Only first whistleblower entitled to collect in Novo Nordisk settlement

(Reuters) – A former Novo Nordisk employee deserves 15 percent of a $46.5 million settlement between the drugmaker and the U.S. Justice Department resolving claims its marketing downplayed its diabetes medication Victoza’s cancer risks, a federal judge has ruled.

U.S. District Judge Reggie Walton in Washington, D.C., on Monday rejected arguments by four other Novo Nordisk whistleblowers who said Elizabeth Kennedy should not alone receive nearly $7 million from the False Claims Act settlement.

But Walton said because Kennedy was the first whistleblower to file a lawsuit that could help the government discover the alleged fraud and reach a settlement in 2017, she alone was entitled to the bounty.

”His reasoned decision means my client will soon receive her portion of the United States’ recovery as reward for her heroic and timely whistleblowing,” said Sarah Frazier, a lawyer for Kennedy at Berg & Androphy.

Lawyers for the other whistleblowers either declined to comment or did not respond to requests for comment.

The $46.5 million was part of an overall $58.7 million settlement in 2017 resolving claims that Novo Nordisk’s sales staff gave doctors information that misled them about importance of U.S. Food and Drug Administration-mandated warnings about Victoza’s link to a rare form of cancer.

The FDA in approving Victoza in 2010 required Novo Nordisk to adopt a risk evaluation and mitigation strategy (REMS) program, under which it had to give doctors information about the risk of developing medullary thyroid carcinoma (MTC).

But the government alleged that doctors were misled into believing that information was wrong or not important, causing false claims for payment for Victoza to be submitted to federal healthcare programs like Medicaid from 2010 to 2014.

Novo Nordisk denied wrongdoing.

The $46.5 million stemmed from claims brought under the False Claims Act and resolved claims contained in seven whistleblower lawsuits filed under that law.

The False Claims Act allows whistleblowers to sue companies on the government’s behalf to recover taxpayer money paid out based on fraudulent claims.

The government may intervene in such cases, and if successful, whistleblowers can receive a cut of any recovery. The law generally bars whistleblowers from pursuing cases if they were not the first to sue.

Kennedy, a former Novo Nordisk diabetes care specialist, said the law’s first-to-file bar meant she alone was eligible for an award since she sued first.

Four whistleblowers in three other lawsuits opposed, arguing Kennedy’s complaint never alleged what the government settled, namely that Novo Nordisk did not comply with REMS program.

But Walton ruled that Kennedy was not required under the False Claims Act to allege the specific legal theory that the Justice Department ultimately pursues when it intervenes in a whistleblower’s case and settles with a company.

He said a whistleblower only needs to allege sufficient facts that allow the government to uncover wrongdoing. In her case, Kennedy alleged that Novo Nordisk marketed Victoza in a way meant to mislead doctors about the cancer risk, he said.

”Thus, relator Kennedy’s allegations that Novo Nordisk misrepresented Victoza’s MTC Risk sufficed to equip the government to discover the alleged motive behind and legal implications of that conduct,” he wrote.

Walton rejected other arguments that the $46.5 million should be split among the whistleblowers.

The case is U.S. ex rel. Kennedy v. Novo A/S, et al, U.S. District Court for the District of Columbia, No. 13-1529.

For the United States: William Olson of the U.S. Justice Department

For Kennedy: Joel Androphy and Sarah Frazier of Berg & Androphy

For Novo Nordisk: Paul Kalb of Sidley Austin

—- Index References —-

Company: NOVO HOLDINGS AS; NOVO NORDISK AS; SIDLEY AUSTIN LLP

News Subject: (Business Lawsuits & Settlements (1BU19); Business Litigation (1BU04); Business Management (1BU42); Corporate Events (1CR05); Government Litigation (1GO18); Judicial Cases & Rulings (1JU36); Legal (1LE33); Major Corporations (1MA93))

Industry: (Pharmaceuticals (1PH33); Pharmaceuticals & Biotechnology (1PH13))

Region: (Americas (1AM92); District of Columbia (1DI60); North America (1NO39); U.S. Mid-Atlantic Region (1MI18); USA (1US73))

Language: EN

Other Indexing: (Elizabeth Kennedy; Reggie Walton; Sarah Frazier; William Olson; Joel Androphy; Paul Kalb)