[00:00:10] Speaker 04: Good morning, Your Honors. [00:00:11] Speaker 04: May it please the Court, Glenn Chappell from TECO and Zavari LLP. [00:00:14] Speaker 04: I represent the relators in this False Claims Act and Andy Kickback statute case. [00:00:19] Speaker 04: I'd like to request three minutes for rebuttal, if I may. [00:00:22] Speaker 04: Your Honors, the District Court erred when it ruled that the False Claims Act's public disclosure bar precludes this lawsuit. [00:00:30] Speaker 04: The public disclosure bar [00:00:32] Speaker 04: requires dismissal of a case if substantially the same allegations or transactions were disclosed through qualifying public records channels prior to the suit. [00:00:42] Speaker 04: That is not the case here, regardless of whether the court applies the familiar x plus y equals z rubric that the court has often used, or whether the court simply asks, as it did in Horizon West, whether the material elements of the fraudulent transaction were disclosed. [00:00:57] Speaker 04: In my view, that's the same test. [00:00:58] Speaker 04: It's just different ways to word the same test. [00:01:02] Speaker 04: Now, Your Honors, the District Court got it right with respect to other key issues in the case, including its application of Rule 9B to the allegations in the First Amendment amended complaint, and with respect to its analysis of the AKS's personal services safe harbor defense. [00:01:18] Speaker 04: Time permitting, I'll touch on those, but for obvious reasons, I want to focus primarily on the public disclosure issue. [00:01:24] Speaker 04: And turning to that issue, Your Honors, what we had prior to this lawsuit was two separate CMS [00:01:32] Speaker 04: databases that had raw data on payments that were made to physicians, and we had prescribing volumes in a different database for prescription drugs that were reimbursed by Medicare. [00:01:46] Speaker 04: Those allegations were not sufficient to trigger the public disclosure bar because what they missed was any hint or any kind of information that the programs that these payments were made under [00:02:00] Speaker 04: were sham programs. [00:02:02] Speaker 04: They were fraudulent programs that had no legitimate educational or business purpose. [00:02:08] Speaker 04: The only purpose of those programs was to funnel money to physicians as investments that defendants hoped to be returned in the form of [00:02:18] Speaker 04: increased prescriptions for the four at-issue drugs. [00:02:22] Speaker 04: And so to put it in the familiar parlance, that is the Y in the X plus Y equals Z formula. [00:02:28] Speaker 04: And because that Y is missing, you cannot find any information that these payments were improper under the anti-kickback statute. [00:02:38] Speaker 05: The thing I agree with you that could be the why this is a new information But is there enough detail to show that the why is actually the why that you say? [00:02:47] Speaker 05: Because a lot of the allegations about that are fairly vague About lunches free lunches. [00:02:54] Speaker 05: I mean it's I agree with you some of it may seem a bit unseemly but [00:02:59] Speaker 05: It doesn't mean it's illegal. [00:03:00] Speaker 05: I mean, you're a lawyer, you know, we have e-discovery vendors who come in to our lawyer's offices, give lunch, ostensibly educational. [00:03:08] Speaker 05: You know, my guess is, you know, there is some ulterior motive of, you know, keep us in mind type of thing, but doesn't mean it's illegal. [00:03:15] Speaker 05: And I don't know if there's enough here to show that these payments were illegal under the anti-kickback statute. [00:03:21] Speaker 04: Your honors, it was enough because what we alleged here is specific indicia to show that these programs were not stand-up programs. [00:03:31] Speaker 04: We showed examples, for example, where payments were made to physicians for educational programs that never happened in some instances. [00:03:41] Speaker 04: We showed examples where payments were made [00:03:45] Speaker 04: that departed from the company's own internal fair market value determinations without any kind of justification or any finding. [00:03:53] Speaker 04: We gave specific allegations on why these payments did not meet the personal services Hayes Harbor defense, and I'm definitely a little bit ahead there, but we explained how they didn't meet the seven criteria of that defense. [00:04:04] Speaker 05: Were there enough details, for example, in the first one that you mentioned about getting paid for events that never occurred? [00:04:11] Speaker 05: Were there details of who it was, when, where, what, were those in there? [00:04:16] Speaker 04: Yes, yes your honor. [00:04:17] Speaker 04: I'm looking for the specific allegations But we allege that it was about a ten thousand dollar payment to one particular daughter We named that doctor in the complaint, and we gave the time frame that that occurred And we said that educational programs never happened, and I'll just mention that that is an example where Nothing like that could be derived from the CMS databases that defendants rely on because all that that shows is [00:04:44] Speaker 04: is that payment of 10,000 and some change. [00:04:47] Speaker 04: And then a canned description pulled from a drop-down menu that says it was something like payment for a speaker program. [00:04:55] Speaker 04: Nothing more specific than that in the public record. [00:04:58] Speaker 02: So if that doesn't come from the public record, does it come from the relators? [00:05:01] Speaker 02: It does, Your Honor. [00:05:01] Speaker 02: It does come from the relators. [00:05:03] Speaker 02: What other evidence? [00:05:04] Speaker 02: I read your complaint, and there are a lot of things in there that I thought, if these are true, some of these things are shocking. [00:05:12] Speaker 02: Although I don't have a lot of context for that. [00:05:15] Speaker 02: But it looked like there was a lot