Thursday 28 Mar 2024
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KUALA LUMPUR (Dec 1): Pfizer Inc and other large pharmaceutical corporations are seeking to block US laws that would make it easier for whistle-blowers to hold companies liable for corporate fraud, according to an investigative publication.

The report on Monday (Nov 29) said major corporate interests, including Pfizer, are fighting an update to the False Claims Act, a Civil War-era law that rewards whistle-blowers for filing anti-fraud lawsuits against contractors on behalf of the government.

The Intercept is an American non-profit news organisation founded by eBay co-founder Pierre Omidyar to present investigative reporting, analysis and commentaries on various topics.

The report said the law had historically returned US$67 billion (about RM281.7 billion) to the government, with whistle-blowers successfully helping uncover wrongdoing by military contractors, banks and pharmaceutical companies.

It said the law had been particularly harsh for Pfizer, highlighting that in 2009, Pfizer paid US$2.3 billion in criminal and civil fines to settle allegations that the company illegally marketed several drugs for off-label purposes that were specifically not approved by the Food and Drug Administration.

However, the report said the law poses far less risk today to companies engaged in criminal behaviour.

It said that is because the anti-fraud statute had been severely hampered by a series of Federal Court decisions that radically expanded the scope of what’s known as “materiality”.

It explained that in 2016, the Supreme Court ruled in Universal Health Services v. United States ex rel. Escobar that a fraud lawsuit could be dismissed if the government continues to pay the contractor.

The court reasoned that if the government continues to pay a company despite fraudulent activity, then the fraud is not “material” to the contract.

That ruling functionally neutered application of the False Claims Act against many companies that are so large that the government cannot abruptly sever payments, especially against large healthcare interests and defence contractors.

The Intercept said Pfizer did not respond to a request for comments.

The report quoted Stephen Kohn, a whistle-blower attorney with law firm Kohn, Kohn & Colapinto as saying this was a very concerted lobbying effort that really took supporters on Capitol Hill by surprise.

Many of the companies engaged in the lobbying fight have chosen to conceal their efforts through undisclosed third-party groups such as the US Chamber of Commerce, which has made the Bill one of its primary targets for defeat.

The chamber does not disclose its membership or which corporations direct its advocacy, but previous reporting suggests companies such as Halliburton, Lockheed Martin and JPMorgan Chase, among others, that have faced False Claims Act violations in the past.

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