Pfizer Inc. and Tris Pharma, Inc. v. the State of Texas and Tarik Ahmed

• Court: Court of Appeals of Texas
• Decided: February 28, 2025
• Docket: 15-25-00021-CV
• Status: Published

Opinion

15-25-00021-CV ACCEPTED 15-25-00021-CV FIFTEENTH COURT OF APPEALS AUSTIN, TEXAS 2/28/2025 8:28 PM No. _____________________ CHRISTOPHER A. PRINE __________________________________________________________________ CLERK FILED IN In the Fifteenth Court of Appeals 15th COURT OF APPEALS Austin, Texas AUSTIN, TEXAS

__________________________________________________________________ 2/28/2025 8:28:00 PM CHRISTOPHER A. PRINE Clerk PFIZER INC. and TRIS PHARMA, INC., Petitioners/Defendants, v. The STATE OF TEXAS and TARIK AHMED, Respondents/Plaintiffs. __________________________________________________________________

Permissive appeal from the 71st Judicial District Court, Harrison County, Texas

Petition for Permission to Appeal by Pfizer Inc. and Tris Pharma, Inc. ______________________________________________ Edward D. Burbach (No. 03355250) Harry “Gil” Gillam, Jr. (No. 07921800) Stacy R. Obenhaus (No. 15161570) Tom Gorham (No. 24012715) 600 Congress, Suite 2900 303 S. Washington Ave. Austin, Texas 78701 Marshall, Texas 75670 eburbach@foley.com gil@gillamsmithlaw.com sobenhaus@foley.com tom@gillamsmithlaw.com Tel: 512.542.7070 Tel: 903.934.8450 Samantha Barrett Badlam (Pro hac pending) William E. Lawler III (Pro hac pending) Stefan P. Schropp (Pro hac pending) 1825 Eye St. N.W. 2099 Pennsylvania Ave., N.W. Washington, D.C. 20006-5403 Washington, D.C. 20006-6807 william.lawler@blankrome.com samantha.badlam@ropesgray.com Tel: 215.569.5449 stefan.schropp@ropesgray.com Counsel for Tris Pharma Inc. Tel: 202.508.4734 George Valton (“Val”) Jones (No. 10888050) 109 West Austin St. Marshall, Texas 75670-3340 val@valjoneslaw.com Tel: 903.927.2220 Counsel for Pfizer Inc. Information Required by Tex. R. App. P. 28.3(e)(1) and 25.1(d)

As required by Tex. R. App. P. 28.3(e)(1), Petitioners provide the following

information in keeping with Tex. R. App. P. 25.1(d):

1. Trial court, style, and case number:

• 71st Judicial District Court, Harrison County

• State of Texas ex rel. Tarik Ahmed v. Pfizer Inc., Tris Pharma, Inc., and Ketan Mehta

• Cause No. 23-1031 2. Petitioners wish to appeal the orders signed on January 29, 2025.

They are attached as Appendix A. Petitioners include two of the parties:

• Joint Petitioner Pfizer Inc. (“Pfizer”), defendant below.

• Joint Petitioner Tris Pharma, Inc. (“Tris”), defendant below. 3. This appeal is to the Fifteenth Court of Appeals.

4. This petition is filed under Tex. Civ. Prac. & Rem. Code § 51.014(d).

The appeal will be accelerated and is not a parental termination or child protection

case.

2 TABLE OF CONTENTS

ISSUE PRESENTED .................................................................................................6 INTRODUCTION .....................................................................................................6 STATEMENT OF FACTS AND PROCEDURAL HISTORY ................................ 9 A. Pfizer and Tris Filed Rule 91a Motions to Dismiss the Petition...........9 B. After the Supreme Court of Texas Decided Malouf, Pfizer and Tris Sought Reconsideration ...............................................................12 C. Pfizer and Tris Sought Certification of an Immediate Appeal of the Ruling ............................................................................................13 ARGUMENT ...........................................................................................................14 I. WHETHER SECTION 36.002(7)(C) REQUIRES MATERIALITY IS A CONTROLLING QUESTION OF LAW FOR WHICH THERE EXISTS SUBSTANTIAL GROUND FOR DIFFERENCE OF OPINION. ................................................................................................15 A. This Appeal Presents a Controlling Question of Law.........................15 B. Substantial Ground for Difference of Opinion Exists on this Question...............................................................................................18 II. AN IMMEDIATE APPEAL WOULD MATERIALLY ADVANCE THE ULTIMATE TERMINATION OF THE LITIGATION. .....................22 III. RESOLUTION OF THIS CONTROLLING QUESTION OF LAW WILL SERVE THE PUBLIC INTEREST....................................................25 CONCLUSION ........................................................................................................26

3 INDEX OF AUTHORITIES

Cases Page(s)

A.S. Horner, Inc. v. Navarrette, 656 S.W.3d 717 (Tex. App.—El Paso 2022, no pet.) ........................................12 ADT Sec. Servs., Inc. v. Van Peterson Fine Jewelers, No. 05-15-00646-CV, 2015 WL 4554519 (Tex. App.—Dallas July 29, 2015, no pet.) ..........................................................................................10, 12 AmeriGas Propane LP v. Aboytes-Muñiz, No. 09-18-00122-CV, 2019 WL 2127750 (Tex. App.—Beaumont May 16, 2019, pet. denied) .................................................................................12 Gulf Coast Asphalt v. Lloyd, 457 S.W.3d 539 (Tex. App.—Houston [14th Dist.] 2015, no pet.) .........9, 11, 12 Malouf v. State ex rel. Ellis, 694 S.W.3d 712 (Tex. 2024) .......................................................................passim State ex rel. NPT Assocs. v. Lab’y Corp. of Am. Holdings, No. 01-23-00043-CV, 2024 WL 5249087 (Tex. App.—Houston [1st. Dist.] Dec. 31, 2024, no pet. h.)......................................................15, 16, 19 Oncor Elec. Delivery Co. v. Brockriede, No. 02-13 00071-CV, 2013 WL 6564276 (Tex. App.—Fort Worth Dec. 12, 2013, no pet.) ........................................................................................12 Sabre Travel Int’l, Ltd. v. Deutsche Lufthansa AG, 567 S.W.3d 732 (Tex. 2019) ........................................................................17, 18

United States ex rel. Yu v. Grifols USA, LLC, No. 1:17-cv-2226, 2021 WL 5827047 (S.D.N.Y. Dec. 8, 2021), aff’d, 2022 WL 7785044 (2d Cir. Oct. 14, 2022) ...............................................15 Statutes

21 U.S.C. § 371 ................................................................................................4, 8, 13 4 21 U.S.C. § 351 ..............................................................................................4, 13, 15

Tex. Civ. Prac. & Rem. Code § 51.014(d)................................................................. 9 Tex. Gov’t Code § 22.201(p) ...................................................................................16

Tex. Gov’t Code § 220(d) ........................................................................................16

Tex. Health & Safety Code §§ 431.001-.415 et seq. ........................................passim Tex. Health & Safety Code § 431.002(15) ..............................................................14

Tex. Health & Safety Code § 431.111(a)(B) ...........................................................13 Tex. Health & Safety Code § 431.245(a) ................................................................14 Tex. Health & Safety Code § 483.001 .....................................................................14

Tex. Hum. Res. Code § 36.001 ......................................................................5, 11, 14

Tex. Hum. Res. Code § 36.002 .........................................................................passim

Tex. Ins. Code § 1369.301 .......................................................................................14 Tex. Occ. Code § 551.003 .......................................................................................14 Tex. Transp. Code § 724.001(6) ..............................................................................14 Other Authorities

21 C.F.R. § 210 ..........................................................................................................4 21 C.F.R. § 211 ..........................................................................................................4

Senate Comm. on State Affairs, Engrossed Bill Analysis, Tex. H.B. 274, 82d Leg., R.S. (2011)..................................................................................18

Tex. R. Civ. P. 91a .........................................................................................4, 5, 6, 7 Tex. S.B. 1045, 88th Leg., R.S. (2023) ..................................................................... 9

5 ISSUE PRESENTED

In a recent landmark decision, the Supreme Court of Texas determined that

the Texas Medicaid Fraud Prevention Act (the “TMFPA,” presently the Texas

Health Care Program Fraud Prevention Act) is a “penal statute,” and so courts “must

strictly construe” ambiguities in the Act in favor of the defendant. Malouf v. State

ex rel. Ellis, 694 S.W.3d 712 (Tex. 2024). The question presented in this case is

whether Section 36.002(7)(C) of the TMFPA, which makes it unlawful to submit

payment claims to the State of Texas for products supplied through Medicaid that

are “adulterated” (an undefined term), requires that the defendant’s conduct be

material to the Texas Health and Human Services Commission’s decision to

reimburse claims.

INTRODUCTION

This litigation concerns Quillivant XR, a medication that since September 27,

2012, has been subject to uninterrupted approval by the U.S. Food and Drug

Administration (“FDA”) to treat attention deficit hyperactivity disorder (“ADHD”).

Quillivant has been subject to uninterrupted approval since June 2013 by the Texas

Health and Human Services Commission (“HHSC”) for reimbursement under the

Texas Medicaid program.

6 The plaintiffs in this lawsuit—the State of Texas and Relator Tarik Ahmed—

claim that all Quillivant distributed to Texas Medicaid participants between 2013

and 2018 was “adulterated” under the TMFPA due to alleged deficiencies in

compliance with FDA’s current Good Manufacturing Practice (“cGMP”)

regulations, promulgated to ensure quality control in drug manufacturing. Plaintiffs

now seek hundreds of millions of dollars in penalties based on the theory that

reimbursement claims submitted to HHSC were unlawful because of alleged cGMP-

related deficiencies.

For context, there are many different cGMP regulations that cover nearly all

aspects of drug manufacturing: some govern conduct that could fundamentally affect

the performance of a product, whereas others address processes and procedures

likely to have minimal impact on the safety or efficacy of a product (e.g., failure to

have the required number of signatures on forms per a company operating procedure

or to have adequate lighting in all areas). Plaintiffs’ position is that any violation of

a cGMP regulation—regardless of the regulation or the effect of the violation—

renders a product per se “adulterated” and ineligible for reimbursement by Texas

Medicaid. Plaintiffs further maintain that it does not matter whether HHSC knew

about these violations but nonetheless continued to reimburse claims for the product,

which is exactly what occurred with Quillivant. This interpretation allows the State 7 to exploit the TMFPA to recover enormous penalties—like the hundreds of millions

of dollars Plaintiffs are seeking in the instant case—even when a product performed

exactly as HHSC expected.

Petitioners, on the other hand, argue that fraud means fraud. In other words,

a TMFPA case premised on cGMP violations must involve conduct that is capable

of influencing HHSC’s decision to reimburse claims for the product⸺material

conduct. Petitioners’ position is consistent with the Texas legislature’s objective in

enacting the TMFPA: combatting fraud. It also avoids converting the TMFPA into

a strict liability statute, where technical (but de minimis) non-compliance with

federal regulations could trigger treble damages, civil penalties, injunctive relief,

and exclusion from the Medicaid program.

The correct interpretation of TMFPA section 36.002(7)(C) will fundamentally

alter the trajectory of this case. If Section 36.002(7)(C) requires materiality,

Plaintiffs’ claim will fail as currently pleaded ⸺Plaintiffs concede they did not plead

materiality for this cause of action. Either way though, answering the question will

materially advance the litigation—defining what Plaintiffs must prove, which will

shape the discovery, summary judgment, and trial stages of the litigation. Moreover,

this Court’s decision will profoundly impact future TMFPA cases and the Texas

Medicaid program. 8 STATEMENT OF FACTS AND PROCEDURAL HISTORY

Tris manufactured Quillivant, a unique liquid extended-released ADHD

medication, on behalf of Pfizer from May 2012 until September 2018. See Second

Am. Pet. (Jan. 17, 2025) (the “SAP”) ¶ 17. Since June 2013, Quillivant has been

accessible to millions of Texans through the Texas Medicaid program, a joint

federal-state program that HSSC administers and that covers the costs of medical

care for hundreds of thousands of Texas residents. Id. ¶¶ 30, 46.

A. Pfizer and Tris Filed Rule 91a Motions to Dismiss the Petition.

On November 8, 2023, Plaintiffs sued Pfizer and Tris alleging they violated

the TMFPA—Texas’s counterpart to the federal False Claims Act (“FCA”). The

petition alleged that Pfizer and Tris violated Section 36.002(7)(C) of the TMFPA,

which prohibits knowingly making a claim for “a product that has been adulterated,

debased, mislabeled, or that is otherwise inappropriate.” See SAP ¶ 127. The

petition asserts other claims against Pfizer (SAP ¶¶ 124-126), but the core allegation

is that between 2013 and 2018, purported violations of federal cGMP regulations

rendered Quillivant “adulterated” under the TMFPA. Id. ¶¶ 12, 127.

The TMFPA does not define the term “adulterated.” Plaintiffs instead import

the definition of “adulterated” set forth in the federal Food Drug and Cosmetic Act

(“FDCA”) and its counterpart, the Texas Food, Drug, and Cosmetic Act (“TFDCA”). 9 Under those statutes, a product is considered “adulterated” if it is manufactured in a

manner that does not comport with FDA’s cGMP regulations. See 21 U.S.C. § 371;

21 C.F.R. §§ 210, 211; Tex. Health & Safety Code §§ 431.001-.415. Plaintiffs allege

that Petitioners violated these cGMP regulations due to alleged deficiencies related

to investigations into dissolution testing results. SAP ¶¶ 53-57, 72, 79-81, 83.

Dissolution testing is a quality control test that measures how quickly a drug’s active

ingredient dissolves to help predict whether the active ingredient will release as

expected after administering the medication. Id. ¶¶ 50-51. The petition does not

allege how the purported investigational deficiencies undermined Quillivant’s safety

or efficacy or could influence HHSC’s decision-making.

On February 5, 2024, Petitioners moved to dismiss the petition pursuant to

Texas Rule of Civil Procedure 91a. Petitioners argued that Plaintiffs failed to—and

cannot—allege that any purported cGMP violations that allegedly “adulterated”

Quillivant influenced or were capable of influencing HHSC’s decision-making

regarding coverage of the drug. See Pfizer’s Mem. of Law in Support of Mot. to

Dismiss Plfs’ First Am. Pet. 32-37 (Feb. 5, 2024). In other words, to state a claim

under Section 36.002(7)(C), Plaintiffs must allege that the purported violations were

“material” to HHSC—i.e., having “a natural tendency to influence or to be capable

of influence.” Tex. Hum. Res. Code § 36.001(5-a). More specifically, Petitioners 10 maintained that the TMFPA term “adulterated” was ambiguous and must be read in

conjunction with the rest of Section 36.002(7)(C), which describes conduct that is

undoubtedly material to HHSC’s decision-making—conduct rendering a product

“debased, mislabeled, or . . . otherwise inappropriate”—because it alters a product’s

safety or efficacy. See id. § 36.002(7)(C). It follows, then, that relying on cGMP

violations to establish “adulteration” requires that those violations be capable of

influencing HHSC’s decision-making. Otherwise, every run-of-the-mill cGMP

violation, such as failing to replace a facility’s light bulbs in a timely fashion, could

render a product “adulterated” and enable the State to weaponize the TMFPA to

recover windfall penalties even when a product performed consistently with HHSC’s

expectations.

This issue was so central to Petitioners’ Rule 91a briefs that the very first

question the court asked the State during oral argument was “why the State continued

to pay if they believed fraud was committed and [why] it remained on the [Texas’s

Preferred Drug List].” See (Tr. 40:8-12, June 10, 2024). The State has repeatedly

avoided answering this question. Nevertheless, in orders signed June 12 and 13,

2024, the trial court summarily denied Petitioners’ motions to dismiss.

11 B. After the Supreme Court of Texas Decided Malouf, Pfizer and Tris Sought Reconsideration.

Just two weeks later, the Supreme Court of Texas decided Malouf v. State ex

rel. Ellis, 694 S.W.3d 712 (Tex. 2024), tipping the balance in favor of defendants

when interpreting ambiguities in the TMFPA—such as Section 36.002(7)(C)’s use

of the term “adulterated.” Much like this case, Malouf involved an attempt to score

a windfall recovery based on a purported technical violation of a seemingly

ambiguous TMFPA provision. In Malouf, the State, advocating for an unnatural

reading of the word “and,” argued that the defendant violated a TMFPA provision

making it unlawful to submit a claim “that fails to indicate the type of license,” which

the defendant accurately provided, “and the identification number” of the individual

performing the service, which he did not. Tex. Hum. Res. Code § 36.002(8)

(emphasis added). The trial court ultimately credited the State’s “and-means-or”

interpretation and awarded $16.5 million, despite the State conceding that it had

received exactly what it paid for: services from a licensed provider. Id. at 717, 721.

The Supreme Court of Texas reversed the ruling and rendered judgment in the

defendant’s favor, reasoning that because the TMFPA is a penal statute, any

ambiguities in the statute’s text must be “strictly construed” in favor of the defendant.

Id. at 721. The Court emphasized that the TMFPA targets fraud, not technical errors,

12 and that the State’s interpretation—failing to include certain information in claims—

did not match the seriousness of potential harm to the Texas Medicaid Program. Id.

Given Malouf’s similarities to the instant case, the decision spurred Petitioners

to seek reconsideration of the Rule 91a motions to dismiss. See Defs’ Joint Mot. for

Reconsideration or Clarification and Request for Hearing (July 2, 2024). In this

motion, Petitioners emphasized Malouf’s directives that: (i) ambiguities in the

TMFPA should be “strictly construe[d]” in favor of defendants (here, Petitioners),

and (ii) the statute should be construed in accordance with its objective of combatting

fraud or leads to absurd results. In an order signed August 12, 2024, the trial court

denied the motion.

C. Pfizer and Tris Sought Certification of an Immediate Appeal of the Ruling. In response, Petitioners moved to certify for interlocutory appeal the question

of whether Section 36.002(7)(C) requires that any claim based on cGMP violations

that render a product “adulterated” must allege that the underlying conduct was

material to the HHSC’s coverage decision. Key to this question is the TMFPA’s

definition of “adulterated” and whether it encompasses every cGMP violation that

can technically adulterate a drug under the FDCA or TFDCA, or whether the term

13 “adulterated” requires that the cGMP violation be material to HHSC’s decision-

making.

After initially denying the motion, the trial court reconsidered the issue and

amended its orders denying Pfizer’s and Tris’ motions to dismiss, certifying those

orders for interlocutory appeal. App. [A], Amend. Order Denying Pfizer’s Mot. to

Dismiss at 1; Amend. Order Denying Tris’s Mot. to Dismiss at 1 (together, the

“Amended Orders”). Shortly before the trial court certified the Amended Orders,

Plaintiffs filed a Second Amended Petition that is identical to the First Amended

Petition, except for clarifying that Plaintiffs do not seek injunctive relief against

Pfizer. Therefore, the controlling question of law before this Court remains

unaffected by Plaintiffs’ recent filing.

ARGUMENT

This Court should hear an immediate appeal of the trial court’s ruling because

(1) “the order to be appealed involves a controlling question of law as to which there

is a substantial ground for difference of opinion” and (2) “an immediate appeal from

the order may materially advance the ultimate termination of the litigation.” Tex.

Civ. Prac. & Rem. Code § 51.014(d). “Civil cases of statewide significance” are the

core of this Court’s jurisdiction, and resolving this controlling question of law will

14 serve the public interest given the impact on the Medicaid program. See Tex. S.B.

1045, 88th Leg., R.S. (2023).

I. WHETHER SECTION 36.002(7)(C) REQUIRES MATERIALITY IS A CONTROLLING QUESTION OF LAW FOR WHICH THERE EXISTS SUBSTANTIAL GROUND FOR DIFFERENCE OF OPINION.

A. This Appeal Presents a Controlling Question of Law.

This appeal raises a controlling question of law, the resolution of which could

terminate Plaintiffs’ principal claim or, at the very least, determine whether at trial

Plaintiffs must prove actual fraud or whether the TMFPA is a strict liability statute.

Texas courts will find an issue “controlling” so long as it “deeply affects the ongoing

process of litigation” and its resolution “will considerably shorten the time, effort,

and expense of fully litigating the case.” See Gulf Coast Asphalt v. Lloyd, 457

S.W.3d 539, 544-45 (Tex. App.—Houston [14th Dist.] 2015, no pet.). And where

“the viability of a claim rests upon the court’s determination of a question of law,

the question is controlling.” ADT Sec. Servs., Inc. v. Van Peterson Fine Jewelers,

No. 05-15-00646-CV, 2015 WL 4554519, at *2 (Tex. App.—Dallas July 29, 2015,

no pet.). Whether Section 36.002(7)(C) requires materiality to prevent “gotcha”

cases like the present one is an issue of statutory interpretation, the answer to which

would lead this litigation on two profoundly different paths.

15 Plaintiffs’ assert that any alleged technical cGMP violation renders a product

“adulterated” under the TMFPA and can lead to liability under the statute. See SAP

¶ 20. Plaintiffs contend that it is irrelevant whether those violations affected the

product or were capable of influencing HHSC’s decision-making. (Tr. 71:17-71:24

June 10, 2024). According to Plaintiffs, if a company suspects it has violated a

cGMP regulation related to a product and then makes a claim for payment for that

product, it has violated the TMPA, even if HHSC knows about the violation and

pays for the product anyway.

The practical impact of this strict liability position is that the State could

impose exorbitant penalties for mere foot-faults or technical violations of complex

federal regulations—violations that occur daily across the country— even if HHSC

knows about the cGMP violations but is still satisfied with the product and continues

to pay for it. See U.S. Food & Drug Admin, Inspection Observations (Jan. 13, 2025)

(noting that, in 2024 alone, FDA inspectors issued 561 drug-related Form 483

reports, which identify observed conditions that may violate cGMP regulations).

That interpretation contradicts Malouf, which emphasized that the TMFPA is not

intended to punish technical violations but is instead a “powerful tool for targeting

fraud against the Texas Medicaid program.” 694 S.W.3d at 721 (emphasis added).

16 Petitioners, on the other hand, contend that an adulteration case based on

cGMP violations requires that the alleged violation be material to HHSC’s decision-

making. Put differently, for a Section 36.002(7)(C) adulteration claim to be viable,

the underlying cGMP violation cannot be an immaterial technical violation; it must

have “a natural tendency to influence or be capable of influencing” HHSC’s

decision-making. See Tex. Hum. Res. Code § 36.001(5-a) (defining materiality

under the TMFPA). This reading is consistent with the TMFPA’s purpose—fraud

prevention—and the surrounding language of Section 36.002(7)(C) (“debased,”

“mislabeled,” or “inappropriate”), which seeks to address conduct that

fundamentally affects a product’s safety and efficacy and is presumptively material

to HHSC’s reimbursement decisions. See Tex. Hum. Res. Code § 36.002(7)(C).

The answer to the question of whether Plaintiffs must plead materiality under

Section 36.002(7)(C)—that the alleged cGMP violation that renders the product

“adulterated” must be capable of influencing HHSC’s reimbursement decision—

“deeply affects the ongoing process of litigation.” Gulf Coast Asphalt, 457 S.W.3d

at 544-45. Plaintiffs conceded that they had not pleaded materiality under this

provision, meaning that their central cause of action would no longer be viable as

pleaded. (Tr. 19:5-9 Jan. 29, 2025). And even if a successful appeal does not result

in the dismissal of Plaintiffs’ Section 36.002(7)(C) claim, a ruling by this Court will 17 determine whether the TMFPA is a strict liability statute or a fraud prevention tool

(as the Texas legislature intended), which impacts every aspect of this litigation. See

Van Peterson Fine Jewelers, 2015 WL 4554519, at *2; App. A at 2.

B. Substantial Ground for Difference of Opinion Exists on this Question.

Substantial ground for difference of opinion exists on the interpretation of

Section 36.002(7)(C), which impacts the scope of the TMFPA. This appeal raises a

novel question of statutory interpretation concerning an ambiguous term, for which

there is no controlling precedent. Gulf Coast Asphalt., 457 S.W.3d at 545. Texas

appellate courts regularly conclude that substantial ground for disagreement exists

in cases involving unresolved questions of statutory interpretation. See Oncor Elec.

Delivery Co. v. Brockriede, No. 02-13 00071-CV, 2013 WL 6564276, at *1 (Tex.

App.—Fort Worth Dec. 12, 2013, no pet.) (granting appeal to determine meaning of

ambiguous term in statute); AmeriGas Propane LP v. Aboytes-Muñiz, No. 09-18-

00122-CV, 2019 WL 2127750, at *4-5 (Tex. App.—Beaumont May 16, 2019, pet.

denied) (same); A.S. Horner, Inc. v. Navarrette, 656 S.W.3d 717, 720 (Tex. App.—

El Paso 2022, no pet.).

One interpretation of Section 36.002(7)(C)—which Plaintiffs advocated and

the trial court adopted—is that, because this section does not use the word “material,”

materiality is not required. See App. A at 2. This oversimplistic interpretation 18 ignores the ordinary meaning of the word “adulterated” and its statutory context. It

also ignores Malouf, which instructs that ambiguities in the TMFPA must be “strictly

construed” in favor of a defendant because the TMFPA is a “penal statute” designed

as a “tool for targeting fraud against the Texas Medicaid program.” 694 S.W.3d at

721.

Malouf is critical not only because it exemplifies a similar “gotcha” attempt

by the State to misuse the TMFPA, but also because the term “adulterated” under

Section 36.002(7)(C) is ambiguous, thus triggering Malouf’s interpretative guidance.

Likely recognizing this, Plaintiffs have argued that Section 36.0027(C) is

unambiguous and assumed that the FDCA’s and TFCDA’s definitions of

“adulterated” necessarily apply in the TMFPA context. See Pls.’ Resp. to Defs.

Pfizer Inc. and Tris Pharma Inc.’s Joint Mot. to Amend Previous Orders and Certify

for Interlocutory Appeal at 4 (Sept. 19, 2024). Those statutes provide that a product

is considered adulterated when it is manufactured in a manner that “do[es] not

conform” with cGMP regulations, which Plaintiffs in turn use to argue that any

cGMP violation can serve as the basis of a TMFPA claim. 21 U.S.C. § 351; Tex.

Health & Safety Code § 431.111(a)(B). But there is no language in the TMFPA

indicating that the Texas legislature intended to import the definitions of

“adulterated” from the FDCA or TFDCA. Had the legislature intended for those 19 statutes’ definitions to apply, it could have explicitly incorporated them as it has

done with other statutes. See, e.g., Tex. Transp. Code § 724.001(6) (“‘Dangerous

drug’ has the meaning assigned by Section 483.001, Health and Safety Code.”); Tex.

Ins. Code § 1369.301 (“In this subchapter, ‘prescription drug’ has the meaning

assigned by Section 551.003, Occupations Code.”). Indeed, the legislature took this

exact approach with the TFDCA, which incorporates the FDCA’s definitions. See

Tex. Health & Safety Code §§ 431.245(a), 431.002(15). In fact, the TMFPA’s

definitions incorporate by reference another section of the Texas Health and Safety

Code, confirming by omission that the legislature did not intend to adopt those

statutes’ definitions of “adulterated” for the TMFPA. See Tex. Hum. Res. Code

§ 36.001(1).

Petitioners agree that courts need to look elsewhere for guidance but contend

that the legislature intended to adopt the common usage of “adulterated,” meaning

that the product has “been made weaker or worse in quality” by the defendant’s

conduct. Adulterated, Cambridge English Dictionary (Feb. 22, 2025),

https://bit.ly/4gjxy6l. Materiality is inherent in this definition, as conduct that

renders a product “weaker or worse in quality” necessarily has “a natural tendency

to influence or to be capable of influencing.” See Tex. Hum. Res. Code § 36.001(5-

a) (defining materiality). Therefore, not every cGMP violation can form the basis 20 of an adulteration claim under Section 36.002(7)(C)—rather, only those that are

capable of influencing HHSC’s decisions, such as those related to altering a

product’s safety or efficacy. Petitioners’ construction thus closely tracks the rest of

Section 36.002(7)(C), which covers products that are “debased,” “mislabeled,” or

rendered “otherwise inappropriate” by the defendant’s conduct. Id. § 36.002(7)(C).

In such cases, the defendant has fundamentally altered the product HHSC chose to

reimburse, making the conduct decidedly “material.”

Petitioners’ interpretation is particularly compelling in light of Malouf’s

instructions that courts should not construe ambiguities in the statute in a manner

that would lead to “absurd results,” such as penalizing every reimbursement claim

if there has been a cGMP violation, irrespective of its materiality to HHSC. 694

S.W.3d at 718, 721. Indeed, federal courts regularly dismiss claims brought under

the TMFPA’s federal analogue, the FCA, where a “[r]elator does not sufficiently

allege th[at] concealed [c]GMP violations were material.” See United States ex rel.

Yu v. Grifols USA, LLC, No. 1:17-cv-2226, 2021 WL 5827047, at *11 (S.D.N.Y.

Dec. 8, 2021), aff’d, 2022 WL 7785044 (2d Cir. Oct. 14, 2022).

Finally, recent conflicting decisions by the First Court of Appeals and a Texas

district court—regarding whether a different TMFPA provision, which also does not

reference the word “material,” nevertheless has a materiality component—reinforce 21 that there is substantial ground for disagreement over whether section 36.002(7)(C)

requires materiality. That court of appeals decision— State ex rel. NPT Assocs. v.

Lab’y Corp. of Am. Holdings, No. 01-23-00043-CV, 2024 WL 5249087 (Tex.

App.—Houston [1st. Dist.] Dec. 31, 2024, no pet. h.) (“Labcorp”)—is another

quintessential “gotcha” case: the defendant disclosed its allegedly fraudulent billing

practices to the State of Texas seven years before the State brought its TMFPA suit.

Despite this disclosure, the State continued to reimburse claims without complaint

and then intervened to seek seeking millions of dollars in penalties for those billing

practices. Id. at *21-22. The trial court implied a requirement of materiality as to a

different TMFPA section prohibiting “knowingly concealing or failing to disclose

information” that “permits” the defendant to receive an unauthorized benefit. While

the First Court of Appeals reversed the trial court, this Court, is now the proper venue

for resolving the issue on a statewide basis. See Tex. Gov’t Code §§ 22.201(p),

220(d).

II. AN IMMEDIATE APPEAL WOULD MATERIALLY ADVANCE THE ULTIMATE TERMINATION OF THE LITIGATION.

An immediate appeal on the scope of Section 36.002(7)(C) will materially

advance the ultimate termination of this litigation by either: (i) resulting in the

dismissal of Plaintiffs’ Section 36.002(7)(C) claim or (ii) at minimum, substantially

22 altering the issues in this litigation. To start, the only claim asserted against Tris is

a violation of Section 36.0002(7)(C), and thus, an immediate appeal may result in

the termination of this case against Tris. But even if it does not, Texas law is clear:

to materially advance the ultimate termination of the litigation, an appeal need not

be capable of resolving the entire case. Sabre Travel Int’l, Ltd. v. Deutsche

Lufthansa AG, 567 S.W.3d 732, 736 (Tex. 2019). Rather, the standard is met when

the appeal would resolve “controlling, uncertain issues of law that are important to

the outcome of the litigation,” including by narrowing the issues or causes of action

in dispute at trial. Id.

As the trial court emphasized in certifying Petitioners’ interlocutory appeal,

“Plaintiffs’ Section 36.002(7)(C) adulteration claim is the threshold allegation of

wrongdoing in this action.” See App. A at 2. Therefore, if materiality is required

under Section 36.002(7)(C), Plaintiffs must plead it, which they have acknowledged

that they failed to do. See Mot. to Certify Hr’g Tr. 19:5-9. And without a viable

adulteration claim, Plaintiffs’ claims against Pfizer for purportedly making false

statements and failing to disclose information about Quillivant’s “adulterated” status

will fail, as there is no basis for holding that Pfizer needed to update HHSC about

conduct that was incapable of influencing HHSC’s decision-making. In other words,

23 Plaintiffs’ Section 36.002(7)(C) claim is the bedrock of their suit—if it crumbles, all

other causes of action collapse with it.

But regardless of whether any of the causes of action are terminated by this

appeal, the resolution of this critical question will fundamentally impact the issues

or causes of action in dispute at trial. Travel, 567 S.W.3d at 736. Its resolution will

determine the scope of discovery, the applicable standard on summary judgment, the

operative jury instructions, the possibility (or likelihood) of a pretrial resolution of

this matter or post-judgment appeal. See App. A at 2 (emphasis added) (stating that

an “an immediate appeal . . . at the very least, is substantially likely to narrow the

issues, claims, and causes of action in dispute and subject to trial”).

The Court need only look to Malouf to see what happens when the State is

allowed to advance an untenable reading of the TMFPA. There, the case took eight

years to reach the Supreme Court, which then agreed with what the defendant had

argued all along. See 694 S.W.3d at 721. Immediate appellate resolution of the

materiality question—however this Court answers it—will therefore promote

judicial economy and expedite the resolution of the case, the very reason the Texas

legislature enacted the permissive interlocutory appeals statute. See Senate Comm.

on State Affairs, Engrossed Bill Analysis, Tex. H.B. 274, 82d Leg., R.S. (2011).

24 III. RESOLUTION OF THIS CONTROLLING QUESTION OF LAW WILL SERVE THE PUBLIC INTEREST.

The Supreme Court of Texas urges the appellate courts to “accept permissive

interlocutory appeals and address the merits of the legal issues certified” when, as

here, doing so would promote efficiency and serve the public interest. Travel, 567

S.W.3d at 733.

In this case, this Court’s ruling on the materiality question under Section

36.002(7)(C) will serve the public interest. The ruling would provide critical

guidance to pharmaceutical manufacturers about: (i) what reporting requirements

apply in the context of an alleged or suspected cGMP violation (i.e., whether

companies must notify HHSC of every suspected cGMP violation), (ii) whether

claims for reimbursement can be made following issuance of an FDA Form 483, and

(iii) whether companies should exit the Texas Medicaid program because they risk

that the State will weaponize suspected cGMP violations to recover millions of

dollars. If businesses remove much-needed products from the Texas Medicaid

program due to liability risks, Texas’s most vulnerable segment would bear the brunt

of the impact: the hundreds of thousands of citizens who depend on Texas Medicaid

for affordable medications.

