Monday, May 31, 2010

DMass ruling in Aranesp case

The issues in the district court in Massachusetts were:

First, the Plaintiffs claim that the Defendants used various types of kickbacks to induce providers to purchase Aranesp, a drug manufactured by Amgen intended for treatment of anemia associated with chronic kidney disease and chemotherapy. One such kickback took the form of "excess overfill," i.e., dosages of liquid Aranesp that Amgen included in its single-dose vials, which were in excess of the amount necessary to withdraw the labeled dosage or the amount recommended by the United States Pharmacoepia ("USP"). This excess overfill was akin to a built-in free sample for which the Defendants encouraged providers all over the country to bill, even when the extra Aranesp was either never administered or was administered in medically unnecessary cases. The free overfill created the potential for providers to profit from excess reimbursement and constituted an illegal kickback.

The Plaintiffs also allege that the Defendants gave kickbacks to providers in the form of sham consulting agreements, all-expense paid retreats, free services, and price concessions. Amgen funded these kickbacks by paying monies to INN, disguised as Group Purchasing Organization ("GPO") administrative fees. INN and ASD would then pass such monies to providers as various forms of kickbacks. The Defendants' provision of all such kickbacks caused providers falsely to certify that they were in compliance with federal and state anti-kickback statutes when seeking reimbursement, and caused federal and state governments to pay claims they otherwise would not have paid.

Second, the Plaintiffs claim that Amgen reported an inflated Average Sales Price ("ASP") for Aranesp to the Medicare and Medicaid programs. The federal and state governments base the reimbursement rate for a particular drug on a pharmaceutical company's reported ASP. Although companies are not required to discount bona fide fees (such as GPO administrative fees) in their ASP calculation, they are required to discount price concessions given to customers. The fees Amgen paid to INN and ASD did not constitute bona fide fees and should have been discounted from Aranesp's ASP because they were passed through to providers as price concessions. Amgen failed to discount the price concessions, thereby causing federal and state governments to overpay for Aranesp claims.

Third, the Plaintiffs claim that the Defendants conspired to violate federal and state False Claims Acts by agreeing to engage in the above fraudulent conduct with an intent to cause false claims to be presented to the government.

The court found:

To the extent Count I of Relator's Third Amended Complaint is based on (1) kickbacks in forms other than the overfill scheme as against Defendant Amgen, (2) the pass-through administrative fee scheme as against all Defendants, and (3) ASP inflation as against all Defendants, it is DISMISSED because such claims are barred by the first-to-file rule and this deprives the Court of jurisdiction over these claims.

Relevant law:

In United States ex rel. Duxbury v. Ortho Biotech Prods., 579 F.3d 13 (1st Cir. 2009), the First Circuit followed the trend of other circuits and held that the first-to-file rule bars "`a later allegation [if it] states all the essential facts of a previously-filed claim' or `the same elements of a fraud described in an earlier suit.'" 579 F.3d at 32 (quoting United States ex rel. LaCorte v. SmithKline Beecham Clinical Labs., Inc., 149 F.3d 227, 232-33 (3d Cir. 1998)). Under this essential facts standard, "ยง 3730(b)(5) can still bar a later claim, even if that claim incorporates somewhat different details." Id. (internal quotation marks omitted).

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