by Nolan and Auerbach on December 13, 2010
On November 15, 2010, Scios, Inc. announced that the investigatory study of NATRECOR (ASCEND-HF trial) demonstrated no statistically significant difference from placebo in the co-primary endpoints of dyspnea, measured at six and 24 hours, or in the composite of heart failure re-hospitalizations and death during the first 30 days following treatment. The results, presented the previous day at an American Heart Association meeting showed that there was no significant difference for patients when they were experiencing the severe shortness of breath/drowning feeling (because their lungs were filled with fluid). While the study was favorable for Natrecor regarding safety concerns, the study reaffirms the current lawsuit against Scios in which our client is involved, that the off label marketing of Natrecor caused a colossal waste of taxpayer funds at best.
In an article, the investigator for the Natrecor trial, Dr. Robert M. Califf, a Duke cardiologist, said that “once again, small studies give us the wrong answers”, referring to previous small studies which suggested that Natrecor was effective. [See article in The International Herald Tribune (November 17, 2010) “The uncertainties of clinical testing; The case of a heart drug shows how small studies can lead to misdirection.”]
The article pointed out that “Cardiologists have similar questions about the effectiveness of Zetia, an eight-year-old cholesterol drug that Dr. Califf is also studying and which has been beset by questions about whether it improves heart health.” Zetia is widely accepted as modestly reducing bad cholesterol and the significantly reducing L.D.L., but the article asserts, studies so far have failed to demonstrate a cardiac benefit to the drugs. It would be a disservice to patients if this drug were marketed off-label as having a benefit in stroke or heart failure for instance,without FDA-approval. Other pharma companies have promoted cholesterol and blood pressure drugs as having a class effect, without the benefit of the indication.
For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, PA.
by Nolan and Auerbach on December 8, 2010
Last month, the influential legal advocacy group Washington Legal Foundation (WLF) called on the FDA to abandon its plans to criminally prosecute the corporate masterminds behind pharmaceutical fraud schemes. Specifically, in a letter to Eric Blumberg, Deputy Chief for Litigation in the FDA’s Office of Chief Counsel, WLF complained that increased criminal prosecution of pharmaceutical executives could “adversely affect the nation’s healthcare delivery system by providing industry executives little incentive to continue working in the pharmaceutical sector.”
The reality is that, until recently, dishonest pharmaceutical executives could devise elaborate fraud schemes, with little concern that the Government would hold them personally liable. Some organizations, such as WLF, are looking to turn back the clock on law enforcement efforts. However, the momentum is now heading in the direction of justice, especially since whistleblowers are increasingly providing the necessary inside information to identify the criminal masterminds.
False Claims Act whistleblowers have proven especially effective in identifying wayward executives and restoring ethical business practices. Indeed, in just the past two months, whistleblowers played key roles in the prosecution of four pharmaceutical companies and the recovery of over $2 billion.
For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, PA.
by Nolan and Auerbach on November 19, 2010
Recently, the United States Department of Justice announced the settlement of the first False Claims Act qui tam case predicated on current Good Manufacturing Practice (cGMP) violations. In this settlement, GlaxoSmithKline pled guilty and agreed to pay $750 million to resolve criminal and civil liability regarding manufacturing deficiencies at its Puerto Rico plant. According to the government, the company’s manufacturing operations failed to ensure that its drugs were free of contamination from microorganisms. Moreover, the government alleged that the company’s manufacturing process caused one of its two-layer tablet products to split, causing the potential distribution of tablets that did not have any therapeutic effect. Lastly, the government alleged that the plant was riddled with longstanding problems of product mix-ups, which caused tablets of one drug type and strength to be commingled with tablets of another drug type and/or strength in the same bottle.
While this is the first False Claims Act qui tam settlement involving cGMP violations, this application of the FCA has been on the radar screen of leading FCA practitioners for years. (For example, in 2004, Kenneth Nolan, founding partner of the national whistleblower firm of Nolan & Auerbach, P.A., penned a 2004 article and a 2008 book chapter on this very topic.) Indeed, similar qui tam actions have been filed and are currently working their way through the Justice Department’s litigative pipeline.
The FCA has implications for cGMP violations because the federal government (funding as it does the Medicare program, the majority of state Medicaid programs, the Veterans Administration, the TRICARE program, and others) is the world’s largest purchaser of prescription medications. Because the FCA imposes liability on any government contractor that knowingly submits false claims to the government or that uses false documents to get a false claim paid, a drug company which knew or was recklessly indifferent to the fact that the manufacturing process was compromised by cGMP violations is in violation of the FCA. The basis of liability under the FCA is that false records have been generated which caused (false) claims for drugs to be paid by the government. The monetary damages result because the government is potentially paying for substandard drugs due to the cGMP violations – later covered up by false statements in documents required to be completed under the cGMP.
