Tag Archives: consumer product

Whistleblower Claims – Corporate Land Mines

From that delicate balance between preserving the public good and the right of private action has emerged that most persuasive, and potent, moderator – the whistleblower claim.  In our laws, the purpose of whistleblower provisions has been to enable employees, representatives and even business partners to report behavior that has harmed or could potentially cause harm to the interests of the government or the public it serves.  The underlying rationale is that reporting this behavior removes the potential harm,  punishes the offenders and makes an example of their behavior as a deterrent against future bad acts, therefore “blowing the whistle” should be encouraged and the person or persons who do it should be rewarded.  Over the years, several well-recognized statutory programs based on federal law have included whistleblower provisions. These include the Occupational Health and Safety Act, the Internal Revenue Service Code and the Fair Labor Standards Act.  State laws are also armed to respond to whistleblower complaints.

For example, a $327 million judgment against drugmaker, Johnson & Johnson, under the South Carolina Unfair Trade Practices Act was just reported to have been upheld.  A whistleblower claim triggered this case, which has so far led to lawsuits by multiple states alleging that their Medicare and Medicaid programs have been defrauded.  The South Carolina  fine was calculated by assessing $4,000 for every “Dear Doctor” letter the company sent to physicians claiming that the drug was better than the competition and $300 for every sample it gave away to healthcare professionals.

But it’s not just big pharmaceutical companies that have been caught in the dragnet of a whistleblower complaint.  In the healthcare arena, the threat is very real for distributors of durable medical equipment and for physicians, physician assistants and nurse practitioners who participate in treating patients and reporting the services provided.  Outside of healthcare, recent whistleblower claims were filed by Alcohol, Tobacco and Firearms (ATF) agents (click link for story), to report violations of the Occupational Health and Safety Act, the Internal Revenue Service Code and the Fair Labor Standards Act.

Here are some useful tips for handling whistleblower scenarios.  For employers:

  • Develop and communicate a procedure for reporting potential compliance violations that is confidential, responsive and can be accessed by employees outside the regular chain of command. Maintain confidentiality as much as possible, and inform the employee of the outcome of your investigation.
  • Carefully address any complaints raised by employees that involve potential violations of federal or state law, and document the resolution.
  • Often, companies do not know the identity of the whistleblower until the indictment as been unsealed.  Even if you receive this information, do not take any personnel action against an employee or business partner because they filed a whistleblower complaint.

For employees:

  • If possible, discuss your concerns with your managers, or if you feel uncomfortable about doing so, with your company’s compliance officer.
  • Continue to observe the rules and requirements of which you are aware while the investigation is progressing, and to do your job.
  • You may choose not to raise the issue internally and report it directly to the government, usually with the assistance of a qui tam lawyer. Supporting facts are very important to substantiate a whistleblower complaint, so be prepared to present information that would adequately support your case in court.

Federal and state whistleblower cases may request civil and/or criminal penalties and often disqualify companies or persons found guilty from participating in government fee-for-service or procurement programs.  The fines are usually high and are a significant source of revenue for cash-strapped government agencies as well.   The number of these cases, especially in the healthcare field, has been increasing and the trend is expected to continue.

Additional links: http://www.whistleblowers.gov/, http://bit.ly/sxFL6V , http://www.irs.gov/compliance/article/0,,id=180171,00.html,

Baxam Law Group, LLC advises clients on business, intellectual property and healthcare law matters. Visit us on FacebookFollow us on Twitter.

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Pfizer Takes Supplements

Pfizer®, that pharmaceutical behemoth of the late 20th century, announced today it is buying the consumer products business of Ferrosan, a Danish supplement maker.  The deal price was not disclosed, but according to Yahoo Finance, Ferrosan said its 2010 earnings were about $55 million.  That is small pickings for a company of Pfizer’s size, but it is yet another trickle in the shifting tides of big pharma’s business focus.  

Truly novel blockbuster drugs are few these days.  One could speculate ad nauseum on the reasons for this, but one possible cause is that the companies who invest money in bringing drugs to market don’t want to risk big money on unproven chemical entities and metabolic pathways that might also be a challenge to cautious regulatory reviewers like those at the FDA.  The results of this very conservative approach from the industry (and from the government)are drugs that for the most part improve upon or modify some known molecular structure or sequence that has shown some success in the past.  It is good business investment for the drug companies, but not so much for the consumers who need “disease preventers” instead of palliative treatments, and for those who are already sick and need a new therapeutic approach instead of a variation of the tried and true.

There is a new wave coming, and in my opinion big cures will be coming from natural products and botanicals in the early part of this century, so this is a good move on Pfizer’s part.  It’s good for consumers too, because big drug companies have the cash to do the studies that would support approval of natural products and botanical therapies, even by the most conservative of regulatory systems.  Let’s hope we see more moves like this. 

Read Pfizer’s press release

Other new product prototypes to watch include Dendreon’s Provenge® immunotherapy treatment for advanced prostate cancer.