Magazine article Drug Topics

Federal Fraud-Buster Stuns R.Ph.S with Blunt Remarks

Magazine article Drug Topics

Federal Fraud-Buster Stuns R.Ph.S with Blunt Remarks

Article excerpt

How drugs gain coveted spots on restrictive formularies is the subject of ongoing fraud investigations, a veteran federal prosecutor has indicated. In a littlenoticed speech, Assistant U. S. Attorney James G. Sheehan cautioned against relying too heavily on a drug's cost as the basis for inclusion on a formulary. He also cast doubt on the legality of a number of common industry practices, including market share movement and "push" programs.

Sheehan, chief of the civil division in Philadelphia, spoke about receiving a flood of inside information and of sending "whistle blowers" wearing "body wires" into pharmacy and therapeutics committee meetings to record incriminating statements. He talked about getting tips in anonymous phone calls to a hotline and in conversations with rival companies and malpractice lawyers. He mentioned search warrants and wiring up offices and a lab worker who could get as much as a $60 million bounty for informing on his drug company employer.

"We don't want to make your lives miserable or large organizations' lives miserable unless we have the evidence to go on," Sheehan told a stunned audience at the American Society of Consultant Pharmacists annual meeting on Nov. 14. "But the number of things that show up today, the volume of cases that show up today at my door, are huge." Sheehan's remarks, in the words of one ASCP staffer, "caused great angst" to the listeners.

Sheehan noted that federal health-care fraud investigations no longer are confined to Medicare and Medicaid, private health-care plans are targets, too. He cited the growing sophistication of "schemes," progressing from awarding frequent-flier miles and grants for "educating" patients to pharmacists and doctors for switching patients from one Rx to another, to market share movement and "push" programs. He described the newer practices this way: "If at the end of the year, you move it from 40% to 70% on this particular heart drug, we will pay you a rebate of xx dollars times the number of drugs you are selling for the push of the market from one direction to another. A very common practice. It exists out there in the marketplace. We see that payment in order to induce a shift just as much a kickback from our perspective as the frequent-flier or the pay-to-educate programs."

Later, during a question-andanswer session, Sheehan said "push payments look an awful lot like-to the average prosecutor and the average investigator-a kickback." He added, "I know this is not a message this audience wants to hear, but that is the law."

Another possible unwelcome message included this one on formularies: "If your formulary decisions are made solely on cost or primarily on cost, you have a significant problem. …

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