OK class, for today’s lesson, assume you are a major, sophisticated drug company. That means you have to have at least one (actually, a bunch) FDA-approved drug that’s safe and effective for its indicated use. So assume that, too – let’s say your drug alleviates muscular inflammation from over-exercise.
There being at least some reality to this hypothetical, assume as well that your drug also has a significant off-label use. With some 50% of all prescriptions being off-label, that’s quite the usual situation. For the purposes of the hypothetical, it doesn’t matter what the off-label use is. Let’s say it cures Alzheimer’s Disease.
As a drug company you have to collect and report adverse events, so you know about the off-label use. It would be difficult not to know, since the patient population is so different. Your marketing people talk to the docs. The docs are telling you that new use is safe and effective. You agree, but you can’t tell anybody that, because even if it’s true, it would be promoting an off-label use – which is illegal (unless you’re asked, then you can respond with certain materials….) Bexis, stop it, this lesson’s not about that.
So you evaluate the situation. It’s an off-label use, but one that’s not extensive enough (at least not yet) to be the medical standard of care. That means two things: (1) it’s still ethical to do the type of double-blinded controlled studies that the FDA requires (because that doesn’t involve withholding standard of care treatment from study subjects, which is a no-no), and (2) there’s more patients to be cured – and money to be made – if you could only say what you knew. You also look at the status of the drug itself. You conclude there’s enough time left on the patent, not by a lot but enough, to justify spending the money for those studies.
So unlike a lot of manufacturers and a lot of off-label uses, you the drug company undertake the time and expense of a supplemental new drug application for this use. Because of the brouhaha about drug companies supposedly “concealing” their research results, you’re careful to make sure that you provide timely updates on your research, which is showing promise, not only to the FDA but to the medical community and public as well.
As the hypothetical just posited, the results are positive and the FDA approves the new, previously off-label, use. You can now state openly what you though all along – that it’s safe and effective to cure Alzheimers. So what happens next?
In an ideal world, the new use becomes the standard of care, lots of people are cured of Alzheimers, you make a lot of money, you receive the FDA’s Peter Barton Hutt Golden Placebo Award for outstanding compliance with regulatory requirements, and Congress, with its committee chairmen now cured…. Stop! Even an ideal world isn’t that ideal.
In the real world, well, the FDA doesn’t give you awards (let alone protection from suit) just for doing what you’re supposed to do. Oh, and by the way, you get sued.
Sued you say? But how? Didn’t the hypo posit that the use was safe and effective all along, so who could have been hurt?
Nobody. It doesn’t matter. In our bizarre tort system, you get sued anyway.
Hell, if I knew that, I wouldn’t have bothered with the supplemental NDA, and left everything off-label. The cost of defending the suit is probably enough to wipe out any profit I might have made from the newly-labeled use.
And thus ends the prologue for the case we want to discuss today – actually two recent opinions in the same case: Prohias v. Pfizer, Inc., ___ F. Supp.2d ___, 2007 WL 1682515 (S.D. Fla. May 29, 2007) (Prohias II), and Prohias v. Pfizer, Inc., 485 F. Supp.2d 1329 (S.D. Fla. 2007) (Prohias I).
The Prohias case involves allegations of promotion of an off-label use that was later approved by the FDA as safe and effective. It also seems to us a classic example of a strike suit based upon the misuse of state consumer fraud statutes to police compliance with federal regulations.
How to tell. OK try this three-part test. First, was there anyone hurt by the product? In Prohias, no. No personal injury damages are even claimed. Apparently the drug was safe for both its original and subsequently approved uses. Second, was anybody cheated? Did the product not work? Again the answer is no. There are no allegations that either the on-label users or the off-label users didn’t get the effective drug they paid for. Third, is this a class action? Yes, of course.
That’s it. Three strikes and your out. This has all the facial attributes of a strike suit. Actually, “strike suit” is being kind. We describe this kind of litigation in much more colorful terms in private.
So what’s going on, then? Well, the plaintiffs are some otherwise satisfied users of the drug, together with some third-party payers with their hands (typically) out. The essence of the claim is that the defendant jumped the gun and illegally promoted the drug for the off-label use that the FDA later approved. This promotion allegedly increased the overall demand for the drug, which, plaintiffs claim, raised the price that the defendant could charge for it. Supposedly everybody, both the on-label and the off-label users, ended up paying more than they “should” have.
