Citing a tiny Key West pharmacy as the top whistle-blower in the country, a national study released Tuesday showed that whistle-blowers are gaining billions of dollars for state and federal governments by exposing fraudulent practices in the pharmaceutical industry.
The study from Public Citizen, a Washington consumer watchdog group, reported that that so far in 2012, whistle-blowers have sparked $6.6 billion in penalties to be assessed against drug manufacturers, primarily for fraudulently charging high prices in the Medicaid program.
The Public Citizen report, which covered whistle-blower settlements of more than $1 million in the period from Nov. 2, 2010, through July 18, 2012, reported almost half of the actions came from Ven-A-Care, a Key West pharmacy owned by four men.
The study cited a CNBC report that Ven-A-Cares revelations had brought more than $1.3 billion to the federal government since 2001. Another report, from the National Law Journal in 2011, estimated that the pharmacy had helped both state and federal governments recover more than $2.5 billion.
The Law Journal estimated that the pharmacy owners and their lawyer received $340 million from the settlements as reward for blowing the whistle.
The Public Citizen report noted how important whistle-blowers had come during tight economic times. In an era of ever-tighter Medicaid budgets, many states have recovered just as much, if not more, money from this litigation as they spent on all Medicaid fraud enforcement.
It should come as no surprise that states facing Medicaid budget shortfalls are finally deciding to root out fraud that likely has cost their taxpayers billions of dollars over the years, Sammy Almashat, a Public Citizen researcher, said in a prepared statement. What this new report unequivocally shows is that those states that have chosen to hold the pharmaceutical industry accountable have largely seen their enforcement efforts pay for themselves.
Ven-A-Care specialized in providing infusions of chemotherapy and other injectable drugs, and in the 1990s, its owners noticed that the drug manufacturers were selling the drugs at huge markups.
The pharmacys co-owners are Luis Cobo, a pharmacist; Zachary Bentley, the office manager; Mark Jones, a nurse who administered the infusions and John Lockwood, an orthopedic surgeon.
The four rarely talk to the press these days. In 2005, Cobo told The Herald, You just start digging, and it starts coming out.
CNBC last year called Ven-A-Care the most successful and least well-known whistle-blower operation of all time.
Public Citizens report cited two major Ven-A-Care victories. One was a 2010 federal settlement with Boehringer Ingelheim for $280 million for overcharging government health programs for various drugs.
Another, also in 2010, was $280 million from Mylan for overcharging government programs for various drugs, including Albuterol.