25 Additionally, the appeal will permit this Court to weigh in on the State’s

continued use of the TMFPA to bring “gotcha cases,” an increasingly common

practice as demonstrated by Malouf and Labcorp and one that the Supreme Court of

Texas has condemned.

CONCLUSION

This Court should grant leave to appeal the trial court’s ruling and address the

merits of the TMFPA issue presented herein.

Date: February 28, 2025 Respectfully submitted, FOLEY & LARDNER LLP GILLAM & SMITH LLP By:/s/ Edward D. Burbach By:/s/ Harry L. Gillam, Jr. Edward D. (“Ed”) Burbach Harry “Gil” Gillam, Jr. Texas State Bar No. 03355250 Texas State Bar. No. 07921800 Stacy R. Obenhaus Tom Gorham Texas State Bar No. 15161570 Texas State Bar. No. 24012715 600 Congress Avenue, Suite 2900 303 S. Washington Ave. Austin, Texas 78701 Marshall, Texas 75670 eburbach@foley.com sobenhaus@foley.com gil@gillamsmithlaw.com (512) 542-7070 tom@gillamsmithlaw.com (903) 934-8450 ROPES & GRAY LLP Samantha Barrett Badlam BLANK ROME LLP (application for pro hoc admission pending) William E. Lawler III Stefan P. Schropp (application for pro hoc admission (application for pro hoc admission pending) pending) 2099 Pennsylvania Ave., N.W. 1825 Eye Street NW Washington, DC 20006-6807 Washington, D.C. 20006 samantha.badlam@ropesgray.com william.lawler@blankrome.com 26 stefan.schropp@ropesgray.com (202) 420-2249 (202) 508-4734 Counsel for Tris Pharma, Inc. THE VAL JONES LAW FIRM George Valton (“Val”) Jones Texas State Bar No. 10888050 109 West Austin St. Marshall, TX 75670-3340 val@valjoneslaw.com (903) 927-2220 Counsel for Pfizer Inc.

27 CERTIFICATE OF COMPLIANCE

I certify that according to the word count of the computer program used to

prepare this document, this document contains 4,233 words, not counting the parts

of the document excluded under TRAP 9.4(i).

/s/ Edward D. Burbach Edward D. Burbach

28 CERTIFICATE OF SERVICE

I certify that a copy of this document was served by delivery to counsel below

by email and through the electronic case manager on February 28, 2025:

COUNSEL FOR THE STATE OF BROWN, LLC TEXAS Jason T. Brown Jonathan Bonilla jtb@jtblawgroup.com Jordan Underhill Patrick S. Almonrode Vivian Egbu patalmonrode@jtblawgroup.com Brittany Peters 111 Town Square Place, Suite 400 Office of the Attorney General, Civil Jersey City, NJ 07310 Medicaid Fraud Division (877) 561-0000 P.O. Box 12548, Capitol Station Austin, TX 78711-2548 POTTER MINTON, P.C. jonathan.bonilla@oag.texas.gov Michael E. Jones jordan.underhill@oag.texas.gov mikejhones@potterminton.com vivian.egbu@oag.texas.gov E. Glenn Thames, Jr. brittany.Peters@oag.texas.gov glennthames@potterminton.com (512) 475-4169 102 North College, Suite 900 Tyler, TX 75702 (903) 597-8311

29 APPENDIX A

Amended Orders

TRAP 28.3(e)(2)(A) 23-1031 Filed 1/29/2025 10:48 PM Sherry Griffis District Clerk Harrison County, Texas

Marcia Bayer CAUSE NO. 23-1031 Deputy

THE STATE OF TEXAS, § IN THE DISTRICT COURT ex rel. TARIK AHMED § § Plaintiffs, § § v. § 71st JUDICIAL DISTRICT § PFIZER INC., TRIS PHARMA, INC., § and KETAN MEHTA, § § Defendants. § HARRISON COUNTY, TEXAS

AMENDED ORDER DENYING DEFENDANT PFIZER INC.’S MOTION TO DISMISS AND CERTIFYING FOR INTERLOCUTORY APPEAL

On this date came to be reconsidered Defendant Pfizer Inc.’s Motion to Dismiss Plaintiffs’

First Amended Petition, which was initially denied on June 13, 2024. After having reconsidered

the Motion, as well as all papers, pleadings, arguments of counsel, and other materials presented,

this Court orders that Pfizer’s Motion to Dismiss is DENIED in its entirety. The Court further

finds as follows:

i. Plaintiffs assert four causes of action against Defendant Pfizer Inc. (“Pfizer”), including

a claim under Section 36.002(7)(C) of the Texas Human Resources Code.

ii. Pfizer moved to dismiss Plaintiffs’ First Amended Petition based on, among other

things, Plaintiffs’ failure to plead materiality under Section 36.002(7)(C).

iii. Because Section 36.002(7)(C) does not contain the word “material,” an alleged

violation thereunder does not require a showing of materiality.

iv. Whether Section 36.002(7)(C) of the Texas Human Resource Code requires a showing

of materiality presents a controlling question of law as to which there is a substantial

ground for difference of opinion. v. An immediate appeal of this question may materially advance the ultimate termination

of this litigation. Plaintiffs’ Section 36.002(7)(C) adulteration claim is the threshold

allegation of wrongdoing in this action and, therefore, an immediate appeal to

determine whether that adulteration requires materiality is critical to the case and

Pfizer’s liability for all causes of action and, at the very least, is substantially likely to

narrow the issues, claims, and causes of action in dispute and subject to trial.

IT IS THEREFORE ORDERED that, pursuant to Texas Civil Practice and Remedies Code

Section 51.014(d) and Texas Rule of Civil Procedure 168, the Court PERMITS immediate appeal

to the Fifteenth Court of Appeals the question of whether a cause of action arising under Texas

Human Resources Code Section 36.002(7)(C) requires a showing of materiality.

IT IS SO ORDERED. 29 day of _____, SIGNED this _____ Jan 2025 _________________________________

Hon. Brad Morin Judge Presiding

-2- Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Paul Lang on behalf of George Jones Bar No. 10888050 paul.lang@ropesgray.com Envelope ID: 96653679 Filing Code Description: ORDER Filing Description: Amended Order Denying Defendant Pfizer Inc.'s Motion to Dismiss and Certifying Interlocutory Appeal Status as of 1/29/2025 10:51 AM CST

Associated Case Party: THE STATE OF TEXAS

Name BarNumber Email TimestampSubmitted Status

Rhonda Rodriguez rhonda.rodriguez@oag.texas.gov 1/27/2025 4:35:31 PM SENT

Jonathan D.Bonilla Jonathan.Bonilla@oag.texas.gov 1/27/2025 4:35:31 PM SENT

Jordan Underhill Jordan.Underhill@oag.texas.gov 1/27/2025 4:35:31 PM SENT

Brittany Peters Brittany.Peters@oag.texas.gov 1/27/2025 4:35:31 PM SENT

Vivian Egbu vivian.egbu@oag.texas.gov 1/27/2025 4:35:31 PM SENT

Associated Case Party: TARIK AHMED

Jason T.Brown jtb@jtblawgroup.com 1/27/2025 4:35:31 PM SENT

Patrick S.Almonrode patalmonrode@jtblawgroup.com 1/27/2025 4:35:31 PM SENT

Michael E.Jones mikejones@potterminton.com 1/27/2025 4:35:31 PM SENT

E. GlennThames glennthames@potterminton.com 1/27/2025 4:35:31 PM SENT

Case Contacts

Jessica Weltge jessica.weltge@oag.tx.gov 1/27/2025 4:35:31 PM SENT

Diana Arias diana@gillamsmithlaw.com 1/27/2025 4:35:31 PM SENT

Olivia Arias olivia@gillamsmithlaw.com 1/27/2025 4:35:31 PM SENT

Rosa Ferguson rosa@gillamsmithlaw.com 1/27/2025 4:35:31 PM SENT

Stefan Schropp Stefan.Schropp@ropesgray.com 1/27/2025 4:35:31 PM SENT

Deanna Foster Deanna.Foster@ropesgray.com 1/27/2025 4:35:31 PM SENT

Samantha Barrett Samantha.Badlam@ropesgray.com 1/27/2025 4:35:31 PM SENT Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Paul Lang on behalf of George Jones Bar No. 10888050 paul.lang@ropesgray.com Envelope ID: 96653679 Filing Code Description: ORDER Filing Description: Amended Order Denying Defendant Pfizer Inc.'s Motion to Dismiss and Certifying Interlocutory Appeal Status as of 1/29/2025 10:51 AM CST

Samantha Barrett Samantha.Badlam@ropesgray.com 1/27/2025 4:35:31 PM SENT

Ed Burbach eburbach@foley.com 1/27/2025 4:35:31 PM SENT

Val Jones val@valjoneslaw.com 1/27/2025 4:35:31 PM SENT

McKellar Karr mckellar@gillamsmithlaw.com 1/27/2025 4:35:31 PM SENT

Docket Clerk DocketClerk_DC@ballardspahr.com 1/27/2025 4:35:31 PM ERROR

Litigation Administrative LitigationLegalAdministrativeAssistantsDC@ballardspahr.com 1/27/2025 4:35:31 PM SENT

Lit Docket MCO LitDocketInformationGovernance@ropesgray.com 1/27/2025 4:35:31 PM SENT

Associated Case Party: PFIZER INC.

Edward Burbach 3355250 eburbach@foley.com 1/27/2025 4:35:31 PM SENT

Veronica Salinas vsalinas@foley.com 1/27/2025 4:35:31 PM SENT

Pfizer Case Team QXRTXQuiTamAssociates&Paralegals@ropesgray.com 1/27/2025 4:35:31 PM ERROR

Pfizer Team QXRTXQuiTamAssociates&Paralegals@ropesgray.com 1/27/2025 4:35:31 PM ERROR

Associated Case Party: TRIS PHARMA, INC.

Harry L.Gillam gil@gillamsmithlaw.com 1/27/2025 4:35:31 PM SENT

Tom Gorham tom@gillamsmithlaw.com 1/27/2025 4:35:31 PM SENT

Barrett ReidHowell barrett.howell@blankrome.com 1/27/2025 4:35:31 PM SENT

John F.Hundley hundleyj@ballardspahr.com 1/27/2025 4:35:31 PM SENT

Christopher Hatfield hatfieldc@ballardspahr.com 1/27/2025 4:35:31 PM SENT

William E.Lawler, III william.lawler@blankrome.com 1/27/2025 4:35:31 PM SENT Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Paul Lang on behalf of George Jones Bar No. 10888050 paul.lang@ropesgray.com Envelope ID: 96653679 Filing Code Description: ORDER Filing Description: Amended Order Denying Defendant Pfizer Inc.'s Motion to Dismiss and Certifying Interlocutory Appeal Status as of 1/29/2025 10:51 AM CST

Associated Case Party: KETAN MEHTA

Harry L.Gillam gil@gillamsmithlaw.com 1/27/2025 4:35:31 PM SENT

Barrett ReidHowell barrett.howell@blankrome.com 1/27/2025 4:35:31 PM SENT

John F.Hundley hundleyj@ballardspahr.com 1/27/2025 4:35:31 PM SENT

Christopher Hatfield hatfieldc@ballardspahr.com 1/27/2025 4:35:31 PM SENT 23-1031 Filed 1/29/2025 10:48 AM Sherry Griffis District Clerk Harrison County, Texas

Marcia Bayer Deputy Jan 29 Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Harry Gillam, Jr. Bar No. 7921800 gil@gillamsmithlaw.com Envelope ID: 96623776 Filing Code Description: ORDER Filing Description: AMENDED ORDER DENYING TRIS PHARMA, INC.S MOTION TO DISMISS AND CERTIFYING FOR INTERLOCUTORY APPEAL Status as of 1/29/2025 10:49 AM CST

Rhonda Rodriguez rhonda.rodriguez@oag.texas.gov 1/27/2025 11:26:32 AM SENT

Jonathan D.Bonilla Jonathan.Bonilla@oag.texas.gov 1/27/2025 11:26:32 AM SENT

Jordan Underhill Jordan.Underhill@oag.texas.gov 1/27/2025 11:26:32 AM SENT

Brittany Peters Brittany.Peters@oag.texas.gov 1/27/2025 11:26:32 AM SENT

Vivian Egbu vivian.egbu@oag.texas.gov 1/27/2025 11:26:32 AM SENT

Jason T.Brown jtb@jtblawgroup.com 1/27/2025 11:26:32 AM SENT

Patrick S.Almonrode patalmonrode@jtblawgroup.com 1/27/2025 11:26:32 AM SENT

Michael E.Jones mikejones@potterminton.com 1/27/2025 11:26:32 AM SENT

E. GlennThames glennthames@potterminton.com 1/27/2025 11:26:32 AM SENT

Jessica Weltge jessica.weltge@oag.tx.gov 1/27/2025 11:26:32 AM SENT

Diana Arias diana@gillamsmithlaw.com 1/27/2025 11:26:32 AM SENT

Olivia Arias olivia@gillamsmithlaw.com 1/27/2025 11:26:32 AM SENT

Rosa Ferguson rosa@gillamsmithlaw.com 1/27/2025 11:26:32 AM SENT

Stefan Schropp Stefan.Schropp@ropesgray.com 1/27/2025 11:26:32 AM SENT

Deanna Foster Deanna.Foster@ropesgray.com 1/27/2025 11:26:32 AM SENT Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Harry Gillam, Jr. Bar No. 7921800 gil@gillamsmithlaw.com Envelope ID: 96623776 Filing Code Description: ORDER Filing Description: AMENDED ORDER DENYING TRIS PHARMA, INC.S MOTION TO DISMISS AND CERTIFYING FOR INTERLOCUTORY APPEAL Status as of 1/29/2025 10:49 AM CST

Deanna Foster Deanna.Foster@ropesgray.com 1/27/2025 11:26:32 AM SENT

Samantha Barrett Samantha.Badlam@ropesgray.com 1/27/2025 11:26:32 AM SENT

Ed Burbach eburbach@foley.com 1/27/2025 11:26:32 AM SENT

Val Jones val@valjoneslaw.com 1/27/2025 11:26:32 AM SENT

McKellar Karr mckellar@gillamsmithlaw.com 1/27/2025 11:26:32 AM SENT

Docket Clerk DocketClerk_DC@ballardspahr.com 1/27/2025 11:26:32 AM ERROR

Litigation Administrative LitigationLegalAdministrativeAssistantsDC@ballardspahr.com 1/27/2025 11:26:32 AM SENT

Lit Docket MCO LitDocketInformationGovernance@ropesgray.com 1/27/2025 11:26:32 AM SENT

Edward Burbach 3355250 eburbach@foley.com 1/27/2025 11:26:32 AM SENT

Veronica Salinas vsalinas@foley.com 1/27/2025 11:26:32 AM SENT

Pfizer Case Team QXRTXQuiTamAssociates&Paralegals@ropesgray.com 1/27/2025 11:26:32 AM ERROR

Pfizer Team QXRTXQuiTamAssociates&Paralegals@ropesgray.com 1/27/2025 11:26:32 AM ERROR

Harry L.Gillam gil@gillamsmithlaw.com 1/27/2025 11:26:32 AM SENT

Tom Gorham tom@gillamsmithlaw.com 1/27/2025 11:26:32 AM SENT

Barrett ReidHowell barrett.howell@blankrome.com 1/27/2025 11:26:32 AM SENT

John F.Hundley hundleyj@ballardspahr.com 1/27/2025 11:26:32 AM SENT

Christopher Hatfield hatfieldc@ballardspahr.com 1/27/2025 11:26:32 AM SENT Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Harry Gillam, Jr. Bar No. 7921800 gil@gillamsmithlaw.com Envelope ID: 96623776 Filing Code Description: ORDER Filing Description: AMENDED ORDER DENYING TRIS PHARMA, INC.S MOTION TO DISMISS AND CERTIFYING FOR INTERLOCUTORY APPEAL Status as of 1/29/2025 10:49 AM CST

Christopher Hatfield hatfieldc@ballardspahr.com 1/27/2025 11:26:32 AM SENT

William E.Lawler, III william.lawler@blankrome.com 1/27/2025 11:26:32 AM SENT

Harry L.Gillam gil@gillamsmithlaw.com 1/27/2025 11:26:32 AM SENT

Barrett ReidHowell barrett.howell@blankrome.com 1/27/2025 11:26:32 AM SENT

John F.Hundley hundleyj@ballardspahr.com 1/27/2025 11:26:32 AM SENT

Christopher Hatfield hatfieldc@ballardspahr.com 1/27/2025 11:26:32 AM SENT APPENDIX B

Relevant Court Filings – Second Amended Petition

TRAP 28.3(e)(2)(B) 23-1031 Filed 1/17/2025 10:47 AM Sherry Griffis District Clerk Harrison County, Texas

Lori Hightower CAUSE NO. 23-1031 Deputy

THE STATE OF TEXAS, § IN THE DISTRICT COURT ex rel. TARIK AHMED § § Plaintiffs, § § v. § 71st JUDICIAL DISTRICT § PFIZER INC., TRIS PHARMA, INC., § and KETAN MEHTA, § § § Defendants. § HARRISON COUNTY, TEXAS

PLAINTIFFS’ SECOND AMENDED PETITION

The State of Texas, by and through the Attorney General of Texas, Ken Paxton, (the State)

and Private Person Plaintiff/Relator Tarik Ahmed (Relator) bring this law enforcement action

pursuant to the Texas Medicaid Fraud Prevention Act (TMFPA), TEX. HUM. RES. CODE Chapter

36. 1 Plaintiffs, the State and Relator, file this Second Amended Petition (Petition) and would

respectfully show the Court as follows:

I. DISCOVERY CONTROL PLAN

1. Discovery is intended to be conducted under Level 3 of Rule 190, Texas Rules of

Civil Procedure.

II. PRELIMINARY STATEMENT AND NATURE OF THIS ACTION

2. This is a law enforcement action under the TMFPA to recover taxpayer dollars

spent as a result of fraudulent conduct committed by Pfizer Inc. (Pfizer), Tris Pharma, Inc. (Tris),

1 On September 1, 2023, TEX. HUM. RES. CODE Ch. 36 was expanded to include state health care programs beyond the Medicaid program. In this action, however, most of the conduct at issue pre-dates September 1, 2023, and Plaintiffs seek only remedies with respect to the Medicaid program. Accordingly, Plaintiffs refer to the pre-September 2023 version of TEX. HUM. RES. CODE Ch. 36. and Tris CEO Ketan Mehta (Mehta). Specifically, these Defendants knowingly distributed a

powerful pediatric attention-deficit/hyperactivity disorder (ADHD) medication, Quillivant XR

(Quillivant), to patients throughout Texas, despite knowing Quillivant was adulterated due to

deficient manufacturing practices. This illegal conduct caused Quillivant to be in violation of

federal and state law, and rendered false Pfizer’s sworn certification of compliance to Texas

Medicaid, which is required for drugs to be eligible for reimbursement under the Texas Medicaid

program. Defendants additionally misrepresented and concealed Quillivant’s status as an

adulterated drug when providing public testimony before Texas Medicaid decision-makers. As a

result, Pfizer and Tris obtained the benefit of virtually unfettered Medicaid reimbursements for

Quillivant on the basis of fraudulent and unlawful misrepresentations and concealments, thereby

violating the TMFPA.

III. THE PARTIES

A. Plaintiffs

3. Plaintiffs are the State of Texas, by and through the Attorney General of Texas,

Ken Paxton, and Relator Tarik Ahmed (collectively, Plaintiffs).

4. Relator Tarik Ahmed is a citizen of the United States and a resident of New Jersey.

From 2013 until approximately June 2017, Relator was employed by Defendant Tris as Head of

Technology. During his time at Tris, Relator also served as the Head of the IT Steering

Committee, and was a member of the Executive Committee, Quality Committee, and Commercial

Committee. Through his employment at Tris, Relator gained a wealth of direct and independent

knowledge of the substandard manufacturing practices implemented by the Defendants.

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 1 B. Defendants

5. Defendant PFIZER is a corporation organized under the laws of Delaware, with its

principal office and place of business located at 1209 Orange Street, in the City of Wilmington,

Delaware. Pfizer marketed and distributed Quillivant in Texas. Pfizer conducts business in Texas.

At the time of filing, its registered agent for service of process is CT Corporation System, 1999

Bryan St., Ste. 900, Dallas, Texas 75201.

6. Defendant TRIS is a corporation organized under the laws of New Jersey and has

its principal place of business in New Jersey, at 2031 U.S. Highway 130, Monmouth Junction, New

Jersey 08852. Tris manufactured Quillivant, which it marketed and distributed in Texas. Tris

conducts business in Texas. At the time of filing, its registered agent for service of process is CT

Corporation System, 1999 Bryan St., Ste. 900, Dallas, TX 75201.

7. Defendant MEHTA is the founder and Chief Executive Officer of Tris. Mehta may

be served with process at his home address: 42 Elm Road, Princeton, New Jersey 08540. Mehta

has direct knowledge of and directly participated in substantially all of the fraudulent conduct

alleged herein.

IV. JURISDICTION AND VENUE

8. This Court has jurisdiction of this action pursuant to TEX. HUM. RES. CODE

§ 36.101. Jurisdiction is further proper because the amounts sought from each Defendant exceed

the minimum jurisdictional limits of this Court.

9. Since at least 2011, the State of Texas has licensed Defendants Pfizer and Tris to

sell and distribute their drugs throughout Texas. This Court has jurisdiction over these Defendants

because they purposefully availed themselves of the benefits, privileges, and responsibilities of

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 2 doing business in Texas; subjected themselves to Texas law, including the TMFPA; and then

committed unlawful acts, in whole or in part, in Texas.

10. This Court has personal jurisdiction over Defendant Mehta, a non-resident of

Texas, because from 2011 to the present, he has purposefully availed himself of the privileges and

benefits of conducting business in Texas. Defendant Mehta, either personally or by his direction

of others: 1) caused Quillivant to be marketed, sold, and/or distributed to Texas customers,

including Texas Medicaid providers; 2) caused Quillivant to be included in the Texas Medicaid

formulary; and 3) applied for and obtained from the State of Texas a license for Tris to sell and

distribute its drugs in Texas. Defendant Mehta’s purposeful availment of the privileges and

benefits of conducting business in Texas and committing unlawful acts in violation of the TMFPA

create sufficient minimum contacts with Texas to give this Court personal jurisdiction over him.

11. Venue is proper in Harrison County, Texas and this judicial district pursuant to

TEX. HUM. RES. CODE § 36.052(d), as Plaintiffs’ causes of action are based upon alleged violations

of the TMFPA which occurred, in part, in Harrison County.

12. More specifically, Defendant Pfizer knowingly promoted Quillivant to Medicaid

providers in Harrison County, and knowingly distributed Quillivant to pharmacies participating in

the Medicaid program in Harrison County, ultimately leading to its use by Harrison County

Medicaid patients, during which time Quillivant was adulterated as a result of the conduct of

Defendants Tris and Defendant Mehta.

V. BACKGROUND

A. ADHD and Quillivant XR

13. ADHD is a chronic and debilitating condition affecting millions of children in the

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 3 United States. 2 As a neurodevelopmental disorder, ADHD can cause persistent problems such as

difficulty sustaining attention, hyperactivity, and impulsive behavior. 3 Typically diagnosed in

school-aged children, it can cause struggles with low self-esteem, troubled relationships, and poor

performance in school. 4

14. There is no cure for ADHD. Rather, the goal of pharmacological treatment is to

manage the symptoms that would otherwise be present. 5 The most commonly prescribed

medications used to help improve the signs and symptoms of ADHD are methylphenidates and

amphetamines. 6 These medications form the foundation of the multibillion-dollar ADHD

pharmaceutical industry.

15. Quillivant is an extended-release oral suspension methylphenidate indicated for the

treatment of ADHD in children. It is a Schedule II Controlled Dangerous Substance and is required

by the Federal Food and Drug Administration (“FDA”) to display a “Black Box Warning”—

FDA’s strictest labeling requirement—for abuse and dependence. The drug is provided to

pharmacies as a powder, and pharmacists reconstitute the drug by combining the powder with

water and then shaking the medication by hand. Caregivers are then instructed to shake the

reconstituted medicine prior to administering each dose.

16. Though Quillivant is approved by the FDA as acceptably safe and effective for

2 American Psychiatric Association, What is ADHD, available at https://www.psychiatry.org/patients- families/adhd/what-is-adhd (last visited Nov. 8, 2023). 3 Mayo Clinic Patient Care & Health Information, Attention-deficit/hyperactivity disorder (ADHD) in children, available at https://www.mayoclinic.org/diseases-conditions/adhd/symptoms-causes/syc-20350889 (last visited Nov. 8, 2023). 4 Id. 5 American Psychiatric Association, What is ADHD, available at https://www.psychiatry.org/patients- families/adhd/what-is-adhd#section_5 (last visited Nov. 8, 2023). 6 Id.

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 4 ADHD when taken as directed, it still has risks associated with normal use. According to the FDA,

the most common adverse reactions include insomnia, nausea, vomiting, anxiety, and tachycardia.

There is also a chance for patients to experience severe side effects, including serious

cardiovascular reactions (which can cause sudden death), psychiatric adverse reactions (including

mania), and long-term suppression of growth. Additionally, when Quillivant is not taken at the

correct dose, patients could experience an overdose requiring emergency medical intervention.

17. Quillivant was developed and owned by Nextwave Pharmaceuticals, Inc.

(Nextwave). Tris held a 5% ownership portion of Nextwave and owned intellectual property that

was part of Quillivant’s development. Nextwave submitted the New Drug Application (NDA) to

the FDA for Quillivant. After Pfizer acquired Nextwave in May 2012, Pfizer contracted with Tris

(through its wholly owned subsidiary, Nextwave) for Tris to manufacture Quillivant on Pfizer’s

behalf. Pfizer, through Nextwave, agreed to compensate Tris for meeting certain milestones,

including product approval, as well as paying Tris a 25% royalty on net sales of Quillivant. The

FDA approved Quillivant’s New Drug Application (NDA) on September 27, 2012, allowing it to

be prescribed within the United States.

B. The Federal Food, Drug, and Cosmetic Act and Current Good Manufacturing Practices

1. The FDA’s Role in Regulating Prescription Drug Quality

18. In the United States, the sale and promotion of prescription drugs is regulated by

the U.S. Food and Drug Administration, pursuant to the authority granted by the Federal Food,

Drug, and Cosmetic Act (FDCA), 21 U.S.C. § 301 et seq. Under the FDCA, new drugs cannot be

marketed in the United States unless the sponsor of the drug demonstrates to the FDA

“substantial evidence that the drug will have the effect it purports or is represented to have under

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 5 the conditions of use prescribed, recommended, or suggested in the proposed labeling thereof.” 7

The drug’s sponsor must also show by substantial evidence that the drug is safe for the conditions

of use “prescribed, recommended, or suggested in the proposed labeling.” 8 Approval of the drug

by the FDA is the final step in a multi-year process consisting of clinical studies and testing.

19. To determine whether a drug is “safe and effective,” the FDA relies on information

provided by a drug’s manufacturer; it does not conduct any clinical investigations itself.

Applications for FDA approval of pharmaceutical products—NDAs—must include “full reports

of investigations which have been made to show whether or not such drug is safe for use and

whether or not such drug is effective in use.” 9

2. FDA Regulations Prohibit the Adulteration of Prescription Drugs

20. Under the FDCA, it is illegal to adulterate a drug, or to introduce into interstate

commerce any drug that is adulterated. 10 A drug becomes adulterated if “the methods used in, or

the facilities or controls used for, its manufacture . . . do not conform to or are not operated or

administered in conformity with current good manufacturing practice.” 11 The purpose of

conforming to Current Good Manufacturing Practice (CGMP) is to assure that a drug “meets the

requirements … as to safety and has the identity and strength, and meets the quality and purity

characteristics” that it is claimed to have.12 CGMP regulations act as a floor, establishing a

minimum set of standards that must be observed by manufacturers to ensure that drug products

7 21 U.S.C. § 355(d)(5). “Substantial evidence” as used in this section is defined at 21 U.S.C. § 355(d)(7). 8 21 U.S.C. § 355(d)(1). 9 21 U.S.C. § 355(b)(1)(A). 10 21 U.S.C. §§ 331(a), (b). 11 21 U.S.C. § 351(a)(2)(B). 12 Id.

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 6 are made according to their approved specifications. 13 Underscoring the importance of maintaining

safety and uniformity in drug manufacturing, courts have broadly interpreted adulteration

requirements, noting that “[d]rugs produced in violation of . . . CGMP regulations are deemed to

be adulterated without the [FDA] having to show that they are actually contaminated.” John D.

Copanos & Sons, Inc. v. Food & Drug Admin., 854 F.2d 510, 514 (D.C. Cir. 1988) (citing 21 U.S.C.

§ 351(a)(2)(B)). Accordingly, it is critical for manufacturers to conform to the safety practices

established under CGMP.

21. The FDA’s CGMP regulations are set forth in 21 CFR Part 211. 14 These legally

binding regulations require various forms of testing and implementation of related procedures to

ensure drugs meet the identity, strength, quality, and purity they purport to represent or possess—

in other words, that the drugs being made are exactly the same as when FDA first approved them. 15

Under this regulatory system, a pharmaceutical company must have a “quality control unit” with

the “responsibility and authority to approve or reject all components, drug product containers,

closures, in-process materials, packaging material, labeling, and drug products,” as well as “the

authority to review production records to assure that no errors have occurred or, if errors have

occurred, that they have been fully investigated.” 16 The responsibility for approving or rejecting

drug products extends to products “manufactured, processed, packed, or held under contract by

another company.” 17 Additionally, all “production and control records” must “be reviewed and

13 U.S. Food and Drug Administration, Facts About the Current Good Manufacturing Practices (CGMP), available at https://www.fda.gov/drugs/pharmaceutical-quality-resources/facts-about-current-good-manufacturing-practices- cgmp (last visited Nov. 8, 2023). 14 See Nat’l Ass’n of Pharm. Mfrs. v. Food & Drug Admin., 637 F.2d 877, 889 (2d Cir. 1981). 15 See e.g. 21 CFR § 211.100. 16 21 CFR § 211.22(a). 17 See id.

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 7 approved by the quality control unit to determine compliance with all established, approved

written procedures before a batch is released or distributed.” 18

22. Furthermore, unexplained discrepancies or failures of a batch or its components to

meet its specifications must “be thoroughly investigated.” 19 The investigation must “extend to

other batches of the same drug product and other drug products that may have been associated

with the specific failure or discrepancy,” and a “written record of the investigation” must be made

and must “include the conclusions and followup.” 20

23. A drug manufacturer must also establish and follow “[w]ritten procedures

describing the handling of all written and oral complaints regarding a drug product.” 21 These

procedures must “include provisions for review by the quality control unit, of any complaint

involving the possible failure of a drug product to meet any of its specifications and, for such drug

products, a determination as to the need for” a thorough investigation. 22 The procedures must

also “include provisions for review to determine whether the complaint represents a serious and

unexpected adverse drug experience which is required to be reported to the” FDA. 23

24. Through these CGMP regulations, the FDA requires pharmaceutical

manufacturers to institute standard processes for evaluating the quality of their products and to

thoroughly investigate complaints about their products as well as unexplained discrepancies in

product quality. This critical regulatory system protects patients and consumers by establishing

18 21 CFR § 211.192. 19 See id. 20 See id. 21 21 CFR § 211.198. 22 See id. 23 See id.

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 8 minimum standards to ensure that the finished drug products taken by patients do not deviate over

time, but rather, remain as safe, effective, and uniform as initially approved by the FDA.

C. Texas’s Role in Regulating Prescription Drugs

25. In Texas, the sale, promotion, and distribution of prescription drugs is further

regulated by the Drugs and Medical Devices Group of the Texas Department of State Health

Services, pursuant to the authority granted by the Texas Food, Drug, and Cosmetic Act

(TFDCA). 24

26. The TFDCA largely mirrors the FDCA. For example, the TFDCA, like the FDCA,

prohibits the adulteration of drugs and the introduction of adulterated drugs into commerce. 25

Additionally, TFDCA § 431.112 defines drug adulteration to include the same relevant provisions

as the FDCA: a drug is adulterated if “the methods used in, or the facilities or controls used for,

its manufacture, . . . do not conform to . . . current good manufacturing practice to assure that such

drug meets the requirements of this chapter as to safety and has the identity and strength, and

meets the quality and purity characteristics, which it purports or is represented to possess. 26

27. Violations of the TFDCA, including violations of rules adopted under the

TFDCA, 27 can result in a written warning, administrative penalties, civil penalties, or criminal

penalties. 28

24 TEX. HEALTH & SAFETY CODE, Ch. 431, et seq. 25 See TEX. HEALTH & SAFETY CODE §§ 431.021(a), (b). 26 TEX. HEALTH & SAFETY CODE § 431.111(a)(2)(B). 27 TEX. HEALTH & SAFETY CODE § 431.046. See, e.g., 25 TEX. ADMIN. CODE Ch. 229. 28 See TEX. HEALTH & SAFETY CODE §§ 431.061, 431.054, 431.0585, 431.059.

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 9 D. Texas Medicaid

1. Overview

28. The state and federal governments fund health care for the poor and disabled

through public health assistance programs. Together, the State of Texas and the federal

government fund the Medical Assistance Program in Texas, commonly referred to as Texas

Medicaid. Texas Medicaid provides vital health care coverage to Texas’s most vulnerable

populations. 29 It is a lifeline ensuring that children, pregnant women, elderly adults, and disabled

individuals receive the medical care they need. 30

29. The Texas Health and Human Services Commission (HHSC) administers the

Texas Medicaid program and has authority to promulgate rules and other methods of

administration governing the program.31 Texas Medicaid reimburses participating providers for

the approved pharmaceuticals they provide to Medicaid recipients. The program strives to provide

safe and effective health services to beneficiaries while maximizing the efficient use of taxpayer

funds within the Texas Medicaid program. 32 To that end, Texas Medicaid uses various procedures

to monitor prescription drug benefits.