Nowhere in either Prohais opinion is are there any mention of allegations that anyone, on- or off-label, got a drug that was not medically appropriate for his/her condition – only that there was promotion of an off label use, which is (gasp) illegal.
We’re pleased to say that in the two opinions, most of this rubbish has been dismissed for failure to state a claim. That means, for your non-lawyers, that even taking everything the plaintiffs claimed as the Gospel truth, there was nothing actionable. Thus, in reading the opinions take the plaintiffs’ allegations with a grain of salt. There’s no reason to believe (beyond a lawyer’s willingness to put it in a complaint – which, believe us, ain’t much) that the defendant (Pfizer) actually did any of the things with which it is charged.
Pfizer’s one of the biggest drug companies around. It’s got equally top quality legal representation – Sheila Birnbaum and her group at Skadden. The resulting opinions are a primer in how to slice, dice, and fricassee bogus litigation. We’d expect nothing less.
The first fascinating issue is the plaintiffs’ purported “damages.” This supposed “price inflation” damages theory (that wrongfully generated demand inflated the price for everyone, and that this differential can be recovered on a classwide basis) has been widely peddled in consumer fraud cases and just as widely shot down as entirely speculative – after all, every person took a medically-indicated drug, and who’s to say they wouldn’t have done so anyway. Prohias I sticks just to the drug cases and cites Heindel v. Pfizer, Inc., 381 F. Supp.2d 364, 379 (D.N.J. 2004), and N.J. Citizen Action v. Schering-Plough Corp., 842 A.2d 174, 178 (N.J. Super. A.D. 2003), as authority for rejecting “price inflation” as speculative. Prohias I, 2007 WL 1228784, at *6. It also found the supposed damages too attenuated even to qualify as an Article III case or controversy in federal court, citing Rivera v. Wyeth-Ayerst Laboratories, 283 F.3d 315, 321 (5th Cir. 2002), and Williams v. Purdue Pharma Co., 297 F. Supp.2d 171, 177-78 (D.D.C. 2003). Prohias I, 2007 WL 1228784, at *7. Prohias I aptly questioned the reasoning of the only court arguably to find that such damage could support a cause of action. Id. at *7-8 (distinguishing and criticizing International Union of Operating Engineers Local # 68 Welfare Fund v. Merck & Co., 894 A.2d 1136 (N.J. Super. A.D. 2006)).
To the cases Prohias I cites, we would add Oliveira v. Amoco Oil Co., 776 N.E.2d 151, 163-64 (Ill. 2002); Weinberg v. Sun Co., 777 A.2d 442, 446 (Pa. 2001) (full disclosure, Bexis briefed that case), and Fink v. Ricoh Corp., 839 A.2d 942, 959-60 (N.J. Super. L.D. 2003), none of which are pharmaceuticals cases.
So lack of a viable theory of damages is the first – and to us the most obvious – way to deal with a lawsuit seeking to find fault with the medically indicated uses of a safe and effective drug.
But there’s more.
Another way the claims failed is that, because the drug itself was safe and effective, the individual plaintiffs did not stop using it once they purportedly found out “the truth.” Prohias I, 2007 WL 1228784, at *4-5. That’s a rather elementary causation principle, it seems to us. It did to the court as well. One would think that, at least, class counsel would recruit better plaintiffs (itself a good thing to investigate, as we argue here), but we’re glad they didn’t. Although it is doubtful that the Prohias litigation will ever get anywhere near class certification, these plaintiffs’ conduct demonstrates the individualized nature of the inquiry, even in stripped-down consumer fraud litigation.
From our perspective Prohias II, gets into even jucier defenses, since it’s more specific to the pharmaceutical industry. There, the court goes after the substantive law relating to the consumer fraud claims. The first thing that caught our eye – and probably what’s most responsible for this post – is the triple whammy the court gave to the plaintiffs’ consumer fraud claims concerning the defendant’s promotion of the drug after the new use was approved by the FDA.
First, the court held that promotion of the FDA-approved use was sanctioned by the FDA, and that meant that the consumer fraud statutes’ (the court was dealing with Florida and Massachusetts) safe harbors for government-authorized activities precluded any liability, Prohias II, 2007 WL 1682515, at *5. That’s not only correct, but incredibly timely in our estimation, since we had posted on the same topic – use of CFA safe harbors to defeat liability – only four days before Prohias II was decided. We had found only five cases applying any of these safe harbors to FDA regulated activity. Bober v. Glaxo Wellcome PLC, 246 F.3d 934, 942 (7th Cir. 2001) (applying Illinois law); Scott v. Glaxo Smith Kline Healthcare, 2006 WL 952032, at *2 & n.1 (N.D. Ill. Apr. 12, 2006); Pennsylvania Employee Benefit Trust Fund v. Zeneca, Inc., 2005 WL 2993937, at *4 (D. Del. Nov. 8, 2005); American Home Products Corp. v. Johnson & Johnson, 672 F. Supp. 135, 144-45 (S.D.N.Y. 1987); and Duronio v. Merck & Co., 2006 WL 1628516, at *7 (Mich. App. June 13, 2006). Now there’s another. We’ll take it, gladly.
