United States ex rel. Gardner v. Vanda Pharm., Inc.
| Decision Date | 19 May 2020 |
| Docket Number | Case No. 17-cv-00464 (APM) |
| Parties | UNITED STATES OF AMERICA, ex rel. RICHARD GARDNER, Plaintiffs, v. VANDA PHARMACEUTICALS, INC., Defendant. |
| Court | U.S. District Court — District of Columbia |
Relator Richard Gardner alleges that Defendant Vanda Pharmaceuticals, Inc. caused the submission of numerous false claims to the Medicare and Medicaid programs by promoting and marketing two of its drugs, Fanapt and Hetlioz, for off-label uses. Relator asserts claims under the federal False Claims Act ("FCA") and 32 analogous state laws. The United States and the various States declined to intervene in this case, but Relator nevertheless elected to prosecute it. Now before the court is Defendant's motion to dismiss. For the reasons that follow, the court dismisses all of Relator's claims, but gives Relator the opportunity to amend his complaint.
Defendant Vanda Pharmaceuticals, Inc. ("Vanda" or "Defendant") is a pharmaceutical manufacturer based in Washington, D.C. First Am. Compl., ECF No. 20 [hereinafter FAC], ¶ 9. Relator worked for Vanda as a Regional Business Leader from November 2015 until August 2016. Relator's territory included Illinois, Wisconsin, Michigan, Ohio, Western Pennsylvania, West Virginia, and Indiana. Id. ¶ 6. Regional Business Leaders are responsible for managing Defendant's sales force. Id. ¶ 56. Relator asserts that his claims are confirmed by another Regional Business Leader at Vanda, Jeff Bourgeois. Id. ¶ 51. Bourgeois worked at Vanda from November 2015 through June 2018. Id. At different times during his tenure at Vanda, Bourgeois's territory included Louisiana, Arkansas, Texas, and Oklahoma. Id.
Defendant owns and markets the two drugs at issue in this case, Fanapt and Hetlioz. Id. ¶ 9. Fanapt is an "atypical antipsychotic" used for "the acute treatment of schizophrenia in adults." Id. Fanapt was developed in 1995, but before it was released on the market, Defendant discontinued its research on the drug and sold the rights to Titan Pharmaceuticals. Id. ¶ 10. Titan later sold Fanapt's development, manufacturing, and marketing rights to another drug company, Novartis. Id. The United States Food and Drug Administration ("FDA") approved Fanapt in 2009, and Novartis marketed it until December 2014, when Vanda took over marketing responsibilities. Id. ¶ 11. Hetlioz is a circadian regulator, which the FDA approved as a treatment for Non-24-Hour Sleep-Wake Disorder ("Non-24"), id. ¶ 12, a circadian rhythm sleep disorder found mostly in blind individuals, id. ¶¶ 12-13. Relator alleges that "Defendant has, since at least November 2015, engaged in a scheme to promote . . . Fanapt and Hetlioz for off-label uses, in addition to several other prohibited promotional strategies." Id. ¶ 50.
The FDA approved Fanapt solely to treat adult schizophrenia patients. Id. ¶¶ 9, 62. Other antipsychotics, by contrast, have a wider variety of uses. Id. ¶ 62. To increase sales, Relator alleges, Vanda's senior management implemented a plan to promote Fanapt for bi-polar disorder and "other conditions treated by competitors' antipsychotic medications." Id. ¶ 63. "Specifically . . . , Vanda trained its sales force to market Fanapt to providers as an effectivesubstitute for other atypical antipsychotics that have more expansive indications and are commonly prescribed for bipolar disorder rather than schizophrenia." Id. ¶ 64; see also id. ¶¶ 66-92. According to Relator, Vanda was aware that "a significant portion of the prescriptions secured by its sales force were for off-label uses." Id. ¶ 65.
Additionally, Vanda "targeted" competitors' atypical antipsychotic drugs by setting its representatives' sales goals for Fanapt on par with other antipsychotic drugs. Id. ¶¶ 93-118. As part of that strategy, Vanda provided "target lists" to its sales representatives, which featured providers who prescribed other atypical antipsychotics. Id. ¶ 109. All of the providers on the target lists had at least a few schizophrenia patients, id. ¶ 110, but according to Relator, "the target lists were not useful, as they were in place solely to shield Vanda from liability, and as a result nearly all of the sales representatives relied almost exclusively on the target lists they personally created," as Vanda's provided lists would not allow representatives to meet sales expectations, id. ¶ 112. Vanda's target lists did not differentiate between providers prescribing atypical antipsychotics for schizophrenia versus other conditions. Id. ¶¶ 113-14. Vanda also declined to remove physicians with no schizophrenia patients from its target lists, even when provided the means to do so, and continued to compensate its sales representatives for off-label prescriptions. Id. ¶ 114. Vanda incentivized and encouraged its sales force to call on doctors to prescribe Fanapt for off-label purposes. Id. ¶¶ 115-18. Finally, internal Fanapt sales projections included off-label prescriptions, Relator says, and Vanda refused to change those projections even when, for example, the Indiana Medicaid program changed its coverage policy so that it no longer reimbursed for off-label uses. Id. ¶¶ 119-21.
