Federal Court Finds that FDA Drug Approval is not Complete Defense to False Claims Act Allegation Involving On-Label PromotionFeb 21, 2013
On January 30, 2013, in United States ex rel. v. Bristol Myers Squibb Company & Sanofi-Aventis U.S., LLC et al., Civ. No. 11-00246 (S.D. Ill.) (“BMS & Sanofi-Aventis”), the Court denied a motion to dismiss the relator’s second amended False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq. complaint alleging the defendants made false efficacy claims regarding Plavix, even though the United States Food and Drug Administration (“FDA”) approved Plavix for the promoted uses. This decision is significant for several reasons, including because (a) it will likely embolden the continued emergence of new FCA relator and government enforcement theories concerning the marketing of drugs; (b) it does not expressly distinguish another recent court decision suggesting that FDA approval for a promoted use will preclude FCA liability for promotional activities consistent with that approved use; and (c) it will require life-science companies to remain vigilant as they monitor the promotion of their products, even for approved uses.
The BMS & Sanofi-Aventis Decision
In BMS & Sanofi-Aventis, relator’s second amended complaint alleged, among other things, that the defendants:
- Promoted “Plavix as a superior drug to aspirin for certain indicated usages, and charg[ed] approximately one hundred times more for Plavix than could be charged for aspirin, when in fact Plavix was no more effective than aspirin for certain indicated usages.”1
- “Targeted such efforts at physicians and prescribers whose patients relied upon public assistance programs such as Medicaid [and] Medicare . . . [and caused them to] submit many prescriptions for Plavix that resulted in grossly inflated costs” to the government “when compared to aspirin.”2
- “[M]anipulated clinical trial data to support fraudulent claims regarding Plavix’s efficacy relative to cheaper alternatives, such as aspirin[,] mischaracterized clinical studies which contradicted the sales campaign. . . . [and] targeted doctors whose patients rely on [government programs] for health care treatment so as to wrongfully inflate sales and profits . . . .”3
Defendants moved to dismiss the complaint, arguing that relator failed to state an FCA claim because, among other reasons, relator did not allege any false certification of compliance with a statute or regulation, and because relator’s allegations related only to Plavix prescriptions for uses that the FDA had approved. Defendants asserted that:
Relator asks this Court essentially to overrule the FDA’s approval of Plavix for treatment of stroke patients and to substitute its judgment for the independent medical judgment of physicians who prescribed Plavix. Relator’s allegations are unprecedented. Defendants are aware of no case that has held a drug manufacturer liable for fraud under the FCA for on-label promotion without allegations of illegal kickbacks.4
The court, however, rejected this argument. The court first explained that pursuant to 42 U.S.C. § 1395y, a prescription must be “reasonable and necessary” as a prerequisite to Medicare reimbursement. In light of this requirement, the Court held that relator sufficiently alleged an FCA claim because – if accepted as true – defendants’ actions “caused physicians and pharmacists to submit claims for reimbursement of prescribed treatment that was not ‘reasonable and necessary’ and thus false.”5
The court further concluded that “the fact a drug is FDA-approved does not mean it is ‘reasonable and necessary’ in every instance it is prescribed” and held that plaintiff sufficiently alleged that defendants caused “physicians to certify that Plavix was reasonable and necessary when it was not . . . .”6 Here, the court noted that the relator alleged that “defendants instructed their sales force to present various data and studies in a manner designed to confuse physicians and make them believe that Plavix was more effective than cheaper alternatives.”7
The Significance of the BMS & Sanofi-Aventis Decision
While the court recognized that the defendants’ arguments may be more effective at the summary judgment stage, the BMS & Sanofi-Aventis decision is nevertheless significant.
Recently, FCA and government enforcement actions have focused on the “off-label” promotion of drugs – that is, the marketing and promotion of drugs for uses that the FDA did not approve. In contrast, the BMS & Sanofi-Aventis matter concerns “on-label” FDA approved uses, a developing front in government and relator attacks on life science promotional practices. In other words, this action seeks punishment for causing purportedly unnecessary or excessive use of FDA approved purposes. Thus, the government and relators may look to this decision when developing FCA on-label theories where there is no false certification of compliance with a statute or regulation, no allegation of a kickback, or based upon claimed violations of FDA requirements – which the defendants in BMS & Sanofi-Aventis argued courts had previously, and soundly, rejected.8
In addition, BMS & Sanofi-Aventis did not expressly distinguish United States ex rel. v. Pfizer, Civ. No. 04-0704 (E.D.N.Y. Nov. 15, 2012) where, according to the defendants, the court held FDA approval of an “on-label” use precluded FCA liability. There the court rejected the relator’s claim that Pfizer violated the FCA because it marketed Lipitor to patients who did not warrant drug intervention according to the National Cholesterol Education Program Guidelines, which were referenced in the drug’s label. The court dismissed the relator’s claims, however, because Pfizer was “marketing the drug, after all, for an FDA sanctioned purpose – to lower cholesterol.” Then the court stated that because Pfizer did not engage in “off-label” marketing it had “not violated the FCA.”9
Notwithstanding BMS & Sanofi-Aventis, life-science companies facing government or relator claims concerning an on-label, FDA-approved use, should continue to look to the Pfizer decision and other analogous decisions where regulatory approval helped defeat liability.
As many life-science companies know all too well, however, defending against an FCA claim or related enforcement action can be costly and time-consuming. Thus, it is important for those entities to continue to monitor carefully the promotion of their products, including for FDA approved on-label uses, and to tailor their compliance programs accordingly
3 Id. at 9.
6 Id. at 5-6.