In a recent False Claims Act case involving the mental health drug Geodon, Pfizer reportedly lost its bid to have the case dismissed after unsuccessfully arguing, among other claims, that relators failed the “first-to-file” and “public disclosure” requirements contained within the language of the FCA. Specifically, the FCA precludes whistleblowers from attempting to file cases based on facts that are either already addressed by a previously-filed lawsuit or are readily discoverable in public documents (e.g., pleadings, public investigations, or media reports). The FCA contains these restrictions in order to encourage whistleblowers with original information to come forward quickly to report fraud.
One notable exception to the public disclosure rule is that even where there is a public disclosure, a relator may still recover a portion of a judgment or settlement when the individual filing the qui tam complaint is an original source of information found within the complaint. To be an original source, the relator must either voluntarily disclose to the Government the information on which the allegations or transactions in a claim are based, prior to a public disclosure, or have knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and voluntarily provide the information to the Government before filing an action.
U.S. ex rel. v. Pfizer, Inc.: The Details
The current case against Pfizer, Inc. involves the powerful drug Geodon, which is designed to treat the symptoms and side effects of schizophrenia. In 2010, two former Pfizer employees filed a lawsuit under the False Claims Act alleging that Pfizer improperly marketed the drug for purposes beyond its approved use – a practice known as “off-label marketing.” According to the complaint, Pfizer “unabashedly” touted the use of Geodon in bi-polar children and the elderly. It also made wild promises that the drug could bring “the ‘long-term disability of schizophrenia’….to an end.”
The relators filed the claim on behalf of 28 states, the District of Columbia, and the federal government. However, the complaint was amended six times at the direction of the court in order for plaintiffs to establish a stronger causal connection between Pfizer’s alleged marketing practices and resulting harm to the government and its taxpayers.
In the several years since the first Geodon complaint was filed, several other relators have come forward alleging the same practices. As a result, Pfizer has asserted that the relators in the original case should be prohibited from continuing due to the above-described prohibition against whistleblower lawsuits premised upon publicly disclosed facts.
However, the Massachusetts District Court disagreed with Pfizer and has allowed the plaintiffs to continue their case. The judge specifically pointed to the fact that Pfizer settled with the U.S. government in 2009 over various marketing violations, and then continued to market the drug in the same way in violation of the settlement agreement. The judge held that the relators have original, unique information about the dangerous off-label marketing practices implemented by Pfizer and their pleadings met the threshold for avoiding a complete dismissal of the action.
The Court held:
“[r]elators plausibly allege that they have knowledge that is independent of and materially adds to the publicly disclosed allegations of those prior complaints — specifically, knowledge regarding Pfizer’s continued fraudulent promotion of Geodon for unapproved uses after its August 2009 settlement with the government, which caused or was material to false claims….relators thus plausibly allege that they qualify for the ‘original source’ exception, and the public disclosure provision does not provide grounds to dismiss the action.”
As a bit of additional background, off-label marketing in and of itself is not necessarily a violation of the False Claims Act. The relator must prove that the practice was purposely used in order to induce Medicare and Medicaid patients to take a certain drug to treat a condition not expressly approved by the FDA. As well, current ongoing cases are challenging the propriety of FCA liability in light of the First Amendment’s protection of free speech.
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