Fifth Circuit decision
Additional issues

The Fifth Circuit recently affirmed summary judgment for Solvay Pharmaceuticals Inc 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.


After the federal government and all implicated state governments failed to intervene in US ex rel King v Solvay Pharmaceuticals, Inc,(1) two former marketing employees proceeded with claims alleging that:

  • Solvay had marketed three drugs – Luvox, Aceon and AndroGel – for off-label uses causing reimbursement by Medicaid;
  • Solvay had lobbied certain states' pharmacy and therapeutic committees ('P&T committees') to secure preferred status on Medicaid formularies, also causing Medicaid reimbursement because physicians were less likely to use non-preferred drugs;
  • Solvay had misled the publisher of the DrugDex Information System compendia to secure "medically accepted" listings, and therefore Medicaid reimbursement eligibility, for various off-label uses of the products; and
  • Solvay had paid physicians kickbacks in the form of consulting fees to induce the purchase of its drugs.(2)

Fifth Circuit decision

The Fifth Circuit ruled in Solvay's favour on all four sets of False Claims Act claims, and also upheld the lower court's decisions to deny the relators' retaliation claims and to award Solvay taxable costs totalling $232,809.92.

On all AndroGel claims, the court upheld the lower court's dismissal for lack of jurisdiction under the False Claims Act's public disclosure bar, finding that the relators were not the original source of the facts they presented and had instead derived their claims from a magazine article. On all claims related to Luvox and Aceon, the Fifth Circuit reasoned that the relators had failed to provide any evidence that Solvay's alleged conduct had caused the submission of even a single false claim to any Medicaid programme.

With regard to the off-label marketing claims, the court found that the relators' few pieces of original evidence (a marketing presentation and limited call notes) failed to "create a genuine issue of material fact that the off-label marketing scheme caused physicians to make off-label prescriptions that were submitted for Medicaid reimbursement".(3) Further, the economic studies on which the relators relied, which indicated that pharmaceutical marketing efforts result in increased sales, suggested "only the potential for a causal link… but sa[id] nothing about whether the marketing scheme actually caused off-label prescription to Medicaid patients".(4)

Similarly, the court doubted the relators' claims that Solvay's alleged lobbying of state P&T committees had influenced the committees' decision to prefer the company's drugs. According to the court, the relators' evidence suggested that the committees had relied on available data in making formulary decisions. In its reasoning, the court highlighted that P&T committees are composed of medical experts, thereby implying that those experts rely on their independent medical judgement to make off-label use determinations (as pharmaceutical defendants often argue). Further, the court held that even if the P&T committees were unduly influenced, the relators had failed to present any evidence that Medicaid claims "were actually filed because Solvay's drugs were placed on preferred drug lists".(5)

The relators then alleged that in Solvay's interactions with DrugDex, the company had suppressed negative studies and flooded the medical literature with small, low-quality studies that supported the use of Luvox for certain off-label uses. However, the relators failed to provide any evidence that Solvay had presented those small company-sponsored studies to DrugDex, let alone any evidence that DrugDex was misled by the studies and that it relied on them in making its compendia listing determinations.

Finally, the court summarily dismissed the relators' kickback allegations, finding no evidence that compensation or other benefits provided to physician-consultants caused those physicians to write prescriptions reimbursed by Medicaid. In siding with Solvay, the court reasoned:

"There was nothing illegal about paying physicians for their participation in these types of programs [eg, promotional speaker programmes] and there is no evidence that participation was conditioned upon prescribing Solvay's drugs to Medicaid patients. Although it is not an unreasonable inference that Solvay intended these programs to boost prescriptions, it would be speculation to infer that compensation for professional services legally rendered actually caused the physicians to prescribe Solvay's drugs to Medicaid patients."(6)

Additional issues

In addition to its rulings on causation, the Fifth Circuit raised two other issues which were relevant to claims based on allegations of off-label promotion.

First, the court stated in a footnote that it remains an open question whether Medicaid programmes have discretion to reimburse for off-label uses that are not "medically accepted" as defined by federal statute (ie, supported by certain compendia such as DrugDex).(7) The court reasoned that if such discretion exists, in order to establish an False Claims Act violation, plaintiffs must present evidence that the states at issue have chosen to deny reimbursement for non-medically accepted off-label uses.(8) This reasoning places the burden on plaintiffs to provide evidence of the reimbursement rules followed by every Medicaid programme at issue in a False Claims Act case – a significant burden for any False Claims Act case that spans multiple years and includes several states.

Second, while the court did not reach the issue of materiality, it reasoned that a state's failure to ask about the purpose of a prescription, and to specifically ask whether a prescription was used off-label (eg, through a prior authorisation process), suggests that use is not material to the state's payment decisions.(9) Critically, this reasoning extends the Supreme Court's holding in Universal Health Services, Inc v United States ex rel Escobar(10) – that continued payment of claims "despite actual knowledge that certain requirements were violated" is "strong evidence" that those requirements are not material to the payment decision. The Fifth Circuit would require much less than actual knowledge and would allow defendants to defeat the False Claims Act's materiality standard based on a federal payor's failure to take adequate steps to ensure that reimbursement requirements were met.

For further information on this topic, please contact Scott D Stein or Amy L DeLine at Sidley Austin LLP by telephone (+1 312 853 7000) or email ([email protected] or [email protected]). The Sidley Austin website can be accessed at www.sidley.com.


(1) For more details see here and here.

(2) US ex rel King v Solvay Pharmaceuticals, Inc 16-20259 at 3-4 (5th Cir Sept 12 2017). The Fifth Circuit's opinion can be found here.

(3) Id at 10 (emphasis added).

(4) Id at 12 (emphasis in original).

(5) Id at 14.

(6) Id at 17.

(7) Id at 10, n7.

(8) Id.

(9) Id at 10, n9.

(10) 136 S Ct 1989, 2003-04 (2016).