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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
PFIZER, INC., et aI.,
Docket No. 03-CV-II084-PBS
The Honorable Patti B. Saris
UNITED STATES OF AMERICA ex reI.
UNITED STATES' STATEMENT OF INTEREST
IN RESPONSE TO DEFENDANT'S MOTION TO DISMISS
PLAINTIFF'S FIRST AMENDED COMPLAINT
The United States, real party in interest in this action, hereby moves to submit this
Statement ofInterest pursuant to 28 U.S.C. § 517 to respond to certain arguments raised in the
context of defendants' Motion to Dismiss Relator's First Amended Complaint. The United
States remains a real party in interest in this matter, even where it has not intervened in the
action. United States ex reI. Karvelas v. Melrose-Wakefield Hosp., 360 F.3d 220,231 (1st Cir.2004). The False Claims Act (FCA), 31 U.S.C. § 3729 et seq., is the United States' primary tool
used to redress fraud on the government. As such, the statute should be read broadly to reach all
fraudulent attempts to cause the government to payout sums of money. United States v. Neifert-
White, 390 U.S. 228, 233 (1968). Thus, the United States has a keen interest in the development
ofthe law in this area and in the correct application ofthe law in this, and similar, cases.44 The brief of amicus Washington Legal Foundation (WLF) offers this Court its views as
to what information manufacturers of medical devices and drugs may lawfully disseminate about
the off-label uses of their products. Defendants, however, do not seek dismissal ofthis case on
the grounds that the off-label marketing alleged in the First Amended Complaint was lawful.
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The United States submits this brief to make four points. First, the fact that an off-label
use is listed in a statutorily recognized compendium does not necessarily mean that the use issupported by the compendium citation, so that, in some circumstances, a use that is listed may
not qualify as a "medically accepted indication" that is covered by law. Second, even if an offlabel
use is supported by a citation in a compendium, a claim nevertheless may be false for any
other number of reasons (if sufficiently plead) and thus present an alternative ground for FCA
liability. Third, as to section (a)(2) ofthe FCA, which requires the existence ofa false record or
statement to get a false or fraudulent claim paid or approved, a complaint need not allege that the
defendants themselves made a false statement - the defendants may be liable ifthey caused a
third party to make a false statement to get a false claim paid. In addition, false statements
include not only affirmative misrepresentations but also material omissions so that the existence
of either one may suffice to satisfy the false statement requirement of section (a)(2). Fourth, the
identification of specific false claims is not an absolute prerequisite to satisfying the particularity
requirement of Rule 9(b) in FCA cases. So long as the complaint as a whole is sufficiently
particular to strengthen the inference of fraud beyond possibility, a court may conclude, as this
one has in other cases, that Rule 9(b) is satisfied. Nonetheless, the United States submits that if
WLF's arguments have not been raised or briefed by the parties, are not relevant to the instant
motion to dismiss, and need not be addressed by this Court.
Indeed, WLF's assertion that it "successfully challenged the constitutionality of certain
FDA restrictions on speech about off-label uses and has in place a permanent injunction against
enforcement ofthose restrictions" is incorrect. There is no permanent injunction against the
enforcement ofFDA's guidance as WLF asserts. Washington Legal Foundation v. Henney, 128
F. Supp. 2d 11, 15-16 (D.D.C. 2000) (denying WLF's motion to confirm and enforce injunction,
stating that the Court ofAppeals "vacated all ofthis Court's previous constitutional rulings on
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the Court finds that relator's complaint fails to meet that test and is subject to dismissal under
Rule 9(b), then it need not reach the other issues addressed herein.
In order to participate in the Medicaid program, a State must have a plan for medical
assistance that has been approved by the Centers for Medicare and Medicaid Services (CMS),
which administers the program on behalfofthe Secretary of Health and Human Services. The
state plan must specify, among other things, the specific kinds of medical care and services that
will be covered. 42 U.S.C. § 1396a(a)(1 0) and (17). If the plan is approved by the Secretary, theState thereafter is eligible for federal financial participation, i.e., reimbursement by the federal
government for a specified percentage of the amounts that qualify as medical assistance underthe state plan. Id. at §§ 1396b(a)(I), 1396d(b).
States are accorded a broad measure of flexibility in tailoring the scope and coverage of
their plans to meet the particular needs oftheir residents and their own budgetary and other
circumstances. While the Medicaid Act requires States to provide certain basic services, the Act
permits, but does not require, States to cover prescription drugs, although most States choose to
do so. 42 U.S.C. § 1396d(a)(12).
