Dueling Counsel Views on Off-label Marketing Ruling

A recent federal appeals court opinion crystalized the difficulty that whistle-blowers face in making legally sufficient allegations to expose off-label drug marketing schemes as fraud against the government.

Two health-care attorneys who represent clients on opposite sides of FCA litigation laid out differing perspectives on whether the Sixth Circuit’s majority opinion on the FCA pleading issue (one of three judges on the panel dissented from the ruling) was correct, and what impact the ruling will have on other FCA off-label litigation.

The U.S. Court of Appeals for the Sixth Circuit affirmed Oct. 27 the dismissal of a False Claims Act lawsuit brought against Bristol-Myers Squibb Co. and Otsuka America Pharmaceutical Inc. because the whistle-blowers, two former BMS sales representatives, failed to provide examples of alleged false claims for Abilify that were induced by improper off-label marketing tactics.

The majority said that a relaxed pleading standard for whistle-blowers who can’t provide examples of actual false claim submissions should be limited to persons with direct knowledge of a defendant’s billing procedures. The dissenting judge said that limiting the availability of a relaxed FCA pleading standard in this way was unnecessary and undermined the intent behind the law.

Claire M. Sylvia, a partner with Phillips & Cohen LLP in San Francisco who represents whistle-blowers, told me that the dissenting opinion “correctly summarizes the trend” in FCA pleading standards, and agreed with the dissent that requiring direct knowledge of a defendant’s billing procedures shouldn’t be necessary.

Sylvia said the decision likely wouldn’t affect pharmaceutical marketing, however, as "[t]he FCA has been extremely effective at enforcing off-label restrictions and calling attention to abuses and the associated harms to public health.” Sylvia said the effect of the decision would be limited because it only applies to cases in the Sixth Circuit, and that drugmakers would be unwise to “ignore past substantial penalties that have been paid for violating the False Claims Act.” Drugmaker Celgene agreed to a $280 million off-label FCA settlement in June of this year.

In contrast, Laura F. Laemmle-Weidenfeld, a partner with Jones Day who represents defendants in health-care fraud matters, told me that the decision to limit the availability of a relaxed FCA pleading standard was appropriate. Laemmle-Weidenfeld said that linking off-label marketing to fraudulent claim submissions “presents a challenged to relators and the government in all off-label cases” during trial and in pre-trial motions. 

Read my full story on the Bristol-Myers Squibb decision here.

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