Whistleblower Protection Blog : Whistleblower Lawyer & Attorney : National Whistleblower Legal Defense and Education Fund : Whistleblower Protection, Fraud Claims : Washington DC

Kathleen Sharp's book about pharmaceutical whistleblower Mark Duxbury will be released in paperback on September 1, 2012. It is Blood Medicine: Blowing the Whistle on One of the Deadliest Prescription Drugs Ever. I had the pleasure of interviewing journalist Kathleen Sharp on November 15, 2011.  You can listen to the archive of that interview here.

Mark Duxbury was a star salesman for a subsidiary of Johnson & Johnson. He was selling Procrit. Procrit is a type of erythropoietin, which is also called EPO. Following management direction, he convinced doctors that prescribing high doses would help cancer and dialysis patients. At the time, Johnson & Johnson was engaged in a bitter turf battle with competitor Amgen. Procrit became Johnson & Johnson's top selling drug. The U.S. government was paying more for EPO than it was for any other class of medications. Duxbury and a co-worker, Dean McClennan, became concerned about the reports of patients dying while taking Procrit. They insisted that their employer respond to this safety concern, and refrain from illegal marketing tactics. This issue cost him his job. By 2007, the dangers of Procrit became public, but not before too many Americans had died.

Duxbury and McClennan filed a whistleblower claim under the False Claims Act (FCA). Duxbury died before the litigation could be completed. Sharp (pictured) examines how a big pharmaceutical company can push its drugs through doctors and into patients' veins before any of them are aware of the true risks. Sharp explains how federal regulators facilitated the pharmaceutical companies and reacted slowly to the reports of adverse reactions. Even today, EPO is on the market, albeit with enhanced "black box" warnings.

Sharp also makes Duxbury's ordeal come to life. Much as attorney Steven Berk explained here, the recoveries of qui tam whistleblowers are rarely reported with the details of the suffering they endured for the public's benefit. In Blood Medicine, Sharp does report the details, in a flowing narrative that makes for an easy read of such a hard story.

Blood Medicine is an important story for whistleblowers, taxpayers and patients. We are indebted to Kathleen Sharp for her thorough research and insightful writing.

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Whistleblowers have succeeded in a $1.5 billion off-label marketing case against Abbott Laboratories Inc., the Department of Justice announced today. Combined, the $700 million criminal fines and $800 million civil fines are the second largest government recovery from a drug company in history.

The Department of Justice intervened after four whistleblowers filed suit against the company. These plaintiffs provided original information to prove that Abbott marketed a drug called Depakote for controlling agitation and aggression in elderly dementia patients and to treat schizophrenia. However, the FDA had never approved Depakote for either use, and Abbott-sponsored studies showed that the drug was both ineffective in these areas and also potentially dangerous. 

“Not only did Abbott engage in off-label promotion, but it targeted elderly dementia patients and downplayed the risks apparent from its own clinical studies,” said Acting Associate Attorney General Tony West. “As this criminal and civil resolution demonstrates, those who put profits ahead of patients will pay a hefty price.”

The fines from these suits are hefty, indeed. Government recoveries are three times the amount of the fraud. Since many crimes are never discovered, though, companies still see an incentive to commit fraud. The Department of Justice's visible and successful cooperation with whistleblowers will force companies to reevaluate their cost-benefit analyses. It is clear, then, that this $1.5 billion settlement is a win for accountability and a win for American health and safety.

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On May 25, 2011, the Department of Labor's Administrative Review Board (ARB) issued a major decision in favor of whistleblowers. In Sylvester v. Parexel International, ARB Case No. 07-123 (ARB May 25, 2011), the ARB held that a whistleblower only needs a "reasonable belief" of a violation to engage in protected activity under the 2002 Sarbanes-Oxley Act (SOX). The ARB makes clear that a whistleblower does not have to wait for a violation to actually happen, and need not inform management of the basis of that reasonable belief. Indeed, since SOX prohibits companies from violating rules of the Securities and Exchange Commission (SEC), a whistleblower can have a reasonable belief about a violation that has nothing to do with any fraud against shareholders. The ARB also rejects the idea that a SOX violation has to be "material" to form the basis of a whistleblower's "reasonable belief." The ARB has also freed whistleblowers of the unnecessary hurdle of "pleading" their claims under the high "Iqbal" standard.

