Source: https://www.druganddevicelawblog.com/category/false-claims-act/page/2
Timestamp: 2019-04-25 16:49:28+00:00

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It took us a long time to understand how off-label promotion of prescription drugs had anything to do with the False Claims Act, and we’re still not so sure that the two are a fit. The FCA penalizes anyone who presents, or causes to be presented, to the federal government “a false or fraudulent claim for payment or approval.” 31 U.S.C. § 3729(a)(1). Easy, right? As we explained just last month in this quick primer on the FCA, Congress enacted the FCA after the Civil War to curb abuses in government procurement. That part we get. If you sell the Army 1,000 horses and send them a bill for 2,000 horses, that’s a false claim.
We’re writing about this today because the First Circuit issued an opinion last month that comes to the correct result and also illustrates how FCA claims are alleged in connection with off-label promotion—and how they fail. In Lawton v. Takeda Pharmaceuticals Co., No. 16-1382, 2016 U.S. App. LEXIS 20943 (11th Cir. Nov. 22, 2016), a patent lawyer filed a qui tam action against the manufacturer of a prescription diabetes medication. He did not actually use the medication, nor did he buy or sell it. So what did he allege? He alleged that the manufacturer engaged in an elaborate scheme to promote the drug for un-approved uses—off-label promotion—and that the manufacturer thereby induced medical providers to make allegedly false claims for reimbursement to Medicare and Medicaid. Id. at **4-7.
It’s a two-step process. The manufacturer did not itself make a false claim, but rather engaged in alleged conduct that induced someone else to make a claim, whether the claimant knew it was false or not. The problem for the plaintiff (or more accurately, the “relator”) is that he alleged neither falseness nor a claim. We call that a double whammy. Or maybe it’s a double fault.
People supplement a lot of things. You can supplement your diet with a multivitamin. You can supplement your income with a part-time side job. On the DDL Blog, we are always supplementing our scorecards and cheat sheets. Generally speaking, supplement is a pretty common word and has a fairly universally accepted definition. A supplement is an add-on. Something you do to make something more complete. Does the food you eat contain vitamins and minerals? Sure. But that multivitamin adds to it. It’s a boost.
In litigation too, we do a lot of supplementing. In fact, we are required to do so. Federal Rule 26(e) requires a party to supplement its discovery responses if it “learns that in some material respect the disclosure or response is incomplete or incorrect.” This duty to supplement extends to expert reports as well. Fed.R.Civ.P. 26(e)(2). But what does it mean to “supplement” an expert report? And when does supplementing to make a correction or completion go too far?
Plaintiffs got the answer to that question in U.S. ex. rel. Brown v. Celgene Corp., 2016 U.S. Dist. LEXIS 156826 (C.D. Cal. Aug. 23, 2016). Plaintiff-Relators brought a False Claims Act and Medicare Anti-Kickback Statute case against defendant alleging it illegally marketed Thalomid and Revlimid off-label and paid kick-backs to physicians for prescribing off-label. Id. at *6. The court set a deadline for the expert reports and relators timely served a report from their damages expert. Shortly thereafter, however, relators sought leave to supplement that expert report based on late produced Medicare data. Id. at *6-8. Relators wanted to time to analyze the data and supplement the report with that analysis. Relators also represented that while the supplement would be based on new data, the opinions were not expected to differ significantly. Id. at *8. The court granted the leave requested. Defendant was likewise given an opportunity to amend its expert reports in rebuttal and relators’ expert was deposed after his supplemental report was served. Id. at *11.
What follows is the promised second guest post from Reed Smith’s Lindsey Harteis concerning the UHS v. Escobar False Claims Act case. Lindsey’s first post set the stage. The Supreme Court decided Escobar yesterday, so now she’s back with her take on the version of FCA “implied certification” that the unanimous Supreme Court recognized.
To someone born in 1984, the phrase “Elvis Lives” is tough to figure out. We don’t know what things were like back when he was alive and on TV (from the waist up). But we do get the general concept that something can live on after death, just in a different way. And we definitely enjoyed the trio of violin-playing Elvises in a Coldplay music video a few years back. So, Elvis is still around. Just in a different way.
