Eli Lilly and Co. and Health Care & Life Sciences and Pharmaceutical

Grassley asks Lilly, peers about whistleblower treatment

July 1, 2010

U.S. Senator Charles Grassley asked 16 drugmakers, including Eli Lilly & Co., Pfizer Inc. and AstraZeneca Plc, to reveal how they treat whistleblowers who file complaints under the False Claims Act.

Grassley, an Iowa Republican, sent letters June 28 that posed eight questions such as how companies notify employees of the law, how they treat whistleblowers and what changes they have made in response to a 2009 law extending anti-retaliation protections. Grassley’s office provided copies of the letters.

The False Claims Act lets private citizens sue on behalf of the government and share in any recovery. Whistleblowers were paid $2.39 billion from 1987 to 2009, or 16 percent of the $15.19 billion collected in False Claims lawsuits in which the U.S. government joined the case, according to the Justice Department.

“What measures does Pfizer have in place to ensure fair treatment to those filing complaints?” Grassley wrote to CEO Jeffrey Kindler. “Of employees who have filed complaints, have any complained of unfair treatment and/or retaliation after the filing of the complaint?”

The False Claims Act was passed by Congress in 1863 and strengthened three times since 1986. Citizens file so-called qui tam cases that remain sealed from public view as the Justice Department investigates the claims and decides whether to join the suit. Twenty-five U.S. states have their own versions of the law.

Drugmakers have reached some of the largest settlements in recent years. Pfizer agreed to pay $2.3 billion over improper drug marketing, Lilly paid more than $1.6 billion to settle claims over its marketing of the drug Zyprexa, and AstraZeneca paid $520 million over marketing of its drug Seroquel.

Chris Loder, a spokesman for New York-based Pfizer, the world’s biggest drugmaker, said the company is responding to the letter and “shares the senator’s desire to detect and report any false claims that may lead to unnecessary costs to our health-care system.”

Pfizer, he said, has invested “substantial resources” to “create a compliance program that consists of mandatory training for every one of our employees, proactive monitoring and surveillance, and strict enforcement of all federal and state health-care laws.”

The company also has a chief compliance officer reporting to the CEO, a corporate compliance committee, a code of conduct, a compliance hotline and extensive procedures to investigate and remediate possible non-compliance, he said.

Tony Jewell, a U.S. spokesman for London-based AstraZeneca, the U.K.’s second-largest drugmaker, said the company encourages its employees to report any instances of misconduct through various channels, including anonymously.

“We respond to all complaints of wrongdoing through prompt investigations and appropriate remedial action,” he said. “Retaliation of any kind is explicitly prohibited under our policies.”

Edward Sagebiel, a spokesman for Indianapolis-based Lilly, confirmed that the company received the senator’s letter.

“We will be cooperating fully with this request for information,” he said.

Grassley was a sponsor of the Fraud Enforcement and Recovery Act passed last year, which restored powers under the False Claims Act that had been narrowed by court rulings. The new law limited the ability of companies to avoid liability under the False Claims Act and made it easier for the Justice Department to issue civil investigative demands, a type of subpoena power, in pursuing cases.

“My appeal to drugmakers is based on the fact that they have a public responsibility to safeguard the tax dollars that pay for their products, and promoting a culture where those who speak up about possible fraud are rewarded rather than retaliated against is one way to fulfill that responsibility,” Grassley said in a statement. “There can never be too many taxpayer watchdogs, so I see this letter as an opportunity to foster a mindset that recognizes the value of whistleblowers and the duty these companies have to act honestly when seeking taxpayer dollars.”

Whistleblowers are routinely exposed to retaliation and blackballing from their industries, said Patrick Burns, a spokesman for Taxpayers Against Fraud, a Washington non-profit advocate for the False Claims Act.

“The goal for companies is to isolate, humiliate, and terminate,” Burns said. “They want to send a signal to anyone else in the company that this is what happens to you—you will lose your job, you may lose your house, you may end up with a dissolved marriage.”

The Justice Department is investigating almost 1,000 whistleblower cases filed under seal, Assistant Attorney General Tony West said in an interview on June 3.

In the letters, Grassley, the ranking Republican member of the Senate Finance Committee, said he expects written responses to his questions by July 20.

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