Citizens for Consume, et al v. Abbott Laboratories,, et al

Filing 6880

Judge Patti B. Saris: ORDER entered. MEMORANDUM AND ORDER, denying (250 in 1:06-cv-11337-PBS) MOTION to Dismiss for Lack of Jurisdiction Under the Public Disclosure Bar filed by Abbott Laboratories, Inc., (253 in 1:06-cv-11337-PBS) MOTION to Dismiss for Lack of Jurisdiction Under the Public Disclosure Bar of The False Claims Act filed by Boehringer Ingelheim Corp., Boehringer Ingelheim Roxane, Inc., Roxane laboratories, Inc., Boehringer Ingelheim Pharmaceuticals, Inc., (382 in 1: 06-cv-11337-PBS) MOTION to Dismiss for Lack of Subject-Matter Jurisdiction Under the False Claims Act's Public Disclosure Bar (Master Docket No. 6398) filed by Abbott Laboratories Inc., (6179 in 1:01-cv-12257-PBS) MOTION to Dismiss for La ck of Jurisdiction Under the Public Disclosure Bar filed by Abbott Laboratories, Inc., (6398 in 1:01-cv-12257-PBS) MOTION to Dismiss for Lack of Subject-Matter Jurisdiction Under the False Claims Act's Public Disclosure Bar filed b y Abbott Laboratories, Inc., (6196 in 1:01-cv-12257-PBS) MOTION to Dismiss for Lack of Jurisdiction Under the Public Disclosure Bar of the False Claims Act filed by Boehringer Ingelheim Pharmaceuicals, Inc., Boehringer Ingelheim Corp., Boehri nger Ingelheim Roxane, Inc., Roxane Laboratories, Inc, (265 in 1:06-cv-11337-PBS) MOTION to Dismiss Defendants Dey, Inc., Dey, L.P., and Dey L.P., Inc.'s Motion to Dismiss the Realtor's Complaints for Lack of Subject Matter Jurisdiction (Document No. 6206 in Case No. 01-12257) MOTION to Dismiss Defendants Dey, Inc., Dey, L.P., and Dey L.P., Inc.'s Motion to Dismiss the Realtor's Complaints for Lack of Subject Matter Jurisdiction (Document No. 6206 in Case No. 01-122 57) filed by Dey L.P., Dey, Inc., Dey L.P., Inc., (6206 in 1:01-cv-12257-PBS) MOTION to Dismiss Defendant's Dey, Inc., Dey, L.P., and Dey L.P., Inc.'s Motion to Dismiss the Realtor's Complaints for Lack of Subject Matter Jurisdiction filed by Dey L.P., Dey Inc., Dey L.P., Inc..Associated Cases: 1:01-cv-12257-PBS, 1:06-cv-11337-PBS(Patch, Christine)

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS ) ) ) ) ) THIS DOCUMENT RELATES TO: ) ) UNITED STATES OF AMERICA, ex rel. ) VEN-A-CARE OF THE FLORIDA KEYS, INC.) v. ABBOTT LABORATORIES, INC., Civil ) Action No. 06-11337-PBS; ) ) UNITED STATES OF AMERICA, ex rel. ) VEN-A-CARE OF THE FLORIDA KEYS, INC.) v. DEY, INC., et al., Civil Action ) No. 05-11084-PBS; and ) ) UNITED STATES OF AMERICA, ex rel. ) VEN-A-CARE OF THE FLORIDA KEYS, INC.) v. BOEHRINGER INGELHEIM CORP., et ) al., Civil Action No. 07-10248-PBS ) ) IN RE PHARMACEUTICAL INDUSTRY AVERAGE WHOLESALE PRICE LITIGATION

MDL NO. 1456 CIVIL ACTION NO. 01-12257-PBS SUBCATEGORY NO. 06-11337-PBS

MEMORANDUM AND ORDER February 1, 2010 Saris, U.S.D.J. I. INTRODUCTION

Relator Ven-A-Care of the Florida Keys, Inc., ("Ven-A-Care") brings this intervened qui tam action under the False Claims Act ("FCA"), 31 U.S.C. §§ 3729-33, to recover penalties and damages for allegedly false claims and statements resulting from fraudulent conduct of the Defendant pharmaceutical companies.1

The Defendants are Abbott Laboratories Inc. ("Abbott"); Dey, Inc., Dey, L.P., and Dey L.P., Inc. (collectively "Dey"); and Boehringer Ingelheim Corp., Boehringer Ingelheim Pharmaceuticals, Inc., Boehringer Ingelheim Roxane, Inc., and

