United States District Court, District of Columbia
UNITED STATES OF AMERICA, et al., ex rel. LESLEY FERRARA, et al., Plaintiffs,
v.
NOVO NORDISK, INC., et al., Defendants.
AMENDED 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
various states (the ‘Medicaid Participating
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 settlement amount to
which she is statutorily entitled [] under the FCA and state
statutes, ” 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 Medicaid
Participating States (the “ Medicaid Participating
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 Federal Settlement Amount
and the portion of the Medicaid Participating State
Settlement Amount paid to the Named Plaintiff States (the
‘Named Plaintiff State 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 Federal
Settlement Amount and Named Plaintiff State 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 [Federal Settlement Amount and Named
Plaintiff State Settlement 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
Named Plaintiff 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. ยง
3730(b), (d)). Once a relator brings an action, ...