Not too long ago – but eons ago by blogging standards – blog reader Alan Modlinger over at Lowenstein Sandler favored us with a copy of an opinion, District 1199P Health & Welfare Plan v. Janssen LLP, 2008 WL 5413105 (D.N.J. Dec. 3, 2008), in which the court blew out one of the other side’s “in things” of the moment – pure economic loss claims alleging “illegal promotion” of off-label use.

It’s an excellent result (then, again, we don’t expect people to send us cases that they lose) in that it disposes of RICO claims that the class action crowd has latched onto since the Supreme Court held last year in Bridge v. Phoenix Bond & Indemnity Co., 128 S. Ct. 2131 (2008), that the statute didn’t have a reliance requirement. The grounds:

  • A third-party payor suffers no cognizable RICO injury, in the form of “overpayment or diminished value,” where the drug was effective for the purpose for which it was prescribed, caused no physical harm to its users, and its efficacy is just as good as (not “inferior” to) competing products. “Without alleging that a product failed to perform as advertised, a Plaintiff has received the benefit of his bargain and has no basis to recover purchase costs.” 2008 WL 5413105, at *6-8
  • Causation is too attenuated and speculative where “the independent and individualized decision-making of physicians prescribing [the drug] breaks any chain of causation.” Id. at *9 (technically this is dictum since the court did not need to decide the issue, given the first ruling).
  • That the RICO statute lacks a separate reliance requirement does not mean that reliance isn’t essential to causation in the great bulk of RICO cases. Id. at *9 n.11.
  • Price inflation is not a viable theory of injury under RICO. Id. at *9 n.12.
  • Mail and wire fraud allegations must plead interstate use and must be pleaded with particularity. That a high percentage of a drug’s use is off-label is not enough. Id. at *11-12.

The reasoning in District 1199P would eliminate most – heck, probably all – RICO claims involving promotion of off-label use – certainly as long as the off-label use is effective and not dangerous in and of itself. Moreover, given the discussion of physical harm to end users, even if the use were dangerous, it seems unlikely that injury could be determined on anything other than a patient-by-patient basis, which is not how plaintiffs want to prove these cases. The independent prescriber element of remote causation alone pretty much seems to preclude non-reliance RICO in any prescription drug case. Finally, the RICO requirement that there be interstate mail or telephone conversations as predicate acts would seem to eliminate allegations of promotion vis face-to-face dealings between company representatives and prescribing doctors.

We blogged last year about the similar fate of another third party payor off-label use claim in the Seroquel MDL – Ironworkers Local Union No. 68 & Participating Employers Health & Welfare Funds v. Astrazeneca Pharmaceuticals LP, 2008 WL 4832659 (M.D. Fla. Nov. 4, 2008) (a case cited in District 1199P) (#6 on our 2008 best list). We also blogged about such claims being considered prohibited attempts to enforce the FDCA in the Epogen litigation. (#8 on our 2008 best list) Finally, we did a post about the contrary opinion (now on appeal (we think)) in the Zyprexa litigation (#2 on our 2008 worst list). So we decided maybe it’s time to do this more systematically. Thus, we thought we’d take a look around and see what else might be going on in similar litigation. We limited ourselves to 2008 – we’re only systematic up to a point.

There was an intriguing off-label use issue in Ebel v. Eli Lilly & Co., 536 F. Supp.2d 767 (S.D. Tex. 2008), about the effect of alleged off-label promotion on a state-law presumption of non-defectiveness. The court held that “poorly drawn inferences” of illegal promotion of off-label use, based on hearsay press stories and the fact that the drug had widespread off-label uses, did not meet the “some evidence” standard needed to rebut the presumption with proof of “overpromotion.” Id. at 776. Not only were the sources questionable, but there was no causation either: “[T]o establish the exception of overpromotion, Plaintiff must not only provide some evidence of a marketing plan to promote the off-label use of [the drug] she must also provide proof that the marketing plan actually reached the prescribing physician.” Id. at 777.

Thus plaintiffs can blame their proof problems on those pesky prescribers. For some reason they keep getting in plaintiffs’ way in off-label use cases. Trouble is – there has to be a prescriber to have a prescription, and there has to be a prescription before a prescription drug can be used. Plaintiffs’ real gripe is not with promotion of off-label use but with the legality of off-label use itself. But they lost that battle in Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341, 350-51 & n.5 (2001).

This type of litigation seems to be taking a lot of lumps – we’d say well deserved – lately, especially in qui tam litigation. There’s been an explosion of allegations in such litigation that “false claims” were submitted to the government because doctors were induced to prescribe off-label by “illegal promotion.” But the abysmal track record of such litigation in 2008 gives us hope that things are finally going to cool down. In United States ex rel. Kennedy v. Aventis Pharmaceuticals, Inc., 2008 WL 5211021, at *3 (N.D. Ill. Dec. 10, 2008), off-label uses could not be “material” where those uses were not separately charged on medical bills. In Hopper v. Solvay Pharmaceuticals, Inc., ___ F. Supp.2d ___, 2008 WL 4177927, at *8-9 (M.D. Fla. Sep. 8, 2008), medically appropriate off-label uses were not “false claims” without individualized proof that promotion caused submission of claims. In United States ex rel. Rost v. Pfizer, Inc., 253 F.R.D. 11, 16-17 (D. Mass. 2008), off-label allegations were pruned down to those involving allegations of actual kickbacks. In United States ex rel. Duxbury v. Ortho Biotech Products, L.P., 551 F. Supp.2d 100, 116 (D. Mass. 2008), yet another qui tam case came a cropper because the plaintiff did not, and apparently could not, allege that any particular prescriptions were caused by illegal promotion – “the court is not permitted to surmise that false claims ‘must have’ occurred as a result of defendant’s conduct.” Id. It looks like the rule emerging in qui tam is not far from the rule in RICO, that there has to be proof of specific instances of off-label use caused by specific instances of illegal off-label promotion.

Other than the Zyprexa litigation that we’ve described elsewhere, the only case in which an off-label claim survived summary judgment in 2008 involved evidence suggesting specific examples of off-label promotion involving plaintiff’s prescriber in that very case, which also involved personal injury. See Knipe v. SmithKline Beecham, ___ F. Supp.2d ___, 2008 WL 4442635, at *16-17 (E.D. Pa. Sep. 30, 2008). Thus, there’s nothing in Knipe that’s going to help purveyors of pure economic loss class actions like District 1199P – and for us, that’s the most important thing.