The Sylvester decision is a significant departure from the decision of the prior administration. All those decisions that required protected activity to "definitively and specifically" implicate a violation of law are now out-of-date. Indeed, in separate concurring opinions, three of the four ARB judges specifically rejected the "definitively and specifically" standard since it is not in the statute.

When considered together with Brown v. Lockheed Martin Corp, ARB No. 10-050, ALJ No. 2008-SOX-49 (ARB Feb. 28, 2011) (no fraud against shareholders need be shown), and Johnson v. Siemens Building Technologies, Inc., ARB Case No. 08-032 (ARB Mar. 31, 2011) (SOX covers the employees of subsidiaries), the Sylvester decision marks a decided turn in favor of recognizing whistleblowers as servants of the public purpose and deserving of strong protection. The ARB is clearing away the hurdles that made SOX so difficult for whistleblowers during its first eight years.

Pictured above are Stephen M. Kohn, Kathy Sylvester and her attorney E. Patrick McDermott. Stephen Kohn co-wrote amicus briefs with me on behalf of the National Whistleblowers Center and Douglas Evans. Congratulations to Kathy Sylvester, her co-complainant Theresa Neuschafer, and their attorney, Patrick McDermott of Annopolis, Maryland. They have helped breath new life into SOX on behalf of future generations of whistleblowers.

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Today the Department of Labor's Administrative Review Board (ARB) held its first oral argument in a case under the Sarbanes-Oxley Act (SOX). Last November, the ARB gave notice of today's oral argument, and invited interested groups to submit friend-of-the-court (or "amicus") briefs. The ARB asked the parties to address issues of how specific OSHA complaints have to be, whether Administrative Law Judges (ALJs) can grant motions to dismiss on the pleadings, and the nature of protected activity under SOX. A prior blog post covered the amicus briefs, including the briefs of the National Whistleblowers Center and Doug Evans. Pictured here are ARB Board Members Luis Corchado, Paul Igasaki (Chair), E. Cooper Brown (Vice-Chair) and Joanne Royce.

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Today, President Obama signed the FDA Food Safety Modernization Act (H.R. 2571), which contains landmark whistleblower protections for food safety employees.

Highlights of the Food Safety Whistleblower Provision:

•   Covers all employers "engaged in the manufacture, processing, packing, transportation, distribution, reception, holding or importation of food;"
• Allows workers have their case heard before a jury in federal court;
• Provides for reinstatement, back pay and compensatory damages.

I issued the following statement in a press release by the National Whistleblowers Center:

The Food Safety Modernization Act (FSMA) will save American lives by protecting the millions of American workers who grow, process, store and deliver our food. Those workers now have modern whistleblower protections when they raise concerns about the safety of our food.

It is important for working people to know that all legal claims have time limits. The time limit under FMSA to file a written complaint with OSHA is 180 days. For raising concerns about toxic chemicals, though, the time limit is still 30 days. Whistleblowers usually get better results when they work with an attorney experienced in employment discrimination law.

The FMSA fills an important loophole left by the Consumer Product Safety Improvement Act (CPSIA) in 2008. CPSIA does not cover food or medical devices. FMSA is the first law to provide whistleblower protections for workers covered by regulations of the Food and Drug Administration (FDA). While tainted food kills about 5,000 Americans a year, medications may kill as many as 100,000 Americans every year. Yet Congress has not extended whistleblower coverage to workers who raise concerns about violations of the FDA's pharmaceutical regulations.

It is time to end the patchwork protection of whistleblowers and pass a law that protects all workers when they raise concerns about health, safety, fraud, illegality, and dangers to the environment.

 Jason Zuckerman has written an excellent guide to the FSMA whistleblower protection. I previously commented on the FSMA and its place in our patchwork in this blog.

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David J. Graham, M.D., M.P.H., is a drug safety whistleblower working at the Food and Drug Administration (FDA). On November 18, 2004, Dr. Graham testified before the U.S. Senate Committee on Finance about Merck's withdrawal of the popular anti-inflammatory drug Vioxx. He testified that FDA policies could not protect the public from drugs with unacceptable risks. "I would argue that the FDA, as currently configured, is incapable of protecting America against another Vioxx. We are virtually defenseless." His words ring prophetic today as the FDA's Joint Meeting of the Endocrinologic and Metabolic Drugs Advisory Committee and the Drug Safety and Risk Management Advisory Committee convenes at the Hilton Hotel in Gaithersburg, Maryland. Dr. Graham is scheduled to speak at 3:00 pm today on "Risk of Acute Myocardial Infarction, Stroke, Heart Failure, and Death in Elderly Medicare Patients Treated with Rosiglitazone [Avandia] or Pioglitazone." Dr. Graham and one of his FDA colleagues, Kate Gelperin, have previously called for the popular diabetes drug Avandia to be pulled from the market. Their study of the drug found possible evidence of an increased incidence of mortality.

