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United States v. Astrazeneca Biopharmaceuticals, Inc.

United States District Court, E.D. New York

April 17, 2017

UNITED STATES OF AMERICA; THE COMMONWEALTHS OF MASSACHUSETTS AND VIRGINIA; THE STATES OF CALIFORNIA, DELAWARE, CONNECTICUT, MARYLAND, COLORADO, FLORIDA, GEORGIA, ILLINOIS, INDIANA, HAWAII, LOUISIANA, MICHIGAN, MONTANA, NEW HAMPSHIRE, NEW MEXICO, NEW YORK, NEVADA, TENNESSEE, NEW JERSEY, RHODE ISLAND, OKLAHOMA, WISCONSIN, NORTH CAROLINA, MINNESOTA AND WASHINGTON, THE CITY OF CHICAGO AND THE DISTRICT OF COLUMBIA ex rel. ALLISON ZAYAS, Plaintiff-Relator,
v.
ASTRAZENECA BIOPHARMACEUTICALS, INC., ASTRAZENECA PLC, ASTRAZENECA, LP, and ASTRAZENECA PHARMACEUTICALS, LP, Defendants.

          For the Plaintiff-Relator Meredith Tavenner Shepherd-Demings Kenney & McCafferty, P.C.

          For the Defendants John C. Dodds Morgan, Lewis & Bockius LLP.

          MEMORANDUM AND ORDER

          FREDERIC BLOCK, SENIOR UNITED STATES DISTRICT JUDGE

         Plaintiff-relator Allison Zayas (“plaintiff”) brought a qui tam suit under the False Claims Act (“FCA”) and multiple related state-law causes of action against defendants Astrazeneca Biopharmaceuticals, Inc.; Astrazeneca PLC; Astrazeneca, LP; and Astrazeneca Pharmaceuticals, LP (together, “defendants”). In her Amended Complaint, plaintiff alleges that defendants (1) marketed Seroquel IR and Seroquel XR (together, “Seroquel”) as safe to be prescribed with QT/QTc prolonging medications when they knew of the risks of such concomitant prescriptions, and (2) engaged in off-label promotion of Seroquel, and that both of these actions led to the submission of false claims for payments to state and federal governments. Defendants now move to dismiss plaintiff's off-label promotion claims pursuant to Federal Rule of Civil Procedure 12(b)(1), and all of plaintiff's claims under Rule 12(b)(6). For the following reasons, the Rule 12(b)(1) motion is GRANTED and the Rule 12(b)(6) is DENIED as to the QT/QTc federal claim in Count One and GRANTED as to Count Two.[1]

         A. Rule 12(b)(1) Motion.

         The first-to-file rule under the FCA bars any new claim if it is “related” to an FCA claim in an already-pending action. See 31 U.S.C. § 3730(b)(5) (“[N]o person other than the Government may intervene or bring a related action based on the facts underlying the pending action . . . .”). When considering a challenge under that rule, a court must therefore determine if a new FCA claim is related to an already-pending FCA claim. To do so, the Court will apply the test used by the majority of Circuits-the essential claim test-which looks not to whether the more recently-filed FCA claim is identical to an FCA claim in an already-pending action, but to “whether the complaints allege the same material facts, i.e. whether they involve the same core conduct, and would give rise to separate recovery.” Id. at 76.

         Defendants argue that plaintiff's off-label promotion claim is barred by the first-to-file rule-and this Court therefore does not have subject matter jurisdiction over such claim-because it is based on the same facts as an earlier-filed case in Delaware, which also alleges off-label promotion. In rebuttal, plaintiff argues that her claim is distinct because (1) she alleges off-label promotion to treat different diseases than those alleged to have been promoted off-label in the Delaware action, (2) she alleges off-label promotion of Seroquel IR, whereas the Delaware action concerns off-label promotion of Seroquel XR, a different drug, and (3) the Delaware action is no longer pending.

         Plaintiff's first argument is unavailing. The False Claims act bars any person from bringing a related action based on the facts underlying an already-filed action. To find that plaintiff could avoid the first-to-file bar by enumerating different diseases for which defendants promoted the same prescription drug off-label would mean transforming the statute's language from “related action” to “identical action.” See 31 U.S.C. § 3730(b)(5). It would also mean disregarding the First Circuit's well-reasoned application of the essential element test, which concluded that “promotion of off-label uses of the two same drugs, but tied to [different] diseases and symptoms . . . [is] not enough to reasonably conclude the earlier . . . Complaint was not a related claim to the government based on the facts.” See U.S. ex rel. Wilson v. Bristol-Myers Squibb, Inc., 750 F.3d 111, 119 (1st Cir. 2014).

         Plaintiff's second argument is factually incorrect. The Third Amended Complaint in the Delaware action expressly alleges that “AstraZeneca's off-label promotion of Seroquel IR and Seroquel XR caused physicians to prescribe both drugs for non-medically accepted uses . . . .” U.S. ex rel. Tracey Miksell-Branch v. AstraZeneca, et al., No. 10-cv-154 (D. Del.), Third Amended Complaint at ¶¶ 112-135.

         Plaintiff's final argument is that the Delaware case is no longer pending because the parties agreed to stay the case. After such agreement, the district court stayed and administratively terminated the case “in a way that preserves the status quo of [the a]ction as of the date of the stay.” U.S. ex rel. Tracey Miksell-Branch v. AstraZeneca, et al., No. 10-cv-154 (D. Del.), Joint Stipulation Requesting Stay of Action at 4. However, the Delaware case was never dismissed. And as the Supreme Court recently instructed, “a qui tam suit under the FCA ceases to be ‘pending' once it is dismissed.” Kellogg Brown & Root Servs., Inc. v. U.S., ex rel. Carter, 135 S.Ct. 1970, 1979 (2015) (emphasis added).

         As the pending Delaware action alleges off-label promotion of Seroquel IR and Seroquel XR, plaintiff's off-label promotion allegations are barred by the first-to-file rule. Therefore, pursuant to Rule 12(b)(1), the Court dismisses those claims.

         B. Rule 12(b)(6) Motion.

         1. Count One.

         Count One in the Ninth Amended Complaint alleges a violation of the False Claims Act. An entity is liable under the False Claims Act when it “‘knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval' to the U.S. government; or . . . ‘knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent ...


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