A six-year legal battle has finally ended for drugmakers Bristol-Meyer Squibb (BMS) and Otsuka as a judicial panel recently made a 2 to 1 decision not to revive a whistleblower lawsuit filed by two former employees.

In U.S. v. Bristol Meyers Squibb Co., the Sixth Circuit ruled that the plaintiffs have failed to prove they had personal knowledge that the companies engaged in illegal off-label promotion for the prescription anti-psychotic medication Abilify and paid kickbacks to physicians as part of a scheme to intentionally defraud state and federal Medicaid programs.

This was the plaintiffs’ third attempt to hold the drug makers accountable.

In the filing, the panel said, “The chain that connects defendants’ alleged misconduct to the eventual submission of false claims to the government is an unusually attenuated one, and relators provide no specific statement showing the plan was made in order to defraud the government.”

The former employees, Joseph Ibanez and Jennifer Edwards, first filed the whistleblower lawsuit in January 2011. According to the complaint, BMS and Otsuka started marketing Abilify to the medical community in 2005 for the treatment of children and the elderly – indications for which the medication had not been approved.

The company offered “incentives” in order to get physicians to prescribe the drug to their pediatric and geriatric patients. Those “incentives” included free meals at upscale restaurants and paid “speaking engagements.” The plaintiffs alleged that the manufacturers’ scheme led directly to the submission of false claims to federal health care programs (i.e., Medicare and Medicaid), since most of the patients who were prescribed Ability were enrolled in said programs.

It was not the first time the drug makers had run afoul of the law. In 2007, BMS paid over $515 million to resolve allegations of illegally marketing Abilify for the treatment of children and teens as well as dementia-related psychosis – neither of which had FDA approval at the time. Between 2000 and 2003, the company had also essentially bribed health care providers in order to get them to prescribe Abilify. As part of that settlement, BMS was required to enter into a corporate integrity agreement with the Department of Health and Human Services.

The plaintiffs further alleged that they had been the target of retaliation at BMS after having raised the issue with their supervisors at the company. Ibanez and Edwards were fired while being “investigated” for making fraudulent sales calls – but had not been given any opportunity to respond to the accusations.

In October 2014, lawyers for the defense argued that the plaintiffs failed to provide any specific information to support their allegations. In March 2015, a federal judge ruled in favor of the defendants:

The complaint does not identify a single pediatric psychiatrist who wrote an off-label prescription that was filled by a patient and on which some entity submitted a fraudulent claim for reimbursement to a federal-health care program.”

The judge dismissed the case against Otsuka; however, the plaintiffs’ retaliation claim against BMS was allowed to stand.

Last year, Ibanez and Edwards filed an appeal with the Sixth Circuit, petitioning the court to revive their case. Otsuka claimed the source of the plaintiffs’ allegations was taken from publicly available information, which cannot be used as evidence under terms of the False Claims Act (FCA).

However, the plaintiffs continued to state that their claim was based on direct first-hand information. In their brief, the plaintiffs pointed out that the “original source exception” provided for under the FCA “does not require that the qui tam relator [the whistleblower] possess direct and independent knowledge of all of the vital ingredients to a fraudulent transaction.”

The Sixth Circuit disagreed. In its decision, handed down at the end of October, they upheld the lower court ruling, stating that even if the drug makers had engaged in improper marketing tactics in order to increase sales, the plaintiffs had failed to prove its case:

To adequately allege an FCA conspiracy, it is not enough for relators to show there was an agreement that made it likely there would be a violation of the FCA; they must show an agreement was made in order to violate the FCA.”

Because the plaintiffs had failed to provide specific examples of wrongdoing based on personal knowledge, the panel said their case would most likely be dismissed again. However, in a partial dissent from the majority, Judge Jane Branstetter-Stranch noted that the most recent amendment of the complaint demonstrates several examples in which illegal off-label prescriptions for Ability had been paid for by state Medicaid programs, arguing that the defendants were being provided “adequate and fair notice…of the claims brought against them.”

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K.J. McElrath is a former history and social studies teacher who has long maintained a keen interest in legal and social issues. In addition to writing for The Ring of Fire, he is the author of two published novels: Tamanous Cooley, a darkly comic environmental twist on Dante's Inferno, and The Missionary's Wife, a story of the conflict between human nature and fundamentalist religious dogma. When not engaged in journalistic or literary pursuits, K.J. works as an entertainer and film composer.