Justia Drugs & Biotech Opinion Summaries

The State of Mississippi brought a civil action against generic pharmaceutical provider Sandoz, Inc., alleging that Sandoz impermissibly exploited Mississippi’s Medicaid reimbursement program by routinely and exponentially reporting fictitious “Average Wholesale Prices,” a key data factor in the federally supervised formula used by the Mississippi Division of Medicaid to reimburse pharmacies serviced by Sandoz. The trial court, sitting as fact-finder, found Sandoz in violation of the Mississippi Consumer Protection Act and liable for common-law fraud. Sandoz appealed, and the State cross-appealed. On a deferential standard of review, the Supreme Court affirmed the trial court in full. View "Sandoz, Inc. v. Mississippi" on Justia Law

From 1998 to 2012 Abbott marketed the anticonvulsant medication Depakote for applications that had not been FDA-approved (off-label uses). Physicians may prescribe drugs for off-label uses, but pharmaceutical companies are generally prohibited from marketing drugs for those same applications. Qui tam actions were filed under the False Claims Act. In 2009, Abbott disclosed in an SEC filing that the Department of Justice was investigating its marketing. Abbott pleaded guilty to illegally promoting Depakote from 2001 through 2006 and agreed to pay $1.6 billion to settle the criminal and qui tam actions. Employee benefits funds filed suit 15 months later, alleging that Abbott misrepresented Depakote’s safety and efficacy for off-label uses, paid kickbacks to physicians, established and funded intermediary entities to promote the drug for off-label uses, and concealed its role in these activities, in violation of the Racketeer Influenced and Corrupt Organizations Act. The district court dismissed, finding that the statute of limitations for the RICO claim began to run in 1998, when the funds initially reimbursed a prescription for off-label use. The court refused to toll the limitations period until the guilty plea, finding that Abbott’s concealment efforts were not designed to hinder potential lawsuits. The Seventh Circuit reversed, finding that dismissal was premature without an opportunity for discovery into when a reasonable fund should have known about its injuries from off-label marketing. View "Sidney Hillman Health Ctr. of Rochester v. Abbott Labs., Inc." on Justia Law

Schumann, as a qui tam relator under the False Claims Act (FCA), 31 U.S.C. 3729, and corresponding state laws, alleged that the drug company defendants improperly induced Medco Health, his employer, to offer certain of defendants’ drugs in its mail-order pharmacies and in health plans it managed; did not include those inducements when calculating the best price for their drugs, and thus submitted inaccurate best price reports to the government; overcharged the government based on those inaccurate best prices; and underpaid rebates owed based on those inaccurate best prices. The district court dismissed, holding that it lacked subject matter jurisdiction over Schumann’s claims because he did not have the requisite direct and independent knowledge to satisfy the original source exception to the FCA’s public disclosure bar. The Third Circuit affirmed. Schumann’s knowledge was not direct because it came from reviewing documents and discussing them with colleagues who participated in the underlying events. View "Schumann v. Astrazeneca Pharm., L.P." on Justia Law

Humana sued, alleging that Glaxo was obligated to reimburse Humana for expenses Humana had incurred treating its insureds’ injuries resulting from Glaxo’s drug, Avandia. Humana runs a Medicare Advantage plan. Its complaint asserts that, pursuant to the Medicare Act, Glaxo is in this instance a “primary payer” obligated to reimburse Humana as a “secondary payer.” The district court dismissed, agreeing with Glaxo that the Medicare Act did not provide Medicare Advantage organizations with a private cause of action to seek such reimbursement. The Third Circuit reversed and remanded. The Medicare Secondary Payer Act, in 42 U.S.C. 1395y(b)(3)(A), provides Humana with a private cause of action against Glaxo. Even if the provision is ambiguous, regulations issued by the Centers for Medicare and Medicaid Services make clear that the provision extends the private cause of action to MAOs. View "Humana Med. Plan Inc. v. GlaxoSmithKline LLC" on Justia Law

Stryker, a manufacturer of medical devices, sued its umbrella insurer XL, seeking coverage for claims stemming from the implantation of expired artificial knees. The dispute concerned the precise "defect" that triggers batch coverage under the Medical Products Endorsement. The district court held that XL was liable under the policy for the entirety of Stryker’s losses on both direct claims brought against Stryker, as well as claims brought against Pfizer that Stryker was obligated to reimburse under an asset purchase agreement. The court found that the items were defective if they were available in Stryker’s inventory for implantation by physicians beyond their shelf-life of five years. The Sixth Circuit affirmed XL’s liability for the full amount of Stryker’s losses and pre-judgment interest. XL’s payment to Pfizer applies to exhaust the policy with respect to the direct claims. The court reversed the holding that the aggregate limit of liability of the XL policy does not apply to the judgments on the direct claims and remanded for determination of what portion, if any, of the total liability for those judgments beyond $15 million represents consequential damages as defined under Michigan contract law. View "Howmedica Osteonics, Corp. v. Nat'l Union Fire Ins. Co." on Justia Law

TIG issued a $25 million excess policy to Stryker, a manufacturer of medical devices. Coverage attached above the underlying (XL) umbrella policy, with a limit of $15 million. Stryker sued XL, seeking defense and indemnification for claims related to replacement knees (first suit). Pfizer then sued Stryker, seeking indemnification with respect to claims based on Uni-Knees; the companies had an asset purchase agreement. The court ruled in favor of Pfizer. When XL denied coverage, Stryker sued both insurers. In 2008, the district court held that XL was liable for all of Stryker's liabilities with respect to both suits and also granted declaratory judgment against TIG. XL settled directly with Pfizer, and obtained a ruling that this satisfied its obligations. TIG moved to remove the declaratory judgment ruling, arguing that the ruling that XL was responsible with respect to both suits made it impossible to subject TIG to liability. The district court denied this motion. The Sixth Circuit affirmed that the case is not moot, noting that the claims may exhaust the XL policy; reversed a ruling that TIG is precluded from raising coverage defenses on remand, noting that TIG was not a party to the first suit; and remanded. View "Stryker Corp. v. Nat'l Union Fire Ins. Co." on Justia Law