September 4, 2014

Case Tests Tension Between False Claims Act and First Amendment

By Marlene Koury

The much claimed but never proven tension between the False Claims Act (“FCA”) and First Amendment is being tested again in United States v. Millenium Pharmaceuticals Inc., currently pending in the Eastern District of California.  The whistleblower, a former pharmaceutical sales representative, alleges in his complaint that Millennium Pharmaceuticals illegally promoted the off-label use of Integrilin, a drug used to prevent blood clots during surgery.  The government declined to intervene but the whistleblower marched forward with the litigation.

Under the FCA, promotional speech may be used to prove a manufacturer knowingly caused a drug to be prescribed for off-label uses not covered by Medicare or Medicaid and thus ineligible for reimbursement.  The complaint alleges just that: the company gave kickbacks to physicians for off-label use of the drug and “funneled millions of dollars in unrestricted grant money to physicians to encourage them to speak and publish articles” supporting the drug’s off-label uses, causing millions in false claims to be submitted to the government for reimbursement.

In August, the trade association Pharmaceutical Research and Manufacturers of America (“PhRMA”) submitted an amicus curiae brief arguing the whistleblower’s case should be thrown out because the theory of harm would violate the First Amendment by imposing liability for truthful and nonmisleading speech.  The group argued that “[t]his case raises serious First Amendment concerns because relator’s and the United States’ construction of the [FCA] imposes liability on manufacturers for engaging in truthful speech about ‘off-label’ uses of their drugs.”  The group further argued the Food, Drug and Cosmetic Act (“FDCA”) should be construed as “prohibiting, at most, only false speech” and that “purported violations of the FDCA for promoting an unapproved drug cannot be a predicate for liability, because such FDCA violations are independent of the FCA and cannot render a claim ‘false.’”

Last week, the United States came out swinging with a statement of interest in opposition to PhRMA’s amicus brief.  The government argued that what PhRMA is actually saying is that there is “a constitutional right to knowingly cause other parties to submit false claims to the government, as long as a party does so by its speech.”  The government was quick to point out that “[t]his radical position has never been endorsed by any court and is not supported by any precedent.”

The defendant’s motion to dismiss is pending and the court is expected to rule shortly, taking into account the PhRMA amicus brief and the government’s statement of interest.  The ruling will no doubt be closely watched by the government and the pharmaceutical industry alike.

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