SILBERSHER V. VALEANT PHARMACEUTICALS INT'L, No. 20-16176 (9th Cir. 2024)
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In this case, Zachary Silbersher, a relator, filed a qui tam action under the False Claims Act against Valeant Pharmaceuticals International, Inc. and others. Silbersher alleged that Valeant fraudulently obtained patents related to a drug and asserted these patents to stifle competition from generic drugmakers. He also claimed that Valeant defrauded the federal government by charging an artificially inflated price for the drug while falsely certifying that its price was fair and reasonable.
The district court dismissed Silbersher’s action under the False Claims Act’s public disclosure bar, ruling that his allegations had already been publicly disclosed. The United States Court of Appeals for the Ninth Circuit reversed the decision of the district court.
The Court of Appeals held that an inter partes patent review proceeding, in which the Patent and Trademark Office invalidated one of Valeant's patents, did not qualify as a public disclosure under the False Claims Act because the government was not a party to that proceeding, and its primary function was not investigative. The Court of Appeals also held that the allegations in Silbersher's qui tam action were not "substantially the same" as the information that had been publicly disclosed. 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. Therefore, the public disclosure bar did not apply. The case was remanded for further proceedings.
Court Description: False Claims Act The panel filed (1) an order denying a petition for panel rehearing and a petition for rehearing en banc; and (2) an amended opinion reversing 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 remanding 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 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.
This opinion or order relates to an opinion or order originally issued on August 3, 2023.
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