In 1990, Congress enacted the Medicaid Drug Rebate Statute, codified at 42 U.S.C.
§1396r-8, to "establish a rebate mechanism in order to give Medicaid the benefit ofthe best price
for which a manufacturer sells a prescription drug to any public or private purchaser." H.R. Rep.
No. 881, 101st Cong., 2d Sess. 96 (1990). That statute prohibits federal financial participation
for covered outpatient drugs unless there is a rebate agreement in effect under section 1396r-8.
See 42 U.S.C. §§ 1396b(i)(10)(A) and 1396r-8(a)(I). Once a drug manufacturer has entered into
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a rebate agreement for a covered outpatient drug, a State is generally required to cover that drug
under the state plan. However, there are several provisions ofthe Medicaid Act that permit a
State to exclude or restrict coverage, at least two of which are potentially implicated in this case.
42 U.S.C. § 1396a(a)(54); H.R. Rep. No. 881 at 97,98. A State may restrict from coverage or
exclude altogether certain drugs or classes of drugs, or certain medical uses, such as drugs used
for, among other things, cosmetic purposes. 42 U.S.C. § 1396r-8(d)(l)(B)(ii). A State also may
exclude or restrict coverage of a drug where "the prescribed use is not for a medically accepted
indication." 42 U.S.C. § 1396r-8(d)(l)(B)(i).5
Under the statute, a "covered outpatient drug" includes a drug dispensed by prescription
and approved as safe and effective under the Federal Food, Drug, and Cosmetic Act (FDCA), 21U.S.C. §§ 355 & 357, but does not include "a drug or biological used for a medical indication
which is not a medically accepted indication." 42 U.S.C. § 1396r-8(k)(2), (3). The statute
defines "medically accepted indication" as:
any use for a covered outpatient drug which is approved under the
[FDCA], or the use of which is supported by one or more citations
included or approved for inclusion in any ofthe compendia described in
subsection (g)(1)(B)(i) of this section.
Id. at § 1396r-8(k)(6). The three compendia described in subsection (g)(I)(B)(i) are the
American Hospital Formulary Service Drug Information, the United States Pharmacopeia-Drug
Information, and the Drugdex Information System. Id. at § 1396r-8(g)(l)(B)(i).
5In addition, under the terms set forth in the Medicaid Act, a State also may adopt a prior
authorization program, maintain a formulary, impose limits on prescription quantities to
discourage waste, and address instances of fraud or abuse by individuals. 42 U.S.C. § 1396r8(
d)(4)-(6). It does not appear that any of these potential restrictions are at issue in this matter.
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I. The Term "Supported By" Requires That a Compeudium Citation Corroborate aParticular Use.
One question raised by the parties here is what is necessary to satisfy the statutory
requirement that a use is "supported by one or more citations" in a compendium. See id. at §
1396r-8(k)(6) (defining "medically accepted indication"). As both relator and defendants
recognize, the mere existence of a compendium citation is not sufficient to meet this standard.
Common usage ofthe term "supported by" generally requires some form of corroboration or
validation. See American Heritage Dictionary of the English Language, 4th ed. (2000) ("to
furnish corroborating evidence for"); Cambridge Dictionary ofAmerican English, 2d ed. (2006)("to show (something) to be true ... New evidence supports his theory"); see,~, In re
Pharmaceutical Indus. Average Wholesale Price Litig., 460 F. Supp. 2d 277,284 (D. Mass.
2006) ("Dictionaries ofthe English language are a fundamental tool in ascertaining the plain
meaning of terms used in statutes and regulations."). Interpreting the definition of medically
accepted indication to require only "citation in the compendia" would be problematic because it
would fail to give meaning to the words "supported by," and would render that phrase
superfluous. See United States v. Flores, 968 F.2d 1366, 1371 (Ist Cir. 1992). Furthermore,
CMS, the agency with responsibility to administer the statute at issue, has reiterated that the
statutory definition of medically accepted indication "requires coverage of off-label uses of
FDA-approved drugs for indications that are supported (as opposed to listed) in the compendia."
See CMS Release No. 141 (emphasis added) (Attached to Relator Brief as Ex. 4). Because the
agency's interpretation ofthis statutory provision is reasonable, it is entitled to deference by this
Court. See Federal Express Corp. v. Holowecki. et aI., 128 Sup. Ct. 1147, 1156 (2008).