We had called that post “Preemption Lite.” Well, one of the plaintiffs in Prohias II was from Pennsylvania, which doesn’t have any such statutory exception (there’s a list of all the statutes that do in our previous post). So in addition to preemption lite, the court – relying in part upon the FDA’s oft-maligned (and unjustly so) Final Rule – brought out preemption heavy as well:
Although I recognize that [the drug] was not approved to reduce the risk of heart attacks in all patients, the alleged advertisements derive from, and largely comport with, the approved label. For this reason, the plaintiffs efforts to hold [defendant] liable for the advertisements conflicts with the FDA’s jurisdiction over drug labeling, and specifically its approval of [the drug] to reduce the risk of heart disease in some patients. Those claims are therefore preempted by federal law.
Prohias II, 2007 WL 1682515, at *5.
To us this ruling is manifestly correct. It’s the simplest conflict in the world – where the FDA has said “yes,” no state law (common law or statutory) should be heard to say “no,” and vice versa. We think that’s a universal principle and should be applied whether the issue is warnings, approval (as here), or testing – a plaintiff should not be able to use a failure to test claim (which doesn’t exist independently in any event, see here) to say that the FDA should have required more pre-approval tests than the Agency decided were necessary.
Covering all the bases, the court in Prohias II also held that the post-approval statements could not possibly be “misleading” so as to constitute consumer fraud. Once again, the FDA’s approval was dispositive:
The information included in the labeling of a new drug reflects a determination by the FDA that the information is not “false or misleading.” [citing 21 C.F.R. §314.125(b)(6)]. Thus, even if the advertisements did not comport precisely with [the drug’s] approved label by claiming that [it] reduces the risk of coronary heart disease, the alleged advertisements generally comport with the approved label, and are therefore not misleading as a matter of law.
Prohias II, 2007 WL 1682515, at *5. The opinion cites Cytyc Corp. v. Neuromedical Systems, Inc., 12 F. Supp.2d 296, 301 (S.D.N.Y. 1998), to which we would add analogous Lanham Act precedent: Mylan Pharmaceuticals, Inc. v. Proctor & Gamble Co., 443 F. Supp.2d 453, 460 (S.D.N.Y. 2006); SmithKline Beecham Consumer Healthcare, L.P. v. Johnson & Johnson-Merck Consumer Pharmaceuticals Co., 1996 WL 280810, at *13 (S.D.N.Y. May 24, 1996), as well as Adamson v. Ortho-McNeil Pharmaceutical, Inc., 463 F. Supp.2d 496, 502 (D.N.J. 2006), which made an similar ruling about statements drawn verbatim from FDA regulations.
After the triple whammy, the court took on the plaintiffs’ claim for “unjust enrichment.” The court held that there was no injustice because the plaintiffs got what they paid for – an effective drug. Indeed, some of the class got more than what they paid for because the drug had more benefits than the FDA allowed the defendant to talk about at the time. Prohias II, 2007 WL 1682515, at *7. While the court doesn’t cite anything for this manifestly common-sense holding, other prescription drug cases coming to the same conclusion are: Adamson, 463 F. Supp.2d at 505; Heindel, 381 F. Supp.2d at 380; In re Rezulin Products Liability Litigation, 210 F.R.D. 61, 68-69 (S.D.N.Y. 2002).
The court buttressed its conclusion about unjust enrichment by holding that it’s an equitable claim and where, as here, the plaintiffs simply hang it onto the identical facts they pleaded for their legal claims, the equitable claim necessarily fails because there’s an adequate remedy at law. Prohias II, 2007 WL 1682515, at *7. That’s a dicier proposition. While there are other cases that reach similar results, In re Guidant Corp. Implantable Defibrillators Products Liability Litigation, 2007 WL 1725289, at *19 (D. Minn. June 12, 2007) (applying California law); In re Guidant Corp. Implantable Defibrillators Products Liability Litigation, 484 F. Supp.2d 973, 985 (D. Minn. 2007); Adamson, 463 F. Supp.2d at 505; In re Lupron Marketing & Sales Practices Litigation, 295 F. Supp.2d 148, 182 (D. Mass. 2003), there are a fair number of cases that have refuse to dismiss unjust enrichment claims against drugmakers on this ground (cases that anyone interested will have to find independently, since we don’t do pro-plaintiff research on this blog).
