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Senate Subcommittee Holds Hearing on Public Health Impacts of PFAS Exposures

On December 5, 2024, the Senate Environment and Public Works (EPW) Subcommittee on Chemical Safety, Waste Management, Environmental Justice, and Regulatory Oversight held a hearing on “Examining the Public Health Impacts of PFAS Exposures.” The Subcommittee heard from the following witnesses (written testimony is not available at this time):

Laurel Schaider, Ph.D., Senior Scientist, Environmental Chemistry and Engineering, Silent Spring Institute;
Sue Fenton, Ph.D., Director of the Center for Human Health and the Environment, Professor of Biological Sciences, North Carolina State University; and
Michael D. Larrañaga, Ph.D., P.E., President and Managing Principal, R.E.M. Risk Consultants, on behalf of the American Industrial Hygiene Association (AIHA).

A transcript of the hearing is available online.

Schaider testified that there needs to be a comprehensive strategy to address all per- and polyfluoroalkyl substances (PFAS), including fluorinated polymers, as a class. Schaider described how the manufacture of PFAS can expose workers and nearby communities to PFAS and how the disposal of products that contain PFAS can contaminate the environment. Fenton offered a number of suggestions for possible legislation, including: limiting the production and use of PFAS; requiring health insurance companies to pay for PFAS testing in susceptible populations; phasing out PFAS in firefighting foams (FFF); requiring manufacturers to provide standards in purified forms of their PFAS; and requiring PFAS manufacturers to fund the development of safe destruction methods for PFAS. Larrañaga stated that PFAS are part of our critical infrastructure and are used in the manufacture of products such as semiconductors, electronics, medical equipment, pharmaceuticals, herbicides, insecticides, plastics, airplanes, automobiles, and buildings. Larrañaga urged that the use of PFAS be balanced against the risk of alternatives.

The hearing included discussion of the use of PFAS in consumer products, including non-stick pans and waterproof mascara, versus other products, such as cell phones and semiconductors. Schaider stated that the issue is not only non-essential uses of PFAS, as in cookware, but also the lifecycle of products that contain PFAS. There may be environmental contamination in communities where PFAS are manufactured, workers may be exposed during manufacture, and at the end of the lifecycle of the product, the PFAS could end up in a landfill or in emissions when incinerated.

During the hearing, Senator Roger Wicker (R-MS) asked whether all PFAS cause the same level of harm and noted the common definition of PFAS as “any compound containing at least one fully fluorinated carbon atom.” Larrañaga responded that although fluoropolymers contain one fully fluorinated carbon atom, they are less bioavailable than other PFAS of concern. There could be an issue if heating them, but by removing that use from the marketplace, instead of banning all PFAS, there would be no adverse effect to critical infrastructure or defense. Schaider stated that, to her knowledge, no PFAS is completely safe. According to Schaider, newer PFAS replacement chemicals raise many of the same health concerns. Schaider suggested that an essential uses framework could be used to identify where PFAS uses can be reduced immediately.

The hearing included discussion of the best way to move forward. Fenton noted that even for essential uses, there is potential exposure to the waste and that proper disposal is important. According to Fenton, labeling products with intentionally added PFAS would allow consumers to make more informed choices. Subcommittee Chair Jeff Merkley (D-OR) suggested that there may be product categories where labeling is more important because the contamination pathway is more significant. Merkley concluded that Congress should continue to explore how to reduce the risk of PFAS to citizens.

Commentary

There is much discussion, seemingly everywhere, about PFAS, but no easy answers to the questions the Subcommittee considered. In a perfect world, PFAS would be comprehensively addressed as Schaider recommends, and all the unknowns about disposal, exposure, and toxicity would be known. But we do not live in that world, and many hard questions remain to be answered. The Subcommittee gets points for raising key issues, but did little to move the needle.

All eyes are now on the new kids in town — the incoming Trump Administration and U.S. Environmental Protection Agency (EPA) Administrator-Designate Lee Zeldin. We expect in 2025 a decidedly different focus on PFAS, but beyond this, much remains to be seen.

Litigation Against Pharmacy Benefit Managers

Pharmacy Benefit Managers (PBMs) play a large role in the pharmaceutical medication distribution industry and have faced a great deal of litigation in recent years. This blog entry looks at cases against PBMs brought under the U.S. False Claims Act (FCA), as well as those brought as class actions on behalf of various kinds of groups.