Moreover, a basic practical consideration is that Drugdex, the compendium relied on by
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defendants here, classifies some indications as "not effective" and describes others as
"controversial." See Def. Brief at Ex. A. Accordingly, whether a particular use is "supported
by" a compendium citation may depend on a variety of factors, including the type of drug and
indication at issue, the compendium's assessment of the drug's efficacy in treating the
indication, the content of the compendium citation, and the scope and outcome ofthe studies as
described in the compendium.
The only other case to have considered this provision, Edmonds v. Levine, 417 F. Supp.
2d 1323, 1339 (S.D. Fla. 2006), is distinguishable because ofthe circumstances in which the
case was presented, and in particular because the decision predated CMS Release 141, which
was released three months after the decision in Edmonds. The Edmonds case arose out of certain
Medicaid beneficiaries challenging the State of Florida's adoption of a policy to make an
independent evaluation of off-label uses for the drug Neurontin that resulted in the State's
denying reimbursement for certain uses ofthe drug that were listed as effective in Drugdex, but
allowing reimbursement for other uses listed as ineffective. The Court need not address the
various issues raised in Edmonds stemming from whether the State's action was permissible.
The relevant point here is that, as both relator and defendants recognize and CMS Release 141
has made clear, the statutory language of"supported by" means something other than merely
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As a final issue relating to coverage, it should be noted that the Medicaid statute permits
a State to exclude or restrict reimbursement of an otherwise "covered outpatient drug" in certain
circumstances.6 See 42 U.s.C. § 1396r-8(d); supra at 3 & n. 1.
II. Coverage of an Off-label Indication Does Not Negate All Potential FCA Liability.
A claim may be false for any number of reasons regardless ofwhether it is submitted for
a use supported by a citation in a compendium. For example, a claim may be ineligible for
payment if a physician submitted a claim for reimbursement for which he received a kickback inexchange for prescribing a particular drug. See,~, United States v. Rogan, 517 F.3d 449 (7th
Cir. 2008); Parke-Davis, 2003 WL 22048255, at *7. Likewise, a claim may be ineligible for
payment if the prescription were signed by a person without a medical license or for a patientthat did not exist. See,~, United States ex reI. Riley v. St. Luke's Episcopal Hosp., 355 F.3d
370,378-79 (5th Cir. 2004) (allegation that services were performed by an unlicensed and
unsupervised physician states a claim under FCA). Finally, a claim may be rendered false if a
drug manufacturer falsified studies or engaged in other unlawful, fraudulent conduct in the
promotion of a drug or to procure FDA approval or inclusion in a compendium. See, ~
United States v. Dynamics Research Corp., 2008 WL 886035, *10 (D. Mass. Mar. 31, 2008)
("[W]here a claim for payment is the result of a fraudulent process-bid rigging, self-dealing, etc.
such that the reliability and trustworthiness of a claim is compromised, the claim may be6 Notably, this case does not present - at least not at this time - the question this Court
left open in Parke-Davis as to whether States have discretion to cover off-label uses that are not
supported by a citation in the compendia. See United States ex reI. Franklin v. Parke-Davis et
aI., 2003 WL 22048255, at *3 (D. Mass. Aug. 22, 2003). The Parke-Davis defendants argued
that States are permitted to cover prescriptions for off-label uses even if those uses are not
supported by a citation in the compendia. In this case, defendants contend that the off-label
indication of"short stature" is supported by compendium citations.
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considered false under the PCA despite its facial accuracy."); United States v. Incorporated
Village ofIsland Park, 888 P. Supp. 419,439 (E.D.N.Y. 1995) ("[T]he [PCA] is violated not
only by a person who makes a false statement or a false record to get the government to pay a
claim, but also by one who engages in a fraudulent course of conduct that causes the government
to pay a claim for money."). Thus, the mere fact that a particular use is a "medically accepted
indication" does not eliminate the possibility of fraudulent conduct or abuse that could render the
claim false and ineligible for payment.
III. False Statements Under Section (a)(2) of the FCA.
This Court has held that illegal off-label marketing that results in the submission of
impermissible claims for reimbursement states a claim under the PCA. Parke-Davis, 2003 WL
22048255, at *2. PCA liability exists so long as the defendants knowingly cause a false claim to
be submitted by a provider to the United States. Id. Proof of falsity could entail a showing that
the provider sought payment from a federal health care program for a use that was off-label and
not covered by that program. Id. at *3. It is not necessary also to show (or allege) an express
falsehood from the defendant to the provider to satisfy the "falsity" element of section (a)(I). Id.
