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Showdown Looms on Cost Accounting Standards

Reported by Peter Hutt II and Peter Terenzio at National Defense Magazine

In August, the Federal Circuit reversed a decision which now allows Boeing to proceed with its challenge to a Federal Acquisition Regulation provision. Peter Hutt II and Peter Terenzio examine the impact that this decision has on government contracts going forward. Boeing changed its cost accounting practices which resulted in an aggregate savings for the government, but the government requested a sum from Boeing due to increased costs in some areas due to FAR 30.606. Even though Boeing did not challenge the amount requested by the government (and the provision itself) prior to the contract award, the Court ruled that Boeing did not waive its challenge. Moreover, the Federal Circuit held that the Court of Federal Claims had jurisdiction over the case despite the provision not being “money-mandating” (one of the three types of Tucker Act claims along with contractual claims and illegal exaction claims)

It is notable that the Federal Circuit was careful to disclaim any opinion as to the merits of Boeing’s challenge to FAR 30.606. We now eagerly await the decision of the Court of Federal Claims on the contractor’s illegal exaction claim on remand.

A $75 Million Drug Sale Lands Teva a $235 Million Penalty

Reported by Susan Decker and Christopher Yasiejko at Bloomberg Law

Susan Decker and Christopher Yasiejko recap a recent Federal Circuit opinion in Glaxosmithkline LLC v. Teva Pharmaceutials USA, Inc. In this case, the Court reversed the decision of the trial court to throw out the jury’s infringement and damages findings. While Teva argued that its “skinny label” excluded a patented use of the drug, the Court found that the jury had sufficient evidence to find that Teva marketed the drug to include the patented use. The Court also disagreed that doctors prescribed Teva’s generic drug for GSK’s patented use based on their knowledge of the GSK drug.

Teva said it maintains that it doesn’t infringe the patent and will ask the Federal Circuit to reconsider the decision. It said it also will “present additional defenses to the district court.” London-based Glaxo said it was pleased with the ruling. The ruling could have broad implications for other generic-drug makers.

For more information on this case, see our coverage.