of stuff that you compiled from the databases. [00:05:19] Speaker 02: And so my question is a follow-up on Judge Lee's is what at the margins came from the relators? [00:05:25] Speaker 02: What information was not available through the databases? [00:05:29] Speaker 02: Because a lot of stuff's been compiled. [00:05:31] Speaker 02: And that's value added. [00:05:32] Speaker 02: But it comes from the databases. [00:05:34] Speaker 04: Absolutely, Your Honor. [00:05:35] Speaker 04: So let me answer that question in reverse order in a sense. [00:05:39] Speaker 04: What was in those CMS databases was simply [00:05:42] Speaker 04: the payment amounts, the dates, and then in a separate database, the prescription volumes for those drugs. [00:05:47] Speaker 04: It was not broken out in any other way. [00:05:49] Speaker 04: What the relator specifically added here is all kind of information about the substructure that underlied those payments. [00:05:58] Speaker 04: For example, we alleged that the defendants used a scorecard to track return on investment on these speaker programs. [00:06:08] Speaker 04: We gave an example where [00:06:12] Speaker 04: Regeneron and Sanofi dropped one doctor, Dr. F, when his prescription volumes went down after he entered the speaker programs and started receiving those payments. [00:06:22] Speaker 04: We gave one example of Dr. R, where he threatened to cancel his speaking engagements if they did not pay for him to stay in a resort. [00:06:33] Speaker 04: That was not anywhere found in the public record. [00:06:35] Speaker 04: And they complied, even though their own internal policies said, you can't do that. [00:06:41] Speaker 02: You've given us a great deal of evidence as to how much doctors were paid for certain things and then alleged that this was, you know, X number of times, you know, 3.5 times, 8 times the company's own internal. [00:06:55] Speaker 02: Where did you get the information on the company's internal policies? [00:06:58] Speaker 04: That was from our relators, Your Honor. [00:06:59] Speaker 04: That was information that they had from their perspective as employees in the sales department of Regeneron. [00:07:06] Speaker 04: Just another example. [00:07:09] Speaker 04: You know, we talked about this one doctor who is named as Dr. D in the First Amendment complaint, where he was paid for speaker programs at a celebrity steakhouse in the Aria Resort and Casino, and then he was lodged up in the Palazzo Hotel, the Venetian Resort. [00:07:23] Speaker 04: All of those things violated the company's internal policies for payments under these speaker programs, and they were just disregarded. [00:07:31] Speaker 04: I think to sum up the answer to your question, everything that was not just prescription volumes and the actual dollar value of the amount paid, everything else comes from the relators in this case, Your Honor. [00:07:46] Speaker 04: That's why the public disclosure bar does not apply. [00:07:49] Speaker 04: And on that point, I would just like to talk about a little bit of a different issue lasting on the public disclosure bar. [00:07:55] Speaker 04: And that is, think about how the defendants prepared their defense [00:08:00] Speaker 04: their public disclosure argument in this case. [00:08:02] Speaker 04: What they did is they took the allegations in the First Amendment complaint. [00:08:06] Speaker 04: They looked at the specific doctors named, the specific timeframes, these four specific drugs. [00:08:13] Speaker 04: They took all that information and then of course the payments and everything and reverse engineered information on the payments and the prescriptions from the information in the two CMS databases. [00:08:25] Speaker 04: But if you put yourself in the shoes of a person who is looking at this information without benefit, [00:08:29] Speaker 04: of the First Amendment complaint. [00:08:31] Speaker 04: All they would have is decontextualized raw data on, again, payments and prescription volumes. [00:08:38] Speaker 04: It would be impossible to sort of connect any of those dots together. [00:08:42] Speaker 04: For example, how those payments had any kind of tie-in to the prescription volumes of these four drugs in particular. [00:08:51] Speaker 04: Those are aggregate records that doctors from across the country and pharmaceutical companies and other companies across the country feed into those records. [00:08:59] Speaker 04: And so just thinking about it from that standpoint, I think, illustrates very well why the government or no one could have been put on the trail of fraud in any way just by looking at these raw numbers in the databases. [00:09:12] Speaker 04: Unless the court has other questions on the public disclosure bar, I'll touch briefly on Rule 9B as well. [00:09:21] Speaker 04: As you said, Your Honor, a familiar way to look at that is the who, what, where, when, and how rubric. [00:09:25] Speaker 04: So I will use that again here just to illustrate that. [00:09:29] Speaker 04: If you talk about the who and where, we allege examples of 15 different physicians in seven different states who received remuneration from these fraudulent speaker programs and then whose subscription volumes went way up. [00:09:50] Speaker 04: You describe as fraudulent, but why are they fraudulent? [00:09:54] Speaker 04: We gave examples of that in the complaint as well, Your Honor. [00:09:56] Speaker 04: They were fraudulent because they were often not attended by anyone. [00:10:00] Speaker 04: They were fraudulent because they did not have any bona fide educational content. [00:10:03] Speaker 05: I mean, you say that, you say it didn't have any educational content, but we don't know what was said, what the topic was. [00:10:13] Speaker 05: A lot of its descriptions of it's fraudulent, there was no educational purpose, but we don't know any of that detail. [00:10:19] Speaker 04: Well, I would disagree with that, Your Honor, to this extent. [00:10:21] Speaker 