Latest updates

Sixth Circuit's split decision highlights questions about pleading standard for materiality after Escobar
Sidley Austin LLP
  • USA
  • July 04 2018

The Sixth Circuit recently resurrected the relator's case in United States ex rel Prather v Brookdale Senior Living Communities, Inc. In a two-to-one decision, the majority held that the relator's materiality and scienter allegations sufficed under Universal Health Services, Inc v United States ex rel Escobar. The gulf between the majority and the vigorous dissent by the judge reflects persistent questions about how Escobar applies at the pleading stage.

DOJ defends use of statistical sampling to prove False Claims Act liability
Sidley Austin LLP
  • USA
  • May 30 2018

The Department of Justice has stepped in to defend a relator's attempt to use statistical sampling to prove False Claims Act liability, contending that if the government cannot utilise sampling in False Claims Act cases, "then defendants would be incentivized to commit fraud on a large scale". The resolution of this issue will have significant implications on the scope of False Claims Act claims going forward, particularly those based on lack of medical necessity.

Department of Justice pursues private equity firm for portfolio company False Claims Act violations
Sidley Austin LLP
  • USA
  • March 21 2018

The US Department of Justice (DOJ) recently filed a complaint in intervention against a compounding pharmacy, alleging that it had violated the False Claims Act by paying illegal kickbacks to induce prescriptions for drugs reimbursed by TRICARE, the federal healthcare programme for active duty military personnel, retirees and their families. Notably, the DOJ was also pursuing claims against a private equity firm that had a substantial ownership stake in the pharmacy.

Second Circuit finds government's continued payment in face of fraud allegations undercuts materiality
Sidley Austin LLP
  • USA
  • January 31 2018

In its recent decision, the Second Circuit held that the relator's failure to plead sufficiently that the allegedly defrauded agency had changed its reimbursement practices after becoming aware of information supposedly withheld by the defendant doomed the complaint on materiality grounds. The decision underscores the significance of the materiality requirement at the motion to dismiss stage.

Court corrects ruling requiring laboratories to verify medical necessity independently
Sidley Austin LLP
  • USA
  • January 17 2018

Clinical laboratories are in a difficult position: although laboratory tests must be medically necessary to be reimbursable by federal healthcare programmes, laboratories often do not directly engage with patients in a way that would permit them to assess medical necessity. A district court recently corrected its ruling regarding the extent to which laboratories can be held liable under the False Claims Act when the tests for which they submit claims are not medically necessary.

California passes sweeping prescription drug price transparency law and co-pay coupon ban
Sidley Austin LLP
  • USA
  • December 06 2017

California recently passed two bills with significant implications for pharmaceutical manufacturers: one imposing prescription drug price transparency requirements and another prohibiting certain types of co-pay coupon and other prescription drug discounting programmes that lower patient cost-sharing amounts for prescription drugs.

Fifth Circuit rules for pharmaceutical manufacturer based on relators' failure to establish causation
Sidley Austin LLP
  • USA
  • October 04 2017

The Fifth Circuit recently affirmed summary judgment for a pharmaceuticals manufacturer on allegations that the company had violated the False Claims Act as a result of off-label marketing efforts and kickbacks to physicians. In its decision, the court emphasised the relators' failure to demonstrate a causal link between the alleged improper conduct and any false claims.

District court dismisses False Claims Act claims based on no evidence of falsity
Sidley Austin LLP
  • USA
  • September 27 2017

The US District Court for the Northern District of Illinois recently dismissed the False Claims Act claims brought by the federal government and two state governments based on allegations that Par Pharmaceuticals had orchestrated an unlawful prescription-switching scheme. While the judge acknowledged that Par may have conspired to increase its own profits, it rejected the federal and state governments' claims due to their failure to allege the submission of any claims that actually were false.

Bipartisan group of senators reintroduces CHRONIC Care Act
Sidley Austin LLP
  • USA
  • June 07 2017

A bipartisan group of senators recently introduced Section 870 of the Creating High-Quality Results and Outcomes Necessary to Improve Chronic Care Act, which reflects proposals to extend home healthcare, expand benefits for chronically ill Medicare beneficiaries and direct the Government Accountability Office to issue reports, among other things.

House narrowly passes American Health Care Act
Sidley Austin LLP
  • USA
  • May 24 2017

The House of Representatives recently passed the American Health Care Act seven years after Republicans pledged to repeal the Affordable Care Act. Amendments to the legislation would allow states to seek waivers from the Affordable Care Act's essential health benefit requirement, age rating requirement and community rating rules for individuals who fail to maintain continuous coverage.

