Court Rules in Novel False Claims Act Case Where One Pharmaceutical Company Sues Another

The U.S. District Court for the Central District of California issued a ruling last week in an unusual, if not unprecedented, case arising from alleged federal False Claims Act (“FCA”) violations where one drug manufacture has sued its competitor. In Amphastar Pharm., Inc. v. Aventis Pharma SA, No. 09-0023 (C.D. Cal.), Amphastar, on behalf of the United States, alleged in its amended qui tam complaint that Aventis had “fraudulently inflated the price of enoxaparin” thus overcharging the federal and various state governments in violation of the FCA. Interestingly, Amphastar’s claims are predicated on allegations that Aventis fraudulently sold Lovenox®, that was “in essence, non-patented enoxaparin,” thereby charging inflated prices. Slip Op. at *7, n. 9. In an earlier decision, the U.S. Court of Appeals for the Federal Circuit affirmed the district court’s ruling that Aventis engaged in “inequitable conduct” and thus held its patents regarding Lovenox® unenforceable. Id. at *2, n. 4.

This case garnered our attention due to the fact that the FCA case was brought by Aventis’ competitor. While qui tam actions against drug manufacturers are by no means rare, those cases are usually brought on behalf of the government by a former employee of the defendant. This is because plaintiffs in FCA cases are required to plead their complaints “with particularity,” a standard that is difficult to meet in any FCA case, and especially difficult to meet without access to inside information. See Fed. R. Civ. P. 9(b). In fact, some jurisdictions require the plaintiff to plead the specific amounts and dates of the alleged fraudulent claims. See, e.g., United States ex rel. Roop v. Hypoguard USA, Inc., 559 F.3d 818, 821 (8th Cir. 2009).

However, the District Court in Amphastar ruled last week that in the 9th Circuit, “pleading representative examples of false claims is one way, but not the only way to meet the Rule 9(b) pleading requirement.” Slip Op. at *6. It explained that Amphastar met its pleading obligations by alleging:

(1) Aventis held the exclusive right to sell enoxaparin in the United States through its fraudulently obtained patent;

(2) Aventis submitted or caused to be submitted to the United States false claims based upon inflated price due to its falsely obtained market exclusivity;

(3) The Government paid claims submitted by Aventis for enoxaparin at illegally high prices and reimbursed Medicare or Medicare providers for dispensing Defendants’ enoxaparin; and

(4) An identified reliable source of data indicated that between 1993 and 2002, the government purchased 6,298,000 units of Lovenox® from Aventis or its distributor for use at federal facilitates totaling $102,655,000 and that between 2003 until the third quarter of 2012, the government purchased 22,497,000 units of Lovenox® from Aventis or its distributors for use at federal facilities totaling $470,559,000.

Id. at *7.