2. Texas Medicaid Tools for Managing Appropriate and Cost-Effective Pharmaceutical Therapy

30. The Vendor Drug Program (VDP) within HHSC oversees the outpatient

prescription drug portion of the Texas Medicaid program. 33 VDP is also charged with safeguarding

29 See TEX. HUM. RES. CODE § 32.001. 30 See 1 TEX. ADMIN. CODE § 358.107; 1 TEX. ADMIN. CODE § 366.307; 1 TEX. ADMIN. CODE § 366.507. 31 TEX. GOV’T CODE § 531.021. 32 See In re Xerox Corp., 555 S.W.3d 518, 524 (Tex. 2018). 33 See 1 TEX. ADMIN. CODE § 354.1809, § 354.1891; TEX. GOV’T CODE § 531.069.

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 10 against fraud, waste, and abuse within the program. 34 VDP was in operation at all times relevant to

this case.

31. Providers can obtain Medicaid reimbursement through VDP for pharmaceutical

products approved for use and reimbursement under this program, and which are listed on the

VDP formulary. 35 To have its particular pharmaceutical products listed on the VDP formulary, a

drug company or manufacturer must file an application with VDP. 36 Texas Medicaid requires

information provided to it by pharmaceutical manufacturers as part of the VDP application process

to be complete, truthful, and up-to-date. 37 VDP may return or reject an application on the

discovery of “false, erroneous, or incomplete information.” 38

32. VDP applications require drug manufacturers to report, for each drug submitted,

the recommended daily dosages, formulation of the drug, FDA approval letters, and copies of the

package inserts and materials for physicians. The VDP application also requires manufacturers to

certify that all the information provided with their application is correct and that their drug is not

in violation of either state or federal law.

33. By signing the application, manufacturers accept an ongoing duty to submit

notifications of changes pertaining to the information in their application no later than the date

such revisions are scheduled to occur, and to submit notifications of any changes pertaining to their

product’s status, formulation, or availability within fifteen days of such changes occurring.

Accordingly, manufacturers owe a continuing duty to Texas Medicaid to supplement information

34 See 1 TEX. ADMIN. CODE § 354.1891. 35 1 TEX. ADMIN. CODE § 354.1831(a). The VDP formulary is also referred to as the Texas Drug Code Index or TDCI. See 1 TEX. ADMIN. CODE § 354.1921. 36 1 TEX. ADMIN. CODE § 354.1921(b). 37 Id. See also 1 TEX. ADMIN. CODE § 354.1923(b). 38 1 TEX. ADMIN. CODE § 354.1923(b)(1).

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 11 provided with their VDP application. 39 Moreover, a new VDP application must be submitted each

time a drug first becomes available in a new formulation or in different dosages.

34. Pharmaceutical manufacturers’ interactions with Texas Medicaid, and Texas

Medicaid’s review of drugs placed on its formulary, do not stop with submission of the initial VDP

application. Texas Medicaid has an ongoing obligation to manage its drug formulary through Drug

Utilization Review (DUR) in accordance with the Omnibus Budget Reconciliation Act of 1990. 40

Pursuant to that obligation, Texas Medicaid created the DUR program to promote optimal and

cost-effective pharmaceutical therapy in the Texas Medicaid VDP. 41

35. Specifically, the DUR program exists to ensure that prescriptions are appropriate,

medically necessary, and are not likely to result in adverse medical outcomes. 42 The program is

designed to educate providers and to identify and reduce the frequency of patterns of fraud, abuse,

overuse, or inappropriate or medically unnecessary care. 43

36. The DUR Board has a number of tools available to it to achieve these goals,

including prior authorization, educational letters expressing therapeutic concerns to Texas

Medicaid providers, DUR alerts, and clinical edits. 44 If necessary, the DUR Board initiates

recommendations that certain drugs be made subject to prior authorization or to restrictions

concerning the types of patients (e.g., children, elderly persons, etc.) or the types of conditions for

which Medicaid reimbursement is obtainable. 45 As part of this program, the DUR Board monitors

39 See 1 TEX. ADMIN. CODE § 354.1921(c)(1). 40 H.R.5835 - 101st Congress (1989-1990): Omnibus Budget Reconciliation Act of 1990, H.R.5835, 101st Cong. (1990), https://www.congress.gov/bill/101st-congress/house-bill/5835; see also 1 TEX. ADMIN. CODE § 354.1941. 41 See TEX. GOV’T CODE § 531.0736; see also 1 TEX. ADMIN. CODE § 354.1941. 42 See TEX. GOV’T CODE § 531.0736(k). 43 See id., § 531.0736(b). 44 See TEX. GOV’T CODE § 531.0736(k); see also 1 TEX. ADMIN. CODE § 354.1831(b), § 354.1941(a). 45 See 1 TEX. ADMIN. CODE § 354.1831(b), § 354.1941(a).

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 12 and analyzes provider-level activity. 46

37. The DUR Board is also tasked with developing recommendations for the Texas

Medicaid Preferred Drug List (PDL), providing another mechanism for managing Texas

Medicaid’s expenditures for pharmaceuticals. 47 In making these recommendations, the DUR

Board must consider the clinical efficacy, safety, and cost-effectiveness of each drug reviewed. 48

HHSC then decides which drugs are placed on the PDL based on DUR Board recommendations,

the cost of competing drugs to the state, clinical considerations, written information offered by

manufacturers about their products, and the existence of a supplemental rebate agreement or other

program benefits. 49 Drugs that are reviewed but not selected for the PDL require prior

authorization. 50

38. In carrying out its functions, the DUR Board frequently receives information from

drug manufacturers, including Defendants, concerning their drugs. 51 The DUR Board expects—

and Texas law requires—all such information to be complete and accurate. The DUR Board cannot

effectively make recommendations to manage drug utilization through clinical edits, the PDL, or

other interventions where material information has been misrepresented or concealed by a drug

company.

39. The Texas Medicaid program includes not just Medicaid decision-makers such as

46 See TEX. GOV’T CODE § 531.0736(g); see also 1 TEX. ADMIN. CODE § 354.1941(a). 47 See TEX. GOV'T CODE § 531.0736(b)(1). Previously, the Pharmaceutical and Therapeutics Committee (P&T Committee) made recommendations regarding the PDL. In 2016, however, the P&T Committee and DUR Board combined into a single, expanded, committee known as the DUR Board, which now handles the functions of the two previous committees. S.B. 200, 84th Leg. (Tex. 2015) (enacted). 48 See TEX. GOV'T CODE § 531.0736(h). 49 1 TEX. ADMIN. CODE § 354.1924(c). 50 See 1 TEX. ADMIN. CODE § 354.1832(a). 51 See TEX. GOV'T CODE § 531.0736(g).

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 13 the VDP and DUR Board, but also Medicaid providers such as pharmacies and physicians that

enter into agreements with Texas Medicaid in order to be covered providers. 52 The TMFPA seeks

to protect against fraud at all levels of the Texas Medicaid program. 53 Providers cannot fully

exercise their professional judgment regarding appropriate patient care for Medicaid beneficiaries

when drug companies misrepresent or conceal material information about a drug’s status.

VI. APPLICABLE TEXAS STATUTORY LAW

40. Plaintiffs re-allege and reincorporate by reference as set forth herein the allegations

contained in Paragraphs 1 through 39 of this Petition.

41. A person commits an unlawful act as defined under the Texas Medicaid Fraud

Prevention Act 54 by, among other things:

A. Knowingly making or causing to be made a false statement or misrepresentation of a material fact to permit a person to receive a benefit or payment under the Medicaid program that is not authorized or that is greater than the benefit or payment that is authorized. TEX. HUM. RES. CODE § 36.002(1).

B. Knowingly concealing or failing to disclose information that permits a person to receive a benefit or payment under the Medicaid program that is not authorized or that is greater than the benefit or payment that is authorized. TEX. HUM. RES. CODE § 36.002(2).

C. Knowingly making or causing to be made a false statement or misrepresentation of material fact concerning: information required to be provided by a federal or state law, rule, regulation, or provider agreement pertaining to the Medicaid program. TEX. HUM. RES. CODE § 36.002(4)(B).

D. Knowingly making or causing to be made a claim under the Medicaid program for . . . a product that has been adulterated, debased, mislabeled, or that is otherwise inappropriate. TEX. HUM. RES. CODE § 36.002(7)(C).

52 See 1 TEX. ADMIN. CODE § 352.5(a), § 354.1801(g). 53 See TEX. HUM. RES. CODE § 36.001 et seq. 54 As amended on September 1, 2023, the Texas Medicaid Fraud Prevention Act is now the “Texas Health Care Program Fraud Prevention Act” and includes state health care programs beyond the Medicaid program. The substance of the unlawful acts remains unchanged.

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 14 42. Hereinafter, references to conduct as constituting “statutory fraud” mean that the

conduct being described was done by Defendants at times when one or more of the statutory

provisions set forth in Paragraph 41 applied and was done in ways and through means that satisfy

all the required elements of at least one applicable statutory provision.

VII. DEFENDANTS’ UNLAWFUL ACTS

A. Background

43. Hoping to carve out a share of the multibillion-dollar ADHD medication industry

for themselves, Pfizer—a multinational pharmaceutical powerhouse—invested heavily in

Quillivant. Pfizer had big ambitions for Quillivant and sought to differentiate it from the

competition as the only extended-release oral suspension methylphenidate indicated for the

treatment of ADHD in children. To manufacture Quillivant, Pfizer partnered with Tris, a

relatively new and growing pharmaceutical company with fewer than 200 employees at the time of

Quillivant’s approval. For Tris, properly manufacturing Quillivant at the quantities requested by

Pfizer would prove to be a significant challenge.

44. Even prior to FDA approval, Tris struggled to achieve consistency in

manufacturing Quillivant, as reflected in Quillivant’s failure of mandatory quality control tests.

Following one such early failure in August 2011, which resulted in FDA issuing a Form 483

citation, 55 Tris promised to correct the identified deficiencies, including conducting root cause

investigations of its manufacturing processes as required by federal CGMP. In the months and

55 “An FDA Form 483 is issued to firm management at the conclusion of an inspection when an investigator(s) has observed any conditions that in their judgment may constitute violations of the Food Drug and Cosmetic (FD&C) Act and related Acts.” U.S. Food & Drug Administration, FDA Form 483 Frequently Asked Questions, available at https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/inspection-references/fda- form-483-frequently-asked-questions (last visited Nov. 8, 2023).

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 15 years that followed, however, Tris concealed subsequent quality control test failures by

manipulating the test process itself, in violation of federal and state laws and regulations.

45. At the same time, Tris and Pfizer both recognized that Texas Medicaid business

would be crucial for Quillivant’s success. To fully exploit the economic potential of Texas

Medicaid, Defendants needed Medicaid decision-makers to add Quillivant to the VDP Formulary

and the Preferred Drug List. These steps would effectively allow Medicaid providers to prescribe

Quillivant to their Medicaid patients and would streamline the prescribing process by eliminating

the need for the treating doctor to go through the burdensome process of obtaining prior

authorization. Describing Texas as a “populous state with a disproportionately high percentage of

children covered by Medicaid,” Pfizer projected that Texas sales of Quillivant were expected to

increase significantly if Quillivant was added to the PDL.

46. Pfizer successfully campaigned to have Quillivant added to the Texas Medicaid

Formulary in June 2013, including by certifying on the VDP Application that Quillivant was not in

violation of state or federal law, and agreeing to update VDP of any changes in “formulation,

product status price, or availability.” From that point forward, Quillivant was listed as being

reimbursable under the Texas Medicaid program. Defendants also successfully obtained

“preferred” placement on the PDL for Quillivant in 2014, following an initial failed attempt in

2013.

47. Quillivant’s status with Texas Medicaid became a selling point, and the Pfizer

salesforce actively promoted Quillivant to Texas Medicaid Providers, including pediatricians and

pharmacists. Defendants knew that Quillivant’s placement on the VDP formulary and the PDL

would not only increase Quillivant’s utilization amongst children enrolled in Texas Medicaid but

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 16 would also increase their market share within the commercial insurance population in Texas by

having the State’s stamp of approval.

48. Defendants, however, would not fulfill their obligations to Texas Medicaid. Despite

engaging in conduct that clearly violated FDCA CGMP regulations; regularly receiving failing test

results on required quality control measures; and receiving notices of deficiencies and a warning

letter from the FDA, at no point in time did Defendants provide Texas Medicaid or VDP with a

relevant product update, as required by their VDP Application certification.

B. Defendants Modified the Dissolution Test Method to Conceal Manufacturing Defects, in Violation of FDA’s CGMP

49. Almost immediately after it received FDA approval—and prior to Pfizer submitting

the VDP application—Quillivant began failing routine quality tests. Under financial pressure to

produce large quantities of Quillivant after a lengthy approval process, Tris tried to rapidly increase

production without adequate protocols to maintain acceptable quality, leading to defects in the

manufacturing process.

50. Beginning at least as early as October 2012, Tris quality control personnel observed

that samples of Quillivant tested under FDA-required dissolution specifications were not

generating passing results. Dissolution testing is an important quality control tool used to measure

whether a drug was properly manufactured, by comparing a simulated release of the drug to a

standard set upon the drug’s initial approval. This in turn helps to predict whether the drug (as

manufactured) will be released as expected in a patient’s body—which is critical for ensuring

proper and consistent patient dosing. 56 Here, the Quillivant samples formed lumps during

56 U.S. Pharmacopeia, Dissolution and Drug Release Tests, available at https://www.usp.org/small- molecules/dissolution (last visited Nov. 8, 2023).

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 17 reconstitution.

51. As noted in the October 2012 Deviation Report, the “probable cause” of the out-

of-specification result was “related to sample reconstitution/hydration,” which refers to the

process by which the drug—manufactured by Tris as a powder—is properly mixed with water prior

either to being dispensed to a patient or tested in Tris’s lab.

52. Rather than seeking to understand why the sample formed lumps during

reconstitution, Tris “retrained” its analysts to shake the water/drug mixture longer, as well as to

conduct the test only when “foaming is absent from the suspension.” Put simply, Tris’s meager

“retraining” was insufficient to prevent further out-of-specification dissolution test results.

53. Just one month later in November 2012, Quillivant failed dissolution testing due to

slower initial dissolution at the 0.5-hour time point. In other words, inadequate amounts of

Quillivant were dissolved half an hour after testing began. Once again, Tris blamed the method of

mixing the sample instead of conducting a proper manufacturing investigation.

54. In February 2013, Tris issued a Notice of Investigation for Quillivant related to out-

of-specification dissolution test results that far exceeded the reference standard at every tested

timepoint. Shortly thereafter, Tris Quality Control issued another Notice of Investigation in March

2013, where the analyst noted that the sample’s dissolution test results were below the minimum

standard. This stark contrast in out-of-specification test results should have resulted in Tris

investigating and revamping its manufacturing process (and thereby incurring substantial costs) to

rectify Quillivant’s inconsistency as a finished product. However, that again did not occur.

55. Rather than thoroughly investigating the root cause of Quillivant’s failures as

required by federal CGMP regulations, Tris—under the direct orders of CEO Mehta—halted

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 18 dissolution testing under the existing test method (Method 5) and focused on creating a new test

under which its defective product could meet FDA criteria. Tris Quality Control staff

implemented the problematic new test (Method 6) on or about July 26, 2013. Alarmingly, the new

test method was not representative of real-world usage by patients, and worse, went against the

pharmacy reconstitution instructions contained in the FDA-approved label for Quillivant. 57

56. Method 5, the dissolution testing method approved by the FDA, required that

dissolution testing samples be “well shaken.” This aligned with the instructions on Quillivant’s

FDA-approved label, which instructed pharmacists and caregivers to shake Quillivant for at least

10 seconds during reconstitution and again prior to administration of a dose.

57. However, under Method 6, after shaking the sample to reconstitute it (all that was

required under Method 5), Tris lab personnel were instructed to let the sample sit for 30 minutes;

sonicate it for three minutes; and then mix it gently with a spatula or glass rod for an additional

minute. 58 Each of these new steps differed from the steps contained in Quillivant’s label, which

meant that Tris’s dissolution testing procedure was no longer measuring dissolution as it would be

experienced by patients taking Quillivant.

58. A sonicator, or ultrasonic bath, works by using sound waves outside the range of

human hearing to create millions of microscopic bubbles in a solution that then implode, releasing

57 A drug’s “label” or “package insert” is the detailed information sheet that is provided with every prescription drug product. It contains all information that FDA has approved as being necessary for a patient to safely take the drug for an indicated condition. This information includes proper dosing, warning and precautions, and usage instructions. 58 For further description of accepted dissolution practices, see United States Pharmacopeia ("USP") Ch. 711, available at https://www.usp.org/sites/default/files/usp/document/harmonization/gen- method/stage_6_monograph_25_feb_2011.pdf (last visited Nov. 8, 2023). See also FDA Guidance for Industry, available at https://www.fda.gov/downloads/drugs/guidances/ucm070239.pdf (last visited Nov. 8, 2023).

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 19 enormous amounts of energy. 59 That energy can then be used to dissolve and homogenize liquids. 60

Tris lab personnel were instructed to sonicate Quillivant using a particular ultrasonic bath model

for three minutes “at maximum power.” Per the specifications sheet for the specified model, it is

one of “the most technologically advanced ultrasonic baths available,” and maximum power

equates to 40 kilohertz, or 40,000 pulses per second. The machine retails for well over $1,000. In

sharp contrast, Quillivant’s label instructed pharmacists to shake the medication bottle “with

vigorous back and forth motion for at least 10 seconds to prepare suspension.” Similarly, the label

instructed caregivers to “vigorously shake bottle for at least 10 seconds” prior to administering a

dose of the medication. Thus, sonication plays no part in normal patient or pharmacy usage of

Quillivant.

59. Under FDA regulations, “a supplement must be submitted” to the FDA “for any

change in the drug substance, drug product, production process, quality controls, equipment, or

facilities that has a moderate potential to have an adverse effect on the identity, strength, quality,

or potency of the drug” at least 30 days before distribution of drugs made using the changes. 61 This

notice is referred to as “CBE-30.” Changes requiring a 30-day prior notice include “Relaxation of

an acceptance criterion or deletion of a test to comply with an official compendium (USP) that is

consistent with FDA statutory or regulatory requirements.” 62 In implementing Method 6,

Defendants failed to notify FDA by submitting a CBE-30 prior to its use, in violation of FDA

regulations.

59 See https://www.emerson.com/documents/automation/manual-bransonic-power-supply-en-5410610.pdf (last visited Nov. 8, 2023). 60 Id. 61 21 CFR § 314.70(c). 62 21 CFR § 314.70(c)(2)(iii).

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 20 60. Even Tris Quality Control personnel realized the absurdity of substituting an

expensive machine for 10 seconds of shaking by hand. In response to an internal report purporting

to justify the new sonication step, Tris’s Senior VP of Quality observed that based on the data he

reviewed, there was “absolutely no reason to sonicate” Quillivant samples. Another Quality

Control employee noted that “we might be pushing it” to add the sonication step, given that it

demonstrably increased the dissolution rate during testing.

61. The Senior VP of Quality continued to voice his objections in a later email directly

to CEO Mehta, where he plainly stated that sonication of samples was “not scientifically sound”

due to the impact on the sample results, and that “we can’t just keep ignoring these [quality]

issues.” Nevertheless, Tris, under orders from its CEO Mehta, moved forward using sonication

as part of Method 6. This would not be the last method change, as Tris was unable to produce

Quillivant that consistently met acceptance criteria even under revised Method 6.

62. Internally at Tris, employees of the Quality Assurance division understood the

sonication step to be affecting Quillivant test results. While investigating a customer complaint in

October 2013, one analyst questioned whether the currently employed Method 6 (including

sonication) should be used, since “the initial results with [Method 5] are on the higher side of the

specification,” and noted that testing with sonication could result in a 5-8% increase in the

dissolution rate, which would exceed the upper limit.

63. Through its Contract Operations Quality Assurance Department (COQA), Pfizer

was responsible for oversight of Tris manufacturing, including CGMP compliance. Pfizer also had

a multidisciplinary team, known as the Audit Quality Response Team (AQRT), tasked with

investigating quality control failures.

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 21 64. As early as October 2012, Pfizer was aware that Quillivant was having difficulty

meeting its FDA-mandated testing specifications. Pfizer understood that Tris was seeking to

change the test method to include sonication at least as early as June 19, 2013. Pfizer did not object

to Tris’s decision to change the test method, but rather, sought to understand what it would entail

for Pfizer in terms of regulatory filings to FDA.

65. In an email in March 2014, after several lots of Quillivant failed dissolution testing

under the new test Method 6 by exceeding the upper limit of the specification, one Pfizer External

Supply employee noted to another Pfizer employee that sonication “did the trick to address low

disso results and then some,” showing that Pfizer understood the real reason for sonication was to

influence dissolution test results.

66. Pfizer’s Senior Director of COQA noted that test Method 6 did not align with the

test method approved by FDA, stating “I read this as they are out of compliance with our [FDA]

filing.” Unfortunately, this realization did not prompt Pfizer COQA to demand that Tris perform

a root cause investigation into Quillivant’s dissolution testing failures, nor did it trigger Pfizer’s

own AQRT to investigate the problem.

67. Instead, Tris began working up a justification to update the test method once again.

In response to seeing the preliminary dissolution report, Tris’s Senior VP of Quality remarked,

“right now it looks like when the product is slow we sonicate and when it’s fast we don’t sonicate

… we need to take a serious scientific approach to solving this issue.” Despite this criticism, Tris

continued forward with once again altering the test method.

68. In a later email in April 2014, a Pfizer External Supply employee characterized the

situation involving Quillivant’s out-of-specification dissolution results as “pretty serious.” The

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 22 Pfizer employee further explained that Pfizer COQA had expected Tris to “present data to

quantify the impact of [a] sonication step in the dissolution method,” but that Tris untimely

provided “a statement but no data.” He went on to conclude that, as a result, Pfizer could not

continue to release Quillivant using the new test method until Tris could justify its use.

69. Roughly a month later, Pfizer’s Senior Director of COQA admitted: “I agree [the

method] doesn’t represent patient usage and am surprised it was [internally] approved…” Despite

Pfizer’s obvious concerns and skepticism regarding the validity of sonication, Pfizer failed to

ensure Tris thoroughly investigated the root cause of Quillivant’s quality issues and failed to alert

Texas Medicaid to those ongoing problems.

70. Rather than conducting a proper manufacturing investigation, Pfizer and Tris

concocted a convenient narrative to explain away the problem. In a May 2014 Field Alert Report

(FAR), Pfizer’s Senior Director/Team Lead for COQA claimed the root cause of Quillivant’s

dissolution testing issues was “confirmed to be laboratory error associated with lack of clarity

within the analytical method.” More specifically, they claimed that an analyst erroneously

sonicated Quillivant samples during a later stage of the testing process, “causing an increase in the

rate of dissolution” observed at that time point in the testing process.

71. This response to FDA was misleading for two reasons. First, contrary to

Defendants’ assertion, Method 6 as implemented plainly instructed analysts to sonicate Quillivant

samples prior to testing, so there was no method ambiguity. Second, by stating that the analyst

sonicated “in error,” Defendants concealed the fact that Quillivant samples were being sonicated

in order to manipulate dissolution test results to falsely pass quality control. 63

63 Under the test method approved by FDA—Method 5—sonication is never appropriate.

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 23 72. After submitting the FAR to FDA, Tris worked to revise its dissolution test method

from Method 6 to Method 7. During the development of Method 7, Pfizer asked Tris about

shipping Quillivant despite the failure to pass dissolution testing. Tris personnel responded that,

although they preferred to not do so, they were “trying to keep up with Pfizer’s demand” and the

decision was up to Pfizer. However, Tris cautioned that the shipment in question would not have

a Certificate of Analysis showing Quillivant met its FDA-required specifications.

73. At that point, Pfizer’s Director and Team Lead for COQA replied that with no

ability to test and no Certificate of Analysis, Pfizer did “not have any support for any [Quillivant]

in distribution,” and that the product would either need to be tested and re-released or recalled.

Despite this grim assessment, the discussion did not prompt Pfizer to press Tris for a thorough

investigation of the underlying cause of the dissolution testing failures that necessitated the

creation of a new test method. It also did not trigger an investigation by Pfizer’s AQRT.

74. The new method went into effect in June 2014. Under the Method 7 test, samples

used for release testing were sonicated, while samples reconstituted and held for stability testing

were not sonicated.

75. A month after Pfizer expressed alarm about whether there was any support for

Quillivant’s continued distribution, Pfizer simply accepted that Tris’s implementation of the

updated test method (Method 7) solved the problem. Minutes from a July 2014 Joint Steering

Committee meeting between Tris and Pfizer noted that a “delay in updating the dissolution

method . . . resulted in a supply risk,” but conveniently explained that, with the new method’s

approval, the Quillivant supply situation was “[n]o longer an issue.”

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 24 76. Importantly, neither Tris nor Pfizer had thoroughly investigated the actual root

cause of the quality control failures that prompted the method change in the first place. Both

companies knew the continued use of sonication in Method 7 was inconsistent with the test method

on file with the FDA; was inconsistent with patient use; was not supported by the appropriate data;

and had an impact on the dissolution test results. But Defendants chose to move forward with its

use to avoid a potential supply disruption.

77. At the same time Pfizer and Tris were working to bypass rather than solve known

quality issues with Quillivant, Pfizer was petitioning the Texas Medicaid P&T Committee for

Quillivant’s addition to the Preferred Drug List. The P&T Committee relies on drug

manufacturers to provide truthful and complete information about their drug products in order to

carry out its duties of recommending preferred drugs based on their efficaciousness, clinical

significance, cost effectiveness, and safety. 64 At no point did Pfizer or Tris inform P&T Committee

decision-makers that there were ongoing and unresolved quality issues with Quillivant.

78. Having kept this crucial information from the P&T Committee, Pfizer and Tris

succeeded in their efforts to have Quillivant added to the Texas Medicaid Preferred Drug List on

July 17, 2014. This removed the need for prior authorizations for Quillivant prescriptions,

broadening the drug’s market appeal and increasing the likelihood that children on Texas Medicaid

would be prescribed Quillivant. Unfortunately for those children, Quillivant also continued to

generate out-of-specification dissolution test results due to the unresolved manufacturing issues

during this time.

64 Vendor Drug Program, Preferred Drugs, available at www.txvendordrug.com/formulary/preferred-drugs (last visited Nov. 8, 2023).

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 25 79. In October 2014, Tris again altered the test method, switching to Method 8. But

just a few months later, Quillivant produced more out-of-specification results using the new

method.

80. Even more out-of-specification dissolution testing results were observed in 2015

and 2016, despite testing occurring under revised Methods 8 and 9. In the Deviation Report for

one of the 2016 failures, Tris’s Senior Compliance Specialist concluded that “the root cause of the

subject deviation was related to method,” thus continuing Tris’s trend of blaming the test method

rather than finding the underlying cause for its product’s variability.

81. Following this Report, Tris changed the dissolution test method to Method 10. But

rather than adjusting the test method to better resemble real-world usage, Tris continued to

increase the extent to which Quillivant samples were manipulated prior to dissolution testing by

adding a rest period of six hours after sonication. This extra step was not included in the only

dissolution testing method properly reported to the FDA (Method 5) and was not reflective of the

patient usage described in the drug’s label. No matching six-hour waiting period was added to

Quillivant’s instructions for pharmacists and caregivers.

82. Tris observed additional out-of-specification dissolutions results for Quillivant in

December 2016. However, this time the failure occurred eight hours after reconstitution—a first

for Quillivant. In response, Pfizer notified the FDA through another Field Alert Report. Following

additional negotiations with FDA, Pfizer agreed to commit to internally narrowing Quillivant’s

dissolution test specifications, which upset Tris personnel and caused Tris CEO Mehta to

personally complain to Pfizer.

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 26 83. Tris modified the dissolution test method to Method 11 in May 2017. Method 11

still included a sonication step. This test method remained in place until at least January 2018.

84. During this time, Defendants failed to properly conduct investigations into the root

causes of the various dissolution failures, electing instead to continue modifying the dissolution

test itself. Both Defendants’ changes in the dissolution testing procedure—at the insistence of

CEO Mehta—as well as Defendants’ failure to investigate the out-of-specification test results

constitute ongoing violations of FDA regulations, causing Quillivant to be adulterated in violation

of state and federal law, including the TFDCA and FDCA.

C. Defendants Failed to Determine the Root Cause of Particle Size Testing Failures, in Violation of FDA CGMP

85. Not only was Quillivant routinely failing dissolution testing, but it was also regularly

failing particle size testing. By way of background, Quillivant’s extended-release technology used

a special coating to control the release of Quillivant’s active pharmaceutical ingredient—

methylphenidate. 65 To manage the release of the active ingredient, Tris applied various

thicknesses of the time-release coating to Quillivant’s active ingredient particles: the thicker the

coating, the longer it takes for the methylphenidate to be released.

86. Particle size testing was an important tool to measure the ratio of how big the

particles of coated methylphenidate present in a sample were, which would directly impact how

rapidly the drug would be absorbed within the body. Critically, the FDA required Quillivant to pass

particle size testing in addition to dissolution testing.

87. At least as early as June 2014, Quillivant started generating out-of-specification

65 Tris Pharma, LiquiXR Technology, available at https://www.trisadhdhcp.com/liquixr-technology/ (last visited Nov. 8, 2023).

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 27 particle size testing results. Quillivant continued to fail particle size tests throughout 2014 and

2015. In an email dated November 12, 2014, Tris’s Senior VP of Quality bluntly stated: “for those

that were unaware, this is now the 8th [methylphenidate] particle size failure in 5 months. I am

absolutely ‘pointing the finger’ at all of us for doing a less than acceptable job investigating this

issue and finding a true root cause.”

88. Quillivant’s particle size is a direct function of the manufacturing process, and

repeatedly failing to meet particle size specifications was another symptom of Tris’s flawed

manufacturing process for Quillivant.

89. But in a familiar move, Tris continued “doing a less than acceptable job” by failing

to investigate the root cause of the manufacturing problem. Instead, Tris had the creative idea to

remove particle size testing altogether.

90. In communications with Pfizer, Tris alleged that batches were failing in-process

particle size testing but meeting their final dissolution specifications, and that the “inappropriate

test” could “potentially impact [Tris’s] ability to supply” Quillivant to Pfizer. During this

discussion, Tris did not inform Pfizer that Tris continued to use the unapproved dissolution test

that improperly manipulated the test samples, thereby making it easier for Quillivant to pass.

91. Tris needed Pfizer’s support to seek FDA approval for the removal of particle size

testing, and they complained that Pfizer’s regulatory group was moving slowly. Pfizer’s

Commercial Lead for Quillivant replied that, while they were “also extremely concerned about the

upcoming out of stock situation” for Quillivant, there were concerns that particle size “was still

out of specification and no root cause [had] been found.” They further cautioned that there were

“significant implications to . . . Quillivant if this is not fully vetted.”

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 28 92. On the same day Pfizer shared their concerns with Tris, they also circulated internal

emails outlining their apprehension about removing particle size testing. Pfizer’s Director of

Business Development for the QXR Franchise noted that Pfizer’s internal analysis contradicted

Tris’s position, explaining that Pfizer personnel were “concerned that sufficient data currently

[did] not exist to eliminate or widen the in-process specification” for particle size testing.

93. A Pfizer memo attached to an email chain by their Senior Director of Chemistry,

Manufacturing, and Controls acknowledged that “[i]ntrinsically, particle size influences

[bioavailability] due to differences in surface area,” and that, because dissolution testing was “not

able to adequately demonstrate clinical performance. . . dissolution testing alone” could not be

relied on to justify removal of particle size testing. He further cautioned, “we are not being

transparent with the [FDA] as . . . we are deleting this specification for cause. This is an issue from

a [C]GMP perspective.” He concluded that sufficient data did not exist to eliminate or widen the

specifications for particle size testing, and that additional testing would be needed to support Tris’s

proposed course of action.

94. A month later, after Tris’s continued insistence on removing particle size testing

based solely on the alleged sufficiency of dissolution testing, Pfizer capitulated. They agreed to

support the change request to the FDA, in large part due to Tris’s agreement to submit the change

as a prior approval supplement (PAS) to Quillivant’s NDA that would include information about

Quillivant’s out-of-specification particle size testing results.

95. But tension still existed regarding how to handle the request. Pfizer personnel

wanted to bring in an external consultant to facilitate the process, but Tris CEO Mehta was anxious

to move forward and thought the consultant added “unnecessary time and convolution.”

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 29 96. In response to pushback from Tris, Pfizer’s General Manager for US Brands

discussed the problem internally with her colleagues. In an email dated December 2, 2015, she

provided the following summary of the situation:

Regulatory believes that they need to be certain that [Tris’] manufacturing process is fully in control before requesting this of the FDA. We have gotten several lack of effect comments from patients that have been reported to the FDA, as well as we have had a consistency issue with the particle size which has caused a high percentage of batches to be discarded as they didn’t meet spec. [T]his is why Tris wants to eliminate the additional standards testing. While these events are not necessarily connected, regulatory must have confidence that they are not. Tris was not able to establish a root cause for the manufacturing issues and as a hard-to- make product, the departure of their key manufacturing person seems to have coincided with these issues. Since Tris has not been amenable to a Pfizer review of the data the compromise was to bring in an external/neutral party to enable this confidence level to be reached before requesting something of the FDA. 66

97. Despite Pfizer’s misgivings, Tris and Pfizer ultimately moved forward with

submission of the PAS to FDA, requesting removal of particle size testing on February 17, 2016.

