Current Good Manufacturing Practice (CGMP) Fraud

Current Good Manufacturing Practice (CGMP) violations occur when pharmaceutical factories fail to adhere to the U.S. Food and Drug Administration’s (FDA) best practices in the production of the medications. The American regulatory agency enforces strict standards regarding the integrity of the drug manufacturing production chain, which includes any foreign or domestic source bound for the U.S. market. Should a company fail to uphold these guidelines, either as a cost-saving measure or a result of negligence, they increase their risk of distributing medicines that are ineffective or dangerous. When CGMP drugs are used in government Medicare/Medicaid programs, they also violate the terms False Claims Act (FCA).

Bellwether Trial Date: April 2017

Injury: Bleeding Accidents, stroke, and death.

Cases Filled: 18,000

Settlement Amounts: EST – $100,000 over $1,000,000

What is a CGMP Fraud?

Proper training, sanitation, record keeping, and quality control for manufacturing sites are as critical to pharmaceuticals as they are to any other consumer product. The FDA has stringent standards regarding the integrity of this production chain. Trained personnel, sanitary labs, effective quality control, and the maintenance of accurate records are some of the key elements required to maintain “CGMP Compliance”.

Drugs in violation of CGMP Compliance are designated “adulterated” by the authorities. An adulterated product is not necessarily tainted or dangerous, but the violation of manufacturing best practices greatly increases health and safety risks when they reach the public. Poor quality control can result in medications containing insufficient quantities of an active ingredient, making it ineffective for treatment. Products can become tainted with bacteria or foreign matter that can prove toxic to human health.

The FDA holds jurisdiction over any domestic or foreign factory under that intends to sell to the American market. Best practices change as developments in science and technology evolve, and companies are required to stay up to code. Should any violation be found, the FDA can request a product recall or even seize the pharmaceuticals themselves.

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The Cost and Dangers of CGMP Violations

Fraud perpetrated against the federal government costs taxpayers billions of dollars annually.  The Department of Justice (DOJ) recovered $1.9 billion in 2015 alone in funds stolen from healthcare public assistance programs such as Medicare/Medicaid. It was the largest amount recovered out of all government program categories.

The FDA and DOJ have both signaled the intention to heighten the civil and criminal enforcement of CGMP manufacturing laws in regards to the FCA. However, the government is often stretched thin and works with limited resources. Its agents have proven quick to investigate direct reports of malfeasance, but routine inspections of American manufacturers only occur once in a two-year period. In the case of foreign sites, that number rises to once in every seven to thirteen years.

Identifying CGMP Fraud

The FDA’s limitations have allowed qui tam cases whistleblower insiders to play an important role in bringing CGMP fraud cases to light. Drug manufacturing executives, factory employees, and Quality Control Managers have traditionally been best positioned to spot these violations and raise internal concerns. They can also see if these concerns are ignored or addressed once they have been raised.

Whistleblowers who are able to build a case based on original, first-hand information, are eligible for 15% – 30% of any settlement or fine paid out by the violating manufacturing company. Foreign citizens are also eligible to file American qui tam cases against companies that sell to the American market.

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