FCA Actions

Cases brought against PBMs under the FCA typically involve allegations of fraudulent billing practices, false statements, and kickback schemes. These cases often address whether PBMs have caused false claims to be submitted to government healthcare programs, such as Medicaid, and whether they have engaged in practices that violate the FCA and other related statutes.

First, PBMs may violate the FCA by failing to pay reimbursements to individuals, other business entities, and/or state or federal agencies. In United States v. Caremark, Inc., the U.S. Court of Appeals for the Fifth Circuit held that the district court erred in finding that the Defendant PBM did not impair an obligation to the government within the meaning of the FCA by unlawfully denying reimbursement requests from state Medicaid agencies.

Second, PBMs may violate the FCA by billing individuals, other business entities, and/or state or federal agencies for services that were never rendered. In United States ex rel. Hunt v. Merck-Medco Managed Care, L.L.C., the U.S. District Court for the Eastern District of Pennsylvania addressed allegations that the PBM billed for services not rendered and fraudulently avoided contractual penalties it would otherwise have had to pay. The Court found that the Complaint sufficiently alleged that the PBM caused false claims to be presented to an agent of the United States, satisfying the statutory requirements of the FCA.

Third, PBMs may violate the FCA by overcharging individuals, other business entities, and/or state or federal agencies for services. For example, in two cases that were settled in 2019 in the Western District of Texas and the Northern District of Iowa, two subsidiaries of Fagron Holding USA LLC settled with the U.S. for over $22 million in connection with such a scheme. In the first, Fagron subsidiary Pharmacy Services Inc. (PSI) and its affiliates were accused of submitting fraudulent compound prescription claims to federal healthcare programs, manipulating pricing through sham insurance programs, paying kickbacks to physicians, and illegally waiving copays. In the second, Fagron subsidiary B&B Pharmaceuticals Inc. faced claims under the FCA for setting an inflated average wholesale price for Gabapentin.

Finally, PBMs may violate the FCA by engaging in kickback schemes with drug manufacturers or other entities. These schemes may also involve waiving copays and the provision of unnecessary services to patients. One notable case involves AstraZeneca LP, a pharmaceutical manufacturer, which agreed to pay $7.9 million to settle allegations that it engaged in a kickback scheme with Medco Health Solutions, a PBM. The allegations included providing remuneration to Medco in exchange for maintaining exclusive status of AstraZenica’s heartburn relief drug Nexium on certain formularies, which led to the submission of false claims to the Retiree Drug Subsidy Program. Similarly, Sanford Health and its associated entities agreed to pay $20.25 million to resolve FCA allegations related to false claims submitted to federal healthcare programs. The allegations included violations of the Anti-Kickback Statute and medically unnecessary spinal surgeries, with one of Sanford’s top neurosurgeons receiving kickbacks from his use of implantable devices distributed by his physician-owned distributorship.

Class Actions

Class action cases against pharmacy benefit managers (PBMs) often involve allegations of deceptive practices, breach of fiduciary duty, and violations of contractual obligations. These cases typically involve issues such as the improper handling of rebates, kickbacks, inflated drug costs, and the failure to act in the best interest of plan participants.

First, PBMs may subject themselves to liability by failing to pass on negotiated rebates or other types of savings to their members. In Corr. Officers’ Benevolent Ass’n of the City of N.Y. v. Express Scripts, Inc., a union alleged that PBM managers failed to pass on negotiated rebates to its members, instead keeping them for their own benefit. The court found sufficient allegations to support claims of deceptive practices and breach of fiduciary duty, allowing these claims to proceed.

Second, and far more commonly, PBMs face liability for engaging in antitrust violations. Such liability typically arises when PBMs collude with one another to fix drug processes or otherwise improperly influence the market for medications and/or other medical services. For example, in In re Brand Name Prescription Drugs Antitrust Litig., a class of retail pharmacies alleged that drug manufacturers and wholesalers conspired to deny them discounts. The court found sufficient evidence of violations to proceed to trial. Similarly, in Independent Pharmacies vs. OptumRx, more than 50 independent pharmacies filed a class action lawsuit against OptumRx, a division of UnitedHealth Group, alleging that OptumRx failed to comply with state pharmacy claims reimbursement laws, leading to illegal price discrimination and reimbursement violations. Lastly, in Elan and Adam Klein, Leah Weav, et. al v. Prime Therapeutics, Express Scripts, and CVS Health, the Plaintiffs brought a action lawsuit against three major PBMs – Prime Therapeutics, Express Scripts, and CVS Health – on behalf of EpiPen purchasers with ERISA health plans for contributing to EpiPen price inflation through rebates and breaching their fiduciary duty to plan members.

