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27 September 2017
On August 18 2017 the US District Court for the Northern District of Illinois dismissed the False Claims Act claims brought by the federal government and two state governments based on allegations that Par Pharmaceuticals orchestrated an unlawful prescription-switching scheme, for the federal and state governments' failure to allege the submission of any actually false claims.
In United States ex rel Lisitza v Par Pharmaceutical Companies Inc the complaints alleged that the company produced widely available generic drugs, but in forms and dosages different from those offered by competitors, then marketed its drugs to pharmacies as a means to obtain higher Medicaid reimbursements that were not subject to Medicaid's standard reimbursement caps due to their forms and dosage strengths. According to the complaints, the claims submitted were fraudulent because the pharmacies dispensed drugs differently from those originally prescribed, not due to either medical necessity or cost, but because the drugs were "simply more profitable".
In granting Par's motion for summary judgment, the court rejected the complaints' assertion that the claims were "inherently false" simply because the claims for Par's drugs exceeded the lowest possible rate, holding that such an assertion ignores the False Claims Act requirement that there must be a false or misleading statement. The federal and state governments also alleged that the submitted claims were false by omission because they failed to disclose that the medications were originally prescribed in different forms or strengths that could have been filled at lower cost. The judge dismissed this argument, holding that:
"omitting information from the claim form about the course of events that led to the dispensing of a particular drug, or about its relative cost, does not go to the truth or falsity of the representations on the claim form itself."
While the judge acknowledged that Par may have conspired with pharmacies to increase its own profits, it rejected their claims under the False Claims Act due to their failure to allege the submission of any claims that actually were false, thus joining the long line of cases rejecting attempts to convert the False Claims Act into a general anti-fraud statute.
A copy of the US District Court's opinion can be found here.
For further information on this topic please contact Jaime LM Jones or Whitney C Nebolisa at Sidley Austin LLP by telephone (+1 202 736 8000) or email (email@example.com or firstname.lastname@example.org). The Sidley Austin LLP website can be accessed at www.sidley.com.
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