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United States ex rel. Ferrara v. Novo Nordisk, Inc.

United States District Court, District of Columbia

April 8, 2019

UNITED STATES OF AMERICA, et al., ex rel. LESLEY FERRARA, et al., Plaintiffs,
v.
NOVO NORDISK, INC., et al., Defendants.

          MEMORANDUM OPINION

          REGGIE B. WALTON, UNITED STATES DISTRICT JUDGE

         The plaintiffs/relators brought the above-captioned cases on behalf of the United States and various plaintiff states (the “Named Plaintiff States”) (collectively, the “government”) against the defendants, Novo Nordisk, Inc. (“Novo Nordisk”), Novo A/S, Novo Nordisk A/S, and Novo Nordisk Foundation, pursuant to the qui tam provisions of the False Claims Act (“FCA”), 31 U.S.C. § 3730(b) (2012), and analogous state laws. See, e.g., Relator Elizabeth Kennedy's Original Complaint ¶¶ 5-8, United States ex rel. Kennedy v. Novo A/S, Civ. Action No. 13-1529 (“Kennedy's Compl.”).[1] In July 2017, the United States, Novo Nordisk, and the relators entered into a settlement agreement resolving the relators' claims and requiring Novo Nordisk to pay to the United States and the Named Plaintiff States a total settlement amount of $46, 500, 000, plus interest (the “Total Settlement Amount”). See Relator Kennedy's Combined Reply Brief to Relators 4-6's Oppositions Regarding Relator Kennedy's Status as First-to-File, Exhibit (“Ex.”) B (Settlement Agreement) (the “Settlement Agreement”) at 3-4. Currently before the Court is Relator [Elizabeth] Kennedy's Motion for Immediate Award of Relator's Share (“Kennedy's Mot.”), which “seeks an immediate award of at least . . . [fifteen percent] of the [Total] [S]ettlement [A]mount, ” Kennedy's Mot. at 1. Upon consideration of the parties' submissions, [2] the Court concludes that it must grant in part and deny in part relator Kennedy's motion.

         I. BACKGROUND

         The relevant factual background is the following. “At all [ ] times [relevant to the Settlement Agreement], Novo Nordisk distributed, sold, and marketed pharmaceutical products throughout the United States, including the drug liraglutide with the trade name Victoza[.]” Settlement Agreement ¶ A. On January 25, 2010, “[t]he Food and Drug Administration (‘FDA') approved a new drug application [ ] for . . . Victoza . . . as an adjunct to diet and exercise to improve glycemic control in adults with type 2 diabetes mellitus.” Id. ¶ B. However,

[a]t the time of approval and at all times since, Victoza's FDA-approved labeling has contained a boxed warning about the unknown risk of medullary thyroid carcinoma (‘MTC') in humans, based on the fact that some rodents exposed to Victoza developed thyroid C-cell tumors . . . during premarket testing of the drug.

Id. ¶ C. Additionally, “[t]he FDA approved . . . Victoza with a Risk Evaluation and Mitigation Strategy (‘REMS'), ” id. ¶ D, which required Novo Nordisk to, inter alia, “develop and implement a [ ] [p]lan . . . for communicating information to healthcare providers about the potential risk of MTC” (the “REMS Communication Plan”), id. ¶ E. The “REMS Communication Plan required Novo Nordisk to communicate this information in various forms, including in a letter to likely prescribers, ” id., and, on May 5, 2011, “the FDA . . . modifi[ed] [ ] the REMS[] to include an additional letter to primary care physicians, ” id. ¶ F.

         Beginning on October 15, 2010, the relators filed their Complaints in this Court and various other district courts. See Kennedy's Compl. at 1 (filed Oct. 15, 2010); Complaint at 1, United States ex rel. Dastous v. Novo Nordisk, Inc., Civ. Action No. 11-1662 (“Dastous's Compl.”) (filed Dec. 28, 2010); Complaint and Jury Demand at 1, United States ex rel. Ferrara v. Novo Nordisk, Inc., Civ. Action No. 11-74 (“Ferrara's Compl.”) (filed Jan. 12, 2011); Complaint for False Claims Act Violations[, ] 31 U.S.C. § 3729, Et Seq. at 1, United States ex rel. Myers v. Novo Nordisk, Inc., Civ. Action No. 11-1596 (“Myers's Compl.”) (filed Sept. 2, 2011); Complaint Filed Under Seal Pursuant to 31 U.S.C. § 3730(b)(2) at 1, United States ex rel. Stepe v. Novo Nordisk, Inc., Civ. Action No. 13-221 (“Stepe's Compl.”) (filed May 24, 2012); Complaint of the United States at 1, United States ex rel. Gratton v. Novo Nordisk, Inc., Civ. Action No. 17-791 (“Gratton's Compl.”) (filed Feb. 22, 2016).[3] Thereafter, all cases filed in other courts were transferred to this Court and assigned to the undersigned. See, e.g., Dkt. Entry, Kennedy, Civ. Action No. 13-1529, ECF No. 41 (reflecting transfer of case from the Southern District of Texas); Reassignment of Civil Case at 1, Kennedy, Civ. Action No. 13-1529 (reassigning case to the undersigned).

