UPDATED: Relators allowed to re-plead reverse false claims against drug maker Cephalon

UPDATED: Relators allowed to re-plead reverse false claims against drug maker Cephalon

May 6, 2015

Earlier this month, U.S. District Court Judge Thomas O’Neill of the Eastern District of Pennsylvania allowed several major claims against pharmaceutical maker Cephalon to survive a motion to dismiss.  In 2010, ex-employees of the former drug giant (now a wholly-owned subsidiary of Teva Pharmaceuticals) filed the False Claims Act suit, claiming that Cephalon submitted, or caused doctors to submit, illegally filed claims for reimbursement for blockbuster drugs Provigil and Nuvigil.  These claims, the court ruled, were sufficiently pleaded to survive dismissal under Federal Rule of Civil Procedure 9(b). 
 
The relators also included a “reverse false claims” allegation in their complaint, asserting Cephalon had failed to comply with its Corporate Integrity Agreement (CIA), part of a 2008 agreement which included a $425 million payout to settle previous FCA claims.  Cephalon’s CIA prohibits the company from promoting drugs off-label, and includes a stipulation to penalties for future violations.  The relators alleged Cephalon violated its duty to self-report the off-label promotion, and that this gave rise to a “reverse false claim” stemming from the company’s withholding of penalties owed.  Judge O’Neill ruled that the relators had to affirmatively plead the stipulated penalties provision of the CIA in order to state this claim, and dismissed this part of the complaint with leave to amend.

UPDATE: Plaintiffs have filed their Third Amended Complaint, which details the CIA’s stipulated penalties provisions (see paragraphs 394-95).

 

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