Pfizer lobbies to thwart fraud whistleblowers
Pfizer and others Big drug companies are pushing to block legislation that would make it easier for whistleblowers to hold companies accountable for corporate fraud.
Amid a dizzying legislative environment, with great attention to the Build Back Better debate, major corporations including Pfizer are fighting an update to the war-era False Claims Act civil law that rewards whistleblowers for filing anti-fraud suits against contractors on behalf of the government.
The law has historically returned $ 67 billion to the government, with whistleblowers successfully helping uncover the wrongdoing of military contractors, banks and drug companies.
The law has been particularly difficult for Pfizer. In 2009, Pfizer paid $ 2.3 billion in criminal and civil fines to settle allegations that the company illegally marketed several drugs for non-compliant purposes that were not specifically approved by the Food and Drug Administration. The company asked its marketing team to advertise Bextra, which has only been approved for arthritis and menstrual cramps, for acute pain issues and for surgery. The False Claims Act lawsuit, brought by the actions of six whistleblowers, resulted in one of the largest healthcare fraud settlements in history.
But the law today presents much less risk for companies engaged in criminal behavior. This is because anti-fraud law has been severely hampered by a series of Federal Court decisions that have dramatically broadened the scope of what is known as “materiality.” In 2016, the Supreme Court ruled in Universal Health Services v. United States ex rel. Escobar that a fraud lawsuit could be dismissed if the government continued to pay the contractor.
The court ruled that if the government continues to pay a company despite fraudulent activity, then the fraud is not “important” to the contract. The move neutralized the application of the False Claims Act against many companies that are so large that the government cannot abruptly halt payments, especially against big interests in health care and defense contractors.
Recent court rulings, including cases involving Honeywell and Halliburton, show that contractors are winning the dismissal of fraud cases by simply citing “ongoing government payments.” Last year, a federal district court dismissed a False Claims Act case against engineering firm Aecom brought by a whistleblower alleging widespread billing fraud for a $ 2 billion contract in Afghanistan. Aecom lawyers also cited the government’s ongoing payments to the company. The trial is now on appeal.
In addition, the federal government has played an active role in deterring cases. In 2018, the Trump administration’s Justice Department released the “Granston Memo,” which encouraged the dismissal of more whistleblower lawsuits under the False Representation Act.
In October, Attorney General Merrick Garland formally repealed the “too restrictive” memo, a move widely seen as designed to promote greater enforcement of the False Claims Act.
Erosion of the law has assembled a bipartisan push, led by Sen. Chuck Grassley, R-Iowa, to update the law to offer whistleblowers greater protection against potential industry retaliation and make it harder for businesses accused of fraud dismissing cases on procedural grounds.
Earlier this year, while introducing the bill, Grassley went to the Senate to present images of scrapped multibillion-dollar Afghanistan war contracts and examples of fraud cases that have escaped liability due to the legal constraints imposed on the false claims law.
“The defendants get away with scalping taxpayers because some government bureaucrats have not done their job,” thundered the senator. “In my many years of investigating the Department of Defense, I’ve learned that a Pentagon bureaucrat is rarely motivated to admit fraud. This is because the money is not coming out of their pocket.
“A Pentagon bureaucrat is rarely motivated to admit fraud. This is because the money is not coming out of their pocket.
The legislation, the False Claims Amendments Act of 2021, adjusts the materiality standard to include cases in which the government has made payments despite knowledge of the fraud “if other reasons exist” to continue the contract. The bill also expands the law’s anti-retaliation protections, which currently only cover current employee whistleblowers of a company. The bill seeks to prevent an industry from blacklisting former whistleblowers looking for work.
This push has met with a wave of opposition from companies, some of which have been leaked and others hidden from public view. Pfizer hired Hazen Marshall, former policy director of Senate Minority Leader Mitch McConnell, R-Ky., To lobby on the issue, along with law firm Williams & Jensen, a powerhouse that employs a range of former members of Congress.
Pfizer, which has touted itself as a hero in the fight against Covid-19 and a trusted corporate citizen, did not respond to a request for comment.