Unsurprisingly, the FDA rejected the request. The agency’s Complete Response Letter

summarized Pfizer’s argument as follows: “You claim that dissolution is a precise quality control

tool and a more relevant and appropriate test for the assessment of the product performance and

evaluation of batch to batch reproducibility compared to the particles size testing.” The FDA

critiqued this claim, noting that Quillivant’s dissolution testing and acceptance criteria—as

understood by FDA—were insufficient to replace particle size testing. Importantly, while

Quillivant was still regularly failing the dissolution tests even under Tris’s increasingly modified

and unapproved dissolution methods, Pfizer was making grandiose claims about the alleged

reliability and sufficiency of dissolution testing. 67

66 Emphasis added. 67 As of 2016, Tris had not identified the root cause of particle size failures, though they had taken steps that they claimed reduced the frequency of such failures.

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 30 98. As approved by the FDA, Quillivant had to meet certain particle size standards.

Tris recorded numerous out-of-specification results for the mandated particle size test from 2014

to at least 2016, while failing to properly conduct investigations into the root causes of the particle

size failures. Defendants’ failure to investigate the out-of-specification test results constitutes an

ongoing violation of FDA regulations, causing Quillivant to be adulterated in violation of state and

federal law, including the TFDCA and FDCA.

D. Defendants Failed to Properly Investigate Numerous Complaints Regarding Quillivant and Lack of Effect, in Violation of FDA’s CGMP

99. Given the numerous quality control issues plaguing Quillivant between 2013 and

2018, it is unsurprising that a significant number of consumers took the extraordinary step of

officially complaining that Quillivant was failing to work as expected. As early as September 2013,

Defendants began receiving consumer complaints that Quillivant had a “lack of effect.”

100. In December 2014, the FDA issued a Postmarket Drug and Biologic Safety

Evaluations report identifying lack of effect for Quillivant as a “new potential issue” the agency

was monitoring. The FDA sent another notice regarding lack of effect complaints to Pfizer in April

2015, identifying it as a “potential safety issue.” Pfizer forwarded the notice to Tris, along with

questions about Tris’s procedures for monitoring and investigating product complaints.

101. On May 21, 2015, Tris’s Senior Manager of Compliance sent Pfizer a memo

addressing the steps Tris had taken to investigate lack of effect complaints concerning Quillivant.

Among other things, the memo assured Pfizer that Tris had tested relevant samples for dissolution

and the samples had met release specifications. The memo concluded there “were no

discrepancies noted in the manufacturing or packaging processes that would have resulted in the

report of a lack of effect.”

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 31 102. But what the memo failed to acknowledge is that in May 2015, Tris was using

dissolution test Method 8, which included sonication and was not approved by the FDA. By using

this unapproved test method, Tris was unable to properly investigate whether the previously

released product actually met the FDA’s finished product specifications.

103. Even when faced with an influx of actual patient complaints about the drug lacking

effect, Tris could not say whether the drug as manufactured was consistent with the drug as

approved, because Tris had changed one of the primary methods to verify that fact. Tris continued

to use unapproved quality control testing methods despite FDA’s warnings regarding patients’

lack of effect complaints.

104. Pfizer was far from blameless in its handling of Quillivant product complaints. In

July 2015, the FDA asked Pfizer for specific information related to Quillivant’s lack of effect

complaints. The FDA’s Information Request was eventually shared with Tris’s Chief Medical

Officer, who emailed Tris CEO Mehta to express her concerns about Pfizer’s handling of the

situation. Pfizer wanted to argue that the lack of effect complaints largely occurred during the

titration phase and were caused by doctors failing to adjust the medication to a fully optimized

dose. But according to Tris, the majority of complaints contained no dosage information, with only

21% of the complaints arising during the initial titration period. Tris’s Chief Medical Officer

worried that “a solution [was] being proposed [by Pfizer] before the problem [was] well

understood.”

105. Even Pfizer personnel recognized weaknesses in the position that dose titration was

to blame for the uptick in product complaints, as the VP of Safety Surveillance and Risk

Management acknowledged, “in the absence of conclusive data it seems we are left with some

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 32 ‘hypothesizing.’” Nevertheless, when Pfizer submitted its response to the FDA’s Information

Request, its report concluded that “the root cause [was] most likely associated with the titration

phase of the dosing regimen.” Pfizer additionally placed some blame on the patients and their

caregivers, suggesting that they were not properly shaking the product prior to use. 68

106. While Pfizer’s response to the Information Request was sufficient to close that

particular inquiry, FDA continued to have concerns regarding Quillivant’s efficacy. For instance,

in an October 2016 email detailing Tris’s discussion with FDA on Quillivant’s particle size testing

requirement, Tris noted that FDA appeared to have the lack of effect topic on their mind, and that

FDA linked it to potential safety issues.

107. Internally, Tris and Pfizer continued to conceal the true scope of lack of effect

complaints, and continued to improperly investigate the complaints by using their unapproved

dissolution test methods. In early 2017, after Tris obtained out-of-specification dissolution test

results for Quillivant, Pfizer compiled a graph summarizing all reported lack of effect complaints

for Quillivant. According to this graph, complaints in 2017 had again spiked to some of the highest

reported levels.

108. Defendants understood the link between Quillivant’s quality control failures and

the lack of effect complaints. Yet at no point did Defendants warn Texas Medicaid providers or

decision-makers that Quillivant had known manufacturing issues affecting its efficacy. Defendants

thereby deprived the Medicaid program of the crucial information it relies on to ensure the safety

and quality of care provided to Medicaid beneficiaries. As a result, thousands of Texas children

received an adulterated Schedule II Controlled Dangerous Substance.

68 This claim was particularly disingenuous given that Pfizer knew Tris was sonicating Quillivant samples prior to dissolution testing. Sonication mixes the drug far more effectively than shaking per the label instructions.

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 33 109. Defendants’ inability to properly compare the consistency of the Quillivant batches

referenced in the lack of effect claims meant that Defendants were unable to properly investigate

the complaints as required by FDA CGMP regulations. Accordingly, Defendants’ actions caused

Quillivant to be adulterated in violation of state and federal law, including the TFDCA and FDCA.

E. FDA Issues Notices of Violations to Tris and Pfizer

110. By 2017, Quillivant’s persistent quality issues triggered an FDA inspection of Tris’s

manufacturing facilities, beginning in February and extending into March 2017. During that time,

Pfizer recalled multiple lots of Quillivant due to dissolution testing failures.

111. After the inspection, the FDA issued Form 483 Inspectional Observations finding,

in relevant part, that: 1) the “quality control unit lack[ed] the responsibility and authority to reject

all components and drug products”; 2) “Out-of-Specification (OOS) results were obtained for

dissolution testing for” multiple lots of Quillivant; 3) the “responsibilities and procedures

applicable to the quality control unit [were] not in writing and fully followed”; 4) the “accuracy,

sensitivity, specificity[,] and reproducibility of test methods [had] not been established and

documented”; and 5) “[e]stablished test procedures and laboratory control mechanisms [were]

not followed and documented at the time of performance.”

112. Pfizer’s Director of Business Development for the QXR Franchise circulated the

FDA 483 Inspectional Observations to others in Pfizer senior leadership positions, noting that the

report revealed “several systemic issues at Tris.” After describing the FDA’s findings, he

summarized: “In essence, I believe FDA is saying that Tris Quality System [i]s broken.” Despite

this dire assessment, when Tris recommended that Pfizer place all lots of Quillivant on hold until

the issues raised by the FDA could be fully investigated, Pfizer pushed Tris to continue supplying

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 34 the marketplace with Quillivant.

113. The events of early 2017 finally prompted Pfizer to internally examine the workings

of its COQA team. In a July 2017 email, Pfizer’s Senior Director of Regulatory Affairs admitted

that Pfizer had not followed “the normal change control process” for making changes to

Quillivant’s dissolution testing method. He blamed this failing on the progression of Pfizer’s

working relationship with Tris, as well as Tris’s position regarding the proprietary nature of

information concerning Quillivant. He further admitted Pfizer’s COQA team had “dropped the

ball” when, after requesting that additional testing be performed regarding the introduction of

sonication, “nothing materialized.”

114. In October 2017, the FDA sent Tris a Drug Master File (DMF) Deficiency Letter

critiquing Tris’s repeated revisions to Quillivant’s dissolution testing method. The agency

explained that the introduction of sonication in Method 6 and its continued use in subsequent test

methods was unacceptable. The agency likewise found unacceptable the six-hour sample rest

period introduced in Method 10. As a result, the FDA concluded that the only appropriate

dissolution testing method for Quillivant was Method 5. The FDA instructed Tris to update

Quillivant’s DMF accordingly.

115. Merely a month after receiving such harsh feedback from the FDA on Quillivant,

Pfizer had the audacity to provide a presentation to the Texas Medicaid DUR Board in an effort to

maintain Quillivant’s preferred status on the PDL. Pfizer did so before related safety and efficacy

issues were fully understood or investigated, and with full awareness that a Quillivant shortage was

imminent.

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 35 116. In fact, Pfizer did not notify Texas Medicaid of Quillivant supply issues until

February 2018, when the shortage was already ongoing. Even that communication was exceedingly

brief, providing zero explanation or discussion of the ongoing manufacturing and quality control

issues causing the shortage. At no point did either Pfizer or Tris disclose to Texas Medicaid the

quality or regulatory issues related to Quillivant, or that an alarming number of patients were

submitting complaints that the drug was not working as intended.

117. Meanwhile, Pfizer’s internal communications were far more candid. In a March

2018 email exchange discussing Quillivant’s dissolution testing issues, Pfizer’s COQA Director

and Team Lead admitted: “I am getting less and less convinced we actually know how to make this

product.”

118. Pfizer’s concerns were warranted. On March 26, 2018, the FDA issued a Warning

Letter to Tris finding that it failed to conform to CGMP and declaring Quillivant to be adulterated,

in violation of the Federal Food Drug and Cosmetic Act. The Warning Letter did not mince words,

describing the issues within Tris manufacturing as “significant” violations of CGMP and stating

in no uncertain terms that because Tris’s “methods, facilities, or controls for manufacturing,

processing, packing, or holding [did] not conform to CGMP,” Tris’s drug products were

“adulterated within the meaning of section 50l(a)(2)(B) of the Federal Food, Drug, and Cosmetic

Act (FD&C Act), 21 U.S.C. 35l(a)(2)(B).”

119. The Warning Letter went on to explain the specific violations the FDA investigator

observed, including that Tris “failed to thoroughly investigate any unexplained discrepancy or

failure of a batch or any of its components to meet any of its specifications” as required under 21

CFR § 211.192. Furthermore, the Warning Letter noted that Tris had failed to “adequately

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 36 investigate product failures and significant defect complaints”; lacked “thorough investigations

into root causes”; and “failed to implement prompt and effective corrective actions and preventive

actions (CAPA).”

120. FDA’s Warning Letter put Pfizer on notice that it violated federal law requiring

compliance with CGMP, and officially put Pfizer and Tris on notice of what was patently obvious

from the start: Quillivant was adulterated starting in 2012 and continuing into 2018. Even after

receiving this clear and unequivocal assessment, neither Tris nor Pfizer alerted Texas Medicaid

decision-makers to the FDA’s serious findings on adulteration. In failing to do so, Defendants’

ongoing violations of the TMFPA became that much more flagrant.

121. Following the Warning Letter, Defendants made one final attempt at concealing the

manufacturing issues with Quillivant by again altering the dissolution test method, this time to

include a prolonged period of hydration.69 However, since FDA had just rebuked Defendants for

unilaterally changing the test method, Pfizer decided to submit the proposed change for FDA’s

approval. Not surprisingly, FDA rejected Pfizer’s proposal, noting that it had concerns with

Quillivant’s reduced dissolution rate, including that Quillivant’s performance in patients may be

different from the batches used in approval.

122. In the wake of the FDA’s Warning Letter and additional criticism from the agency

in the ensuing months, Pfizer ultimately chose to divest itself of Quillivant by selling the subsidiary

company that owned the drug to Tris. The transfer became effective on September 24, 2018. On

November 16, 2018, Tris would finally inform the FDA that it had identified the true root cause of

Quillivant’s out-of-specification dissolution testing results. After over six years and a multitude of

69 Hydration, in this context, refers to allowing a recently reconstituted sample to sit for a specified period of time prior to testing—in other words, a rest period. The proposed hydration period in this instance was 24 hours.

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 37 evasions, Tris finally acknowledged the utterly unsurprising fact that its flawed manufacturing

process caused Quillivant’s quality issues.

VIII. CAUSES OF ACTION

123. Plaintiffs re-allege and reincorporate by reference as set forth herein the allegations

contained in Paragraphs 1 through 122 of this Petition.

A. Defendants’ Violations of the TMFPA for Which Plaintiffs Seek Civil Remedies and Penalties

124. Defendant Pfizer knowingly made or caused to be made false statements and/or

misrepresentations of material facts to Texas Medicaid in applying for Quillivant’s inclusion on

the VDP formulary. Specifically, Pfizer falsely certified on the VDP application that Quillivant was

not in violation of federal and state law, and that it would update Texas Medicaid as to any change

in Quillivant’s product status. Pfizer’s false statements and/or misrepresentations permitted

Pfizer to receive benefits under the Medicaid program that were not authorized or that were greater

than the benefits authorized, including, but not limited to, inclusion on the VDP formulary, in

violation of the TMFPA. TEX. HUM. RES. CODE § 36.002(1).

125. Defendant Pfizer knowingly concealed information from, and/or failed to disclose

information to, Texas Medicaid in conjunction with the VDP, DUR, and PDL processes.

Specifically, Pfizer failed to disclose Quillivant’s known quality issues to VDP, the DUR Board,

and the former P&T Committee, including that Quillivant was adulterated. This conduct

permitted Pfizer to receive benefits under the Medicaid program that were not authorized or that

were greater than the benefits authorized, including, but not limited to, continued inclusion on the

formulary and PDL, and virtually unfettered reimbursement of Quillivant, in violation of the

TMFPA. TEX. HUM. RES. CODE § 36.002(2).

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 38 126. Defendant Pfizer knowingly made, caused to be made, induced, or sought to induce

the making of false statements and/or misrepresentations of material facts concerning information

required to be provided by a federal or state law, rule, regulation, or provider agreement pertaining

to the Medicaid program, in violation of the TMFPA. Specifically, during the VDP application

process, Defendant Pfizer falsely certified that Quillivant was not in violation of federal and state

law, and that Pfizer would update Texas Medicaid as to any change in Quillivant’s product status,

which was a legal requirement for Quillivant to be added to the Texas Medicaid formulary. Despite

making this certification, at no point thereafter did Pfizer inform Texas Medicaid about Quillivant

becoming adulterated. Pfizer’s false certification, which allowed Pfizer to receive the benefit of

inclusion on the Medicaid formulary, therefore violated the TMFPA. TEX. HUM. RES. CODE §

36.002(4)(B).

127. Defendants Tris, Pfizer, and Mehta knowingly made or caused to be made claims

under the Medicaid program for a product, Quillivant, that was adulterated. Specifically, Tris,

under the direction of CEO Mehta, knowingly adulterated Quillivant and released it to Pfizer with

the understanding that Pfizer would promote Quillivant to Texas physicians, including Texas

Medicaid physicians, and would distribute Quillivant in Texas, ultimately leading to its use by

Texas Medicaid patients. Pfizer, for their part, knew Tris was adulterating Quillivant, yet

continued to distribute and to promote it throughout Texas, including promoting Quillivant to

Texas Medicaid physicians and decisionmakers. Pfizer also continually undertook efforts to ensure

Quillivant was available on the Texas Medicaid formulary and listed as preferred on the Medicaid

PDL, despite being adulterated. These efforts by Defendants violated the TMFPA. TEX. HUM.

RES. CODE § 36.002(7)(C).

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 39 128. As a result of Defendants’ conduct, the Texas Medicaid program was prevented

from making fully informed and appropriate policy decisions, and from fully utilizing the tools and

safeguards available to the program, including the VDP, DUR, and PDL processes, to manage

appropriately the reimbursement of Quillivant prescriptions. Defendants’ illegal conduct,

therefore, resulted in millions of dollars of unauthorized or greater-than-authorized

reimbursements for Quillivant by the State of Texas. Defendants’ conduct additionally resulted in

Defendants receiving the benefit of having Quillivant listed and maintained on the Texas Medicaid

formulary during times when the drug was in violation of federal and state law.

129. Under the TMFPA, each Defendant is liable to the State of Texas for the amount

of any payments or the value of any monetary or in-kind benefits provided under the Medicaid

program, directly or indirectly, as a result of its unlawful acts; two times the amount of those

payments or the value of the benefit; pre-judgment interest on the amount of those payments or

the value of the benefit; and a civil penalty for each unlawful act committed, in addition to

reasonable fees, expenses, and costs of the State of Texas in investigating and obtaining civil

remedies in this matter. TEX. HUM. RES. CODE §§ 36.052, 36.007, 36.110(c); TEX. GOV’T CODE

§ 402.006(c).

130. Plaintiffs invoke in the broadest sense all relief possible at law or in equity under

TEX. HUM. RES. CODE § 36.052, whether specified in this pleading or not.

131. The amounts sought from each Defendant are in excess of the minimum

jurisdictional limits of this Court.

132. The TMFPA is a statute of absolute liability. There are no statutory, equitable, or

common law defenses for any violation of its provisions. Further, Texas jurisprudence provides

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 40 that the defenses of estoppel, laches, and limitations are not available against the State of Texas as

a Sovereign. 70

IX. STATUTORY INJUNCTION UNDER § 36.051 OF THE ACT

133. The Attorney General has good reason to believe that Defendants Tris and Mehta

are committing, have committed, or are about to commit unlawful acts as defined by the TMFPA.

These illegal acts may be enjoined under § 36.051 of the TMFPA.

X. JURY DEMAND

134. Plaintiffs respectfully request a trial by jury on all claims pursuant to Texas Rules of

Civil Procedure 216.

XI. PRAYER

135. Plaintiffs ask that judgment be entered upon trial of this case in favor of the State

against Defendants to the maximum extent allowed by law.

136. Plaintiffs ask for injunctive relief pursuant to § 36.051 of the TMFPA as to

Defendants Tris and Mehta.

137. The State of Texas asks that it recover from Defendants under the TMFPA:

A. the amount of any payments or the value of any monetary or in-kind benefits provided under the Medicaid program, directly or indirectly, as a result of Defendants’ unlawful acts;

B. two times the amount of any payments or the value of any monetary or in- kind benefits provided under the Medicaid program, directly or indirectly, as a result of Defendants’ unlawful acts;

C. civil penalties in an amount not less than $5,500 or more than $11,000 for each unlawful act committed by Defendants, as adjusted by 31 U.S.C. 3729(a);

70 State v. Durham, 860 S.W.2d 63, 67 (Tex. 1993).

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 41 D. prejudgment interest;

E. expenses, costs, and reasonable attorneys’ fees; and

F. post-judgment interest at the legal rate.

138. Plaintiffs seek monetary relief in excess of $1,000,000.

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 42 Respectfully submitted,

KEN PAXTON Attorney General of Texas

BRENT WEBSTER First Assistant Attorney General

RALPH MOLINA Deputy First Assistant Attorney General

JAMES LLOYD Deputy Attorney General for Civil Litigation

AMY SNOW HILTON Chief, Healthcare Program Enforcement Division

/s/ Jonathan D. Bonilla JONATHAN D. BONILLA Healthcare Program Enforcement Division Assistant Attorney General Texas State Bar No. 24073939 Jonathan.Bonilla@oag.texas.gov

JORDAN UNDERHILL Assistant Attorney General Texas State Bar No. 24102586 Jordan.Underhill@oag.texas.gov

VIVIAN I. EGBU Assistant Attorney General Texas State Bar No. 24079078 Vivian.Egbu@oag.texas.gov

BRITTANY D. PETERS Assistant Attorney General Texas State Bar No. 24124762 Brittany.Peters@oag.texas.gov

Office of the Attorney General Healthcare Program Enforcement Division P.O. Box 12548, Capitol Station 056 Austin, Texas 78711-2548 Telephone: (512) 936-9932 Facsimile: (512) 320-0667

COUNSEL FOR THE STATE OF TEXAS

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 43 BROWN, LLC Lead Counsel

/s/ Jason T Brown Jason T. Brown (pro hac vice) Patrick S. Almonrode (pro hac vice) 111 Town Square Place, Suite 400 Jersey City, New Jersey 07310 (877) 561-0000 (office) (855) 582-5297 (fax) jtb@jtblawgroup.com patalmonrode@jtblawgroup.com

POTTER MINTON A PROFESSIONAL CORPORATION Local Counsel

Michael E. Jones E. Glenn Thames, Jr. 102 North College, Suite 900 Tyler, Texas 75702 (903) 597-8311 (office) (903) 593-0846 (fax) mikejones@potterminton.com glennthames@potterminton.com

COUNSEL FOR RELATOR TARIK AHMED

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 44 CERTIFICATE OF SERVICE

By my signature below, I hereby certify that a true and correct copy of the foregoing was served on all counsel of record via electronic mail on January 17, 2025.

THE VAL JONES LAW FIRM GILLAM & SMITH LLP

George Valton (“Val”) Jones Harry “Gil” Gillam, Jr. 109 West Austin St. Tom Gorham Marshall, TX 75670-3340 303 S. Washington Ave. (903) 927-2220 (telephone) Marshall, Texas 75670 val@valjoneslaw.com (903) 934-8450 (telephone) (903) 934-9257 (facsimile) FOLEY & LARDNER LLP gil@gillamsmithlaw.com tom@gillamsmithlaw.com Edward D. (“Ed”) Burbach 600 Congress Avenue, Suite 2900 Austin, Texas 78701 BLANK ROME LLP (512) 542-7070 (telephone) (512) 542-7100 (facsimile) Barrett Reid Howell eburbach@foley.com 300 Crescent Court Suite 200 Dallas, Texas 75201 ROPES & GRAY LLP (972) 850-1476 (telephone) (972) 850-1451 (facsimile) Samantha Barrett Badlam barrett.howell@blankrome.com (Admitted Pro Hac Vice) Stefan Schropp William E. Lawler III (Admitted Pro Hac Vice) (admitted pro hac vice) 2099 Pennsylvania Ave., N.W. 1825 Eye Street NW Washington, DC 20006-6807 Washington, D.C. 20006 (202) 508-4734 (telephone) william.lawler@blankrome.com samantha.badlam@ropesgray.com (202) 420-2249 Stefan.Schropp@ropesgray.com Attorneys for Defendant Tris Pharma, Inc. Attorneys for Defendant Pfizer Inc.

/s/ Jonathan D. Bonilla Jonathan D. Bonilla Assistant Attorney General

PLAINTIFFS’ SECOND AMENDED PETITION PAGE 45 Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Rhonda Rodriguez on behalf of Jonathan Bonilla Bar No. 24073939 rhonda.rodriguez@oag.texas.gov Envelope ID: 96347046 Filing Code Description: Amended Petition Filing Description: PLAINTIFFS' SECOND AMENDED PETITION Status as of 1/17/2025 10:56 AM CST

Edward Burbach 3355250 eburbach@foley.com 1/17/2025 10:47:18 AM SENT

Veronica Salinas vsalinas@foley.com 1/17/2025 10:47:18 AM SENT

Pfizer Team QXRTXQuiTamAssociates&Paralegals@ropesgray.com 1/17/2025 10:47:18 AM ERROR

Pfizer Case Team QXRTXQuiTamAssociates&Paralegals@ropesgray.com 1/17/2025 10:47:18 AM ERROR

Rhonda Rodriguez rhonda.rodriguez@oag.texas.gov 1/17/2025 10:47:18 AM SENT

Jonathan D.Bonilla Jonathan.Bonilla@oag.texas.gov 1/17/2025 10:47:18 AM SENT

Jordan Underhill Jordan.Underhill@oag.texas.gov 1/17/2025 10:47:18 AM SENT

Brittany Peters Brittany.Peters@oag.texas.gov 1/17/2025 10:47:18 AM SENT

Vivian Egbu vivian.egbu@oag.texas.gov 1/17/2025 10:47:18 AM SENT

Jason T.Brown jtb@jtblawgroup.com 1/17/2025 10:47:18 AM SENT

Patrick S.Almonrode patalmonrode@jtblawgroup.com 1/17/2025 10:47:18 AM SENT

Michael E.Jones mikejones@potterminton.com 1/17/2025 10:47:18 AM SENT

E. GlennThames glennthames@potterminton.com 1/17/2025 10:47:18 AM SENT

Case Contacts Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Rhonda Rodriguez on behalf of Jonathan Bonilla Bar No. 24073939 rhonda.rodriguez@oag.texas.gov Envelope ID: 96347046 Filing Code Description: Amended Petition Filing Description: PLAINTIFFS' SECOND AMENDED PETITION Status as of 1/17/2025 10:56 AM CST

Diana Arias diana@gillamsmithlaw.com 1/17/2025 10:47:18 AM SENT

Olivia Arias olivia@gillamsmithlaw.com 1/17/2025 10:47:18 AM SENT

Rosa Ferguson rosa@gillamsmithlaw.com 1/17/2025 10:47:18 AM SENT

Stefan Schropp Stefan.Schropp@ropesgray.com 1/17/2025 10:47:18 AM SENT

Deanna Foster Deanna.Foster@ropesgray.com 1/17/2025 10:47:18 AM SENT

Samantha Barrett Samantha.Badlam@ropesgray.com 1/17/2025 10:47:18 AM SENT

Ed Burbach eburbach@foley.com 1/17/2025 10:47:18 AM SENT

Val Jones val@valjoneslaw.com 1/17/2025 10:47:18 AM SENT

McKellar Karr mckellar@gillamsmithlaw.com 1/17/2025 10:47:18 AM SENT

Lit Docket MCO LitDocketInformationGovernance@ropesgray.com 1/17/2025 10:47:18 AM SENT

William E.Lawler, III william.lawler@blankrome.com 1/17/2025 10:47:18 AM SENT

Harry L.Gillam gil@gillamsmithlaw.com 1/17/2025 10:47:18 AM SENT

Tom Gorham tom@gillamsmithlaw.com 1/17/2025 10:47:18 AM SENT

Barrett ReidHowell barrett.howell@blankrome.com 1/17/2025 10:47:18 AM SENT

Harry L.Gillam gil@gillamsmithlaw.com 1/17/2025 10:47:18 AM SENT Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Rhonda Rodriguez on behalf of Jonathan Bonilla Bar No. 24073939 rhonda.rodriguez@oag.texas.gov Envelope ID: 96347046 Filing Code Description: Amended Petition Filing Description: PLAINTIFFS' SECOND AMENDED PETITION Status as of 1/17/2025 10:56 AM CST

Harry L.Gillam gil@gillamsmithlaw.com 1/17/2025 10:47:18 AM SENT

Barrett ReidHowell barrett.howell@blankrome.com 1/17/2025 10:47:18 AM SENT

John F.Hundley hundleyj@ballardspahr.com 1/17/2025 10:47:18 AM SENT

Christopher Hatfield hatfieldc@ballardspahr.com 1/17/2025 10:47:18 AM SENT APPENDIX C

Relevant Court Filings – Motions to Dismiss and Memorandum of Law

TRAP 28.3(e)(2)(B) CAUSE NO. 23-1031

THE STATE OF TEXAS, § IN THE DISTRICT COURT ex rel. TARIK AHMED § § Plaintiffs, § § v. § 71st JUDICIAL DISTRICT § PFIZER INC., TRIS PHARMA, INC., § and KETAN MEHTA, § § Defendants. § HARRISON COUNTY, TEXAS

DEFENDANT PFIZER INC.’S MOTION TO DISMISS PLAINTIFFS’ FIRST AMENDED PETITION AND REQUEST FOR HEARING

Defendant Pfizer Inc. (“Pfizer”), by and through its undersigned counsel, and pursuant to

Rule 91a of the Texas Rules of Civil Procedure, hereby moves the Court to dismiss the First

Amended Petition in the above-captioned matter. Pfizer specifically requests a hearing on this

motion.

This motion is supported by Pfizer’s Memorandum of Law in Support of Motion to Dismiss

Plaintiffs’ First Amended Petition submitted herewith, as well as all papers, pleadings, documents,

arguments of counsel, and other materials presented before or during the hearing on this motion,

and any other evidence and argument the Court may consider.

[Signature Page Follows] February 5, 2024 Respectfully submitted,

THE VAL JONES LAW FIRM By: /s/ Val Jones George Valton (“Val”) Jones 109 West Austin St. Marshall, TX 75670-3340 State Bar No. 10888050 val@valjoneslaw.com (903) 927-2220

FOLEY & LARDNER LLP Edward D. (“Ed”) Burbach State Bar No. 03355250 600 Congress Avenue, Suite 2900 Austin, Texas 78701 eburbach@foley.com (512) 542-7070 / (512) 542-7100 (fax)

ROPES & GRAY LLP Samantha Barrett Badlam (admitted pro hac vice) 2099 Pennsylvania Ave., N.W. Washington, DC 20006-6807 samantha.badlam@ropesgray.com (202) 508-4734

COUNSEL FOR DEFENDANT PFIZER INC.

2 CERTIFICATE OF SERVICE

By my signature below, I hereby certify that a true and correct copy of the foregoing was served on all counsel of record via fileandservetexas.com in accordance with the Texas Rules of Civil Procedure on this 5th day of February, 2024.

Jason T. Brown Patrick S. Almonrode 111 Town Square Place, Suite 400 111 Town Square Place, Suite 400 Jersey City, NJ 07310 Jersey City, NJ 07310 Fax: (855) 582-5297 Fax: (855) 582-5297 Email: jtb@jtblawgroup.com Email: patalmonrode@jtblawgroup.com

E. Glenn Thames, Jr. Michael E. Jones 102 North College, Suite 900 102 North College, Suite 900 Tyler, TX 75702 Tyler, TX 75702 Fax: (903) 593-0846 Fax: (903) 593-0846 Email: glennthames@potterminton.com Email: mikejones@potterminton.com

Jonathan D. Bonilla Jessica L. Weltge Assistant Attorney General Assistant Attorney General The State of Texas The State of Texas Office of the Attorney General Office of the Attorney General Civil Medicaid Fraud Division Civil Medicaid Fraud Division PO Box 12548, Capitol Station PO Box 12548, Capitol Station Austin, TX 78711 Austin, TX 78711 Fax: (512) 320-0667 Fax: (512) 320-0667 Email: Jonathan.Bonilla@oag.texas.gov Email: Jessica.Weltge@oag.texas.gov

Jordan Underhill Barrett Reid Howell Assistant Attorney General Texas State Bar. No. 24032311 The State of Texas 300 Crescent Court Office of the Attorney General Suite 200 Civil Medicaid Fraud Division Dallas, TX 75201 PO Box 12548, Capitol Station Fax: 972.534.1297 Austin, TX 78711 barrett.howell@blankrome.com Fax: (512) 320-0667 Email: Jordan.Underhill@oag.texas.gov

Harry “Gil” Gillam, Jr. Tom Gorham 303 S. Washington Ave. 303 S. Washington Ave. Marshall, Texas 75670 Marshall, Texas 75670 gil@gillamsmithlaw.com tom@gillamsmithlaw.com

3 John F. Hundley Christopher A. Hatfield 1909 K Street, NW, 12th Floor 1909 K Street, NW, 12th Floor Washington, DC 20006-1157 Washington, DC 20006-1157 Fax: (202) 661-2299 Fax: (202) 661-2299 hundleyj@ballardspahr.com hatfieldc@ballardspahr.com

/s/ Val Jones George Valton (“Val”) Jones

4 CAUSE NO. 23-1031

THE STATE OF TEXAS, § IN THE DISTRICT COURT § ex rel. TARIK AHMED § Plaintiffs, § § v. § 71st JUDICIAL DISTRICT § PFIZER INC., TRIS PHARMA, INC., § § and KETAN MEHTA, § Defendants. § HARRISON COUNTY, TEXAS

DEFENDANT TRIS PHARMA, INC.’S MOTION TO DISMISS PLAINTIFFS’ FIRST AMENDED PETITION AND NOTICE OF JOINDER IN RULE 91a MOTION TO DISMISS

Defendant Tris Pharma, Inc. (“Tris”) moves under Rule 91a of the Texas Rules of Civil

Procedure to dismiss Plaintiffs’ First Amended Petition (the “Petition”) and hereby joins in,

adopts, and incorporates by reference pursuant to Rule 58 of the Texas Rules of Civil Procedure

the arguments, authorities, and evidence in the Memorandum of Law in Support of Motion to

Dismiss Plaintiffs’ First Amended Petition (the “Pfizer Memorandum”) filed by Defendant

Pfizer Inc. (“Pfizer”) on February 5, 2024, which are relevant to the sole cause of action asserted

against Tris under TEX. HUM. RES. CODE § 36.002(7)(C).

Tris is a privately owned pharmaceutical development company organized under the laws

of, and with its principal place of business in, the State of New Jersey. Tris is dedicated to

developing and commercializing a suite of prescription medications designed to support patients

suffering from attention deficit hyperactivity disorder (“ADHD”). Among the ADHD medications

Tris has developed and brought to market is Quillivant XR (“Quillivant”).

On September 30, 2020, the State of Texas Office of the Attorney General (the “Attorney

General”) served Tris with a Civil Investigative Demand (“First CID”) for the production of

1 documents and other information pursuant to the Texas Medicaid Fraud Prevention Act

(“TMFPA”). Tris cooperated fully with the Attorney General’s investigation. Between October

2020 and October 2022, Tris produced approximately 583,566 documents totaling just under 2.9

million pages, as well as a single spreadsheet containing an export of more than 260,000 entries

of sales data, to the Attorney General’s office. On August 3, 2023, the Attorney General served

Tris with another, much narrower Civil Investigative Demand (“Second CID”), pursuant to which

Tris produced 62 additional documents totaling 258 pages.

On November 8, 2023, Plaintiffs the State of Texas, by and through the Attorney General

of Texas, Ken Paxton (“Texas” or the “State”) and Relator Tarik Ahmed (“Relator”), filed under

seal the Petition against Defendants Pfizer, Tris, and Ketan Mehta. In the Petition, Plaintiffs assert

four violations of the TMFPA, under TEX. HUM. RES. CODE §§ 36.002(1), (2), (4)(B), and (7)(C).