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In short, because PBMs play such a large role in the pharmaceutical medication distribution industry, there are many ways that they can subject themselves to liability under the FCA, pursuant to a class action, or otherwise. As the place of PBMs in this marketplace continues to grow, we can expect that litigation against them will do likewise. Potential plaintiffs seeking to bring claims against a PBM should consult with an experienced attorney in order to determine all of the causes of action that may be available to them.

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¹United States v. Caremark, Inc., 634 F.3d 808 (5th Cir. 2011).
²United States ex rel. Hunt v. Merck-Medco Managed Care, L.L.C., 336 F. Supp. 2d 430 (E.D. Pa. 2004).
³ Corr. Officers’ Benevolent Ass’n of the City of N.Y. v. Express Scripts, Inc., 522 F. Supp. 2d 1132.
⁴In re Brand Name Prescription Drugs Antitrust Litig., 123 F.3d 599.

Whistleblower Receives $11 Million for Reporting Pharmaceutical Fraud

September 16, 2022. The United States Department of Justice settled a case against the pharmaceutical manufacturer Bayer Corporation. Under the terms of the settlement, Bayer paid $40 million. A former employee in the pharmaceutical company’s marketing department filed two qui tam lawsuits alleging violations of the False Claims Act. For reporting fraud, the whistleblower received approximately $11 million, and they pursued both cases after the Department of Justice (DOJ) declined to intervene.

According to the allegations, the pharmaceutical company was paying kickbacks to healthcare providers to “induce them to utilize the drugs Trasylol and Avelox, and also marketed these drugs for off-label uses that were not reasonable and necessary.” This lawsuit was filed in the District of New Jersey and alleged that the because of these kickbacks, the pharmaceutical company caused submission of false claims to Medicare and Medicaid. The lawsuit that was transferred to the District of Minnesota entailed the pharmaceutical company knowingly misrepresenting the safety and efficacy of Baycol, a statin drug, and also renewing contracts with the Defense Logistics Agency based on these misrepresentations. To settle these allegations, Bayer paid $38,860,555 to the United States and $1,139,445 to the Medicaid Participating States. The Principal Deputy Assistant Attorney General remarked about this settlement, “Today’s recovery highlights the critical role that whistleblowers play in the effective use of the False Claims Act to combat fraud in federal healthcare programs.”

The False Claims Act incentivizes private citizens to report fraud against the government and holds accountable companies that financially benefit from participation in government contracts and government-sponsored programs. The Department of Justice needs whistleblowers to the be the antidote to pharmaceutical fraud.

Article By Renée Brooker and Eva Gunasekera of Tycko & Zavareei LLP

For more whistleblower and white collar crime legal news, click here to visit the National Law Review.

Supreme People’s Court Upholds China’s First Patent Linkage Ruling – Decision Released

On August 28, 2022, 知识产权那点事 published the first patent linkage decision from the Supreme People’s Court (SPC). The SPC upheld the Beijing IP Court ruling that Wenzhou Haihe Pharmaceutical Co., Ltd.’s application for marketing authorization for a generic form of “Aidecalcidol Soft Capsule” did not fall within scope of protection of the relevant patent. China’s patent linkage system prevents marketing authorization for a generic prior to the expiration of the patent term on the branded equivalent unless the Beijing IP Court or the China National Intellectual Property Administration (CNIPA) rules that the generic does not fall within the scope of the relevant patent rights or is invalid.

On November 10, 2021, the Beijing IP Court announced that the plaintiff of the case, Chugai Pharmaceutical Co., Ltd., a subsidiary of Roche, claimed that it was the patentee as well as the holder of the marketing license for the patented drug “Aidecalcidol Soft Capsule”, and the patent involved in the drug was CN 2005800098777.6 entitled “ED-71 preparation.” The plaintiff discovered that the defendant Wenzhou Haihe Pharmaceutical Co., Ltd. had applied to the National Medical Products Administration (NMPA) for a generic drug marketing license application named “Aidecalcidol Soft Capsule”. The public information on the Chinese listed drug patent information registration platform showed that the defendant had made a 4.2 category statement regarding the generic drug (the generic drugs do not fall into the scope of protection of the related patents). Therefore, the plaintiff filed a drug patent linkage lawsuit with the Beijing Intellectual Property Court in accordance with the provisions of Article 76 of the Amended Patent Law, requesting the court to confirm that the generic drug “Aidecalcidol Soft Capsule” that the defendant applied for registration fell into the scope the rights of Patent No. 2005800098777.6 enjoyed by the plaintiff.

