First Circuit Ends Closely Watched Takeda Suit With Limited Ruling

Justin A. Chiarodo

The First Circuit recently affirmed the dismissal of a closely watched False Claims Act (FCA) suit in United States ex rel. Ge v. Takeda Pharmaceutical Co. because the relator’s complaint failed to identify any examples of actual false claims presented to the federal government. The relator Helen Ge, alleged that Takeda, a pharmaceutical company, failed to inform the U.S. Food and Drug Administration (FDA) of adverse events associated with its drugs Uloric, Kapidex/Dexlant, Prevacid, and Actos. Federal law requires Takeda to inform the FDA of such adverse events. According to Ge, claims for the reimbursement of Takeda drugs under federal Medicare and state Medicaid programs must have been false because Takeda failed to inform the FDA of adverse events associated with those drugs. The First Circuit held that such allegations do not rise to the level of particularity required by the federal rules.

The Takeda case has been closely watched since the district court dismissed the case in November 2012. The district court’s dismissal order stated that compliance with the FDA’s reporting requirements was not a material condition of payment. Although the FDA has the discretion to remove drugs that are marketed in violation of the adverse-event reporting requirement, it is not required to do so. Thus, in the district court’s view, claims such as Ge’s would always be subject to dismissal.

The Department of Justice (DOJ), which did not intervene in the case, argued that the district court’s dismissal order went too far. DOJ was concerned that the district court’s order might mean that “the existence of a regulatory mechanism that allows citizens to petition FDA could preclude liability under the FCA.” DOJ was also concerned that the district court’s order might suggest that “FCA liability could never be premised on a failure to comply with FDA’s adverse event reporting requirements.” DOJ contended that if the First Circuit adopted the district court’s reasoning, “the government’s enforcement of the FCA could be significantly impaired.”

The First Circuit’s Takeda ruling did not go as far as the district court’s. Instead, the First Circuit held that Ge’s complaint failed to identify a single false claim to the government for reimbursement. The First Circuit explained that alleging a specific scheme without identifying a specific false claim is not enough to survive a motion to dismiss under Rule 9(b).

Although the First Circuit’s ruling represents a victory for those fighting against the ever-expanding scope of FCA liability, it was not a sweeping victory. The district court’s holding, if adopted in its entirety, would have made it impossible for a relator to premise an FCA suit on a pharmaceutical manufacturer’s failure to report adverse events. The First Circuit, in contrast, leaves that possibility open by holding only that Ge’s failure to identify a single false claim presented to the federal government doomed her case.