The first three claims are asserted only against Pfizer, with the fourth asserted against all

Defendants, alleging that Defendants knowingly made or caused to be made claims under the

Texas Medicaid program for an adulterated drug. Tris joins in Pfizer’s Motion to Dismiss

Plaintiffs’ First Amended Petition (the “Pfizer Motion to Dismiss”) and the portions of the Pfizer

Memorandum pertaining to Plaintiffs’ claim under Section 36.002(7)(C), which should be

dismissed because Plaintiffs have failed to plead that Quillivant was adulterated under U.S. Food

and Drug Administration (“FDA”) regulations. Specifically:

1. Plaintiffs have failed to adequately plead that any purported misconduct related to

changes to the dissolution testing method for Quillivant violated FDA Current Good

Manufacturing Practice (“CGMP”) requirements;1

1 See Pfizer Memorandum, Argument Section I.A.1.

2 2. Plaintiffs have failed to adequately plead that any conduct related to particle size

testing for Quillivant violated FDA CGMP requirements;2

3. Plaintiffs’ Petition pleads allegations including that Defendants took all required steps

under FDA regulations related to “lack-of-effect” complaints that preclude any

possibility to allege that Defendants violated FDA CGMP requirements related to

those complaints;3

4. Even if Quillivant, an undisputedly safe and effective drug, was technically

“adulterated” under CGMP requirements—which it was not —Plaintiffs have failed

to allege that Texas Medicaid would not have authorized the payment of claims for

Quillivant as a result.4

WHEREFORE, Defendant Tris Pharma, Inc. respectfully asks the Court to grant this

motion to dismiss, grant the Pfizer Motion to Dismiss, and grant Tris such other and further

relief, both general and specific, in law or in equity, to which it may show itself justly entitled.

(Remainder of Page Intentionally Left Blank)

2 See Pfizer Memorandum, Argument Section I.A.2. 3 See Pfizer Memorandum, Argument Section I.A.3. 4 See Pfizer Memorandum, Argument Section I.B.

3 Dated: February 5, 2024 Respectfully submitted,

GILLAM & SMITH LLP

By:/s/ Harry L. Gillam, Jr. Harry “Gil” Gillam, Jr. Texas State Bar. No. 07921800 Tom Gorham Texas State Bar. No. 24012715 303 S. Washington Ave. Marshall, Texas 75670 gil@gillamsmithlaw.com tom@gillamsmithlaw.com (903) 934-8450

BLANK ROME LLP By:/s/ Barrett R. Howell Barrett Reid Howell Texas State Bar. No. 24032311 300 Crescent Court Suite 200 Dallas, TX 75201 barrett.howell@blankrome.com (972) 850-1476

BALLARD SPAHR LLP By:/s/ John Hundley John F. Hundley Virginia Bar No. 36166 (admitted pro hac vice) Christopher Hatfield Virginia Bar No. 95224 (admitted pro hac vice) 1909 K Street, NW, 12th Floor Washington, DC 20006-1157 hundleyj@ballardspahr.com hatfieldc@ballardspahr.com (202) 661-2200 (phone) (202) 661-2299 (fax)

COUNSEL FOR DEFENDANT TRIS PHARMA, INC.

4 CERTIFICATE OF SERVICE

The undersigned hereby certifies that a true and correct copy of this Answer was served on

the below-listed counsel of record on February 5, 2024.

/s/ Harry L. Gillam, Jr.

COUNSEL FOR THE STATE OF TEXAS COUNSEL FOR TARIK AHMED

Jonathan Bonilla Jason T. Brown jonathan.bonilla@oag.texas.gov jtb@jtblawgroup.com Jessica Weltge Patrick S. Almonrode jessica.weltge@oag.texas.gov patalmonrode@jtblawgroup.com Jordan Underhill jordan.underhill@oag.texas.gov Brown, LLC 111 Town Square Place, Suite 400 Office of the Attorney General Jersey City, NJ 07310 Civil Medicaid Fraud Division Telephone: (877) 561-0000 P.O. Box 12548, Capitol Station Facsimile: (855) 582-5297 Austin, TX 78711-2548 Telephone: (512) 475-4169 Michael E. Jones Facsimile: (512) 320-0667 mikejhones@potterminton.com E. Glenn Thames, Jr. glennthames@potterminton.com

Potter Minton, P.C. 102 North College, Suite 900 Tyler, TX 75702 Telephone: (903) 597-8311 Facsimile: (903) 593-0846

George Valton (“Val”) Jones val@valjoneslaw.com

The Val Jones Law Firm 109 West Austin St. Marshall, TX 75670-3340 Telephone: (903) 927-2220

5 Edward D. (“Ed”) Burbach eburbach@foley.com

Foley & Lardner LLP 600 Congress Avenue, Suite 2900 Austin, TX 78701 Telephone: (512) 542-7070 Facsimile: (512) 542-7100

Samantha Barrett Badlam (admitted pro hac vice) Samantha.badlam@ropesgray.com

Ropes & Gray LLP 2099 Pennsylvania Ave., N.W. Washington, D.C. 20006-6807 Telephone: (202) 508-4734

6 CAUSE NO. 23-1031

THE STATE OF TEXAS, § IN THE DISTRICT COURT ex rel. TARIK AHMED § § Plaintiffs, § § v. § 71st JUDICIAL DISTRICT § PFIZER INC., TRIS PHARMA, INC., § and KETAN MEHTA, § § Defendants. § HARRISON COUNTY, TEXAS

DEFENDANT PFIZER INC.’S MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS PLAINTIFFS’ FIRST AMENDED PETITION

-i- TABLE OF CONTENTS

DEFENDANT PFIZER INC.’S MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS PLAINTIFFS’ FIRST AMENDED PETITION ..................................................... 1 PRELIMINARY STATEMENT .................................................................................................... 1 FACTUAL AND LEGAL BACKGROUND ................................................................................. 4 I. QUILLIVANT XR .................................................................................................................. 4 A. FDA’s Approval of Quillivant XR ........................................................................................ 5 B. Manufacturing and Testing of Quillivant .............................................................................. 8 II. RELEVANT TEXAS STATUTES AND REGULATORY FRAMEWORK ...................... 11 A. Texas Medicaid Vendor Drug Program Formulary ............................................................. 11 B. Quillivant’s Texas State Medicaid Application ................................................................... 13 C. Texas Medicaid Fraud Enforcement Framework ................................................................ 13 PROCEDURAL HISTORY.......................................................................................................... 15 ARGUMENT ................................................................................................................................ 15 I. PLAINTIFFS FAIL TO PLEAD THAT DEFENDANTS CAUSED A CLAIM TO BE MADE FOR AN “ADULTERATED” PRODUCT WITHIN THE MEANING OF SECTION 36.002(7)(C) OF THE TMFPA THAT RESULTED IN UNAUTHORIZED PAYMENTS BY THE STATE OF TEXAS. ........................................................................ 17 A. Plaintiffs fail to plead that Defendants were responsible for a claim for “product that has been adulterated” under Section 36.002(7)(c). .................................................................... 19 B. Even if Quillivant had been “adulterated” based on a CGMP violation, reimbursement was still authorized under the TMFPA. ...................................................................................... 32 II. PLAINTIFFS’ CAUSES OF ACTION UNDER SECTIONS 36.002(1) AND 36.002(4)(B) REGARDING PFIZER’S ALLEGED FALSE STATEMENTS OR MISREPRESENTATIONS FAIL AS A MATTER OF LAW. ............................................ 37 A. Plaintiffs fail to allege that Quillivant was adulterated, or otherwise in violation of federal or state law, at the time of Pfizer’s VDP application. .......................................................... 38 B. Plaintiffs fail to allege that Pfizer “falsely certified” that it would update Texas Medicaid as to any change in “product status.” ....................................................................................... 39 III. PLAINTIFFS FAIL TO PLEAD THAT PFIZER CONCEALED OR FAILED TO DISCLOSE INFORMATION IN VIOLATION OF 36.002(2). ........................................... 42 A. Plaintiffs cite no legal requirement that obligated Pfizer to disclose information related to post-manufacturing controls as part of the VDP formulary or PDL approval processes. ... 43 B. Plaintiffs do not allege that any purported issues with post-manufacturing controls impacted the safety or efficacy of Quillivant such that Pfizer was required to disclose this information to the P&T Committee or DUR Board............................................................. 45

-i- IV. PLAINTIFFS’ ALLEGATIONS FAIL TO SATISFY THE TMFPA’S SCIENTER REQUIREMENT .................................................................................................................. 46 CONCLUSION ............................................................................................................................. 51

- ii - TABLE OF AUTHORITIES

Page(s)

Cases

Aguilar v. Morales, 545 S.W.3d 670 (Tex. App.—El Paso 2017, pet. denied) .......................................................16

United States ex rel. Babalola v. Sharma, No. H-11-cv-4026, 2013 WL (S.D. Tex. Feb. 1, 2013) ...........................................................15

Bethel v. Quilling, Selander, Lownds, Winslett & Moser, P.C., 595 S.W.3d 651 (Tex. 2020)....................................................................................................17

Chapman v. Paul R. Wilson, Jr., D.D.S., Inc., 826 S.W.2d 214 (Tex. App.—Austin 1992, writ denied) ........................................................48

City of Dallas v. Sanchez, 494 S.W.3d 722 (Tex. 2016)....................................................................................................17

El Paso Hosp. Dist. v. Tex. Health & Hum. Servs. Comm’n, 247 S.W.3d 709 (Tex. 2008)....................................................................................................12

GoDaddy.com, LLC v. Toups, 429 S.W.3d 752 (Tex. App.—Beaumont 2014) ......................................................................17

United States ex rel. Gudur v. Deloitte Consulting LLP, 512 F. Supp. 2d 920 (S.D. Tex. 2007) .....................................................................................49

Guillory v. Seaton, LLC, 470 S.W.3d 237 (Tex. App.—Houston [14th Dist.] 2015, pet. denied) ..................................18

United States ex rel. Jacobs v. Walgreen Co., No. 21-20463, 2022 WL 613160 (5th Cir. Mar. 2, 2022)........................................................48

In re Joel Kelley Interests, Inc., No. 5:19-cv-559, 2019 WL 2521725 (Tex. App.—Dallas 2019, no pet.) ...............................17

John D. Copanos & Sons, Inc. v. FDA, 854 F.2d 510 (D.C. Cir. 1988) ...........................................................................................23, 31

Knudsen v. Sprint Commc’ns. Co., No. C13-04476, 2016 WL 4548924 (N.D. Cal. Sept. 1, 2016) ...............................................36

- iii - Malouf v. State, 656 S.W.3d 402 (Tex. App.—El Paso 2022, pet. filed) ..............................................34, 48, 51

United States ex rel. McBride v. Halliburton Co., 848 F.3d 1027 (D.C. Cir. 2017) ...............................................................................................36

United States ex rel. Rost v. Pfizer, Inc., 446 F. Supp. 2d 6 (D. Mass. 2006) ..........................................................................................15

United States ex rel. Rostholder v. Omnicare, Inc., 745 F.3d 694 (4th Cir. 2014) ...................................................................................................36

Salazar v. HEB Grocery Co., No. 4:16-cv-734, 2018 WL 1610942 (Tex. App.—San Antonio 2018, pet. denied, cert. denied) .................................................................................................................16

United States ex rel. Scharff v. Camelot Counseling, No. 13-cv-3791, 2016 WL 5416494 (S.D.N.Y. Sept. 28, 2016) .............................................36

United States ex rel. Schimelpfenig v. Dr. Reddy’s Lab’ys Ltd., No. 11-cv-4607, 2017 WL 1133956 (E.D. Pa. Mar. 27, 2017) .........................................36, 38

United States ex rel. Schutte v. SuperValu Inc., 598 U.S. 739 (2023) ...........................................................................................................48, 51

State of Texas ex. rel. Tarik Ahmed v. Pfizer Inc., No. 23-1031 (Tex. Dist. Ct. (Harrison Cnty.) Feb. 5, 2024)....................................................16

Tarrant Cty. v. Bonner, 574 S.W.3d 893 (Tex. 2019)..............................................................................................48, 51

Texas v. Caremark, Inc., 584 F.3d 655 (5th Cir. 2009) ...................................................................................................15

United States v. Dental Health Programs Inc., No. 3:18-cv-463, 2021 WL 3213709 (N.D. Tex. July 29, 2021)..................................... passim

Universal Health Services, Inc. v. United States ex rel. Escobar, 579 U.S. 176 (2016) ......................................................................................................... passim

Vasquez v. Legend Nat. Gas III, LP, 492 S.W.3d 448 (Tex. App. 2016) ...........................................................................................17

Waldmann v. Fulp, 259 F. Supp. 3d 579 (S.D. Tex. 2016) .....................................................................................15

- iv - Wilder v. Va. Hosp. Ass’n, 496 U.S. 498 (1990) .................................................................................................................12

United States ex rel. Williams v. McKesson Corp., No. 3:12-cv-371, 2014 WL 3353247 (N.D. Tex. July 9, 2014)...............................................15

United States ex rel. Yu v. Grifols USA, LLC, No. 1:17-cv-2226, 2021 WL 5827047 (S.D.N.Y. Dec. 8, 2021), aff'd, No. 22- 107, 2022 WL 7785044 (2d Cir. Oct. 14, 2022) ................................................................34, 35

Zheng v. Vacation Network, Inc., 468 S.W.3d 180 (Tex. App.—Houston [14th Dist.] 2015, pet. denied) ..................................16

Statutes

21 U.S.C. §§ 301–2404 et seq..........................................................................................................6

21 U.S.C. § 351 ..............................................................................................................................18

21 U.S.C. § 355 ................................................................................................................................6

21 U.S.C. § 371(h) ...........................................................................................................................6

21 U.S.C. § 393(b) ...........................................................................................................................6

42 U.S.C. §§ 1396–1396(w) et seq. ...............................................................................................12

Tex. Gov’t Code § 531.0736(g) .....................................................................................................13

Tex. Health & Safety Code Ann. § 1.001 ......................................................................................14

Tex. Hum. Res. Code § 36.001(7-a)(D).........................................................................................46

Tex. Hum. Res. Code § 36.002(1) .....................................................................................14, 18, 38

Tex. Hum. Res. Code § 36.002(2) ......................................................................................... passim

Tex. Hum. Res. Code § 36.002(4)(B) ................................................................................14, 18, 38

Tex. Hum. Res. Code § 36.002(7)(C) ..........................................................................15, 18, 20, 34

Tex. Hum. Res. Code § 36.0011(a) ...................................................................................48, 49, 52

Other Authorities

21 C.F.R. § 211.160 .......................................................................................................................23

-v- 21 C.F.R. § 211.165 .........................................................................................................................8

21 C.F.R. § 211.192 .......................................................................................................................30

21 C.F.R. § 211.198 .................................................................................................................31, 32

21 C.F.R. § 314.50 .....................................................................................................................6, 25

21 C.F.R. § 314.70 .............................................................................................................24, 25, 26

21 C.F.R. § 314.420 .........................................................................................................................7

21 C.F.R. §§ 820.1–820.5 ..............................................................................................................29

65 Fed. Reg. 83,041 (Dec. 29, 2000) .............................................................................................29

1 Tex. Admin. Code § 351.1 ..........................................................................................................12

1 Tex. Admin. Code § 354.1042 ....................................................................................................12

1 Tex. Admin. Code § 354.1831 ....................................................................................................12

1 Tex. Admin. Code § 354.1832 ....................................................................................................13

1 Tex. Admin. Code § 354.1877 ....................................................................................................12

1 Tex. Admin. Code § 354.1921 ........................................................................................39, 40, 41

1 Tex. Admin. Code § 354.1923 ........................................................................................39, 44, 45

1 Tex. Admin. Code § 354.1924 ............................................................................................ passim

1 Tex. Admin. Code § 354.1941 ..............................................................................................13, 45

25 Tex. Admin. Code § 229.420 ....................................................................................................14

Tex. R. Civ. P. 1.............................................................................................................................16

Tex. R. Civ. P. 45...........................................................................................................................16

Tex. R. Civ. P. 47...........................................................................................................................16

Tex. R. Civ. P. 59.....................................................................................................................13, 14

Tex. R. Civ. P. 91a. ................................................................................................................ passim

- vi - Umesh V. Bankakar, Pharmaceutical Dissolution Testing, Bioavailability and Bioequivalence: Science, Applications, and Beyond, §§ 1.1, 1.6 (2022) ..................................9

- vii - DEFENDANT PFIZER INC.’S MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS PLAINTIFFS’ FIRST AMENDED PETITION

Defendant Pfizer Inc. (“Pfizer” or the “Company”) respectfully submits this Memorandum

of Law in Support of its Motion to Dismiss the First Amended Petition (the “Petition” or the “FAP”)

filed by plaintiffs the State of Texas (“Texas” or the “State”) and Relator Tarik Ahmed (“Relator”

and, together with the State, “Plaintiffs”) with prejudice pursuant to Texas Rule of Civil Procedure

91a.

PRELIMINARY STATEMENT

This “gotcha” Petition is heavy on feigned indignation about decade-old conduct that is not

even alleged to have jeopardized so much as a single Texan’s safety. By contrast, it is exceedingly

light on legal authority and factual allegations that would sustain a viable cause of action under

the Texas Medicaid Fraud Prevention Act (“TMFPA”). Plaintiffs’ mischaracterizations and

misdirection can carry them only so far, and the Petition is due to be dismissed under Rule 91a

because “the allegations, taken as true, together with inferences reasonably drawn from them do

not entitle [Plaintiffs] to the relief sought” and because “no reasonable person could believe the

facts pleaded.”

Plaintiffs raise allegations regarding one drug, Quillivant XR (“Quillivant”), which at all

relevant times was and continues to be a prescription drug approved by the U.S. Food and Drug

Administration (“FDA”) to treat attention deficit hyperactivity disorder (“ADHD”). Plaintiffs

make broad and sweeping allegations that Quillivant distributed in Texas was adulterated due to

perceived deficiencies in Defendants’ manufacturing practices. While relying liberally on their

own post hoc conceptions of what those practices should have been, Plaintiffs wholly neglect to

cite to a single statutory or regulatory authority setting forth the required manufacturing practices

that Defendants allegedly violated. Plaintiffs then make the leap that, as a result of these alleged deficiencies, Texas Medicaid would not have authorized payment for any bottle of Quillivant

distributed in Texas from 2013 to 2018.

But in making that leap, Plaintiffs fail to grapple with the intractable fact that the

assessment that Quillivant was at all times safe and effective for distribution was not Pfizer’s alone,

but also an assessment made by FDA, the country’s primary regulator of drug products and an

expert authority on which Texas Medicaid and the Texas Attorney General’s office correctly and

routinely rely. Despite awareness of the relevant facts described in the Petition related to

dissolution testing method changes, FDA never revisited Quillivant’s approval status and, instead,

worked with Pfizer and Defendant Tris Pharma, Inc. (“Tris”) to ensure a steady supply of

Quillivant was available to patients. The Petition also cannot overcome the incontrovertible fact

that the Texas Medicaid program agrees with Pfizer and FDA. Indeed, despite the public nature

of the conduct underlying the allegations in the Petition, including an FDA-issued Warning Letter

to Tris on March 26, 2018 that was widely reported in the press, and a more than three-year

investigation by the Attorney General’s office, Texas Medicaid has never removed Quillivant from

the Preferred Drug List (“PDL”) since it was officially added in 2014 and has consistently paid for

prescriptions of the product.

That this Petition is an action in search of a cause is underscored by the extent to which

Plaintiffs misconstrue both governing law and the underlying facts. The Petition reveals

fundamental misunderstandings and outright misrepresentations about the laws and regulations

governing the manufacture of prescription drug products and the reimbursement process for those

medications. Despite possessing more than 2.1 million pages of documents produced by Pfizer,

and an untold number from Tris and other sources, the Petition reveals a lack of clarity about the

-2- timeline at issue here and the relevance of dissolution testing for Quillivant, to speak nothing of

the other voluminous testing that is conducted on every drug before it reaches a single patient.

Despite the Petition’s attempts to twist the facts and relevant legal framework to sensationalize

this case, the changes to the dissolution testing method that Plaintiffs mistakenly and misleadingly

allege caused Quillivant to be adulterated based on violations of Current Good Manufacturing

Practice (“CGMP”) requirements relate only to the method by which Quillivant samples were

prepared for dissolution testing in the lab. Plaintiffs cite no CGMP regulation for the proposition

that changing an aspect of a dissolution test method, or in particular the sample preparation method,

constitutes adulteration. Nor could they, as no such regulation exists. Furthermore, any potential,

theoretical impact from sample preparation changes related solely to the first dose in a bottle that

can contain up to 45 doses. 1 Based on Plaintiffs’ own admissions, FDA was fully aware of these

dissolution testing issues by at least December 2016, 2 yet allowed the product to remain on the

market and in fact explicitly exercised discretion to allow its release to patients despite the known

issues with dissolution testing.

A careful review of the Petition reveals that it does not adequately state a cause of action—

and no amount of re-pleading will fix its inadequacies:

• First, Plaintiffs’ cause of action premised on Defendants’ submission of claims for purportedly adulterated drugs lacks a basis in the law, and this failure to sufficiently plead adulteration dooms Plaintiffs’ other causes of actions. 3

1 U.S. Food & Drug Admin., Quillivant XR (methylphenidate hydrochloride) Label, Highlights of Prescribing Information (Sept. 2012), https://www.accessdata.fda.gov/drugsatfda_docs/label/2012/202100lbl.pdf (hereinafter “Quillivant XR Label”). The number of doses in a particular bottle of Quillivant is determined by the amount prescribed per day (which typically ranges from 20 to 60 mgs) and the size of the bottle (which ranges from 300 mgs to 900 mgs). The estimate of up to 45 doses in a bottle is based on the FDA-recommended dose range of 20 mg-60 mg per day. 2 FAP ¶ 82. 3 See infra Argument, Section I.

-3- • Second, Plaintiffs fail to plead that Pfizer made or caused to be made any false statements, or misrepresentations, to Texas Medicaid. 4 • Third, Plaintiffs fail to allege that Pfizer concealed information that impacted Texas’s decision to provide payment under the Medicaid program when Pfizer had no obligation to disclose such information. 5 • Fourth, and finally, Plaintiffs fail to plead that Pfizer “knowingly” made or caused to be made any false claims for reimbursement, or any false statement, misrepresentation, or actionable non-disclosure. 6

FACTUAL AND LEGAL BACKGROUND

I. QUILLIVANT XR

Quillivant is a central nervous system stimulant indicated for the treatment of ADHD,

which is approved by FDA for use in adults and children ages 6 years and older. 7 It is the first,

once-daily, extended-release liquid medication in the United States for treating ADHD with the

active ingredient methylphenidate. 8 Although Quillivant is dispensed as a liquid medicine, the

product is shipped as a powder that the pharmacist must “reconstitute” by adding water and

vigorously shaking for ten seconds before dispensing to a patient, at which point it forms the

Quillivant extended-release oral suspension. 9 The FDA-approved prescribing information for

Quillivant recommends that the drug be administered “once daily in the morning” so that it will

be effective throughout the day but will not interrupt night-time sleep. 10 The number of doses in

4 See infra Argument, Section II. 5 See infra Argument, Section III. 6 See infra Argument, Section IV. 7 See Quillivant XR Label, supra note 1. 8 Pfizer Announces Availability of Quillivant XR™ (methylphenidate hydrochloride) CII for Extended-Release Oral Suspension in The United States, Pfizer (Jan. 13, 2013), https://www.pfizer.com/news/press-release/press-release- detail/pfizer_announces_availability_of_quillivant_xr_methylphenidate_hydrochloride_cii_for_extended_release_or al_suspension_in_the_united_states. 9 See Quillivant XR Label, supra note 1. 10 Id.

-4- any bottle dispensed depends on the daily dose prescribed for the patient, which usually ranges

from 20mg to 60mg, and the size of the bottle of Quillivant that is reconstituted. 11

Pfizer acquired Quillivant in November 2012 through its acquisition of NextWave

Pharmaceuticals, Inc. (“NextWave”). 12 NextWave developed Quillivant in collaboration with Tris,

which owns the patent for the technology that governs the extended-release characteristic of

Quillivant. 13 As part of the NextWave acquisition, Pfizer became party to a pre-existing

collaboration agreement between Tris and NextWave under which Tris manufactured Quillivant

on behalf of Pfizer and received a 25% royalty on the net sales of the product. 14 Later that same

month, Pfizer and Tris entered into a quality agreement that governed the relationship and outlined

Tris’s manufacturing and regulatory obligations. 15 Pfizer eventually sold NextWave to Tris in

September 2018, 16 maintaining limited, ongoing responsibilities for Quillivant during a brief

transition period before transferring responsibility for FDA filings and state submissions to Tris

upon closing of the deal. 17

A. FDA’s Approval of Quillivant XR

Congress has vested FDA with responsibility for protecting the public health by ensuring

the safety and efficacy of human and animal drugs, among other products. 18 As part of this mission,

FDA has responsibility for regulating the manufacturing, marketing, and distribution of such

11 Id. Quillivant is available in the following quantities/sizes: bottles of 300mg powder (to prepare 60mL suspension); bottles of 600mg powder (to prepare 120mL suspension); bottles of 750mg powder (to prepare 150mL suspension); and bottles of 900mg powder (to prepare 180mL suspension). Id. 12 FAP ¶ 17. 13 Id. 14 Id. 15 Id. 16 FAP ¶ 122. Plaintiffs recognize that Pfizer divested itself of Quillivant effective September 24, 2018 by selling NextWave to Tris. Id. 17 FAP ¶ 122. 18 21 U.S.C. § 393(b).

-5- drugs. 19 FDA fulfills its responsibilities, in part, by enforcing compliance with the Federal Food,

Drug, and Cosmetic Act (the “FDCA”) and its implementing regulations. 20 FDA also issues

guidance to help regulated entities better understand how FDA views the numerous requirements

encompassed under the FDCA and its implementing regulations. 21

Under the FDCA, a drug manufacturer may market a new drug only after it has filed, and

FDA has approved either a New Drug Application (“NDA”) or an Abbreviated New Drug

Application (“ANDA”) demonstrating that the drug is safe and effective for its intended uses.22

Among many other categories of important information, an NDA must include details about the

composition, manufacture, and specifications for a finished drug and its active pharmaceutical

ingredient (“API” or “drug substance”). 23 This information must be included in a highly technical

section of the NDA referred to as the “chemistry, manufacturing and controls” (or “CMC”) section.

The required CMC contents are described in 21 C.F.R. § 314.50(d)(1). The purpose of this CMC

section is to enable FDA to evaluate whether the methods proposed for use in manufacturing the

drug and the controls proposed for use in maintaining its quality are adequate to preserve the drug’s

identity, strength, quality, and purity. 24

A pharmaceutical company that manufactures both the API and the finished drug itself

generally will have all this information in its possession and will include it directly in the CMC

section of its NDA. 25 Many manufacturers, however, rely on third parties to manufacture the APIs

19 Id. 20 21 U.S.C. §§ 301–2404. 21 See 21 U.S.C. § 371(h). 22 21 U.S.C. § 355. 23 See 21 C.F.R. § 314.50(d). 24 See U.S. Food & Drug Admin., New Drug Application (NDA) (Jan. 21, 2022), https://www.fda.gov/drugs/types- applications/new-drug-application-nda. 25 See id.

-6- or finished products they distribute, and those third parties may treat details about their own

manufacturing processes—i.e., the recipes for their drugs or drug ingredients—as confidential. 26

In such circumstances, FDA permits the third-party manufacturer to protect the secrecy of their

intellectual property by submitting a Drug Master File (“DMF”) that contains information FDA

needs about the drug or drug ingredient in order to make a decision on the NDA for the finished

drug, which incorporates the DMF by reference. 27

On July 20, 2010, Tris, the owner of the intellectual property for Quillivant’s extended

release characteristic, submitted a DMF for Quillivant to FDA (DMF 023870) (the “Quillivant

DMF”), 28 and shortly thereafter, on July 29, 2010, NextWave submitted the NDA for Quillivant

(NDA 202100), which incorporated by reference the Quillivant DMF. 29 At all times, Tris

maintained responsibility for the Quillivant DMF, which contained the detailed manufacturing

recipe and process, drug specifications, and testing methods (often referred to as “analytical

methods”) for Quillivant, including the analytical method for conducting dissolution testing.30

Although this type of information is ordinarily included in the CMC section of an NDA, Tris

considered this information its proprietary trade secret information, and FDA approved

Quillivant’s NDA in September 2012 largely by relying on the Quillivant DMF for the CMC

information. Pfizer never had direct access to the DMF, and the details typically included in the

26 See U.S. Food & Drug Admin., Drug Master Files (DMFs) (Nov. 3, 2023), https://www.fda.gov/drugs/forms- submission-requirements/drug-master-files-dmfs. 27 See 21 C.F.R. §§ 314.420(a); 314.430(a). 28 U.S. Food & Drug Admin., List of Drug Master Files (DMFs) (2024), https://www.fda.gov/drugs/drug-master-files- dmfs/list-drug-master-files-dmfs. 29 U.S. Food & Drug Admin., Ctr. for Drug Evaluation & Research, Approval Package for Application Number: 202100orig1s000 at 4 (Sept. 27, 2012), https://www.accessdata.fda.gov/drugsatfda_docs/nda/2012/202100Orig1s000Approv.pdf. 30 FAP ¶ 114.

-7- CMC section were incorporated only by reference in the NDA that Pfizer acquired. 31 Quillivant

became commercially available in January 2013.

B. Manufacturing and Testing of Quillivant

As a quality control measure, a battery of tests is performed on each batch, or lot, of

Quillivant manufactured to ensure that it meets the product specifications described in the

approved NDA submission. 32 One type of testing conducted is “dissolution testing.” 33

Dissolution testing is intended to “predict” whether Quillivant’s active ingredient,

methylphenidate, “will be released as expected in a patient’s body.” 34

Dissolution Testing. The process for dissolution testing first involves reconstituting a

powder sample of Quillivant from a selected batch, which is the “the process by which the drug . . . .

is properly mixed with water prior either to being dispensed to a patient or tested in Tris’s lab.” 35

After reconstitution, portions of the sample are introduced into dissolution vessels (which are

designed to mimic the conditions in the human body), and tested to measure the amount of active

ingredient in each vessel at the time points identified in the dissolution testing protocol approved

by FDA. 36 A successful test will demonstrate that an average of the individual amounts of active

31 See U.S. Food & Drug Admin., Ctr. for Drug Evaluation & Research, Application Number: 202100orig1s000, Chemistry Review(s), https://www.accessdata.fda.gov/drugsatfda_docs/nda/2012/202100Orig1s000ChemR.pdf (noting in the “Comments and Recommendation Section” that “the NDA appears to be fileable from a CMC perspective. . . . The NDA cross-references two DMFs [redacted] for drug substance and #23870 for drug product[]. As a result, there is very little CMC information submitted in the NDA”). 32 21 C.F.R.§ 211.165. 33 FAP ¶ 50. 34 FAP ¶ 51. 35 Id. 36 See United States Pharmacopeia (USP), Chp. 711, at 14-15, “Procedure” (describing various methods for placing a sample in a dissolution vessel, then withdrawing fluid from the vessel and subjecting it to testing to determine the amount dissolved in the vessel, and noting that generally three time points are tested); see also USP Chp. 1092, “The Dissolution Procedure: Development and Validation § 1.3: Choosing a Medium and Volume” (“The media are designed to represent the fed and fasted state in the stomach and small intestine.”); Umesh V. Bankakar, Pharmaceutical Dissolution Testing, Bioavailability and Bioequivalence: Science, Applications, and Beyond, §§ 1.1, 1.6 (2022) (Dissolution testing is “one of the key tests that can provide valuable information about the functional

-8- ingredient measured in the dissolution vessels at the various time points falls within the ranges in

the protocol approved by FDA. 37

Dissolution testing must be performed both on batches intended for release to the market

(“release testing”), and on batches kept by the manufacturer (Tris) to test “long-term stability.”

Long-term stability batches of the product are held in their original powder form in a stability

chamber and then reconstituted at specific time intervals to determine (through the process

described above) whether the drug meets its dissolution specifications. 38 Stability testing is

designed to ensure that the product will continue to meet its dissolution (and other) specifications

throughout its shelf-life, which, for Quillivant, is thirty-six months. 39

Stability testing for a product that requires reconstitution also includes “in-use” stability

testing, which is intended to demonstrate that once the product is reconstituted it will continue to

meet its approved specifications, including those for dissolution, for the shelf-life of the

reconstituted product. 40 Unlike immediate release and long-term stability testing, in-use stability

performance of the product, an insight into the potential in vivo behavior of the product . . . . [T]he primary object of such a test is to closely mimic the physiological environment and the dynamics that the dosage form expects to be exposed following administration to the human.”). 37 See USP Chp. 711, Procedure Section, Extended Release Dosage Form, Acceptance Tbl. 2. Chp. 1092, § 5 (“The selection of acceptance criterion/criteria should be consistent with the dissolution data generated from bio/pivotal or clinical batches at the point of release as well as from stability batches. Generally, there is an expectation that acceptable batches will have results that fall within the acceptance criterion/criteria and that all manufactured batches should have similar dissolution behavior . . . .”). 38 See U.S. Dep’t of Health & Human Servs., Guidance for Industry: Q1A (R2) Stability Testing of New Drug Substances and Products (Nov. 2003), https://www.fda.gov/media/71707/download (discussing the various types of testing that should be conducted as part of stability testing, including dissolution testing). 39 Id. (“A systematic approach should be adopted in the presentation and evaluation of the stability information, which should include, as appropriate, results from the physical, chemical, biological, and microbiological tests, including particular attributes of the dosage form (e.g., dissolution rate for solid oral dosage forms)…The purpose of the stability study is to establish… a shelf life and label storage instructions applicable to all future batches of the drug product manufactured and packaged under similar circumstances.”) See also https://www.accessdata.fda.gov/drugsatfda_docs/nda/2012/202100Orig1s000MedR.pdf. 40 See Guidance for Industry: Q1A, supra note 38 at 10: (“Stability testing of the drug product after constitution or dilution, if applicable, should be conducted to provide information for the labeling on the preparation, storage condition, and in-use period of the constituted or diluted product. This testing should be performed on the constituted or diluted product through the proposed in-use period on primary batches as part of the formal stability studies at

-9- testing is performed on Quillivant that has been reconstituted and maintained in liquid form. 41 For

Quillivant, the product label states that the reconstituted product can be used for up to four

months. 42 Thus, in-use stability tests were conducted on liquid samples of Quillivant that had been

kept in a stability chamber post-reconstitution until specified testing time points.