Defendants correctly observe that to state a claim under section (a)(2), there must be a
false record or statement. To satisfy this requirement, defendants assert that relator needed to
allege "both that Pharmacia made a false statement and that this false statement was made to get
a false claim paid by the government." See Def. Brief at 11. However, requiring a false
statement to be made by the defendant drug company is contrary to the plain language ofthe
PCA. Although section (a)(2) requires the existence ofa false statement, it does not require the
Case 1:03-cv-11 084-PBS Document 118 Filed 05/12/2008 Page 9 of 13false statement to be made by the defendant. Section (a)(2) imposes liability on a defendant so
long as it "caused" another, such as a hired consultant, to make a false statement.
Contrary to what defendants' brief implies (Def. Br. at 11-12), for a statement to be
"false," it need not be an affirmative misrepresentation; a material omission will suffice: "[H]alf
the truth may obviously amount to a lie, if it is understood to be the whole." W. Page Keeton.Prosser & Keeton on the Law of Torts § 106, at 738 (5th ed. 1984); see Luckey v. Baxter
Healthcare Corp., 183 F.3d 730, 732 (7th Cir. 1999) (observing that a half-truth may amount to a
false statement under the FCA in certain circumstances); United States ex reI. Schwedt v.
Planning Research Corp., 59 F.3d 196, 199 (D.C. Cir. 1995) (finding that false progress reports
may constitute false statements under the FCA); United States ex reI. Fry v. Guidant Corp., 2006WL 2633740, at *10-11 (M.D. Tenn. Sept. 3, 2006) (finding representation was rendered false
by concealment of material information); United States ex reI. Kneepkins v. Gambro Healthcare.
Inc., 115 F. Supp. 2d 35, 43 (D. Mass. 2000) (an "omitted material fact," such as the existence of
illegal kickbacks, may be actionable under the FCA). Thus, a statement urging a physician to
prescribe a drug for an unapproved, off-label use could well amount to a half-truth and satisfy
the false statement requirement of section (a)(2), where, for example, the drug sales
representative fails to mention that the evidence does not support the drug's efficacy for the use
he or she is promoting or the FDA has specifically concluded that the drug is not safe or
effective for that use.77 Notably, despite defendants' suggestion to the contrary (Def. Br. at 11, n. 8), the fact
that the Medicaid Act provides for coverage for off-label uses that are supported by citation in
certain compendia is irrelevant to whether a drug company made a false statement. To the extent
that the FDA Modernization Act, 21 U.S.C. § 360aaa, provided a safe harbor for the
dissemination of certain scientific information if a manufacturer complied with the requirements
Case 1:03-cv-11084-PBS Document 118
IV. FCA Pleading Requirements.
Filed 05/12/2008 Page 10 of 13Ofcourse, if a relator is claiming that the defendant drug company caused the providers
to submit these false claims, the relator must adequately allege such causation. See Parke-Davis,
2003 WL 22048255, at *4-5; United States ex reI. Cantekin v. University ofPittsburgh, 192 F.3d
402, 416 (3d Cir. 1999). The relator need not allege an express false statement to satisfy the
causation element, though such evidence would be one way the relator could do SO.8
Defendants argue that relator's complaint fails to set forth with sufficient particularity
that conduct by defendants caused false claims to be submitted to federal health care programs.
Defendants also argue the complaint does not sufficiently allege that the two off-label uses raised
by relator (adult anti-aging and pediatric short stature) resulted in claims being submitted to
federal health care programs that were false. Finally, Defendants further assert that relator has
failed to identify specific adult anti-aging claims and that regardless of whether relator has
identified specific pediatric short-stature claims submitted to federal health care programs, he
set forth in the statute, the provision expired on September 30, 2006, and Congress has notrenewed it. Moreover, the FDA draft guidance on Good Reprint Practices for the Distribution of
Medical Journal Articles and Medical or Scientific Reference Publications on Unapproved NewUses ofApproved Drugs and Approved or Cleared Medical Devices states that it contains
"Nonbinding Recommendation, Draft - Not for Implementation" and that the FDA is accepting
comments on the draft.8 WLF wrongly suggests that the defendant must have instructed or directed that claims
be submitted or how to do so in order for liability to exist for "causing" the submission ofa false
or fraudulent claim. As the Supreme Court has recognized, the prototypical FCA case involving
the "causing" of the submission of a false claim - when a subcontractor submits a false invoice
to a prime contractor which, in tum, submits the invoice to the United States - rarely involves a
subcontractor affirmatively instructing or directing the prime contractor to submit a false claim.
