Massachusetts District Court Rules Compliance with Adverse Event Reporting Rules Is Not a Material, Precondition of Payment

 

In United States ex rel. Ge v. Takeda Pharm. Co., Civil Action Nos. 10-11043-FDS, 11-10343-FDS, 2012 U.S. Dist. LEXIS 156752 (D. Mass. Nov. 1, 2012) (Saylor, J.), the U.S. District Court for the District of Massachusetts held that the defendant drug companies’ compliance with the duty to report adverse drug events to the U.S. Food and Drug Administration (“FDA”) was not a material precondition to payment of the claims at issue in the case, foreclosing liability under the False Claims Act and subjecting the relator’s qui tam action case to dismissal.

Allegations and Procedural History:  The relator brought suit against drug manufacturers Takeda Pharmaceutical Company Limited and Takeda Pharmaceuticals North America, Inc., alleging violations of the federal False Claims Act, 31 U.S.C. §§ 3729 et seq., and a number of state false claims laws.  The relator alleged that the defendants failed to properly report adverse drug events relating to the drugs Actos, Uloric, Kapidex/Dexlant, and Prevacid to the FDA as required by 21 C.F.R. §§ 314.80 and 314.81.  The complaint alleged that the defendants, among other things, misclassified adverse drug events as “non-serious” in order to avoid filing expedited 15-day reports with the FDA.  According to the relator, had the defendants properly reported adverse events, the FDA might have required drug label changes or additional information to be posted in databases maintained by the FDA and that such actions by the FDA might have resulted in fewer prescriptions and, in turn, fewer claims to, and decreased reimbursement by government programs.  The complaint further alleged that, had the defendants properly reported the adverse events, the FDA might have not approved the drugs or might have withdrawn approval.  The district court dismissed the complaint for failure to state a claim upon which relief can be granted and for failure to plead fraud with particularity.

Ruling on Compliance with Duty to Report Adverse Drug Events to the FDA:  The district court followed prior precedent in ruling that the sufficiency of the relator’s complaint depended on whether the claims for payment were false or fraudulent, which in turn, turned on  whether the claims misrepresented compliance with a material, precondition of payment.  The court ruled that compliance with the adverse drug event reporting requirements was not material to the government’s decisions on whether to pay the claims at issue based on its findings that “the FDA exercises discretion in its enforcement procedures for such types of violations, and does not always prosecute them, let alone enforce the harshest penalty” of withdrawal of drug approval, and, moreover, the relator had not introduced any evidence or information establishing that the government’s payment of the drug claims was conditioned on the manufacturers’ compliance with the adverse event reporting rules.  Takeda Pharm. 2012 U.S. Dist. LEXIS 156752, at *18-*19.  The court explained that the “relator [had] relie[d] on a blind, unsupported assertion that the claims at issue included [] an implied representation as to compliance with reporting requirements.”  Id. at *18.