May 16, 2013 Healthcare Fraud
Latest Court Ruling Allows Groundbreaking Qui Tam Lawsuit to Proceed
In one of the most unusual qui tam lawsuits ever filed, generic drug manufacturer Amphastar has charged its competitor, Aventis Pharma (a division of Sanofi-Aventis), with violating the federal False Claims Act. Although False Claims Act suits against pharmaceutical companies are common, they are normally brought on behalf of the government by a former employee of the defendant. This qui tam action is completely unique due to the fact that the False Claims Act lawsuit was originated not by an employee insider, but by a rival business competitor.
In 2009, Amphastar Pharmaceuticals filed a whistleblower lawsuit against its rival drug maker, Aventis Pharma. Amphastar alleged that the Aventis had fraudulently obtained a patent on the anticoagulant enoxaparin, a drug more commonly known as Lovenox. The fraudulently obtained patent essentially allowed Aventis, now known as Sanofi, to increase its prices for the drug across the board. Aventis then passed the inflation on to Medicare and Medicaid programs, defrauding both agencies of millions of dollars.
In a recent ruling by U.S. District Judge Marvin Garbis of the Central District of California, the qui tam lawsuit was allowed to proceed on grounds that Amphastar had made satisfactory argument, showing that Aventis had, in fact, overcharged Medicare and Medicaid for the medication. The price increase of enoxaparin and fraudulent charges that were passed on to both government healthcare providers resulted in violations of the False Claims Act. An earlier legal decision in this case affirmed a previous ruling that found Aventis engaged in “inequitable conduct” and its patents regarding Lovenox were to be considered unenforceable.
The History of Bad Blood
The allegations in Amphastar’s qui tam lawsuit stem from a long-time patent dispute. In 1995, Aventis obtained a patent on the drug enoxaparin from the U.S. Patent and Trademark Office. They then sold the medication under the brand name Lovenox.
Later in 2003, Amphastar filed their own application with the Food and Drug Administration, requesting to produce their own generic version of the drug. What resulted from that application was a lengthy series of patent infringement lawsuits between the two companies.
Amphastar began accusing Aventis of making false statements to the Patent and Trademark Office when they were obtaining the patent for Lovenox. As a result, a California judge found that the patents were unenforceable based on the conduct of Avenits. Later in 2008, the Federal Circuit Court of Appeals upheld that decision. Aventis held the exclusive rights to sell Lovenox from 1993 through 2003, costing Medicare and Medicaid a decade of overpriced medication reimbursements.
In a shocking move, Amphastar ran with the court’s patent decision and filed their own whistleblower lawsuit against Aventis in 2009 under the False Claims Act. The federal False Claims Act clearly states that defrauding or conspiring to defraud any government program is illegal.
Allegations Contained Within Amphastar’s Qui Tam Lawsuit
According to the official court documents, Amphastar alleged that Aventis violated the False Claims Act by:
- making false statements to the U.S.P.T.O. in obtaining two Lovenox patents
- fraudulently listed their patents in the Orange Book, a publication used to identify drug products that are approved on the basis of safety and effectiveness by the Food and Drug Administration (FDA)
- engaging in baseless patent litigation against Amphastar, which extended Aventis’ wrongful monopoly by another 30 months
Aventis filed a motion to dismiss the qui tam lawsuit. Following those arguments, a district court held that, even though Amphastar’s complaint was based on publically disclosed patent litigation, he court considered Amphastar to be the “original source” of the False Claims Act allegations.
Even with that ruling, the court chose to grant Aventis’s motion to dismiss on the grounds that Amphastar’s claims lacked “particularity that Aventis’s false claims were paid or approved by the government.” The court did give Amphastar the option to amend its qui tam complaint, however.
On November 30, 2012, Amphastar took advantage of the court’s option and filed an amended qui tam lawsuit. In the new complaint, Amphastar once again presented their original allegations. However, they went a step further and alleged that, according to “IMS reports . . . from 1993 until 2002, the United States purchased 6,298,000 units of Lovenox® from Aventis . . . totaling $102,655,000.00 [and] that from 2003 until the third quarter of 2012, the government purchased 22,497,000 units of Lovenox® from Aventis . . . totaling $470,559,000.00 . . . [all resulting in] the United States federal government pa[ying] false claims totaling at least $573,214,000.00.”
Aventis filed a motion to dismiss the new and amended qui tam lawsuit on the grounds that the new allegations were still inadequate. However, the district court denied the motion last month, granting Amphastar’s qui tam False Claims Act lawsuit the opportunity to proceed.
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