In U.S. ex rel. Petratos v. Genentech, Inc., the U.S. District Court for the District of New Jersey dismissed a qui tam action claiming that Genentech underreported side effects of the widely-used cancer drug Avastin. In its opinion, the district court reiterated that the FCA is not intended to reach wrongful behavior that does not lead to a false claim or regulatory violations not tied to payment.
Relator’s complaint alleged that defendants made false submissions to the FDA by relying on patient databases that contained inadequate information about drug risks and side effects and otherwise refused to provide data regarding such risks to a Key Opinion Leader based upon defendants’ false assertion that this information was unavailable. The relator claimed that this conduct cost taxpayers “hundreds of millions of dollars,” because fewer doctors would have prescribed Avastin if defendants had provided complete and accurate information, and government payers would have reimbursed for fewer Avastin indications, for lower dosages, or not at all.
The district court explained that defendants’ submissions to the FDA and to third-party compendia authors or KOLs were not claims for payment. The district court noted that “[t]he only conceivable claims discussed in the Amended Complaint are the submissions doctors make for Medicare and Medicaid reimbursement,” which the relator argued were false because certain procedures were not medically “reasonable and necessary.” In rejecting this theory of FCA liability, the district court reiterated that “medically ‘reasonable and necessary’ is a determination made by the relevant agency, not individual doctors.” For this reason, “where the FDA has approved a drug for a particular use, that use is ‘reasonable and necessary,’ no matter what an individual doctor thinks.” The district court’s conclusion underscores that FCA liability may not be based upon theories of prescriber-specific, product liability-style causation.
The district court also rejected the relator’s implied certification theory of liability stemming from alleged regulatory violations, which were not tied to payment of any claims. The district court emphasized that “[v]iolations of regulations only give rise to FCA liability if such regulations are preconditions of payment.”
The relator filed a notice of appeal on November 19, 2015.