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A whistle-blower lawsuit against Bayer A.G. alleging it knowingly sold an unsafe drug to the Department of Defense can proceed based on the precision of its allegations, an appeals court has ruled.
Units of Leverkusen, Germany-based Bayer began marketing Baycol to compete with other cholesterol-lowering or statin drugs in early 1998, according to Tuesday's ruling by the 8th U.S. Circuit Court of Appeals in St. Louis in In re: Baycol Products Litigation.
Certain studies concluded that the drug was less effective at lowering cholesterol than competing drugs when prescribed at the dosage initially approved by the Food and Drug Administration.
Bayer then sought and obtained FDA approval to sell it at higher dosage levels. But doctors began to report that patients taking the drug developed rhabdomyolysis, a rare but serious muscle disorder that breaks down muscle fibers and releases myoglobin into the bloodstream, and that the likelihood of the disorder appeared to increase when taken at the higher dose level or conjunction with another cholesterol-lowering drugs.
Bayer voluntarily withdrew the drug from the market in August 2001, according to the ruling.
Laurie Simpson, who worked at Bayer from 1998 through 2004 as a market research manager, filed a whistle-blower suit in October 2006, charging in part that Bayer fraudulently induced the Department of Defense to enter into two contracts to buy the drug for members of the armed services.
Bayer initially entered into an agreement to sell the drug to the Department of Defense for an 18-month term for an estimated $11.5 million per year on Oct. 1, 1999. On Jan. 20, 2001, the department extended the contract through February 2002 for an estimated $11.9 million. In addition, on Feb. 20, 2001, it agreed to purchase a higher dosage of Baycol from Bayer for $45 for 90 tablets.
After entering into the initial contract with Bayer, the Department of Defense became concerned about the connection between rhabdomyolysis and Baycol and contacted the company regarding the concerns.
Ms. Simpson alleged in her whistle-blower suit that a Bayer representative falsely assured the Department of Defense contact in November 1999 that it was no more likely to cause the condition than other statins.
A federal judge in Minneapolis dismissed the charge, concluding in part that Ms. Simpson's assertions were insufficient because she “did not tie her allegations of Bayer's fraud to specific fraudulent claims for payment submitted to the government.”
However the appeals court panel disagreed Tuesday, ruling 2-1 to reinstate the suit.
“Based upon our review of Simpson's allegations regarding the (Department of Defense) contracts, we conclude her complaint sufficiently 'identif(ies) the who, what, where, when and how of the alleged fraud,'” the panel said in quoting another ruling.
She identified the individuals involved in the exchange between Bayer and the Department of Defense, the alleged misrepresentations, dates when the alleged misrepresentations occurred and the reasons why the representations were alleged to be fraudulent, said the ruling.
The appeals court, however, did uphold the lower court's dismissal of Ms. Simpson's claims that Bayer also fraudulently caused the government to make reimbursements for Baycol prescriptions through federal health insurance programs such as Medicare and Medicaid.
“Unlike the (Department of Defense) contracts we have just discussed, there is no direct contractual relationship between the government and Bayer with respect to Simpson's allegations regarding reimbursements under federal health insurance programs,” the appeals court said in remanding the case.