A Takeda Manager Asks The Supreme Court To Review A Whistleblower Ruling
Will a recent appeals court ruling restrict the ability of whistleblowers to file lawsuits that allege drugmakers duped federal healthcare programs into paying for medicines?
This is the contention made by Noah Nathan, a sales manager at Takeda Pharmaceuticals, who claims the drugmaker defrauded Medicare by falsely marketing higher doses of its Kapidex treatment for gastroesophageal reflux disease, or GERD, than what was approved by the FDA. So far, Nathan has lost two rounds in court, but now hopes the US Supreme Court will review his case.
Why? In his view, a decision earlier this year by the US Court of Appeals for the Fourth Circuit requires whistleblowers to meet an impossibly high bar for satisfying a key provision of the False Claims Act. And his lawyers argue that, given division among federal appeals courts, if the Fourth Circuit decision is allowed to stand, the ability of the US government “to recover billions of dollars for fraud is at stake.”
At its core, the fight is over the standards used to determine whether a lawsuit alleging violations of the False Claims Act sufficiently provides enough specific information to provide evidence of fraud. Any decision could have enormous implications for the federal government and the pharmaceutical industry. In fiscal year 2012, the US government recovered $3 billion from violations of the False Claims Act, including illegal pricing and marketing by drug and device makers (see this).
The issue in this case is interpretation of rule 9b of the False Claims Act, which refers to alleging fraud claims with “sufficient specificity,” another way of saying a whistleblower must provide very specific info about false claims that a drugmaker submits to the government for payment. This information may include amounts charged, drugs prescribed, patient diagnosis and individuals involved in billing, which is a level of detail that can be very hard to obtain, given patient privacy laws such as HIPAA.
In ruling against Nathan last January, the Fourth Circuit ruled that a whistleblower must “allege with particularity that specific false claims were presented to the government for payment.” In other words, the appeals court wanted detailed and verifiable evidence of individual instances where the government was defrauded, even while acknowledging the difficulties that can be encountered in obtaining specific prescription invoices and the barriers posed by privacy laws (here is the petition to the Supreme Court and the Fourth Circuit ruling appears in the appendix).
In seeking a Supreme Court review, his attorneys maintain that such an interpretation, which is shared by three other circuits, does not jibe with the interpretation made by four other circuit courts, which only require “particular details of (a) scheme to submit false claims paired with reliable indica that lead to a strong reference that claims were actually submitted.” In other words, four circuit courts have a more relaxed take on rule 9b, while four others are much more stringent.
Some background: the FDA approved a 30mg dose of Kapidex to treat GERD, which affects up to 20 percent of the US population. A 60mg dose was approved to treat the much rarer erosive esophagitis. Nathan charged that Takeda only provided physicians with samples of the 60mg dose, a tactic designed to create a market among GERD patients, because doctors would then be induced to write prescriptions for the higher dose. And he charged that 93 percent of all Kapidex prescriptions were written for 60 mg doses, and this was evidence of a scheme to illegally market the drug to treat GERD.
For its part, Takeda argues that Nathan, nonetheless, failed to meet rule 9b standards set by all of the circuits. Even though Nathan was able to identify 98 prescriptions that were written for Medicare patients by 16 primary care physicians on specific dates, the drugmaker contends that the sales manager actually made a “series of generalized allegations” because he did not allege the specific dosages in those prescriptions or that the prescriptions were written for off-label purposes (here is the Takeda response).
But Nathan and his attorneys point to affidavits provided by two gastroenterologists, including a former American Medical Association president, who maintained they were unaware that a 30mg dose of Kapidex was available and that the sampling of the 60mg dose influenced them to write prescription for the higher dose for their GERD patients. Given that erosive esophagitis effects just 2 percent of the population, they reasoned that prescriptions for the 30mg dose should outstrip the 60m prescriptions. Instead, they argue the situation was topsy-turvy (and here is the Nathan response to the Takeda response).
Whether the Supreme Court will agree to review the case remains unclear. Certainly, a split among the circuit courts exists, but to what extent the Fourth Circuit ruling could be more broadly applied may be a wild card. Perhaps the Supreme Court will consider reviewing the dispute if the Obama administration were to file a brief, which would underscore the importance with which the White House views the matter.
Recently, for instance, the feds underscored concerns about the viability of the False Claims Act by asking a federal appeals court to overturn a decision that Takeda was not liable for failing to inform the FDA of adverse event reports concerning several of its drugs. In any event, a controversy over rule 9b is in play and is likely to continue to vex drugmakers and whistleblowers alike if a review does not occur.
