Seven of the Most Common Fraud Tactics in the Pharma Industry

Pharmaceutical fraud exists in many ways. Generally speaking, pharma fraud involves a party (or parties) within the pharmaceutical industry who illegally submit false claims to achieve financial gain from unnecessary services or programs. When individuals or organizations commit these crimes, they often force taxpayers to bear the burden of their wrongdoing

Spotting fraud can be complex as many organizations disguise their operations with false hopes that portray good intentions. In this article, we define seven of the most common fraudulent activities in the pharma industry and what to do if you suspect fraud in your organization.

Seven Common Pharma Fraud Tactics

Illegal Kickbacks to Patients and/or Referral Sources

  • One of the most common tactics used in the pharmaceutical industry is illegal kickbacks. Kickbacks are anything of value either directly or indirectly offered to a patient or physician that influences their medical decision to use a certain company or product. This action constitutes fraud because it undermines the ethics of our medical community.

Fraudulent Use of KOLs and Speaker Programs

  • According to IQVIA, Key Opinion Leaders (KOLs) are “physicians with a professional reputation for far-reaching and high-quality expertise. They are on the cutting edge and, as such, their opinions are highly regarded and their knowledge sought-after by their peers in the healthcare industry.” Fraud occurs when pharmaceutical companies compensate these KOLs based upon their own ability to make referrals for a specific drug or service. This tactic creates a false sense of security for the patient as they are led to believe reputable sources have backed the drug or treatment.

Independent Contractors

  • Often many pharmaceutical companies utilize professional medical consultants which are compensated on either a straight commission or a percentage of collections (1099). These financial arrangements depending on how they’re structured may violate the Anti-Kickback Statute. You will see these types of arrangements, not only in the pharmaceutical industry, but in the DME, genetic testing and laboratory services.

Patient Assistance Programs

  • One of the more devious tactics used in pharmaceutical fraud involves patient assistance programs (PAP). These programs are funded by pharmaceutical companies that have a self-serving interest in donating to the PAPs. These programs help pharmaceutical companies raise drug prices on the consumer by alleviating the co-pay responsibility of the patient. As drug prices rise the average patient is not capable of meeting the higher co-pays which triggers their enrollment in one of these PAP programs. Often these programs exist to funnel money through the foundations to pay for its own drugs. When this happens it violates the Anti-Kickback Statute.

Physician Buy-and-Bill Programs

  • According to the National Board of Prior Authorization Specialists, “Buy-and-bill is a process for physician offices to acquire medications that providers can administer in the office.” In order to induce a physician to purchase their drug, pharmaceutical companies will often offer steep discounts or “Free” samples to offset the cost of the drug. This practice may violate the Anti-Kickback Statute.

Best Price Fraud

  • According to the Electronic Code of Federal Regulations, best price refers to “the lowest price available from the manufacturer during the rebate period to any wholesaler, retailer, provider, health maintenance organization, nonprofit entity, or governmental entity in the United States in any pricing structure (including capitated payments), in the same quarter for which the AMP is computed.” Fraud occurs when the pharmaceutical manufacturer inflates the price reported to the government, which decreases the rebate amount.

Off-label Marketing of Drugs

  • Off-labeling refers to the practice of marketing drugs or treatments for uses other than those indicated by the Food and Drug Administration (FDA). This tactic constitutes fraud because consumers are led to believe that researchers have thoroughly tested the drugs they are taking to treat their specific condition.

Whistleblower law firms like DJO want to put an end to pharmaceutical fraud tactics that hurt consumers. DJO is comprised of a highly experienced team of whistleblower experts, lawyers, and even former whistleblowers, who strive to deliver the highest monetary reward for brave individuals who have valuable information that can bring fraud to light.

If a whistleblower’s lawsuit is successful, the reward can be between 15% to 25% of the funds recovered. The False Claims Act also offers whistleblowers protection against job retaliation.

DJO will be there every step of the way to ensure you are safe and your information is confidential so you will have confidence knowing you’re doing the right thing. If you have valuable information that can help expose fraud, we encourage you to speak to our experts today.


Speak Out: How You Can Play a Role in Eliminating Pharmaceutical Fraud

As much as we try to protect consumers, unfortunately, pharmaceutical fraud continues to affect millions of individuals every year. Pharma companies, doctors, and drug representatives can misuse their positions. Areas of concern include illegal kickbacks, off-labeling, and even fraudulent genetic testing intended to scam seniors into agreeing to unnecessary medical procedures. The players in these schemes reap the benefits of the misused insurance funds and use the profits to strengthen their illegal operations to target more vulnerable populations.

The best way to battle fraud is to expose where it is occurring and the individuals perpetrating the offenses. But the decision to blow the whistle is never easy. It requires careful determination and the right legal team to enact positive change. But where do you begin? If you suspect pharma fraud is occurring, here is a helpful step-by-step guide to reporting the activity.

Step 1: How to Spot Pharma Fraud

Pharma fraudsters work so quickly and frequently that many of us may experience it or become victims of it without even knowing. Some telltale signs of pharma fraud in your organization can be: doctors or pharmacists receiving compensation for utilizing certain specialty providers; marketing drugs or treatments for uses other than those indicated by the Food and Drug Administration (FDA), and pushing patients into assistance programs funded by self-serving pharmaceutical companies.

Fraudulent activity can also exist if your organization instructs employees to make unexpected phone calls and emails to ask consumers for sensitive or personal information. It’s important to remember that if you’re ever unsure if something constitutes fraud, it never hurts to reach out to us. You can have confidence and peace of mind knowing your information is confidential.

Step 2: Document Everything

If you suspect pharma fraud or have seen signs that indicate fraudulent activity, the next step is to gather information. The information you provide will help your legal team build a stronger case. Here are just a few items to consider when documenting data and information:

  • Names of important players: doctors, pharmaceutical representatives, lab facilities
  • Names of drugs or treatments being off-labeled, marketed, abused, or misused
  • Any websites, phone numbers, or cell phone data associated with the fraudulent activity
  • Copies of documents used to record and solicit information
  • Knowledge or evidence of false medicare claims
  • Nature of any kickbacks exchanged: how were the parties compensated
  • Knowledge of lead generation/targeting practices
  • Failure of medical facilities to uphold patient care

The signs of pharma fraud can be varied and tailored to fit specific drugs, treatments, or illegal goals. You can explore more examples of allegations and how to report fraud on our website. It’s essential to gather information carefully.

Step 3: Who to Contact

With the information you collected, reach out for help. Search for available resources and partners to best expose the fraud. If you have coworkers who also suspect or have witnessed the alleged fraud, be sure to include them in the discussion. Whistleblower law firms like DJO want to make sure you feel safe as we partner together to expose and eliminate pharmaceutical fraud.

Whistleblowing is a heroic action that can stop pharma fraud in its tracks. Whether your knowledge of fraudulent activity is minimal or heavily exposed, DJO will be there every step of the way to ensure you are safe and your information is confidential. You will have confidence knowing you’re doing the right thing. Plus, if your tip leads to a settlement, you can be eligible to receive a substantial reward for your information. If you’re ready to take the next step, contact us today.