United States District Court, M.D. North Carolina
UNITED STATES OF AMERICA, ex. rel. JUAN N. WALTERSPIEL, M.D., F.A.A.P., Plaintiff,
BAYER A.G., QUINTILES TRANSNATIONAL CORP., JOHN DOE, JOE DOE, JANE DOE, Defendants.
MEMORANDUM OPINION AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
JOI ELIZABETH PEAKE, Magistrate Judge.
This is a False Claims Act action under 31 U.S.C. § 3729(a) filed by qui tam Plaintiff/Relator Dr. Juan N. Walterspiel ("Plaintiff" or "Walterspiel") against Bayer A.G. ("Defendant Bayer") and Quintiles Transnational Corporation ("Defendant Quintiles"). The United States has filed a Notice of Election to Decline Intervention [Doc. #29] in the action. The action is now before the Court on Defendant Quintiles' Motion to Dismiss [Doc. #72] pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, the Court recommends that Defendant Quintiles' Motion to Dismiss be granted. The Court also recommends that the claims against Defendant Bayer and the Doe Defendants be dismissed for failure to timely effectuate service of process, and that this action be dismissed.
I. FACTS, CLAIMS, AND PROCEDURAL HISTORY
A. Facts and Procedural History
Plaintiff Walterspiel alleges that he is a licensed physician with experience in developing clinical trials for various drugs. According to the Complaint, in 2002, he worked as an independent contractor for Defendant Bayer, a German pharmaceutical company, to retrieve information from electronic study databases and present that information in narratives sent to Bayer's Independent Pediatric Safety Committee. Walterspiel alleges that Defendant Quintiles provides clinical trials, including medical study data collection and source verification services, to pharmaceutical companies such as Bayer. Defendant Quintiles collected Ciprofloxacin ("Cipro") pediatric data under contract with Defendant Bayer for two studies at issue in this action. In his Complaint, Walterspiel alleges that some of the database information provided by Defendant Quintiles and relied upon by Bayer was false. Defendant Bayer then allegedly used this data in studies provided to the Food and Drug Administration ("FDA"), which allowed Bayer to receive a six-month market exclusivity extension from the FDA for Cipro in December 2003. The six-month market exclusivity extension granted to Defendant Bayer ran from December 2003 until June 2004.
Walterspiel alleges that Jane Doe worked for Defendant Quintiles when it was collecting data on Cipro, reviewed the allegedly false data submitted to Defendant Bayer by Defendant Quintiles, and allowed the data to be submitted to Defendant Bayer while failing to disclose the falsity of the data. Walterspiel further alleges that Joe Doe worked for Defendant Bayer, reviewed the allegedly false data submitted to Defendant Bayer by Defendant Quintiles, and allowed the data to be submitted to the United States in support of Bayer's Cipro market exclusivity extension while failing to disclose the falsity of the data. Walterspiel alleges that John Doe worked for Defendant Quintiles, reviewed the Cipro pediatric study data submitted to Defendant Bayer, and observed irregularities in the data but failed to report this finding to his superiors or Defendant Bayer.
Walterspiel further alleges that Cipro is one of the most successful quinolone antimicrobials ever marketed. However, he further contends that it is known to destroy joint cartilage in juvenile animals, and that because of this, Cipro was considered contraindicated in children and not studied for market approval. Walterspiel contends that in August 2000, the Food and Drug Administration ("FDA") gave emergency use permission for Cipro in children for prophylaxis and treatment of pediatric inhalation anthrax based on bioterrorism concerns. Walterspiel further contends that this approval was conditional on further acquisition of reliable cartilage safety data from studies such as the two studies performed by Defendant Bayer that are at issue in this action.