04: We did allege in the First Amendment complaint explicitly that the topic of conversation in these so-called lunch and learn programs was how to treat the prior authorization process as just a paperwork hurdle that had to be cleared. [00:10:37] Speaker 04: And that was the topic. [00:10:38] Speaker 04: There were no new updates about the drugs at issue here. [00:10:42] Speaker 04: And we allege in the complaint, again, another example that Regeneron had a slide deck about [00:10:49] Speaker 04: you know, these drugs and information about those, that was not updated and often was not even referred to in these trainings. [00:10:55] Speaker 04: So I disagree that we didn't go into detail about the content. [00:10:58] Speaker 02: Does your case turn at all as to whether these drugs are medically necessary? [00:11:06] Speaker 04: So I put it this way. [00:11:09] Speaker 04: I don't think it turns on that because what the anti-kickback statute turns on is the purpose of the payment. [00:11:18] Speaker 04: And then what the False Claims Act focuses on is whether the claim that was submitted was linked to a payment that violated the anti-kickback statute. [00:11:28] Speaker 04: So I don't think that there needs to be a finding that any particular prescription was or was not medically necessary to get there in this case, Your Honor. [00:11:35] Speaker 02: So you don't have to prove that something was being overprescribed? [00:11:39] Speaker 04: That's correct, Your Honor. [00:11:40] Speaker 02: These might be perfectly good products. [00:11:43] Speaker 02: The way that the sales were conducted violates the laws. [00:11:47] Speaker 02: That's the heart of your complaint? [00:11:48] Speaker 04: Yes, Your Honor, that's correct. [00:11:50] Speaker 04: Even if the prescription was okay for this person, it was still linked to a kickback, and therefore that renders it false under the False Claims Act, regardless. [00:12:00] Speaker 05: But for it to be a kickback, there has to be inducement. [00:12:02] Speaker 05: There has to be causation, not just correlation of they were paid to speak at an event and a certain drug was prescribed. [00:12:11] Speaker 04: So we agree with the way that the Third Circuit described that issue in the Greenfield case, and what the Third Circuit said is [00:12:18] Speaker 04: The causation standard is that there does have to be a link between the payment that was made that was a kickback and a prescription, but that prescription does not have to be the but for cause of the kickback. [00:12:33] Speaker 04: It just has to be, in other words, tainted by the presence of an illegal kickback. [00:12:39] Speaker 05: You know the bigger conceptual problem. [00:12:41] Speaker 05: I'm trying to figure out here is again some of the allegations you make Unseemly, but is it illegal you know just a rough different analogy obviously different laws this you know people who Donate money to political campaigns, and then turns out the elected officials Passes the law that's it's beneficial to the person who donated [00:13:03] Speaker 05: perfectly legal unless there's some quid pro quo Unseemly sure and I think that's a lot of complaints about About how things work, but isn't a lot of this kind of falls into that a little bit unseemly Maybe but not necessarily unless there's a little bit more evidence showing kind of a causation there No, you are I think because what this maybe in some circumstances elsewhere It might just be unseemly and not necessarily illegal, but I think all this evidence is important here [00:13:31] Speaker 04: because it shows the true purpose of the payments that were made to the physicians. [00:13:35] Speaker 04: And that is indicia that the true purpose was to induce increased prescriptions, and that's what makes it violate the anti-kickback statute. [00:13:43] Speaker 04: So it's not that the payments themselves were on their face illegal. [00:13:48] Speaker 04: It was the purpose of those payments. [00:13:50] Speaker 04: And then, of course, if you get into the defenses, it did not meet the various safe harbor defenses. [00:13:55] Speaker 04: But I think that's the key distinction here is that [00:13:58] Speaker 04: It's not that the unseemliness is not what makes it illegal. [00:14:01] Speaker 04: The purpose of it is what makes it illegal, Your Honors. [00:14:05] Speaker 00: Counsel, let me ask you this. [00:14:06] Speaker 00: I know you're running short on time, but I just want to make sure I understand. [00:14:09] Speaker 00: The allegations that you discussed earlier about keeping the scorecard for return on investment, the dropping Dr. F, dropping Dr. R, Dr. D being paid for attending a celebrity steakhouse to do his speech, and then getting a nice hotel. [00:14:26] Speaker 00: Are those the allegations that you argue show inducement and meet the requirements of Rule 9B? [00:14:32] Speaker 04: So that, Your Honor, our argument is that if you look at the complaint holistically, when you take those allegations and you combine them together, that's what satisfies Rule 9B, because each one is a different data point that, when you add it up, shows the presence of this program. [00:14:46] Speaker 04: And so, for example, you might have particular instances, one-off instances. [00:14:50] Speaker 04: If you identified them in isolation, that might perhaps not be enough under Rule 9B. [00:14:56] Speaker 04: But when you take everything together and then all the stuff about the programs and these individual examples, and then you combine that with the data on prescription volumes, when you add it all together, we argue that we easily clear the bar under Rule 9B. [00:15:09] Speaker 04: And I would just add one little clarification, Your Honor. [00:15:12] Speaker 04: You mentioned inducement. [00:15:14] Speaker 04: We don't have to show that the inducement actually happened. [00:15:18] Speaker 04: We have to show under the anti-kickback statute that the purpose was to induce