- Suit alleges drugmakers fraudulently obtained patent extensions
- Approach could discourage brand-name drugmakers from extending patents
A patent attorney’s novel strategy to use the False Claims Act to lower brand-name drug prices will be tested today in the U.S. District Court for the Northern District of California.
Judge Joseph C. Spero will hear motions to dismiss by the defendants and responses from the whistleblower who brought the action.
The unusual case alleges that Allergan PLC and Adamas Pharmaceuticals Inc. violated the False Claims Act by fraudulently obtaining a “follow-on” patent for the dementia drugs Namenda XR and Namzaric. Follow-on patents extend an original patent for the same drug that’s slightly altered or delivered in a different form.
At stake is the question of whether a common practice in the pharmaceutical industry—obtaining new patents for minor changes in drug formulation to extend brand-name market exclusivity—constitutes a false claim when those patents were obtained fraudulently.
Entities violate the False Claims Act when they obtain payment from the federal government based on misrepresentation or fraudulent schemes.
False Claims Act cases are common in the health-care industry where whistleblowers allege fraudulent Medicare claims by doctors or hospitals. But they’re rare against drugmakers in a patent context “because no one has prevailed,” said Kevin Noonan, a Chicago-based patent attorney who isn’t involved in the case.
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Namenda retails for roughly $495 per month and brought in $1.5 billion in revenues for Allergan in 2014 before generic versions entered the market in 2015.
“The theory of the case is sound,” said Jeanne Markey, a partner and whistleblower attorney in the Philadelphia offices of Cohen Milstein. “This is a way of using the False Claims Act as a very effective tool to put a price cap at least on some of these drugs.”
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In addition to the Namenda case, Silbersher has brought similar actions against Valeant (now Bausch Health Cos Inc.) over its ulcerative colitis drug Apriso, and against Johnson & Johnson and its Janssen unit over its prostate cancer drug Zytiga.
The implications of the cases are potentially huge, Markey said. “The False Claims Act statute has an overpayment provision and it works in tandem with the Affordable Care Act,” she said. “When the recipient of government money learns that they have received an overpayment, there is an obligation to return that overpayment.”
“You may be looking at a situation where they [Allergan and Adamas] are obligated to pay back money that they received from the government for years past for all the time that the invalid patent was working its mischief.”
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