Dr. Graham's research has helped protect the public from other unsafe drugs, including Omniflox an antibiotic, Rezulin, a diabetes treatment, Fen-Phen and Redux, weight-loss drugs, and phenylpropanolamine, an over-the-counter decongestant, Lotronex, Baycol, Seldane, and Propulsid.

A story in today's New York Times discloses that Avandia's maker, GlaxoSmithKline, knew about Avandia's heart attack dangers since 1999. Coincidentally, the Los Angeles Times is reporting today that GlaxoSmithKline ill pay $460 million to settle claims by Avandia victims. The LA Times reports that this is good news as the market had anticipated that the company would suffer $6 billion in losses from Avandia. Troy Media is reporting today VIOXX caused 140,000 heart attacks that killed 60,000 people. It adds:

[F]ormer FDA medical reviewer Dr. David B. Ross stated, “industry has become FDA’s client. People at FDA know that they have to be careful about upsetting industry” and that “even if a product doesn’t work, . . . there is pressure on managers that gets transmitted down to reviewers to find some way of approving it.” Former FDA medical reviewer Dr. Robert L. Misbin, now deceased, likewise observed: “One of my superiors said something . . . I have never forgotten, that we have to maintain good relations with the drug companies because they are our customers.” In each case, these career government scientists spoke out, aware that doing so invited agency retaliation; FDA has a long, sordid history of retaliating against whistle-blowers.

I must wonder if Avandia really is another VIOXX. I would hope that another 60,000 deaths would be enough to get the U.S. Senate to pass meaningful protections for federal employee whistleblowers.

By the way, I have now learned that Dr. Misbin is not deceased. Troy Media erred both in reporting that his is "former FDA" and "now deceased."  I received an email from him that you can read in the comments to this blog entry.

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Sen. Charles Grassley today released copies of his letters to 16 big pharmaceutical companies about their whistleblower policies. Bloomberg news service is also reporting on these inquiries. The letters review Sen. Grassley's efforts to strengthen the False Claims Act (FCA), and ask what the companies are doing to inform employees about the FCA, and then to protect employees who come forward with information about frauds. Sen. Grassley notes that since the 1986 amendments, the government has recovered $22 billion that had been obtained by fraud. He notes that Section 6032 of the Deficit Reduction Act (DRA) required contractors receiving over $5 million a year to issue written policies to employees about their rights under the FCA. The Bush administration then determined that this Section 6032 did not apply to pharmaceutical companies.  Sen. Grassley disagrees, but still wants to know if the 16 biggest pharmaceutical companies nevertheless have the policies that would be required by Section 6032. Of the $22 billion recovered, Pfizer paid $2.3 billion in one settlement. Pfizer's Chris Lodertold Bloomberg that it is responding to the letter and “shares the senator’s desire to detect and report any false claims that may lead to unnecessary costs to our health-care system.” Pfizer, he said, has invested “substantial resources” to “create a compliance program that consists of mandatory training for every one of our employees, proactive monitoring and surveillance, and strict enforcement of all federal and state health-care laws.” I wonder if Pfizer is more highly motivated since it paid that $2.3 billion.  Sen. Grassley letters are available in the continuation of this blog entry

