ZACHARY SILBERSHER, ET AL V. VALEANT PHARMACEUTICALS INT'L, ET AL, No. 20-16176 (9th Cir. 2023)
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Plaintiff alleged that Valeant fraudulently obtained two sets of patents related to a drug and asserted these patents to stifle competition from generic drugmakers. Plaintiff further alleged that Defendants defrauded the federal government by charging an artificially inflated price for the drug while falsely certifying that its price was fair and reasonable. Dismissing Plaintiff’s action under the False Claims Act’s public disclosure bar, the district court concluded that his allegations had already been publicly disclosed, including in inter partes patent review (“IPR”) before the Patent and Trademark Office.
The Ninth Circuit reversed the district court’s dismissal. The panel held that an IPR proceeding in which the Patent and Trademark Office invalidated Valeant’s “‘688” patent was not a channel (i) disclosure because the government was not a party to that proceeding, and it was not a channel (ii) disclosure because its primary function was not investigative. The panel held that, under United States ex rel. Silbersher v. Allergan, 46 F.4th 991 (9th Cir. 2022), the patent prosecution histories of Valeant’s patents were qualifying public disclosures under channel (ii). The panel assumed without deciding that a Law360 article and two published medical studies were channel (iii) disclosures. The panel held that the “substantially the same” prong of the public disclosure bar applies when the publicly disclosed facts are substantially similar to the relator’s allegations or transactions. None of the qualifying public disclosures made a direct claim that Valeant committed fraud, nor did they disclose a combination of facts sufficient to permit a reasonable inference of fraud.
Court Description: False Claims Act The panel reversed the district court’s dismissal of relator Zachary Silbersher’s qui tam action under the False Claims Act against Dr. Falk Pharma GmbH and drugmaker Valeant Pharmaceuticals International, Inc., and remanded for further proceedings.
Silbersher alleged that Valeant fraudulently obtained two sets of patents related to a drug and asserted these patents to stifle competition from generic drugmakers. Silbersher further alleged that defendants defrauded the federal government by charging an artificially inflated price for the drug while falsely certifying that its price was fair and reasonable. Dismissing Silbersher’s action under the False Claims Act’s public disclosure bar, the district court concluded that his allegations had already * The Honorable John Antoon II, United States District Judge for the Middle District of Florida, sitting by designation. been publicly disclosed, including in inter partes patent review (“IPR”) before the Patent and Trademark Office.
The False Claims Act’s public disclosure bar, as amended in 2010, applies if (1) the disclosure at issue occurred through one of the channels specified in the statute; (2) the disclosure was public; and (3) the relator’s action is substantially the same as the allegation or transaction publicly disclosed. Here, it was undisputed that the relevant documents were publicly disclosed.
Under the first prong of the public disclosure bar, the Act provides for the following three channels. Channel (i) applies if a disclosure was made “in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party,” and channel (ii) applies if a disclosure was made “in a congressional, Government Accountability Office, or other Federal Report, hearing, audit, or investigation.” Channel (iii) applies if a disclosure was made in the news media.
The panel held that an IPR proceeding in which the Patent and Trademark Office invalidated Valeant’s “‘688” patent was not a channel (i) disclosure because the government was not a party to that proceeding, and it was not a channel (ii) disclosure because its primary function was not investigative. The panel held that, under United States ex rel. Silbersher v. Allergan, 46 F.4th 991 (9th Cir. 2022), the patent prosecution histories of Valeant’s patents were qualifying public disclosures under channel (ii). The panel assumed without deciding that a Law360 article and two published medical studies were channel (iii) disclosures.
The panel held that the “substantially the same” prong of the public disclosure bar, as revised by Congress in its 2010 amendments to the False Claims Act, applies when the publicly disclosed facts are substantially similar to the relator’s allegations or transactions. None of the qualifying public disclosures made a direct claim that Valeant committed fraud, nor did they disclose a combination of facts sufficient to permit a reasonable inference of fraud. Accordingly, the public disclosure bar was not triggered.
The panel resolved a cross-appeal in a separately-issued memorandum disposition.
The court issued a subsequent related opinion or order on January 5, 2024.
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