Medical & pharma industries are one of the most regulated sectors in today’s world. This is so for good reason simply because healthcare products and services impact human lives.

However, by the end of fiscal year ended Sep 2010, a record civil settlements & judgments involving healthcare fraud against the US federal government chalked up a whopping US$3 billion! This was proclaimed as the largest in history & made up 83% of the year’s total civil fraud recoveries by the US government. See report here.

Following the many historical cases which resulted in injuries & fatalities (eg. the adulteration of glycerol using diethylene glycol in syrups etc), many countries have since enacted legislations & implemented regulatory frameworks to ensure quality, safety & efficacy of drug & medical products throughout their value chain & life cycle; thus making it unlawful for sub-standard or fraudulent products to be marketed in order to protect public health & safety.

Cases that took place in the US might or might not have immediate or direct impact on the rest of the world; but make no mistake, this is uneasy reading for the industries which used to earn respects from others for regulatory compliance & self-imposed ethical standards. Many high profile cases emanated from the US,  therefore there are predictably differences in the way the industry interacts with the overall economics & dynamics of the healthcare industry. For a start, the legislative environment in the US differs markedly, many of the high profile cases that were brought to light involved whistleblowers or qui tam under the False Claims Act (FCA) or Lincoln Act. Under the provisions of the FCA, a private individual not affiliated with the government  can assist to prosecute individuals or companies committing frauds against the US federal government. In return, the whistleblower may be awarded a portion of the settlements recovered, typically between 15 to 25% for the risks & efforts involved.

 
Some of the big pharma names mentioned from page 18 of the report are: Allergan (US$600 million); Novartis (US$422.5 million); AstraZeneca (US$520 million) & Pfizer (US$2.3 billion, page 82) topped the list of all times.  With so much risks involved, it’s interesting to see that high profile cases of healthcare frauds against the US federal government continues unabated. A few months ago, GSK was implicated in another high profile case & agreed to pay US$750 million for settlement , making the whistleblower, an ex-employee, instant multi-millionaire in the process. It’s not difficult to fathom the deterrent powers of the past cases, but similar cases keep cropping up, either it’s a reflection that US legal environment is more intolerant towards such practices; or whistleblowing in healthcare industries has become more fashionable; or it simply marks the profit vs. risk stakes such companies willing to endure in order to tap commercial gain & edge out their competitor, not least because US healthcare market has been & will remain as the world’s largest for many more years to come!

Meanwhile, it seems that ethics & legal framework in healthcare system are not in the exact good health as one might expect it to be!

Ng Cheng Tiang, PSS Past President