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From Health Law Daily, April 14, 2017

After a year of arguments, court rejects Pfizer Vfend® dismissal motion

By Sarah E. Baumann, J.D.

Qui tam relators may proceed with their False Claims Act (FCA) (31 U.S.C. §3729, et seq.) and Antikickback Statute (AKS) (42 U.S.C. §1320a-7b) allegations that Pfizer, Inc. engaged in an unlawful marketing campaign that "cynically exploited" incorrect study results to encourage doctors to prescribe an antifungal drug, and unlawfully billed Medicare and other government programs for the medicine. The U.S. District Court for the Eastern District of Pennsylvania determined that the relators’ claims were not barred by the FCA statute of limitations, as it related back to an earlier complaint, and that relators sufficiently pleaded off-label use, AKS, and fraudulent concealment claims. After repeatedly mentioning that some of Pfizer’s arguments had been addressed in an earlier motion to dismiss, the court denied the motion at hand (U.S. ex rel. Brown v. Pfizer, Inc., April 12, 2017, Surrick, R.).

Complaint and first amended complaint. Pfizer sought FDA approval of Vfend® for "first line" use in the treatment of aspergillosis, localized topical and bloodborne Candida infections, and "empiric use" in suspected fungal infections that had not yet been diagnosed, along wiith preventive use. Relators alleged that Pfizer submitted study results that it knew to be flawed in support of its FDA application—specifically, that Pfizer submitted a study with switched endpoints, which incorrectly suggested that it was a superior antifungal drug when, in fact, patients with certain infections "were more likely to die with Vfend." The FDA approved the drug for first line use to treat aspergillosis and second line use to treat several other fungal infections; it denied approval for bloodborne Candida and empiric use. Relators alleged that the Pfizer relied on the flawed study results in marketing the drug and paid unlawful kickbacks to physicians for prescribing the drug. Furthermore, they alleged that Pfizer unlawfully billed Medicare and other government programs for off-label empiric use.

Relators filed a complaint against Pfizer in 2005. In 2009, another set of relators filed the Wolford complaint. The Wolford complaint contained similar allegations, but was amended to include allegations of pediatric and prophylactic use. Relators in the instant case amended their complaint to include those allegations. Pfizer filed a motion to dismiss. The district court determined that the majority of relators’ claims were not barred by the FCA’s first-to-file rule, since the 2005 complaint was filed first, but dismissed the pediatric and prophylactic use allegations as barred by the first-to-file rule. However, it noted that the Wolford complaint was dismissed while the motion to dismiss was pending, and therefore granted Relators leave to amend their complaint (see Fraudulent marketing of unapproved use supports action, March 3, 2016). It also determined that Relators pleaded fraud with sufficient particularity.

Second amended complaint. Relators filed a Second Amended Complaint (SAC) including pediatric and prophylactic allegations. Pfizer filed a motion to dismiss, arguing that Relators lacked subject matter jurisdiction because they were required to file a separate action rather than an amended complaint after their initial complaint was barred by the first-to-file rule, and that any such action would be barred the FCA’s statute of limitations. It further argued that Medicare and other government programs cover empiric therapy, making the off-label use allegations unsustainable, that Pfizer was subject to a safe harbor provision to the AKS, and that Relators failed to properly allege that Pfizer submitted expressly false reimbursement claims to the FDA pursuant to the implied certification theory. After more than a year of pleadings on the motion, the district court ruled in favor of Relators on all counts.

First-to-file. Under the first-to-file rule, a relator is only entitled to relief if he or she is the first to file the complaint (31 U.S.C. §3730(b)(5)). However, the district court determined that the Wolford complaint was no longer pending at the time it issued its decision on the earlier motion to dismiss, and that it permitted Relators to file filed the SAC to cure the jurisdictional defect. Therefore, Relators were not required to file a new action. Furthermore, the SAC related back to the complaint filed in 2005, within the statute of limitations period, because it contained the same general allegations involving off-label use.

Off-label use. Empiric therapy is reimbursable by Medicare if it is supported by a recognized compendium and is not characterized as "not indicated for ‘Empiric Therapy in Febrile Neutropenic Patients.’" The statute clearly did not exempt Vfend from the requirement, so the court allowed Relators to engage in discovery to determine whether any compendia stated that the drug was not medcially appropriate. Pfizer did not submit any statutory authority clearly stating that the drug was covered by TRICARE, the Federal Employees Health Benefit Program (FEHBA), the Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA) and the Railroad Retirement Medicare Program (RRM). The court therefore allowed relators’ FCA claims with respect to unlawful billing for off-label use to continue.

AKS. The court ruled that Relators’ kickback allegations were more than speculative. Furthermore, Pfizer failed to demonstrate that it met all seven requirements necessary for the personal services and management contracts safe harbor regulation. It only discussed four of the seven requirements in its pleadings, including the requirement that aggregate payments be set in advance, consistent with fair market value in arms-length transactions, and not determined in a manner that takes volume or value of referrals or other generated business that could be reimbursed by federal health care programs. Relators’ allegations called compliance with that requirement into question. As a result, the court permitted Relators to proceed with their AKS claims.

Fraudulent inducement. Pfizer also argued that Relators failed to state that the drug company’s reimbursement claims included expressly false statements, requiring them to assert an implied certification theory. The court determined that an implied false certification theory was not required and that Relators adequately asserted a fraudulent inducement theory of liability. That theory asserts that subsequent claims for payment, while not literally false, are deemed false when they arise from the original false representation. Relators sufficiently pleaded falsity, as Pfizer exploited the erroneous positive results of the flawed study. The consequences of the flawed study were material, in that the FDA approved Vfend for use in Candida infections based upon those results. Furthermore, Relators alleged that knew the study was flawed and still concealed the actual results. The court thus refused to dismiss the complaint.

The case is No. 05-6795.

Attorneys: Margaret L. Hutchinson, U.S. Attorney's Office, for the United States. Loren H. Brown (DLA Piper LLP) for Pfizer, Inc.

Companies: Pfizer, Inc.; United States of America

MainStory: TopStory CaseDecisions CMSNews FDCActNews AdvertisingNews AntikickbackNews BillingNews DrugBiologicNews FCANews FraudNews LabelingNews PartDNews MilitaryNews MisbrandingNews PrescriptionDrugNews QuiTamNews SafetyNews PennsylvaniaNews

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