by Ben Vernia | January 31st, 2013
On January 25, District Judge J. William Ditter, Jr., dismissed the relator’s complaint in U.S. ex rel. Schumann v. Astra-Zeneca Pharmaceuticals LP, a whistleblower case brought by a former vice president of pharmaceutical contracting for the pharmacy benefits manager (PBM), Medco. The relator alleged that Astra-Zeneca and other companies paid kickbacks to Medco in the form of rebates and “special deals” in exchange for preferential treatment, particularly in the development of prescription drug formularies. The whistleblower further alleged that these rebates undercut the average wholesale price (AWP) that the companies reported to the government, which was used in pricing drug costs in federal health care programs. (In October, 2010, Judge Ditter dismissed the other manufacturers on public disclosure grounds, but denied Astra-Zeneca’s particularity-based motion to dismiss.)
Judge Ditter agreed with Astra-Zeneca that, as in the relator’s case against the other companies, his allegations were barred by their public disclosure and his failure to qualify as an original source. The Court rejected the relator’s argument that the Astra-Zeneca allegations were significantly novel because they included allegations of payments by Medco to two “trophy account” clients of the PBM. All these allegations did, Judge Ditter reasoned, was name an additional entity engaged in a scheme that had otherwise been publicly disclosure in prior lawsuits and press reports. Moreover, the fact that Medco was passing Astra-Zeneca’s rebates on to at least some of its clients was publicly disclosed, as was the government’s knowledge of it.
He likewise rejected the relator’s argument that he was an original source. Although the relator alleged that he participated in contacts and negotiations concerning the subjects of his qui tam suit while he was an officer of Medco, the Court reiterated its earlier conclusion that these allegations nevertheless left it to the court to guess how the relator obtained knowledge of the fraud.