Recent Qui Tam/FCA Articles from Around the Web

Dear Readers:

I apologize for my absence the last few weeks. I am happy to be back writing articles. I have recently come across several blogs and bloggers who have written about a number of interesting qui tam and False Claims Act ("FCA") cases:

• Generic drug maker filing a qui tam against a competitor in part based on the competitor’s fraudulent patent drug application.

Berger & Montague’s blog, “Latest Court Ruling Allows Groundbreaking Qui Tam Lawsuit Between Pharmaceutical Rivals to Proceed,” highlights an interesting qui tam filed by the generic drug manufacturer Amphastar against its competitor, Aventis Pharma. The qui tam alleges that Aventis fraudulently procured a patent on its drug, Lovenox, and that as a result of the false patent, Aventis overcharged Medicare and Medicaid for that drug. The Court has recently denied Aventis' Motion to Dismiss Amphastar’s Amended Complaint. See Pharmaceuticals v. Aventis Pharma, U.S.District Court, C.D. CA., EDCV-09-0023 MJG.

• In an insurance coverage dispute over a qui tam settlement, the billing practices of a medical management services organization were not subject to coverage because they were not professional services covered by the professional liability policy.

Wiley Rein recently wrote about an interesting case, MSO Washington, Inc. v. RSUI Group, Inc., 2013 WL 1914482 (W.D. Wash.), which addressed insurance coverage for a qui tam settlement: “False Claims Act Qui Tam Action Over Billing Practices Does Not Involve Professional Services; Claim Is Barred by Fraud Exclusion.” In this case, the Court granted summary judgment against the insured, a medical management services organization, who sought coverage and a finding of bad faith against its insurer for failing to reimburse it for the qui tam settlement that it paid that related to the billing practices. The Court did not find coverage because “billing claims under the [False Claims Act] does not qualify as a professional service.” Additionally, the Court found that claims arising under the False Claims Act did not fall within the scope of the policy’s coverage for a “negligent act, error or omission” because a FCA claim must involve a “knowing presentation of what is known to be false.” The article includes a link to the Court’s decision.

• Court dismisses False Claims Act Suit Related to Alleged Mortgage Fraud by Bank of America and Countrywide Financial.

Vinson & Elkins ("V&E") has a interesting article, "Court Forecloses Government’s Attempt to Use False Claims Act to Combat Mortgage Fraud," discussing the ruling by U.S. District Court Judge Jed Rakoff dismissing the False Claims Act claims brought in a qui tam in which the U.S. Attorney for the Southern District of New York has intervened. The case is U.S. ex rel O’Donnell v. Bank of America Corporation successor to Countrywide Financial Corp., 12-cv-1422, U.S. District Court, Southern District of New York. In this case, the government alleged that Countrywide used a “streamlined” loan origination model to increase the speed in which it originated and sold loans and that the use of that model resulted in “rampant instances of fraud and other serious loan defects.”  Many of those fraudulent loans, the government claims, were sold to Freddie Mac and Fannie Mae. As V&E points out, the government’s FCA claims were a stretch because the provision of the FCA under which it was proceeding was passed in 2009, after most of the loans at issue.  At the same time, the Court permitted the government to pursue its claims brought pursuant to the Financial Institutions Reform Recovery Enforcement Act (“FIRREA”). The Court has informed the parties that it will soon issue a detailed opinion in support of its ruling.

A. Brian Albritton
May 27, 2013 

Court Rejects Attempt to Stretch Off-Label Marketing Liability to Prescriptions Outside Drug Label Guidelines

In US ex rel. Polansky v. Pfizer, 2012 WL 5595933 (E.D.N.Y., Nov. 15, 2012), U.S District Judge Cogan rejected a relator’s attempt to stretch False Claims Act liability for the “off-label marketing” of drugs to include instances where physicians prescribe prescription drugs to patients outside of the drug label guidelines.

In Polansky, the relator brought a qui tam pursuant to the False Claims Act alleging that Pfizer illegally marketed its cholesterol lowering drug, Lipitor, to patients whose “risk profiles fell outside” the recommended parameters for using cholesterol lowering drugs that are set forth in the National Cholesterol Education Program Guidelines (NCEP Guidelines) and which are referenced in Lipitor’s “label". Simply stated, the relator contended that the label which accompanied Lipitor (which the Court described as the size of a “pamphlet” or “brochure”) “restricts the prescription of Lipitor to patients within the NCEP Guideline range.”

The relator, stated the Court, appeared to be arguing that “any marketing of the drug for patients outside the Guidelines’ range is ‘off-label marketing,’ resulting in the filing of false claims . . .” Applying the relator’s theory, the Court explained:  

Thus, if a Pfizer representative told a doctor that he should prescribe Lipitor to any of his patients who smoke and have a bad family cardiac history (i.e., two risk factors) and LDL levels of 131 mg/dl or more that advice would be proper because that patient falls within the Guideline range. However, change the number in the sales pitch to 125 mg/dl, or even 129 mg/dl, and any prescription issued by a doctor who relied on that advice, and which Medicare or Medicaid subsequently reimbursed, would constitute a false claim. 

