Thursday, February 25, 2010

Qui Tam Action Looks Like A Ripoff

One of the interesting things about blogging is that a lot of people seem to consider us part of the “press” – whether that’s the “health” press or the “legal” press. As a result, we get sent a lot of unsolicited press releases, maybe a couple of dozen a week. Most of them are from various small medical-related companies announcing this or that medical advance. Since we’re lawyers, not doctors, we’re not competent to evaluate such things, nor would product reviews be what our chosen audience wants to read. Those emails get the “delete” button, even though they've occasionally offered us money for reviews.

But part of the litigation dance these days also involves the press. One thing that the other side does is try to make itself as obnoxious as possible to our clients any way they can.  There's good reason for it.  It’s part of the game; their rationale being that anything that annoys our clients increases the settlement value of their cases.  Even if a case is lousy and has only a nuisance value – the bigger the nuisance, the bigger that value will be.  Or so a lot of folks on the other side thinks.

Among other things, plaintiffs’ lawyers pursue this annoyance function by trying to generate negative buzz about our clients in the media.  So they (or their PR flacks) send out press releases too. And they send them out to bloggers and other media types who aren’t really competent to make heads or tails of what they’re getting.  In particular, the other side throws adjectives like “illegal” and “fraudulent” around as if they’re so much confetti – or, if (like us) you’re less inclined to be charitable, a smokescreen. Toss in a few vague but dark hints about safety risks, and the other side hopes it can generate negative press. We know all about this as lawyers; it’s part of the drill, especially in the major litigation that we get called upon to defend.
 
But sometimes the plaintiff side's offerings to the press find their way to us - as bloggers.

Thus, it’s interesting to experience plaintiffs' annoyance function from the receiving end – as recipients of their press releases.  It’s especially interesting where the topic is something that we’re at least marginally competent to evaluate, and not conflicted from doing so. Yesterday we received an email that started out like this:

Thought you should be aware that a qui tam lawsuit against device maker, Medtronic was recently unsealed by the U.S. District Court in Boston.  The key takeaway in this particular case is that lawsuit suggests that Medtronic knowingly made a mockery of the FDA and its 501(k) process. . . .
The email went on to make various other allegations along the same lines.

We don’t do qui tam work, so ordinarily we’d have binned this too. But we are interested in off-label use, and thus we have taken on qui tams that would seek to penalize off-label use. This looked like it might be one of those cases, so we took a look.

The plaintiffs’ publicist is blatantly trying to direct the gullible press recipients of the email – most of whom don’t know jack about the FDA, off-label use, device approvals, or anything else that’s relevant – to the point of hand-feeding them a “takeaway.” Being defense lawyers, you can’t expect us to take away the same thing. Here are two takeaways we have from the email:
  • Any qui tam action filed in the District of Massachusetts (“U.S. District Court in Boston”) should be automatically suspect. If ATRA ever did a hellhole jurisdiction analysis of qui tam actions, that district would rank number one. It’s notorious for letting plaintiffs get away with cases that would be thrown out of court elsewhere.
  • The allegation “knowingly made a mockery of the FDA and its 501(k) process” is hauntingly familiar to us. That sounds almost exactly like the claim made against the defendants in the Bone Screw litigation – and which, when presented as a state-law claim, was unanimously held preempted in Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001).
With those two takeaways in mind, we thought we’d take a closer look.

But before we get into this particular case, a couple of preliminary points:  First, we’re defense lawyers. If you don’t want a critical review of this case, go somewhere else.  Second, although we’re defense lawyers, we’re not representing Medtronic on this or on any product liability matter at the moment. These are our reactions, unfiltered by client interest and unfettered by client conflicts.

Now, what we know about the workings of qui tam actions isn’t much. But we do know this. The law (called the “False Claims Act”) was first enacted during the Civil War to prevent the government from getting ripped off by defense contractors. In order to do that, the law appeals to greed. That is, anybody who tips off the government that it’s being scammed gets a share of any recovery of ill-gotten proceeds. The people that the plaintiffs’ lawyers like to call “whistleblowers” can also be described as “disgruntled ex-employees out for a buck.”

The intent of the qui tam statute is to make sure:  (1) that the government gets good stuff (not moldy food, non-functional rifles, or broken-down horses), and (2) the government gets a fair price for the good stuff it’s bought. In the area of prescription drugs and medical devices that means – to us anyway – that the products the government pays for should work for what they’re being used, and that those products are safe (recognizing that all prescription products have risks) for the people using them.  And since the qui tam act has a financial aspect, we’ll add a third purpose:  (3) the government also shouldn't be getting overcharged.

