It seems that the pharmaceutical industry is synonymous with fraudulent activity because news stories regularly bring the matter to the fore. The increased use of medications during COVID-19 has created opportunities for mercenary individuals and companies to exploit the system, not caring that their actions have consequences for others.
As a subsidiary of the healthcare industry, pharmaceutical research, manufacturing, and distribution companies play a vital role in ensuring that patients can receive treatment for various, often life-threatening conditions. However, several fraud types are prevalent in the pharmaceutical industry:
Medicare Part D fraud
The Medicare Prescription Drug Program covers prescription medication costs for the elderly or disabled and the country’s veterans, who are all Medicare beneficiaries. Private insurance companies provide prescription drugs to eligible Medicare members, either directly or through pharmacy benefit managers (PBMs). They then forward claims for the total prescription cost to Medicare.
When it comes to pharmaceutical false claims, it appears that Medicare Part D is extremely vulnerable. Fraudulent activities include billing for drugs not provided or not covered by Medicare, expired medication, or drugs dispensed without a valid prescription from authorized healthcare providers.
Some service providers have been caught billing full prices for medications after supplying the recipient with a generic brand. In other cases, Medicare Part D claims were filed for the supply of opioids and other controlled substances for illegal purposes.
Medicaid best price fraud
Pharmaceutical companies seek to secure Medicaid coverage of their drugs as it is a lucrative revenue stream. To gain approval, companies must supply Medicaid programs with its lowest cost price per drug.
It is usually calculated by averaging the manufacturing price or general wholesale price. Medicaid pays pharmaceutical providers for supplies of their drugs, and companies must refund Medicaid with rebates for sums paid in excess of this best price.
Pharmaceutical companies have been found guilty of manipulating the numbers used for their best price calculation. This reduces how much money they must return to Medicaid. There are regulations to prevent this fraud, which is a violation of the False Claims Act. Unfortunately, attention is often only brought to these practices once a whistleblower reports them.
Non-compliance with Current Good Manufacturing Practices (CGMP)
Medication manufacture is subject to FDA (Food and Drug Administration) policies and protocols referred to as CGMP regulations. These are put in place to ensure that drugs are manufactured according to set processes to ensure their purity, strength, and efficacy. These rules protect consumers from tainted, harmful, and inferior quality medicines.
Government healthcare programs pay for medication, assuming that it was under CGMP. Pharmaceutical companies must declare that they follow CGMP. In reality, several companies have been found guilty of manufacturing medications in dirty factories, using incorrect equipment, or poor-quality ingredients. Such practices are a violation of the False Claims Act.
Manipulation of clinical trials
A new drug undergoes many processes before it becomes available for human consumption. First, extensive research is necessary before coming up with a drug compound to treat an illness or condition. After this comes testing, during which concrete data of results are collected as evidence of a drug’s efficacy. There are several trials run before presenting a product to the FDA for its approval.
Pharmaceutical companies submit New Drug Applications (NDAs) to the FDA for approval. Applications must contain detailed descriptions of tests undertaken with the results formulated as data.
Some drug companies pay researchers to falsify this data, while others choose to manipulate or omit some information when presenting their application. Any false statements made to the FDA violate the False Claims Act, and perpetrators, be they individuals or companies, are subject to prosecution.