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Whistleblower suit against Allergan over dementia drug tossed

A federal judge ruled patent attorney Zachary Silbersher, who filed the lawsuit, had no standing to sue under the False Claims Act because he wasn't actually a whistleblower.

SAN FRANCISCO (CN) — A federal judge on Monday dismissed with prejudice a whistleblower lawsuit filed by a patent attorney against the drugmaker Allergan over two prescription drugs used to treat dementia in Alzheimer's patients.

In his 2018 suit, Zachary Silbersher claimed Allergan, now owned by the Chicago-based AbbVie, had fraudulently obtained patents by failing to disclose certain information in order to extend their monopoly on two drugs, Nameda XR and Namzaric, both delayed-release versions of drugs to fight dementia.

Silbersher sued under the False Claims Act, a law that allows state and federal governments to sue companies that defraud governmental programs. The law also includes a provision to allow people with knowledge about the alleged fraud to file these suits as "relators." These relators are typically whistleblowers — insiders who perhaps need an incentive to come forward — and are entitled to between 15% to 30% of damages recovered. About 70% of all False Claims Act suits are filed by whistleblowers.

In his complaint, Silbersher described his job as one who “focuses on investigating invalid pharmaceutical patents that brand manufacturers use to protect their drugs from price competition.” He claimed "generic manufacturers have been ready to enter the market" for both Nameda and Namzaric "since at least July 13, 2015, but they have been prevented from doing so by the fraudulently obtained patents asserted by defendant."

Once a new drug is approved, the drugmaker typically has a six-year monopoly on sales of the drug. After that, other companies can sell generic versions of the drug, usually at a steep discount.

“As a direct result of defendants’ fraudulent scheme, defendants have unlawfully excluded generic manufacturers from introducing lower-priced generic alternatives for Namenda XR and Namzaric, allowing defendants to charge monopoly prices," Silbersher said in his complaint.

In its motion to dismiss the suit, Allergan argued Silbersher had no standing to bring about a False Claims Act complaint because he wasn't actually a whistleblower — he was not an "original source," as the law requires — and that the information in his suit was publicly disclosed. Silbersher wasn't an Allergan employee who blew the whistle, Allergan argued, he's a patent lawyer who analyzed publicly available documents and used his own expertise to draw conclusions — not exactly what the law intended.

In his ruling, U.S. Magistrate Judge Joseph Spero sided with Allergen, citing a Ninth Circuit ruling that states that a relator can't be someone who “merely uses his or her unique experience or training to conclude that the material elements already in the public domain constitute a false claim."

"For the reasons stated above, the court finds that relator is not an original source and that his claims against all defendants are therefore barred under the public disclosure bar and must be dismissed," Spero concluded.

Because Silbersher lacks standing, Spero dismissed his case without leave to amend.

Neither Silbersher nor Allergan, nor their respective attorneys, responded to emails requesting comment by press time.

Spero had initially denied Allergan's motion to dismiss in 2020, but the Ninth Circuit revived the motion using much the same reasoning that Spero would eventually come around to — that Silbersher had relied on public information to file his lawsuit.

Silbersher has filed similar False Claims Act complaints, against Johnson & Johnson and Valiant Pharmaceuticals. In 2020, one of his complaints against Valiant was thrown out by a judge who called Silbersher's lawsuit "the quintessence of the opportunistic and ‘parasitic’ lawsuit” meant to be disqualified under the False Claims Act.

Categories:Business, Consumers, Health

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