A federal appeals court has reinstated a False Claims Act case alleging Gilead Sciences Inc. received billions in government reimbursements for HIV drugs that weren't qualified under the Food and Drug Administration.
The U.S. Court of Appeals for the Ninth Circuit on Friday reversed a lower court that found ex-Gilead employees Jeff and Sherilyn Campie failed to state plausible claims in their suit brought on behalf of the government.
In the Ninth Circuit's opinion, visiting Judge Donald W. Molloy of the District of Montana said the relators laid out sufficient allegations that Gilead's claims, seeking payment for noncompliant drugs, were a basis for liability under the four elements of the FCA.
The Campies alleged that Gilead used synthetics from a Chinese company to drive down the cost of producing its HIV drugs, something that the Campies allege it did before asking for FDA approval. The two also allege Gilead hid or falsified certain data to aid in their subsequent bid for FDA approval of the Chinese ingredients.
Gilead argued that the relators' allegation of nonconforming goods failed because the sale of the drugs was not part of a contract detailing the nature of the product to be delivered. Molloy disagreed with the drugmaker's assessment.
"Contrary to the position taken by Gilead, a claim for non-conforming goods is not limited to situations where there is an express specification in a payment contract between a supplier and the government regarding the disputed aspect of the product to be supplied," Molloy said.
He added, "It is fraudulent conduct that gives rise to liability, regardless of whether the underlying relationship is based in contract, regulation, or statute."
Regarding the Campies' allegations that Gilead made false statements to the government, including the company's alleged omissions to the FDA, and its alteration of inventory codes, and mislabeling or altering shipping and tracking information to conceal its origin, Molloy said the relators' claims should proceed.
"Relators adequately plead falsity under the False Claims Act. To hold otherwise would reduce FDA regulations akin to approval of the curate's egg," Molloy said.
Lastly, Molloy said the relators satisfied the promissory fraud element under the act.
"Because Gilead [allegedly] committed either factually false or impliedly false certification through its representations to the FDA and labeling of its products," Molloy said, "each claim was fraudulent even if false representations were not made therein."