PharMerica requests Supreme Court review of FCA’s first-to-file bar

PharMerica Corporation, a provider of long-term care pharmacy services, asked the Supreme Court to change its position on the “first-to-file” bar under the False Claims Act (FCA). In a petition for a writ of certiorari, the pharmacy company asked the high court to review its May 2015 ruling in Kellogg Brown & Root Services, Inc. v. U.S. ex rel. Carter (Carter), in which the court ruled that an earlier FCA suit based upon substantially the same subject matter ceases to bar related and subsequent FCA suits after the earlier suit is dismissed. PharMerica objects to the 2015 ruling because it led to the revival of a whistleblower case brought against the company by a former employee. PharMerica’s petition warns that the Supreme Court needs to review its earlier decision to prevent the “neutering of the first-to-file bar.”

Trial court

The dispute arose from the qui tam action of a pharmacist formerly employed by PharMerica. Because a similar case was pending in Wisconsin (Wisconsin case) when the whistleblower’s case was filed, a district court dismissed the case on the grounds that it was barred under 31 U.S.C. §3730(b)(5). The trial court concluded that dismissal under the first-to-file bar was appropriate because the two actions were based on substantially the same facts and conduct.

First Circuit

After the case was dismissed, the Supreme Court handed down its decision in the Carter case, changing the outlines of the FCA’s first-to-file bar. Subsequent to that decision, the Wisconsin case that barred the whistleblower action was settled and dismissed. As a result, the whistleblower filed a motion to remand, seeking to either have the appeals court supplement his complaint with additional facts or have the case remanded to allow for supplementation. The First Circuit granted the whistleblower’s request to supplement his complaint (see FCA action dismissed under first-to-file bar may get another chance on remand, Health Law Daily, December 17, 2015).

Certiorari

PharMerica objected to the First Circuit’s decision in its petition, asserting that the Carter decision and the appellate court’s holding will allow copycat lawsuits to “circumvent the plain terms of the first-to-file bar.” The pharmacy service provider argued that the whistleblower should not have been able to resurrect his case simply by keeping it on the docket until the prior case was inevitably dismissed. PharMerica asserted that review is necessary to prevent copycat relators from “bringing placeholder suits, certain in the knowledge that earlier-filed actions will one day conclude.”

FTC files first court action to address authorized generic pay-for-delay pharmaceutical agreements

After years of challenging pay-for-delay settlements, the Federal Trade Commission (FTC) is taking strong action in court for the first time against arrangements between pharmaceutical companies that prevent generic alternatives from entering the market. The agency filed a complaint against Endo Pharmaceuticals, Inc., (Endo), Teikoku Pharma USA, Inc. (Teikoku Pharma), Watson Laboratories, Inc., Allergan PLC, and Impax Laboratories, Inc., alleging that Endo paid the first manufacturers that filed for generic approval to delay marketing drugs that competed with its branded drugs Opana® ER and Lidoderm®.

Reverse-payment agreements

The FTC challenges Endo’s “reverse-payment agreements,” which the government categorizes as anticompetitive, to prevent authorized generic drugs from entering the market. The agency points out that Opana ER and Lidoderm make up about 64 percent of the company’s annual revenues. Endo paid companies millions to delay market entrance of authorized generics (AGs), with a promise that it would allow the other company to be the only generic seller for several months before Endo entered with its own generic version. The first generic applicant is granted 180 days of generic exclusivity under federal law, except when a branded drug manufacturer decides to make its own generic. The FTC believes that these no-AG agreements are valuable to the first generic applicant, who is guaranteed to be the only producer for the 180-day period and can corner the market while charging higher prices.

In its complaint, the FTC pointed out generic drugs save patients, health plans, and government-sponsored health programs billions of dollars per year. It also noted that retail pharmacies often stock the brand and one generic, and that competition exists among generic suppliers, which serves to drive down the price. The FTC alleged that Endo’s actions eliminated the risk of generic competition for years, depriving the market of reduced prices. The agency requested a declaration that the agreements violated the FTC Act (15 U.S.C. §41 et seq.) and a permanent injunction preventing the companies from entering into similar agreements in the future.

Stipulated injunction

Along with its complaint for injunction, the FTC filed a stipulated order for permanent injunction against both Teikoku Seiyaku Co., Ltd., and Teikoku Pharma, Endo’s partners, prohibiting them from entering into prohibited brand/generic settlement agreements for 20 years. During that time, they may not pay a generic filer to stop researching, developing, manufacturing, marketing, and selling a drug unless the FTC approves the agreement.

FDA relaxes guidelines for abortion-inducing drug, flames abortion controversy

The FDA announced a labeling change for the drug Mifeprex®, which, when used together with another drug called misoprostol, will terminate a pregnancy in the early stages. The labeling change will relax certain guidelines in prescribing practices and expand the time in which women can take this drug in order to induce an abortion. This change comes at a controversial time as the Supreme Court just heard oral arguments, and oddly asked parties for additional briefing, in a challenge to the contraception mandate under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). At the same time, anti-abortion candidates in the race to the White House have recently fueled the fire with inflammatory remarks while some pro-life proponents are framing the FDA’s change as a political move.

