Ex-Gilead employees’ fraud claims move forward

A federal appeals court on Friday reinstated a lawsuit against Bay Area pharmaceutical giant Gilead Sciences by two former employees who accused the company of concealing flawed test results for anti-HIV drugs before gaining government approval and reaping billions of dollars.

One of the plaintiffs, Jeffrey Campie, Gilead’s former director of global quality assurance, said he was fired in 2009 for objecting to the company’s practices and threatening to inform the government. His wife and co-plaintiff, Sherilyn Campie, was a quality control manager for Gilead, which is based in Foster City.

The Ninth U.S. Circuit Court of Appeals in San Francisco ruled that the Campies’ allegations of fraud were specific enough to allow them to proceed with the suit and try to prove the company deceived the government into approving the active ingredient for three antiretroviral medications widely used to combat the AIDS virus.

The drugs are Atripla, Truvada and Emtiva. Federal agencies paid more than $5 billion for patients’ use of them in 2008-09 alone, the court said.

The court also allowed Jeffrey Campie to proceed with his claim of illegal retaliation. The federal government filed arguments in support of the Campies, who would be entitled to a portion of any damages paid to the government.

The suit did not allege that the drugs are currently unsafe — Gilead has changed its supply source for the contested ingredient, and the U.S. Food and Drug Administration has maintained its approval of each drug. But the Campies said the company had concealed the previous source of the ingredient in 2008, and gained FDA approval in 2010 by misrepresenting test results.

According to the lawsuit, Gilead told the FDA that it obtained the active ingredient, known as FTC, from governmentregistered facilities in the United States, Canada and other countries. In fact, the suit alleged, the company had contracted with a firm called Synthetics China as early as 2006 to manufacture FTC for lower prices at unregistered Chinese facilities.

After initially misrepresenting the source, the Campies said, Gilead sought FDA approval for FTC from Synthetics China in October 2008, and obtained it in 2010, while misrepresenting its test results. The suit said that the product had failed two of three quality tests, and that one test showed contamination from microbes, arsenic, chromium and nickel.

Gilead stopped using FTC from the Chinese firm in October 2011 because of recurring contamination, the suit said.

The company denied defrauding the government and noted that the FDA had continued to approve the drug after learning of contamination in some Synthetics China ingredients. A federal judge cited the FDA’s approval in dismissing the suit in 2015 and also said the Campies had not accused Gilead of misleading the federal agencies that paid for the drugs.

But the appeals court said those payments were based on FDA approval.

Although the Campies must prove that the approval was due to deception, dismissing their suit “would allow Gilead to use the allegedly fraudulently obtained FDA approval as a shield against liability for fraud,” Daniel Molloy, a federal judge from Montana temporarily assigned to the court, said in Friday’s 3-0 ruling. He said the allegations state a “plausible” claim of fraud.

Gilead indicated it would appeal.

“We are disappointed with today’s ruling and intend to challenge this outcome and vigorously defend against these allegations,” the company said in a statement.

The Campies “are very pleased by the ruling,” said their lawyer, Ingrid Evans.