The False Claims Act: a review and policy recommendations

Purpose – The purpose of the study is to review The False Claims Act (FCA) settlements and challenges facing the industry to suggest the motivation behind firms’ alleged fraudulent activity. FCA has been applied against pharmaceutical companies by the US Government to combat marketing fraud including kickbacks, improper pricing and off-label promotion. The interests of the US 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 US Department of Health and Human Services (DHHS) Corporate Integrity Agreements Web site and annual reports and the quitamhelp.com Web site. Case details were collected from US Department of Justice press releases, DHHS annual reports, and case documents in the Public Access to Court Electronic Records database. Findings – Of the settled cases in the final sample, improper pricing practices were evident in 33 per cent of the cases; off-label promotion in 52 per cent; and both in 15 per cent of the cases. Forty-eight per cent of the alleged fraudulent marketing activity occurred within the brands’ first year and 68 per cent within the first two years on the market. Reported settlements ranged from US$4 million to US$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.