Beyond that, whether there’s been “illegal” promotion of off-label use isn’t any more the concern of private qui tam plaintiffs than it is of private tort plaintiffs, private RICO plaintiffs, or private Lanham Act plaintiffs. As to all of them, whether it’s called “preemption” (in state law litigation) or “standing” (in federal question litigation), we say “go away.”

In the FDCA, Congress said explicitly that the FDA and only the FDA (all right, technically the Department of Justice) has the right to take enforcement action against violators of the Act.  See 21 U.S.C. §337(a).  We did a long post recently, called “What To Do With Unpreempted Fraud On The FDA Claims,” detailing just how Buckman’s policy arguments concerning preemption are equally valid in the context of private parties (such as qui tam plaintiffs) purporting to use other federal statutes to pursue FDCA violations.  In short, private federal fraud on the FDA suits are just as meritless as state-law ones - we just can’t use the word “preemption.”

So – keeping the three points we just mentioned (effectiveness, safety, and price) in mind – we followed the link provided in the email to the qui tam plaintiffs’ lawyers’ website.

The first thing we see is that, while the action against Medtronic has been “unsealed,” there’s no mention in the propaganda piece of the government taking over the suit. That’s an important distinction in this area, and one that most of the “press” recipients of this sort of email wouldn’t know about. If the government thinks there’s anything to a qui tam plaintiff's allegations, it has the right (while the suit’s still under wraps) to take over prosecution of the case. That evidently didn’t happen here, which immediately suggests to us that there isn’t much “there there” – at least in a qui tam/false claims sense – to the plaintiff’s claims.

The second thing we see is a statement way at the end quoting the Wall Street Journal to the effect that “the lawsuit appears to parallel a federal investigation by the Department of Justice in Boston into marketing of the biliary stents.” That’s also important. The qui tam act doesn’t want tag alongs; it denies any share of the swag to people who only tell the government old news. So putting aside anything else, that’s another indication that there’s a lot less to this action than the plaintiffs’ publicist would have the press believe. If the Department of Justice, the folks with proper authority to enforce the FDCA on the FDA's behalf, are already are looking into this, then this stab at private enforcement is superfluous.

The plaintiffs’ propaganda, not surprisingly, is liberally strewn with “wrongfullys,” “fraudulentlys” “deceptivelys” “unlawfuls,” and the like. That’s par for the course with this kind of thing. Nothing unexpected there. There’s also a paragraph about “serious adverse events.” That’s more interesting to us than any lawyer’s purple prose.  That paragraph lists various complications that allegedly attend the use of these stents.  Okay.  All prescription medical products, particularly anything that has to be implanted in the human body, have risks, up to and including death in many instances.  If there weren’t any risks, you wouldn’t need a prescription to get one. We frankly can’t tell from the plaintiff lawyer’s propaganda whether there’s any worse risk in using these stents in this way than might be the case with any alternative product. That’s telling.  Since this is propaganda, if there were any way to spin the facts in order to claim such a worse risk, well, we’d expect to see the lawyers trumpeting that to the skies. There isn’t a peep, so we doubt there’s anything of this sort.

The guts of the plaintiffs’ legal claim, moreover, look quite close to the allegations that the Supreme Court unanimously booted in Buckman. The propaganda piece claims that the defendant defrauded the FDA (“submitted false certifications and statements to the FDA”) in order to get these stents approved (“circumvent government regulations. . .for approval of high-risk medical devices”). Given the reference to “high-risk,” we surmise that the claim might be exactly like Buckman – where those plaintiffs alleged that the defendant improperly used the FDA’s “substantial equivalence” (so-called “§510(k) clearance”) procedure to get a device approved for marketing with the intent of selling it for some other use. We’ll have to look at the complaint to be sure.