Sonication. In connection with laboratory testing, lab technicians often use a technique

called “sonication,” which is a process by which low-strength sound waves are passed through a

reconstituted liquid, to agitate particles and aid in their dispersal. 43 In other words, sonication

breaks up “clumps” that form when water is added to powder. 44 Sonication can simulate vigorous

shaking by a pharmacist during the reconstitution process. 45 Beginning in July 2013, Tris used

sonication as part of the reconstitution process when preparing samples for dissolution testing on

batches intended for release to the market. 46

Particle Size Testing. In addition to dissolution testing, another component of Quillivant’s

post-manufacturing controls was particle size testing. 47 Quillivant’s formulation contains millions

of microscopic delivery complexes for methylphenidate. 48 Each complex is covered in a coating

initial and final time points, and if full shelf life, long-term data will not be available before submission, at 12 months or the last time point for which data will be available.”) 41 See FAP ¶ 51. 42 Quillivant XR Label supra, note 1 (“QUILLIVANT XR is stable for up to 4 months after reconstitution.”). 43 FAP ¶ 58. 44 See id. 45 See id. 46 FAP ¶ 55. 47 See U.S. Food & Drug Admin., FDA Guidance: ICH Guidance on Q6A Specifications: Test Procedures and Acceptance Criteria for New Drug Substances and New Drug Products: Chemical Substances (Dec. 2000), https://www.fda.gov/regulatory-information/search-fda-guidance-documents/q6a-specifications-test-procedures- and-acceptance-criteria-new-drug-substances-and-new-drug-products (“For some new drug substances intended for use in solid or suspension drug products, particle size can have a significant effect on dissolution rates, bioavailability, and/or stability. In such instances, testing for particle size distribution should be carried out using an appropriate procedure, and acceptance criteria should be provided.”). 48 Tris Pharma, Inc., Unique Technology: How Quillivant XR Provides Consistent Medication Release (2023), https://www.trisadhd.com/quillivant-xr/unique-technology/.

- 10 - that is designed to control the release of methylphenidate to ensure consistent medication release

over time. 49 In short, the thicker the coating, the longer it takes the methylphenidate to release.50

As part of Quillivant’s post-manufacturing controls, particle size testing was performed to measure

the size of particles of coated methylphenidate present in a sample, as the particle size may impact

how rapidly the patient’s body will absorb the drug. 51

II. RELEVANT TEXAS STATUTES AND REGULATORY FRAMEWORK

A. Texas Medicaid Vendor Drug Program Formulary

Created by Title XIX of the Social Security Act, the Texas Medicaid program is a joint

federal-state program that pays for the medical care of certain eligible Texas residents. 52 The

Texas Health and Human Services Commission (“HHSC”) is charged with supervising the

administration and operation of the Texas Medicaid program. 53 HHSC has numerous oversight

responsibilities, including promulgating rules governing reimbursement for the approved

medications provided to Texas Medicaid patients through HHSC’s Vendor Drug Program (“VDP”)

formulary. 54 The VDP formulary is an HHSC-administered program that manages the outpatient

prescription drug portion of the Texas Medicaid program. 55

In order for a pharmaceutical company to have its drug listed on the VDP formulary, and

thus be eligible for reimbursement, it must file an application. 56 Included in the application is a

49 FAP ¶ 85. 50 Id. 51 See FAP ¶ 86. 52 See 42 U.S.C. §§ 1396–1396(w); see also El Paso Hosp. Dist. v. Tex. Health & Hum. Servs. Comm’n, 247 S.W.3d 709, 711 (Tex. 2008); Wilder v. Va. Hosp. Ass’n, 496 U.S. 498, 502 (1990) (citing 42 U.S.C. § 1396)). 53 See 42 U.S.C. §§ 1396-1396(w); see also El Paso Hosp. Dist., 247 S.W.3d at 711; Va. Hosp. Ass’n, 496 U.S. at 502 (citing 42 U.S.C. § 1396)). 54 1 Tex. Admin. Code §§ 351.1, 354.1042. 55 1 Tex. Admin. Code § 354.1877. 56 1 Tex. Admin. Code § 354.1831(a).

- 11 - multi-part questionnaire requesting, among other things, the recommended daily dosages of the

drug, the drug’s ingredient list, FDA approval letters, and copies of the package inserts and

materials for physicians. 57 The questionnaire does not request any information that would be

included in the CMC section of the NDA. 58 Nor does it request any information that would be

included in the DMF in the case of an NDA, like Quillivant’s, that incorporates the DMF by

reference for information related to post-manufacturing controls like dissolution testing. HHSC

instead defers to FDA’s assessment of a product’s safety and efficacy, based on the information

provided to FDA, and covers only drugs that FDA has approved for distribution. 59

In addition to the VDP formulary, Texas Medicaid also reviews classes of drugs to decide

which brands should be placed on the state’s Preferred Drug List. 60 Drugs listed on the PDL are

available to Texas Medicaid participants without prior authorization. 61 Texas Medicaid’s Drug

Utilization Review Board (the “DUR Board”) is charged with developing recommendations as to

which drugs appear on the PDL. 62 The DUR Board is comprised of healthcare and pharmaceutical

experts appointed by HHSC’s Executive Commissioner. 63 When evaluating whether to approve a

drug for the PDL, the DUR Board will consider the product’s efficaciousness, clinical significance,

57 Texas Vendor Drug Program: Texas Drug Code Index Electronic Certification of Information (eCOI): Agent User Guide, Conduent (Mar. 3, 2023), https://www.txvendordrug.com/sites/default/files/docs/ecoi-user-guide.pdf. 58 See id. 59 Reminder: HHSC Does Not Cover Vaccines or Drugs That Do Not Have FDA Approval or Emergency Use Authorization, (Sept. 21, 2023) https://www.tmhp.com/news/2023-09-21-reminder-hhsc-does-not-cover-vaccines-or- drugs-do-not-have-fda-approval-or. 60 1 Tex. Admin. Code § 354.1941(a); Tex. Gov’t Code § 531.0736(g). 61 1 Tex. Admin. Code § 354.1832. 62 1 Tex. Gov’t Code § 531.0736(g). 63 1 Tex. Admin. Code § 354.1941.

- 12 - cost effectiveness, and safety. 64 Based on the DUR Board’s recommendation, HHSC will then

decide whether to add a product to the PDL. 65

B. Quillivant’s Texas State Medicaid Application

In early January 2013, Pfizer submitted Quillivant’s application to the Texas VDP

formulary. 66 On April 16, 2013, HHSC added Quillivant to the VDP formulary and, on January

31, 2014, the P&T Committee (the precursor to the DUR Board) recommended adding Quillivant

to the PDL. 67 That recommendation was adopted by HHSC and took effect on July 14, 2014, with

Quillivant maintaining its PDL status ever since.

C. Texas Medicaid Fraud Enforcement Framework

Texas has its own statutes that govern the manufacture and distribution of drugs in the

state. 68 However, the prohibited acts in the Texas Food, Drug, and Cosmetic Act (“TFDCA”)

mirror those in the federal FDCA, the operative definitions in the TFDCA refer to those in the

FDCA, and Texas state law adopts by reference the entire FDCA as well as its implementing

regulations relating to prescription drugs, including the provisions regarding new drug approval

and CGMPs. 69

64 1 Tex. Admin. Code § 354.1924(c)(2). 65 1 Tex. Admin. Code § 354.1832. 66 See Exhibit A, Quillivant XR VDP Application. Quillivant’s VDP application package, which Plaintiffs repeatedly reference and quote in the Petition, is attached as Exhibit A to this Memorandum pursuant to Texas Rules of Civil Procedure 59 and 91a.6. See Tex. R. Civ. P. 59 (providing that “written instruments, constituting, in whole or in part, the claim sued on, or the matter set up in defense, may be made a part of the pleadings by copies thereof . . . being attached or filed and referred to as such . . . and shall be deemed a part thereof for all purposes”); Tex. R. Civ. P. 91a.6 (providing that “the court . . . must decide the motion based solely on the pleading of the cause of action, together with any pleading exhibits permitted by Rule 59”) (emphasis added). 67 FAP ¶¶ 46, 78. 68 See Tex. Health & Safety Code Ann. § 1.001. 69 See 25 Tex. Admin. Code § 229.420.

- 13 - In addition, the TMFPA imposes civil penalties for the submission of false claims for

payment to Texas’s Medicaid program. The TMFPA prohibits, in relevant part:

• Knowingly making or causing to be made a false statement or misrepresentation of a material fact to permit a person to receive a benefit or payment under the Medicaid program that is not authorized or that is greater than the benefit or payment that is authorized. 70 • Knowingly concealing or failing to disclose information that permits a person to receive a benefit or payment under the Medicaid program that is not authorized or that is greater than the benefit or payment that is authorized. 71 • Knowingly making or causing to be made a false statement or misrepresentation of material fact concerning: information required to be provided by a federal or state law, rule, regulation, or provider agreement pertaining to the Medicaid program. 72 • Knowingly making or causing to be made a claim under the Medicaid program for ... a product that has been adulterated, debased, mislabeled, or that is otherwise inappropriate. 73

The TMFPA is Texas’s analogue to the Federal False Claims Act (“FCA”). While “[t]he

TMFPA differs textually from the FCA, [] the Fifth Circuit and several federal district courts have

considered TMFPA claims analogous to claims brought under the FCA.” 74 As one Texas federal

court described it, the two statutes differ textually but are “depend[ent] on the same operative facts

and legal requirements.” 75 Thus, FCA precedent provides guidance for applying the TMFPA. 76

70 Tex. Hum. Res. Code § 36.002(1). 71 Tex. Hum. Res. Code § 36.002(2). 72 Tex. Hum. Res. Code § 36.002(4)(B). 73 Tex. Hum. Res. Code § 36.002(7)(C). 74 United States v. Dental Health Programs Inc., No. 3:18-cv-463, 2021 WL 3213709, at *7 (N.D. Tex. July 29, 2021); see also Texas v. Caremark, Inc., 584 F.3d 655, 657 (5th Cir. 2009); Waldmann v. Fulp, 259 F. Supp. 3d 579, 632-33 (S.D. Tex. 2016). 75 United States ex rel. Williams v. McKesson Corp., No. 3:12-cv-371, 2014 WL 3353247, at *4 (N.D. Tex. July 9, 2014); United States ex rel. Babalola v. Sharma, No. H-11-cv-4026, 2013 WL, 431821, at *2-5 (S.D. Tex. Feb. 1, 2013) (noting that that the relator brought unlawful acts counts under both the FCA and TMFPA, but only considered whether the relator’s FCA claim sufficed to survive summary judgment); United States ex rel. Rost v. Pfizer, Inc., 446 F. Supp. 2d 6, 12 n.13 (D. Mass. 2006) (considering FCA and TMFPA claims brought by a relator and primarily discussing the relator’s FCA claim, noting only in a footnote that the relator brought a TMFPA claim, which “extend[s] liability in situations virtually identical to those contained in the federal FCA”). 76 Babalola, 2013 WL 431821, at *2-5; Rost, 446 F. Supp. 2d at 12 n.13.

- 14 - PROCEDURAL HISTORY

On September 30, 2020, the State of Texas Office of the Attorney General’s Civil Medicaid

Fraud Division served Pfizer with a Civil Investigative Demand (“CID”) for the production of

documents and other information pursuant to the TMFPA. Between November 2020 and March

2023, Pfizer cooperated fully with the investigation, including by producing more than 440,000

documents totaling more than 2.1 million pages to the Attorney General’s office.

On November 8, 2023, without seeking any clarification regarding the documents produced

or interrogatory responses provided and without engaging in any discussion following the final

document production on March 20, 2023, the State filed the Petition (alongside Relator, a former

Tris employee who never worked for Pfizer), which Pfizer now moves to dismiss pursuant to Texas

Rule of Civil Procedure 91a. 77

Texas Rules of Civil Procedure 45 and 47 require that pleadings “consist of a statement in

plain and concise language of the plaintiff’s cause of action” that is “sufficient to give [the

defendant] fair notice of the claim involved.” 78 The obligation to plead facts extends to each

element of a cause of action. 79 Where a plaintiff’s petition fails to plead facts that plausibly show

any necessary element of the claim, the claim must be dismissed. 80

77 Defendant Tris has submitted its own Motion to Dismiss and incorporates by reference the arguments, authorities, and evidence in Pfizer’s Memorandum of Law in Support of Motion to Dismiss Plaintiffs’ First Amended Petition. See Defendant Tris Pharma, Inc.’s Motion to Dismiss Plaintiffs’ First Amended Petition, State of Texas ex. rel. Tarik Ahmed v. Pfizer Inc., No. 23-1031 (Tex. Dist. Ct. (Harrison Cnty.) Feb. 5, 2024). 78 Tex. R. Civ. P. 45; Tex. R. Civ. P. 47. 79 See Zheng v. Vacation Network, Inc., 468 S.W.3d 180, 184, 186 (Tex. App.—Houston [14th Dist.] 2015, pet. denied); see also Salazar v. HEB Grocery Co., No. 4:16-cv-734, 2018 WL 1610942, at *3 (Tex. App.—San Antonio 2018, pet. denied, cert. denied) (holding “Salazar was required to plead facts, from which reasonable inferences could be drawn to support each element” of his claims to survive a Rule 91a motion). 80 See, e.g., Aguilar v. Morales, 545 S.W.3d 670, 680 (Tex. App.—El Paso 2017, pet. denied).

- 15 - To this end, Texas Rule of Civil Procedure 91a permits a party to a civil action to move for

dismissal of “a cause of action on the grounds that it has no basis in law or fact.” 81 Rule 91a,

which was enacted by the Supreme Court of Texas in 2013 following a 2011 directive from the

state legislature, furthers the overriding emphasis of the Texas Rules of Civil Procedure that cases

should be resolved “with as great expedition and dispatch and at the least expense both to the

litigants and to the state as may be practicable,” 82 by “allowing courts to dismiss meritless cases

before parties engage in costly discovery.” 83 In short, “[t]he purpose of Rule 91a . . . is to require

the early and speedy dismissal of baseless claims.” 84

As the Texas courts have recognized, “[w]hile not identical, Rule 91a is analogous to

[federal] Rule 12(b)(6),” and, therefore, the Texas courts “find case law interpreting Rule 12(b)(6)

instructive.” 85 Critically, among the well established principles that Rule 91a has adopted from

the federal Rule 12(b) context is the admonishment that “threadbare recitals of the elements of a

cause of action, supported by mere conclusory statements, do not suffice” to survive a motion to

dismiss.86 While this motion to dismiss addresses all of the causes of action in the Petition, a Rule

91a motion may be addressed to some or all of the causes of action stated in a complaint, and may

seek both the outright dismissal or the narrowing of any claims to the extent they exceed any basis

in fact or law. 87

81 Tex. R. Civ. P. 91a.1. 82 Tex. R. Civ. P. 1. 83 Bethel v. Quilling, Selander, Lownds, Winslett & Moser, P.C., 595 S.W.3d 651, 656 (Tex. 2020). 84 In re Joel Kelley Interests, Inc., No. 5:19-cv-559, 2019 WL 2521725, at *1 (Tex. App.—Dallas 2019, no pet.). 85 GoDaddy.com, LLC v. Toups, 429 S.W.3d 752, 754 (Tex. App.—Beaumont 2014). 86 Vasquez v. Legend Nat. Gas III, LP, 492 S.W.3d 448, 451 (Tex. App. 2016) 87 See, e.g., Dental Health Programs, 2021 WL 3213709, at *10–13 (considering relator’s TMFPA claims under which she alleged several distinct theories of liability and narrowing the scope of her causes of action to just those theories for which she sufficiently stated a TMFPA claim).

- 16 - Under Rule 91a, a “cause of action has no basis in fact if no reasonable person could believe

the facts pleaded,” and a “cause of action has no basis in law if the allegations, taken as true,

together with inferences reasonably drawn from them, do not entitle the claimant to the relief

sought.” 88 Because “the availability of a remedy under facts alleged is a question of law,” 89 the

Texas courts, interpreting Rule 91a over the last decade, have identified at least two situations in

which a cause of action has no basis in law: (i) where the petition does not allege sufficient facts

“to demonstrate a viable, legally cognizable right to relief,” and (ii) where the plaintiffs “allege[]

additional facts that, if true, bar recovery.” 90

Dismissal under Rule 91a is appropriate in this case because the Petition runs directly afoul

of these guardrails for adequate pleading of a TMFPA claim. Plaintiffs (1) fail to make certain

allegations against Pfizer that are required to state a legally viable right to relief under the TMFPA

and then, (2) in an effort to make those allegations, affirmatively plead away their case against

Defendants and/or make allegations that no reasonable person could believe.

I. PLAINTIFFS FAIL TO PLEAD THAT DEFENDANTS CAUSED A CLAIM TO BE MADE FOR AN “ADULTERATED” PRODUCT WITHIN THE MEANING OF SECTION 36.002(7)(C) OF THE TMFPA THAT RESULTED IN UNAUTHORIZED PAYMENTS BY THE STATE OF TEXAS.

Plaintiffs’ entire case is premised on the claim that Quillivant distributed in Texas was

adulterated. Adulteration is a legal concept reflected in the FDCA, and incorporated into the

TFDCA, that reflects one aspect of how a product can violate that statute. There are many different

ways a drug product can be adulterated under the FDCA. 91 The theory of choice selected by

88 Tex. R. Civ. P. 91a.1. 89 City of Dallas v. Sanchez, 494 S.W.3d 722, 724 (Tex. 2016). 90 Guillory v. Seaton, LLC, 470 S.W.3d 237, 240 (Tex. App.—Houston [14th Dist.] 2015, pet. denied). 91 See 21 U.S.C. § 351.

- 17 - Plaintiffs is that the Quillivant distributed in Texas was adulterated because it was manufactured

in violation of CGMPs. 92 However, Plaintiffs fail to adequately allege their theory of choice, or

any other adulteration theory. Without a viable adulteration claim, Plaintiffs’ cause of action under

Section 36.002(7)(C)—which prohibits a Medicaid claim for “a product that has been

adulterated”—falls away, and with it so too do the claims for purportedly making false statements

and failing to disclose information about the allegedly adulterated Quillivant. 93 Given the absence

of any safety or efficacy concerns with Quillivant, the Petition goes to great pains to establish that

even a drug that works exactly as intended can be adulterated if it was not manufactured in

conformance with CGMPs. 94 But despite filing a 138-paragraph Petition, Plaintiffs fail to

sufficiently allege the existence of any specific CGMP violation. Instead, the Petition resorts to

threadbare and conclusory allegations—with blanket assertions that “Tris, under the direction of

CEO Mehta, knowingly adulterated Quillivant and released it to Pfizer” and that “Pfizer, for [its]

part, knew Tris was adulterating Quillivant”—while failing to allege facts sufficient to demonstrate

that any specific CGMP regulation was indeed violated. 95 Plaintiffs then downplay the

significance of FDA’s involvement in pharmaceutical manufacturing oversight, making bald

accusations that the State of Texas made unauthorized payments for an “adulterated” product while

omitting the key fact that FDA explicitly permitted the distribution of numerous batches of

Quillivant even while the agency was fully aware of the conduct alleged in the Petition. 96 This

92 FAP ¶ 2. 93 Tex. Hum. Res. Code § 36.002(1); § 36.002(2); § 36.002(4)(B). 94 FAP ¶ 20 (citing John D. Copanos & Sons, Inc. v. FDA, 854 F.2d 510, 514 (D.C. Cir. 1988) for the proposition that drugs “produced in violation of . . . CGMP regulations” can be deemed adulterated “without the [FDA] having to show that they are actually contaminated”). 95 FAP ¶ 17. 96 See U.S. Food & Drug Admin., URGENT: Important Prescribing Information Update (Mar. 22, 2018), https://www.fda.gov/media/112433/download (hereinafter “Urgent”).

- 18 - point is underscored by the fact that Quillivant remained on the PDL, and Texas Medicaid

consistently paid for prescriptions of the product, despite the very public nature of many of the

issues described in the Petition, including the FDA Warning Letter issued to Tris on March 26,

2018. 97 Plaintiffs sensationalize a mundane issue involving the method by which Quillivant was

reconstituted prior to dissolution testing without identifying any CGMP requirement that were

violated and thus have not met the requirements for pleading a TMFPA adulteration claim. Further

Plaintiffs do not—and cannot—allege that Quillivant posed any safety or efficacy concerns.

A. Plaintiffs fail to plead that Defendants were responsible for a claim for “product that has been adulterated” under Section 36.002(7)(c).

To establish a viable claim for relief based on adulteration due to manufacturing practice

violations, Plaintiffs must allege which CGMP regulations were violated and how Defendants’

alleged conduct violated those regulations. They have not done so and, accordingly, the Petition

should be dismissed in its entirety.

1. Plaintiffs fail to plead adequately that any purported misconduct related to dissolution testing method changes violated CGMP regulations.

The crux of Plaintiffs’ allegations is that Tris inappropriately modified the method by

which it prepared the sample to conduct dissolution testing and failed to conduct proper

investigations of out-of-specification dissolution testing results. 98 Despite devoting ten pages to

detailing these allegations, Plaintiffs do not allege that any modifications to the dissolution testing

97 U.S. Food & Drug Admin., Warning Letter, Tris Pharma Inc. (Mar. 26, 2018), https://www.fda.gov/inspections- compliance-enforcement-and-criminal-investigations/warning-letters/tris-pharma-inc-534537-03262018 (hereinafter, “Warning Letter”). Notably, Plaintiffs attempt to rely on the Warning Letter to do the work of pleading an adulteration claim that they have been unable to do on their own. Not only do Plaintiffs fail to explain how the substance of the Warning Letter substantiates the claims they seek to make in the Petition, they also fail to support such an explanation with the facts that would allow Defendants to address those concerns, despite having access to all of the underlying materials. 98 FAP ¶¶ 53-57, 72, 79-81, 83.

- 19 - method by Tris or any subsequent actions by Defendants actually violated a CGMP regulation,

which forecloses the adulteration theory on which Plaintiffs rely.

Sample Preparation for Dissolution Testing. Dissolution testing is just one part of

manufacturing oversight that is intended to ensure that Quillivant’s active ingredient,

methylphenidate, will be released as expected in a patient’s body. 99 Before the product can be

tested, it first needs to be reconstituted. 100 Reconstitution is the process by which Quillivant

powder is mixed with water, both prior to being dispensed to a patient and prior to being tested for

compliance with dissolution specifications. 101

The primary allegation in this case is that Defendants improperly changed the “sample

reconstitution/hydration” method (i.e., the process for reconstituting Quillivant prior to performing

dissolution testing). 102 As alleged in the Petition, Tris discovered that the powder was not

hydrating as expected when mixed with water, so it added sonication (i.e., sound waves used to

agitate and break up particles) and a 30-minute “hold time” to the sample preparation method

(Method 6). 103 This preparation method was intended to be used on release testing samples that

had to be reconstituted prior to dissolution testing.104

Later, Tris discovered that sonication was also being used on in-use stability samples—

those batches that had already been reconstituted and were being held in reconstituted form for

later testing at specified intervals to demonstrate they remain stable for their labeled four-month

99 FAP ¶ 50. 100 FAP ¶ 51. 101 Id. 102 Id. 103 See FAP ¶¶ 50-58 104 See id.

- 20 - shelf life. 105 Sonication of those samples resulted in out-of-specification results because the sonic

agitation of the molecules in the long-reconstituted (and hydrated) “in-use” samples that had

already been held for a period of months in a reconstituted state inappropriately increased the

release rate. 106 This discovery resulted in the 2014 Field Alert Report (“FAR”)—which the

Petition incorrectly calls a “Field Action Report”—advising FDA of the out of specification

(“OOS”) dissolution testing results. 107 The root cause of these OOS results was “confirmed” to

be the sonication of an in-use stability sample, which, unlike the release testing samples on which

the remainder of the Petition is based, was not supposed to be sonicated under Method 6. 108 Tris

subsequently revised the sample preparation method to clarify that samples reconstituted for the

purpose of in-use stability testing should not be sonicated, and only samples reconstituted for

release testing should be sonicated (Method 7). 109

Tris made additional modifications to the sample preparation method for release testing,

with the most notable being the addition of a “six-hour hold time” included in Method 10. 110 This

modification gave the reconstituted sample additional time to hydrate prior to testing. 111 Although

the instructions for reconstitution still directed a pharmacist to vigorously shake the solution for

105 See Quillivant XR Label, supra note 1; see Guidance for Industry: Q1A, supra note 38 (describing in-use stability testing). 106 FAP ¶¶ 65, 70. 107 See FAP ¶ 70. 108 There is no one-size-fits-all approach to stability testing: FDA guidance states that “[a]lthough specific methods are critical to determine product stability, [manufacturers] do not have to employ any specific technique.” U.S. Food & Drug Admin., Expiration Dating and Stability Testing for Human Drug Products (Nov. 7, 2014), https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/inspection-technical- guides/expiration-dating-and-stability-testing-human-drug-products. FDA generally recommends that stability testing be performed initially, then every three months for the first year, and then every six months for the second year. Id. However, different drugs have different characteristics and periods of expiry, and thus FDA-approved stability testing protocols for different drugs will vary. 109 FAP ¶¶ 72, 74. 110 FAP ¶ 81. 111 See id.

- 21 - ten seconds before dispensing to a patient, there is a natural hold time built into the administration

of Quillivant because, once it is reconstituted by the pharmacist for a patient, it is then administered

only once daily, in the morning. 112 Patients or their caregivers are also instructed to shake the

reconstituted product before each dose to ensure the even distribution of particles in the

suspension, 113 but any doses administered the day after the product is reconstituted by the

pharmacist (including the first dose in a bottle so long as it is not taken the same day the product

is reconstituted) are not impacted by the dissolution testing method changes at issue because the

product is fully hydrated by that point and would meet all dissolution specifications if tested at that

time. 114

Changing the sample preparation method for dissolution testing does not, in and of itself,

render a product adulterated. Indeed, Plaintiffs cite no CGMP regulation for the proposition that

changing an aspect of a dissolution test method constitutes adulteration, which they need to do to

properly plead adulteration based on CGMP violations. Nor could they, as no such regulation

exists. Plaintiffs instead summarily claim that FDA and state regulations “require” that drug

samples be “tested under FDA-required dissolution specifications.” 115 However, the Petition cites

no legal obligation in support of this proposition (because this is incorrect). To plead adulteration

112 See Quillivant XR Label, supra note 1. Most prescriptions would be picked up the day or night before to administer the following morning. 113 See Quillivant XR Label, supra note 1. 114 See FAP ¶ 15. Plaintiffs attempt to suggest that the alleged issues relating to the initial hydration impacts later doses that require caregivers to “vigorously shake bottle for at least 10 seconds” prior to administering a dose of the medication. Id. ¶ 58. That instruction for later doses was never impacted by the addition of sonication or a hold time, which only was for the initial reconstitution of the product prior to testing of release batches. Further, the purpose of shaking before each dose is to ensure even distribution of particles in the suspension and is not relevant to the release of drug. 115 FAP ¶ 50.

- 22 - strictly based on manufacturing practice violations, Plaintiffs are obligated to identify at least one

legally mandated manufacturing practice that has been violated. 116

CBE-30 Submission. Perhaps recognizing that they cannot plead a claim for adulteration

based solely on changes to the dissolution test sample preparation method, Plaintiffs claim that

Defendants rendered Quillivant adulterated by failing to appropriately report those same

dissolution test method revisions to FDA. 117 Plaintiffs thus seek to establish that Defendants

violated FDA regulations regarding post-approval changes to the manufacturing process by

alleging that changes to the dissolution test method should have been reported through a Changes

Being Effected in 30 Days (“CBE-30”) submission to FDA. 118 But Plaintiffs’ claim is wholly

inconsistent with FDA’s reporting scheme and unsupported by the facts as alleged. Moreover,

such violations, even if true, do not render a drug adulterated.

As the Petition acknowledges, the proper reporting of post-approval changes (such as those

to analytical test methods) for an approved drug is set out in regulations promulgated by FDA,

which create three broad categories, each with their own reporting requirements. 119 “Major

changes” are those “that ha[ve] a substantial potential to have an adverse effect on the identity,

strength, quality, purity or potency of the drug product” as it relates to safety or efficacy and require

FDA approval of a “prior-approval supplement” or “PAS” before the change is made. 120

“Moderate changes” are those that have only a “moderate” potential to impact the above-

116 See, e.g., John D. Copanos & Sons, 854 F.2d at 523 (holding that adulteration was established where FDA identified violations of specific CGMP regulations, including 21 C.F.R. § 211.160(b)(4), which governed the calibration of laboratory equipment “at suitable intervals in accordance with an established written program”). 117 See FAP ¶¶ 59, 127. 118 FAP ¶¶ 12, 59. 119 FAP ¶ 59. 120 21 C.F.R. § 314.70(b)(1).

- 23 - referenced characteristics as they relate to the drug’s safety or efficacy and can be implemented

30 days after submitting a CBE-30 supplement to FDA, so long as FDA does not object to the

change in those 30 days. 121 Lastly, “minor changes” with only a “minimal potential” to impact

the drug’s above-referenced characteristics as they relate to safety or efficacy can be documented

in the drug’s next annual report, often long after the change has actually been implemented. 122

The determination of whether a post-approval change needs to be documented in a PAS, CBE-30,

or annual report involves a detailed analysis of the change and the likelihood that it will negatively

impact the safety or efficacy of a drug. 123

The Petition alleges that, in order to change the dissolution testing method from Method 5

to Method 6, Defendants were required, but failed, to submit a CBE-30 before implementing the

new method. 124 The basis for that allegation lies in the purportedly relevant fact that “relaxation

of an acceptance criterion or deletion of a test” to comply with relevant FDA requirements is the

type of change that requires a CBE-30. 125 But the Petition then pleads away the suggestion that

there was any “relaxation of an acceptance criteri[a]” or “deletion of a test.” By Plaintiffs’ own

admissions, dissolution testing was consistently performed throughout the relevant period. 126 And,

importantly, the acceptance criteria, which reflect a range for the percentage of active ingredient

121 21 C.F.R. § 314.70(c). 122 21 C.F.R. § 314.70(d). 123 21 C.F.R. § 314.70. Manufacturers describe their proposed method for dissolution testing in the CMC section of the NDA (or DMF in the case of Quillivant). See 21 C.F.R. § 314.50(d). When CMC details are proprietary and contained within a DMF, and the DMF holder (here, Tris) wants to make a post-approval change to some aspect of a drug’s chemistry, manufacturing, or controls, including a testing method, the DMF holder has to update the DMF with the new information and notify FDA about the change to the DMF. 21 C.F.R. § 314.70. The DMF holder must also inform the NDA holder (here, Pfizer) about the change so that the NDA holder can determine whether the change requires documentation in a PAS, a CBE-30, or annual report. See 21 C.F.R. § 314.70(a)(2). 124 FAP ¶ 59. 125 Id.; 21 C.F.R. § 314.70(c)(2)(iii). 126 See ¶¶ FAP 83, 114 (making clear that while dissolution testing methods may have changed, Tris never stopped conducting such testing).

- 24 - that must be released by specific time points after reconstitution of the product, remained the

same. 127 The only thing that changed was the method for the “sample reconstitution/hydration”

process. 128 Plaintiffs are simply wrong on the law and regulatory framework in alleging that Pfizer

was obligated to file a CBE-30 with FDA before Tris implemented the alleged method revision.

But even assuming that Defendants should have submitted a CBE-30 describing the

dissolution testing method changes, the Petition fails to allege how violating this requirement

would have rendered Quillivant adulterated. The FDA regulation cited in support of this argument,

21 C.F.R. § 314.70, does not define any aspect of Current Good Manufacturing Practices. As

noted above, to adequately plead that Quillivant was adulterated due to CGMP violations,

Plaintiffs must identify at least one CGMP requirement that Defendants allegedly violated. It

simply cannot be the case that a plaintiff is permitted to file a cause of action for adulteration

predicated on the violation of a CGMP, and then survive a motion to dismiss by citing exclusively

to alleged violations of notification obligations that are not CGMPs.

Investigations of OOS Results. Plaintiffs also allege that Defendants preferred to

implement test method changes rather than investigate why certain dissolution tests were

generating OOS results, which somehow rendered Quillivant adulterated. 129 Defendants did

investigate dissolution testing failures; the allegations in the Petition reference and describe the

very investigations that Defendants conducted. 130 Most importantly, though, the Petition once

again neglects to identify why Defendants’ investigations failed to satisfy CGMPs. Moreover, the

127 FAP ¶¶ 57, 61. Specifically, Method 6 is alleged to have added only a requirement that the sample sit for thirty minutes following reconstitution, be sonicated for three minutes, and mixed gently for an additional minute. There is no allegation that the acceptance criteria changed. 128 FAP ¶ 51. 129 FAP ¶ 84. 130 FAP ¶¶ 70,80.

- 25 - Petition does not describe in any way how the alleged investigational deficiencies undermined

Quillivant’s safety or efficacy.

The only details Plaintiffs provide regarding allegedly deficient investigations involve the

March 2014 OOS dissolution testing result, which they allege “did not prompt Pfizer to press Tris”

for a thorough investigation of “the underlying cause.” 131 For the reasons described above,

Plaintiffs’ argument is based on a misunderstanding of the facts and the law. 132 When Tris learned

that one of its analysts wrongfully “caus[ed] an increase in the rate of dissolution” while sonicating

the batch held in reconstituted form for in-use stability testing, 133 Pfizer submitted a FAR promptly

notifying FDA that the samples were sonicated “in error.” 134 The FAR clearly stated that the

dissolution testing method would be further revised for clarity on that point. 135 The FAR thus also

put FDA on notice that sonication had been added to the dissolution testing method for testing

release samples, and that the test method would be further clarified in the future.