The Beijing IP Court held:

The technical solution used by the generic drug involved is neither the same nor equivalent to the technical solution of claim 1 of the involved patent, so the technical solution does not fall within the protection scope of claim 1 of the involved patent. Since claims 2-6 are dependent claims of claim 1, if the technical solution of the generic drug involved does not fall within the protection scope of claim 1, it also does not fall within the protection scope of claims 2-6. Accordingly, the plaintiff’s claim that the involved generic drug falls within the protection scope of claims 1-6 of the involved patent cannot be established, and the court will not support it.

In the decision, the Supreme People’s Court stated there were two key points:

1. In the process of drug marketing review and approval, disputes arising from the patent rights related to the drug to be registered between the drug marketing license applicant and the relevant patentee or interested parties are only one type of the related patent rights between the two parties – often referred to as drug patent link disputes. For chemical generic drugs, the drug regulatory department of the State Council conducts drug marketing review and approval based on the application materials of the generic drug applicant, and decides whether to suspend the approval of the relevant drugs according to the effective judgment made by the people’s court [or the China National Intellectual Property Administration] on such disputes within the prescribed time limit. Therefore, when judging whether the technical solution of a generic drug falls within the scope of patent protection, in principle, it should be compared and judged on the basis of the application materials of the generic drug applicant. If the technical solution actually implemented by the generic drug applicant is inconsistent with the declared technical solution, it shall bear legal responsibility in accordance with the relevant laws and regulations on drug supervision and administration; if the patentee or interested party believes that the technical solution actually implemented by the generic drug applicant constitutes infringement, a separate lawsuit for patent infringement may also be filed. Therefore, whether the technical solution actually implemented by a generic drug applicant is the same as the application materials is generally not within the scope of examination to confirm that the dispute falls within the scope of patent protection.

2. The court of second instance held that both the donation [to the public] rule and the estoppel rule can constitute a restriction on the application of the principle of equivalence, both of which aim to achieve a reasonable balance between equitably protecting the interests of the patentee and safeguarding the interests of the public. If the conditions for limiting the application of the principle of equivalence are met, there is usually no need to judge whether the two features constitute similar means, functions, and effects, and whether those skilled in the art can conceptualize them without creative work. In this case, since Haihe Company claimed the application of the estoppel rule by virtue of the amendment of the claims by Chugai Pharmaceutical Co., Ltd., and claimed the application of the donation rule by the patent text as the result of the amendment, the court of second instance first rendered a judgment on whether the rules on estoppel should be applied on the basis of the amendment of the claims by the patentee.

The case numbers are:

北京知识产权法院（2021）京73民初1438号民事判决书

最高人民法院（2022）最高法知民终905号民事判决书

The full text of the decision courtesy of 知识产权那点事 is available here (Chinese only).

Article By Aaron Wininger of Schwegman, Lundberg & Woessner, P.A.

For more intellectual property legal news, click here to visit the National Law Review.

New Tools in the Fight Against Counterfeit Pharmaceuticals

The explosive growth of internet pharmacies and direct-to-consumer shipment of pharmaceuticals has provided increased access to, and reduced the cost of, important medications. Unfortunately, these same forces have increased the risks that counterfeit medicines will make their way to consumers, endangering patient safety and affecting manufacturers’ reputation in the public eye.

While the Food and Drug Administration attempts to police such misconduct through enforcement of the Food, Drug, and Cosmetics Act (FDCA), the resources devoted to enforcement are simply no match for the size and scope of the counterfeiting threat. Fortunately, pharmaceutical manufacturers are not without recourse, as several well-established tools may be used in the right circumstances to stop counterfeiters from profiting from the sale of knock-offs.