Unfortunately for us defense bloggers, so is the implied certification theory. Yesterday the Supreme Court handed down its opinion in Universal Health Services, Inc. v. Escobar, No. 15-7, slip op. (U.S. June 16, 2016). This is the pending Supreme Court decision we blogged about last month (here) that has determined both the scope and validity of the implied certification theory of False Claims Act liability. While the theory survived, the opinion is not all bad news. In fact, it should have relators all shook up more so than defendants. So we’ll get going with a little less conversation and try to ease your suspicious minds about how a case that allows a pro-relator theory of liability to survive can actually still be good.
Recently, we noted that one of the first decisions we wrote a post about had been affirmed by the Second Circuit. Of the district court decision, we had penned “It is nice to see a judge with a proper understanding of how drug labels, FDA, and cockamamie theories about off-label marketing should fit together. We would like to see more of the judges handling product liability cases with similar issues follow the lead of the judges handling FCA cases and dismiss complaints premised on nonsensical interpretations of labels and regulations.” In discussing U.S. ex rel. Polansky v. Pfizer, Inc., No. 14-4774, 2016 U.S. App. Lexis 8974 (2d Cir. May 17, 2016), we could be lazy and swap in “a panel” for “a judge” in the preceding quote. That would be true, but it would be incomplete. A few weeks after the district court’s decision in Polansky, the Second Circuit decided U.S. v. Caronia, 703 F.3d 149 (2d Cir. 2012), where it vacated the conviction (conspiracy to sell a misbranded drug under 21 U.S.C. §§ 331(a) and 333(a)(1)) of a sales representative for promoting a prescription drug for off-label use. Then, a few months before the Polansky appeal was argued, the Southern District of New York enjoined the FDA from prohibiting a manufacturer’s truthful off-label promotion concerning a (generic) prescription drug. Next, a few months later, FDA reached a well-publicized settlement with that manufacturer, preserving that “Amarin may engage in truthful and non-misleading speech promoting the off-label use” of its drug without risking prosecution for misbranding. While there are still decisions like Neurontin out there and many cases still seek to impose liability under the FCA or other statutes for truthful off-label promotion, the off-label landscape has clearly changed.
With that in mind, we turn back to Polansky. For eight years and through multiple amended complaints, the plaintiff pursued a FCA claim that Pfizer’s promotion of Lipitor for use within the approved indications was actually off-label—and therefore allegedly led to false claims for Medicare and Medicaid reimbursement—because of references in the label to the National Cholesterol Education Program Guidelines. We will be blunt—shocking to our readers, we know—this was always a dubious claim because any common sense reading of the label does not come close to supporting the contention that the Guidelines narrowed what was “on-label” compared to the five indications that were approved and described in the label.
The NCEP Guidelines, which came out of NIH and were expressly not intended to trump clinical judgment, set out an algorithm for recommendations for the general type of treatment (e.g., just lifestyle modifications) depending on risk categories derived from lab results and clinical history. 2016 U.S. App. Lexis 8974, **7-9. The Indications section in the pre-Physician Labeling Rule label referenced the Guidelines in conjunction with stating that lipid-altering agents should be used only when response to diet and other lifestyle modifications “has been inadequate” and included a summary of the Guidelines. Id. at **10-11. When PLR changes went into effect in 2009, the reference and summary were omitted, which suggested something about the relative importance of these references. Id. at *9. Both before and after PLR, the Dosage section of the label had a cite to the Guidelines when stating, for one subcategory of patients, that “The starting does and maintenance doses of Lipitor should be individualized according to patient characteristics such as goal of therapy and response.” Id. at *11.
Today’s guest post is courtesy of Reed Smith’s Lindsey Harteis. She’s been following the big-deal UHS v. Escobar False Claims Act that the Supreme Court could decide any day now (or could wait until the end of June), which involves the existence and (perhaps) extent of the so-called “implied certification” theory of FCA liability.