Rather than supporting Plaintiffs’ theory, the allegations instead demonstrate that Pfizer

fully complied with its regulatory obligations. FDA guidance instructs that manufacturers

investigating OOS results should only proceed to an escalated, full-scale OOS investigation where

the initial assessment does not indicate any “meaningful errors” were made in the analytical

131 See FAP ¶ 73. To be sure, Plaintiffs make other allegations about the nature of the investigations conducted by Tris, each of which are too conclusory or internally inconsistent to permit Defendants to respond. For instance, Plaintiffs note that following the 2012 OOS results for dissolution testing, “Tris blamed the method of mixing the sample instead of conducting a proper manufacturing investigation,” despite noting in the very next sentence that “Tris issued a Notice of Investigation for Quillivant” and identifying no purported shortcomings of that investigation. FAP ¶¶ 53-54. 132 See supra Factual and Legal Background, Section I.B. 133 FAP ¶ 70. 134 FAP ¶ 72. 135 FAP ¶ 71.

- 26 - method used to arrive at the data. 136 Put differently, if a manufacturer performs an initial

assessment and determines that a laboratory error (e.g., a technician misapplying the test method)

caused the OOS result, the investigation need not proceed any further. 137 Plaintiffs thus criticize

Tris, and by extension, Pfizer, for doing precisely what FDA guidance instructs.

The Petition admits that Pfizer again appropriately filed a FAR following OOS testing

results in 2016, engaged in discussions with FDA about the proper course of action to investigate

those results, and “agreed to commit to internally narrowing Quillivant’s dissolution test

specifications.” 138 This FAR notification is significant for two reasons. First, it demonstrates that

when made aware of problems that required reporting to FDA, Pfizer complied with its legal

obligations to report. Second, it provided FDA with the opportunity to take action to prevent

further distribution of the product, if the agency thought that step was appropriate. But FDA did

not seek to enjoin further distribution of the product. Rather, Pfizer ultimately recalled certain

impacted Quillivant batches after conducting investigations into dissolution testing results, and

FDA permitted release of other potentially impacted batches (nearly double the number of batches

Pfizer recalled) in the context of an ongoing shortage of ADHD medications. 139 Plaintiffs now

claim that the OOS results were not properly investigated and somehow adulterated the very

product that FDA continued to permit to be released to the market despite knowing of issues with

dissolution testing. Further, Plaintiffs do not allege how the investigations into OOS results that

136 See U.S. Food & Drug Admin., Guidance for Industry Investigating Out-of-Specification (OOS) Test Results for Pharmaceutical Production (May 2022), https://www.fda.gov/regulatory-information/search-fda-guidance- documents/investigating-out-specification-oos-test-results-pharmaceutical-production-level-2-revision. 137 Id. 138 FAP ¶ 82. 139 See Urgent, supra note 96.

- 27 - they concede occurred actually violated any CGMP requirements, or that they rendered Quillivant

in any way unsafe or ineffective.

2. Plaintiffs fail to allege that Defendants’ conduct related to particle size testing violated CGMPs to render Quillivant adulterated.

In their relentless effort to attribute unsupported and unjustified motives to otherwise

clearly legal actions, Plaintiffs also allege that Defendants sought FDA permission through

submission of a PAS to remove particle size testing from Quillivant’s battery of pre-release tests

in order to avoid conducting investigations into particle size testing failures. 140 As a threshold

matter, it cannot be the case that making a submission to FDA with a proposed change under the

most stringent reporting framework, the PAS, and then making no changes to the testing methods

for particle size while FDA considered that request, somehow rendered Quillivant adulterated.

That is because there is nothing wrong with asking for FDA’s permission to remove a testing

requirement that was contemplated by Quillivant’s DMF. On the contrary, the process as

alleged—with Tris suggesting a change and Pfizer submitting a PAS to FDA 141—is precisely the

conduct that FDA expects. 142 Moreover, the request submitted in the PAS was particularly

appropriate here because there is no generally applicable FDA requirement that particle size testing

be conducted at all. 143 In fact, FDA has promulgated non-binding guidance stating that “for some

new drug substances intended for use in solid or suspension drug products, particle size can have

a significant effect” on drug performance and that “[i]n such instances, testing for particle size

140 FAP ¶ 89. 141 FAP ¶ 94. 142 See U.S. Food & Drug Admin., Guidance for Industry: Changes to an Approved NDA or ANDA (Apr. 2004), https://www.fda.gov/files/drugs/published/Changes-to-an-Approved-NDA-or-ANDA.pdf. 143 See 21 C.F.R. §§ 820.1–820.5.

- 28 - distribution should be carried out.” 144 By its own language, FDA guidance concedes that particle

size testing will be appropriate only in “some” cases and, therefore, asking FDA to evaluate

whether Quillivant was such a case—particularly where the DMF holder has stated that particle

size testing is not necessary—does nothing to establish that Quillivant was adulterated.

Plaintiffs, perhaps cognizant of this hurdle, summarily allege that Tris recorded OOS

results for particle size testing from 2014 to 2017 and failed “to properly conduct investigations

into the root causes of the particle-size failures,” which violated the law and rendered Quillivant

adulterated. 145 Although manufacturers are required to conduct a “thorough[] investigation”

following the receipt of OOS results that are not due to laboratory error, and such an investigation

should “extend to other batches of the same drug product and other drug products that may have

been associated with the specific failure or discrepancy,” FDA mandates only that manufacturers

produce a written record of the investigation that “include[s] the conclusions and follow-up.”146

Defendants complied with this requirement.

Other than offhandedly stating that Defendants failed to “properly conduct investigations”

into purported particle size issues, Plaintiffs do not allege that Defendants failed to take any of the

required steps described above. 147 Instead, the Petition reflects that Tris did investigate particle

size testing failures, but asserts that Defendants are supposedly at fault because Tris did not find a

“true root cause.” 148 The Petition leaves unspoken why this renders Quillivant adulterated, since,

144 International Conference on Harmonisation [sic]; Guidance on Q6A Specifications: Test Procedures and Acceptance Criteria for New Drug Substances and New Drug Products: Chemical Substances, 65 Fed. Reg. 83,041 (Dec. 29, 2000) (emphasis added). 145 FAP ¶ 98. 146 21 C.F.R. § 211.192 147 FAP ¶¶ 55, 69, 76, 119. 148 FAP ¶ 87.

- 29 - as noted above, there is no explicit statutory or regulatory obligation requiring the identification

of “true root cause” as part of an investigation, which makes good sense considering even the most

thorough investigations can fail to identify a “true root cause.” Accordingly, once again, Plaintiffs

fail to meet the minimum burden of alleging how Defendants’ conduct violated a specific CGMP

requirement, 149 and leave the Defendants—and more importantly, the Court—without fair notice

as to what obligation Defendants violated and how Defendants supposedly did so.

3. The Petition itself undermines Plaintiffs’ theory that Defendants violated CGMPs in connection with Defendants’ investigation into complaints regarding lack-of-effect.

Lastly, Plaintiffs allege that Defendants failed to investigate lack-of-effect complaints, and

that failure rendered Quillivant adulterated. But again, Plaintiffs have not identified a single

CGMP requirement with which Defendants failed to comply during their purportedly “improper”

investigation, nor have Plaintiffs explained how the Defendants’ investigation violated that

regulation. This is with good reason. FDA anticipates that pharmaceutical manufacturers will

receive complaints and, for this reason, FDA regulations outline protocols for handling such

complaints. 150 CGMP regulations governing investigations related to “the possible failure of a

drug product to meet any of its specifications” require that “lack-of-effect” complaints be reviewed

by the manufacturer’s quality control unit, and that this unit make a determination regarding

whether an investigation is warranted. 151 Additionally, complaint handling procedures should

contain “provisions for review to determine whether the Petition represents a serious and

unexpected adverse drug experience which is required to be reported to [FDA].” 152 Neither of

149 John D. Copanos & Sons, 854 F.2d at 514. 150 21 C.F.R. § 211.198(a). 151 Id. 152 Id.

- 30 - those regulations—or any others for that matter—prescribe how a complaint investigation should

be conducted. 153

The Petition concedes that Defendants took all required steps when it acknowledges that

Tris did in fact investigate lack-of-effect complaints and subsequently sent Pfizer a memorandum

in May 2015 documenting the steps it had taken. 154 This investigation memorandum noted that

relevant samples met the dissolution release specifications and that there were “no discrepancies

noted in the manufacturing or packaging processes that would have resulted in the report of lack-

of-effect.” 155 Undeterred by the absence of any legal or factual basis for the allegation, Plaintiffs

press full steam ahead by mischaracterizing that investigation as “improper[]” and thus in violation

of manufacturing practice obligations because of Defendants’ “inability to properly compare the

consistency of the [Quillivant] batches referenced in the lack-of-effect claims.” 156 It is entirely

unclear what Plaintiffs mean by this allegation. Plaintiffs do not attempt to explain (i) what

consistency comparison should have been done that was not conducted, (ii) what is contemplated

by “consistency,” or (iii) what information such testing would have provided. Further, the Petition

points to no CGMP regulation that mandates consistency comparison testing—a concept with no

defined meaning—in order for an investigation to be considered “proper” or sufficient. That

failure occurs because no such regulation exists. The Petition thus fails to provide an adequate

basis in law to support the claim that Quillivant was adulterated as a result of Defendants’

investigations into lack-of-effect complaints.

153 See id. 154 FAP ¶ 101. 155 Id. 156 FAP ¶ 109.

- 31 - It is striking that the Petition acknowledges and then ignores the import of FDA’s

awareness of these lack-of-effect complaints. The Petition acknowledges that FDA was aware of

the lack-of-effect complaints and asked additional questions about them. 157 This awareness

reflects both that Pfizer fulfilled its regulatory complaint reporting responsibilities in compliance

with the law and that FDA did not see fit to request removal of the batches associated with the

complaints because it was not actually concerned about the safety or efficacy of marketed batches

that were subject to such complaints. Despite Plaintiffs’ efforts to obfuscate, the fact remains that

FDA continued to work with Defendants to resolve the issues that were properly reported 158 and

to allow the product to remain on the market.

B. Even if Quillivant had been “adulterated” based on a CGMP violation, reimbursement was still authorized under the TMFPA.

Even if this Court were to find that Plaintiffs adequately alleged that Quillivant was

“adulterated” (strictly speaking) based on a CGMP violation, which it should not, Plaintiffs have

not sufficiently alleged that Texas Medicaid would not have authorized the payment of claims for

Quillivant as a result. In other words, Plaintiffs do not allege that Texas Medicaid views every

“foot fault” or failure to comply perfectly with CGMPs—especially related to complex and highly

technical issues like those that would in theory have been implicated here if Plaintiffs had cited

any—as material to its reimbursement decisions.

It is clear from both its text and historical alignment with other health care fraud statutory

regimes (primarily the federal FCA) that the TMFPA is designed to detect and deter fraudulent

conduct that could cause the State to expend taxpayer resources on medications for which it might

157 FAP ¶ 100. 158 FAP ¶ 82.

- 32 - not otherwise pay. Indeed, Section 36.002(7) as a whole is squarely focused on claims for payment

that are “unauthorized or greater-than-authorized” due to the seriousness of the conduct it seeks to

proscribe, 159 including claims for services not “approved . . . by a treating physician” and products

that are “substantially inadequate” when “compared to generally recognized standards . . . within

the health care industry.” 160 And the Petition states as much, alleging that Defendants’ conduct

“resulted in millions of dollars of unauthorized or greater-than-authorized reimbursements.”161

Pfizer submits to this Court that the TMFPA as a whole is not intended to reach conduct

that is immaterial to Texas Medicaid’s payment decision, including technical CGMP violations

that do not impact a product’s safety or efficacy. 162 To conclude that every claim for a drug

product that was manufactured in a facility where a CGMP violation occurred is unauthorized—

no matter how minor or technical the violation or its potential impact on safety or effectiveness—

would lead to an absurd result.

Notably, the TMFPA’s focus on conduct that is material to the payment decision mirrors

the requirements of the federal FCA, on which it is modeled. 163 Indeed, courts have routinely

dismissed cases where a “[r]elator does not sufficiently allege th[at] concealed [C]GMP violations

were material” precisely because it would “turn the FCA into a tool with which a jury of six people

could retroactively eliminate the value of FDA approval and effectively require that a product

159 See FAP ¶ 128. 160 Tex. Hum. Res. Code § 36.002(7)(C) § 36.002(7). 161 See FAP ¶ 128 (outlining Plaintiff’s claim under Tex. Hum. Res. Code § 36.002(7)(C)) (emphasis added). 162 United States ex rel. Yu v. Grifols USA, LLC, No. 1:17-cv-2226, 2021 WL 5827047, at *12 (S.D.N.Y. Dec. 8, 2021), aff'd, No. 22-107, 2022 WL 7785044 (2d Cir. Oct. 14, 2022) (“Given that Relator alleges only speculative harms resulting from the alleged [C]GMP violations, the Court sees no basis in Relator’s allegations to supplant [] FDA’s decision-making with that of a court or jury.”). 163 See Universal Health Services, Inc. v. United States ex rel. Escobar, 579 U.S. 176, 194 (2016); (“The materiality standard is demanding. The False Claims Act is not an all-purpose antifraud statute, or a vehicle for punishing garden- variety breaches of contract or regulatory violations.”); Malouf v. State, 656 S.W.3d 402, 407 (Tex. App.—El Paso 2022, pet. filed) (noting that the TMFPA is modeled on the FCA).

- 33 - largely be withdrawn from the market even when FDA itself sees no reason to do so.” 164 Speaking

directly to what the State is seeking to do in this case, that court went on to explain that there was

a lack of materiality to technical CGMP compliance “because payment is conditioned on FDA

approval, which has been granted and never withdrawn, rather than [C]GMP compliance.” 165 And

while the State of Texas has inquired about more than mere FDA approval for Quillivant, it has

never inquired about the conduct it was fully aware of and now alleges was fraudulent and thus

cannot allege that the conduct would have affected the government’s decision to pay for the

product. 166

Recognizing, and seeking to avoid, the absurdity that would result if every technical

noncompliance with a federal regulation or guidance document could sustain a fraud claim, the

U.S. Supreme Court has established guideposts for analyzing what conduct is likely to impact a

payment decision (i.e., whether it is material to the payment decision). 167 Under this framework

“[m]inor or insubstantial” violations of federal law or regulation are insufficient to sustain a

fraudulent payments claim, and even the government’s decision to “expressly designate[]” a

provision as a condition of payment is “relevant to [the materiality analysis] but not dispositive.”168

A purely technical violation is not material even if “the Government would have the option to

decline to pay if it knew of the defendant’s noncompliance” and, instead, the government must

show (or allege) that it “consistently refuses to pay claims in the mine run of cases based on” the

violation alleged. 169

164 Grifols USA, LLC, 2021 WL 5827047, at *12 (quoting D'Agostino v. ev3, Inc., 845 F.3d 1, 8 (1st Cir. 2016)). 165 Id. at 8. 166 Escobar, 579 U.S. at 194 (2016) (explaining that the FCA targets fraud, rather than technical regulatory violations). 167 Id. at 192-93. 168 Id. at 190. 169 Id. at 196.

- 34 - These guideposts are instructive here, and Plaintiffs fail to heed their advice. To begin,

Plaintiffs never allege that HHSC treated strict CGMP compliance as a condition of payment

during the relevant time period. 170 Courts have consistently recognized that “compliance with []

CGMPs is not required for payment by Medicare and Medicaid.” 171 Tellingly, the Petition also

does not allege that HHSC has ever denied any claims based on purported violations of CGMP

regulations. 172 Nor are there any reported cases where the State or a relator successfully brought

TMFPA claims solely based on purported CGMP violations. Plaintiffs therefore certainly cannot

allege that HHSC consistently refuses to pay claims in the “mine run of cases.” 173 As courts have

stated in the FCA context, allegations about the government’s prior payment decisions are vital

because they relieve the court from having to “opine in the abstract” about materiality. 174 Courts

have thus repeatedly dismissed FCA claims that fail to plead facts about the government’s prior

payment decisions, as Plaintiffs have done here. 175

Beyond failing to allege that Texas Medicaid requires strict compliance with CGMPs as a

condition of payment, Plaintiffs cannot overcome the fact that Quillivant has continued to remain

170 Id. at 196. 171 United States ex rel. Rostholder v. Omnicare, Inc., 745 F.3d 694, 702 (4th Cir. 2014) (dismissing FCA claims premised on CGMP violations involving packaging). 172 See United States ex rel. Schimelpfenig v. Dr. Reddy’s Lab’ys Ltd., No. 11-cv-4607, 2017 WL 1133956, at *1 (E.D. Pa. Mar. 27, 2017) (dismissing FCA claims based on alleged violations of the Poison Prevention Packaging Act because, among other things, the relators did not allege that the government ever refused payment of any claim based on non-compliance with federal packaging requirements). 173 Escobar, 579 U.S. at 196. 174 United States ex rel. McBride v. Halliburton Co., 848 F.3d 1027, 1032 (D.C. Cir. 2017) (affirming the district court’s grant of summary judgment on FCA claim for failure to establish materiality), 175 See United States ex rel. Scharff v. Camelot Counseling, No. 13-cv-3791, 2016 WL 5416494, at *8 (S.D.N.Y. Sept. 28, 2016) (dismissing FCA claim and noting plaintiff’s failure to plead facts about the government’s prior payment decisions); see also Knudsen v. Sprint Commc’ns. Co., No. C13-04476, 2016 WL 4548924, at *14 (N.D. Cal. Sept. 1, 2016) (finding complaint insufficiently alleged materiality “because it did not further allege that the government was unaware of the alleged . . . violations”).

- 35 - on the VDP formulary and Texas PDL from its initial permanent inclusion to today. 176 After

officially adding Quillivant to its PDL in 2014, Texas Medicaid has never revisited that decision

and has consistently paid for the product without any prior authorization, including after the

Warning Letter was publicly released in March 2018. 177 This fact completely undercuts any

suggestion that Texas Medicaid would not have reimbursed claims had it known about Quillivant’s

purported CGMP violations. That Texas Medicaid continued to pay for Quillivant despite

knowledge of the purported issues with dissolution testing is hardly surprising given FDA’s

position on the subject: Despite receiving multiple FARs and notices regarding OOS results

starting in 2014, 178 despite issuing 483 observations to Tris in 2017, 179 and despite issuing a DMF

letter to Tris in 2017 180 and a Warning Letter to Tris in 2018,181 FDA still permitted Quillivant to

remain on the market. Even more, FDA explicitly allowed batches of Quillivant that potentially

failed to meet their dissolution testing specifications to be released to the market in March 2018

with full knowledge of the allegations that Plaintiffs have used as the basis of their Petition,182

which it would not have done if it had patient safety concerns with Quillivant. 183 FDA is the

176 Texas Health & Human Servs., Texas Preferred Drug List, Texas Medicaid PDL and PA Criteria 136 (Jan. 25, 2024), https://www.txvendordrug.com/sites/default/files/docs/2024-0125-preferred-drug-list.pdf. 177 See FAP ¶ 118. 178 FAP ¶¶ 70, 82. 179 FAP ¶¶ 44, 111. 180 FAP ¶ 114. 181 See Warning Letter, supra note 97. 182 See Urgent, supra note 96 (“In order to alleviate the current drug shortage of Quillivant XR . . . , Pfizer is coordinating with the U.S. Food and Drug Administration (FDA) to help ensure availability of the drug. Accordingly, Pfizer is releasing eleven lots [] of Quillivant XR to address the current critical shortage.”). 183 See U.S. Food & Drug Admin., Frequently Asked Questions (FAQs) about Drug Shortages (Oct. 11, 2023), https://www.fda.gov/drugs/drug-shortages/frequently-asked-questions-about-drug-shortages (“FDA is responsible for ensuring that safe, effective drugs are available for U.S. patients. . . . FDA does everything possible to work with firms to address any potential risks to keep medically necessary products available while also ensuring there is not going to be harm to patients associated with the quality issues.”).

- 36 - country’s primary regulator of drug products, 184 and one would expect Texas Medicaid to rely on

FDA’s assessment that even Quillivant that may have failed to meet its dissolution specifications

should be distributed because the risk of patients lacking access to the drug far outweighed any

potential problems caused by any theoretical dissolution testing anomalies.

The State of Texas cannot have it both ways. The Attorney General’s office must not be

allowed to second-guess Texas Medicaid’s decision to pay for Quillivant in their quest to play

“gotcha” with the world’s largest pharmaceutical manufacturer, when both FDA and Texas

Medicaid appear to have concluded that any alleged CGMP violation did not impact the safety or

efficacy of Quillivant, or in any way deprive HHSC of the “essence of the bargain” such that any

claim paid by Texas Medicaid for Quillivant was unauthorized. 185

II. PLAINTIFFS’ CAUSES OF ACTION UNDER SECTIONS 36.002(1) AND 36.002(4)(B) REGARDING PFIZER’S ALLEGED FALSE STATEMENTS OR MISREPRESENTATIONS FAIL AS A MATTER OF LAW.

Plaintiffs’ causes of action under both Texas Human Resources Code Section 36.002(1)

and Section 36.002(4)(B) center on alleged false statements or misrepresentations by Pfizer during

the VDP application process. First, Plaintiffs allege that Pfizer made a false statement or

misrepresentation when it certified on the VDP application that Quillivant was not in violation of

federal or state law. 186 Second, Plaintiffs allege that Pfizer made a false statement or

misrepresentation when it committed to updating Texas Medicaid as to any change in Quillivant’s

184 Cf. Dr. Reddy’s Lab’ys Ltd., 2017 WL 1133956, at *1 (noting that “Plaintiffs’ own pleadings reflect the existence of federal agencies equipped with the administrative power to address Defendants’ statutory and regulatory violations,” so allowing the plaintiffs sue based on the defendants’ noncompliance with federal packaging requirements would bypass the regulatory scheme that was “established to address noncompliance with those regulations”). 185 Escobar, at 194 n.5. 186 See FAP ¶¶ 124, 126.

- 37 - “product status.” 187 These causes of action rely on the foundational assumption that Quillivant

was adulterated and, thus, in violation of federal and state law. But even setting aside the absence

of an adequately pled adulteration claim, Plaintiffs’ two causes of action concerning false

statements or misrepresentations allegedly made by Pfizer in connection with the VDP application

also fail for independent reasons: Pfizer did not make any false statements or misrepresentations

in its January 2013 VDP application, and Pfizer complied with its obligation to update Texas

Medicaid about changes in Quillivant’s “product status.”

A. Plaintiffs fail to allege that Quillivant was adulterated, or otherwise in violation of federal or state law, at the time of Pfizer’s VDP application.

Plaintiffs’ allegations concerning the VDP application present a clear problem of timing

with which Plaintiffs wholly fail to grapple. Plaintiffs allege that Pfizer made a false statement or

misrepresentation when it certified in the VDP application that Quillivant “was not in violation of

federal and state law.” 188 But Plaintiffs conveniently omit a key portion of this particular

certification which states, in its entirety, “I certify that the information submitted is correct to the

best of my knowledge and that this product is not now in violation of either Federal or State

Law.” 189

Pfizer submitted the VDP application for Quillivant in January 2013. The Petition, on its

face, concedes that Pfizer did not know until late June 2013 that Tris was considering changing its

dissolution test method; 190 did not know until September 2013 about any lack-of-effect

187 See id. 188 See FAP ¶¶ 124, 126. 189 See Exhibit A (emphasis added). Plaintiffs state, “Pfizer successfully campaigned to have Quillivant added to the Texas Medicaid Formulary in June 2013,” FAP ¶ 46, and also conveniently omit that Pfizer submitted the application—which Plaintiffs quote directly in the Petition—in January 2013. See also 1 Tex. Admin. Code §§ 354.1921(b), 354.1923(b). 190 See FAP ¶ 64. The Petition does allege, “As early as October 2012, Pfizer was aware that Quillivant was having difficulty meeting its FDA-mandated testing specifications,” FAP ¶ 64, but does not—and cannot—allege that

- 38 - complaints; 191 and could not have known until at least June 2014 that Quillivant was generating

out-of-specification particle size testing results. 192 To be clear, none of these alleged facts or

circumstances rendered Quillivant adulterated or otherwise “in violation of federal and state law”

for the reasons explained in the preceding section. But even if any one of them caused Quillivant

to be in violation of federal or state law, the facts as alleged do not permit a reasonable person to

believe that Pfizer knew Quillivant was in violation of federal or state law in January 2013 when

the VDP application was submitted. 193

B. Plaintiffs fail to allege that Pfizer “falsely certified” that it would update Texas Medicaid as to any change in “product status.”

Plaintiffs’ second theory—that Pfizer falsely certified in its VDP application that it would

update Texas Medicaid as to any change in Quillivant’s “product status” —fares no better. 194 As

a condition of participating in the VDP formulary, pharmaceutical manufacturers are required to

“update [Texas Medicaid] with changes to formulation, product status, or availability.” 195

Consistent with this requirement, pharmaceutical manufacturers must certify in the VDP

application that the manufacturer will “inform [HHSC], in writing, of any changes in formulation,

product status, price or availability as herein describe[d].” 196

encountering “difficulty,” while ultimately meeting the testing specifications, renders a product adulterated or otherwise in violation of federal or state law. 191 See FAP ¶ 99. 192 See FAP ¶ 87. Additionally, with respect to particle size testing issues, Plaintiffs allege that Tris discovered problems related to particle size testing between “2014 to at least 2016,” well after Pfizer submitted the VDP application. See FAP ¶ 98. 193 As previously noted, while Plaintiffs state, “Pfizer successfully campaigned to have Quillivant added to the Texas Medicaid Formulary in June 2013,” FAP ¶ 46, it is clear from the face of the application that Pfizer submitted it in January 2013. See Exhibit A. 194 See FAP ¶ 125. 195 1 Tex. Admin. Code § 354.1921(c)(2). 196 See Exhibit A (emphasis added). The Petition notably omits the qualifier at the end of the certification, which was present in the form as of January 2013 and expressly limited Pfizer’s disclosure obligations to changes affecting information included in the VDP submission. Id.

- 39 - As a threshold matter, neither the Texas law requiring manufacturers to report changes in

a drug’s “product status” nor the VDP application define this term. 197 Whatever “product status”

means, though, it does not include changes to the method of sample preparation in advance of

dissolution release testing or the occurrence of out-of-specification results for certain in-use

stability batches. Indeed, HHSC’s own use of the term belies any such interpretation. For example,

in the context of drug shortages, HHSC’s inquiry about “product status change” asks whether “the

manufacturer introduced [the] same drug under a different NDC [National Drug Code] or [whether]

another manufacturer re-patent[ed] it with different NDC and packing, etc.” 198 FDA’s usage of

“product status” is similar and equally instructive: in its 2019 Investigations Operations Manual,

FDA uses the term “product status” to refer to a drug’s branding and approval status. 199 Evidently,

neither agency uses the term “product status” to refer to compliance (or lack thereof) with post-

manufacturing controls like dissolution testing methods.

Plaintiffs’ theory that Pfizer violated purported disclosure obligations is further undercut

by the language in Pfizer’s VDP application. 200 While Plaintiffs repeat multiple times that Pfizer

certified on the VDP application that it “agree[d] to update VDP of any changes” in Quillivant’s

“product status” 201 they conveniently fail to mention that, in fact, the VDP certification required

Pfizer to notify Texas Medicaid of changes to Quillivant’s product status only “as herein

197 1 Tex. Admin. Code § 354.1921(c)(2) (requiring manufacturers to “update [Texas Medicaid] with changes to formulation, product status, or availability” and affirm that they will do so on their VDP formulary application). 198 See Texas Health & Human Servs., Form 1315, Drug Shortage Notification, https://www.hhs.texas.gov/regulations/forms/1000-1999/form-1315-drug-shortage-notification, (last visited Jan. 28, 2024). 199 FDA Investigations Operations Manual, Chp. 5.5.5.3 - Drug Status Questions (“If you have questions about misbranding, new drug status, API/finished drug product status, drug/cosmetic, drug/food (dietary supplement) status, or compounded drugs, contact the Office of Unapproved Drugs and Labeling Compliance[.]”). 200 See FAP ¶¶ 124, 126. 201 See FAP ¶ 46.

- 40 - described.” 202 By its terms, then, “product status” refers to information that was included in

Quillivant’s VDP application, which did not address post-manufacturing controls like dissolution

testing. Indeed, the State has previously taken the position that the VDP certification’s disclosure

requirement is limited to changes “pertaining to the [] points specified in the application.” 203

To be clear, Pfizer’s VDP application consisted of (i) a completed VDP formulary

questionnaire, (ii) a letter from FDA approving Pfizer’s NDA for Quillivant, and (iii) a letter in

which Pfizer committed to providing five million dollars of product liability protection to defend

Texas against claims or lawsuits concerning Quillivant. 204 Pfizer’s responses to the VDP

formulary questionnaire included information about Quillivant’s National Drug Code number,

color and flavor, DEA schedule, packaging, recommended daily dosage of the drug and available

strengths, recommendation for duration of usage, shelf-life, ingredients, and pricing

information. 205 The questionnaire does not request any information that would be included in the

CMC section of the NDA—or in the DMF in the case of Quillivant—such as the methods for post-

manufacturing release controls like dissolution testing. Instead, the correspondence with FDA

regarding Quillivant’s NDA included proposed carton and container labels for Quillivant with

202 See Exhibit A (emphasis added). 203 See Pls.’ Fourth Am. Pet., United States of America ex rel. Allen Jones v. Janssen Pharma. Prods., LP, No. D-1- GV-04-001288 (Tex. Dist. Ct. (Travis Cnty.) Apr. 8, 2011), Dkt. No. 439 (“In approving VDP applications, HHSC expressly provides that manufacturers are responsible for submitting notification of changes pertaining to the 16 points specified in the application no later than the date such revisions are scheduled to occur. Accordingly, manufacturers owe a continuing duty to Texas Medicaid to supplement information provided with their VDP application after its initial submission to the VDP, including materials provided to physicians.”); Notice of Removal, State of Texas ex. Rel. Layne D. Foote, No. 1:15-cv-00102-RP, (W.D. Tex. Feb. 4, 2015), ECF No. 1, (attaching Plaintiffs’ First Amended Petition, which noted that for Texas’ VDP formulary, “the applications state that manufacturers are responsible ‘for submitting notification of any changes pertaining to any of the [information required by the application] not later than the date such revisions are scheduled to occur.’”) (brackets included in original). 204 See FAP ¶ 46 (referencing the VDP application); see Exhibit A. 205 See Exhibit A. When a pharmaceutical manufacturer applies for its drug to be added to the VDP formulary, HHSC requests information about “the recommended daily dosages, formulation of the drug, FDA approval letters, and copies of the package inserts and materials for physicians.” FAP ¶ 32.

- 41 - usage and dosage information, reconstitution instructions for pharmacists, and warnings and

precautions related to potential side effects. 206 Pfizer’s VDP application included no information

whatsoever about Quillivant’s dissolution testing, particle size testing, or patient complaints. 207

Plaintiffs’ own allegations defeat their theory that the VDP application itself contained a

single false statement or misrepresentation by Pfizer. Their causes of action based on Pfizer’s

certifications in the VDP application under sections 36.002(1) and 36.002(4)(B) should be

dismissed swiftly and with prejudice.

III. PLAINTIFFS FAIL TO PLEAD THAT PFIZER CONCEALED OR FAILED TO DISCLOSE INFORMATION IN VIOLATION OF 36.002(2).

Plaintiffs’ cause of action under Section 36.002(2), which focuses on Pfizer’s alleged

concealment of information about Quillivant’s post-manufacturing controls in connection with the

VDP formulary or PDL approval processes, has no basis in law or fact. To begin, Plaintiffs cite

no Texas law or regulation to support their allegation that Pfizer was obligated to disclose

information about post-manufacturing controls such as dissolution testing, investigations, and

complaint reporting in connection with the VDP or submissions to the P&T Committee and its

successor, the DUR Board—which is unsurprising because none exists. 208 This omission alone

dooms Plaintiffs’ theory of liability for purported non-disclosures in the context of Quillivant’s

VDP and PDL listings. Additionally, Plaintiffs do not sufficiently allege facts demonstrating that

any issues with dissolution testing compromised Quillivant’s safety or efficacy such that Pfizer

206 See Exhibit A. 207 See FAP ¶ 46. 208 See Texas Drug Utilization Review Board Handbook, A-2 Bylaws, A-2.3. Preferred Drug List (defining the PDL as a “[l]ist of covered outpatient drugs reviewed by Board for their efficaciousness, clinical significance, cost- effectiveness, and safety for patients and recommended as either preferred or non-preferred”).

- 42 - was required to disclose this information to the P&T Committee or DUR Board in connection with

their decision to list Quillivant on the PDL. 209

A. Plaintiffs cite no legal requirement that obligated Pfizer to disclose information related to post-manufacturing controls as part of the VDP formulary or PDL approval processes.

The VDP formulary and PDL approval processes focus primarily on a drug’s safety and

efficacy. 210 As discussed in Factual and Legal Background, Section II, the VDP formulary

application does not require any information about post-manufacturing controls like dissolution

testing. After an application is submitted, HHSC will add the drug to the VDP formulary based

on a determination of “need,” which involves consideration of (i) whether adding the drug to the

VDP formulary will expand the arsenal of treatment tools available to Texas physicians; (ii) the

predominant use of the drug in an outpatient setting; and (iii) the cost of the drug. 211 HHSC’s

approval of a pharmaceutical manufacturer’s VDP application serves as the “authorization” of

payment through the VDP formulary; there is no separate statute or regulation providing specific

considerations to be used by HHSC when approving individual reimbursement claims. 212

Plaintiffs fail to point to any requirement on the VDP application itself, or any other legal

requirement, obligating Pfizer to disclose issues related to dissolution testing, particle size testing,

or lack-of-effect complaints in the VDP formulary process. Nor do they allege that such

209 See 1 Tex. Admin. Code § 354.1924(c)(2); see also Texas Drug Utilization Review Board Handbook, A-5 Documents (“The board recommends drugs and drug classes for inclusion to the PDL based on clinical, financial, and safety at each board meeting.”). 210 See FAP ¶¶ 32, 37. 211 1 Tex. Admin. Code § 354.1923. 212 Id.