In setting out his claims under the False Claims Act, Walterspiel contends that the fraud at issue in this action is the use of allegedly false data in the two Bayer studies, Nos. 100169 and 100201, that allowed Defendant Bayer to obtain the six-month Cipro market exclusivity extension. Walterspiel claims that he worked as a consultant to Bayer's Health Care Division in Connecticut from about mid-2002 into early 2003. His responsibility was to retrieve information from electronic study databases and prepare written narratives whenever the data indicated a musculoskeletal or neurological adverse event. The narratives were then presented by Walterspiel to an independent adjudication committee, Bayer's Independent Pediatric Safety Committee, which then came to treatment-blinded assessments on causality.
Walterspiel claims that he found "improbable" joint angle measurements in "some of the subjects under review" and asked Mrs. Perroncel, the senior clinical research associate that Bayer had assigned to him, to help him find the correct data. (Compl. ¶ 56.) Mrs. Perroncel allegedly agreed that the measurement data in question were "wrong, " and brought the issue to the attention of Bayer's management. A neurologist leading the Cipro patent market exclusivity team purportedly asked Mrs. Perroncel to "confirm" the values in question by asking the investigators to sign letters confirming that these values were measured at their sites in the respective subjects and were correct. Mrs. Perroncel told Walterspiel shortly thereafter that signed letters from the investigators had arrived and were put into the file.
Walterspiel also alleges that he "noticed a lack of variability from measurement to measurement from some sites compared to others and noticed a lack of an analysis to flag any suspect data in advance of the committee's periodic reviews." ( Id. ¶ 59.) Walterspiel says that in reviewing the data he "noted long rows of joint angle degree numbers that were obviously just filled in.' These numbers repeated themselves in endless fashion compared to those that were within norm for age range and, with expected small variations from measurement to measurement, that other investigators recorded." ( Id. ¶ 64.) Walterspiel alleges that some of the data included values for joint angles that were scientifically impossible because the human limbs in question were not capable of such movement. Walterspiel concluded that "some of the data in the Bayer Cipro pediatric studies had been falsified." ( Id. ¶ 66.)
Walterspiel claims that the "false data and statements submitted by Defendants to the FDA which hid adverse effects of Ciprofloxacin in children were material to the FDA's decision to approve the six month patent market exclusivity extension for Bayer for Cipro." ( Id. ¶ 60.) He further asserts that the FDA follows a standard under which once an investigator and/or assignee has been observed to have invented data, all data from the site are compromised and need to be discarded. Walterspiel alleges that based upon this practice, if the alleged fraud had been reported, Defendant Bayer could have been disqualified from future federal contracts for a period of years. According to Walterspiel, the fraudulent data should have been noticeable to Defendant Bayer physicians and to source verification personnel of Defendant Quintiles. Walterspiel contends that Defendant Quintiles and Defendant Bayer nevertheless "elected to take the option of knowingly submitting the Bayer Cipro pediatric study data to the FDA without disclosure of the false and fraudulent data, so as to not jeopardize Bayer's $0.5 billion in Cipro sales and Quintiles Transnational's current and future contracts with Bayer and other drug companies." ( Id. ¶ 73.)
With respect to the amount of the purported claim, Walterspiel alleges that prior to approval of the market exclusivity extension in December 2003, sales of Cipro worldwide were over $1.1 billion per year. He "estimates" that, during the six-month exclusivity extension period, Defendant Bayer enjoyed $550 million in worldwide sales. He further estimates that 30% of this Bayer Cipro income is from the United States, or approximately $165 million. He then estimates that the United States government's share of U.S. sales-including Veterans Administration, Medicare, Medicaid, and DOD strategic national stockpile push pack rotation-is approximately 10%, or $16.5 million. Walterspiel further estimates that the loss to the U.S. government from Defendant Bayer's false claims relating to Cipro during the six-month market exclusivity extension is, at minimum, $14.85 million, which Walterspiel contends is the difference between the amount paid (by his estimates), and the amount that would have been paid if a generic alternative were available.
Walterspiel includes five counts in his Complaint. In his Response to Defendant Quintiles' Motion to Dismiss, he clarifies that only Counts 1-3 are alleged against Defendant Quintiles. (Pl.'s Resp. [Doc. #77] at 12 ("Counts 4 and 5 were intended to assert ...