August 08, 2013

The Worm Turns: the Government Stakes Out a Standard that May Foreclose Many Federal False Claims Act Cases Based on Certain Alleged FDCA Violations

By John R. Fleder –For many years, FDA has taken the public position that nongovernmental entities cannot enforce the Federal Food, Drug, and Cosmetic Act.  That position has not deterred lawsuits against businesses under statutes other than the FDCA, arguing that the defendants’ conduct violated the FDCA.  Examples include class action and individual product liability cases, suits filed under the federal Lanham Act (relating to alleged false advertising), and alleged securities law violations involving companies that publicly indicate their compliance with the FDCA.The federal False Claims Act, 31 U.S.C. §§ 3729-3733 (“FCA”), is a commonly used statute these days.  Alleged whistleblowers seek to recover money on behalf of the United States, and of course, themselves in situations where the alleged whistleblower (relator) believes that companies and others have caused the federal government to pay out money based on “false claims” that were submitted by the defendant or someone else.We have seen numerous relators file creative lawsuits under the FCA claiming that companies regulated by FDA violated the FCA because those companies sold products that: (1) violated the FDCA in some respect; and (2) the federal government reimbursed someone for the costs of those products.  For instance, relators have claimed that companies have illegally marketed products off-label, have engaged in manufacturing practices that violated FDA’s cGMP requirements, have sold unapproved products, have conducted clinical trials that were not cleared by FDA, and have failed to report to FDA adverse events associated with a product (see, e.g., here and here).  One relator unsuccessfully tried to argue that a defendant’s alleged failure to comply with an FDA Consent Decree provided authority for that relator to obtain a recovery under the FCA.  There have undoubtedly been other cases where relators have pushed other FDCA-related theories pursuant to the FCA.

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