See United States v. Bomstein, 423 U.S. 303, 309 (1976); Marcus v. Hess, 317 U.S.537, 544-45
Case 1:03-cv-11084-PBS Document 118 Filed 05/12/2008 Page 11 of 13has failed to provide sufficient details about those claims.9 To the extent that defendants
contend that relator's complaint must fail because it did not identify specific false claims or do
so with sufficient particularity, defendants seek to impose too rigid a pleading standard in FCA
As a general matter, the allegation of a specific false claim is not an absolute prerequisite
to pleading a viable FCA claim. Although FCA liability attaches to the claim for payment, the
First Circuit and this Court have held that whether specific claims must be identified for a
complaint to satisfy Rule 9(b)'s particularity requirement will depend on the circumstances of
each case. See United States ex reI. Rost v. Pfizer, Inc., 507 F.3d 720, 732 (Ist Cir. 2007);
United States ex reI. West v. Ortho-McNeil Pharm., Inc., 2008 WL 435497, at *18 (D. Mass.
Feb. 19, 2008). Thus, in off-label cases, where the alleged false claims were submitted not by
the defendant, but instead by a third party, a relator "need not allege the details of particular
claims, so long as 'the complaint as a whole is sufficiently particular to pass muster under the
FCA.'" See Rost, 507 F.3d at 732 (quoting Karvelas, 360 F.3d at 225).10 In evaluating such9 Whether the requisite knowledge under the FCA was sufficiently plead does not appear
to be a focus of defendants' brief and, in any event, questions relating to a defendant's
knowledge typically cannot be resolved at the pleadings stage of a case. Accordingly, the Courtneed not address this issue. It bears noting here, however, that if a defendant knew or acted with
reckless disregard as to the truth or falsity of claims that they caused to be submitted, "any
possible ambiguity in the regulations is water under the bridge." Minnesota Ass'n ofNurse
Anesthetists v. Allina Health System Corp., 276 F.3d 1032, 1053 (8th Cir. 2002).
10 Such an analysis is consistent with FCA cases in which courts have found that when a
complaint sets forth with particularity allegations of a fraudulent scheme or course of conduct, it
is not also necessary to identify specific claims because doing so adds little to the sufficiency ofthe complaint as a whole. See,~, United States ex reI. Singh v. Bradford Regional Medical
Center, 2006 WL 26425 I 8, at *7 (W.D. Pa. 2006) ("[T]he falsity of the instant claims does notturn on anything unique to any individual claim or that would be revealed from an examination
of any claim, but rather the claims 'are false because ofthe improper financial arrangements
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matters, "the strength ofthe inference of fraud on the government" may be measured by, for
example, factual or statistical evidence tending to show fraud beyond possibility. See West,
2008 WL 435497, at *18. Given the posture ofthis matter, the unique circumstances ofthe drug
at issue in this case, and to assist the Court in applying the standard here, the United States
submits that it is not aware of any billable diagnosis code for an anti-aging use that would be
recognized or reimbursable by federal health care programs.
The United States submits this brief regarding how to interpret and apply certain aspects
ofthe Medicaid Act and the FCA. The United States takes no position on the sufficiency ofthe
GREGORY G. KATSAS
ACTING ASSISTANT ATTORNEY GENERALMICHAEL 1. SULLIVAN
UNITED STATES ATTORNEY
/s/ Sara Miron Bloom
SARA MIRON BLOOM
Assistant U.S. Attorney
Suite 9200, One Courthouse Way
Boston, MA 02210
Phone: (617) 748-3265JOYCE R. BRANDA
MICHAEL D. GRANSTON
JAMIE ANN YAVELBERG
EDWARD C. CROOKE
Civil Division, Commercial Litigation Branch
P. O. Box 261, Ben Franklin Station
between [defendant] and the physicians."').
Case 1:03-cv-11 084-PBS Document 118 Filed 05/12/2008 Page 13 of 13
Dated: May 12,2008
Washington, D.C. 20004
Phone: (202) 353-0426-13-