Experienced litigators can use the Lanham Act and the Racketeer Influenced Corrupt Organizations (RICO) Act to stop unscrupulous individuals and organizations from deceiving customers with counterfeit versions of trademarked drugs. Until recently, these legal weapons – including search warrants, seizures, forfeitures, and significant penalties – were typically wielded only by the government and only in criminal prosecutions.

As one recent case demonstrates, however, many of the tools that law enforcement has used for years to combat counterfeiters are also available to pharmaceutical manufacturers. In Gilead Sciences, Inc. v. Safe Chain Solutions, LLC, et al., the manufacturer of several trademarked HIV medications filed a civil complaint, under seal, alleging violations of the Lanham Act and RICO against scores of individuals and companies that were allegedly selling counterfeit versions of these drugs to patients across the country.

By deploying private investigators and techniques typically used by law enforcement, Gilead was able to gather a substantial amount of evidence before even filing the case. The company then used this evidence to secure ex parte seizure warrants and asset freezes, allowing it to locate and seize thousands of counterfeit pills and packaging before they could be shipped to unsuspecting consumers. Through the seizure of the financial proceeds of the alleged counterfeiting, Gilead prevented the dissipation of assets. If the company can successfully prove its RICO case, it stands to recover treble damages and attorneys’ fees as well.

Manufacturers of trademarked pharmaceuticals may consider using these and other tools to tackle the threat posed by counterfeiters. By drawing upon the experience and skills of trained litigators – particularly counsel who previously deployed these tools on behalf of the government while serving as federal prosecutors – companies can proactively protect their intellectual property and the consumers who depend on their products.

Article By Eric J. Beste, Anthony J. Burba and Heather F. Delgado of Barnes & Thornburg LLP

For more health law legal news, click here to visit the National Law Review.

New York Compounding Pharmacy Settles Fraudulent Billing and Kickback Allegations in Whistleblower Lawsuit

Upstate New York pharmaceutical companies FPR Specialty Pharmacy (now defunct) and Mead Square Pharmacy, along with their owners, agreed to pay $426,000 to settle fraudulent claims and kickback allegations brought forth by a whistleblower. According to the U.S. government, the pharmacies submitted fraudulent claims for reimbursement to federal healthcare programs for compounded prescription drugs in violation of the False Claims Act and the Anti-Kickback Statute. The pharmacies allegedly sold prescription drugs to federal healthcare program beneficiaries in states without a license, improperly induced patients to purchase expensive custom compounded medications by waiving all or part of the substantial co-payments required under the federal healthcare programs, and paid sales representatives per-prescription commissions to illegally induce writing more prescriptions.

“The rules governing federal healthcare programs require pharmacies dispensing prescriptions to their members to be licensed with the appropriate state authorities to request reimbursement for the cost of the medications. The pharmacies violated the False Claims Act by dispensing and requesting reimbursement for hundreds of prescriptions of “Focused Pain Relief” cream dispensed to federal healthcare program beneficiaries located in states where the pharmacies were not licensed to operate by the appropriate state authorities, and by failing to disclose that they were not licensed. The Pharmacies also violated the False Claims Act by billing federal healthcare programs for prescriptions dispensed in states where they had obtained their state licenses under false pretenses, including by failing to inform state authorities that they had previously dispensed drugs in the states without a license and by failing to disclose” one of the pharmacy owners’ “criminal history on pharmacy license applications.”

Additionally, the pharmacies violated the Anti-Kickback Statute by engaging in two separate illegal practices, according to the government. First, the pharmacies regularly charged federal healthcare program beneficiaries co-payments substantially below program requirements (which often exceeded $100) to induce them to purchase its pain cream, “Focused Pain Relief,” for which the federal healthcare programs paid hundreds and sometimes thousands of dollars each. Second, the Pharmacies often paid illegal kickbacks to their sales representatives by giving sales commissions for the number of prescriptions written by the physicians the sales reps marketed.

Manhattan U.S. Attorney Geoffrey S. Berman said: “Pharmacies, like other participants in the healthcare industry, must follow the rules. The defendants here brazenly flouted basic rules on licensing and kickbacks to line their pockets with dollars from federal healthcare programs. That is a prescription for intervention by my office and our partners.”

Similar to this case, there have been many instances in which whistleblowers exposed company fraud against the Medicare system.

ARTICLE BY the Tycko & Zavareei LLP Whistleblower Practice Group.

For more on pharmaceutical fraud, see the National Law Review Biotech, Food & Drug law section.

