United States ex rel. Street v. Genentech, Inc.

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UNITED STATES ex rel. Daron Street, M.D. and R. Steven Paulson, M.D., Plaintiffs, v. GENENTECH, INC., Defendant.

No. 17-CV-00293-GKF-JFJ

United States District Court, N.D. Oklahoma

March 14, 2024

OPINION AND ORDER

GREGORY K. FRIZZELL, UNITED STATES DISTRICT JUDGE

This matter comes before the court on the Motion to Dismiss Plaintiff-Relators' Complaint [Doc. 48] of defendant Genentech, Inc. For the reasons set forth below, the motion is granted in part and denied in part.

Background/Procedural History

In order to understand the procedural history of this matter, it is first necessary to briefly consider a related case, MDL No. 2700 In re: Genentech Herceptin (Trastuzumab) Marketing and Sales Practice Litigation.

A MDL No. 2700

In 2016, the United States Judicial Panel on Multidistrict Litigation created MDL No. 2700, In re: Genentech, Inc. Herceptin (Trastuzumab) Marketing and Sales Practices Litigation.^[1] The Panel selected the Northern District of Oklahoma as the appropriate transferee district and assigned the matter to the Honorable Terence C. Kern. The MDL and cases therein are brought against defendant Genentech, Inc. and relate to the marketing and sales of Herceptin (Trastuzumab), a prescription medication for the treatment of certain types of breast cancer.

On March 20, 2019, Judge Kern granted Genentech's motion for summary judgment based on federal preemption and entered judgment in Genentech's favor. Plaintiffs appealed to the United States Court of Appeals for the Tenth Circuit.

On May 29, 2020, the Tenth Circuit reversed the grant of summary judgment in favor of Genentech and remanded the matter to this district for further proceedings. The mandate issued on August 7, 2020.^[2]

B. This Case

On May 24, 2017, plaintiff-relators Daron Street, M.D. and R. Steven Paulson, M.D., initiated this action on behalf of the United States to recover damages sustained by, and penalties owed to, the government for Genentech's allegedly false claims regarding federal purchases of Herceptin. [Doc. 2]. The case was initially assigned to U.S. District Judge Claire V. Eagan, but was reassigned to Judge Kern, as the case relates to the MDL. [Doc. 11].

On August 30, 2019, pursuant to 31 U.S.C. § 3730(b)(4)(B), the United States notified the court of its decision not to intervene in this action^[3] [Doc. 34], and, on October 7, 2019, the case was unsealed. [Doc. 35]. Relators served Genentech with Summons in this case on October 21, 2019. [Doc. 37].

On November 4, 2019, prior to Genentech filing a responsive pleading, Dr. Street and Dr. Paulson filed an unopposed motion to stay pending resolution of the appeal of Judge Kern's grant of summary judgment on federal preemption grounds in the MDL. [Doc. 38]. That same day, Judge Kern granted the stay. [Doc. 39].

This matter remained stayed until August 24, 2020, when Judge Kern lifted the stay following issuance of the Tenth Circuit's mandate in the MDL. [Doc. 44]. Judge Kern directed that Genentech file a response to the Complaint on or before September 4, 2020. [Doc. 43].

On September 4, 2020, Genentech filed the motion to dismiss. [Doc. 48]. Realtors responded in opposition on October 16, 2020, [Doc. 60], and Genentech filed a reply on November 6, 2020 [Doc. 62].

On January 29, 2024, this matter was reassigned to the undersigned upon Judge Kern's retirement. [Doc. 76]. The motion to dismiss is ripe for the court's determination.

Allegations of the Complaint

The Complaint includes the following allegations:

Herceptin is a patent-protected medication used to treat patients with early stage, advanced, and metastatic breast cancer and tumors that overexpress the HER2 neu receptor. [Doc. 2, p. 5 ¶ 20]. Genentech develops, manufactures, and markets Herceptin. [Id. ¶ 22].

Genentech has sold Herceptin to the United States and maintains a list of authorized distributors for federal purchasers. [Id. at pp. 3-4, 6, ¶¶ 14, 25]. Authorized distributors include AmerisourceBergen Drug Corporation, Cardinal Health Specialty Distribution, Dakota Drug, DMS Pharmaceutical, and McKesson Plasma and Biologics. [Id. at p. 6, ¶ 25].

In the third quarter of 2004, 1% of Herceptin sales were to federal facilities. [Id. at p. 6, ¶ 26]. Since July 1, 2008, the United States has entered into over 50 contracts and grants to purchase Herceptin. For example, on April 11, 2012, the Department of Defense entered into a $40,686.47 contract with Cardinal Health to purchase Herceptin 440 mg MDV. On June 23, 2014, the DoD entered into a $30,216.41 contract with Cardinal Health to purchase Herceptin 440 mg MDV 1S. On August 4, 2014, the DoD entered into a $66,570.05 contract with Cardinal Health to purchase Herceptin 440 mg MDV 1S. [Id. ¶ 27]. Additionally, on September 30, 2016, the U.S. Department of Veterans' Affairs awarded Genentech a five-year contract worth $3,850,225, 230.00 for the purchase of Herceptin. [Id. at pp. 6-7, ¶ 28].