Finally, the court went on to address some Pennsylvania peculiar issues. We’d ordinarily pass on these, except that Bexis insists this is the one place where the court got something plainly wrong – and he demands to be heard. That’s on page *9 of Prohias II, where the court cites Weiler v. SmithKline Beecham Corp., 53 Pa. D. & C.4th 449, 452-55 (Pa. C.P. 2001), for the proposition that a 1996 amendment to the Pennsylvania consumer fraud statute, called into question whether reliance remained an essential element of a Pennsylvania “catch-all” consumer fraud claim. That’s what Weiler holds, but it’s only a trial court opinion, and has been overruled by subsequent Pennsylvania appellate authority upholding the post-1996 reliance requirement. See Yocca v. Pittsburgh Steelers Sports, Inc., 854 A.2d 425, 438-39 (Pa. 2004) (post-1996 facts); Drelles v. Manufacturers Life Insurance Co., 881 A.2d 822, 840 (Pa. Super. 2005); Commonwealth v. TAP Pharmaceuticals Products, Inc., 868 A.2d 624, 637 n.9 (Pa. Cmwlth. 2005); Toy v. Metropolitan Life Insurance Co., 863 A.2d 1, 9-11 (Pa. Super. 2004), appeal granted, 882 A.2d 462 (Pa. 2005); Debbs v. Chrysler Corp., 810 A.2d 137, 156 (Pa. Super. 2002); Sexton v. PNC Bank, 792 A.2d 602, 607 (Pa. Super. 2002); Booze v. Allstate Insurance Co., 750 A.2d 877, 880 (Pa. Super. 2000); and Tran v. Metropolitan Life Insurance Co., 408 F.3d 130, (3d Cir. 2005). Bexis wrote an amicus brief in the pending appeal to the Pennsylvania Supreme Court on this issue in Toy, and presumably knows what he’s talking about.
Anyway, what’s left of Prohias after these two opinions? As far as we can tell the sole surviving claim is that the defendant somehow caused damage to somebody by virtue of its supposed pre-approval promotion of an off-label use that the FDA eventually approved. The ordinary way to go about finishing off that kind of allegation is to demonstrate that the plaintiffs are wrong – by means of an summary judgment motion that pierces mere allegations and puts the plaintiffs to their proof (should they have any). Pfizer’s a big company undoubtedly with a skillful regulatory affairs section, so we’re as positive as we can be without being in the case ourselves that they must have dotted every regulatory “i” and crossed every “t” with what they actually did. A win is a win is a win, and a summary judgment motion demonstrating that all necessary disclaimers accompanied every promotional statement is undoubtedly the most cost-effective way of closing the door on this meritless suit over nothing.
That being said, these peculiar facts – the subsequent FDA approval – scream out “First Amendment” to us. As we’ve posted before, we don’t think that the FDA can ban truthful promotion of off-label use consistently with the First Amendment. Truthful commercial speech is protected unless there’s no other way to pursue a substantial government interest, and there are lots of other ways to regulate promotion of off-label use with out banning such speech. For more, read Bexis’ amicus brief that’s linked to in our First Amendment post.
The problem is, where the First Amendment actually gets raised, the facts are usually less than pristine, because some of the promotional statements aren’t true, or there’s bad conduct, or there’s something else out there that smells. In Prohias we know to a certainty that the allegedly illegal off-label promotion (if there was any) has to be true – because the FDA subsequently approved the drug for the exact use in question. There’s likewise no question that the off-label use at issue was safe and effective, again because of the subsequent FDA approval.
We’ll never, ever begrudge Pfizer or its counsel for seeking to kill Prohias off in the simplest, cheapest, least controversial ground possible. Vince Lombardi could have been a lawyer when he said “winning isn’t everything, it’s the only thing.” We’ve been in this position ourselves and made the same decision. But we look at those facts and salivate. Pfizer could do the whole industry – and we think doctors and patients, too – a big favor if it could use those good facts to make good First Amendment precedent. We’d gladly toss an amicus brief its way.