What is Pharmaceutical Fraud?

Drug Manufacturers

Fraud can occur during clinical trials, FDA applications, or through improper marketing targeting off-label uses, vulnerable populations, or high-volume prescribers.

Contract Research Organizations (CROs)

CROs conducting clinical trials for pharmaceutical companies may manipulate data, fail to obtain proper consent, or underreport serious side effects.

Distributors and Pharmacies

Large distributors and retail chains have been implicated in pricing fraud, illegal discount schemes, and opioid diversion scandals.

Pharmacy Benefit Managers (PBMs)

PBMs may engage in spread pricing, undisclosed rebates, or formulary manipulation to inflate drug prices and defraud government programs.

False Marketing and Promotion

• Off-label promotion: Marketing drugs for unapproved uses
• Misleading claims: Exaggerating benefits or concealing risks
• Ghostwriting: Publishing biased studies under independent names

Kickbacks and Unlawful Incentives

• Payments to prescribers to encourage prescriptions
• Free samples or perks tied to increased drug sales
• Sham consulting or research payments masking promotional influence

Clinical and Regulatory Misconduct

• Falsified trial data to secure FDA approval
• Failure to report adverse events as required
• Omitting key information from New Drug Applications (NDAs) or Abbreviated NDAs

Price Manipulation and Reimbursement Fraud

• Overcharging Medicare or Medicaid
• Manipulating Average Wholesale Price (AWP) data
• Violating Medicaid Best Price rules through dual pricing

False Claims Act (FCA)

The FCA is the primary law for prosecuting fraud against federal healthcare programs. Whistleblowers can sue on the government’s behalf and may share in any recovery.

Scope: Applies to fraudulent claims made to programs like Medicare, Medicaid, TRICARE, and the VA

Reward: Whistleblowers may receive 15%–30% of the recovery

Protection: Prohibits retaliation and offers legal remedies

Food, Drug, and Cosmetic Act (FDCA)

Regulates drug approval, labeling, manufacturing, and marketing. FDCA violations such as false marketing or unsafe drugs often lead to FCA liability.

Anti-Kickback Statute (AKS)

Prohibits offering or receiving anything of value in exchange for referrals for services or drugs reimbursed by federal programs. Violations can trigger FCA actions.

SEC Whistleblower Program

Publicly traded pharmaceutical companies engaging in false investor disclosures or hiding legal risks may be subject to SEC whistleblower reports.