Vol 22, 2013 Annals of Health Law 418
PROSECUTIONS OF PHARMACEUTICAL COMPANIES
resolve both criminal and civil claims is expected to total as much as $2.2
billion.70 Johnson & Johnson also agreed to settle thirty-six states’ and the
District of Columbia’s claims for $181 million, combined.71
Despite the substantial fines that can be exacted on a company for FCA
violations, these enormous settlements may be driven by corporate fear of
exclusion, rather than of monetary damages. Exclusion is an administrative
sanction that is imposed by the Department of Health and Human Services
(“HHS”), barring individuals and entities from participating in federal
health care programs, including Medicare and Medicaid, if they have been
convicted of certain crimes or had other enforcement taken against them.72
Exclusion is mandatory if the individual or entity has been convicted of a
felony related to health care fraud.73 Additionally, HHS has discretion to
exclude individuals or entities that have been found guilty of misdemeanor
fraud, either health care-related or non-health care-related,74 including fraud
under the FDCA.75 These FCA exclusion rules were significantly expanded
in 1998.76 HHS revised the rule to give the Office of Inspector General
(“OIG”) the authority to exclude drug manufacturers from receiving federal
health care program reimbursements if they are found to have engaged in
significant financial or other impropriety.77
Corporate officers as well as companies can be excluded, even when
there is no evidence that they had personal knowledge of the conduct that
Settlement Over Risperdal Marketing Would Include $400 Million Criminal Fine, WALL ST.
J., July 19, 2012, http://online.wsj.com/article/SB10000872396390444097904577537090895
140670.html [hereinafter Rockoff & Lublin]; see discussion infra Part V. A.
71. Press Release, Johnson & Johnson, Janssen Pharmaceuticals, Inc. Announces
RIPSERDAL Consumer Protection Settlement with 36 States and the District of Columbia
(Aug. 30, 2012), http://www.investor.jnj.com/releasedetail.cfm?ReleaseID=703611. In
addition to the District of Columbia, the following thirty-six states are part of the settlement:
Alabama, Arizona, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois,
Indiana, Iowa, Kansas, Maine, Maryland, Michigan, Minnesota, Missouri, Nebraska,
Nevada, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio,
Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Vermont,
Washington, Wisconsin, and Wyoming. Id.
72. Exclusion of Certain Individuals and Entities From Participation in Medicare and
State Health Care Programs, 42 U.S. C. § 1320a-7 (2010).
73. § 1320a-7(a)(3).
74. §§ 1320a-7(b)(1)( A)( i)-( ii), 1320a-7(b)(1)( B).
75. See discussion supra Part I.
76. See Health Care Programs: Fraud and Abuse; Revised OIG Exclusion Authorities
Resulting from Public Law 104-191, 63 Fed. Reg. 46,676, 46,676, 46,485-92 (Sept. 2, 1998)
(codified at 42 C.F.R. Pts. 1000, 1001, 1002, 1005) (expanding the scope of exclusion from
only entities that provide services directly to patients to all entities) amended by 64 Fed. Reg.
39, 420 (July 22, 1999) (refining the 1998 rule).