U.S. ex rel. Franklin v. Parke-Davis

• Decision Date: 25 June 2001
• Docket Number: No. 96-CV-11651-PBS.,96-CV-11651-PBS.
• Citation: 147 F.Supp.2d 39
• Parties: UNITED STATES of America ex rel. David FRANKLIN, Plaintiff, v. PARKE-DAVIS, DIVISION OF WARNER-LAMBERT COMPANY, Defendant.
• Court: U.S. District Court — District of Massachusetts

147 F.Supp.2d 39

UNITED STATES of America ex rel. David FRANKLIN, Plaintiff, v. PARKE-DAVIS, DIVISION OF WARNER-LAMBERT COMPANY, Defendant.

No. 96-CV-11651-PBS.

United States District Court, D. Massachusetts.

June 25, 2001.

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Thomas G. Hoffman, Greene & Hoffman, PC, Thomas M. Greene, Greene & Hoffman, P.C., Boston, MA, for David Franklin.

Robert B. Fiske, Jr., James P. Rouhandeh, James E. Murray, Barbara D. Diggs, Davis Polk & Wardwell, New York City, David B. Chaffin, Hare & Chaffin, Boston, MA, for Parke-Davis.

Thomas E. Kanwit, United States Attorney's Office, Boston, MA, for United States.

MEMORANDUM AND ORDER

SARIS, District Judge.

In this qui tam action under the False Claims Act ("FCA"), 31 U.S.C. § 3729-33, Relator Dr. David Franklin alleges, among other things, that his former employer engaged in a fraudulent scheme to promote the sale of the drug Neurontin for "off-label" uses (i.e., uses other than those approved by the Food and Drug Administration) and that this illegal marketing campaign caused the submission of false claims to the Veterans Administration and to the federal government for Medicaid reimbursement.¹ The Defendant has moved for dismissal based on Relator's failure to plead a claim of fraud with particularity pursuant to Fed.R.Civ.P. 9(b) and his failure to state a claim upon which relief may be granted pursuant to Fed.R.Civ.P. 12(b)(6).

After hearing, Defendant's motion to dismiss is DENIED in part and ALLOWED in part.

I. BACKGROUND

As it must on a motion to dismiss, the Court takes the facts alleged in the complaint and disclosure as true:

A. The Parties

Relator David Franklin ("Franklin" or "Relator") is a former employee of Defendant Parke-Davis, a division of Warner-Lambert Company. Franklin, who holds a doctorate degree in biology, was employed by Parke-Davis as a "medical liaison" for a period of approximately five months during 1996. He has co-authored five scientific publications, is an author of a pending patent application, and received a two-year research fellowship with Harvard Medical School and the Dana Farber Cancer Institute in Boston in 1992.

At the time of the events in question, Warner-Lambert Company was a corporation engaged in the manufacture and sale of pharmaceutical and consumer products. Defendant Parke-Davis was the company's pharmaceutical products division, which manufactured, marketed, and conducted research relating to prescription drugs.²

B. "Off-label" usage of pharmaceuticals

Under the Food, Drug, and Cosmetics Act ("FDCA"), 21 U.S.C. §§ 301-97, new pharmaceutical drugs cannot be distributed in interstate commerce unless the sponsor of the drug demonstrates to the satisfaction of the Food and Drug Administration ("FDA") that the drug is safe and effective for each of its intended uses. See 21 U.S.C. § 355(a) & (d). Once a drug is approved for a particular use, however, the FDA does not prevent doctors from prescribing the drug for uses that are different than those approved by the FDA. Allowing physicians to prescribe drugs for such "off-label" usage "is an accepted and necessary corollary of the FDA's mission to regulate [pharmaceuticals] without directly interfering with the practice of medicine." Buckman Co. v. Plaintiff's Legal Comm., 531 U.S. 341, 121 S.Ct. 1012, 1018, 148 L.Ed.2d 854 (2001). Though physicians may prescribe drugs for off-label usage, the FDA prohibits drug manufacturers from marketing or promoting a drug for a use that the FDA has not approved. See 21 U.S.C. § 331(d) (prohibiting distribution of drug for non-approved uses); id. § 331(a) (prohibiting distribution of a "misbranded" drug). A manufacturer illegally "misbrands" a drug if the drug's labeling includes information about its unapproved uses. See Washington Legal Foundation v. Henney, 202 F.3d 331, 333 (D.C.Cir. 2000). If the manufacturer intends to promote the drug for new uses in addition to those already approved, the materials on off-label uses must meet certain stringent requirements and the manufacturer must resubmit the drug to the FDA testing and approval process. Id. at 334 (setting forth the requirements in the Food and Drug Administration Modernization Act of 1997, 21 U.S.C. § 360aaa, et seq.)

