Health Law Daily Government already knows about drug pricing problems, FCA action barred
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Thursday, January 21, 2016

Government already knows about drug pricing problems, FCA action barred

By Mary Damitio, J.D.

Prior public disclosures barred a False Claims Act (FCA) (31 U.S.C. § 3729 et seq.) lawsuit against a drug manufacturer because multiple government sources specifically identified drug pricing discrepancies. The district court dismissed the complaint because the relator’s allegations added nothing to the previously disclosed information and, therefore, he could not be considered an original source (U.S. ex rel. Lager v. CSL Behring, LLC, January 20, 2016, Jackson, C.).

Fraud claims. The relatora former employee of CSL Behring, LLC, a drug manufacturer and its parent corporation, CSL Behring Limited (collectively Behring), brought suit alleging that the companies conspired with specialty pharmacies Accredo Health, Inc. and Coram LLC (collectively, the pharmacies) to submit false claims to the government in violation of the FCA. He alleged that Behring reported inflated wholesale prices for the prescription drugs, Vivaglobin® and Hizentra®, which resulted in the government overpaying for the drugs. Behring and the pharmacies moved to dismiss the action.

Reimbursement levels. The drugs at the center of the allegations are protein-based therapies, classified as durable medical equipment (DME) infusion drugs, which are self-administered by patients using a pump. While the government typically reimburses pharmacies based on a percentage of the average sales price (ASP), DME infusion drugs, in contrast, are reimbursed based on a percentage of the drug’s average wholesale price (AWP), which is determined by using figures that manufacturers report to third-party publishers.

The former employee alleged that Behring reported inflated AWPs, while the pharmacies actually paid lower costs for drugs. He also alleged that the pharmacies specifically sought out beneficiaries of government health programs as customers, and that the government overpaid $100 million for Vivaglobin and $180 million for Hizentra.

Public disclosure bar. The lawsuit was prohibited under the public disclosure bar (31 U.S.C. § 3730(e)(4)(A)), however, because multiple government sources previously disclosed that the AWP of drugs does not represent actual prices. Media outlets also reported on the differences between AWPs and actual prices, and there were multiple disclosures that manufacturers used the price discrepancies to influence sales.

The court rejected the former employee’s argument that the bar did not apply because the public disclosures failed to specifically identify Behring or the drugs at issue, as such a degree of specificity was not required. The bar applies, however, when the disclosures are sufficient as to alert the government of the fraud by a particular party as in the present case. A 2013 OIG report disclosed the "extreme spread" between the AWP and ASPs for DME infusion drugs, and CMS showed the spread for Vivaglobin and Hizentra, which was sufficient to identify Behring and the drugs. The former employee was not the original source of the information because the allegations in his complaint did not materially add to the already publicly disclosed allegations in order for him to qualify as the original source of the information (31 U.S.C. § 3730 (e)(4)(B)(2)).

The case is No. 4:14-cv-00841-CEJ.

Attorneys: Christina Bahr Moore, Office of U.S. Attorney, for the United States of America. Bruce C. Howard (Siprut PC) for Shane Lager. Claire M. Schenk (Thompson Coburn, LLP) and Jessica L. Ellsworth (Hogan Lovells US LLP) for CSL Behring L.L.C. and CSL Ltd. Allen M. Gardner (Latham and Watkins, LLP) for Accredo Health, Inc. Colleen M. McNamara (Williams and Connolly LLP) for Coram LLC.

Companies: CSL Behring, LLC; CSL Behring Limited; Accredo Health, Inc.; Coram LLC (Coram)

MainStory: TopStory CaseDecisions CMSNews DMENews FCANews FraudNews PartDNews PrescriptionDrugNews QuiTamNews MissouriNews

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