LITIGATION ROUND-UP

Litigation Round-up

Settlements

On October 15th, Fougera Pharmaceuticals agreed to pay $22.75 million to resolve civil allegations related to Medicaid drug pricing claims.  The government alleged that between September 1995 and October 2013, Fougera knowingly set, reported and maintained fraudulent and/or inflated pricing information for certain drugs that resulted in overpayments by the government.   

The U.S. Department of Justice (DOJ) announced on October 17th that Boston Scientific Corp. and its subsidiaries, Guidant LLC, Guidant Sales LLC and Cardiac Pacemakers Inc. (collectively, Guidant), have agreed to pay $30 million to settle allegations that, between 2002 and 2005, Guidant knowingly sold defective heart devices to health care facilities that were implanted into Medicare patients.  Specifically, the DOJ alleged that Guidant learned as early as April 2002 that its Prizm device was defective, and as early as November 2003 that its Renewal 1 and 2 devices were similarly defective.  Although Guidant took corrective action to fix the defects, the company continued to sell its remaining stock of the old, defective versions of the devices and took steps to hide the defects from patients, health care providers and the Food and Drug Administration (FDA). 

Investigations

Louisiana has accused 38 pharmaceutical companies of inappropriately receiving reimbursements for drugs that were not approved by the FDA.  The complaint, which was removed to federal court this month, alleges that the pharmaceutical companies submitted false National Drug Codes (NDC) that Louisiana Medicaid relied on in determining that the drugs were eligible for reimbursement in violation of the state’s Unfair Trade Practices and Consumer Protection Law, Medical Assistance Programs Integrity Law, as well as liability for fraud, negligent misrepresentation, unjust enrichment and redhibition.   

On October 7th, the U.S. Supreme Court invited the U.S. Solicitor General to provide comment on the level of specificity that must be alleged in a complaint under the False Claims Act (FCA) in connection with United States ex rel. Nathan v. Takeda Pharm. N. Am.  Earlier this year, the U.S. Court of Appeals for the Fourth Circuit affirmed dismissal of the case on the grounds that the qui tam relator’s complaint, which was amended three times, did not meet the specificity requirements of Rule 9(b).  The court stated that relator’s allegations of off-label promotion of Kapidex, a proton pump inhibitor used to treat gastric conditions, required specific examples of off-label prescriptions of Kapidex presented to government health-care programs for reimbursement.  The U.S. Supreme Court has not yet granted nor denied review of the Takeda case, which could resolve a multi-circuit split of opinion.    

Other Significant Developments Related to Government Investigations/Settlements 

On October 4th, the U.S. District Court for the District of Columbia ruled on dueling motions for summary judgment regarding a Freedom of Information Act (FOIA) request for corporate integrity agreement (CIA) reports filed with the Department of Health and Human Services (HHS) by Pfizer Inc. and Purdue Pharma LP.  In May 2009, the plaintiff, Public Citizen, filed a FOIA request seeking “all annual reports submitted to the [OIG]” by Purdue and Pfizer in connection with their respective CIAs.  HHS identified 1,177 pages of responsive records for Purdue’s CIA, withheld 1,093 pages, and produced 84 pages with partial redactions.  HHS also identified 9,432 pages of responsive records for Pfizer’s CIA, withheld 5,216 pages, and produced 4,216 with partial redactions.  The withheld documents were exempted as confidential commercial information under FOIA exemption four and/or private personal information under FOIA exemption six, according to HHS. 

The court granted a part of HHS’s summary judgment motion, ruling that certain withheld and redacted documents fell within the FOIA exemption categories. These documents include: (i) “changes in process” of monitoring and removing ineligible persons under both CIAs; (ii) off-label findings and responsive actions take by Pfizer under its CIA; (iii) independent review organization (IRO) reports filed under both CIAs; and (iv) Purdue’s 2009 reports regarding its promotional monitoring program.

The court also granted a part of Public Citizen’s summary judgment motion, ruing that certain requested categories of documents did not fall into within FOIA exemption four or exemption six.  The records that must be produced include: (i) Pfizer’s CIA section V.B.6 documents; (ii) titles and responsibilities of ineligible persons removed under both CIAs; and (iii) the identity of the investigatory agency and status of any investigations under both CIAs.
 
Finally, the court stated that it had insufficient information to determine whether the other documents were properly withheld or redacted.  These documents include: (i) any “reportable events” summaries required by both CIAs; (ii) disclosure log summaries under both CIAs; (iii) title and responsibility information of ineligible persons for both CIAs; (iv) information about any investigating agency under both CIAs; (v) information from Purdue’s 2009 report that does not pertain to the promotional monitoring program; (vi) summaries of legal and investigatory reports under both CIAs; (vii) communications with the FDA required by both CIAs; and (viii) records of sessions between covered persons and healthcare providers.
 
The court ordered the parties to meet and confer to determine which requested documents remain in dispute and to submit additional reports and briefings to the court by November 8th.

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