We’ve reported before on the good decisions from the federal district court in New Jersey rejecting putative class actions based on off-label marketing, including a decision earlier this year and the Intron/Temodar decision last year. The first Intron/Temodar decision gave the third-party payer plaintiffs leave to amend their complaint. They did, and the court has now found their amended complaint insufficient and dismissed the action. In re Schering-Plough Corp. Intron/Temodar Consumer Class Action, 2010 U.S. Dist. LEXIS 56613 (D.N.J. June 9, 2010) (“Intron/Temodar II”). The same day, the court also dismissed a complaint by a patient. In re Schering-Plough Corp. Intron/Temodar Consumer Class Action, 2010 U.S. Dist. LEXIS 56621 (D.N.J. June 9, 2010) (“Intron/Temodar III”). Because we have covered this litigation extensively before, we’ll just give you the highlights.
Intron/Temodar I held that the third party payer plaintiffs failed to allege standing – that is, their complaint did not plead facts plausibly supporting plaintiffs’ assertions that they had been injured in a way capable of remedy under the alleged causes of action or that their loss was causally connected to defendants’ alleged misconduct. 2010 U.S. Dist. LEXIS 56613 at *8. Plaintiffs’ amended complaint added a lot more noise about off-label marketing practices. Perhaps plaintiffs believed that if they tried to make defendants look really, really, really bad, the court will be bamboozled into thinking that the allegedly bad defendants should give the good plaintiffs some money.
The court was not fooled. The plaintiffs’ original complaint wasn’t dismissed because the defendants allegedly weren’t bad enough. Rather what wasn’t pleaded was that the defendants’ alleged bad conduct somehow hurt the plaintiffs. In that respect the amended complaint was just as bad, if not worse. Plaintiffs’ amended complaint never alleged actual injury because they didn’t (and no doubt couldn’t) allege that the drugs purchased by the third party payers actually were ineffective or unsafe. That the drugs were used or even marketed off label didn’t make them ineffective or unsafe. Plaintiffs tried a slightly different angle by arguing that Schering’s studies were inadequate to support its off-label marketing claims, but that angle remained obtuse. The court held that “is a far cry from pleading that the Subject Drugs were in some way not appropriate to treat a condition and fraudulently marketed by Schering to the contrary.” Id. at *28.
In other words, the third party payer was not harmed by paying for a drug absent evidence that the drug didn’t work or was unsafe. That makes sense. No one gets a refund for a product that works simply because they don’t like the ads for the product.
In addition to not alleging an actual injury, the amended complaint failed to allege facts establishing a causal connection between defendants’ conduct and the named plaintiffs’ off-label purchases. Plaintiffs asked the court to infer a connection based on the volume of off-label sales, but the court refused to do so. Id. at *32-33. Plaintiffs also filled their amended complaint with allegations that Schering committed “bribery” by paying physicians for speaking engagements and consulting agreements, but the amended complaint “does not allege that any doctor who wrote Subject Drug prescriptions for a Named Plaintiff’s beneficiary did so in return for cash or gifts from Schering.” Id. at *35.
The court concluded by roundly rejecting piggybacking. The court stressed that other governmental authorities were responsible for and had punished Schering for the alleged off-label marketing, and the third party payers’ civil case could survive only if that alleged misconduct conduct caused them injury. Id. at *36-38. Because the amended complaint did not plead facts establishing a cognizable injury traceable to the misconduct, plaintiffs had no standing to bring their claims. Id. at *38-39.
Unlike the third party payer plaintiffs in Intron/Temodar II, an actual consumer and patient filed the amended complaint at issue in Intron/Temodar III, but the outcome was the same. She claimed that her doctor initially did not prescribe her the subject drugs but changed his mind, which allegedly must have been caused by off-label marketing. The court reiterated what it said in 2009 – “that off-label marketing is not inherently fraudulent” – and said that plaintiff had to connect her doctor’s decision to an off-label promotional claim that was false or misleading. 2010 U.S. Dist. LEXIS 56613 at *26-27. Because she did not, she lacked standing, and her case was dismissed. Id. at *29-30.
The procedural fetishists in the audience (you know who you are) will be interested in one other aspect of the court’s ruling on this motion to dismiss: it referred repeatedly to the plaintiff’s medical records, some but not all of which were attached to the amended complaint. The court explained that it did so because the plaintiff’s medical records were “the explicit basis for many of [her] allegations” and therefore “are properly considered by the Court in adjudicating the instant motion.” Id. at *12 n.8 (citing In re Burlington Court Factory Secs. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)).
The Intron/Temodar decisions should drive another stake into plaintiffs’ idea that they are entitled to money because a company is found to have engaged in off-label marketing – a regulatory violation at most, but not deceptive or fraudulent conduct and not an actionable sin. They simply can’t get a piggyback ride on a civil penalty or even an criminal conviction for off-label marketing.
Well done, District of New Jersey. Some of New Jersey’s state courts may qualify for judicial hellhole status, but the Garden State’s federal courts are a bit of all right.