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Big Pharma Medicaid Fraud Penalties at Record High

Major pharmaceutical companies undeterred as profits continue to rise

Common Dreams staff

(Photo: ALAMY)

Settlements between pharmaceutical companies and state and federal governments over cases of Medicaid fraud are at an all time high, with financial penalties for major drug companies on the rise, according to a new report by Public Citizen. However, as Public Citizen urged Thursday, much still needs to be done in order to curb big pharma malpractice, as major profits still largely outweigh the costs of legal penalties, making it difficult to deter future violations.

The charges against major pharmaceutical companies accused of defrauding their Medicaid programs, include overcharging health programs, largely in the form of drug pricing fraud, as well as unlawful promotion of 'off-label' drugs (promoting drugs for unapproved uses).

2012 has already broken the record for financial penalties and court settlements against the pharmaceutical industry, with $6.6 billion recovered by mid-July.

The big pharma corporations associated with the largest penalties include GlaxoSmithKline, Johnson & Johnson and Abbott. These companies were responsible for two-thirds of the financial penalties paid out to the federal and state governments over the course of the study period. GlaxoSmithKline topped the list with $3.1 billion in settlements.

“It should come as no surprise that states facing Medicaid budget shortfalls are finally deciding to root out fraud that likely has cost their taxpayers billions of dollars over the years,” said Dr. Sammy Almashat, a researcher with Public Citizen’s Health Research Group and the study’s author. “What this new report unequivocally shows is that those states that have chosen to hold the pharmaceutical industry accountable have largely seen their enforcement efforts pay for themselves.”


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Since 1991, pharmaceutical companies have paid out $30 billion in settlements to the federal government and states.

However, according to Public Citizen, the penalties still pale in comparison to the companies' profits, which also continue to sky rocket, making it difficult to actually discourage future violations.

The seemingly undeterred pharmaceutical industry remains the biggest defrauder of the federal government.

"The fact that the fraud has continued unabated means that new legislation and more felony charges against drug company executives who oversee this fraudulent activity are urgently needed," urged Public Citizen on Thursday.

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