Healthy Skepticism Library item: 19096

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: Electronic Source

Hobson K
It’s Time to Cap Whistleblower Payments, Former Prosecutor Says
The Wall Street Journal Blog 2011 Feb 3
http://blogs.wsj.com/health/2011/02/03/its-time-to-cap-whistleblower-payments-former-prosecutor-says/

Full text:

Blowing the whistle on drug-company shenanigans has never been more lucrative.

Just ask the former GlaxoSmithKline employee who in October was awarded a record $96 million for her role in exposing manufacturing problems at the pharma company. Other whistleblowers have collected tens of millions of dollars, and there have even been “serial” whistleblowers who have collected awards for blowing the whistle on more than one former employer. The Los Angeles Times recently reported on a small pharmacy that has made a specialty out of filing suit against drug companies that overcharge Medicare and Medicaid and collecting whistleblower payouts.

Michael Loucks, a former big-time health-care fraud prosecutor with the Massachusetts U.S. Attorney’s Office and now a partner at Skadden, Arps, Slate, Meagher & Flom, says it’s time to think about capping those awards.

When the False Claims Act was bolstered in 1986 to give whistleblowers up to a quarter of any monetary recoveries, “no one anticipated there would be recoveries in the hundreds of millions of dollars,” he tells the Health Blog. In a paper recently published in Health Care Fraud Report, Loucks calculates that from 14 settlements in two years, whistleblowers have taken home $650 million. (Before paying their attorneys, that is.)

In his article Loucks suggests a cap of $2 million, saying that an analysis of the data shows that “the potential for earning as ‘little’ as $400,000 has encouraged blowing the whistle.” (Should you think he changed his views when he switched to the defense side, he says he gave a speech advocating caps when he was still with the U.S. Attorney’s Office and has supported the change since about 2003.)

“The goal is not to create a payment so that no one ever has to work again, and it’s not to create a pool of money to pay for lawyers, it’s to encourage [people] to blow the whistle,” Loucks says. The money instead should go back to Medicare and Medicaid. He also says that to be eligible for a payout, whistleblowers should be required to have first gone through their employer’s corporate compliance program.

A special report by the New England Journal of Medicine last year would seem to shore up Loucks’s contention that folks would still blow the whistle even without the prospect of a big payout. The NEJM interviewed 26 pharma-company whistleblowers and none of them said that the possibility of financial reward was the motivating factor. They said instead they were driven by integrity, altruism or public safety concerns, a sense of justice and self-preservation. And despite walking away with between $100,000 and $42 million, “the prevailing sentiment was that the payoff had not been worth the personal cost,” the report found.