During a first test vote, the bill was blocked. In August, Grassley proposed his False Claims Amendments Act as an amendment to the bipartisan Senate infrastructure agreement. The bill, however, never reached the floor for a vote due to an objection filed on behalf of Senate Democrats.
In October, the legislation once again found a hearing. Senator Tom Cotton, R-Ark. Tried to erase most of the bill at a Judiciary Committee meeting. The amendment proposed by Cotton was intended to remove all the substantive lines of the bill except for the first title, which is simply the description of the legislation. During the committee debate, Cotton argued that the Supreme Court “made the right decision” in the Escobar case and the “continuity of payment” standard for materiality. The legislation “could potentially increase healthcare costs,” the senator argued, echoing industry claims that litigation over the false claims law would force healthcare interests to increase costs. price.
The American Hospital Association reportedly lobbied to delay a vote, but the bill was eventually passed 15-7 by the Senate Judiciary Committee, with the support of Grassley and his main co-sponsor, Senator Patrick Leahy, D-Vt.
“This is a very concerted lobbying effort that has really surprised our supporters on Capitol Hill.”
“This is a very concerted lobbying effort that has really surprised our supporters on Capitol Hill,” said Stephen Kohn, whistleblower lawyer at the law firm Kohn, Kohn & Colapinto.
Many companies engaged in the lobbying struggle have chosen to conceal their efforts through undisclosed third-party groups such as the United States Chamber of Commerce, which made Bill Grassley one of its main targets of defeat. . The chamber does not disclose its members or the companies leading its advocacy, but previous reports suggest companies such as Halliburton, Lockheed Martin, and JPMorgan Chase, among others, have faced False Claims Act violations in the past. .
Other business groups – including the American Hospital Association, the Healthcare Leadership Council, the Pharmaceutical Research and Manufacturers of America, and the American Bankers Association – have lobbied against the bill without disclosing the companies that run their actions.
Known business interests lobbying Bill Grassley include Pfizer, Amgen, AstraZeneca, Merck, and Genentech. These companies have listed the lobbying disclosure legislation. All five have paid nine-figure settlements for healthcare fraud highlighted by the False Claims Act.
“Pharmaceutical companies are notorious for paying bribes, offering benefits in exchange for competitive advantage. Pharmaceuticals and healthcare companies account for around 80 percent of false claims[s] Acting on recoveries for a reason, ”Kohn said.
In the case of Pfizer’s settlement, whistleblowers accused the company of promoting Bextra for uses that were not approved by the FDA, putting patients at risk for heart attack and stroke. The company reportedly paid bribes to doctors for improper uses. The False Claims Act, like other “qui tam” laws, gives whistleblowers a portion of the money the government recovers from lawsuits.
“Pharmaceutical companies are notorious for paying bribes, offering benefits in exchange for competitive advantage.”
“The whole culture at Pfizer is driven by sales, and if you didn’t sell drugs illegally, you weren’t considered a team player,” said John Kopchinski, one of the whistleblowers at Pfizer, following the settlement.
The Grassley initiative is championed by a wide variety of government waste watch groups. Taxpayers Against Fraud, the National Whistleblower Center, the Project on Government Oversight, and the Government Accountability Project are among the groups formally supporting the update of the anti-fraud law.
But advocates have expressed confusion over the involvement of several other supposed taxpayer protection organizations. Citizens Against Government Waste and Americans for Tax Reform, two conservative groups that do not disclose donor information, have filed a letter to lawmakers urging them to vote against the Grassley measure.
Despite Citizens Against Government Waste’s official focus on tackling government waste, the very intent of the False Claims Act, the group’s lobbying arm argued in a letter that the bill was not appropriate. to be included in the infrastructure package because it is “not linked to traditional infrastructure. And the bill is not fully “understood by the 95 senators who did not co-sponsor” the legislation. Americans for Tax Reform also argued that the legislation had not “received a proper debate.”
Neither Citizens Against Government Waste nor Americans for Tax Reform responded to a request for comment on why they have lobbied so aggressively against taxpayer protection legislation and whether donor interests are involved.