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Whistleblower case against Gilead Sciences wins important court victory for patient protection

A whistleblower lawsuit involving Gilead Sciences was allowed to proceed after an appeals court ruled the the company could be held liable for allegedly false statements made to the FDA, even though the FDA doesn't make the decision to pay for the drugs. (Photo by Chris Potter)

A recent appeals court decision cleared a legal path for future whistleblower cases seeking to ensure that drugs paid for by the government comply with important safety regulations that protect patients.

The Ninth Circuit Court of Appeals held earlier this month that companies that lie to the US Food and Drug Administration (FDA) to obtain approval of a drug can face liability under the False Claims Act. The court ruled that a company can be held liable even though the FDA is not the government agency that makes the decision to pay for the drugs and even when the FDA has not withdrawn approval of the drug.

US ex rel. Campie v. Gilead Sciences Inc., is a qui tam lawsuit brought under the False Claims Act by whistleblowers Jeff and Sherilyn Campie, who alleged that their former employer, Gilead, made false statements to the FDA to secure approval for several of its HIV drugs. In general, federal healthcare programs only pay for FDA-approved drugs.

One key aspect of FDA approval is that facilities used to source active ingredients must meet federal “good manufacturing standards” that help ensure the quality and purity of drugs.

The whistleblowers’ complaint said that when Gilead initially sought approval of the drugs, it told the FDA it would source the active ingredient in the drugs from specific, approved registered facilities in the US, Canada, Germany and South Korea. But instead of sourcing the active ingredient from approved facilities, Gilead allegedly sourced it from unregistered facilities in China in an effort to save money, and actively concealed the switch.

It wasn’t until two years after Gilead allegedly began using the Chinese facilities that it sought FDA approval to use one of them. Then it took an additional two years for the approval to be granted.

The complaint alleges that Gilead obtained that approval through misstatements and omissions, including covering up test failures and problems with contamination of the drugs. The company later stopped using the Chinese facilities after continued contamination problems.

A federal district court initially dismissed the case for failure to allege a valid claim under the False Claims Act. The Ninth Circuit reversed that decision, holding that the complaint adequately alleged that Gilead falsely represented it was providing a product that conformed to the FDA requirement on using approved facilities when it did not.

The court also concluded that because Gilead misrepresented it was providing specific drugs that met FDA regulations and failed to disclose its noncompliance with those regulations, the complaint adequately alleged the type of “implied certification” claim approve by a Supreme Court ruling last year. The appeals court held it did not matter that the misrepresentations were made to a regulatory agency rather than to the agency that makes the payment decision, observing that “if a false statement is integral to a causal chain leading to payment, it is irrelevant how the federal bureaucracy has apportioned the statements among layers of paperwork.”

Noting that the Courts of Appeal in the First, Third, and Fourth Circuits had cautioned against False Claims Act cases “wad[ing] into the FDA regulatory regime,” the Ninth Circuit observed that it is not the FDA’s purpose to prevent fraud on the government and that the key question was whether the misrepresentation was “material,” meaning it was likely to affect the government’s decision to make a payment.

The court rejected the defense argument that FDA approval of a drug immunizes companies from False Claims Act liability, even when false statements were used to obtain the approval. The court also rejected Gilead’s argument that any violations could not have mattered to the government because the FDA did not revoke the drug’s approval and the government continued to pay for the drug.

As the court noted, there could be many reasons for the government’s actions, even assuming the government knew about the misrepresentations. And because Gilead had stopped using the Chinese facilities, continued payment and approval by the government mattered less than if the violations had been ongoing.

While the Ninth Circuit noted the whistleblowers will still need to prove their case, by upholding their legal theory, the decision lends important support for whistleblower cases that seek to recover taxpayer funds spent on drugs that are adulterated, contaminated or otherwise do not comply with FDA safety regulations.

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