Court issues important decision for dietary supplement industry
Sidley Austin LLP
  • USA
  • May 17 2017

Judge Vasquez recently granted summary judgment to Bayer in a consumer class action over its probiotic dietary supplement. This decision should help to rein in the onslaught of lawsuits that improperly target dietary supplements. First, it reinforces that dietary supplements are not regulated as drugs and structure/function claims need not be supported by randomised controlled clinical trials. Second, it makes clear that private consumer class actions cannot be premised on a 'lack of substantiation' theory.

What clinical laboratories should expect in 2017
Sidley Austin LLP
  • USA
  • May 03 2017

With draft Affordable Care Act repeal and replace legislation under consideration by Congress, the clinical laboratory community should prepare for significant disruptions in the healthcare marketplace, even as it continues to grapple with major policy shifts set in motion in the final years of former President Barack Obama's administration.

Sanders introduces drug importation bill
Sidley Austin LLP
  • USA
  • April 19 2017

Senator Bernie Sanders recently introduced the Affordable and Safe Prescription Drug Importation Act, which would amend the Federal Food, Drug and Cosmetic Act to allow the importation of drugs from Canada and possibly other countries. The bill directs the Department of Health and Human Services secretary to promulgate regulations permitting the importation of prescription drugs by individuals, wholesalers and pharmacies within 180 days of its enactment.

Senate approves HHS secretary by party-line vote of 52 to 47
Sidley Austin LLP
  • USA
  • March 08 2017

The Senate recently approved Republican Tom Price (R-GA) to be secretary of the Department of Health and Human Services by a party-line vote of 52 to 47. During the nearly 30-hour debate that preceded the vote, a number of Republican senators voiced their strong support for Price. In contrast, Democrats expressed opposition to his nomination and reiterated their concerns about his stockholdings in certain healthcare companies and his views regarding the Affordable Care Act, Medicaid and Medicare.

FDA proposes regulatory framework for laboratory-developed tests
Sidley Austin LLP
  • USA
  • February 22 2017

In an unusual move, the Food and Drug Administration (FDA) recently published a discussion paper which proposes a new regulatory framework for laboratory-developed tests. The discussion paper describes a risk-based approach that differs significantly from the FDA's initial proposal in a draft guidance document issued in 2014 and reflects a lighter touch for most laboratory-developed tests.

New Republican Study Committee legislation to repeal and replace Affordable Care Act
Sidley Austin LLP
  • USA
  • February 15 2017

The Republican Study Committee recently released the American Healthcare Reform Act of 2017, which would repeal and replace the Affordable Care Act of 2010. Although the act has not (to date) been formally introduced, it is expected to garner support from conservative members of the House of Representatives and serve as a basis for negotiation with other key lawmakers.

HHS significantly expands permissive exclusion authority
Sidley Austin LLP
  • USA
  • February 08 2017

The US Department of Health and Human Services Office of Inspector General (OIG) recently published a final rule that provides guidance on its new and expanded bases for permissive exclusion from federal healthcare programmes. The preamble to the final rule addressing the OIG's enlarged exclusion authority suggests that the agency views its enforcement oversight as mirroring the reach of the False Claims Act.

FDA's flurry of food and cosmetic activities continues unabated
Sidley Austin LLP
  • USA
  • February 01 2017

As the Obama administration drew to a close, the Food and Drug Administration's Centre for Food Safety and Applied Nutrition (CFSAN) continued to release multiple final or interim final rules and guidance documents pertaining to food safety, nutrition labelling and cosmetic safety. The CFSAN also began posting adverse event reports for foods and cosmetics and extended its comment period for 'healthy' claims in food labelling.

Affordable Care Act in 115th Congress: 'repeal and replace' strategy faces hurdles
Sidley Austin LLP
  • USA
  • January 25 2017

A priority of Republicans in Congress and President Trump is to 'repeal and replace' the Affordable Care Act; however, this is replete with challenges. Among other procedural and political hurdles, the budget reconciliation process limits the types of provision that the legislation can include to those that affect the federal budget, and it remains to be seen which provisions Republicans will seek to repeal and which they will seek to keep.

OIG finalises long-awaited rules on civil monetary penalties and new Anti-kickback Statute safe harbours
Sidley Austin LLP
  • USA
  • January 18 2017

The US Office of Inspector General recently finalised two key proposed rules. The first relates to the civil monetary penalties and exclusion statutes, and the second amends the safe harbours to the Anti-kickback Statute and the definition of 'remuneration' under the beneficiary inducements civil monetary penalty.