Before we do, let’s assess the plaintiffs’ propaganda by our three key qui tam points.
  • (1) Do the devices work (part one of did the government get good stuff)?  We think so.  There’s nothing at all in on the plaintiff’s website claiming that these stents aren’t effective for whatever off-label uses to which they’ve been put.  If there’s even a slim argument that they didn’t do the job, we’d expect plaintiffs to shout that from the rooftops. They don’t, so we assume they work.
  • (2) Are the devices safe (part two of did the government get good stuff)?  The plaintiffs mention various risks and call the devices “high risk.”  But remember these are implantable stents.  All implants have risks and failure rates.  We don’t see any claim that these devices were less safe than any alternatives, and again if that argument could be made any competent plaintiff’s side lawyer would make it – loudly.  So our strong suspicion is that this off-label use isn’t any less safe than available alternatives.
  • (3) Did the government get overcharged? Funny, there’s nothing at all about pricing in the plaintiff’s propaganda. What’s that Sherlock Holmes said about it being “curious” that some dog didn’t bark?  It’s equally curious that there’s no hint of an overcharge claim here.  Frankly, an overcharge seems implausible (yes, we mean that in the Twombly/Iqbal sense) to us.  To the contrary, we suspect that the government got a bargain.  There’s only one reason to go the “substantially equivalent”/§510(k) route rather than seek FDA pre-market approval.  That’s because the first way is a lot easier and cheaper.  In product liability, it’s much better to have a PMA device, because then there’s preemption.  Remember Riegel v. Medtronic, Inc., 552 U.S. 312 (2008)?  So a defendant using §510(k) would probably pass some of the cost savings on to its customers.  In other words, if the defendant had done what plaintiffs’ claim it should have, the government probably would have paid more than it did.
At this point, we’re thinking that this lawsuit is a bleached on the beach, tickle your peach ripoff of the legal system.  But we’ll look at the complaint just to be sure.  We’ve provided the link so you can follow along if you're so inclined.

So what do we see?

1. Yup, it’s an off-label promotion case. U.S. ex rel. Nowak v. Medtronic Complaint ¶¶3, 28-29.

2. Double yup, it’s a reprise of Buckman. The claim is that the defendant got these stents cleared as “biliary stents,” didn’t really intend to sell them for that “intended use,” but rather for an off-label use.  Complaint ¶¶4, 6, 19, 22-23, 31, 57, 62.  There’s even the old Buckman “they changed the approved design” claim.  Id. ¶59.  The specific allegation is that, instead of their being “biliary” stents, the product should have been approved for marketing as “vascular” stents, which require PMA as “high-risk Class III” devices.  That’s where the “high risk” riff comes from.

3. As we suspected, there’s no evidence that these stents are particularly dangerous when used off label.  The Complaint characterizes them as “potentially harmful.”  Complaint ¶9.  Every prescription product is that.  More importantly, there’s nothing suggesting that these stents are more dangerous – or less effective – than alternative products, just that, because of their approval route, they haven’t been tested as much as a PMA device would have been.  Id. ¶60.

Supposedly, an “increased” number of MDRs (“medical device reports” of adverse events) happened.  Complaint ¶¶38, 126, 138.  Again, consider the source.  An increase in reports is to be expected if more doctors believe the devices work and choose to use them more often.  More use = more reports.  As we’ve discussed, among other places such as here, the FDA itself says that adverse event reports can’t establish causation.  And jeez, we don’t think these plaintiffs can do math very well – they actually allege that an off-label use representing “90%” of product use produces “81%” of malfunction reports and “87.9%” of all adverse events that are reported.  Complaint ¶137.  On a per-use basis, that indicates (as much as anecdotal reports indicate anything) that the off-label uses are safer than the labeled uses.

The situation appears to be pretty much a reprise of Bone Screw/Buckman – involving an off-label use that is simultaneously the medical standard of care.  See Complaint ¶108 (stating that procedures involved are “standard of care”).  It would be highly unlikely (albeit not impossible, but then it’s possible for the LHC to create black holes that would destroy the earth) for such a use to be less effective or less safe than alternatives.  Widespread off-label use is highly indicative of a simple fact.  The product in question works for the widely accepted use.  That’s because tt’s exteremely difficult to fool the collective clinical experience of the entire medical community for very long.

4. Yup, forum shopping is the only reason this case was filed in the District of Massachusetts.  The plaintiffs are both from California, and defendant is headquartered in Minnesota.  Complaint ¶¶11-13.  Maybe with the Supreme Court’s recent clarification of what “principal place of business” means, see Hertz Corp. v. Friend, 2010 WL 605601 (U.S. 2010), the defendant can get the case moved to a more neutral forum.

5. Heck, it’s even worse than we thought.  It’s just like that Hopper case we blogged about a couple of months ago.  The allegations are that every off-label use, no matter how much it helped the patient who received a stent, is supposedly a “false claim.”  Complaint ¶¶28, 42-47, 140, 174.

In that respect, plaintiffs’ allegations remind us of those weird handgun nuisance cases that Congress thankfully got rid of.  They’re claiming that knowing promotion of off-label use can be presumed from oversupply – that more “biliary” stents are made than the “biliary” market supposedly can absorb.  Complaint ¶35, 92, 100.