Dismissing the relator’s 5th Amended Complaint with prejudice, the Court held that the "False Claims Act, even in its broadest application, was never intended to be used as a back-door regulatory regime to restrict practices that the relevant federal and state agencies have chosen not to prohibit. . . . . . Off-guideline does not equate to off-label.” The Court provided three chief reasons in support of its holding. First, the Court noted that the NCEP Guidelines are, in fact, non-compulsory, advisory, guidelines: there is nothing in the drug’s label or the Guidelines themselves which transforms the NCEP Guidelines into a mandatory limit. “[A]s long as Pfizer markets the drug to lower cholesterol,” the Court observed, “it is doing what the label permits.” Second, the Court observed that the FDA could have very easily included restrictive language in its label –as it “commonly requires” -- limiting the use of Lipitor only to those patients who fall within the Guidelines, but it did not. Third, the Court found that other regulatory authorities such as Medicare and state Medicaid programs had not passed any regulations or restrictions that prevented a physician from prescribing statins when he or she finds that a patient would benefit from lowered cholesterol.

As we saw in the Renal Care Group case, the Polansky case is another instance where courts apply a common sense analysis and refuse to permit the False Claims Act to be used as a “back-door regulatory regime.”

 

A. Brian Albritton 

November 22, 2012

GlaxoSmithKline to Pay Largest Health Care Fraud Settlement in US History

In the largest health care fraud settlement in U.S. history, the U.S. Department of Justice announced today that "global health care giant" GlaxoSmithKline LLC ("GSK") agreed to plead guilty and to pay $3 billion to resolve "its criminal and civil liability arising from the company’s unlawful promotion of certain prescription drugs, its failure to report certain safety data, and its civil liability for alleged false price reporting practices."

Deputy Attorney General James Cole described the plea and settlement with GSK as follows:  "GSK will plead guilty to criminal charges and pay $1 billion in criminal fines and forfeitures for illegally marketing and promoting the drugs Paxil and Wellbutrin for uses not approved by the FDA – including the treatment of children for depression, and the treatment of other patients for ailments ranging from obesity, to anxiety, to addiction and ADHD – and for failing to report important clinical data about the drug Avandia to the Food and Drug Administration.  GSK will pay an additional $2 billion to resolve civil allegations that it caused false claims to be submitted to federal health care programs for these and other drugs as a result of the company’s illegal promotional practices and payments to physicians.  This settlement also resolves a civil investigation of the company’s alleged underpayment of rebates that were required under the Medicaid Drug Rebate Program."

As with previous criminal and False Claim Act settlements with Big Pharma discussed in the blog, GSK's conduct as detailed in the plea and the allegations of the False Claim Act complaint is disturbing and reprehensible.  For example, the factual allegations of the Information detail GSK's marketing of the prescription drug Paxil for use in treating depression in children and adolescents even though the drug had not been found to have any efficacy for such a population. 

Paxil had been approved by the FDA for the treatment of depression in adults, and it was one of the top 10 selling drugs in the U.S., with sales surpassing $1.8 billion a year in 2001-2002.  Paxil, however, was never approved by the FDA "for any purpose" in the treatment of children and adolescents.  In fact, GSK conducted three placebo-controlled studies in the safety and efficacy of using Paxil to treat depression in children and adolescents, and those studies failed to demonstrate any "efficacy" for the treatment of this population between the "patients in the study who received the drug being studied and patients in the study who received a placebo."  After these studies, a GSK contractor hired to write an article about one of the studies misrepresented the study's findings as being favorable for the treatment of children and adolescents with Paxil, going so far as to say that "the findings of this study provide evidence of the efficacy and safety of [Paxil] in the treatment of adolescent depression."

With the article in hand, GSK then forwarded it to its 1900 sales representatives who sold Paxil with a cover letter stating, "Paxil demonstrates REMARKABLE efficacy and safety in the treatment of adolescent depression." This was just the beginning of GSK's marketing of Paxil.  In addition, the Information reflects that GSK created a "150 person neuroscience specialty sales force to promote Paxil to psychiatrists."  The Company also promoted Paxil's use in adolescents at Paxil "Forum Events," dinner programs, lunch programs, and spa programs. GSK had their sales personnel target those physicians --including physicians who only treated patients under age 18-- who prescribed the most antidepressants and provide free samples of Paxil in the hope that they would shift their patients to using Paxil.

GSK, however, did not inform its sales personnel that the FDA had not approved Paxil for the treatment of children or adolescents, and it continued to conceal that its studies did not support its claims for Paxil's efficacy in this population.  In fact, the FDA later recommended that Paxil "not be used to treat depression in patients under 18" and later recognized that antidepressants, such as Paxil, "increased the risk of suicidal thinking and behavior in . . . patients under age 18." 

Paxil was not the only drug that GSK unlawfully promoted:  it unlawfully promoted Wellbutrin and Avandia as well.  As a result of the criminal plea, GSK will pay fines and forfeiture totaling $1 billion.  The "civil settlements" resolve claims relating to these three drugs and others and will require GSK to pay $2 billion. 

One of the civil settlements reported that relators had filed 4 qui tams against GSK and that the U.S. had intervened in them in 2011.  The settlements explicitly did not address the whether any relator was entitled to any share of the proceeds or whether in fact they had filed valid qui tams.

DOJ has posted the  key documents in the criminal and civil matters, and they can be found here.

A. Brian Albritton
July 2, 2012