Implementing US-style anti-fraud laws in the Australian pharmaceutical and health care industries

To the Editor: Faunce and colleagues wisely called for the introduction of legislation modelled on the United States False Claims Act (FCA) in the Australian health care setting.1 Indeed, whistleblowers require protection and reward.2 The authors stated that the “key strengths of the US qui tam anti-fraud regime ... lie in its recovery of large amounts of public monies, its encouragement of good corporate practice” and noted that it is “largely compensatory or remedial rather than punitive”.2 However, the non-punitive nature of the regime is problematic.

Settlements in the US may appear substantial. In 2009, Pfizer paid US$2.3 billion to settle a false claims action against their marketing of Bextra (valdecoxib).1 However, this sum represents only a small proportion of Pfizer’s overall profits, given that Bextra was marketed from 2001 to 2005 and the company’s profit for the first quarter of 2011 was US$2.2 billion.3

Clearly, pharmaceutical companies in the US cope with the FCA — their huge profits largely compensate for the settlements. “While the defense industry used to be the biggest defrauder of the federal government under the FCA ... the pharmaceutical industry has greatly overtaken the defense industry in recent years.”4 Between 1991 and 2010, settlements for criminal and civil monetary penalties reached a total of US$20 billion. Three-quarters of these occurred between 2006 and 2010.4

The message from the US experience is that non-punitive anti-fraud laws do not stop pharmaceutical companies from engaging in fraudulent activities.