that prescription. [00:15:24] Speaker 04: So I just want to make that clarification. [00:15:26] Speaker 05: One thing you can elaborate during rebuttal, I think I found the paragraph in the complaint about payments to doctors for events that never occurred. [00:15:36] Speaker 05: I think it's paragraph 162, ER 801 that says, Regeneron even paid $10,595.10 to doctors for events that never occurred, further showing the purpose of the program was to induce doctors to prescribe more of the covered drugs and not to educate. [00:15:52] Speaker 05: I guess there, you know, I just didn't see any additional details other than that statement. [00:15:56] Speaker 05: There's the dollar amount, but who the doctors were and what the events were. [00:16:00] Speaker 05: But anyway, I'll take a look at that and respond to that and rebuttal. [00:16:04] Speaker 05: I'll give you two minutes extra for rebuttal. [00:16:08] Speaker 05: Thank you. [00:16:08] Speaker 05: We'll take a look at that. [00:16:20] Speaker 01: Good morning, your honors, and may it please the court. [00:16:22] Speaker 01: Matthew Rowan on behalf of the Regeneron defendants. [00:16:25] Speaker 01: So I want to start by taking a step back and providing a contextual framework for what we're dealing with here. [00:16:32] Speaker 01: This is not a typical case, even in the context of the relatively atypical confines of a False Claims Act case premised on an anti-kickback statute violation. [00:16:41] Speaker 01: Because normally, the key reveal that a relator has is that payments about which the government was unaware happened. [00:16:48] Speaker 01: or that the payments about which the government was aware were actually not what they appeared on the forms. [00:16:54] Speaker 01: And the reason that this context is particularly appropriate for the public disclosure bar is because all of this is in the context of a comprehensive public disclosure regime. [00:17:04] Speaker 01: I mean, I think Your Honor's all sort of recognized that there is potentially something unseemly with payments to physicians by prescription drug companies, but Congress recognized that [00:17:16] Speaker 01: that's not sort of malum in se and the way that they were going to get at the potential problems that can arise is by requiring a comprehensive down to the dollar public disclosure regime and so this isn't and that's why you know to look to the specific allegations this is not a case like this court sam jones decision from a few months ago where the allegation is that a company was making payments to the brother of a doctor about which the government was unaware this isn't even a case [00:17:46] Speaker 01: And to go specifically to paragraph 162, I'm happy you highlighted that. [00:17:49] Speaker 01: This isn't a case where they're saying the payments aren't what they were reported to before, or that there are payments about which the government was unaware. [00:17:58] Speaker 01: The single allegation that they have about payments that were for true shams is paragraph 162. [00:18:06] Speaker 01: And it does not say who, what, where, when, how. [00:18:08] Speaker 01: It says nothing. [00:18:10] Speaker 01: It just says $10,500 for a program that never happened. [00:18:14] Speaker 01: If that allegation [00:18:16] Speaker 01: were followed by a whole bunch of the things you think about for 9b, I'd have a really hard argument here. [00:18:23] Speaker 01: Because then you'd say, oh, there's actually fraud on the government. [00:18:26] Speaker 01: Either there's a Sunshine Act violation, or they'd say, look, this is reported as $10,000 for a speaker program, but actually it went to buy a Rolex. [00:18:34] Speaker 01: In that kind of context, a whistleblower is coming forward with real private information about which the government is unaware, and that can move the ball forward in terms of finding a fraud. [00:18:45] Speaker 01: But what they have here is essentially allegations that Regeneron was making payments in ways that were essentially profit-maximizing. [00:18:55] Speaker 01: And of course it was. [00:18:58] Speaker 02: Well, let's put it in a little bit different context. [00:19:00] Speaker 02: According to the complaint, Regeneron had an internal schedule of what it regarded as reasonable compensation for certain kinds of services the doctor would provide. [00:19:10] Speaker 02: If the doctor's going to go and speak at a conference, then their standard says, [00:19:13] Speaker 02: Here's how much here's how much we're going to we're going to give you right and they're very they've been very specific to say Yes, and Regeneron violated all of its own internal guidelines and sometimes in very substantial amounts Sometimes it was three point five times sometimes it was nine times What their internal required? [00:19:35] Speaker 02: If a doctor had so much experience they would be tier one or tier two and also they get bumped to a different tier I don't remember where it goes up or down You get bumped to a different tier that gives them a great deal more compensation then again Regeneron's internal Evaluation of what was an appropriate and reasonable fund so I mean two responses to that the first is the fact that the rates are increasing is all public I mean the fact that [00:20:00] Speaker 01: each doctor that they want to focus on, that their rate for a consulting service went from X to X times 1.5. [00:20:07] Speaker 01: That's public. [00:20:09] Speaker 01: And the fact that the payments, when the payments are made, is public. [00:20:13] Speaker 01: The fact that it's $1,000 in February and then $1,500 in November. [00:20:18] Speaker 01: that's public. [00:20:19] Speaker 01: If Regeneron having internal guidelines and the fact that it made some deviations from it is enough to sort of infer fraud, well then, Katie bar the door, what you're sort of telling companies to do is actually don't have internal guidelines because if you ever deviate from them, you're going to be stuck