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.”

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.

Reversal of fortune: Sandoz seeks Supreme Court review in Amgen biosimilars battle

Sandoz filed a petition for a writ of certiorari, asking the Supreme Court to review the Federal Circuit’s interpretation of the Biologics Price Competition and Innovation Act’s (BPCIA) “notice of commercial marketing” provision. In its February 16, 2016, filing, Sandoz asked the Court to decide the validity of the Federal Circuit’s ruling in Amgen v. Sandoz, which held that the 180-day notice of commercial marketing can only be given after a proposed biosimilar product receives FDA approval (see Court interprets biosimilar ‘enigma’ in favor of abbreviated biologic license applicant, Health Law Daily, July 22, 2015).

Just last month Amgen declined to file its own free-standing cert petition. Under the Supreme Court’s rules, however, Amgen could file a “conditional cross-petition,” requesting that if the Court chooses to take up Sandoz’s petition, it would address the issue Amgen lost before the Federal Circuit, specifically whether the BPCIA’s patent “dance” was mandatory.

In an interview with Wolters Kluwer, Courtenay C. Brinckerhoff, a partner with Foley & Lardner and editor of Foley’s PharmaPatents blog, noted that the Supreme Court may be inclined to hear the case because (1) Sandoz presented an issue of statutory construction of an important provision of the BPCIA; and (2) district courts are already applying the Federal Circuit’s interpretation of the BPCIA in other biosimilars cases.

Federal Circuit ruling

The BPCIA, which was passed in 2010 as sections 7001-7003 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), created an abbreviated pathway for FDA approval of a “biosimilar” biologic product. Amgen brought originally brought suit against Sandoz in federal court asserting various violations of Amgen’s approved license for its cancer-fighting biologic Neupogen® (filgrastim) and infringement of Amgen’s patent for a particular method of using filgrastim. The FDA previously accepted Sandoz’s application for the filgrastim biosimilar Zarxio in July 2014 and approved the application in early 2015 (see FDA enters new era with approval of first biosimilar, Health Law Daily, March 6, 2015). Although the BPCIA includes a complicated process for addressing patent disputes surrounding biosimilar products, known as the “patent dance,” Sandoz chose not to engage in that process (see Shall we dance? Biosimilars step toward new legal and regulatory future, Health Law Daily, August 5, 2015).

Amgen sued Sandoz for violating the BPCIA. Upon reviewing the lower court’s decision, the Federal Circuit decided that an abbreviated biologic license application (aBLA) applicant did not need to engage in the patent dance with the reference product sponsor (RPS), but did need to comply with the pre-marketing notice provision of 42 U.S.C. §262(l)(8). Specifically to the latter, the appellate panel held that notice of commercial marketing, to be effective under the BPCIA, must be given only after the product is licensed by the FDA. In a dissent from this portion of the decision, Judge Chen wrote that the majority’s position extra-statutorily extended RPS’ 12-year market exclusivity as established in the BPCIA by an additional six months.

Commercial marketing notice

The majority’s decision in Amgen v. Sandoz acknowledged that its ruling could establish additional six months exclusivity for the RPS, but found that it was consistent within the four- and 12-year exclusivity periods in the BPCIA. Under the Federal Circuit’s interpretation of 42 U.S.C. §262(l)(8)(A), actions authorized by §262(l)(8)(B) cannot be commenced until the biosimilar product has been approved. Sandoz’s argument is that this interpretation is not supported by either the BPCIA’s language or purpose. According to Brinckerhoff, the majority’s rationale seems to rest on the assumption that, if a biosimilar application is filed during the 12-year exclusivity period, the FDA will “license” the biosimilar product before the 12-year period has run, in which case the pre-marketing notice could be given before the 12-year period has run. However, the 12-year period is embodied in 42 U.S.C. §262(k)(7)(A), which states that “[a]pproval of [a biosimilar application] may not be made effective” until the 12-year period has run. Thus, Brinckerhoff said, it is not clear that the FDA has the statutory authority to “license” a product before the 12-year period has run.