With that being said, the government is just now dipping its toes into these FCA waters, so only the most egregious violations will likely rise to the top. When assessing whether a violation meets this high hurdle, one must determine whether the violation is severe enough such that the drug product that finally reaches the public is foreseeably substantially less safe or less effective than if the cGMPs were not violated. If the answer is yes, then for the sake of patient safety, potential whistleblowers are strongly encouraged to contact experienced False Claims Act attorneys who are familiar with the cGMP.
For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, PA.
by Nolan and Auerbach on November 12, 2010
On Monday, the U.S. Supreme declined to hear a False Claims Act case in which the Fourth Circuit had ruled that a release contained in an employment separation agreement barred a former sales manager for Purdue Pharmaceuticals from bringing a qui tam action against the company. U.S. ex rel. Radcliffe v. Purdue Pharma LP, No. 10-254 (U.S. October 12, 2010) (denying certiorari). In this case, the Fourth Circuit, reversing a lower court decision, and held that a pre-filing release of a qui tam action is enforceable when the government has knowledge of the relator’s allegations of fraud independent of the filing of the qui tam action. At the time of the qui tam filing, the government had been investigating the Purdue Pharma’s fraudulent activities for nearly three years.
The relator filed a cert petition with the US Supreme Court, arguing that, if left intact, the decision would undermine Congress’s intent that relators pursue claims that the government is aware of but, for one reason or another, decides not to pursue. The relator also highlighted that FCA defendants, especially pharmaceutical companies, frequently include broad release language in their severance agreements. The Supreme Court was not swayed.
Some have trumpeted these decisions as an endorsement that pre-filing releases bar qui tam actions. However, these decisions only come into play in the rare instance where the government was fully aware of the relator’s specific fraud allegations involving a specific wrongdoer.
In order to wade through these legal waters, potential whistleblowers should retain experienced qui tam attorneys who are familiar with the nuances of the False Claims Act and government investigations.
For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, PA.
by Nolan and Auerbach on October 22, 2010
Last month, drug company Allergan, Inc. agreed to pay $225 million to resolve civil allegations that it unlawfully promoted its drug Botox® Therapeutic for unapproved uses and that it paid illegal remuneration to health care providers to induce them to prescribe the company’s products. In addition, the company agreed to pay a $375 million criminal fine and to plead guilty to a misdemeanor charge of introducing this misbranded drug into interstate commerce. Earlier this week, the court approved Allergan’s plea agreement.
Prior to the sentencing hearing, the government filed a sentencing memorandum, detailing the allegations. According to the government’s memo, Allergan entered into a co-promotion agreement with a pharmaceutical company that had an FDA-approved headache drug, with the underlying goal of promoting Botox to neurologists who were customers of the other company.
“As a result of this unlawful off-label marketing scheme, Botox sales skyrocketed,” the court document said. By 2007, for example, the medical uses of Botox had annual sales of more than $500 million, with up to 80 percent from unapproved uses, primarily headache, pain and spasticity, the government’s document said.
The government began investigating Allergan’s marketing efforts after Nolan & Auerbach’s clients filed a qui tam action against the company.
For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, PA.
by Nolan and Auerbach on October 15, 2010
For the third time in one month, we announced another substantial whistleblower recovery on behalf of their clients. Collectively, the cases have returned in excess of $1.4 billion to the US Treasury to reimburse America’s health care programs. During September, we also represented two whistleblowers in a $600 million overall settlement with Allergan, Inc. and one whistleblower in the $300 million overall settlement with Forest Laboratories, Inc. and its subsidiary Forest Pharmaceuticals, Inc. This latest settlement marks the unsealing of our clients’ cases against pharmaceutical manufacturer Novartis Pharmaceuticals Corporation, which has agreed to pay $237.5 million to resolve civil allegations that it unlawfully promoted its drug Trileptal for unapproved uses and that it paid illegal kickbacks to physicians to induce them to prescribe other of the company’s drugs: Diovan, Exforge and Tekturna. In addition, the company has agreed to pay a $185 million criminal fine and to plead guilty to a misdemeanor charge of introducing misbranded drugs into interstate commerce. Nolan & Auerbach, P.A. represented three of the key whistleblowers in this case, which was brought under the qui tam, or whistleblower, provisions of the False Claims Act. This settlement also resolves two other qui tam actions raising similar allegations. The Nolan & Auerbach press release contains full details.
For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, PA.
