Life Science Compliance Update

April 04, 2017

DOJ Has Third Highest Annual Recovery in FCA History


The United States Department of Justice has announced the fiscal year 2016 recoveries from civil False Claims Act. This article delves into the numbers, extracting those recoveries related to the healthcare industry, and comparing DOJ-brought suits versus whistleblower-brought suits.

The United States Department of Justice (“DOJ”) announced fiscal year (“FY”) 2016 recoveries from civil False Claims Act (“FCA”) cases mid-December 2016. The total, over $4.7 billion, includes both settlements and judgments and was the third highest annual recovery in FCA history. The 2016 recoveries brought the fiscal year average to nearly $4 billion since FY 2009, and a total of $31 billion has been recovered over the last eight fiscal years. 

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March 30, 2017

Bristol-Myers Squibb Settles Off-Label Promotion Case for $19.5 Million


Late last year, Bristol-Myers Squibb (BMS) settled with the government to resolve allegations that spanned several states that it improperly promoted a schizophrenia treatment for uses not approved by the United States Food and Drug Administration (FDA).

The agreement, with a whopping forty-two states (including California, New York, and Texas) and the District of Columbia, focuses on charges that BMS promoted Abilify (an anti-psychotic drug) for use in children and elderly patients with dementia and Alzheimer’s disease. The FDA approved Abilify in 2002 for treating schizophrenic adults. Since then, it has since approved various forms of the drug for other uses. When the alleged improper marketing occurred, such uses were not approved by the FDA. In 2006, Abilify received a “black box” warning stating that it could increase the risk of death for dementia patients.

The states further alleged that BMS misrepresented risks that the drug posed to patients, such as weight gain and metabolic side effects, violating consumer protection laws.

The agreement prohibits BMS from promoting Abilify for off-label use, making false or misleading claims about it, paying health care providers for merely attending a promotional event for the drug, using medical education grants to promote the drug and rewarding health care providers with grants based on prescribing habits, among other restrictions.

“Drug companies should not market their drug for off-label uses or make claims that are not supported by scientific evidence,” New York Attorney General Eric T. Schneiderman said.  “Consumers must be able to rely on their doctor’s advice for medication without having to worry about drug companies manipulating their advertising to promote their products at the expense of patients.” 

“We allege that Bristol-Myers Squibb improperly marketed this drug to encourage prescriptions to children and seniors and misled the public about its safety for those populations,” said Massachusetts Attorney General Maura Healey. “Companies cannot use deceptive practices and unfair marketing to increase their sales at the expense of patients’ health and well-being.”

The settlement allows each state to receive hundreds of thousands of dollars, with some getting over $1 million. For example, New York will receive $788,774, Texas will rake in $1 million from the settlement and California will come away with $1.3 million. The only eight states that were not part of the settlement, and therefore will receive no part of the settlement funds, were Alaska, Idaho, Mississippi, New Mexico, South Carolina, Utah, Virginia, and Wyoming.

The settlement will finally lay to rest over a decade of allegations about Abilify marketing. In 2015, a United States judge tossed federal court claims that BMS and its Abilify partner, Otsuka, paid kickbacks to boost prescriptions of the drug. Similar to this state settlement, that whistleblower suit cited promotions to pediatric psychiatrists as evidence of off-label marketing. At the time, the judge allowed the whistleblowers to pursue claims that BMS fired them to retaliate for their off-label accusations.

This settlement follows a 2007 settlement at the federal level, where the company agreed to pay $515 million to settle an off-label investigation involving Abilify, along with other drugs.

BMS notes that it has not marketed the drug since 2013 and did not admit to any wrongdoing and denied all allegations against it. 

March 10, 2017

Sanofi Settles Vaccine Antitrust Dispute


Sanofi Pasteur Inc., has agreed to pay $61.5 million in a five-year long class action brought by doctors alleging that the drug company violated antitrust laws with contracts for its pediatric vaccines, according to an agreement filed in federal court in New Jersey in late January. Specifically, the plaintiffs claimed the drug company held a dominant position in five pediatric vaccine markets, including a complete monopoly with quadrivalent meningococcal vaccine Menactra from 2005 to February 2010, when a competitor was introduced. At that point, Sanofi began bundling Menactra with other pediatric vaccines and substantially increasing the prices. 

According to the suit, Sanofi customers who bought a certain percentage of all four pediatric vaccines received a “loyalty discount” that reduced prices back to where they had been prior to the entry of the Novartis’ vaccine onto the market. Customers who did not buy enough of the four vaccines allegedly paid much more, according to the suit.

The lawsuit class was composed for 25,000 physician practices, 1,000 hospitals, 2,000 pharmacies, and 100 wholesalers. The suit received class certification in September 2015. The class was defined as anyone who purchased Menactra directly from Sanofi or its subsidiaries such as VaxServe Inc. 

Buyers in exclusive contracts for Sanofi vaccine bundles faced a penalty if they used Menveo instead of Menactra, the suit claimed. The penalty—ranging from 15.8% to 34.5%—would then apply to all the Sanofi vaccines a particular customer bought. The vaccines Sanofi put in those bundles included its Hib vaccines Pentacel and ActHIB, "for which there are no reasonably adequate medical substitutes," the suit claimed.

Sanofi defended its bundled sales approach in court documents, however. The company's "contracting and pricing practices did not constitute anticompetitive bundling,” Sanofi said in a court filing. Instead, the bundles helped competition and “benefited consumers by, among other things, lowering vaccine prices.” Sanofi also argued that Novartis was “both a profitable and successful competitor.”

The class action, on the other hand, said the practice “unfairly” hurt Novartis’ ability to compete with its meningococcal entrant, according to the complaint.

Sanofi fought the case for years, and even filed a counterclaim, but finally agreed to pay $61.5 million (and abandon the counterclaim) to settle and wrap up the lawsuit. The counterclaim argued that the class “engaged in unlawful collective action through membership” in physician buying groups, “purportedly causing vaccine prices to fall below competitive levels.” A Sanofi spokesperson said the company “has vigorously denied and continues vigorously to deny the plaintiffs’ claims and any allegation of wrongdoing.” The settlement does not require Sanofi to admit any fault.

“Despite Sanofi’s strong defenses, [our company] recognizes that continued litigation is likely to be extraordinarily expensive and time-consuming and thus has agreed to enter into this Settlement Agreement to avoid the further expense, inconvenience, risk and distraction of burdensome and protracted litigation,” according to a statement by Sanofi.

The potential settlement comes in advance of a trial, and has yet to receive approval. 


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