The U.S. Supreme Court should rule that a false claims case against HIV drug maker Gilead Sciences Inc. can’t stand because the Food and Drug Administration always approved its drugs despite knowledge of alleged misrepresentations, the company told the court in its petition.
Multiple appeals courts have ruled in recent years that the government’s continued approval of goods after learning of alleged regulatory violations is strong evidence of immateriality, which is fatal to a false claims case under Universal Health Servs., Inc. v. United States ex rel. Escobar, Gilead said.
The Ninth Circuit, which said whistle-blowers’ case against Gilead can proceed, erred by not following the rationale of those courts’ materaility rulings, Gilead said.
The Ninth Circuit’s ruling “dangerously transfers regulatory authority from expert agencies to private litigants,” and could improperly turn every minor regulatory misstep into a potential False Claims Act case, Gilead said.
Whistle-blowers sufficiently alleged that misrepresentations about drug ingredients to the FDA were material to government payment decisions, and that the agency could refuse payment if it knew about alleged violations, the Ninth Circuit held in July.
This view of materiality is irreconcilable with other circuit courts’ rulings, including Abbott v. BP Expl. & Prod. Inc. whereby the Fifth Circuit sided with defendants because the Department of the Interior allowed BP to continue drilling for oil despite knowledge of alleged regulatory noncompliance, Gilead said.
The Ninth Circuit standard forces a defendant to show immateriality even where the government continued making purchases after it learned of alleged violations, which is an impossible task on a motion to dismiss, Gilead said.
The case is Gilead Sci. Inc. v. United States ex rel. Campie, U.S., petition filed 12/26/17.
Orrick, Herrington & Sutcliffe LLP represented Gilead.
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