6. Ooey-gooey!  The complaint asserts the most broad and constitutionally indefensible reading of the FDA’s “intended use” regulation, 21 C.F.R. §801.4, possible – that simply knowing about likely off-label use is a form of “illegal promotion.”  Complaint ¶¶8, 20, 28, 73.  As we’ve mentioned, even the FDA swore off that reading in its response to the Allergan suit.  FDA Allergan Mot. at 22 (“[i]n practice, FDA usually does not treat an unapproved use as an intended use solely because the manufacturer knows that the unapproved use is taking place”).

That these qui tam plaintiffs claim illegal off-label promotion predicated on a regulatory construction that the FDA not only doesn’t use but has repudiated, brings their suit squarely within Buckman’s reasoning and may well explain the government’s lack of interest.  It’s a really bad idea to have private plaintiffs going around claiming that defendants are violating the FDA’s regulations basis on a reading of those regulations that conflicts with how the Agency applies those same regulations.  We think that’s a much more important takeaway than anything mentioned in the plaintiffs’ email.

7. Yup again.  Plaintiffs are claiming that, because the defendant used the cheaper §510(k) clearance procedure rather than the more expensive PMA, it undercut its competition.  Complaint ¶¶8, 21-22, 36, 63 (“achieved an unfair competitive advantage”).  In other words the government supposedly got ripped off because it got charged less!!  Words fail us, so we’ll just remind everyone how wise Twombly/Iqbal were to require “plausibility” as a pleading standard.

8. Yuk. Plaintiffs cite to Dan Schultz, Complaint ¶¶34, 127-28, an FDA official who recently resigned under a cloud involving funny business with – you guessed it – device approvals.  For more about that see here and here (among other places).

Here, then, are the “takeaways” that us defense lawyers would offer after a quick read of the complaint in Nowak:

There shouldn’t be any qui tam case here.  First, there’s not even an allegation that the medical devices the government bought didn't work.

Second, the allegations don’t establish lack of safety either.  If anything the off-label uses seem to be relatively less productive of adverse events than these stents’ on-label uses.  There’s no allegation that other products were significantly safer.  In short, the government bought and paid for good stuff.

Third, the government wasn’t ripped off.  The Complaint suggests that these devices were cheaper (Remember the allegation about “competitive advantage”?) than other products that could treat the same conditions.

Fourth, The Nowak case is simply an attempt to piggy-back on, and make some money from, a government investigation of off-label promotion.  The Hopper case, discussed here, makes it crystal clear that purportedly off-label promotion, by itself, can’t be a false claim.

Fifth, to interpret the qui tam/False Claims act as the plaintiffs do would be to impose huge, statutory penalties upon off-label use – off-label use that helps patients – simply due to allegations of “off-label promotion” that supposedly violate the FDCA.  Such a result not only invades the FDA’s jurisdiction to prosecute claimed violations, but would also be harmful to everyone involved in the healthcare system, that is everyone except for parasitic plaintiffs such as these.

Sixth, we’re not saying anything one way or another about the purported off-label promotion.  We’ve already stated our views long and loud that truthful (and only truthful) promotion should protected by the First Amendment.  We continue to believe that the proper way to deal with the regulatory issues arising from widespread off-label use (promoted or otherwise) is for the FDA to establish dollar or percentage benchmarks and then to require off-label uses that exceed those benchmarks to be submitted for Agency review.

All in all, we’re reminded of Judge Weinstein’s recent words when he threw out another overreaching off-label promotion case:
The social value of the product at issue in this litigation is also noteworthy. . . .  [Defendant] has created a product with substantial benefits that even now-after many years of litigation, research, testing, and controversy-is still favored by many physicians and patients. . . .  [T]his lawsuit is an effort. . .to obtain a windfall:  to recoup money [] spent covering a prescription drug for Medicaid beneficiaries even though it does not claim that the drug injured them or that it failed to work. . . .

If allowed to proceed in their entirety, [these] claims could result in serious harm or bankruptcy for this defendant and the pharmaceutical industry generally.  For the legal system to be used for this slash-and-burn-style of litigation would arguably constitute an abuse of the legal process.  Constitutional, statutory, and common law rights of those injured to seek relief from the courts must be recognized.  But courts cannot be used as an engine of an industry’s destruction.

In re Zyprexa Products Liability Litigation, ___ F. Supp.2d ___, 2009 WL 4260857, at *65-66 (E.D.N.Y. Dec. 1, 2009).

So thanks to whoever you are for sending us the email that brought this situation to our attention, even though the result wasn’t exactly what you wanted.  We’re always looking for ideas with which to “feed the blog.”

1 comment:

bennie said...

All the other comments now seem superfluous.


Product Liability