MORRISON C. ENGLAND, Jr., Chief District Judge.
This lawsuit was originally filed under seal on November 4, 2009, pursuant to the qui tam provisions of the Federal False Claims Act, 31 U.S.C. § 3729, et seq. ("FCA"), against Defendants, who are pharmaceutical companies, include Millennium Pharmaceuticals, Inc., Schering-Plough Corp., and Merck and Co. ("Defendants" unless otherwise indicated). The so-called "Relator" Plaintiff, Frank Solis, a former sales employee who at various points worked for all three Defendants ("Relator" or "Plaintiff") claims that the companies fraudulently marketed and/or promoted the use of two drugs, Integrilin and Avelox, for so called "off label" uses not approved by the Food and Drug Administration.
In response to Motions to Dismiss previously filed on behalf of each of the Defendants, Relator filed a First Amended Complaint ("FAC") on June 27, 2013. The viability of Plaintiff's FAC was then attacked through three separate motions. Defendants Schering-Plough Corp. ("Schering-Plough") and Merck & Co. ("Merck") filed a joint Motion to Dismiss for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1)
Relator's SAC was filed on April 5, 2014. Presently before the Court is a Motion to Dismiss pursuant to Rule 12(b)(6) filed on behalf of Defendants Schering-Plough and Merck (hereinafter referred to collectively as "Moving Defendants"). Moving Defendants further seek dismissal of Relator's FCA claims under Rule 9(b) for failure to plead fraud with particularity. As set forth below, Moving Defendants' Motion is DENIED.
Integrilin is a drug that helps reduce blood clots and thereby helps to prevent heart attacks and death in patients suffering from acute coronary syndrome ("ACS"). ACS is an umbrella term covering a variety of diseases related to clotting in the coronary arteries that supply blood to the heart muscle, including unstable angina ("UA"), mild heart attacks known as non-ST-segment elevation myocardial infarctions ("NSTEMI"), and more severe heart attacks called ST-segment elevation myocardial infarctions ("STEMI"). Avelox, on the other hand, is an antibiotic approved by the Food and Drug Administration ("FDA") for treating adult patients with infections caused by a few susceptible strains of microorganisms.
With respect to Integrilin, FDA approval was first obtained in May 1998 by a company named COR Therapeutics, Inc. ("COR"), which thereafter promoted the drug along with Defendant Schering-Plough. In February of 2002, Defendant Millennium acquired COR and thereby obtained the right to co-promote Integrilin. In September of 2005, Defendant Millennium transferred its right to market Integrilin within the United States to Defendant Schering-Plough, thereby relinquishing any responsibility for the drug after a period of less than four years. Schering-Plough later merged with Merck in November of 2009 to form a new company, also known as Merck. In addition to Integrilin, Schering-Plough and Merck (but not Millenium) also market, sell and distribute Avelox. SAC, ¶ 2.
The allegations incorporated within Relator's initial complaint included contentions that Moving Defendants facilitated the presentation of false reimbursement claims by doctors and hospitals. According to Relator, Defendants promoted the prescription of Integrilin in particular, in combination with other drugs, without properly disclosing the dangers implicit in such combinations. As already stated, those allegations have already been adjudicated in Moving Defendants' previous Rule 12(b)(1) Motion to Dismiss. Relator's SAC, however, also alleges other allegedly improper uses of Integrilin, including its off-label early use for STEMI patients, despite the fact that such early use is "extremely dangerous, off-label and fraudulent." SAC, ¶ 5, 11. Relator further claims that Defendants violated the so-called Anti-Kickback Statute ("AKS"), which prohibits a drug company from knowingly and willfully offering or paying remuneration to purchase goods or services for which payment may be made by a federal healthcare program.
Relator Solis was a pharmaceutical sales representative for Millennium covering the Los Angeles area between July 2003 and September of 2005, and as part of his duties he promoted the sale of Integrilin. After Schering-Plough acquired the exclusive U.S. marketing rights for Integrilin from Millenium in late 2005, he transitioned to employment for Schering-Plough, where he also promoted Integrilin. Then, in November of 2009, after the Schering/Merck merger, he became a Merck sales representative. Relator was terminated by Merck on March 9, 2010.
Plaintiff's 144-page SAC alleges causes of action for federal false claims based on the AKS (Counts One and Two), false claims for causing the submission of off-label billings (Count Three and Four), and false claims for the fraudulent promotion of Integrilin (Count Five). Plaintiff's claims are all rooted in the federal FCA, but additional causes of action based on corresponding state law statutory provisions are also made on behalf of both California (Count Seven) and 27 other states (Counts Eight through Thirty Four).
In now requesting dismissal under Rule 12(b)(6), Moving Defendants argue that Relator has failed to adequately allege the submission of any false claim under the FCA, either with respect to alleged "off-label" promotion of Integrilin or with regard to any FCA violation predicated on the AKS.
On a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), all allegations of material fact must be accepted as true and construed in the light most favorable to the nonmoving party.
