Submitted: December 15, 2016
from United States District Court for the Eastern District of
Missouri - St. Louis
WOLLMAN and SMITH,  Circuit Judges, and WRIGHT,  District Judge.
Shane Lager brought this qui tam action pursuant to
the False Claims Act (FCA), 31 U.S.C. §§ 3729
et seq., alleging that drug manufacturer CSL
Behring, LLC, and its parent corporation CSL Behring Limited
(collectively, "CSL Behring") conspired with
pharmacies Accredo Health, Inc., ("Accredo") and
Coram LLC ("Coram") to submit false claims to the
United States for reimbursement for prescription drugs. The
government declined to intervene. CSL Behring, Accredo, and
Coram (collectively, "defendants") moved to dismiss
the complaint based on, among other things, the FCA's
public disclosure bar, 31 U.S.C. § 3730(e)(4)(A). The
district court granted the motion. Lager appeals this
dismissal, and we affirm.
accept as true the material allegations in the complaint and
present the facts in the light most favorable to
[Lager]." Kulkay v. Roy, 847 F.3d 637, 640 (8th
Cir. 2017). Lager worked for CSL Behring for 14 years in
sales and sales management. CSL Behring manufactures and
distributes protein-based therapies, including Vivaglobin and
Hizentra. These drugs are self-administered by patients
through a pump. This pump qualifies as "Durable Medical
Equipment" (DME) under the Medicare statutes. CSL
Behring began marketing and distributing Vivaglobin in 2006
but discontinued Vivaglobin in 2011. CSL Behring introduced
Hizentra in 2010 and continues to manufacture it. Seventy
percent of CSL Behring's sales of Vivaglobin and Hizentra
are made to Coram and Accredo.
that dispense drugs to beneficiaries of government health
care programs (such as Medicare) submit claims for
reimbursement to the federal government. Since Congress's
enactment in 2003 of the Medicare Prescription Drug,
Improvement, and Modernization Act (MMA), 42 U.S.C.
§§ 1395w-21-1395w-28, most drugs that Medicare and
other government health programs cover are reimbursed based
on the average sales price (ASP). See 42 U.S.C.
§§ 1395u(o), 1395w-3, 1395w-3a, 1395w-3b. However,
the MMA excluded DME infusion drugs, such as Vivaglobin and
Hizentra; instead, reimbursements for these drugs are based
on 95 percent of the average wholesale price (AWP). While the
ASP is based on actual sales data, the AWP is based on
figures that the drug manufacturer reports to third-party
publishers, such as Red Book. Office of Inspector Gen., U.S.
Dep't of Health & Human Servs., OEI-12-12-00310,
Part B Payments for Drugs Infused Through Durable Medical
Equipment at 2-3 (2013) ("2013 OIG Report").
And, while the ASP is defined by law, the AWP is not.
See Office of Inspector Gen., U.S. Dep't of
Health & Human Servs., OEI-03-05-00200, Medicaid Drug
Price Comparison: Average Sales Price to Average Wholesale
Price (2005) ("2005 OIG Report"). The ASP is
"substantially lower" than the AWP. Id. at
8. For example, in 2004, "[f]or 2, 077 national drug
codes with ASP and AWP data, ASP [was] 49 percent lower than
AWP at the median." Id.
AWP was the average price charged by wholesalers to
providers, like doctors and pharmacies." In re
Pharm. Indus. Average Wholesale Price Litig., 491
F.Supp.2d 20, 33 (D. Mass. 2007), aff'd, 582
F.3d 156 (1st Cir. 2009). The AWP was "derived from the
markup charged by wholesalers over their actual acquisition
cost, sometimes called the 'Wholesale Acquisition
Cost' or 'WAC.'" Id. Historically,
providers added a 20 to 25 percent markup to the price that
they paid to manufacturers. Id. "At some point,
though, because of consolidation and competition among
wholesalers, these standard markups on branded drugs no
longer reflected actual wholesaler margins, which were
reduced to 2 to 3 percent." Id. As a result,
the actual AWP that wholesalers charged "to providers
was much lower than the 20 or 25 percent markup over
brought this qui tam action pursuant to the FCA
against CSL Behring, Accredo, and Coram, alleging that they
agreed to and engaged in a joint action to defraud the
government over the course of several years. Specifically,
Lager alleges that CSL Behring reported inflated AWPs for
Vivaglobin and Hizentra to third-party publishers when, in
actuality, the "true selling price" at which CSL
sold the drugs was "substantially less than their
falsely reported amounts." Lager alleges that CSL
Behring used the "spread" between the actual cost
and the reported AWPs to induce their customers, including
Accredo and Coram, to buy its products. Lager alleges that
Accredo and Coram then sought out patients covered by
government health programs to take advantage of the spread.