Whether a drug is FDA-approved for a particular use will largely determine whether a prescription for that use of the drug will be reimbursed under the federal Medicaid program. Reimbursement under Medicaid is, in most circumstances,³ available only for "covered outpatient drugs." 42 U.S.C. § 1396b(i)(10). Covered outpatient drugs do not include drugs that are "used for a medical indication which is not a medically accepted indication." Id. § 1396r-8(k)(3). A medically accepted indication, in turn, includes a use "which is approved under the Federal Food Drug and Cosmetic Act" or which is included in specified drug compendia. Id. § 1396r-8(k)(6). See also id. § 1396r-8(g)(1)(B)(i) (identifying compendia to be consulted). Thus, unless a particular off-label use for a drug is included in one of the identified drug compendia, a prescription for the off-label use of that drug is not eligible for reimbursement under Medicaid.

C. Defendant's products

Neurontin, which is the brand name for the drug gabapentin, was approved by the FDA in 1994 for use as an adjunctive treatment for epilepsy in doses from 900 to 1800 mg per day. Neurontin is also used for a number of off-label purposes. For example, Neurontin is prescribed for pain control, as mono-therapy for epilepsy, for control of bipolar disease, and as treatment for attention deficit disorder. According to Relator, 50% of Neurontin's sales in 1996 are attributable to off-label uses. Of those sales, Relator estimates that 50% (or 25% of Neurontin's total sales) were reimbursed by the government either indirectly through Medicaid or directly through purchases by the Veterans Administration.

Accupril, which is the brand name for the drug quinipril, is an angiotensin converting enzyme (ACE) inhibitor that has been approved for the control of hypertension and as a treatment for heart failure.

During the events in question, neither Neurontin nor Accupril were eligible for reimbursement from Medicaid when prescribed for an off-label use because neither drug's off-label uses were included in one of the compendia specified by 42 U.S.C. § 1396r-8(g)(1)(B)(i).

D. Allegations regarding marketing of Neurontin and Accupril

The crux of Relator's allegations is that the Defendant engaged in an extensive and far-reaching campaign to use false statements to promote increased prescriptions of Neurontin and Accupril for off-label uses which caused the filing of false claims for reimbursement by the federal government.

Relator alleges that he was hired by Parke-Davis onto a team of "medical liaisons." While medical liaisons are ordinarily connected to the research divisions of the manufacturer, Parke-Davis's medical liaisons were exclusively employed as sales and promotion personnel.

Parke-Davis's medical liaisons, including Relator, were instructed to make exaggerated or false claims concerning the safety and efficacy of Parke-Davis drugs for off-label uses. They were also trained to convey that Neurontin could be prescribed for its various off-label uses in amounts of up to 4800 mg per day—far above the maximum dosage of 1800 mg per day approved by the FDA. To bolster their representations to physicians, medical liaisons were encouraged to misrepresent their scientific credentials and to pose as research personnel, rather than as sales representatives.

Relator also alleges the doctors were rewarded with kickbacks for prescribing large quantities of Parke-Davis drugs. These alleged kick-backs took various forms. For instance, some doctors were allegedly paid sums of money which were ostensibly compensation for drug studies. However, Relator alleges these studies were shams and had no scientific value. Other doctors were allegedly paid sums of money under the guise of being compensated for their services as "consultants" or "preceptors" or for participating in a "speakers bureau." Doctors were also allegedly given cash payments for small record-keeping tasks, such as allowing Parke-Davis access to information about the doctors' patients who were receiving Neurontin. There are also allegations that doctors prescribing large amounts of Parke-Davis drugs were given gifts such as travel and tickets to the Olympics.

According to Relator, when questions arose concerning the availability of reimbursement for prescriptions for off-label uses of Parke-Davis drugs, medical liaisons were instructed to coach doctors on how to conceal the off-label nature of the prescription. Relator also alleges that Parke-Davis took numerous actions to conceal its activities from the FDA, including shredding documents, falsifying documents, and encouraging medical liaisons to conduct their marketing activities without leaving a "paper trail" that might be discovered by the FDA.

E. Present action

Relator filed this nine-count qui tam action under seal on August 13, 1996. The case remained in limbo and under seal for several years while the United States mulled over its option to intervene. The seal on the complaint was finally lifted on December 21, 1999, and the litigation began in earnest. To date, the government has elected to participate only in the capacity of amicus curiae while reserving its right to intervene as a plaintiff at a later point.

II. ANALYSIS

A. Failure to plead fraud with particularity

1. Application of Rule 9(b) to FCA qui tam claims

Qui tam actions under the FCA must comply with Fed.R.Civ.P. 9(b), which requires that "the circumstances constituting fraud ... shall be stated with particularity." See United States ex rel. Walsh v. Eastman Kodak Co., 98 F.Supp.2d 141, 147 (D.Mass.2000) (applying heightened pleading requirement of Rule 9(b) to...