PHARMACEUTICAL WHISTLEBLOWER BLOG: Whistleblower Lawsuit Against Novartis Survives Motion to Dismiss

Recently, a federal district judge in the Southern District of New York denied, in part, Novartis’ motion to dismiss a whistleblower lawsuit filed under the civil False Claims Act.

The pharmaceutical whistleblower alleged that Novartis engaged in pharmaceutical fraud through its speaker program. According to the complaint, Novartis used its speaker program to induce physicians to preferentially prescribe its drugs to their patients. The whistleblower alleges that these prescriptions were tainted by a federal Anti-Kickback Statute violation. Compliance with the federal Anti-Kickback Statute is a precondition of government payment for prescription drugs. Therefore, the whistleblower alleged that the claims tainted by Anti-Kickback Statute violations also violates the civil False Claims Act and the New York State False Claims Act.

Specifically, the whistleblower alleges that Novartis conducted speaking engagements that, in reality, were just a mechanism for compensating physicians for preferentially prescribing Novartis medications to its patients. According to the pharmaceutical whistleblower, the physicians Novartis hired to speak were provided with luxurious travel accommodations and paid thousands of dollars, under the guise of honoraria, for speaking on behalf of the company.

The pharmaceutical whistleblower also alleged that Novartis violated the civil False Claims Act by promoting the off-label use (i.e. uses not approved by the U.S. Food and Drug Administration) of certain drugs to physicians. Because federal health care programs such as Medicare typically will not cover prescription drugs prescribed for off-label use, the whistleblower alleged that Novartis caused these off-label prescriptions to be paid by government health care programs as a result of its off-label promotion.

The federal government intervened and filed a complaint in intervention. Novartis argued that the whistleblower lawsuit should be dismissed because the complaint was not plead with sufficient particularity as required by federal rule of civil procedure 9(b). The government and whistleblower argued that the court should use the relaxed 9(b) standards adopted by some courts. This relaxed standard only requires allegations regarding the “particular details of a scheme paired with reliable indicia that lead to a strong inference that claims were actually submitted.”

The district court rejected this standard, however, and instead applied the stricter standard used by other courts. The stricter standard requires the complaint plead allegations about the “particulars of the false claims themselves.”

The court ultimately found that the Anti-Kickback Statute violations was plead with sufficient particularity under 9(b) and therefore survived the motion to dismiss. The court found this way because of the hundreds of pages provided by the government listing the particular false claim. The court stated that at the pleading stage “it [was] not necessary for the Government Entities to demonstrate with precision that every prescription written by every doctor was written in exchange for a kickback. To the extent that there is evidence that a prescription was written appropriately, that issue may be raised at summary judgment and/or at trial.”

The court did however dismiss the pharmaceutical whistleblower’s other claim regarding off-label marketing of the pharmaceutical manufacturer’s drugs. The court found that the off-label marketing claim did not meet the pleading standard required under Rule 9(b) because the whistleblower did not identify “a single false claim that was submitted in connection with the alleged off-label promotion scheme.”

The pleading standard required by Rule 9(b) for whistleblower lawsuits under the civil False Claims Act has been debated in courts for some time. Some courts have found that the whistleblower must point to specific false claims submitted in order for a whistleblower lawsuit under the FCA to meet the Rule 9(b) pleading standards. Therefore, in these jurisdiction, a whistleblower needs information regarding specific false claims, and not just information about a scheme to defraud the federal government.

Courts that require complaints to show representative samples of false claims submitted to the government has caused a problem for whistleblowers and whistleblower attorneys. In many instances, a whistleblower may know that fraud against the government is being committed. However, it is typically the entity committing the fraud that has the evidence of specific false claims submitted to the government. Before the discovery stage in a qui tam lawsuit, obtaining evidence of specific false claims can be difficult. Therefore, it may be easier for whistleblowers to bring qui tam lawsuits under the civil False Claims Act in jurisdictions that do not require the stricter Rule 9(b) pleading standard.

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Please contact Ross M. Wolfe if you would like to speak with a whistleblower attorney for more information about the whistleblower process, pharmaceutical fraud or to schedule a free consultation to confidentially discuss your potential case.