with a, you know, or a later who can come in and, you know, I mean, I think it's important to sort of step back and look at, like, the allegations here are not at the end of the day [00:20:48] Speaker 01: like these programs didn't happen or that they weren't educational. [00:20:51] Speaker 01: I mean, I think it's important to look at what, so what they say as for the allegations that these weren't educational, they have three paragraphs, paragraphs 295, 296, and 297. [00:21:01] Speaker 01: What they say in paragraph 296 is, or with 295, it's that they have one essentially review form, and it says that these programs would be better if there were focus groups with key thought leaders. [00:21:16] Speaker 01: If that's enough to say that it's a sham, as opposed to somebody had feedback, I mean, gosh, that doesn't sort of seem like the thing that you would sort of get over the bar against the backdrop. [00:21:27] Speaker 02: So the problem that I'm struggling with, and I realize this is not sort of your classic typical CFA case or FCA case, is trying to figure out what to do with sort of the relative amounts that people got, OK? [00:21:45] Speaker 02: A doctor's been given $10,000. [00:21:47] Speaker 02: Okay, is that a lot of money or is that a little bit of money? [00:21:50] Speaker 02: I don't know. [00:21:50] Speaker 02: I've never been part of a speaker's bureau. [00:21:54] Speaker 02: I'm barred from accepting that kind of compensation as a public official. [00:21:57] Speaker 02: So I can't tell whether that's a lot of money or a little bit of money. [00:22:00] Speaker 02: So the only way that we've been able to gather whether this money, which is being disclosed, is a lot or a little, is by looking at what Regeneron thought the appropriate schedule was that would be the fair market value. [00:22:14] Speaker 02: Now, if a doctor's coming in and saying, yeah, but I'm not going to come and talk unless you give me $50,000 or $100,000, now, I don't, at some point, can we say that's just not fair market value? [00:22:28] Speaker 01: So, I mean, I think, I would respectfully say that you're not thinking about it exactly the right way because the sort of one entity that knows what fair market value is, at least constructively, is the United States government because all of the payments are reported to it. [00:22:42] Speaker 01: from every pharmaceutical company to every doctor. [00:22:46] Speaker 01: So the government knows what fair market value is. [00:22:49] Speaker 02: And again, I mean... And does the government have a schedule? [00:22:52] Speaker 01: No, no, no. [00:22:53] Speaker 01: The government will be able to know from the reports what the fair market value is. [00:22:57] Speaker 02: It can run regression reports. [00:22:59] Speaker 02: If this was a serious case, the United States should have taken it up because they didn't take it up and therefore fails. [00:23:03] Speaker 01: Well, I mean, I do think there is something to that here. [00:23:06] Speaker 01: I mean, again, so the United States gets two bites at the apple. [00:23:09] Speaker 01: The United States can always disempower the public disclosure bar, right? [00:23:13] Speaker 01: They can object to the operation of the public disclosure bar, and then they can intervene. [00:23:16] Speaker 01: And the allegations here, and this gets sort of to what Rule 9B is supposed to do here, but the allegations here are that upwards of 75% of the prescriptions that were written were false. [00:23:31] Speaker 01: They don't tie. [00:23:33] Speaker 01: any particular prescription that was written to any particular payment. [00:23:38] Speaker 01: And I mean, so just based on their allegations, this is a multi-billion dollar case. [00:23:43] Speaker 01: They're essentially saying that the leading treatment for the leading cause of blindness in Americans, which is ILIA, which treats wet AMD, that actually the overwhelming majority of prescriptions that were written for that were all because all of the doctors were on the take. [00:24:01] Speaker 01: I think that sort of [00:24:02] Speaker 01: general superstructure of an allegation shows why with the third circuits held on the resulting from language in the 2010 amendment to the anti kickback statute and what the district court applied here. [00:24:14] Speaker 01: is the sort of temporal correlation, you gave a payment and then later prescriptions were written, that they can't satisfy the statute. [00:24:21] Speaker 01: That's not resulting from, that just shows that it's sort of post hoc ergo proctor hoc, which is a logical fallacy, not a standard of causation. [00:24:29] Speaker 01: I think there's a reason that each of the last three circuits that has addressed what the resulting from language means, most recently the first circuit in a case that bears Regeneron's name, said no, you need actual allegations that make it plausible to infer [00:24:44] Speaker 01: that the prescriptions wouldn't have been written but for the payments. [00:24:48] Speaker 01: And look, I'm not here to say that you can never do that in this sort of context. [00:24:52] Speaker 01: I think if you had a bags of cash case where a drug company came in and they had unreported payments that violated the Sunshine Act, and they said, hey, here's your $50,000 in a baggie, I think you'd have a pretty strong inference that actually that $50,000 is what the subsequent [00:25:12] Speaker 01: prescriptions resulted from that payment. [00:25:15] Speaker 01: But when you have reported payments, all of which are reported and which the government apparently doesn't think are outside fair market value, you need more than just the fact that there were payments and the fact that there were prescriptions. [00:25:28] Speaker 02: How do we know that the government believes that this is fair market value? [00:25:31] Speaker 01: I'm not saying that the government believes this is fair market value. [00:25:34] Speaker 01: I'm saying the government