Finally – be sure to read the IMPORTANT ANNOUNCEMENT at the end of this post. DDLaw blog is getting ready to move, and that means you’ll have to resubscribe to continue getting our posts. But don’t worry, it’s easy.
That’s a quote from a Justice we missed dearly while listening to the oral argument in this case. Justice Scalia used it in his concurring opinion in Skilling v. United States, 561 U.S. 358 (2010), which limited a fraud statute in the criminal context due to vagueness and via the 5th Amendment Due Process route.
Skilling reminds us of United Health Services for a couple of reasons: (1) It dealt with defining the contours of a sort of fraud – honest services fraud – for which the lower courts took an expansive view that wasn’t foreseeable based on the plain language in the statute; (2) Scalia was accusing the Courts of Appeals of invention of law rather than interpretation in their rulings on what constituted honest services fraud; and (3) the case involved a fusion of Restatement and black letter law in an unrelated area (Agency and Trusteeship) but was a criminal case.
Usually, when res judicata comes up in our cases, we are trying to fend it off. Luckily, non-mutual offensive res judicata is rarely recognized, so plaintiffs usually fail when trying to preclude the drug or device manufacturer from putting up a full defense based on a prior ruling or verdict in a different case. Occasionally, in serial product liability litigation, we find a plaintiff trying to sue over the same injury twice, but that rarely requires motions, let alone motions based on res judicata. Today, however, we are discussing a Georgia state court case where a drug company’s settlement with Georgia and other governmental entities in a longstanding federal case precluded eight Georgians from suing the same company on behalf of Georgia. Were we to channel a fellow blogger, we might draw some parallel to “The Walking Dead,” which is filmed in Georgia and had been based in Georgia until season 5 (when the gang headed up to Virginia). We might say something about how related cases that pop up after an adjudication on the merits are like “walkers” and have to be disposed of accordingly. We might inject some spoilers by mentioning which main character got shot in the most recent episode and which main character is rumored to die in the next episode. We might even connect these events to an earlier failure to resolve an earlier dispute more definitively. Instead, we will just stick to the case.
Jordan v. State, No. A15A1733, 2016 Ga. App. LEXIS 176 (Ga. App. Mar. 23, 2016), does not have the drug manufacturer as a party to the appeal because it was the State of Georgia that filed and won the motion to dismiss below (although treated as a motion for summary judgment on appeal). This procedural quirk flows from the nature of qui tam litigation. In 2004, a relator named Starr filed a suit in the Eastern District of Pennsylvania against her former employer claiming that its marketing of a prescription anti-psychotic for off-label uses created liability under various statutes, including the federal False Claims Act for reimbursement by various governmental entities. (Some of this background is presented in Jordan, but some details are added from public information.) Over time, other relators filed similar cases, the United States intervened, and Starr’s complaint was amended to include claims under the later-enacted Georgia False Medicaid Claims Act (GFMCA) and various similar state statutes. In late 2013, there was a massive settlement of criminal and civil cases between the manufacturer, the United States, and a number of states—including Georgia—resulting in, among other things, payment of millions of dollars to Georgia and a dismissal with prejudice of the Starr case.
I recently had a partner ask me: Will the court consider our client’s actions (not in any FDA safe harbor) to be off-label promotion—i.e., were their actions “promotional” in nature even though they were not advertising the product for off-label uses. After extensive research, I returned to him more or less empty-handed. I explained the arguments for and against our client’s actions being considered “promotion” of off-label uses, but I could not provide a definitive answer because there was simply no case law on point.
Over the last several years, there have been numerous cases discussing the legal ramifications of promoting drugs or medical devices for off-label uses from seemingly every angle. Indeed, this blog has a handy tag “Off-Label Use” that discusses many of these cases. But this basic question—what counts as off-label promotion?—has largely gone unanswered. Recently, however, the Court in United States ex rel. King v. Solvay S.A., 2016 U.S. Dist. LEXIS 14804 (Feb. 8, 2016 S.D. Tex.), laid out a few examples of what is not off-label promotion.

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