Drug makers find whistle-blowing a bitter pill to swallow

If rising costs and demanding regulators aren't enough to torment pharmaceutical executives, here's one more thing to worry about:

Some of your employees might be wearing a wire. And collecting documents and voice mails. And looking for a lawyer who can help them blow the whistle on what they consider your dirtiest secrets.

This year, the pharmaceutical industry is caught in a wave of whistle-blower cases, as employees help the government shine a bright light on what they consider fraudulent behavior.

Pharmaceutical fraud accounts for the largest amounts of money paid out under the False Claims Act, a 146-year-old federal law that allows ordinary people, usually employees, to file civil actions against federal contractors for fraud, kickbacks and shoddy services.

In January, Eli Lilly and Co. agreed to pay $1.4 billion to settle charges it illegally promoted its antipsychotic drug, Zyprexa, for unapproved uses. Nine whistle-blowers, former Lilly employees, split about $100 million of the settlement as their reward.

In September, Pfizer said it would pay $2.3 billion to settle charges that it illegally promoted numerous drugs, including the painkiller Bextra. Six whistle-blowers split about $102 million.

In October, AstraZeneca reached a $520 million agreement to settle investigations into illegal marketing of its psychiatric drug, Seroquel. Several whistle-blowers will split an undisclosed amount of money.

And last week, in a courtroom in Trenton, N.J., the latest case began, as a former sales worker at Janssen (owned by Johnson & Johnson) testified she was fired in 2004 for complaining about what she considered pressure to illegally promote the antipsychotic drug Risperdal for unapproved uses.

Meanwhile, more than 1,000 active whistle-blower cases are backlogged at the Department of Justice, and about 200 of them deal with drug companies.