A tip of the cap to the FDA Law Blog, which beat us to this story because the decision involves Seroquel, we had to find out if Bexis (whose firm is involved in that litigation) could blog about the case. It turns out he can, as long as he sticks to the legal principles involved.

In a recent decision, Bridge v. Phoenix Bond & Indemnity Co., 128 S.Ct. 2131 (U.S. June 9, 2008), held “that a plaintiff asserting a RICO claim predicated on mail fraud need not show, either as an element of its claim or as a prerequisite to establishing proximate causation, that it relied on the defendant’s alleged misrepresentations.” We predicted that, after Bridge, third-party payers (and other economic loss plaintiffs) would now make non-reliance RICO claims one of their theories of choice, since “no reliance” translates into “class action” in the minds of most plaintiff’s counsel.

That happened. But now the Seroquel MDL court says “not so fast.” Drug cases, unlike Bridge, involve learned intermediaries. That makes a difference.

First of all, Bridge did not completely eliminate reliance in every circumstance. “[T]he complete lack of reliance may prevent the plaintiff from establishing proximate cause.” 128 S.Ct. at 2144.

Thus, in Ironworkers Local Union No. 68 v. AstraZeneca Pharmaceuticals LP, the court held that the complexity of having to prove the extent to which there actually was prescribing physician reliance – or none at all – or something in between – required dismissal of a third-party payer suit under Holmes v. Securities Investor Protection Corp., 503 U.S. 258 (1992), the case that established a remoteness test for proximate cause under RICO. Slip op. at 6.

In relation to the first Holmes factor [directness of injury], this case raises serious concerns regarding the ascertainment of damages caused by Defendants’ alleged fraudulent conduct, as opposed to damages caused by other, independent factors. The key independent factor in this case stems from the fact that consumers may only obtain Seroquel through a prescription from a physician. Presumably, these physicians use their independent medical judgment to decide whether Seroquel is the best treatment for a given patient. This independent judgment can be influenced by a number of things, only one of which may be representations by a manufacturer…. Thus, in the context of this case, establishing that Plaintiffs’ injuries were caused by Defendants’ misconduct would require an inquiry into the specifics of each doctor-patient relationship implicated by the lawsuit. In other words, each physician who prescribed Seroquel to an individual … would have to be questioned as to whether his or her independent medical judgment was influenced by Defendants’ misrepresentations, and to what extent. Furthermore …, this individualized inquiry would likely have to be conducted with regard to each consumer purchase transaction or third-party reimbursement payment made over the last approximately ten years. This is precisely the type of “intricate, uncertain inquir[y]” the Holmes court sought to prevent.

Slip op. at 7 (emphasis added).

There’s lots more where this comes from, but we’re busy today, so you can read the opinion for yourselves.

The key takeaway: under this decision, Bridges-style non-reliance RICO liability is not available to third-party payers seeking to impose liability upon prescription drug manufacturers. Even if RICO doesn’t have a reliance element, such cases are defensible on the basis of Holmes remoteness, given the intervening presence of independent prescribing physicians.