can determine what the fair market value is because it has all the data. [00:25:38] Speaker 02: Has the government done that? [00:25:39] Speaker 02: Do we know whether the government's done that? [00:25:41] Speaker 01: I mean, I think constructively the government has, as a matter of law, based on how the public disclosure bar works, all of those numbers are in its files. [00:25:49] Speaker 01: And it is charged with constructive knowledge of all of the payments that are made. [00:25:53] Speaker 01: So, I mean, I think, yes, as a matter of law, the government has essentially made a determination that, according to the government, that this is fair market value. [00:26:01] Speaker 01: Now, that wouldn't bind a court. [00:26:04] Speaker 01: But I do think it's sort of instructive about what we're looking at here. [00:26:06] Speaker 01: But I do want to sort of make the point about [00:26:09] Speaker 01: why the pleading failures and the resulting from language in the AKS actually matter. [00:26:15] Speaker 01: I mean, they have no, and I think it's sort of the cleanest way to just affirm across the board. [00:26:19] Speaker 01: They have no allegation, for instance, that there was a different treatment that a physician could have offered that was FDA approved. [00:26:28] Speaker 01: They sort of gesture toward, well, there was a cancer treatment that could be compounded in a compounding pharmacy that could be prescribed instead of ilia. [00:26:38] Speaker 01: which is injected into your eyeball, but they have no allegations that actually there's reason to believe that doctors would have done anything different had they not gotten the 1.5 original rate. [00:26:54] Speaker 01: for one or two speaker programs. [00:26:59] Speaker 05: So what's the relationship between the public disclosure bar on the one hand and, let's say, rule 12b6, rule 9b? [00:27:05] Speaker 05: I mean, is the analysis essentially the same? [00:27:08] Speaker 05: We're just looking through two different prisms, or are there different requirements? [00:27:11] Speaker 01: So I think in this particular context, where all of the payments and all of the prescriptions are public, [00:27:19] Speaker 01: that they sort of are different ways of getting at the same problem, and that's obviously not always going to be the case. [00:27:26] Speaker 01: But that's why I sort of started with, this is a particularly odd sort of false claims act case, because they're not coming forward with, except for paragraph 162, which I think, Judge Lee, you were exactly right to point out, that can't come close to 9b, because it just sort of has no who, what, where, when, how. [00:27:44] Speaker 01: But what they're coming forward with is essentially allegations that [00:27:48] Speaker 01: you know, we should think that Regeneron sort of had a bad motive. [00:27:52] Speaker 01: But Congress knew that pharmaceutical companies are profit-maximizing entities, and the way it got at that was by creating this, you know, public disclosure regime. [00:28:02] Speaker 01: And against that backdrop, I mean, I just think, like, you know, if a whistleblower comes forward with and says, you know, hey, government, I know about payments about which, you know, you aren't aware. [00:28:11] Speaker 01: Or the payments that they told you about were actually for golf clubs instead of speaker fees. [00:28:17] Speaker 01: Those are sort of real whistleblower claims that give the government material information, material facts about which it was unaware. [00:28:26] Speaker 05: I think you've well exceeded your time, so I want to let your colleague speak. [00:28:30] Speaker 01: Thank you, Your Honor. [00:28:42] Speaker 03: Good morning, Your Honors. [00:28:43] Speaker 03: I'm Aaron Van Oort for Sanofi. [00:28:45] Speaker 03: May it please the court [00:28:47] Speaker 03: As to Sanofi, this case is resolved by a simple application of the public disclosure bar because the two relators never worked for Sanofi and they don't adequately plead any genuinely new and material information as to Sanofi beyond what Sanofi already reported to the government and the government reported to the world on that. [00:29:09] Speaker 03: And I want to address very specifically [00:29:13] Speaker 03: what counsel for the relatives pointed out as his four examples. [00:29:17] Speaker 03: He gave four examples of the same four from the brief. [00:29:20] Speaker 03: What your honors are going to see is as to those four examples, they have no faxes to Sanofi. [00:29:25] Speaker 03: So example one is programs that never happened. [00:29:29] Speaker 03: Judge Lee, this is paragraph 162 that you're asking about. [00:29:32] Speaker 03: That's deficient as to Regeneron for the reasons that my colleague explained, but the critical point for Sanofi is Sanofi doesn't appear in that paragraph. [00:29:42] Speaker 03: There's no allegation that Sanofi made any payment to any doctor that wasn't reported. [00:29:48] Speaker 03: The next thing that he alleges is that they deported from internal policies. [00:29:54] Speaker 03: Judge Bybee, this is what you are asking about, about the tiering and exceeding tierings. [00:29:59] Speaker 03: What you'll see, that's paragraph 139 in the complaint. [00:30:03] Speaker 03: As to Sanofi, it is expressly on information and belief, which means they have no facts as to Sanofi. [00:30:12] Speaker 03: The third example is the scorecard, where they're supposedly tracking metrics internally about return on investment, put aside whether there's anything wrong with that. [00:30:22] Speaker 03: That's paragraph 164 of the complaint. [00:30:26] Speaker 03: As to Sanofi, it is expressly on information and belief, meaning they don't have any information, no facts as to Sanofi. [00:30:34] Speaker 03: The last one they alleged that as a doctor was supposedly dropped because his prescriptions went down. [00:30:40] Speaker 03: That's paragraphs 180 and 181 in the complaint. [00:30:44] Speaker 03: That doctor prescribed only Ilea. [00:30:47] Speaker 03: And as relators admit, Sanofi had nothing to do with Ilea. [00:30:52] Speaker 03: I will say as a general matter that every time this complaint says Regeneron and Sanofi in the same breath, Your Honors can't trust it. [00:31:02] Speaker 03: It's not true. [00:31:03] Speaker 03: It's group pleading because they repeatedly allege things like Regeneron and Sanofi paid a doctor and then you look at Exhibit A at the end of the chart and it turns out only Regeneron did. [00:31:14] Speaker 03: They say Regeneron and Sanofi manufactured drugs in paragraph two. [00:31:18] Speaker 03: Sanofi didn't manufacture any of them. [00:31:21] Speaker 03: They repeatedly say like paragraph four, Sanofi and Regeneron promoted ILEA. [00:31:26] Speaker 03: They admit Sanofi didn't plead ILEA. [00:31:30] Speaker 03: The group pleading here is simply indefensible. [00:31:33] Speaker 03: As to Sanofi, there are no good faith allegations as to Sanofi. [00:31:38] Speaker 03: This is a simple case as to Sanofi. [00:31:41] Speaker 03: The district judge is entirely right. [00:31:44] Speaker 03: Regarding the public disclosure bar, I think this court could usefully do a couple of things. [00:31:50] Speaker 03: There are two big picture principles here I think that would be useful to write in an opinion. [00:31:56] Speaker 03: Number one, the public disclosure bar doesn't bar claims. [00:32:00] Speaker 03: It just bars people from bringing claims. [00:32:05] Speaker 03: The government can always bring its own claims, even if these releters can't. [00:32:11] Speaker 03: An original source can always bring the claims, even if these releters can't. [00:32:16] Speaker 03: The only question about the public disclosure bar is whether these people can bring these claims for the government. [00:32:25] Speaker 03: And it sets up a very simple test for whether they can. [00:32:27] Speaker 03: The test is, have they added any genuinely new and material information to what the government already knows? [00:32:35] Speaker 03: Like, the right to bring a key TAM claim is not something for nothing. [00:32:39] Speaker 03: It's something for something. [00:32:41] Speaker 03: And the something is genuinely new in material information beyond what was already disclosed. [00:32:48] Speaker 03: Now, the relators say something that I think is wrong, and it's useful to explain why it's wrong. [00:32:54] Speaker 03: They suggest that the public disclosure bar can apply only if a valid claim was disclosed. [00:33:01] Speaker 03: In other words, they suggest that an invalid claim [00:33:04] Speaker 03: can't ever be barred by the public disclosure bar. [00:33:07] Speaker 03: They say that all the elements of a fraud need to have been disclosed, putting the government on notice. [00:33:14] Speaker 03: If the government wasn't put on notice, it can't be. [00:33:17] Speaker 03: That is not the public disclosure bar. [00:33:20] Speaker 03: The public disclosure bar textually says if the allegations are substantially the same as what has been disclosed, they're barred. [00:33:28] Speaker 03: So there are four combinations. [00:33:30] Speaker 03: There can be a valid claim that was not disclosed, [00:33:33] Speaker 03: There can be a valid claim that was disclosed, think a strong claim but a strong disclosure. [00:33:38] Speaker 03: There can be an invalid claim that was not disclosed, weak claim but nobody said anything about it. [00:33:45] Speaker 03: And there can be an invalid claim that was disclosed, a weak claim with a weak disclosure. [00:33:51] Speaker 03: That's this case. [00:33:53] Speaker 03: This is a weak claim with a weak disclosure. [00:33:57] Speaker 03: Council for the Relators admitted and they emphasized in their brief Senate argument this morning [00:34:03] Speaker 03: that the simple combination of prescriptions submitted to Medicaid plus payments to doctors does not state a claim. [00:34:13] Speaker 03: Why do they say that? [00:34:14] Speaker 03: They say it's not even enough to put the government on inquiry notice. [00:34:18] Speaker 03: Why? [00:34:18] Speaker 03: Because if they admit that payments to doctors plus prescriptions is enough to put the government on notice, their claims barred because that's all publicly reported. [00:34:29] Speaker 03: You need something more. [00:34:31] Speaker 03: But here, they don't allege the anything more. [00:34:34] Speaker 03: As my colleague said, if they allege payments that were made but not reported, that's something more. [00:34:40] Speaker 03: If they allege payments for something that wasn't actually provided, they said it was a conference, it was actually golf clubs, that would be something more. [00:34:48] Speaker 03: If they're a genuine insider and they have the emails inside that say, hey, let's do this because we think we could induce more prescriptions, that's something more. [00:34:58] Speaker 03: That's material and new. [00:35:00] Speaker 03: That's what's completely missing here, S to Sanofi, Your Honors, and I've gone through that. [00:35:06] Speaker 03: The last thing I'll say is that this X plus Y versus Z formula, [00:35:12] Speaker 03: That's not the statutory test. [00:35:14] Speaker 03: The statutory test is substantially the same as. [00:35:17] Speaker 03: This court has applied X plus Y equals Z when it's useful. [00:35:21] Speaker 03: It hasn't applied it when it's not. [00:35:22] Speaker 03: The most recent case, Sam Jones versus Biotronic, doesn't come up at all. [00:35:27] Speaker 03: But here's the really important point when that test is used. [00:35:31] Speaker 03: The important point is that a claim can be barred, a public disclosure can be made either from the X plus Y, from facts, or Z an allegation. [00:35:40] Speaker 03: Like a public disclosure can come from either place. [00:35:44] Speaker 03: But to overcome the public disclosure, the only thing that counts is why. [00:35:49] Speaker 03: Facts. [00:35:50] Speaker 