Can whistle-blowers pay for Obamacare?

Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius at a press conference on fighting health care fraud Thursday.

On Thursday an alphabet soup of government investigative agencies from the HHS OIG to the DOJ’s FBI reported that the new health reform law – the Affordable Care Act – gives them new tools to help fight fraud and protect tax dollars.

The new law “strengthens our ability to stop fraud before it starts by making it harder to submit false claims and easier to catch those who try to cheat,” said Health and Human Services Secretary Kathleen Sebelius.

But even as the Obama administration touts its approach to proactively stop health fraud rather than the old “pay and chase” model, that old approach has been paying huge dividends.

In 2009 pharmaceutical giants Pfizer and Eli Lilly paid $2.3 billion and $1.4 billion respectively to settle charges stemming from whistle-blower lawsuits of the improper marketed drugs to doctors.

In April, AstraZeneca, the British drugmaker with its American headquarters in Wilmington, Del., agreed to a $520 million civil settlement over allegations that it illegally marketed its antipsychotic drug Seroquel for uses that were not approved by the U.S. Food and Drug Administration.

Whistle-blower suits helped the government recover $9 billion from alleged health care frauds from 1996 to 2005. And with nearly 1,000 whistle-blower suits out pending, the government could potentially reap huge windfalls if it manages the process better, according to researchers from Harvard University and the University of Melbourne in Australia.

Whistle-blower suits (known as qui tam cases) account for 90 percent of health care fraud cases, according to a special report from the researchers in the New England Journal of Medicine Thursday. They examined the experiences of whistle-blowers as the Obama Administration moves to crack down on health care fraud to save the money necessary for its new heath reform law.

In interviews with 26 whistle-blowers involved in drug company cases, the researchers sought to “shed light on the motivations and experiences” of those people who brought cases against drug companies and see how well the qui tam processes works.

The researchers concluded that the length of time it took to pursue these cases and the personal cost (lost jobs, divorces, stress) on the whistle-blowers, suggested that the government should invest more in these cases to resolve them more quickly. And with nearly 1,000 such suits pending, “shortening the timelines and attendant stresses of qui tam litigation requires more resources from enforcement, an investment that should more than pay for itself.”

The people who brought the suits said the personal cost was great and the amount they earned in return relatively small. The researchers said that the government should find ways to change the way these cases are handled to “promote responsible whistle-blowing and enhance the effectiveness of this integral component of efforts to combat health care fraud.”