Just over a year ago, GlaxoSmithKline paid $750 million to resolve a False Claims Act lawsuit arising out of significant violations of current Good Manufacturing Practice (cGMP) regulations at its plant located in Cidra, Puerto Rico. The adulterated drugs manufactured at that plant were sold to government healthcare programs for use by patients.
Recently, the United States Attorney's Office for the District of Maryland filed a Statement of Interest in United States ex rel. Barry Rostholder et al. v. Omnicare, Inc. et al., Civ. Action No. 1:07 cv 01283. Rostholder's complaint alleges that Omnicare violated the False Claims Act by failing to comply with the cGMP regulations prohibiting manufacturers from packaging penicillin in the same facility as non-penicillin drugs.
In its Statement of Interest, the United States took the position that violations of cGMP regulations may be material to the government decision whether to pay for the affected products, and thus are relevant in FCA cases. The government made clear that violations of cGMP regulations may be relevant in FCA cases where the violations are "significant, substantial, and give rise to actual discrepancies in the composition or functioning of the product." Such is the case when, for example, "the affected drug's strength materially differed from, or the purity or quality fell below, the strength, purity, or quality specified in the drug's FDA-approved New Drug Application, the drug's labeling, and/or the standards set forth in official compendium."
In addition, "manufacturing deficiencies may affect the strength, purity and/or quality of the affected drug such that the drug is essentially 'worthless' and not eligible for payment by the government." Submitting claims, or causing claims to be submitted, to government healthcare programs for drugs that are so deficient as to be worthless may, according to the government, give rise to FCA liability.
In rejecting Omnicare's argument that this is a false certification case, the government argued that "when a claim is false because it is for a non-reimbursable item (e.g., a tainted drug), analysis under a 'certification theory' is inapposite." The government clarified that "the core issue for 'falsity' under the FCA is whether the government received the benefit of its bargain."
Manufacturing problems result in substandard products and directly affect the health and safety of patients who use the adulterated drug or device. If you have information regarding significant and substantial cGMP violations by a drug or device manufacturer, contact Andrew M. Beato, a experienced whistleblower attorney at the law firm of Stein, Mitchell & Muse in Washington, D.C. The False Claims Act provides significant protections for employees who step forward and report fraud.
