United States v. Sumitomo Pharma America, Inc.

Background

Sumitomo Pharma America, Inc., formerly known as Sunovion Pharmaceuticals, Inc., manufactured Brovana, a drug used to treat chronic obstructive pulmonary disease. Scott Louderback brought this qui tam action under the federal False Claims Act, alleging that Sunovion paid rebates to pharmacies that agreed to arrangements concerning Brovana prescriptions and dispensing.

Louderback alleged that two provisions of the pharmacies’ agreements were important to the alleged scheme: a “dispense-as-written” provision and a “counterdetailing” provision. He alleged that these provisions required pharmacies to dispense Brovana as prescribed and prevented them from educating prescribers about less expensive equivalent or generic alternatives. He claimed that the rebate arrangement violated the Anti-Kickback Statute and that claims for services resulting from such a violation were false claims under the False Claims Act.

Motion and legal standards

Sumitomo moved to dismiss the Second Amended Complaint under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. The court explained that the complaint had to contain enough factual allegations to make the claim plausible, rather than merely possible. Because the False Claims Act is an anti-fraud statute, the complaint also had to satisfy Rule 9(b), which requires fraud to be pleaded with particularity.

The court relied on the requirement that a False Claims Act claim based on the Anti-Kickback Statute must plausibly allege a but-for causal connection between the alleged kickback violation and the items or services included in the government claim. In this case, Louderback therefore had to allege facts showing that pharmacies would not have included Brovana prescriptions on Medicare claims absent the rebate arrangement tied to the agreement’s dispensing and counterdetailing provisions.

Analysis

The court found that the Second Amended Complaint alleged that pharmacies received rebates and dispensed Brovana, but did not plausibly connect the alleged unlawful provisions to the submission of particular Medicare claims. Louderback’s argument that the rebates alone caused all Brovana claims was inconsistent with the complaint’s theory, which alleged that the violation involved rebates conditioned on compliance with the dispense-as-written and counterdetailing provisions.

The court also found insufficient the complaint’s allegations, made on information and belief, that pharmacies failed to substitute competing drugs or failed to promote competitors when they otherwise would have done so. The court characterized those allegations as conclusions or unsupported assertions that did not provide facts showing the required but-for causation. The court noted examples of allegations that might have supported causation, such as specific situations within personal knowledge, relevant prescription data, or scientific studies, but found that the complaint contained no comparable allegations.

Because the court concluded that the complaint failed to plead the required causation, it did not address Sumitomo’s alternative argument that actual damages were an element of the False Claims Act claim and had not been pleaded.

Disposition

The court granted Sumitomo’s Motion to Dismiss. It dismissed the Second Amended Complaint with prejudice. It denied Sumitomo’s Motion to Strike as moot and ordered judgment to be entered accordingly.