         In July 2017, the United States, Novo Nordisk, and the relators entered into the Settlement Agreement, see generally Settlement Agreement at 18-21, which requires Novo Nordisk to pay the Total Settlement Amount to settle “certain civil claims [possessed by the government] against Novo Nordisk arising from [specific] conduct concerning the marketing, promotion, and sale of Victoza from January 1, 2010, through December 31, 2014” (the “Covered Conduct”), id. ¶ K. The Covered Conduct includes two categories of conduct. The first category includes the following alleged conduct:

Novo Nordisk provided [its] sales force with training to appropriately implement the REMS, but also provided them with information that had the overall effect of arming them with messages that could create a false or misleading impression with physicians that the Victoza REMS MTC risk message was erroneous, irrelevant, or unimportant. Following the training, certain Novo Nordisk sales representatives made false or misleading statements that were designed to avoid and circumvent the requirements of the Victoza REMS Communication Plan. Those statements included:
a. the potential risk of MTC associated with Victoza is only applicable to rats and mice;
b. all diabetes drugs have boxed warnings and Victoza is no different and no less safe than those other drugs;
c. because of differences between rodents and humans it is implausible that humans would contract MTC from the use of Victoza;
d. physicians should not be concerned about MTC because it is easy to treat if a patient does get it;
e. “sandwiching” the MTC risk information between promotional messages; and
f. when delivering to primary care physicians a letter required by the May 5, 2011 modification to the Victoza REMS, certain Novo Nordisk sales representatives, executing instructions from Novo Nordisk's Vice President, Diabetes Marketing, told primary care physicians in June 2011 that there were no new safety concerns with Victoza and that the letter was simply the second part of the REMS requirement, which was a false or misleading message and contradicted the REMS modification[.]

Id. ¶ K(i). The Court will refer to this conduct as the “MTC Risk Conduct” and will refer to the government's claims based on this conduct as the “MTC Risk Conduct claims.” The second category of Covered Conduct includes allegations that “Novo Nordisk knowingly promoted the sale to and use of Victoza by adult patients who did not have [t]ype [2] diabetes, a use for which it was not approved as safe and effective by the FDA, that was not a medically accepted indication . . ., and not covered by [ ] [f]ederal [h]ealth [c]are [p]rograms.” Id. ¶ K(ii). The Court will refer to this conduct as the “Off-Label Promotion Conduct” and the government's claims based on this conduct as the “Off-Label Promotion Conduct claims.” The Settlement Agreement allocated $43, 970, 000 of the Total Settlement Amount to the MTC Risk Conduct (the “MTC Risk Settlement Amount”) and the remaining $2, 530, 000 of the Total Settlement Amount to the Off-Label Promotion Conduct (the “Off-Label Promotion Settlement Amount”). Id. ¶ 6. Additionally, the Settlement Agreement instructed that Novo Nordisk would pay $43, 179, 036.87 of the Total Settlement Amount to the United States (the “Federal Settlement Amount”), id. ¶ 1(a), and $3, 320, 963.13 to the Named Plaintiff States (the “State Settlement Amount”), id. ¶ 1(b).

