The drug industry has now become the biggest defrauder of the US government, surpassing defence, the long-time leader.

That is the claim of a study from the influential US consumer group Public Citizen, which found that pharmaceutical cases accounted for at least 25% of all federal False Claims Act payouts over the past decade, compared with 11% by the defence industry. The analysis  looked at all major pharmaceutical company civil and criminal settlements on state and federal levels since 1991.

Of the 165 drugmaker settlements, comprising $19.8 billion in penalties during the past 20 years, 73% of the number (121) and 75% of the dollar amount ($14.8 billion) have occurred during the past five years. Most of them involve off-label promotion and purposely overcharging programmes such as Medicaid and Medicare.

The study also found that more than a half of the industry’s fines were paid by four companies - GlaxoSmithKline, Pfizer, Eli Lilly and Schering -Plough - and they accounted for more than half of all financial penalties over the past two decades, paying $10.50 billion in fines collectively. The two largest fines ever assessed by the US government against any companies were against Lilly ($515 million) and Pfizer ($1.2 billion), both in 2009.

The analysis revealed that former employees and other whistleblowers "have been instrumental in bringing to light the most egregious violations". The number of federal settlements arising from whistleblower cases has more than doubled over the past five years, yielding payouts more than two-and-a-half times higher than in the previous 15 years combined. The report also recommends imposing steeper financial penalties and "criminally prosecuting company leadership, including jail sentences, if merited".

Sidney Wolfe, director of the Health Research Group at Public Citizen, said that "desperate to maintain their high margin of profit in the face of a dwindling number of important new drugs, these figures show that the industry has engaged in such activities as dangerous, illegal promotion for unapproved uses of drugs and deliberately overcharging vital government health programmes". He concluded that "the danger to public safety and loss of state and federal dollars that comes with these violations require a more robust response".