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Relator alleges that Defendants reported inflated pricing information for certain drugs which caused the Medicaid and Medicare programs to make substantial overpayments. Abbott, Dey,

and Roxane have moved separately to dismiss Ven-A-Care's complaint, asserting that Ven-A-Care cannot satisfy the FCA's public disclosure/original source rule. After briefing and a hearing, Defendants' motions [Docket Nos. 6179, 6196, 6206, and 6398] are DENIED. II. DISCUSSION

This case comes as part of the massive AWP litigation currently in front of this Court. The Court assumes familiarity

with the drug pricing schemes discussed in its previous AWPrelated decisions. Section 3730(e)(4) of the FCA provides: (A) No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information. (B) For purposes of this paragraph, "original source" means an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action under this section which is based on the information.

Roxane Laboratories, Inc. (collectively "Roxane"). 2

31 U.S.C. § 3730(e)(4).

This operates as a jurisdictional bar

when (1) there has been a "public disclosure," (2) the relator has "based" its suit on the disclosure, and (3) the relator was not the original source of the information on which its suit is based. See In re Pharm. Indus. Average Wholesale Price Litig.,

538 F. Supp. 2d 367, 375-79 (D. Mass. 2008). Whatever the merits of the Defendants' arguments regarding public disclosure, it is clear that Ven-A-Care qualifies as an original source. Satisfaction of the "original source" provision

of the FCA turns on a relator having direct and independent knowledge of information underlying his allegations. "Direct"

generally means that the information was acquired by the plaintiff through his own efforts, and "independent" means that it is not derived from public disclosures. United States ex rel.

O'Keefe v. Sverdup Corp., 131 F. Supp. 2d 87, 93 (D. Mass. 2001). The relator need not have direct and independent knowledge of every detail or element of his complaint. United States ex rel.

Minn. Ass'n of Nurse Anesthetists v. Allina Health Sys. Corp., 276 F.3d 1032, 1050 (8th Cir. 2002) ("To qualify as an original source, a relator does not have to have personal knowledge of all elements of a cause of action."). A relator satisfies the

requirement if he has "direct and independent knowledge of any essential element of the underlying fraud transaction." United

States ex rel. Springfield Terminal Ry. Co. v. Quinn, 14 F.3d 645, 657 (D.C. Cir. 1994). As numerous courts have noted, the 3

statute requires only that the relator be "an" original source, not "the" original source. See, e.g., United States ex rel.

Ervin & Assocs., Inc. v. Hamilton Sec. Group, Inc., 370 F. Supp. 2d 18, 40 n.11 (D.D.C. 2005) ("use of the word `an,' . . . suggest[s] there may be more than one original source eligible to bring suit . . . ."). Here, Ven-A-Care had direct and independent knowledge of essential information. Most importantly, Ven-A-Care had direct

and independent knowledge of the Defendants' true prices for the relevant drugs in the marketplace over time, from which it could determine the prices generally and currently paid for the drugs. This information was not public; it was available only to participants in the pharmaceutical industry, primarily through GPOs that negotiated prices with the Defendants and then transmitted them to their members, like Ven-A-Care. The

Defendants' scheme was based upon creating inducements for pharmacies like Ven-A-Care to buy their products based on the difference between these prices and the prices the Defendants reported; Ven-A-Care learned of the Defendants' true prices in just the manner the Defendants intended. As Defendants have

admitted, their contracts with wholesalers and retailers establishing these prices stipulated that the prices were confidential. Ven-A-Care voluntarily provided this critical Ven-A-Care also had knowledge of

information to the government.

the marketplace and the methods by which price and spread 4

information was communicated by manufacturers to Medicare and Medicaid providers. Ven-A-Care qualifies as an original source,

and the Court thus has jurisdiction.2 ORDER Defendants' motions [Docket Nos. 6179, 6196, 6206, and 6398] are DENIED. /s/ Patti B. Saris Patti B. Saris United States District Judge

Defendants argue that while a corporation, such as Ven-ACare, can be a relator, it cannot be an original source under the FCA. However, numerous courts have accepted corporations as original sources. See, e.g., Springfield Terminal Ry., 14 F.3d at 657; Ervin & Assocs., 332 F. Supp. 2d at 6-10. The Court agrees with the 8th Circuit's explicit rejection of the Defendants' arguments. See Minn. Ass'n of Nurse Anesthetists, 276 F.3d at 1048 n.12. Moreover, even were the Defendants' arguments correct, they have been sued "by and through" Ven-ACare's individual officers. 5

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