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Keeping track of litigation over off-label use/promotion frequently sends us off on tangents.  We’ve wandered into abortion cases, securities law cases, criminal cases – even cases brought by criminals.

This time our meanderings have led us into False Claims Act (“FCA”) litigation, and not for the first time.  That’s not surprising since when the First Amendment ultimately takes down the FDA’s ban on truthful off-label promotion, the vehicle is likely to be an FCA case.  The FDA can control its own prosecutions and make sure falsity is always alleged, but it can’t control FCA relators, who if they can get away with it, will avoid alleging anything – such as falsity – that might be difficult to prove.

We have two recent off-label FCA developments to share with you.

Keeping “False” in a False Claim

The first new decision is really recent, like from a couple of days ago.  In United States ex rel. Garcia v. Novartis AG, ___ F. Supp.3d ___, 2015 WL 1206122 (not on yet), C.A. Nos. 06-10465-WGY, et al., slip op. (D. Mass. March 17, 2015), the court dismissed three FCA complaints with prejudice (including one that had been hanging around since pi-day 2006) for a number of reasons – including failure to allege anything false about purported off-label promotion.  The Garcia opinion is 63 pages long.  We only care about pages 44-56, dealing with the relators’ complaints’ failure to plead their false claims with particularity under Fed. R. Civ. P. 9(b).

In this part of the opinion, Garcia starts with the obvious, that the FCA requires “knowing” falsity.  Slip op. at 44.  That means fraud, and fraud means Rule
9(b).  These complaints contained a lot of allegations about off-label promotion – none of which we suspect are true, but which must be assumed to be true for purposes of a motion to dismiss.  Keep that in mind as we list them, because it may well be that these plaintiffs, with FCA dollar signs in their eyes, made this stuff up:

  • Providing scientific studies that supported off-label use;
  • Stating that the cost of the off-label prescriptions would be reimbursable by government programs;
  • Helped prescribing physicians with filling out government reimbursement forms (including coding) and provided blank forms;
  • Alerting physicians to educational literature;
  • The drugs’ FDA-approved labeling;
  • An internal slide presentation for sales representatives, indicating targeting of particular physicians;
  • Various other internal documents;
  • Various kickback related activities (food and drink); and
  • An FDA report about wide-spread off-label use.

Garcia, slip op. at 45, 46 n.47, 48-50.  Beyond that, the complaint alleged that, simultaneously with the off-label promotion, “sales increased.”  Id. at 48, 50.  “In sum,” the allegations “describe[ ] numerous sales practices” that promoted off-label use.  Id. at 51.  That wasn’t the problem with these complaints.  Rather, these allegations “provide[d] sufficiently detailed information about [off-label] sales and marketing practices.”  Id.

No, the trouble with the complaints was the paucity of allegations of: (1) anything false in these practices; and (2) any particular false claims actually being submitted.  Mere violations of other statutes – the FDA’s off-label promotion ban and a kickback statute (with which we’re not concerned) – isn’t enough to get into court under the FCA.

[T]he detailed information . . . regarding the instructions . . . to promote [the drugs] to HCPs [health-care professionals], even for unapproved uses, are nothing more than improper marketing practices. . . .  Such allegations are not sufficient by themselves to make out a violation under the FCA. . . .  [T]here is no evidence of any false statement.

Garcia, slip op. at 51 (footnote omitted).  Sure, there were plenty of allegations that off-label promotion took place, but still no “false statement.”  Id. Off-label promotion can be purely truthful.  These are the kinds of FCA allegations that will eventually put an FCA action squarely in the First Amendment cross-hairs.

There’s more.  The FCA requires both falsity and causation, and a relator doesn’t get there by loading up a complaint (“11 pages”) with descriptions of the medical literature that support the off-label use; moreover a (“60 paragraphs”) “summary of the law and the regulatory history,” id. at 52, isn’t enough either.  Here’s the most important holding (stripped of case-specific baubles), with respect to the most detailed of the three dismissed complaints:

[The] allegations suggest that fraud was probable.  But the factual and statistical evidence resulting from the information . . . in support of these allegations, . . . is not sufficient to strengthen the inference of fraud beyond possibility.  [Plaintiff] does not provide reliable indicia that the alleged underlying schemes resulted in submission of false claims, nor does she bring forward evidence that the physicians who prescribed . . . sought federal reimbursement. . . .  Consequently, absent proof of a false statement that resulted in the submission of a single claim, the Court concludes that [the complaint] has not met the requirements of Rule 9(b).

Garcia, slip op. at 52-53 (block quote from First Circuit decision omitted). Statistics may “strengthen the inference of fraud beyond possibility,” id. at 46, but can’t carry the day without proof that actual doctors submitted actual false claims.

Nor did a “disclosure statement” identifying five specific “targeted” physicians fit the bill.  Id. at 54-55.  Once again, although the statement “suggest[ed]” that “fraud was probable,” it wasn’t enough to  get the plaintiffs over the line.

[T]hey do not strengthen the inference of fraud beyond possibility:  they do not provide information about the filing of the false claims themselves − the effective submission of false claims seeking federal reimbursement.

