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May 22, 2012 

Pharmaceutical Companies Must Be Held Fully Accountable for Defrauding the Government

Statement of Dr. Sammy Almashat, Researcher, Public Citizen’s Health Research Group

Public Citizen strongly supports a measure proposed by U.S. Sen. Bernie Sanders (I-Vt.) that would more effectively curb fraudulent activity committed by the pharmaceutical industry against the federal and state governments.

The provision, embodied in an amendment to S.3187, the Food and Drug Administration Safety and Innovation Act (FDASIA – the renewal of the Prescription Drug User Fee Act) – would rescind data exclusivity rights of a pharmaceutical product granted under the Food, Drug and Cosmetic Act (FDCA) if the company marketing that product is found, or admits to, engaging in unlawful activity involving the drug. Data exclusivity refers to the exclusive marketing rights granted by the federal government to most brand-name pharmaceuticals for several years following approval.

Such an amendment has never been more necessary. Over the past two decades, the pharmaceutical industry has emerged as the biggest defrauder of the federal government under the False Claims Act (FCA) and has paid $23 billion in settlements and fines to the federal and state governments for myriad civil and criminal violations of the FCA and other laws.

This illegal activity has cost the taxpayers dearly while putting the public’s safety at risk. Companies engaging in off-label promotion of pharmaceuticals – the most common violation – bypass the Food and Drug Administration’s (FDA) critical review process, which can endanger patients. Other companies are committing pricing fraud of already overstretched Medicare and Medicaid programs.

Despite a recent increase in settlements and convictions, the financial penalties handed down are so small relative to industry profits that the companies simply factor them into the cost of doing business. The penalties paid by all pharmaceutical companies in the past 21 years comprise just more than half the profits made by the 10 largest pharmaceutical companies in a single year (2010).In addition, company heads almost always escape without punishment for overseeing this fraudulent activity.

The proposed amendment would thus add a critical tool to the federal government’s enforcement efforts while serving as an effective deterrent against further fraud. Pharmaceutical companies already generate enormous profits through government-granted data exclusivity rights. The Sanders amendment simply would make those exclusivities contingent on a company following the letter of the law. This is hardly a radical proposition and must be adopted to help put an end to the ongoing fraud perpetrated by the pharmaceutical industry.

To see the letter and fact sheet sent to all senators urging a “yes” vote on the amendment, visit: http://www.citizen.org/public-citizen-support-for-sanders-amendment.

To see Public Citizen’s 2010 report on pharmaceutical fraud, visit: www.citizen.org/hrg1924.

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