- 43 - information would have affected the factors HHSC considered when determining the “need” to

add Quillivant to the VDP formulary. 213

Likewise, Plaintiffs cite no legal requirement that obligated Pfizer to disclose purported

issues related to post-manufacturing controls during the PDL process. Once HHSC adds a drug to

the VDP formulary, the DUR Board (previously the P&T Committee) develops recommendations

for Texas’s PDL based on a product’s safety, efficacy, and cost effectiveness. 214 HHSC ultimately

decides which drugs are placed on the PDL based on the DUR Board’s recommendations and

FDA’s assessment of clinical efficacy and safety. 215 During the PDL application process, drug

manufacturers present information to the DUR Board in oral meetings and through paper

submissions, but there is no standard-form questionnaire and no statutory or regulatory

requirement mandating that drug manufacturers provide specific, defined information. 216 Thus,

despite Plaintiffs’ indignation that “Pfizer had the audacity to provide a presentation to the Texas

Medicaid DUR Board [] to maintain Quillivant’s preferred status on the PDL” after Tris received

negative feedback from FDA concerning dissolution testing, the Petition cites no “obligation”—

no contractual provision, statute, or regulation—to disclose information about post-manufacturing

controls—or CGMP compliance more broadly—to the DUR Board in connection with seeking or

maintaining PDL status. 217

213 Id. 214 See FAP ¶ 37. 215 See 1 Tex. Admin. Code § 354.1924(c)(2) 216 Texas Administrative Code § 354.1941(d) states that “[t] he DUR Board or its designee must present a summary of any clinical efficacy and safety information or analyses regarding a drug under consideration for a preferred drug list that is provided to the DUR Board by a private entity that has contracted with HHSC to provide the information.” 1 Tex. Admin. Code § 354.1923. It does not define what private entities must present in terms of clinical efficacy of safety information. Id. 217 As defined in the TMFPA, “obligation” means a “duty, whether or not fixed,” that arises from four distinct sources: “(A) an express or implied contractual, grantor-grantee, or licensor-licensee relationship; (B) a fee-based or similar

- 44 - B. Plaintiffs do not allege that any purported issues with post-manufacturing controls impacted the safety or efficacy of Quillivant such that Pfizer was required to disclose this information to the P&T Committee or DUR Board.

As Plaintiffs described, the P&T Committee adds products to the PDL “based on their

efficaciousness, clinical significance, cost effectiveness, and safety.” 218 But across Plaintiffs’ 41-

page Petition, they do not sufficiently allege facts to support the inference that the purported issues

concerning dissolution testing had any impact whatsoever on patient safety or the overall efficacy

of the product. 219

Indeed, FDA’s actions undercut any such inference. 220 After the agency was on notice of

the very same dissolution testing issues Plaintiffs malign, FDA did not seek to enjoin further

distribution of the product. 221 Rather, Pfizer voluntarily recalled certain impacted Quillivant

batches, and FDA permitted release of other impacted batches in the context of an ongoing

shortage of ADHD medications. 222 Given FDA’s permission to distribute potentially impacted

batches, 223 Pfizer had no reason to believe that Quillivant’s “clinical efficacy [or] safety” was

compromised such that disclosure to the P&T Committee and DUR Board would be required. 224

relationship; (C) a statute or regulation; or (D) the retention of any overpayment.” Tex. Hum. Res. Code § 36.001(7- a)(D). 218 FAP ¶ 77. 219 See 1 Tex. Admin. Code § 354.1924(c)(2) (“In developing its recommendations for the preferred drug lists, the board shall consider the clinical efficacy, safety, and cost-effectiveness of and any program benefit associated with a product.”) (emphasis added). 220 See supra p. 27. 221 Id. 222 See Warning Letter, supra note 97; Urgent, supra note 96. 223 See FAQs, supra note 183 (noting that “[r]egulatory discretion may be employed for a drug to be distributed to address shortages after additional controls are implemented to mitigate significant risk to patients as needed” but only after “ensuring there is not going to be harm to patients”). 224 Id.

- 45 - FDA’s actions are particularly noteworthy because Texas Medicaid considers FDA’s

analysis of clinical efficacy in determining whether to list a drug on the PDL. 225 Given HHSC’s

deference to FDA, Quillivant’s continuous status as an FDA-approved drug, and FDA’s

participation in Quillivant drug release decisions in 2018, it is unsurprising that Texas Medicaid

never considered removing Quillivant from the PDL since it was added nearly a decade ago despite

the very public nature of many of the issues described in the Petition. 226 This is despite the fact

that Texas would have had access to the recall and release notices, which expressly stated that the

released lots “may not meet dissolution testing specifications.” 227

Plaintiffs’ Petition is devoid of any factual allegations supporting a conclusion that the

alleged manufacturing process control concerns with Quillivant posed safety or efficacy concerns

such that Pfizer would have been obligated to report such issues to the P&T Committee or DUR

Board. Plaintiffs’ attempt to have it both ways, lobbing unfounded accusations at Pfizer while still

facilitating its citizens’ ready access to Quillivant, should be rejected. The Court should therefore

dismiss Plaintiffs’ claim under Section 36.002(2).

IV. PLAINTIFFS’ ALLEGATIONS FAIL TO SATISFY THE TMFPA’S SCIENTER REQUIREMENT

Even if Plaintiffs could plead that certain batches of Quillivant were adulterated, or that

Pfizer made a single material false statement, misrepresentation, or non-disclosure to HHSC,

225 See 1 Tex. Admin. Code § 354.1924(c)(2) (noting that one of the factors considered by HHSC in ultimately determining whether to add a drug to the PDL is the “clinical efficacy of the drug, consistent with the determination of the Food and Drug Administration” and the DUR Board’s recommendation). 226 See Warning Letter, supra note 97; Urgent, supra note 96. 227 See Urgent, supra note 96.

- 46 - Plaintiffs must allege facts sufficient to support a plausible inference that Pfizer acted with a

“culpable mental state.” 228 Plaintiffs fail to do so here.

Under the TMFPA, a person acts “knowingly” with respect to information if the person (i)

“has knowledge of the information,” (ii) “acts with conscious indifference to the truth or falsity of

the information,” or (iii) “acts in reckless disregard of the truth or falsity of the information.” 229

The TMFPA does not define “conscious indifference” or “reckless disregard,” but the Texas

Supreme Court has said that these terms “require proof that a party knew the relevant facts but did

not care about the result.” 230 The definition of “knowingly” under the TMFPA thus closely tracks

the FCA’s scienter requirement, both in statutory definition and in courts’ application of the

standard. 231 As the TMFPA’s plain language makes clear, good-faith omissions, mistakes, or

negligence—even if sufficient to support a reasonable inference that the claim was false—are

insufficient to state a TMFPA claim. 232 And for good reason: as courts have explained in the

analogous FCA context, the inclusion of “knowingly” signifies that the statute “is not an

228 Tex. Hum. Res. Code § 36.0011(a); Chapman v. Paul R. Wilson, Jr., D.D.S., Inc., 826 S.W.2d 214, 219 (Tex. App.—Austin 1992, writ denied) (noting, in the context of a different statute, that a “‘[k]nowing’ action is not the equivalent of negligent action.”); see also United States ex rel. Jacobs v. Walgreen Co., No. 21-20463, 2022 WL 613160, at *1 (5th Cir. Mar. 2, 2022) (“Our precedent is clear: ‘th[e] mens rea requirement [of an FCA claim] is not met by mere negligence or even gross negligence.’”) (citation omitted). 229 Tex. Hum. Res. Code § 36.0011(a). 230 See Malouf, 656 S.W.3d at 412 (quoting City of San Antonio v. Hartman, 201 S.W.3d 667, 672 n.19 (Tex. 2006)); see also Tarrant Cty. v. Bonner, 574 S.W.3d 893, 901 (Tex. 2019) (“Conscious indifference denotes a decision . . . to not care about the consequences of the act which may ultimately lead to that harm.”). 231 See United States ex rel. Schutte v. SuperValu Inc., 598 U.S. 739, 749–50 (2023) (“The FCA defines the term ‘knowingly’ as encompassing three mental states: First, that the person has actual knowledge of the information. Second, that the person acts in deliberate ignorance of the truth or falsity of the information. And, third, that the person acts in reckless disregard of the truth or falsity of the information.”) (cleaned up); Dental Health Programs Inc., 2021 WL 3213709, at *14 (analogizing the TMFPA to the FCA). 232 Tex. Hum. Res. Code § 36.0011(a).

- 47 - appropriate vehicle for policing technical compliance with administrative regulations” as the

statute’s goal—like the TMFPA’s—is “fraud prevention.” 233

Here, Plaintiffs must plead specific facts supporting a plausible inference that Pfizer “knew”

Quillivant was adulterated, or that Pfizer “knew” certain information submitted to (or withheld

from) HHSC was false or misleading, or, at a minimum, that Pfizer acted with conscious

indifference or reckless disregard of these alleged facts. 234 Plaintiffs’ inconsistent efforts to paint

Pfizer as having a culpable mental state fall flat.

As discussed supra Argument, Section II, Plaintiffs do not—and cannot—allege that Pfizer

“knew” Quillivant was adulterated in January 2013 when the VDP application was submitted. 235

At best, the Petition is inconsistent with respect to allegations of Pfizer’s mental state after the

VDP application process. The Petition alleges that Pfizer may have been aware of certain issues

related to dissolution testing, while at other times explicitly stating that Pfizer lacked access to the

same relevant information. 236 Similarly, the Petition alleges that Tris misled Pfizer and withheld

information about the dissolution testing method revisions and those changes’ potential effect on

investigations involving lack-of-effect complaints 237 and particle size testing failures. 238 The

233 United States ex rel. Gudur v. Deloitte Consulting LLP, 512 F. Supp. 2d 920, 931 (S.D. Tex. 2007) (quoting United States ex rel. Lamers v. City of Green Bay, 168 F.3d 1013, 1019 (7th Cir. 1999)). 234 Dental Health Programs Inc., 2021 WL 3213709, at *8-10 (dismissing relator’s false certification claim based on incorrect information the defendant included in a submission to HHSC). 235 As previously noted, Plaintiffs state, “Pfizer successfully campaigned to have Quillivant added to the Texas Medicaid Formulary in June 2013,” FAP ¶ 46, but Pfizer submitted the application in January 2013. 236 Compare FAP ¶ 64 (alleging that Pfizer “was aware that Quillivant was having difficulty meeting its FDA- mandated specification”) with FAP ¶ 90 (stating that Pfizer did not know about dissolution testing issues in 2014). 237 See FAP ¶ 101 (“Tris’s Senior Manager of Compliance sent Pfizer a memo addressing the steps Tris had taken to investigate lack of effect complaints concerning Quillivant. Among other things, the memo assured Pfizer that Tris had tested relevant samples for dissolution and the samples had met release specifications. The memo concluded there ‘were no discrepancies noted in the manufacturing or packaging processes that would have resulted in the report of a lack of effect.’”) 238 See FAP ¶¶ 90, 93-94.

- 48 - Petition also repeatedly acknowledges that Tris (not Pfizer) received communications from FDA

on the dissolution testing changes that were contained in the DMF filing—not the NDA submission

that Pfizer submitted. 239 And Plaintiffs concede that when Pfizer learned of Quillivant’s out-of-

specification dissolution test results, Pfizer filed multiple FARs to alert FDA. 240

What is clear from the Petition is that when Pfizer knew about the issues with respect to

OOS dissolution results, it immediately notified FDA. 241 The Petition admits that in December

2016, Pfizer notified FDA of the dissolution testing issues and that “Pfizer agreed to commit to

internally narrowing Quillivant’s dissolution specifications.” 242 It also details FDA’s involvement

in addressing dissolution testing issues from 2017 through 2018, and the fact that Tris—not Pfizer

— received Form 483 Inspection Observations, a DMF Deficiency Letter, and a Warning Letter. 243

Conveniently, though, the Petition fails to provide important context including that Pfizer recalled

certain impacted Quillivant batches, and that FDA permitted release of other batches with full

knowledge that those batches may not have met their dissolution testing specifications. 244 FDA’s

involvement is significant. It demonstrates that Pfizer proactively engaged with its primary

regulator and complied with its legal obligations as soon as it was made aware of problems that

required reporting to FDA. In other words, once Pfizer knew the relevant facts, the Company

clearly “cared about the result” 245 and took steps to fix identified problems and do the right thing.

239 See FAP ¶¶ 111, 114. 240 See FAP ¶ 82. 241 Id. 242 Id. 243 See FAP ¶¶ 111-119. 244 See FAP ¶ 110; Urgent, supra note 96. 245 See Malouf, 656 S.W.3d at 412; see also Bonner, 574 S.W.3d at 901.

- 49 - Such behavior is wholly inconsistent with the idea of “conscious indifference” or “reckless

disregard.”

Importantly, the notifications provided FDA with the opportunity to take action to prevent

further distribution of the product if the agency thought that step was appropriate. FDA did not

seek to enjoin further distribution of the product, but rather permitted batches to be released to

address a drug shortage around the same time the agency issued its Warning Letter to Tris. 246 This

decision understandably led Pfizer to believe that there was no impact to the safety and efficacy of

the product that would undermine payors’ willingness to pay for the product or otherwise cause

the submission of false claims. 247 It follows that Pfizer also reasonably believed—based on the

enforcement discretion decisions of its primary regulator—that there would be no need to update

Texas Medicaid under the VDP formulary rules and regulations.

These reasonable, subjective beliefs foreclose any notion that Pfizer “knowingly” violated

the TMFPA. As the Supreme Court recently explained when interpreting the FCA’s scienter

standard, a person does not “knowingly” violate the FCA where they reasonably believe (even

mistakenly) that they have not submitted a false claim. 248 That is because the “knowingly” scienter

requirement “track[s] traditional common-law fraud, which ordinarily ‘depends on a subjective

test’ and the defendant’s ‘culpable state of mind.’” 249 Plaintiffs fail to plead facts sufficient to

support a plausible inference that Pfizer acted with actual knowledge, “conscious indifference,” or

“reckless disregard” that Quillivant was adulterated when Pfizer sought placement for Quillivant

246 See Warning Letter, supra note 97; Urgent, supra note 96. 247 See FAQs, supra note 183. 248 See Schutte, 598 U.S. at 752. 249 Id.

- 50 - on the Texas Medicaid formulary and PDL or anytime thereafter. 250 Plaintiffs’ causes of action

therefore fail to satisfy the TMFPA’s scienter requirement and the Petition should be dismissed in

its entirety pursuant to Rule 91a.

For the foregoing reasons, Pfizer prays that this Court grant its Rule 91a Motion to Dismiss,

dismiss Plaintiffs’ claims with prejudice, and grant any such other relief to which Pfizer may be

justly entitled.

250 See Tex. Hum. Res. Code § 36.0011(a).

- 51 - February 5, 2024 Respectfully submitted,

THE VAL JONES LAW FIRM By: /s/ Val Jones George Valton (“Val”) Jones 109 West Austin St. Marshall, TX 75670-3340 State Bar No. 10888050 val@valjoneslaw.com (903) 927-2220

FOLEY & LARDNER LLP Edward D. (“Ed”) Burbach State Bar No. 03355250 600 Congress Avenue, Suite 2900 Austin, Texas 78701 eburbach@foley.com (512) 542-7070 / (512) 542-7100 (fax)

ROPES & GRAY LLP Samantha Barrett Badlam (admitted pro hac vice) 2099 Pennsylvania Ave., N.W. Washington, DC 20006-6807 samantha.badlam@ropesgray.com (202) 508-4734

- 52 - CERTIFICATE OF SERVICE

By my signature below, I hereby certify that a true and correct copy of the foregoing was served on all counsel of record via fileandservetexas.com in accordance with the Texas Rules of Civil Procedure on this 5th day of February, 2024.

Jason T. Brown Patrick S. Almonrode 111 Town Square Place, Suite 400 111 Town Square Place, Suite 400 Jersey City, NJ 07310 Jersey City, NJ 07310 Fax: (855) 582-5297 Fax: (855) 582-5297 Email: jtb@jtblawgroup.com Email: patalmonrode@jtblawgroup.com

E. Glenn Thames, Jr. Michael E. Jones 102 North College, Suite 900 102 North College, Suite 900 Tyler, TX 75702 Tyler, TX 75702 Fax: (903) 593-0846 Fax: (903) 593-0846 Email: glennthames@potterminton.com Email: mikejones@potterminton.com

Jonathan D. Bonilla Jessica L. Weltge Assistant Attorney General Assistant Attorney General The State of Texas The State of Texas Office of the Attorney General Office of the Attorney General Civil Medicaid Fraud Division Civil Medicaid Fraud Division PO Box 12548, Capitol Station PO Box 12548, Capitol Station Austin, TX 78711 Austin, TX 78711 Fax: (512) 320-0667 Fax: (512) 320-0667 Email: Jonathan.Bonilla@oag.texas.gov Email: Jessica.Weltge@oag.texas.gov

Jordan Underhill Barrett Reid Howell Assistant Attorney General Texas State Bar. No. 24032311 The State of Texas 300 Crescent Court Office of the Attorney General Suite 200 Civil Medicaid Fraud Division Dallas, TX 75201 PO Box 12548, Capitol Station Fax: 972.534.1297 Austin, TX 78711 barrett.howell@blankrome.com Fax: (512) 320-0667 Email: Jordan.Underhill@oag.texas.gov John F. Hundley 1909 K Street, NW, 12th Floor Harry “Gil” Gillam, Jr. Washington, DC 20006-1157 303 S. Washington Ave. Fax: (202) 661-2299 Marshall, Texas 75670 hundleyj@ballardspahr.com gil@gillamsmithlaw.com Tom Gorham Christopher A. Hatfield 303 S. Washington Ave. 1909 K Street, NW, 12th Floor Marshall, Texas 75670 Washington, DC 20006-1157 tom@gillamsmithlaw.com Fax: (202) 661-2299 hatfieldc@ballardspahr.com

-2- APPENDIX D

Relevant Court Orders

TRAP 28.3(e)(2)(B) 23-1031 Filed 6/13/2024 10:41 AM Sherry Griffis District Clerk Harrison County, Texas Lori Hightower CAUSE NO. 23-1031 Deputy

THE STATE OF TEXAS § IN THE DISTRICT COURT ex rel. TARIK AHMED § § Plaintiffs, § § v. § 71ST JUDICIAL DISTRICT § PFIZER, INC., TRIS PHARMA, INC., § and KETAN MEHTA, § § Defendants. § HARRISON COUNTY, TEXAS _____________________________________________________________________________

ORDER DENYING DEFENDANT PFIZER INC.’S MOTION TO DISMISS PLAINTIFFS’ FIRST AMENDED PEITION _____________________________________________________________________________

CAME ON THIS DAY to be heard in the above-numbered and styled cause Defendant Pfizer

Inc.’s Motion to Dismiss Plaintiffs’ First Amended Petition and Plaintiffs’ Response. The Court,

having considered said Motion is of the opinion that it should be DENIED in all respects. It is

therefore:

ORDERED Defendant Pfizer Inc.’s Motion to Dismiss Plaintiffs’ First Amended Petition is

DENIED in all respects. 13 day of _______________, SIGNED this ______ June 2024.

______________________________ HONORABLE JUDGE BRAD MORIN Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Janice Garrett on behalf of Jonathan Bonilla Bar No. 24073939 Janice.Garrett@oag.texas.gov Envelope ID: 88386608 Filing Code Description: Order Filing Description: ORDER DENYING DEFENDANT PFIZER INC.'S MOTION TO DISMISS PLAINITFFS' FIRST AMENDED PETITION Status as of 6/13/2024 10:42 AM CST

Edward D. Burbach 3355250 eburbach@foley.com 6/3/2024 4:31:34 PM SENT

Jonathan D.Bonilla Jonathan.Bonilla@oag.texas.gov 6/3/2024 4:31:34 PM SENT

Jordan Underhill Jordan.Underhill@oag.texas.gov 6/3/2024 4:31:34 PM SENT

Jessica Weltge jessica.weltge@oag.texas.gov 6/3/2024 4:31:34 PM SENT

Jason T.Brown jtb@jtblawgroup.com 6/3/2024 4:31:34 PM SENT

Patrick S.Almonrode patalmonrode@jtblawgroup.com 6/3/2024 4:31:34 PM SENT

Michael E.Jones mikejones@potterminton.com 6/3/2024 4:31:34 PM SENT

E. GlennThames glennthames@potterminton.com 6/3/2024 4:31:34 PM SENT

Harry L.Gillam gil@gillamsmithlaw.com 6/3/2024 4:31:34 PM SENT

Tom Gorham tom@gillamsmithlaw.com 6/3/2024 4:31:34 PM SENT

Barrett ReidHowell barrett.howell@blankrome.com 6/3/2024 4:31:34 PM SENT Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Janice Garrett on behalf of Jonathan Bonilla Bar No. 24073939 Janice.Garrett@oag.texas.gov Envelope ID: 88386608 Filing Code Description: Order Filing Description: ORDER DENYING DEFENDANT PFIZER INC.'S MOTION TO DISMISS PLAINITFFS' FIRST AMENDED PETITION Status as of 6/13/2024 10:42 AM CST

Barrett ReidHowell barrett.howell@blankrome.com 6/3/2024 4:31:34 PM SENT

John F.Hundley hundleyj@ballardspahr.com 6/3/2024 4:31:34 PM SENT

Christopher Hatfield hatfieldc@ballardspahr.com 6/3/2024 4:31:34 PM SENT

Diana Arias diana@gillamsmithlaw.com 6/3/2024 4:31:34 PM SENT

Olivia Arias olivia@gillamsmithlaw.com 6/3/2024 4:31:34 PM SENT

Rosa Ferguson rosa@gillamsmithlaw.com 6/3/2024 4:31:34 PM SENT

Stefan Schropp Stefan.Schropp@ropesgray.com 6/3/2024 4:31:34 PM SENT

Deanna Foster Deanna.Foster@ropesgray.com 6/3/2024 4:31:34 PM SENT

Samantha Barrett Samantha.Badlam@ropesgray.com 6/3/2024 4:31:34 PM SENT

Ed Burbach eburbach@foley.com 6/3/2024 4:31:34 PM SENT

Val Jones val@valjoneslaw.com 6/3/2024 4:31:34 PM SENT

McKellar Karr mckellar@gillamsmithlaw.com 6/3/2024 4:31:34 PM SENT

Litigation Administrative LitigationLegalAdministrativeAssistantsDC@ballardspahr.com 6/3/2024 4:31:34 PM SENT

Jessica Weltge jessica.weltge@oag.tx.gov 6/3/2024 4:31:34 PM ERROR

Docket Clerk DocketClerk_DC@ballardspahr.com 6/3/2024 4:31:34 PM ERROR

Pfizer Case Team QXRTXQuiTamAssociates&Paralegals@ropesgray.com 6/3/2024 4:31:34 PM ERROR

Lit Docket MCO LitDocketInformationGovernance@ropesgray.com 6/3/2024 4:31:34 PM SENT

Harry L.Gillam gil@gillamsmithlaw.com 6/3/2024 4:31:34 PM SENT

Tom Gorham tom@gillamsmithlaw.com 6/3/2024 4:31:34 PM SENT Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Janice Garrett on behalf of Jonathan Bonilla Bar No. 24073939 Janice.Garrett@oag.texas.gov Envelope ID: 88386608 Filing Code Description: Order Filing Description: ORDER DENYING DEFENDANT PFIZER INC.'S MOTION TO DISMISS PLAINITFFS' FIRST AMENDED PETITION Status as of 6/13/2024 10:42 AM CST

Barrett ReidHowell barrett.howell@blankrome.com 6/3/2024 4:31:34 PM SENT

John F.Hundley hundleyj@ballardspahr.com 6/3/2024 4:31:34 PM SENT

Christopher Hatfield hatfieldc@ballardspahr.com 6/3/2024 4:31:34 PM SENT 23-1031 Filed 6/13/2024 10:43 AM Sherry Griffis District Clerk Harrison County, Texas

THE STATE OF TEXAS § IN THE DISTRICT COURT ex rel. TARIK AHMED § § Plaintiffs, § § v. § 71ST JUDICIAL DISTRICT § PFIZER, INC., TRIS PHARMA, INC., § and KETAN MEHTA, § § Defendants. § HARRISON COUNTY, TEXAS _____________________________________________________________________________

ORDER DENYING DEFENDANT TRIS PHARMA, INC.’S MOTION TO DISMISS

_____________________________________________________________________________

CAME ON THIS DAY to be heard in the above-numbered and styled cause Defendant Tris

Pharma, Inc.’s Motion to Dismiss and Plaintiffs’ Response. The Court, having considered said

Motion is of the opinion that it should be DENIED in all respects. It is therefore:

ORDERED Defendant Tris Pharma, Inc.’s Motion to Dismiss is DENIED in all respects. 13 day of _______________, SIGNED this ______ June 2024.

______________________________ HONORABLE JUDGE BRAD MORIN Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Janice Garrett on behalf of Jonathan Bonilla Bar No. 24073939 Janice.Garrett@oag.texas.gov Envelope ID: 88388874 Filing Code Description: Order Filing Description: ORDER DENYING DEFENDANT TRIS PHARMA, INC.'S MOTION TO DISMISS Status as of 6/13/2024 10:45 AM CST

Edward D. Burbach 3355250 eburbach@foley.com 6/3/2024 4:55:50 PM SENT

Jonathan D.Bonilla Jonathan.Bonilla@oag.texas.gov 6/3/2024 4:55:50 PM SENT

Jordan Underhill Jordan.Underhill@oag.texas.gov 6/3/2024 4:55:50 PM SENT

Jessica Weltge jessica.weltge@oag.texas.gov 6/3/2024 4:55:50 PM SENT

Jason T.Brown jtb@jtblawgroup.com 6/3/2024 4:55:50 PM SENT

Patrick S.Almonrode patalmonrode@jtblawgroup.com 6/3/2024 4:55:50 PM SENT

Michael E.Jones mikejones@potterminton.com 6/3/2024 4:55:50 PM SENT

E. GlennThames glennthames@potterminton.com 6/3/2024 4:55:50 PM SENT

Harry L.Gillam gil@gillamsmithlaw.com 6/3/2024 4:55:50 PM SENT

Tom Gorham tom@gillamsmithlaw.com 6/3/2024 4:55:50 PM SENT

Barrett ReidHowell barrett.howell@blankrome.com 6/3/2024 4:55:50 PM SENT Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Janice Garrett on behalf of Jonathan Bonilla Bar No. 24073939 Janice.Garrett@oag.texas.gov Envelope ID: 88388874 Filing Code Description: Order Filing Description: ORDER DENYING DEFENDANT TRIS PHARMA, INC.'S MOTION TO DISMISS Status as of 6/13/2024 10:45 AM CST

Barrett ReidHowell barrett.howell@blankrome.com 6/3/2024 4:55:50 PM SENT

John F.Hundley hundleyj@ballardspahr.com 6/3/2024 4:55:50 PM SENT

Christopher Hatfield hatfieldc@ballardspahr.com 6/3/2024 4:55:50 PM SENT

Diana Arias diana@gillamsmithlaw.com 6/3/2024 4:55:50 PM SENT

Olivia Arias olivia@gillamsmithlaw.com 6/3/2024 4:55:50 PM SENT

Rosa Ferguson rosa@gillamsmithlaw.com 6/3/2024 4:55:50 PM SENT

Stefan Schropp Stefan.Schropp@ropesgray.com 6/3/2024 4:55:50 PM SENT

Deanna Foster Deanna.Foster@ropesgray.com 6/3/2024 4:55:50 PM SENT

Samantha Barrett Samantha.Badlam@ropesgray.com 6/3/2024 4:55:50 PM SENT

Ed Burbach eburbach@foley.com 6/3/2024 4:55:50 PM SENT

Val Jones val@valjoneslaw.com 6/3/2024 4:55:50 PM SENT

McKellar Karr mckellar@gillamsmithlaw.com 6/3/2024 4:55:50 PM SENT

Litigation Administrative LitigationLegalAdministrativeAssistantsDC@ballardspahr.com 6/3/2024 4:55:50 PM SENT

Jessica Weltge jessica.weltge@oag.tx.gov 6/3/2024 4:55:50 PM ERROR

Docket Clerk DocketClerk_DC@ballardspahr.com 6/3/2024 4:55:50 PM ERROR

Pfizer Case Team QXRTXQuiTamAssociates&Paralegals@ropesgray.com 6/3/2024 4:55:50 PM ERROR

Lit Docket MCO LitDocketInformationGovernance@ropesgray.com 6/3/2024 4:55:50 PM SENT

Harry L.Gillam gil@gillamsmithlaw.com 6/3/2024 4:55:50 PM SENT

Tom Gorham tom@gillamsmithlaw.com 6/3/2024 4:55:50 PM SENT Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Janice Garrett on behalf of Jonathan Bonilla Bar No. 24073939 Janice.Garrett@oag.texas.gov Envelope ID: 88388874 Filing Code Description: Order Filing Description: ORDER DENYING DEFENDANT TRIS PHARMA, INC.'S MOTION TO DISMISS Status as of 6/13/2024 10:45 AM CST

Barrett ReidHowell barrett.howell@blankrome.com 6/3/2024 4:55:50 PM SENT

John F.Hundley hundleyj@ballardspahr.com 6/3/2024 4:55:50 PM SENT

Christopher Hatfield hatfieldc@ballardspahr.com 6/3/2024 4:55:50 PM SENT 23-1031 Filed 8/12/2024 2:25 PM Sherry Griffis District Clerk Harrison County, Texas

THE STATE OF TEXAS § IN THE DISTRICT COURT ex rel. TARIK AHMED, § § Plaintiffs, § § v. § 71ST JUDICIAL DISTRICT § PFIZER INC., TRIS PHARMA, INC., § and KETAN MEHTA, § § Defendants. § HARRISON COUNTY, TEXAS

ORDER DENYING DEFENDANTS PFIZER INC. AND TRIS PHARMA, INC.’S JOINT MOTION FOR RECONSIDERATION OR CLARIFICATION AND REQUEST FOR HEARING

CAME ON THIS DAY to be heard in the above-numbered and styled cause Defendants

Pfizer Inc. and Tris Pharma, Inc.’s Joint Motion for Reconsideration or Clarification and

Request for Hearing. The Court, having considered said Motion is of the opinion that it should

be DENIED in all respects. It is therefore:

ORDERED Defendants Pfizer Inc. and Tris Pharma, Inc.’s Joint Motion for

Reconsideration or Clarification and Request for Hearing is DENIED in all respects.

SIGNED this 12 day of Aug , 2024

HONORABLE JUDGE BRAD MORIN

PLAINTIFFS’ RESPONSE TO DEFENDANTS’ JOINT MOTION FOR RECONSIDERATION OR CLARIFICATION 1 Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Janice Garrett on behalf of Jonathan Bonilla Bar No. 24073939 Janice.Garrett@oag.texas.gov Envelope ID: 90263044 Filing Code Description: ORDER Filing Description: ORDER DENYING DEFENDANTS PFIZER INC. AND TRIS PHARMA, INC.'S JOINT MOTION FOR RECONSIDERATION OR CLARIFICATION AND REQUEST FOR HEARING Status as of 8/14/2024 8:39 AM CST

Edward Burbach 3355250 eburbach@foley.com 7/28/2024 2:25:47 PM SENT

Mary JoToupin maryjo.toupin@oag.texas.gov 7/28/2024 2:25:47 PM SENT

Janice Garrett Janice.Garrett@oag.texas.gov 7/28/2024 2:25:47 PM SENT

Jonathan D.Bonilla Jonathan.Bonilla@oag.texas.gov 7/28/2024 2:25:47 PM SENT

Jordan Underhill Jordan.Underhill@oag.texas.gov 7/28/2024 2:25:47 PM SENT

Brittany Peters Brittany.Peters@oag.texas.gov 7/28/2024 2:25:47 PM SENT

Vivian Egbu vivian.egbu@oag.texas.gov 7/28/2024 2:25:47 PM SENT

Jason T.Brown jtb@jtblawgroup.com 7/28/2024 2:25:47 PM SENT

Patrick S.Almonrode patalmonrode@jtblawgroup.com 7/28/2024 2:25:47 PM SENT

Michael E.Jones mikejones@potterminton.com 7/28/2024 2:25:47 PM SENT

E. GlennThames glennthames@potterminton.com 7/28/2024 2:25:47 PM SENT

Case Contacts Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Janice Garrett on behalf of Jonathan Bonilla Bar No. 24073939 Janice.Garrett@oag.texas.gov Envelope ID: 90263044 Filing Code Description: ORDER Filing Description: ORDER DENYING DEFENDANTS PFIZER INC. AND TRIS PHARMA, INC.'S JOINT MOTION FOR RECONSIDERATION OR CLARIFICATION AND REQUEST FOR HEARING Status as of 8/14/2024 8:39 AM CST

Samantha Barrett Samantha.Badlam@ropesgray.com 7/28/2024 2:25:47 PM SENT

Val Jones val@valjoneslaw.com 7/28/2024 2:25:47 PM SENT

Harry L.Gillam gil@gillamsmithlaw.com 7/28/2024 2:25:47 PM SENT

Tom Gorham tom@gillamsmithlaw.com 7/28/2024 2:25:47 PM SENT

Barrett ReidHowell barrett.howell@blankrome.com 7/28/2024 2:25:47 PM SENT

John F.Hundley hundleyj@ballardspahr.com 7/28/2024 2:25:47 PM SENT

Christopher Hatfield hatfieldc@ballardspahr.com 7/28/2024 2:25:47 PM SENT