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United States v. Novartis AG

United States District Court, D. Massachusetts

March 17, 2015

UNITED STATES OF AMERICA ET AL., EX REL. FRANK GARCIA ET AL., Plaintiffs,
v.
NOVARTIS AG, NOVARTIS PHARMACEUTICALS CORPORATION, AND GENENTECH, INC., Defendants. UNITED STATES OF AMERICA ET AL., EX REL. STEPHEN FAUCI, Plaintiffs,
v.
NOVARTIS PHARMACEUTICALS CORPORATION, GENENTECH, INC., AND ROCHE HOLDINGS, INC., Defendants. UNITED STATES OF AMERICA ET AL., EX REL. ALLISON KELLY, Plaintiffs,
v.
NOVARTIS PHARMACEUTICALS CORPORATION, NOVARTIS AG, NOVARTIS CORPORATION, GENENTECH, INC., ROCHE HOLDINGS, INC., AND THE ROCHE GROUP, Defendants

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[Copyrighted Material Omitted]

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For United States of America, ex rel. Stephen Fauci, Plaintiff (1:10-cv-11728-WGY): Sara M. Bloom, LEAD ATTORNEY, Sonya A. Rao, United States Attorney's Office, Boston, MA.

For Stephen Fauci, State of California, State of Connecticut, State of Delaware, State of Florida, State of Georgia, State of Hawaii, State of Illinois, State of Indiana, Plaintiffs (1:10-cv-11728-WGY): Sara M. Bloom, LEAD ATTORNEY, United States Attorney's Office, Boston, MA.

For United States of America, ex rel Allison Kelly, Plaintiff (1:12-cv-10962-WGY): Christine J. Wichers, United States Attorney's Office MA, Boston, MA; Sonya A. Rao, United States Attorney's Office, Boston, MA.

For State of Texas, ex rel Allison Kelly, Plaintiff (1:12-cv-10962-WGY): Paula C. Juba, LEAD ATTORNEY, Office of the Texas Attorney General Civil, Medicaid Fraud Division, Austin, TX.

For Allison Kelly, ex rel, Plaintiff (1:12-cv-10962-WGY): Timothy M. Cornell, LEAD ATTORNEY, Gardner Cornell, P.C., Boston, MA.

For Novartis Pharmaceuticals Coporation, Novartis Corporation, Defendants (1:12-cv-10962-WGY): Debra E. Schreck, Michael A. Rogoff, LEAD ATTORNEYS, PRO HAC VICE, Kaye Scholer LLP, New York, NY; Michael J. Ticcioni, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, PC, Boston, MA; Tracy A. Miner, Demeo LLP, Boston, MA.

For Genentech, Inc., Roche Holdings, Inc., Defendants (1:12-cv-10962-WGY): David J. Silbert, Elliot R. Peters, LEAD ATTORNEYS, PRO HAC VICE, Keker & Van Nest, LLP, San Francisco, CA; Ronald G. Dove, Jr., PRO HAC VICE, Matthew J. O'Connor, LEAD ATTORNEY, Covington & Burling LLP, Washington, DC.

For United States of America, ex rel. Allison Kelly & Frank Garcia, ex rel. Stephen Fauci, Plaintiff (1:06-cv-10465-WGY): Robert M. Thomas, Jr., LEAD ATTORNEY, Thomas & Associates, Boston, MA; Christine J. Wichers, United States Attorney's Office MA, Boston, MA; Sonya A. Rao, United States Attorney's Office, Boston, MA.

For State of California, State of Delaware, State of Florida, State of Hawaii, State of Illinois, State of Indiana, State of Louisiana, State of Michigan, State of Nevada, State of New Hampshire, State of New Mexico, State of Tennessee, State of Texas, The Commonwealth of Massachusetts, The Commonwealth of Virginia, District of Columbia, Plaintiff (1:06-cv-10465-WGY): Robert M. Thomas, Jr., LEAD ATTORNEY, Thomas & Associates, Boston, MA.

For Allison Kelly, ex rel, Frank Garcia, ex rel, Plaintiffs (1:06-cv-10465-WGY): Mark I. Labaton, LEAD ATTORNEY, Isaacs Friedberg & Labaton, Los Angeles, CA; Robert M. Thomas, Jr., LEAD ATTORNEY, Thomas & Associates, Boston, MA; Timothy M. Cornell, LEAD ATTORNEY, Gardner Cornell, P.C., Boston, MA.

For Roche Holdings, Inc., Consolidated Defendant (1:06-cv-10465-WGY): David J. Silbert, Elliott R. Peters, LEAD ATTORNEYS, PRO HAC VICE, Keker & Van Nest, LLP, San Francisco, CA; Matthew J. O'Connor, LEAD ATTORNEY, Covington & Burling LLP, Washington, DC; Ronald G. Dove, Jr., LEAD ATTORNEY, Covington & Burling, Washington, DC.