New York Compounding Pharmacy Settles Fraudulent Billing and Kickback Allegations in Whistleblower Lawsuit

Similar to this case, there have been many instances in which whistleblowers exposed company fraud against the Medicare system.

ARTICLE BY Tycko & Zavareei LLP Whistleblower Practice Group.

For more on Whistleblowers, see the National Law Review Criminal Law & Business Crimes section.

Growing Number of States Enact Drug Pricing Transparency Laws

Drug prices continue to be a hot button issue in American politics. While many of the Trump Administration’s efforts to curb increasing drug prices stalled in 2019, a number of state legislatures have adopted drug price transparency laws in recent years. Since 2015, Vermont, Nevada, California, Maryland, Louisiana, New York, Oregon, Colorado, Connecticut, Maine, Texas, and Washington have all adopted drug pricing transparency laws. These laws are designed to incentivize manufactures to lower drug prices by requiring them to report information about drug price increases and their justification for how drug prices are set. We have been tracking and summarizing these laws, and you can find our summary here.

Below is a brief overview of the trends that we’re seeing in state drug price transparency laws.

State Laws Requiring Manufacturer Reporting on Drug Price Increases. The most prevalent type of drug price transparency laws requires manufacturers to report an extensive amount of information about drug price increases. Generally, states require manufacturers to report the information to a state government agency (e.g., Oregon), but other states (e.g., California) require manufacturers to provide advance notice of drug price increases to purchasers. Generally, reporting requirements are triggered when the wholesale acquisition cost (WAC) increases over a certain dollar threshold or when the net increase of the WAC increases a certain percentage over the course of a year.
State Laws Requiring Manufacturer Reporting for Specific Drugs Identified by the State or Certain Types of Drugs. Several states (e.g., Connecticut and Vermont) authorize an independent board to compile a list of drugs on which the state spends significant dollars and/or for which the WAC has increased significantly over the past year or past five years. Manufacturers of the drugs identified by the board are required to report certain information about the drugs’ costs and pricing. The reporting requirements in other state laws are specific to certain types of drugs. For example, Nevada’s drug price transparency law initially applied only to forms of insulin and biguanides, which are essential for diabetes treatment. In 2019, Nevada expanded the law to apply to prescription drugs essential for asthma treatment as well.
State Laws Requiring Pharmacy Benefit Managers (PBMs) to Disclose Manufacturer Rebates. These laws place accountability for drug price increases on PBMs by requiring them to disclose the amount of rebates they negotiate and retain from manufacturers.

ARTICLE BY Rachel E. Yount of Mintz.

For more drug pricing transparency developments see the National Law Review Biotech, Food & Drug law page.

Pharmaceutical Company Agrees To $54 Million To Settle False Claims Kickback Allegations

Teva Pharmaceuticals has agreed to pay $54 Million to settle false claims kickback allegations brought by two whistleblowers, Charles Arnstein and Hossam Senousy. In their 2013 complaint, the whistleblowers asserted that Teva Pharmaceuticals (“Teva”) violated the False Claims Act when the company knowingly induced physicians to prescribe two of the company’s drugs in exchange for “speaker fees.”

Physicians hosted Teva’s speaker events, which were attended by the speakers, their families, Teva employees, and various repeat attendees. In her memorandum decision and order denying Teva’s motion for summary judgment, Chief Judge Colleen McMahon pointed to the suspect audience in attendance as well as the event locations, and the amount of alcohol served as further evidence of the questionable nature of the events.

Physician speakers earned speaker fees for their event appearances. These same physicians subsequently prescribed the drugs Copaxone and Azilect, both manufactured by Teva. The physicians in question also encouraged other doctors to prescribe the medications that treated multiple sclerosis and Parkinson’s disease, respectively. Pharmacies across the United States filled the prescriptions and submitted reimbursement claims to government-funded healthcare programs. Reimbursement funds to the pharmacies are taxpayers’ dollars.

The whistleblowers allege that the reimbursement payments from the various Federal health care programs were a result of fraud, namely the questionable “speaker fees” paid to the physicians in exchange for their prescribing Copaxone and Azilect. Furthermore, the Anti-Kickback Statute of the False Claims Act makes it illegal to knowingly pay or offer to pay kickbacks, bribes, or rebates to encourage someone to recommend the purchase of a pharmaceutical covered by a Federal health care program.

