Good luck bringing a class action in New Jersey federal court invoking the “off-label marketing” bugaboo. Last year, we had Schering-Plough Corp. v. Intron/Temodar Consumer Class Action, a putative class action we’ve previously covered. In that case, the court dismissed a third-party payor (TPP) class action for failure to state a claim where the allegation was that the defendant illegally promoted its products for off-label purposes, causing the hapless TPPs to pay more for prescriptions. Intron/Temodar was dismissed with leave to replead, but now we have another case confirming the correctness of that decision. In Central Regional Employees Benefit Fund v. Cephalon, Inc., 2010 U.S. Dist. LEXIS 29677 (D.N.J. Mar. 29, 2010) – or CREBF if you’re into that whole brevity thing – the District Court concluded it would be futile to allow TPPs to amend their already-dismissed complaint because they could not state a claim under New Jersey’s version of RICO, fraudulent concealment, “illegal fraud” (as opposed to legal fraud), “unjust enrichman” (don’t blame us, we’re just reporting the claims as pled by the plaintiffs), and violation of the covenant of good faith and fair dealing. Id. at *5.
The CREBF plaintiffs sought to represent a class of governmental entities who had to reimburse for off-label prescriptions of a number of Cephalon products: the aptly-named Provigil (an anti-narcolepsy drug), Gabitril, Actiq, and Fentora. Id. at *4. In an interesting wrinkle, the CREBF plaintiffs also sought to add as parties: (1) Express Scripts, Inc., a Pharmacy Benefits Manager; (2) Doctor Shaiova, who was allegedly a “speaker” for Cephalon; and (3) “Jane Doe,” a member of one of the plaintiff funds who was allegedly prescribed Actiq for off-label purposes. Id. Plaintiffs’ theory was two-fold. First, they alleged that Cephalon engaged in improper “off-label promotion,” which caused excessive prescriptions to be written and plaintiff TPPs to pay more money for those prescriptions. Id. at 3. Second, plaintiffs alleged that Cephalon hired Dr. Shaiova to conduct off-label studies and serve as a “speaker” for Cephalon, which presumably increased off-label prescriptions. Id. at *4.
The court’s rejection of the CREBF plaintiffs’ claims strongly reaffirms Intron/Temodar (a decision cited throughout the more recent opinion), and confirms – once again – that you don’t have a lawsuit just because you incant the magic words, “off-label marketing.” In thoroughly dismantling plaintiffs’ RICO claims, the court concluded:
1) “Off-label marketing activities, including Cephalon’s alleged payment to Shaiova for ‘studies,’ are ‘not inherently fraudulent,’” id. at *9. That’s the court’s emphasis, and in fact, the court thought this point was so important that it appears twice in the opinion. See id. at *17 (“off-label marketing and promotion of prescription drugs is not inherently fraudulent.”). And drug and device plaintiffs across the country just howled in protest.
2) Plaintiffs failed to allege that any of the products were ineffective for their off-label uses. Id. at *9-10.
3) Plaintiffs also failed to allege that Cephalon itself made misrepresentations directly to plaintiffs. Id.
4) “An allegation that the plaintiffs were caused to pay more for prescription drugs than would have otherwise been prescribed but for off-label marketing does not constitute a cognizable injury under NJ RICO.” Id. at *8-9. Double ouch for the plaintiffs’ bar, who have fallen in love with RICO lately (that is, since the Supreme Court’s Bridge decision).
Plaintiffs’ fraud claims fared no better under Twombly/Iqbal – especially where the complaint failed to specify the alleged misrepresentations or allege that any material misrepresentation was relied upon by the plaintiffs, and thus there was no “nexus” by which the court could infer reliance or causation. Id. at *11-12. In other words, it’s not enough to say “Cephalon engaged in off-label marketing” or that Cephalon paid a “speaker” who prescribed large quantities of Actiq for off-label purposes. Id. at *12. And plaintiffs’ tag-along claims were dismissed for what they are – unsupportable fluff. Id. at *14-16.
In the end, then, CREBF bolsters Intron/Temodar, drives another nail in the coffin of “off-label marketing claims” – at least in D.N.J. – and once again identifies these “off-label” cases for what they truly are – a “legally unsupportable attempt to bring a private cause of action against [insert manufacturer here] for its ‘misbranding’ and off-label promotion violations of the Federal Food, Drug, and Cosmetics Act (‘FDCA’) and implementing regulations.” Id. at *16.