Pharmaceutical fraud encompasses a variety of illegal schemes utilized by pharmaceutical manufacturers, pharmacies, or other health care providers resulting in the submission of claims for reimbursement from government programs for drugs that are improperly manufactured, marketed, or priced.
As the world’s largest purchaser of prescription drugs under Medicare, Medicaid, the Veterans Administration, and other government healthcare programs, the United States government has a vested interest in ensuring that prescription drugs are safe and effective. Good Manufacturing Practices (GMP) regulations are already in place for public safety reasons, requiring that all prescription medications are manufactured in a way that meets FDA standards for safety, identity, strength, and purity under the Federal Food, Drug, and Cosmetic Act. While the FDA already enforces these standards, a pharmaceutical company that is aware of or is indifferent to GMP violations in the manufacturing of drugs purchased by the government may be held to have made a false claim under the False Claims Act.
The basis for holding a pharmaceutical company liable under the False Claims Act is that in knowingly covering up GMP violations in written records already required under GMP standards, the manufacturer has generated false records. These false GMP records are required for the government to purchase their drugs. Therefore, hiding GMP violations in those records resulted in the government paying a false claim when purchasing those drugs, resulting in pharmaceutical fraud.