Why Is Cancer Care So Expensive: Potential Implications of Fraud and Abuse

Abstract

AbstractAbstract 4275 Introduction:Annually, $82 billion to $272 billion is reportedly lost to federal health care fraud. Between 1996 and 2005, 379 federal health care fraud cases initiated by qui tam relators (“whistle blowers”) concluded, resulting in $9.3 billion in recoveries. Of these, pharmaceutical companies accounted for 13 cases (False Claims Act (FCA) cases, the primary statute invoked in health care fraud and abuse), but $3.9 billion of recoveries (4% of the cases and 39% of the financial recoveries). We report concluded FCA cases involving pharmaceutical manufacturers between 2006 and 2011. Oncology accounts for the largest per cent of total pharmaceutical expenditures. Over 90% of all new cancer pharmaceuticals cost > $20,000 for 12-weeks of treatment. Methods:Websites for the Department of Justice (DOJ), Taxpayers Against Fraud, Health and Human Services Inspector General's Office, Health Care Fraud and Abuse Control Project, and Lexis/Nexis were queried for pharmaceutical FCA cases (2006 to 2011). Results:Between 2006 and 2011, the DOJ closed 54 cases with pharmaceutical FCA violations, 38 with and 16 without qui tam relators, accounting for recoveries of $11.3 billion (mean $296 million) and $2.6 billion (mean, $165 million), respectively. Illegal marketing is the most common fraud allegations invoked against pharmaceutical manufacturers (19 cases). Pharmaceutical manufacturers accounted for 31% of total FCA cases, and 71.5% of total FCA recoveries (Table 1). Conclusion:Since the DOJ's shift of focus to pharmaceutical corporations in 2001, the trend has intensified, with virtually every large pharmaceutical corporation settling at least one FCA case. Pharmaceutical cases now account for 31% of the federal fraud cases and 71% of the financial recoveries. Fraud and abuse may be an important component of the high costs of cancer care in the United States. Moreover, unless fundamental changes occur, the pharmaceutical industry will continue to be the main FCA investigative target as this sector has the deepest pockets and is the health care sector most resistant to deterrence.Frequency of Enforcement Actions by Industry Type and Qui Tam Relator StatusQui Tam Relator CasesNon-Qui Tam Relator CasesIndustryNumber of Cases (%)Total Recoveries (million $, %)Mean Recoveries (million $)Number of Cases (%)Total Recoveries (million $, %)Mean Recoveries (million $)Pharmaceutical manufacturer38 (30.9%)11,259 (71.6%)29616 (30.8%)2636 (70.8%)165Health system9 (7.3%)1,385 (8.8%)1549 (17.3%)304 (8.2%)34Hospital20 (16.3%)716 (4.6%)3610 (19.2%)200 (5.4%)20Medical equipment company8 (6.5%)294 (1.9%)374 (7.7%)347 (9.3%)87Laboratroy services provider†3 (2.4%)363 (2.3%)1210 (0)0 (0)0Pharmacy or pharmacy chain5 (4.1%)152 (1.0%)303 (5.8%)81 (2.2%)27Home health care provider3 (2.4%)186 (1.2%)622 (3.8%)18 (0.5%)9Physician practice or individual physician group†10 (8.1%)149 (0.9%)150 (0)0 (0)0Billing company3 (2.4%)71 (0.5%)242 (3.8%)33 (0.9%)16Long-term care facility2 (1.6%)22 (0.1%)111 (1.9%)20 (0.5%)20Ambulance medical transportation company1 (0.8%)9 (0.1%)91 (1.9%)7 (0.2%)7Other health care related organization21 (17.1%)1,114 (7.1%)534 (7.7%)80 (2.1%)20Total123 (100%)15,720 (100%)12852 (100%)3,725 (100%)72*All cases include both qui tam relator cases and non-qui tam relator cases Disclosures:No relevant conflicts of interest to declare.