• District Court Dismisses FCA Case, Rejecting Whistleblower’s Attempt to Plead Off-Label Marketing Allegations Through Statistics
  • September 27, 2011 | Author: Michael E. Paulhus
  • Law Firm: King & Spalding LLP - Atlanta Office
  • On September 6, 2011, the District Court for the Eastern District of Virginia dismissed a qui tam whistleblower’s False Claims Act (FCA) allegations of off-label promotion because the relator could not plead facts sufficient to state a claim.  See United States ex rel. Nathan v. Takeda Pharms. N. Am., Inc., No. 1:09-cv-1086 (AJT), 2011 WL 3911095 (E.D. Va. Sept. 6, 2011).  The Court rejected the relator’s attempt to buttress his third amended complaint with statistical evidence, finding the complaint failed to plead fraud with particularity and failed to state a claim.

    The relator, Noah Nathan, alleged that Takeda Pharmaceuticals North America, Inc. and Takeda Pharmaceuticals America, Inc. (Takeda) engaged in a scheme to market its drug, Kapidex, in a manner that resulted in physicians prescribing the drug for “off-label” uses in violation of the Food, Drug and Cosmetics Act.  This promotion allegedly caused the submission of false claims to federal healthcare programs, including Medicare and Medicaid.  The relator’s operative complaint “fail[ed] to identify any specific false claims or any specific prescriptions, physicians, pharmacies, payments or reimbursements that caused such a false claim to be filed.”  Instead of pleading these facts, the relator argued that he could satisfy the specificity requirements for a fraud claim under the FCA by pleading, among other details, statistics concerning the distribution of Kapidex sales and patient populations served by the specialists who received samples in certain doses.

    The Court found that the relator failed to plead the facts of any specific claims that were presented to the Government for payment or that Takeda caused any such presentment in violation of 31 U.S.C. § 3729(a)(1)(A).  The relator also failed to allege affirmative misrepresentations with the specificity required by Rule 9(b) to plead a violation of 31 U.S.C. § 3729(a)(1)(B).  Among other claims, the relator asserted that rheumatologists do not treat conditions that are on-label for Kapidex, so all prescriptions written by rheumatologists must be off-label.  He then sought to establish that some of these prescriptions must have been reimbursed by Government payers, given that “a significant percentage of prescriptions from his territory and his district were submitted for reimbursement to government programs.”  The court rejected this contention, finding “there is nothing that establishes beyond a possibility that ‘tens of thousands of prescriptions’ of Kapidex were written by rheumatologists” or that the Government paid for some of them.

    Additionally, the relator pled no facts to support his theory that primary care physicians in his district prescribed Kapidex at a 60 milligram dose, which he contended was off-label for the conditions treated by primary care physicians.  He claimed that more than 90 percent of the company’s overall sales were at 60 milligrams, so it was reasonable to infer that over 90 percent of the primary care physicians’ prescriptions would have been for the 60 milligram dose.  The Court, nevertheless, found no factual evidence to allow it to conclude the same ratio of overall Kapidex sales would apply to prescriptions that were actually written by the primary care physicians at issue.

    The Court also found the relator failed to plead facts sufficient to make a plausible claim that Takeda “caused” the submission of any false claims.  It explained that “physicians are not unsophisticated lay persons and it is reasonable to assume that they are familiar with relevant medical literature” and that “off-label FCA cases generally involve allegations that the judgment of a physician was altered or affected by the defendant’s fraudulent activities, which also typically involve improper payments, benefits or inducements, or misrepresentations.”  In this case, the “[r]elator [did not make] any allegations regarding kickbacks or other improper incentives or attempts to distort otherwise objective medical literature.”

    The Court found additional amendments would be futile, and it dismissed the FCA claims without leave to amend.  It declined to exercise supplemental jurisdiction over state law claims and dismissed these without prejudice.