03: Honest to goodness facts about what really happened that the government didn't have. [00:35:56] Speaker 03: You know, this court started this in the Miteski case. [00:36:00] Speaker 03: It said it has to be genuinely new and material information. [00:36:03] Speaker 03: Because if you aren't bringing something new, you don't get the right to assert the government's claim. [00:36:08] Speaker 03: That's the trade. [00:36:10] Speaker 03: Here, they don't have facts. [00:36:12] Speaker 03: They don't have well-pleaded facts. [00:36:14] Speaker 03: Judge Lee, Your Honor asked about the interaction between Rule 9B and the public disclosure bar on this. [00:36:22] Speaker 03: And here's what I said on that. [00:36:25] Speaker 03: The public disclosure bar itself insists that the relators are bringing something new and material. [00:36:32] Speaker 03: If they don't plead it, it doesn't count. [00:36:36] Speaker 03: The text of it says it is decided on the allegations, right? [00:36:41] Speaker 03: It happens at the stage because it's a bar at the front. [00:36:44] Speaker 03: You can't go forward. [00:36:45] Speaker 03: This is not one of those situations where a jury is the ultimate decision maker. [00:36:50] Speaker 03: The judge is the decision maker. [00:36:52] Speaker 03: The statute says the court shall dismiss it if the allegations are substantially similar. [00:36:59] Speaker 03: So it happens there. [00:37:01] Speaker 03: I don't think it's a factor of 9b, Your Honor. [00:37:03] Speaker 03: It comes straight from the statute itself and said if it's not substantially the same, they're dismissed, which means the relators have to allege it because it's only allegations that count. [00:37:14] Speaker 03: It's not a burden on them because they have to provide all the information they have to the government in the first place. [00:37:20] Speaker 03: It's not as if they're being required to allege something that's outside of their knowledge. [00:37:24] Speaker 03: They have to have the knowledge. [00:37:26] Speaker 03: That's the reason they get to bring the claim in the first place for the government. [00:37:29] Speaker 03: And there's no bar on the court deciding it, because it's comparing the allegations. [00:37:35] Speaker 03: And the defendants can have what's publicly disclosed that's on them. [00:37:38] Speaker 03: So just to wrap up your honors, I'm glad to answer any questions. [00:37:42] Speaker 03: But as to Sanofi, this is really easy on the public disclosure bar. [00:37:47] Speaker 03: Thank you. [00:37:47] Speaker 03: Thank you. [00:37:54] Speaker 04: Just a couple quick points, Your Honors. [00:37:57] Speaker 04: So first, I did look back at that one allegation about the $10,000. [00:38:01] Speaker 04: And that one, you're correct, that one did not specifically allege a particular position. [00:38:06] Speaker 04: But I would just add that I think the overarching point is that was just one more point in the holistic analysis that shows that there was fraud and satisfies rules 9b. [00:38:16] Speaker 04: A couple things in response to what my colleagues on the other side mentioned in their arguments. [00:38:21] Speaker 04: The fair market value determination, I think it's a distraction as to whether the government presumably thought these were within fair market, these payments were within fair market value or not. [00:38:31] Speaker 04: That is complete speculation unsupported by anything in the record or judicially noticeable materials. [00:38:37] Speaker 04: I think it's more telling that Regeneron and Sanofi, as alleged in the first amendment complaint, they established [00:38:43] Speaker 04: what was a fair market value, and we allege scores of instances where payments went many times above what their own fair market value determinations were. [00:38:55] Speaker 04: But I think the larger point on that issue is this. [00:38:58] Speaker 04: The case does not turn on whether the payments satisfied the fair market value standard. [00:39:03] Speaker 04: The case turns upon the purpose [00:39:06] Speaker 04: of the payments and was the purpose to induce referral for these prescriptions that were then reimbursed by Medicare. [00:39:14] Speaker 04: The fair market value examples that we allege in the First Amendment complaint are simply alleged to provide more indicia that there was no legally permissible purpose behind these payments, because as shown by the fact that they departed dramatically from their own internal fair market value determinations, that just shows the real purpose of these payments. [00:39:37] Speaker 04: One other point I would make on Sanofi, we allege more than what my friend on the other side says. [00:39:45] Speaker 04: Specifically, we allege in paragraph 155 that Sanofi conducts the same kind of return on investment analyses that Regeneron does. [00:39:55] Speaker 04: Those are proof that the goal here is to pay this money to facilitate increased prescriptions. [00:40:02] Speaker 04: We allege in paragraph 160 that Sanofi blends its tracking metrics [00:40:06] Speaker 04: with Regeneron's metrics to ensure its programs are having their intended effects. [00:40:10] Speaker 04: They're working together. [00:40:12] Speaker 04: This whole thing is a co-marketing arrangement as well. [00:40:15] Speaker 04: We alleged Sanofi's trouble with corporate integrity agreements in the past. [00:40:21] Speaker 04: We alleged that Sanofi staffed out their offices with its own sales reps. [00:40:26] Speaker 04: That's paragraph 217. [00:40:28] Speaker 04: And then we alleged multiple payments by Sanofi, Drs. [00:40:31] Speaker 04: KK, QQ, MM, B, SS, and ZZ. [00:40:35] Speaker 04: Those are all alleged specifically as to Sanofi in particular. [00:40:40] Speaker 04: And so with my time expiring your honor, I will just ask that the court reverse the dismissal. [00:40:45] Speaker 05: Thank you. [00:40:45] Speaker 05: Thank you all for the excellent advocacy case is submitted.