Herceptin is manufactured as lyophilized (dehydrated and “freeze-dried” powder) medicine which is delivered in vials, labeled by Genentech as containing 440 milligrams of Trastuzumab (the active ingredient in Herceptin). The Herceptin product is mixed with a liquid (diluent), also provided by Genentech, which reconstitutes each vial of Herceptin into a multi-dose liquid solution. [Id. at p. 7, ¶¶ 31-32].

In 1998, as part of its Biologics Licensee Application (BLA) for Herceptin, Genentech submitted to the Food and Drug Administration a proposed label and Prescribing Information for Herceptin. [Id. ¶ 33]. The BLA was approved. [Id.]. The 1998 label claimed that the Herceptin vial contained 440 mg of Trastuzumab and provided a Preparation for Administration section that instructed: “Each vial of HERCEPTIN should be reconstituted with 20mL of [Bacteriostatic Water for Injection] as supplied, to yield a multi-dose solution containing 21 mg/mL Trastuzumab.” [Id. at pp. 7-8, ¶ 34].

Relators allege that Genentech has modified the Herceptin label several times since 1998, but that each Herceptin label has claimed that the vial contained 440 mg of Herceptin and that reconstitution with 20 mL of Bacteriostatic Water for Injection would yield a multi-dose solution containing 21 mg /mL of Herceptin. [Id. at p. 8, ¶¶ 35-36]. Thus, with the sale of each vial of Hereptin to the United States, Genentech claims that (1) the vial contains 440 mg of Herceptin, and (2) if a healthcare provider follows the instructions for reconstitution on the Herceptin Label, the resulting multi-dose liquid solution is concentrated at a density of 21 mg of Herceptin per milliliter of solution, which would result in 20.952 mL of liquid solution. [Id. ¶¶ 37-38].

However, Relators allege that they have discovered that Genentech “regularly fills vials sold in the United States with less than 440 mg of Herceptin.” [Id. ¶ 39]. In fact, Relators assert that approximately 90% of the lots of Herceptin released in the United States contained less than 440 mg of Herceptin. [Id. ¶ 40]. Thus, when healthcare providers follow the Preparation of Administration instructions provided by Genentech, a vial of Herceptin does not yield 20.952 mL of liquid solution. [Id. ¶ 46]. Rather, when they follow Genentech's instructions, providers cannot obtain more than 20.2 mL of liquid solution from a Herceptin vial, and Relators and the United States have received less drug product than the claim on Genentech's label promises they should receive. [Id. ¶¶ 47-48]. Specific to the United States, Relators allege that, “[g]iven the systematic under-filling of vials, many Herceptin vials purchased by the United States contained less Herceptin than the amount claimed by Genentech and for which the United States paid.” [Id. ¶ 41].^[4]

Additionally, Relators assert they discovered that, in 2002, Genentech's Herceptin Production Engineer stated in an internal Genentech email that the actual concentration of reconstituted Herceptin was 21.8 mg/mL, not the 21 mg/mL stated on the label. [Id. at pp. 8-9, ¶ 42; see also id. at p. 97]. Relators allege that, by misstating the concentration, Genentech caused purchasers-including the United States-to administer more Herceptin than necessary to patients and to purchase more Herceptin than they would otherwise purchase. [Id. at p. 9, ¶ 44]. That is, if the label included an accurate concentration of the reconstituted Herceptin solution, Relators and the United States would purchase fewer Herceptin vials.^[5] [Id. ¶ 45].

The Relators allege that Genentech knew that most Herceptin vials sold in the United States did not contain 440 mg of Herceptin. [Id. at p. 10, ¶ 49]. Specifically, during a hearing in the MDL, Genentech's lead counsel stated that Genentech had produced certificates of analysis showing that “in every lot [of Herceptin] released in the United States, we were below 440. Almost every. Ninety percent, I think they said. So we knew,” and that Genentech's “own manufacturing documents . . . show we're below 440, in [plaintiffs'] words, 90 percent of the time.” [Id. ¶¶ 5051]. Additionally, in 2002, Genenetch's Herceptin Production Engineer stated the actual concentration of reconstituted Herceptin was 21.8 mg/mL, not the labeled 21 mg/mL. [Id. ¶ 52]. Thus, Relators allege that because Genentech knew that the vast majority of Herceptin vials sold in the United States do not contain 440 mg of Herceptin, it also knew that the vials would not yield 20.952 mL of liquid Herceptin solution and, further, because Genentech also knew that its label did not accurately state the concentration of reconstituted Herceptin, it knew the vials would not yield 20.952 mL of liquid Herceptin medicine. [Id. ¶ 53].

In addition to the foregoing factual allegations, the Relators attached to the...