutical companies by the U.S. government to combat marketing fraud including kickbacks, improper pricing, and off-label promotion. The authors review FCA settlements and challenges facing the industry to suggest the motivation behind firms’ alleged fraudulent activity. The interests of the U.S. government and medical professionals are also considered. Changes to the law governing pharmaceutical marketing practices are recommended. Design/methodology/approach Cases settled under the FCA between 2005 and 2012 were identified by accessing the U.S. Department of Health and Human Services (DHHS) Corporate Integrity Agreements website and annual reports and the quitamhelp.com website. Case details were collected from U.S. Department of Justice press releases, DHHS annual reports, and case documents in the PACER database. Findings Of the settled cases in the final sample, improper pricing practices were evident in 33% of the cases; off-label promotion in 52%; and both in 15% of the cases. Forty-eight percent of the alleged fraudulent marketing activity occurred within the brands’ first year and 68% within the first two years on the market. Reported settlements ranged from $4 million to $4.3 billion. Originality/value This research simultaneously considers business issues facing the pharmaceutical industry and alleged fraudulent marketing activity to recommend changes to the law governing drug promotion. Changes have the potential to improve the balance between the respective interests of industry, medicine, and government and to improve compliance and patient care in the future.