Furthermore, "Rule 8(a)(2) . . . requires a showing, rather than a blanket assertion, of entitlement to relief."
Rule 9(b) requires that "in all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." To meet the requisite particularity standards on a case like the present one, which asserts claims under the federal FCA, Relator's allegations must be accompanied by the "who, what, when, where, and how of the misconduct charged."
To state a false certification claim giving rise to FCA liability, a relator must establish four elements: 1) a false statement or fraudulent course of conduct; 2) made knowingly; 3) causing; 4) the government to pay out money.
As indicated above, Relator herein argues that Moving Defendants had the requisite involvement in the submission of claims they knew were false in two different ways: 1) improper marketing of Integrilin for off-label uses; and 2) using kickbacks, bribes and other remuneration in contravention of the AKS to influence doctors to prescribe Integrilin. The sufficiency of Relator's SAC with respect to both of those contentions will now be addressed.
Relator alleges that Moving Defendants caused the submission of false claims by "presenting physicians with false information about off-label uses of Integrilin and encouraging physicians to prescribe Integrilin for such uses and procure the drug for such uses which were not approved by the FDA or any relevant drug compendium." SAC, ¶ 157. According to Relator, such improper promotion "caused physicians and facilities to submit numerous bills for Integrilin that were ineligible for reimbursement under Medicaid, Medicare, and TRICARE because the drug [was] used for an off-label use."
The FDA has approved Integrilin for the treatment of ACS in two different ways. First, it is approved as a drug therapy for UA and NSTEMI patents "who are to be managed medically or with percutaneous coronary intervention (`PCI"), a procedure through which blocked coronary arteries are opened or widened by inflating a tiny balloon inserted into the artery by using a catheter. Second, Integrilin is approved "for the treatment of patients undergoing PCE."
The SAC goes on to allege that Moving Defendants intentionally promoted the early, off-label use of Integrilin for STEMI patients before undergoing PCI, and for treating other cardiovascular problems not approved by the FDA.
Moving Defendants correctly point out that "off-label marketing of an approved drug is itself not inherently fraudulent."
In advocating dismissal, Moving Defendants contend that Medicare pays a flat fee for inpatient hospital care based on broad diagnostic categories. Moving Defendants consequently argue that such single-price billing based on the condition at issue, regardless of the actual treatment being provided, makes Integrilin use irrelevant to the medical services being invoiced. This factual defense, however, does not change the viability of Relator's pleadings. It presents factual issues not proper for determination as a matter of law in the context of a motion to dismiss.
Similarly, while Moving Defendants also claim that a physician's independent decision to prescribe Integrilin trumps any promotional activities that may have preceded that decision, that fact also does not obviate Moving Defendants' potential liability, given the allegations in the SAC as described above. As discussed above, to incur FCA liability Defendants need only play some role in submitting a false claim; they need not play the only role.
For all of these reasons, Relator's SAC sufficiently alleges actionable FCA activity with respect to off-label use to survive Moving Defendants' Motion to Dismiss.
To state a viable FCA violation based on kickback claims in contravention of the AKS, Relator must show that Moving Defendants: 1) knowingly and willfully, 2) offered or paid remuneration, 3) to induce another to purchase a good or service, 4) for which payment may be made by a federal healthcare program. 42 U.S.C. § 1320a-7b(b)(2)(B). Claims influenced by kickbacks are false because "courts, without exception, agree that compliance with the Anti-Kickback Statute is a precondition of Medicare payment, such that liability under the False claims Act can be predicated on a violation of the Anti-Kickback Statute."
As Moving Defendants point out, however, the FCA does not prohibit all business transactions between physicians and drug companies.
The SAC describes, in detail, Moving Defendants' alleged actions between 2002 and 2009 to convince physicians to write prescriptions of Integrilin for off-label uses. Those purported "kickback" activities included funding grants (SAC, ¶¶ 6,7), paying excessive speaker fees (
Again, while Moving Defendants deny these allegations and claim Relator has shown no excessive remuneration that would run afoul of the AKS, the facts of the SAC as alleged by Relator must be deemed true for purposes of ruling on a motion to dismiss. Additionally, as also enumerated above, the SAC need only show that Moving Defendants' alleged illegal promotional activity was a "substantial factor" in the submitting of false claims.
The SAC plainly makes averments that survive a pleadings challenge, either with respect to Rule 12(b)(6) or Rule 9(b). Consequently, Moving Defendants' motion to dismiss the kickback allegations levied against them also fails.
Moving Defendants argue that Relator's state FCA claims fail for the same reasons that his federal FCA claims cannot be sustained. Pl.'s Mem. In Supp. of Mot. to Dismiss, 19:26-27. Given the Court's finding, as enumerated above, that Relator's federal FCA claims survive, the sole reason advanced by Moving Defendants for dismissing the state law claims necessarily fails.
For all the reasons stated above, Moving Defendants' Motion to Dismiss, ECF No. 113, is DENIED.