As a result of the defendants' conduct, Lager claims that
the federal government has overpaid in excess of $100 million
for Vivaglobin and in excess of $180 million for Hizentra.
the United States declined to intervene in Lager's suit,
the defendants moved to dismiss the complaint (1) under the
FCA's public disclosure bar, 31 U.S.C. §
3730(e)(4)(A); (2) for failure to plead fraud with
particularity under Federal Rule of Civil Procedure 9(b); and
(3) for failure to state a claim under Federal Rule of Civil
Procedure 12(b)(6). The district court dismissed Lager's
complaint pursuant to the FCA's public disclosure bar,
which bars an action or claim "if substantially the same
allegations or transactions as alleged in the action or claim
were publicly disclosed" in qualifying sources. 31
U.S.C. § 3730(e)(4)(A). First, the court discussed the
"public disclosures regarding DME infusion drugs,
generally." United States ex rel. Lager v. CSL
Behring, LLC, 158 F.Supp.3d 782, 789 (E.D. Mo. 2016).
The court recognized that "[m]ultiple government sources
have long disclosed that AWP does not represent the actual
prices of drugs." Id. at 788. The district
court also cited several media sources as previously
reporting that AWPs do not reflect actual drug prices.
Id. And the court found that "multiple
disclosures" showed that "manufacturers used the
difference between actual costs and AWPs to influence
sales." Id. The court cited Wholesale Price
Litigation (a 2007 decision) as explaining the negative
effect of AWP-based reimbursements. Id. at 789
(citing Wholesale Price Litig., 491 F.Supp.2d at
the district court discussed "public disclosures
regarding the AWP and ASP for Vivaglobin and Hizentra."
Id. at 789. According to the court, "[t]he
third-party publications publish AWPs, while the Centers for
Medicare & Medicaid Services (CMS) publishes ASPs for
drugs on a quarterly basis." Id. Based on
publicly available figures derived from CMS and Red Book,
Coram had provided the following table to the district court:
Id. at 790. The court characterized this table as
"showing the significant spread between ASPs and AWPs
for Vivaglobin and Hizentra for the years 2007 through
2013." Id. at 789.
in response to Lager's argument that his allegations of
fraud are based on the difference between the "actual
AWPs" and the "reported AWPs" and not
based on the "simple, irrelevant disparity between the
ASPs and the reported AWPs" for the drugs, the district
court found that "the term 'actual AWP' is
meaningless in the absence of any statutory or regulatory
definitions." Id. at 791. The court also found
that the "target of relator's allegations is the
difference between the AWPs and what he calls the drugs'
'true selling prices'"; according to the court,
"true selling prices" are the same as the ASPs for
the drugs. Id.
reviewed all the sources that the defendants put forth, the
district court concluded that "[a]ll the essential
elements of relator's claims were publicly disclosed
before he filed suit." Id.
district "[c]ourt decline[d] to address defendants'
remaining arguments in any detail, " but it did note
that Lager's complaint lacked a "single, specific
instance of fraud, much less any representative
examples" and therefore failed to satisfy Rule 9(b).
Id. at 793 (quoting United States ex rel. Joshi
v. St. Luke's Hosp., Inc., 441 F.3d 552, 557 (8th
Cir. 2006)). The court denied Lager's request to amend
his complaint and granted the defendants' motion to
appeal, Lager argues that the district court erroneously
applied the public disclosure bar to his FCA claim because
the disclosures that the district court relied on (1) do not
readily identify the defendants in this case; and (2) do not
contain "substantially the same allegations or
transactions, " 31 U.S.C. § 3730(e)(4)(A), as those
contained in Lager's complaint or reveal any of the
defendants' fraudulent activity.
imposes civil liability on one who "knowingly presents .
. . a false or fraudulent claim [to the government] for
payment or approval." 31 U.S.C. § 3729(a)(1)(A).
"Almost unique to the FCA are its qui tam
enforcement provisions, which allow a private party known as
a 'relator' to bring an FCA action on behalf of the
Government." State Farm Fire & Cas. Co. v.
United States ex rel. Rigsby, 137 S.Ct. 436, 440 (2016).
The FCA also provides that the Attorney General may
"intervene in a relator's ongoing action or . . .
bring an FCA suit in the first instance." Id.
The FCA's qui tam enforcement provision "is
designed to benefit both the relator and the Government. A
relator who initiates a meritorious qui tam suit
receives a percentage of the ultimate damages award, plus
attorney's fees and costs." Id.
Additionally, private enforcement "strengthen[s] the
Government's hand in fighting false claims."
Id. (quoting Graham Cty. Soil & Water
Conservation Dist. v. United States ex rel. Wilson, 559
U.S. 280, 298 (2010)).
"[t]he FCA places a number of restrictions on suits by
relators." Id. "At the same time that the
statute encourages whistleblowers, it discourages
'opportunistic' plaintiffs who 'merely feed off a
previous disclosure of fraud.'" United States v.
Walgreen Co., 846 F.3d 879, 880 (6th Cir. 2017) (quoting
United States ex rel. Poteet v. Medtronic, Inc., 552
F.3d 503, 507 (6th Cir. 2009)). As a result, "individual
plaintiffs cannot bring qui tam complaints based