Fourth time's a charm for pharma qui tam in Massachusetts

by Ben Vernia | September 23rd, 2010

In a September 20 decision in U.S. ex rel. Westmoreland v. Amgen, Inc., Judge William G. Young of the District of Massachusetts denied the defendants’ motion to dismiss the fourth amended complaint in a declined pharmaceutical qui tam. The case involved the sale and marketing of Aranesp, an injectable anti-anemia drug. The relator alleged that the company provided overfilled single-use vials of the drug as a kickback to prescribing physicians. The doctors, the whistleblower alleged, could increase their profit by submitting claims for treatment using the free portion of the drug.

Judge Young rejected each of the defendants’ arguments:

  • Viability of the overfill-as-kickback theory – The court found that the relator’s allegations – that the company gave excess, free drug to physicians, encouraged them to bill Medicare for the free doses, and induced the purchase of the drug – sufficiently stated a claim under the False Claims Act. The court likewise found that these claims were pleaded with sufficient particularity under the circumstances.
  • Billing of unadministered or medically unnecessary doses – The relator alleged that the company encouraged some physicians to bill for an amount of the drug exceeding the standard dosage, despite the inability to reliably withdraw that much drug from the vial. The court found these allegations to be adequately pled, and rejected the defendants’ claims that the physicians’ decision constituted an intervening cause which broke the causal link. The physicians’ decision, the court reasoned, was foreseeable, and so did not affect the defendants’ liability.
  • Liability of two ancillary defendants – The court concluded that two entities other than the drug’s manufacturer should remain in the suit. They, too, had used marketing materials which allegedly caused the submission of false claims, and the relator had pleaded provider-specific conduct with respect to each.
  • ASP inflation – the court agreed with the relator that free quantities of the drug could constitute “price concessions” required to be (but allegedly not) reported to CMS by Amgen in its “Average Sales Price” computation.
  • Conspiracy to inflate ASP as to the ancillary defendants – The court rejected these non-manufacturer defendants’ argument that they could not be help liable for conspiring to inflate ASP because the obligation to report ASP belonged to Amgen. Applying general conspiracy principles, the court concluded that the companies need not directly participate in submitting false information to be held liable, and it noted that the complaint alleged that the companies were deeply involved in marketing the drug’s economics, which depended upon an inflated ASP. This was sufficient to survive the motion to dismiss.

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