         For purposes of “effectuating and formalizing” the Settlement Agreement, the United States partially intervened in the above-captioned cases “as to the Covered Conduct . . ., to the extent that the [relators'] Complaint[s] contain[ed] such claims.” See, e.g., The United States' Notice of Intervention in Part and Declination in Part at 1 (July 27, 2017), Kennedy, Civ. Action No. 13-1529. However, it “decline[d] intervention as to all other claims asserted on [its] behalf.” Id. Shortly thereafter, the government and the relators stipulated to the “dismiss[al] with prejudice . . . [of] all claims asserted . . . against [Novo Nordisk] concerning the Covered Conduct, ” but agreed that the “[r]elator[s'] claims, if any, for a share of the [settlement] proceeds . . . [would] not be prejudiced until they are settled, adjudicated[, ] or otherwise resolved.” See, e.g., Stipulation of Dismissal at 1-2 (Aug. 2, 2017), Kennedy, Civ. Action No. 13-1529. Then, on September 5, 2017, the United States filed a new action against Novo Nordisk pursuant to the Food, Drug, and Cosmetic Act (“FDCA”), 21 U.S.C. § 332 (2012), see Complaint ¶ 1, United States v. Novo Nordisk, Inc., Civ. Action No. 17-1820, which it stipulated to dismiss “pursuant to the settlement agreement the parties . . . entered into on July 26, 2017, ” Joint Stipulation for Dismissal and [Proposed] Order at 1 (Sept. 5, 2017), Novo Nordisk, Inc., Civ. Action No. 17-1820. “Novo Nordisk paid $12.15 million in connection with the FDCA [ ] settlement” (the “FDCA Settlement Amount”). United States' Resp. at 9.

         On October 27, 2017, relator Kennedy filed her motion for an immediate award of a share of the Total Settlement Amount. See Kennedy's Mot. at 1. Thereafter, relator David Myers, relator McKenzie Stepe, and relators Kathleen Gratton and Raymond Hippolyte (the “Gratton relators”) filed oppositions to relator Kennedy's motion, also asserting entitlement to a share of the Total Settlement Amount. See Myers's Opp'n at 21; Stepe's Opp'n at 27; Gratton's Opp'n at 2-3. On the other hand, relators Lesley Ferrara and Shelly Kelling (the “Ferrara relators”) filed a memorandum supporting relator Kennedy's motion, see generally Ferrara's Mem., which relator Peter Dastous joined, see generally Dastous's Not. Additionally, relators Myers and Stepe each filed motions requesting that “the Court issue an Order [requiring the United States and the Named Plaintiff States] to deposit into . . . the Court's [r]egistry an amount . . . equal to [fifteen percent] of the [Total] [S]ettlement [Amount] . . . pending the Court's resolution of the outstanding issues concerning the amount of the relator's share to be awarded to the various [r]elators.” Plaintiff/Relator McKenzie Stepe's Motion to Deposit the Disputed Global Settlement Funds into the Court's Registry at 1, Stepe, Civ. Action No. 13-221; see Plaintiff/Relator David Myers's Motion to Deposit the Disputed Global Settlement Funds into the Court's Registry at 1, Myers, Civ. Action No. 11-1596. Then, the United States filed an unopposed motion similarly requesting that the Court order the deposit of fifteen percent of the Federal Settlement Amount into the Court's registry. See, e.g., United States' Unopposed Motion for Court Registry Deposit at 2-3, Kennedy, Civ. Action No. 13-1529.

         On June 1, 2018, the Court granted the government leave to deposit fifteen percent of the Federal Settlement Amount and the State Settlement Amount into the Court's registry. See, e.g., Order at 3 (June 1, 2018), Kennedy, Civ. Action No. 13-1529, ECF No. 107. The Court further ordered that these amounts “be held in the Court's registry pending the Court's adjudication of the . . . dispute amongst the relators over entitlement to a relator share of the . . . settlement proceeds and until all appeals are exhausted (or the time for filing any notices of appeal has expired).” Id. This Memorandum Opinion constitutes the Court's adjudication of that dispute.

         II. ANALYSIS

         “The [FCA] broadly proscribes the knowing or reckless submission of false claims for payment to the federal government or within a federally funded program.” United States ex rel. Heath v. AT&T, Inc., 791 F.3d 112, 115 (D.C. Cir. 2015) (internal citation omitted). The statute “allows a private person (a ‘relator') to bring an action in the [g]overnment's name, and to recover a portion of the proceeds of the action, subject to the requirements of the statute.” United ex rel. Batiste v. SLM Corp., 659 F.3d 1204, 1206 (D.C. Cir. 2011) (internal citations omitted) (citing 31 U.S.C. § 3730(b), (d)). Once a relator brings an action, “[t]he [g]overnment may elect to intervene and proceed with the action.” 31 U.S.C. § 3730(b)(2). Regarding the portion of the proceeds that a relator may recover,

[i]f the [g]overnment proceeds with an action brought by a . . . [relator], such [relator] shall[] . . . receive at least [fifteen] percent but not more than [twenty-five] percent of the proceeds of the action or settlement of the claim, depending upon the extent to which the ...

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