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The Maryland Senate yesterday passed a state version of the False Claims Act (FCA) by a vote of 37 in favor and 8 against. Before passing this bill, however, the Senate watered it down with an amendment. The Maryland False Health Claims Act of 2010, SB 279, as amended, no longer allows the state (or a whistleblower acting on behalf of the state) to obtain compensatory damages. The amendment also requires a court to dismiss the action if the State of Maryland declines to intervene. The Senate's amendment also waters down the provision for attorney fees. It now provides that attorney's fees and costs "may" be allowed by the court, and that the court must consider the amount of penalties and damages recovered. This last provision is contrary to prevailing law that calls on courts to award attorney fees based on market rates, without regard to any proportionality to the amount of recovery. The Senate's bill also allows courts to reduce the amount of the whistleblower's recovery if the court finds that the whistleblower participated in the violation. A more enlightened view would have barred recovery only if the person caused the violation through actions other than following orders of a superior. Also, I mentioned before that Maryland could gain even more if this bill covered all frauds, and not just those arising in medical care programs. Perhaps the Maryland House will consider these shortcomings when its Judiciary and Appropriations committee conducts the bill at its first hearing on April 1. The Senate bill does include an anti-retaliation provision, Section 2-607, that would allow employees to sue if they suffer retaliation for participating in a lawsuit, objecting to a violation, or refusing to participate in a violation. According to a Baltimore Sun article, the state administration estimates that between 5 and 10 percent of the state's $6 billion in annual medical spending is lost in fraudulent claims. The article quotes a spokesperson for the hospital association as saying that the amendment would cost the state the extra 10% it would receive from federal false claims lawsuits in the state. This refers to the Grassley Amendment to the federal FCA which increases a state's share if the state's law meets certain minimum requirements.  Apparently, making hospital administrators happy is more important to Maryland's Senators than protecting taxpayer dollars.

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The United States Government, along with the governments of 15 states and the District of Columbia, have joined with two whistleblowers who allege that drug manufacturer Wyeth bilked US taxpayers out of hundreds of millions of dollars. As reported in the Wall Street Journal and the FierceHealthcare website, Wyeth is accused of overcharging Medicare and Medicaid programs nationwide for purchases of it's acid-reflux drug Protonix. Under federal law, drug companies are required to offer prescriptions to federal aid programs at the lowest possible price. Wyeth, however, the suit alleges, was offering Protonix at a 90% discount to private hospitals, while charging the federal government much higher rates.

The lawsuit was filed under the False Claims Act, which has its roots in the civil war era, and remains  the United States' most powerful tool for rooting out fraudulent government contracts. President Obama's administration has recently expressed its support for strengthening the law, and legislation to do so is currently pending in Congress.

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I would like to take this opportunity to remind everyone that the False Claims Act is supposed to be a Whistleblower law. Something is strange when there's a 670 Million Dollar settlement under this law and it’s actually pretty hard to find out what happened. (The only reports I could find were in the Corporate Crime Reporter and a paragraph five mention in this Associated Press article)


There's a lot of good news in the fact that Merck had to pay this money, but we'll have to wait for all the details because it seems many of the documents are still under seal. False Claims Act Plaintiffs always have a hard time adjusting to the idea that they have to keep their mouths shut to let the Government investigate their claims. In this case, the Government should be congratulated - they got a huge result. Yet one of the points of the law is to deter the type of behavior Merck engaged in, and it's hard to see how keeping the results quiet does that.


We were able to find one court document, the Complaint filed in Nevada under that State's False Claims Act. If that complaint can be believed, and there are 670 million reasons to give it credibility, Merck went about "increasing market share" as they call it, pretty much the way a drug pusher does. Only drug pushers don't get the US taxpayer to underwrite sales.


The complaint filed in Nevada district court outlines a scheme to defraud the taxpayer. Merck essentially gave away their drugs, drugs for chronic conditions, to hospitals so that patients would be dependent on the prescription when they left the hospital. Then Merck charged higher prices when the patient left. Only problem is that by discounting drug away earlier they were supposed to report that as the new price of the drug and re-imburse the government accordingly. Ooops. You can't say the pill is 10 cents in the hospital but costs 2 dollars when the patient leaves and get two dollars per pill from the government which pays the bills each time.


In a special irony, one of the drugs whose "market share" this scheme Improved was Vioxx. So now Merck has more Vioxx liability for that drug's cardiac problems than if they marketed the drug legally. That would almost be funny if it didn't put so many patients' lives at risks.


Anyway, the US Department of Justice is to be congratulated for winning such a huge settlement. The Lawyers who won the case and certainly the Plaintiff who brought it have all earned their reward. I just wish that instead of keeping everything quiet everybody would do a little more bragging. Get all the documents out of seal and tell the world that the False Claims Act works to recover funds stolen from the government even in complex schemes. Let's encourage the whistlebowers to report fraud as the False Claims Act was enacted to do. When you win $670 Million, its time to tell the world.

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