Jane McCredie: Getting away with fraud

WHEN the COX–2 inhibitor rofecoxib (Vioxx) was withdrawn from the market in 2004, the focus of doctors and the media was — understandably — on the cardiovascular risk for patients who took the drug.

As a journalist covering the story at the time, I never considered that allegations that the manufacturer had downplayed the drug’s potential dangers to patients also raised questions about the potential misuse of public money.

Hypothetically, if doctors prescribe a drug listed on the Pharmaceutical Benefits Schedule (PBS) based on false claims about its safety or efficacy, this not only puts patients at risk but could also be seen as defrauding the public purse.

Yet, while patients who suffer harm are often eager to sue pharmaceutical companies for damages, large-scale prosecutions for fraud are a rare occurrence in our health system.

While doctors accused of overservicing under Medicare rules may face action over the relatively small sums involved, corporate giants who transgress tend to remain unscathed.

Legal experts writing in this week’s MJA are calling for the introduction of American-style anti-fraud laws to bolster actions against companies that act fraudulently by, for example, illegally marketing off-label uses of a drug or making false claims about safety and efficacy.

In the US, such laws have proved very cost-effective for government, allowing it to claim treble damages — three times what the court would normally award — from offenders, with actions against some companies totalling in the hundreds of millions of dollars.

Crucially, the laws also provide protection and financial reward to industry insiders who blow the whistle on fraudulent behaviour.

Whistleblowing is a rare phenomenon in Australian health care where, the MJA authors say, “it is not encouraged, rewarded or adequately protected”.

In the US, where whistleblowers may be entitled to receive a 15–30% share of any funds recovered by the government, prosecutions often rely on the insider information they provide.

If you’re wondering whether the Australian taxpayer would stand to benefit from an equally tough regime here, it’s worth noting that the American arms of seven out of the eight market-leading pharmaceutical companies (and PBS suppliers) in Australia have faced actions under the US laws.

Our PBS is a precious and, by world standards, generous mechanism for ensuring people have access to the medications they need at an affordable price.

It’s also extremely expensive.

If we want it to remain sustainable, we need to have a legal framework that allows us to take effective action against any organisation or person who would seek to manipulate it for their own ends.

Jane McCredie is a Sydney-based science and medicine writer.

Posted 2 May 2011