In addition, the appellate ruling leaves some uncertainty about whether an aBLA applicant engaging in the BPCIA’s patent dance needs to provide this notice of commercial marketing to an RPS if the patents cannot be litigated until after FDA approval. Brinckerhoff said one purpose of the pre-marketing notice is to give the RPS an opportunity to seek a preliminary injunction based on patents that were not litigated in the patent dance litigation, for instance with patents that were not selected after the exchange of patent lists. Thus, there is still some benefit in the patent dance, as it provides a mechanism to litigate patents before the biosimilar is approved.

Biosimilar availability

Sandoz also noted in its petition that the Federal Circuit’s ruling would create a delay in availability for all biosimilars. Brinckerhoff stated that whether the post-approval notice requirement itself would keep a biosimilar product off the market in another case would depend on the circumstances, including whether the RPS had obtained a preliminary injunction based on any patents being litigated. She noted that it was possible that in other cases the notice requirement would be the only factor keeping the biosimilar product off the market.

Patent dance

As discussed earlier, while not addressed in Sandoz’s petition, the Federal Circuit also held that the patent dance was optional. A consequence of an optional patent dance is that the biosimilar applicant would be subject to patent infringement action. By not filing a petition, Amgen implied that it was content with an optional patent dance.

Under an optional patent dance scheme, Brinckerhoff said that the RPS can benefit because it can bring an immediate declaratory judgment action without having to go through the patent dance procedures. The RPS can litigate all patents that it believes should be litigated instead of being limited to the patents agreed upon after the exchange of patent lists. Conversely, biosimilar applicants may find it beneficial not to share the confidential information that may be in their biosimilar applications with the RPS during the patent dance, or at least be able to keep the information confidential unless and until the RPS initiate litigation (when the application may be discoverable).

Brinckerhoff also said that the latter strategy presented its own problems for the biologic applicant. If the patents are not litigated until later in the approval process or after the product is approved, the biosimilar applicant may have to choose between delaying market entry until the patent litigation is resolved or launching at risk, e.g., entering the market at the risk of being held liable for willful patent infringement. Brinckerhoff said that given the costs of biologics and the risk of treble damages, a launch at risk could be associated with significant financial risk.

Religious organizations file a plan B for contraception challenge

Religious non-profits seeking an exemption from the Patient Protection and Affordable Care Act’s (ACA) (P.L. 111-148) mandate that employers pay for contraceptives as part of standard health insurance plans are gearing up for the March 23, 2016, hearing scheduled in front of the Supreme Court. In November, the Court consolidated seven cases challenging the birth-control mandate into one: Zubik v. Burwell. Unhappy religious organizations outside of the seven are not waiting for the Supreme Court’s decision to make their next move, they have already filed another petition before the Court.

In this, the fourth legal challenge of the law to be accepted by the Court since the ACA was passed in 2010, involves religious, non-profit corporations that morally object to the ACA provision that allows their employees to obtain contraceptive coverage through their health insurance, even if those contraceptive products are provided by insurance companies and the government, and not by the institutions. These organizations claim that this indirect participation is offensive and violates their rights to religious freedom. The federal government, however, believes that these institutions have numerous employees who may not necessarily share the beliefs of religious groups that sponsor the non-profits, and these workers would be harmed by the exclusions.

Grace Schools and Diocese of Ft. Wayne

Just in case the Supreme Court does not decide in favor of the religious organizations, two groups that were unsuccessful in front of the Seventh Circuit, Grace Schools and Biola University, and Diocese Of Fort Wayne-South Bend, Inc., filed a petition for writ of certiorari as well. These cases were also decided in favor of the government. On September 4, 2015, the Seventh Circuit issued a decision denying the request for a stay of the enforcement of the ACA’s contraception coverage requirement, holding the accommodation does not impose a substantial burden on their religious beliefs (see 7th Cir Court sticks to its guns overturns injunction for non-profit employers, Health Reform WK-EDGE, September 9, 2015). This petition filed before the Supreme Court requests a hold on the enforcement of the provision, but the Court has not yet responded.

Government

The government also filed a response brief in Zubik v. Burwell. In the brief, the government again claims that the accommodation regulations do not constitute a substantial burden which imposes on the organizations’ religious beliefs. It also states that the accommodation is the least restrictive means of furthering the government’s compelling interest in providing women with full and equal health coverage.

Justice Scalia’s absence

Now that the measure of liberals versus conservatives on the court has changed, the most likely outcome is a four-to-four tie among the justices that would leave the contraceptive mandate in place for the non-profits.