From time to time, pharmaceutical companies have challenged the reach of the FCA, especially as it is applies to off-label pharmaceutical marketing schemes. Last week, the US Department of Justice weighed in on this debate, when it filed a Statement of Interest in an ongoing FCA case that alleges that Pfizer violated the FCA by off-label marketing its drug Lipitor.
While not intervening in this qui tam action, the Justice Department submitted its Statement to clarify the legal basis for an FCA claim predicted on allegations of off-label marketing by pharmaceutical manufactures. First, it stressed that claims for payment of items or services that are not eligible for reimbursement by federal health programs are “false claims.” Second, the Justice Department argued that a drug manufacturer may cause a provider to submit a false claim for reimbursement if that false claim was a reasonably foreseeable consequence of the drug manufacturer’s conduct. Third, the Government maintained that the identification of specific false claims is not an absolute prerequisite to satisfying the heightened pleading requirements of the FCA. According to the Statement, “So long as the complaint as a whole is sufficiently particular to strengthen the inference of fraud beyond possibility, a court may conclude that [the pleading standard] is satisfied.”
Notably, in this case, Pfizer had argued that a subsequent FDA-approved use absolved the company of any False Claims Act liability. The Government responded: “If a claim was false when it was submitted in 2004, a label change five years later does not transform that false claim into a reimbursable one. To hold otherwise would be to render federal health care program restrictions on coverage meaningless.”
For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, PA.
The government intervened in a qui tam action, alleging that a software company paid illegal kickbacks to resellers of its products and services. The company argued that the government did not sufficiently allege the facts of the case, for it did not provide details of every single alleged kickback payment. In U.S. ex rel. Rille v. Sun Microsystems, Inc., 2010 WL 3307510 (E.D. Ark. Aug. 18, 2010), the court ruled that the government had sufficiently pled the allegations, for when a systemic practice of fraud is alleged in this circuit, the complaint only needs to include “some” representative examples.
While some courts do not even require “examples” of the underlying false claims, this evidence is important corroboration for a relator’s fraud allegations. Moreover, in some circuits, these false statements or claims are a basic requirement for gaining entrance into the courthouse.
For more information about qui tam law and health care fraud, contact Nolan & Auerbach, P.A.
by Nolan and Auerbach on October 6, 2010
In the opening article of this month’s issue of Nature Medicine, Nolan & Auerbach partner Jeb White advocated sending the masterminds of pharmaceutical fraud to prison. While this idea is still percolating on Capitol Hill, Congress is, at least, taking strides to prevent these masterminds from repeating their criminal mischief with other pharmaceutical companies.
In a bill that overwhelming passed the House of Representatives, corporate executives of companies criminally convicted of health care fraud would be banned from doing business with Medicare and Medicaid. Moreover, the legislation gives HHS-OIG the ability to ban parent companies that committed fraud through their subsidiaries.
Currently, there are glaring loopholes. Under the existing law, executives at companies that are convicted of fraud can be banned from doing business with Medicare and Medicaid, but if that individual had left the company by the time of conviction, there is no mechanism to enforce a ban. This legislation would close this loophole.
This bipartisan bill had 19 co-sponsors, from both sides of the aisle, and it was in response to mounting criticism, including from Lewis Morris, the HHS OIG chief counsel, who recently highlighted this loophole in his congressional testimony.
“When masterminds of pharmaceutical fraud drive their companies into criminal culpability, we should make sure that they are not permitted behind the wheel of another company, particularly when our Medicare and Medicaid dollars are along for the ride,” said Nolan & Auerbach partner Jeb White. “This bill would put the brakes on this endless joyriding by dishonest corporate executives.”
For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, PA.
by Nolan and Auerbach on September 24, 2010
Earlier this week, the federal government and nineteen state governments intervened in a False Claims Act qui tam action against Pfizer and its subsidiary Wyeth Pharmaceuticals, accusing the companies of illegally off-label marketing their drug Rapamune, a drug used to prevent rejection of kidney transplants.
While health care providers can prescribe drugs for anything they see fit, it is illegal for drug companies to promote their drugs for uses not approved by the FDA. In this case, the whistleblowers, former Wyeth sales reps, maintained that they were encouraged to promote this drug for heart, lung, liver and pancreas transplants, even though the FDA had only approved the drug for kidney transplants.
Notably, the federal and state governments initially declined to intervene in this qui tam action. However, because the whistleblowers were able to move the case forward and piece together additional evidence of wrongdoing, the governments decided to take a second look.
Pfizer could be in violation of a corporate integrity agreement it signed a year ago, when it settled another FCA action for $2.3 billion, quieting similar claims of off-label promotions.
For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, PA.
