Morgan & Morgan
Before a pharmaceutical or biotech company can sell a drug in the United States, the drug must be submitted to specific clinical trials and must clearly and objectively report the results to the Food and Drug Administration (FDA). A pharmaceutical company must prove to the FDA’s satisfaction that the new drug candidate is safe and effective. Even after approval of a drug by the FDA, a pharmaceutical company must report all information and data in its possession that may negatively impact a drug’s safety and efficacy profile.
In the past decade, many securities fraud cases have been brought against pharmaceutical companies and biotech companies when the public has become aware that a pharmaceutical company failed to disclose to the FDA negative information or even incomplete information relating to clinical trials of drug candidates. Each new drug can be worth billions of dollars in profit to a pharmaceutical company so at times the stock price of the pharmaceutical company can decrease dramatically once the disclosure is made public.
Pharmaceutical insiders – scientists, mathematicians, or any employee with original information- can now serve as whistleblowers and anonymously report a pharmaceutical company to the SEC for that company’s improper disclosure of data and information relating to drug candidates when in clinical trials or even after FDA approval.
When the FDA approves a drug, it approves the drug only for the particular use for which it was tested. The FDA does not regulate how a physician prescribes a drug after the drug has been approved for a specific and intended use. It is common then for a physician to prescribe a drug for a use not intended, and this is called a drug's “off-label” use.
While it is perfectly acceptable for a doctor to prescribe drugs for off-label use, the FDA prohibits drug manufacturers from marketing or promoting a drug for a use that the FDA has not approved. This is known as “off-label marketing”. To bring it together then, when a pharmaceutical company engages in illegal off-label marketing in an effort to increase off-label uses for that drug, and the cost of that drug is then billed to Medicaid or Medicare, that pharmaceutical company has engaged in fraud upon the federal government. Whistleblowers have ranged from pharmaceutical salespeople, to other insiders and even to third party doctors.
A large growth area for pharmaceutical companies is emerging markets such as China, Russia, India, and Brazil. Government health programs in such countries often control prescription drug prices and decide which brands they will buy to treat their millions of patients. Under the Foreign Corrupt Practices Act, it is illegal for pharmaceutical companies to bribe foreign officials to win these lucrative pharmaceutical contracts. Recent disclosures from pharmaceutical companies indicate that the federal government is taking a closer look at how pharmaceutical companies have acted in pursuit of these large contracts from emerging markets.
A pharmaceutical insider – or a third party with original information- can become a whistleblower by reporting inappropriate conduct on the part of pharmaceutical companies when competing for these lucrative foreign contracts.