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United States ex rel. Leysock v. Forest Labs., Inc.

United States District Court, D. Massachusetts

October 27, 2014

UNITED STATES OF AMERICA et al. ex rel. TIMOTHY LEYSOCK, Plaintiffs,
v.
FOREST LABORATORIES, INC., and FOREST PHARMACEUTICALS, INC., Defendant

Page 211

For United States of America, Plaintiff: Patrick M. Callahan, LEAD ATTORNEY, Assistant United States Attorney, Boston, MA.

For Commonwealth of Massachusetts, Plaintiff: Angela J. Neal, LEAD ATTORNEY, Office of the Attorney General Martha Coakley, Boston, MA.

For Timothy Leysock Ex Rel, Plaintiff: David Pastor, LEAD ATTORNEY, Pastor Law Office, LLP, Boston, MA; Alastair Findeis, James M. Shaughnessy, PRO HAC VICE, Milberg, LLP, New York, NY.

For Forest Laboratories, Inc., Forest Pharmaceuticals, Inc., Defendants: Cari A. Wint, J. Robert Abraham, Kristin D. Kiehn, Mark P. Goodman, PRO HAC VICE, Debevoise & Plimpton, LLP, New York, NY; William F. Benson, Sugarman, Rogers, Barshak & Cohen, P.C., Boston, MA.

Page 212

MEMORANDUM AND ORDER ON MOTION TO DISMISS THE SECOND AMENDED COMPLAINT

F. Dennis Saylor IV, United States District Judge.

This is a qui tam action alleging the submission of claims to Medicare for the off-label use of pharmaceuticals. Relator Timothy Leysock has brought suit against defendants Forest Laboratories, Inc., and Forest Pharmaceuticals, Inc., which market and sell the drug Namenda.

Relator filed a second amended complaint on April 30, 2014. The second amended complaint alleges that defendants caused the submission of false claims for payment to Medicare by unlawfully marketing Namenda for the off-label use of treating mild Alzheimer's disease. It alleges three violations of the False Claims Act, 31 U.S.C. § 3729 et seq.

Defendants have moved to dismiss the second amended complaint. For the following reasons, the motion will be granted in part and denied in part.

I. Background

A. Factual Background

The facts summarized below are set forth in the second amended complaint unless otherwise noted.

1. The Parties

Forest Laboratories, Inc., is a Delaware corporation with a principal place of business in New York, New York. Forest Pharmaceuticals, Inc., which is a wholly owned and controlled subsidiary of Forest Laboratories, is a Delaware corporation with a principal place of business in St. Louis, Missouri.[1] Forest sells a drug called Namenda (also known as memantine or Namenda-XR).

Timothy Leysock is a resident of Florida. From August 1996 until May 2012, he was employed by Forest as a sales representative. His sales territory covered the counties of Palm Beach, Indian River, Martin, St. Lucie, and Okeechobee in Florida.

2. Regulatory Framework

Under the Food and Drug Cosmetic Act, 21 U.S.C. § 301 et seq., pharmaceutical manufacturers may not market or promote a drug for a use that the Food and Drug Administration has not approved. 21 U.S.C. § § 331(a), (d). When a drug is used for a treatment not approved by the FDA, the use is called " off-label."

Medicare is a government healthcare program. Medicare Part D covers reimbursement for the use of prescription drugs. A patient can only be reimbursed by Medicare under Part D if the drug is being used in an FDA-approved manner. See 42 U.S.C. § § 1396b(i)(10), 1396r-8(k). In other words, Medicare does not reimburse a patient for the off-label use of a prescription drug.

2. Alleged Fraudulent Scheme

Alzheimer's disease is an irreversible progression of dementia. Physicians commonly use a test called the mini-mental state examination to determine the severity of a patient's Alzheimer's disease, which

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can be classified as mild, moderate, or severe.

In 2003, Namenda was approved by the FDA for the use of treating moderate or severe Alzheimer's disease. In July 2005, the FDA declined to approve the drug for the use of treating mild Alzheimer's because research indicated that it was not effective for that use. In 2006, the FDA approved the use of a drug named Aricept, manufactured by a competitor, for treatment of all stages of Alzheimer's disease, including mild Alzheimer's.

The second amended complaint alleges that Forest believed that Aricept would hurt its sales of Namenda. It believed that physicians would initially prescribe Aricept to mild Alzheimer's patients, and that it would be difficult to convince physicians to change drugs or prescribe two drugs to treat the same disease in the same patient. It therefore believed that physicians would start Alzheimer's patients with Aricept when their symptoms first started and would never prescribe Namenda.

According to the second amended complaint, Forest then began a nationwide scheme to promote the off-label use of Namenda for mild Alzheimer's. It alleges that Forest's managers instructed the company's sales representatives to tell physicians falsely that Namenda was effective for all stages of Alzheimer's, that Namenda had fewer harsh side-effects than Aricept, and that Namenda protected the gastrointestinal tract. Sales representatives were also instructed to tell physicians that they should start treating Alzheimer's with Namenda and add Aricept later.

The second amended complaint alleges that Forest's managers were careful not to discuss the off-label marketing program by text or e-mail. It also alleges that the company's sales representatives received off-label training in break-out sessions instead of all at once. It alleges that this was done so that Forest could falsely claim that any off-label marketing was done by rogue sales representatives.

More than 95 percent of Alzheimer's patients are over 65 years old and on Medicare. According to the second amended complaint, many of those patients were prescribed Namenda for mild Alzheimer's by physicians who were misled by fraudulent statements made by Forest's sales representatives. Reimbursement claims were presented on behalf of those patients to Medicare.

Leysock alleges that he observed Forest's fraudulent scheme while working for the company as a sales ...


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