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.