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Article: July 2016: Product Liability Update

July 01, 2016
Business Litigation Reports

Curbing False Claims Act Liability for Off-Label Promotion. As class actions have become harder to certify following Wal-Mart v. Dukes and Comcast v. Behrend, the plaintiffs’ bar has increasingly turned to qui tam litigation under the False Claims Act, 31 U.S.C §§ 3729-3733, as an alternate means of aggregating claims. Qui tam actions offer private litigants and their attorneys the ability to aggregate claims from a single source, the federal government, without the necessity of amassing hundreds or even thousands of individual, relatively low value, damages claims. And unlike traditional class actions, qui tam litigants may recover treble damages, attorneys’ fees, and statutory penalties.

The turn to qui tam litigation has been notable in suits involving off-label marketing of pharmaceutical products and medical devices. For example, in several related cases, U.S. ex rel. Thorpe, et al. v. GSK, et al., Nos. 11-10398, 03-10641, 11-10741, 11-10921, 12- cr-10206 (D. Mass. 2012), the relators alleged that GSK employed a number of improper marketing tactics to promote several medications, including Paxil, Wellbutrin, and Zofran. Specifically, relators contended that GSK promoted these medications for off-label uses, misrepresented related safety data, and paid illegal kickbacks. This wrongful activity, relators asserted, caused doctors to write improper prescriptions for these medications, which ultimately resulted in the submission of false claims for reimbursement to Medicaid and other federal health care programs. GSK settled the cases for three billion dollars. In U.S. ex rel. Kruszewski v. AstraZeneca Pharmaceuticals L.P., No. 06-4004 (E.D. Pa. 2010), the relator similarly alleged that AstraZeneca marketed Seroquel for off- label uses and misrepresented safety data, resulting in the submission of false claims. AstraZeneca settled the case for 520 million dollars. See also United States ex rel. Osiecki et al. v. Amgen, Inc., et al., Civil Action No. CV-05-5025 (E.D.N.Y. 2012) (Amgen settling criminal and civil FCA claims arising out of relator’s allegations of off-label promotion for $762 million); United States ex rel. Steven Woodward et al. v. Eli Lilly & Co., Case No. 06-5526 (E.D. Pa. 2009) (Eli Lilly & Co. settling similar claims for 1.415 billion dollars).

But a recent Second Circuit victory by Quinn Emanuel may help turn the tide and become a potent tool for obtaining dismissal at the pleading stage of qui tam actions premised on off-label marketing claims. In United States ex rel. Polansky v. Pfizer, 2016 WL 286510, No. 14-4774 (2d. Cir. May 17, 2016), Dr. Jesse Polansky, a former medical director at Pfizer, brought a qui tam suit against the company under the FCA, as well as an analogous state cause of action. Dr. Polansky alleged that Pfizer promoted Lipitor, its top-selling cholesterol-lowering medicine, “off-label,” and sought to recover on behalf of the government for payments for millions of Lipitor prescriptions. Specifically, he alleged that Pfizer sales representatives and marketing materials promoted Lipitor for use by certain patients whose cholesterol levels were not low enough to warrant treatment based on national cholesterol guidelines. And because the guidelines were referenced in the labels for Lipitor, Polansky claimed that they imposed a mandatory restriction on the approved uses for Lipitor, and thus a restriction on how Pfizer could market the medicine.

A unanimous panel of the Second Circuit affirmed the dismissal of Dr. Polansky’s FCA claims on the ground that the guidelines summarized in the label merely “provide[d] advice and (unsurprisingly) guidance, ‘not mandatory limitation.’” Not only did the Second Circuit reject Polansky’s entire theory of “off-label” marketing of Lipitor, but it also questioned whether the conduct alleged—off-label marketing by sales representative or through promotional materials—could even constitute a false claim to the government. The Court reasoned that under Polansky’s theory:

it is unclear just whom Pfizer could have caused to submit a ‘false or fraudulent’ claim: The physician is permitted to issue off‐label prescriptions; the patient follows the physician’s advice, and likely does not know whether the use is off‐label; and the script does not inform the pharmacy at which the prescription will be filled whether the use is on‐label or off.
The False Claims Act, even in its broadest application, was never intended to be used as a back-door regulatory regime to restrict practices that the relevant federal and state agencies have chosen not to prohibit through their regulatory authority.” Polansky II, 914 F. Supp. 2d at 266. It is the FDA’s role to decide what ought to go into a label, and to say what the label means, and to regulate compliance. We agree with Judge Cogan that there is an important distinction between marketing a drug for a purpose obviously not contemplated by the label (such as, with respect to Lipitor, “to promote hair growth or cure cancer”) and marketing a drug for its FDA-approved purpose to a patient population that is neither specified nor excluded in the label. Id. at 265.

Although dicta, this language in the Polansky decision is a step in the right direction to narrow whether and how off-label marketing to physicians can constitute a false claim to the government. A line of previous cases had held that, if the chain between the off-label marketing and the claim seeking Medicare reimbursement is foreseeable, there is a sufficient link between the conduct and the claim to impose False Claims Act liability. See, e.g., United States ex rel. Franklin v. Parke-Davis, Div. of Warner Lambert Co., 147 F. Supp. 2d 39 (D. Mass 2001); United States ex rel. Galmines v. Novartis Pharmaceuticals Corp, 2013 WL 2649704 (E.D. Pa. Mar. 26, 2014); Strom ex rel. United States v. Scios, Inc., 676 F. Supp. 2d 884 (N.D. Cal. 2009; United States ex rel. Kennedy v. Aventis Pharmaceuticals, Inc., 610 F. Supp. 2d 938 (N.D. Ill. 2009). But Polansky suggests that might not be true in circumstances where the drug could be legitimately prescribed for the alleged off-label use. Polansky thus advises that False Claims Act liability should be limited to off-label marketing and promotion that is actually false. Truthful and non-misleading statements that are made with the knowledge that doctors may prescribe the drug for off-label uses to some patients as an exercise of their medical judgment is arguably not enough for False Claims Act liability.

The Polanksy decision could have far reaching implications because it supports the argument that a qui tam relator alleging an FCA claim based on alleged off-label marketing must establish a nexus between the marketing and the submission of the false claim to the government. Given the heightened pleading standard for alleging an FCA claim, this requirement could become a potent tool for obtaining dismissal at the pleading stage.