Labeling changes

While the FDA first approved Mifeprex in 2000, the latest announcement outlines a new approved regimen which was found to be safe and effective after a supplement application was submitted by the manufacturer. The FDA stated that the drug may be appropriately used to end a pregnancy through 70 days of gestation and through the following procedure:

  • The ingestion of 200g of Mifeprex on day one;
  • The ingestion of 800mcg of misoprostol 24 to 48 hours after taking the Mifeprex; and
  • A follow-up with a health care provider seven to 14 days after taking the Mifeprex.

The FDA also outlined an appropriate risk evaluation and mitigation strategy (REMS) for Mifeprex, as follows: (1) that it must be ordered, prescribed, and dispensed under the supervision of a health care provider with certain qualifications; (2) that those health care providers must complete a Prescriber Agreement Form before prescribing; (3) that it only may be dispensed in clinics, medical offices, and hospitals; and (4) the provider must obtain a Patient Agreement Form before dispensing it.

Effect

Other than extending the time in which this medication can be prescribed from seven weeks to 10 weeks, the new labeling reflects a change in dosage and procedure that, according to some sources, was adopted by physicians that prescribed Mifeprex off-label long ago. “The change brings the direction for taking the drug . . . in line with what has become standard medical practice in most states: reducing the dosage to 200 milligrams from 600 milligrams, decreasing the number of visits a woman must make to the doctor to two from three, and extending the period when she can take the pill to 10 weeks of pregnancy from seven weeks,” according to the New York Times. There is also evidence that fewer side effects accompany the lower dosage. The same article notes that while the new labeling might be applicable to all states at the moment, at least one state is already working to pass a law that would hold provider’s to the stricter standards imposed in the past.

Context

This FDA approval came at an interesting time for the abortion and contraceptive coverage controversy as, the day before this announcement, the Supreme Court issued an order asking for supplemental briefing in a case on which it had heard oral arguments the previous week and which challenged the contraception coverage mandate of the ACA. Some experts see this as the eight-Justice Court potentially looking for an avenue to strike a compromise on an issue and avoid a 4-4 vote, which would effectively result in the continuation of a circuit split and different laws applying in different jurisdictions on this issue. In this context, pro-life proponents argued that the FDA announcement is a politically fueled move to satisfy the “abortion industry” and pro-choice groups. Others defended it as unrelated to election year politics and as simply part of the FDA’s regulatory responsibility in the face of a supplement drug application.

21st Century Oncology faces class actions in wake of data breach

Following a data breach of the nationwide cancer center, 21st Century Oncology, patients filed multiple class action lawsuits against the provider alleging that 21st Century failed to establish adequate cybersecurity measures in violation of federal and state law. Although the breach impacted an alleged 2.2 million patient records, the provider notified patients that it does not believe medical records were accessed or information was misused as a result of the breach. One of the class action complaints condemns the provider’s lack of control over protected health information (PHI), saying, “the last thing patients dealing with potentially deadly illnesses need is further harm and stress caused by the insecurity of their most private data and how it may be used by thieves.”

Lawsuits

In a complaint filed on March 23, 2016, several patients alleged that the provider was not aware that it had been infiltrated until notified of the breach by the FBI. Although investigators informed the provider of the breach on November 12, 2016, 21st Century announced it was instructed not to inform patients until this month. The lawsuits allege that data stolen by thieves includes patients’ names, Social Security numbers, physicians’ names, medical diagnoses, treatment information, and insurance information. One lawsuit asserted that the content of the 2.2 million current and former patients may have been copied and transferred as a result of the breach. The complaints allege that the provider violated the Health Information Portability and Accountability Act (HIPAA) (P.L. 104-191) and industry data protocols, was negligent in its safeguarding of PHI, was in breach of the implied covenant of good faith and fair dealing, and, in some cases, violated state consumer protection laws.

Prior breach

One lawsuit alleges that 21st Century is not a stranger to data breaches. Specifically, the complaint alleged that between October 11, 2011 and August 8, 2012, a 21st Century employee provided PHI to a third party who used the information—names, Social Security numbers, and dates of birth—to file fraudulent tax refunds. The complaint alleged that 21st Century also failed to detect the earlier breach.

21st Century

According to 21st Century’s announcement on the more recent breach, the provider is notifying affected patients and offering them free one-year credit protection services. Some of the lawsuits acknowledge the provider’s offer and call it inadequate, suggesting that the threat and harm resulting from the breach is more serious than the compensation reflects and will last longer than a year. The lawsuits follow a settlement earlier this month, where 21st Century agreed to pay $34.7 million to settle claims that it billed Medicare and Tricare for medically unnecessary radiation tests between 2009 and 2015.