The False Claims Act has been a vital tool in the fight against government programs fraud since its inception; however, the success of the act depends on private citizens like Charles Arnstein and Hossam Senousy who are willing and able to speak out against the wrong that they encounter and work closely with the help of an experienced False Claims Act attorney to get results for everyone. The settlement of this case is not only beneficial to the government from a monetary perspective, but it is also a win for the taxpayers – those who ultimately pay when companies like Teva Pharmaceuticals choose to defraud the government.

ARTICLE BY Jonathan Tycko of Tycko & Zavareei LLP.

For more false claims act settlements, see the National Law Review Litigation & Trial Practice section.

HHS HIV Drug Lawsuit: Setting Precedent for Other High Priced Medications or Government Collaborations?

On November 6, 2019, the bonds between the U.S. government and pharmaceutical companies were stretched when the U.S. Department of Health and Human Services (“HHS”) filed a patent infringement lawsuit against Gilead Sciences in Delaware federal court regarding Gilead’s popular HIV drugs, Truvada® and Descovy®. HHS rarely sues for patent infringement. In fact, the U.S. government and pharmaceutical companies typically have collaborative relationships. For example, Gilead provided the Center for Disease Control and Prevention (“CDC”) with free drugs for government experiments to expand treatment for certain diseases. So, what happened?

In 2004, Gilead—after receiving patent protection—began selling Truvada® to treat people already infected with HIV. The CDC later investigated whether Truvada® could be used as a prophylactic to prevent HIV in monkeys and received patent protection for four key patents that “generally cover processes for protecting a primate or human host from a self-replicating infection by an immunodeficiency retrovirus, including HIV.” (Complaint, ¶ 196). Specifically, the claimed inventions provide protection “by a combination of nucleoside reverse transcriptase inhibitor, such as FTC, and a nucleotide reverse transcriptase inhibitor, such as tenofovir, or esters/prodrugs of tenofovir, such as TDF or TAF.” Id. Gilead donated the FTC, TDF, and tenofovir used in the CDC’s research, but its personnel do not appear to have otherwise assisted in the research.

The government alleges that first, it helped develop the drug with Gilead, and second, that Gilead “repeatedly refused to obtain a license from CDC to use the patented regimens” and “profited from research funded by hundreds of millions of taxpayer dollars[,]” without paying any royalties to the CDC. HHS seeks damages and royalties for Gilead’s alleged infringement. Many speculate that HHS’s motivation goes beyond royalties to something deeper: to increase access and decrease the price of Truvada® and Descovy® for pre-exposure prophylaxis (“PrEP”).

One goal identified by the Trump administration is to eradicate new cases of HIV and AIDS by 2030. In fact, the administration requested $291 million for this initiative in May 2019. Truvada® and Descovy® play a critical role in PrEP. PrEP is stated to be a highly-effective HIV prevention strategy that may play a vital role in ending the global HIV and AIDS epidemic. However, PrEP is not as widely used as it could be. Some allege that the limited use is related to limited access to the drugs—which in turn could be due in part to the high cost. In the United States, Truvada® costs roughly $1,782 a month.^[1] Some have speculated that this suit is part of the Trump administration’s initiative to lower PrEP prices and end the HIV epidemic in the United States. But is there more?

Political anger and public outcry over drug costs has increased over the years. Three years ago, a national controversy erupted over the price of EpiPen injectors manufactured by Mylan pharmaceuticals. In 2008, EpiPens cost about $100. In 2016, that price rose to $600. This price increase outraged customers and put the company at the forefront of the debate over drug costs. Public outrage, coupled with a whistleblower lawsuit, led Mylan to finalize a $465 million settlement with the U.S. Justice Department over claims that it overcharged the government for EpiPens.

The EpiPen controversy, coupled with the HHS lawsuit against Gilead, may signal to pharmaceutical companies across the country that the U.S. government is ready and willing to step in and demand lower drug prices. Accordingly, this case may be an important bellwether and should be followed by those with interests in these areas.

[1] Descovy® is new to the market, so the average monthly cost is unknown.

ARTICLE BY Aarti Shah and Kara E. Grogan of Mintz.

For more on drug patents, see the National Law Review Intellectual Property law page.

Tag: pharmaceuticals

Senate Subcommittee Holds Hearing on Public Health Impacts of PFAS Exposures

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