Garcia, slip op. at 55-56.

Garcia is important because it keeps the “false” in the False Claims Act.  There must be a “false statement,” not just allegations (however extensive) of off-label promotion.  There must also be causation.  Even in the often liberal First Circuit, FCA complaints must allege that the “false statement” in the off-label promotion caused the physician who received it actually to do something that “resulted in submission of false claims.”  Ironically, decisions like Garcia are the best thing the government (FDA and Department of Justice) can hope for in private FCA/off-label promotion actions. Keeping “false” in the FCA also keeps the First Amendment wolf from the door.

Son of Buckman

Our other FCA note is from last year – the dismissal of United States ex rel. D’Agostino v. Ev3, Inc., 2014 WL 4926369 (D. Mass. Sept. 30, 2014), which we’ve dubbed the “son of Buckman” case.  We say that because the claims alleged fraud on the FDA of exactly the same sort that was preempted in Buckman Co. v. Plaintiffs Legal Committee, 531 U.S. 341 (2001), when  brought as a state-law theory.  The FCA, of course, is a federal statute, so there’s no preemption, but all of the practical concerns that drove the finding of preemption in Buckman – the attack on FDA product approvals, fallout from external second-guessing of the completeness of submissions, and the express provision of the FDCA prohibiting private enforcement – are present.

This is not the first time this has happened.  We previously discussed another case , Ge v. Takeda Takeda Pharmaceutical Co., 737 F.3d 116 (1st Cir. 2013), which dismissed similar allegations, but not on their (lack of) substantive merit.

Briefly, in D’Agostino, the attack was on the “narrow” indication for which the defendant had obtained FDA approval of its product:

In broad terms, [relator] alleges that [defendant] misled the FDA during the . . . approval process by proposing an overly narrow indication for [the device’s] use, while concealing the true scope of its marketing strategy, and failing to report relevant safety information.  [Relator] alleges that, but for [defendant’s] fraud, [the device] would not have been approved for any use by the FDA.

2014 WL 4926369, at *1.  That’s exactly the fraud on the FDA allegation found in Buckman:

Many of these actions include state-law causes of action claiming that [defendants] made fraudulent representations to the FDA as to the intended use of the [device] and that, as a result, the devices were improperly given market clearance and were subsequently used to the plaintiffs’ detriment.

531 U.S. at 346-47.  Same allegations – defendants obtained “fraudulent” clearance of one use while intending to promote another off-label.  Had the FDA only known, the device would never have been allowed on the market.

Of course, both situations share the same fundamental problem.  The FDA did act and did allow marketing of the device in question. The plaintiffs’ allegations invoke “fraud” to ignore what the FDA actually did.  Buckman sought damages for personal injuries from the resultant off-label use.  D’Agostino sought recovery of false claims from the resultant off-label use. Although admitting that the device actually “was FDA-approved (and therefore Medicare eligible),” plaintiff in D’Agostino “argue[d] that because defendants fraudulently induced the FDA to grant approval . . ., all off-label reimbursement claims were tainted as a result.”  2014 WL 4926369, at *3.

[Relator] theorizes that because [the device] should not have been approved by the FDA in the first instance, or, alternatively, because it should have been withdrawn from the market or placed under more stringent controls . . ., all reimbursement claims for the use of [the device] must be deemed categorically false.

Id. at *7.

Fortunately, the court in D’Agostino, like the Supreme Court in Buckman, was unwilling to entertain an FCA theory predicated on using “fraud” as an excuse for ignoring an in-force FDA product approval.  The court refused to allow FCA relators to “usurp” FDA regulatory decisions:

The FDA is charged with the difficult task of balancing the risk and benefits of placing drugs and medical devices on the market, and [relator] in effect is asking this court to usurp the FDA and assume that function.  [Relator] proposes, in the guise of an FCA action, that this court reevaluate years of FDA decisions concerning the approval or recall of [defendant’s] medical devices.  The FCA is a vehicle for rooting out undetected financial fraud against the federal government . . .; it is not a substitute for the certiorari review of discretionary decisions taken by the FDA in the area of competence delegated to it by Congress.

In this latter regard, there is a well-established regulatory path for bringing medical devices (as well as new drugs) to clinical trials on an investigational basis, and if the benefits of the device are determined to outweigh its potential risks, to place it in the stream of commerce. . . .  While the FDA expects and requires good faith and responsible behavior from participants in the clinical review and marketing processes, it also has significant administrative sanction and enforcement powers, as well as an Office of Criminal Investigations empowered to refer cases to the Department of Justice for prosecution. . . . [A]n FCA action is not the appropriate venue for this court to exercise its judgment in second-guessing decisions taken by the FDA in approving the use of medical devices simply because the government happens to pay for some of them.

Id. at *9. Compare Buckman, 531 U.S. at 348-49 (describing FDA regulatory process and the “variety of enforcement options that allow it to make a measured response to suspected fraud”).It might not be preemption, but the result, and the reason for it, in D’Agostino is exactly the same as in Buckman. Good riddance to both theories of liability.