Vanda also promoted Fanapt for off-label use in pediatric patients. See id. ¶¶ 123-35. As evidence of this, Relator points to target lists, which include child psychiatrists. See id. "Thefact that Vanda included child psychiatrists in its targets lists demonstrates that [Vanda] intended its sales representatives to promote Fanapt to child psychiatrists," as did its failure to remove child psychiatrists from those lists or to stop sales representatives from calling on child psychiatrists to prescribe Fanapt. Id. ¶¶ 130-31.
In addition to off-label promotion and messaging, Relator makes a number of secondary allegations regarding Vanda's improper promotion of Fanapt. First, Relator alleges that Vanda promoted Fanapt as a "first line" treatment when the FDA approved it only as a "second line" treatment. Id. ¶¶ 136-40. More specifically, Fanapt's FDA-approved label states that Fanapt prolongs "QT interval," which may be associated with arrhythmia and sudden death, therefore users should "consider using other antipsychotics first," and "[i]n many cases . . . other drugs should be tried first." Id. ¶ 136. Despite the FDA's warnings and limitations, "Vanda trained its sales force to promote Fanapt as a first line drug." Id. ¶ 137. Second, "Vanda trained its sales representatives to pitch Fanapt to physicians as a once-a-day medication," even though the FDA had approved the drug to be administered twice daily. Id. ¶¶ 141-47. Third, "[i]n order to gain FDA approval," Vanda was required to give certain safety warnings about Fanapt to both patients and providers. Id. ¶ 148. Yet, Vanda implemented strategies and sales techniques to downplay those risks, thereby misleading users. Id. ¶¶ 148-60. Fourth, the FDA-approved Fanapt label states that patients starting the drug should use titration to achieve the target dose. However, according to Relator, "Fanapt sales representatives in some territories were ignoring the FDA-approved titration schedule and giving providers two or three titration packs, rubber banded together, to give to their patients starting Fanapt." Id. ¶ 163. Vanda failed to include instructions on how a patient should properly titrate Fanapt using multiple titration packs, id. ¶ 171, and this "scheme" therefore "had the effect of increasing the target dose for patients receiving the bundledtitration packs, id. ¶ 169. Improper titration could increase a patient's risk for dangerous side effects. See id. ¶¶ 173-74. Fifth, Vanda "regularly promoted, falsely, that the clinical studies demonstrate that Fanapt is just as effective as [another antipsychotic]." Id. ¶¶ 176-78. Finally, "Relator discovered a fraudulent scheme to misuse Fanapt copay cards which Vanda helped conceal." Id. ¶ 179. Relator alleges that in the Detroit, Michigan sales territory there was "a large spike in Fanapt prescriptions among a certain group of physicians." Id. Those physicians had historically prescribed two to three Fanapt prescriptions per month, but in October and November of 2015, they wrote more than 70 Fanapt prescriptions. Id. Vanda's Head of Sales told Relator that the prescription increase was "the result of a fraudulent scheme between the physicians and local pharmacists to submit hundreds of Fanapt copay cards and prescriptions, receive reimbursement from the insurance provider, and then pocket the money because the prescriptions were never dispensed." Id. ¶ 182. Vanda was allegedly an "active participant" in the scheme. Id.
In 2010, the FDA granted "orphan drug" status to Hetlioz to treat Non-24 in blind patients without light perception. Id. ¶ 187.1 Approximately 90,000 blind individuals in the United States suffer from Non-24. Id. ¶ 188. Non-24 is very rare in sighted people, although the exact number of sighted individuals who suffer from Non-24 is not known. Id. ¶ 190. When Vanda sought FDA approval for Hetlioz, it sought approval for use in blind patients. Id. ¶ 191. Similarly, Vanda's clinical trials for the drug involved only blind individuals. Id. But according to Relator, Vanda"quickly turned to sighted patients as their primary target for Hetlioz," a use for which it had not been approved by the FDA. Id.
Relator points to a number of marketing strategies implemented by Defendant as evidence. For example, Regional Business Leaders were directed by Vanda's CEO to tell providers that Hetlioz was "effective in treating circadian rhythm disruption," and that psychiatrists "would connect the dots and easily determinate that [ ] Hetlioz . . . would also be able to treat their non-blind patients with other sleep disorders caused by circadian rhythm disruption, such as shift work sleep disorder, jet lag, and insomnia." Id. ¶¶ 193-94. One sales representative, who had doctors...
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