For Novartis Pharmaceuticals Corporation, Defendant (1:06-cv-10465-WGY): Debra E. Schreck, Michael A. Rogoff, LEAD ATTORNEYS, PRO HAC VICE, Kaye Scholer LLP,, New York, NY; Tracy A. Miner, LEAD ATTORNEY, Lawrence S. Delaney, Demeo LLP, Boston, MA; Matthew J. O'Connor, Covington & Burling LLP, Washington, DC; Michael J. Ticcioni, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, PC, Boston, MA.

For Genentech, Inc., Defendant (1:06-cv-10465-WGY): David J. Silbert, Elliott R. Peters, LEAD ATTORNEYS, PRO HAC VICE, Keker & Van Nest, LLP, San Francisco, CA; Matthew J. O'Connor, LEAD ATTORNEY, Covington & Burling LLP, Washington, DC; Ronald G. Dove, Jr., LEAD ATTORNEY, Covington & Burling, Washington, DC.

For Novartis Corporation, Defendant (1:06-cv-10465-WGY): Debra E. Schreck, Michael A. Rogoff, LEAD ATTORNEYS, PRO HAC VICE, Kaye Scholer LLP,, New York, NY; Tracy A. Miner, LEAD ATTORNEY, Lawrence S. Delaney, Demeo LLP, Boston, MA; Matthew J. O'Connor, Covington & Burling LLP, Washington, DC; Michael J. Ticcioni, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, PC, Boston, MA.

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MEMORANDUM AND ORDER

WILLIAM G. YOUNG, DISTRICT JUDGE.

I. INTRODUCTION

In these qui tam actions, two former employees of Genentech, Inc. and a former employee of Novartis Pharmaceuticals Corporation brought lawsuits against their former employers alleging unlawful and fraudulent practices in the marketing of a drug called Xolair, in violation of the federal False Claims Act (" FCA" ) and individual states' qui tam statutes. Relators Frank Garcia (" Garcia" ) and Allison Kelly (" Kelly" ) (collectively, the " Relators" ), as well as a third relator, Stephen Fauci (" Fauci" ), filed complaints in the name of the United States and of individual states[1]

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against various pharmaceutical companies including Novartis Pharmaceuticals Corporation (" Novartis" ),[2] Novartis AG, and Genentech, Inc. (collectively, the " Defendants" ) accusing them of causing health care providers to overbill federal and state health insurance programs.[3] Garcia Docket, Compl. (" Garcia Compl." ), ECF No. 1, ¶ 2; Garcia Docket, First Am. Compl., (" Garcia Am. Compl." ) ¶ 270, ECF No. 17; Kelly Docket, Compl. Damages, Civil Penalties, & Other Relief Under Qui Tam Provisions Federal Civil FCA & Similar State Statutes (" Kelly Compl." ) ¶ 1 ECF No. 1; Fauci Docket, Pl.'s Compl. Fed. FCA 31 U.S.C. § § 3729 et seq. & Pendent St. FCA (" Fauci Compl." ) ¶ 1, ECF No. 1.

On June 17, 2014, the Defendants filed a motion before the Court to dismiss the actions brought in 2006 by Garcia (the " First Action" ), in 2012 by Kelly (the " Second Action" ),[4] and in 2010 by Fauci (" Fauci's Action" ).[5] Garcia Docket, Defs.' Joint Mot. Dismiss Compls. Relators Garcia, Fauci, & Kelly (" Defs.' Mot. Dismiss" ), ECF No. 123. The Defendants argue that the Relators, as well as Fauci, failed to plead fraud with sufficient particularity in accordance with Federal Rule of Civil Procedure 9(b). Garcia Docket, Defs.' Joint Mem. Law Support Mot. Dismiss Compls. Relators Garcia, Fauci, & Kelly (" Defs.' Mem. Dismiss" ) 2, 27-32, ECF No. 125. The Court holds that the Relators' pleadings do not meet the requirements of Rule 9(b) and therefore grants the Defendants' motion to dismiss.

A. Factual Background

Beginning in 2003, Novartis and Genentech, Inc. co-marketed Xolair in the United

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States. Garcia Compl. ¶ 6; Kelly Compl. ¶ 2. Xolair is the brand name for a medication approved by the Food and Drug Administration (" FDA" ) to treat moderate to severe, persistent allergic asthma in patients aged twelve and older whose symptoms are inadequately controlled with inhaled corticosteroids. Garcia Compl. ¶ ¶ 5, 27; Kelly Compl. ¶ 3. According to Kelly, the Defendants had hoped that the FDA would approve Xolair for " much wider use, including the treatment of mild asthma." Kelly Compl. ¶ 3.

Garcia worked as a Xolair sales representative at Genentech, Inc. in the New York area from June 2003 through May 2004. Garcia Compl. ΒΆ 23. Kelly worked as a Xolair sales representative for Novartis from 2003 until late 2006 in the Bronx and ...


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