STORY ENDS HERE
whistle pic thx to katerna on flickr
This is the contention made by Noah Nathan, a sales manager at Takeda Pharmaceuticals, who claims the drugmaker defrauded Medicare by falsely marketing higher doses of its Kapidex treatment for gastroesophageal reflux disease, or GERD, than what was approved by the FDA. So far, Nathan has lost two rounds in court, but now hopes the US Supreme Court will review his case.
Why? In his view, a decision earlier this year by the US Court of Appeals for the Fourth Circuit requires whistleblowers to meet an impossibly high bar for satisfying a key provision of the False Claims Act. And his lawyers argue that, given division among federal appeals courts, if the Fourth Circuit decision is allowed to stand, the ability of the US government “to recover billions of dollars for fraud is at stake.”
At its core, the fight is over the standards used to determine whether a lawsuit alleging violations of the False Claims Act sufficiently provides enough specific information to provide evidence of fraud. Any decision could have enormous implications for the federal government and the pharmaceutical industry. In fiscal year 2012, the US government recovered $3 billion from violations of the False Claims Act, including illegal pricing and marketing by drug and device makers (see this).
The issue in this case is interpretation of rule 9b of the False Claims Act, which refers to alleging fraud claims with “sufficient specificity,” another way of saying a whistleblower must provide very specific info about false claims that a drugmaker submits to the government for payment. This information may include amounts charged, drugs prescribed, patient diagnosis and individuals involved in billing, which is a level of detail that can be very hard to obtain, given patient privacy laws such as HIPAA.
In ruling against Nathan last January, the Fourth Circuit ruled that a whistleblower must “allege with particularity that specific false claims were presented to the government for payment.” In other words, the appeals court wanted detailed and verifiable evidence of individual instances where the government was defrauded, even while acknowledging the difficulties that can be encountered in obtaining specific prescription invoices and the barriers posed by privacy laws (here is the petition to the Supreme Court and the Fourth Circuit ruling appears in the appendix).
In seeking a Supreme Court review, his attorneys maintain that such an interpretation, which is shared by three other circuits, does not jibe with the interpretation made by four other circuit courts, which only require “particular details of (a) scheme to submit false claims paired with reliable indica that lead to a strong reference that claims were actually submitted.” In other words, four circuit courts have a more relaxed take on rule 9b, while four others are much more stringent.
Some background: the FDA approved a 30mg dose of Kapidex to treat GERD, which affects up to 20 percent of the US population. A 60mg dose was approved to treat the much rarer erosive esophagitis. Nathan charged that Takeda only provided physicians with samples of the 60mg dose, a tactic designed to create a market among GERD patients, because doctors would then be induced to write prescriptions for the higher dose. And he charged that 93 percent of all Kapidex prescriptions were written for 60 mg doses, and this was evidence of a scheme to illegally market the drug to treat GERD.
For its part, Takeda argues that Nathan, nonetheless, failed to meet rule 9b standards set by all of the circuits. Even though Nathan was able to identify 98 prescriptions that were written for Medicare patients by 16 primary care physicians on specific dates, the drugmaker contends that the sales manager actually made a “series of generalized allegations” because he did not allege the specific dosages in those prescriptions or that the prescriptions were written for off-label purposes (here is the Takeda response).
But Nathan and his attorneys point to affidavits provided by two gastroenterologists, including a former American Medical Association president, who maintained they were unaware that a 30mg dose of Kapidex was available and that the sampling of the 60mg dose influenced them to write prescription for the higher dose for their GERD patients. Given that erosive esophagitis effects just 2 percent of the population, they reasoned that prescriptions for the 30mg dose should outstrip the 60m prescriptions. Instead, they argue the situation was topsy-turvy (and here is the Nathan response to the Takeda response).
Whether the Supreme Court will agree to review the case remains unclear. Certainly, a split among the circuit courts exists, but to what extent the Fourth Circuit ruling could be more broadly applied may be a wild card. Perhaps the Supreme Court will consider reviewing the dispute if the Obama administration were to file a brief, which would underscore the importance with which the White House views the matter.
Recently, for instance, the feds underscored concerns about the viability of the False Claims Act by asking a federal appeals court to overturn a decision that Takeda was not liable for failing to inform the FDA of adverse event reports concerning several of its drugs. In any event, a controversy over rule 9b is in play and is likely to continue to vex drugmakers and whistleblowers alike if a review does not occur.
STORY ENDS HERE
whistle pic thx to katerna on flickr
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