Last month, we covered United States ex rel. King v. Solvay Pharmaceuticals, Inc. on the issue of the FCA’s public disclosure bar pre-Affordable Care Act. Today, we explore another aspect of that same opinion — the causation requirements necessary to sustain a fraudulent inducement FCA claim. The Fifth Circuit delivered relators a dose of bitter medicine in its opinion, affirming the district court’s grant of summary judgment to the defendant pharmaceutical company on the grounds that relators failed to demonstrate a causal link between the alleged false statements and any actual false claims.

In Solvay, relators alleged, among other things, that Solvay had fraudulently induced physicians to prescribe (and Medicaid thereafter to reimburse for) its drugs by marketing them for off-label uses, lobbying state pharmaceutical and therapeutic (P&T) committees to list their drugs on preferred drug lists, and using misleading scientific data to lobby the publisher of drug compendia to list a broader range of medically accepted off-label uses than relators believed appropriate.

The Fifth Circuit affirmed the district court’s finding of summary judgment, holding that the relators’ causation evidence for off-label marketing and lobbying of P&T committees and drug compendia did not create genuine issues of material fact. The court noted that relators’ evidence purporting to show off-label marketing contributing to increased off-label Medicaid prescriptions was largely speculative, and only demonstrated a potential causal link between Solvay’s marketing practices and false Medicaid claims. They also noted the particular difficulty of establishing causation in pharmaceutical cases where a high volume of prescriptions — even in the absence of misleading marketing — are made for off-label uses. Relators presented evidence (of questionable admissibility) of pharmaceutical sales rep “call notes” suggesting a link between calls made by the reps with later off-label prescriptions written by the physicians. But the Fifth Circuit agreed this evidence was far too speculative, given physicians’ common practice of prescribing drugs off-label. The court reached a similar conclusion on both of the lobbying claims. Although Solvay had campaigned to get its drugs added to state preferred drug lists through P&T committees, and one drug was added to such a list, the court found that there was no evidence that undue influence from Solvay produced that determination, nor was there evidence that placement on the lists actually caused prescriptions to be written (the list indicates only that a drug is preferred, but not required). Additionally, the court found that Solvay’s paying for studies to support its drug’s off-label use for inclusion in the DrugDex medical compendium did not mislead the DrugDex publisher nor induce them to list the drug. DrugDex, the court pointed out, could assess the proper weight to assign to such studies and make its own judgment about the results, and relators presented no evidence that Solvay had communicated with DrugDex about the studies. The court again pointed to relators’ lack of causation evidence showing a direct connection between the studies, listing on the compendium, and any resulting false claims to the government.

The causation reasoning in this case may feel very particular to the pharmaceutical industry, and perhaps that is true. But pharmaceutical-specific jurisprudence is becoming more relevant every day in the FCA world. As Fiscal Year 2017 has closed out and the year’s trends are being brought into focus, it has become clearer than ever that pharmaceutical enforcement by the government continues to expand. We will post more detailed analysis of our year-end data later this week, but the preliminary data shows that for FY 2017, the healthcare industry accounted for 68.8 percent of the Department of Justice’s FCA recoveries, totaling over $2.37 billion dollars. This is a drop from just last year, when healthcare accounted for just 57.9 percent of all FCA recoveries — but totaled $2.77 billion dollars. Recoveries within the healthcare industry from pharmaceutical defendants specifically, however, have increased over the past year — in FY 2016, pharma accounted for roughly $953 million dollars, but in FY 2017, pharma recoveries have grown to over $1.28 billion dollars. For FCA defendants, the hope is that decisions like the Fifth Circuit’s in Solvay may signal the rallying of a jurisprudential immune system to beat back this growing enforcement trend. For more information on trends from the last year, in pharma and other industries, be sure to check back later this week for our statistical breakdown of FY 2017.