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Here’s another “guest” post (at this point, only in the sense that we have to load it) from our semi-regular contributor, Melissa Wojtylak of Reed Smith.  She gets all the credit for her work.


The Fourth Circuit is the latest court to reject a claim that prescribing a drug for off label use gives rise to False Claims Act liability.  As regular readers of the blog know, the False Claims Act imposes liability for knowingly presenting a false or fraudulent claim for payment to the government.  See 31 U.S.C. § 3729 (a)(1)(A).  And as regular readers also know, in recent years, enterprising relators (who can often also be described as “disgruntled former employees of the defendant”) have attempted to cash in under the FCA by bringing qui tam actions against pharmaceutical companies, claiming that the company purposely marketed its drugs for off-label uses.  While various explanations and theories are advanced by these relators, the underlying premise of these actions is essentially the flawed proposition that the mere existence of off label use of a drug is, in and of itself, a bad thing.  Which, or course, it isn’t.   As we’ve discussed on the blog in the past, several courts have seen the flaw in this logic and sent relators packing.

In U.S. ex rel. Nathan v. Takeda Pharmaceuticals North America, Inc., 2013 U.S. App. LEXIS 765 (4th Cir. Jan. 11, 2013), the Fourth Circuit affirmed a district court’s dismissal of the relator-plaintiff’s third amended complaint on the grounds that it did not plausibly allege that any false claims had ever been presented to the government for payment, let alone that any conduct on the defendant’s part  – in particular,  an alleged scheme of promoting drugs for off-label uses − had caused those phantom claims to be presented.   While the products liability lawyer in us in drawn to the latter part of that statement and really wanted to see the Fourth Circuit address it, the court didn’t, as it held that the relator couldn’t even get out of the gate on the first part – that is, the need to show that false claims for payment were in fact made to government programs such as Medicaid.

The court began its analysis by noting that the relator’s complaint was governed by Rule 9(b), which sets out the minimum standard for pleading an actionable (i.e., false) representation under the FCA.   This relator, faced with a pesky absence of specifics about things such as the dates on which reimbursement claims were submitted to the government and who submitted them, argued that Rule 9(b)’s standard could be met if the complaint pled acts sufficient to show a scheme by the defendant to promote the drug for off label use.  Id. at *11-14.  Once that was done, relator argued, the court could plausibly find that false claims must have been presented as a result of this scheme.   Id.   Well, no, the court responded.   Just because the existence of such a scheme could have led to presentation of false claims, it need not necessarily have done so, and therefore the relator was still required to plead some facts that showed that false claims actually were presented.   Id. at *14.  The court rejected cases cited by the relator in which other courts had relaxed the standard, while at the same time acknowledging that without such relaxation, some relators would face a tough road.   In essence, the court held that the rules are the rules, for better or for worse, and the relator’s complaint would have to be judged by them.

Things quickly fell apart for the relator at that point.   The Fourth Circuit examined four types of allegations from the third amended complaint that supposedly satisfied relator’s pleading burden, rejecting every single one.   First, the relator alleged that the company’s sales reps had marketed to doctors who didn’t even treat the condition that the drug at issue was labeled to treat.   Id. at *16.  Somewhat disappointingly, the court didn’t call this statement out for the nonsense that it is, and instead just noted that the third amended complaint didn’t allege that any of these doctors had actually written prescriptions for the drug.  Id.  at *17.  (Yeah, we know that’s the appropriate legal analysis, but still, a little smackdown on the flawed logic would have been nice).  Given the failure to allege that prescriptions were even written, the relator could hardly have plausibly alleged that reimbursement claims for the costs of these prescriptions were presented to the government for payment, and on this point, the allegations fell short of the standard.  Id.

Moving on, the court next rejected a variation on the theme.   Relator alleged that 98 prescriptions written by 16 primary care physicians had resulted in false claims because 1) those physicians had gotten samples of the drug in a 60 mg dosage, which was only approved for treatment of one condition, and 2) primary care physicians typically do not treat this condition.  Id. at *18-19.  Ergo, these primary care physicians must have been writing the prescriptions for off-label uses.   There’s that underlying theme that we mentioned earlier – that if it’s an off-label use, it must be bad/wrong/fraudulent.

But here it gets even more incredible:   while the relator pled that 98 prescriptions for the drug were filled after being written by PCP’s who got the 60 mg samples, he didn’t even plead the dosages of the prescriptions that these physicians wrote.   Instead, relator argued that physicians tend to prescribe drugs in the same dosage as the samples that they give to patients, so these 98 prescriptions must have been for the 60 mg dosage.   The relator tried to buttress this sheer speculation by quoting a statistic that 93% of all prescriptions written for this particular drug were for the 60 mg dosage.

Here the court delivered a gentle form of the smackdown we were hoping to see earlier.  It pointed out that 1) if it was true that PCP’s don’t normally treat the condition for which the 60 mg dose was approved, then it would be more logical to assume that these doctors were not prescribing this dosage; 2) the third amended complaint didn’t directly allege that the prescriptions were written for off-label use (to which we say, “so what if it had?”), and 3) the mere fact that PCP’s don’t normally treat the condition for which the 60 mg dose was approved doesn’t necessarily mean that they weren’t treating the condition in
the patients for whom the 98 prescriptions were written.   Id. at 20-21.

The relator next tried to argue that because 9,000 prescriptions had been submitted to government agencies for reimbursement in just two of the defendant’s sales districts during certain time periods, this must support the averment that false claims were presented.   The court made short work of this one, noting the stark lack of detail with regard to who wrote these prescriptions, the illnesses that they were intended to treat, and – importantly – whether these physicians had been on the receiving end of the defendant’s (alleged) sample distribution practices.   Id. at 21-22.

Finally, the court rejected the affidavits of three different doctors submitted with the latest version of the complaint, in which the doctors said they had prescribed the 60 mg dose of the drug to Medicare patients because they didn’t know the drug was available in a lower dose, thanks to the company’s bang-up marketing efforts for the 60 mg dose.  (Note to these physicians:  you should check out this fabulous new invention called the “internet” – or even an older one called the “PDR.”  You’d be amazed what you could learn about the drugs you prescribe.)  The court similarly shot down this claim, noting that the physicians and the relator had failed to provide critical details such as dates of prescriptions, or to allege that the Medicare patients actually filled these prescriptions, thus resulting in claims to Medicare for reimbursement.  Id. at 22.

After looking at these four groups of allegations identified by relator, the court boiled down the relators’ alleged factual bases for his claims as follows:

Relator essentially has alleged that some claims must have been presented to the government for payment because prescriptions of this kind are frequently and routinely obtained by persons who participate in health care programs sponsored by the federal government, or because federally insured patients receive off-label prescriptions.

Id. at *24.  The court noted, however, that allegations of this type don’t survive a motion to dismiss because they are “inherently speculative in nature.” Id.   The court also reminded the relator that the purported scheme, as alleged, was not “an integrated scheme in which presentment of a claim for payment was a necessary result.”  Id.

Good stuff, but what happens next is our favorite part.  The Fourth Circuit affirmed the district court’s denial of the relator’s motion for leave to amend his complaint yet again, finding no abuse of discretion where the relator had been given two years and four chances to get a properly-pled complaint on file.  (Because of this, we were tempted to title this post “Four Strikes and You’re (Finally) Out”).  The Fourth Circuit noted that allowing yet another amendment – the fifth complaint, as it pointed out – “would undermine the substantial interest of finality in litigation and unduly subject [defendant] to the continued time and expense occasioned by Relator’s pleading failures. “  Id. at *25-26.  We couldn’t have said it better ourselves.