Philadelphia has seen more than its share of perplexing decisions. This is where the Founders gave Delaware the same number of Senators as New York. The great painter Thomas Eakins scandalized his high-strung, high society patrons by permitting female students to paint male nude models. Bad career move. Fregosi let Mitch Williams pitch to Joe Carter. Another bad career move. Somebody here thought of pouring cheez-wiz over low-grade, high-grease meat. Oddly, a good career move. And as for John Oates’s porn stache — well, the less said the better. And, yes, there have been some judicial decisions that made us scratch our cyber noggins.
But sometimes courts here get it right. That happened a couple of weeks ago in the Commonwealth’s case against Janssen over Risperdal. The court issued a nonsuit that was a model of clear thinking. The written opinion came out on Friday, and it was well worth the wait. Commonwealth v. Ortho-McNeil-Janssen Pharmaceuticals, Inc., No. 2181 (Phila. Ct. Comm. Pleas June 25, 2010).
Speaking of perplexing decisions, let’s depress ourselves for a moment by remembering how the Commonwealth decided to bring cases against manufacturers of atypical antipsychotics. (We’ve blogged about that case a number of times, including here.) A Texas plaintiff firm shopped the representation to the Pennsylvania Attorney General, who politely declined. (Chalk that up to prescience). Then the Governor’s office, in an unusual move, took over the case and hired the Texas firm. It was a no-bid, contingent contract. Did we mention that the Texas firm had made significant campaign contributions to the Governor? The propriety of this smelly deal is in front of the Pennsylvania Supreme Court, and we’re keeping our fingers crossed that the Justices will put an end to these shenanigans, which reek of conflicts of interest and pay-to-play politics. (Disclosure: Bexis wrote much of the WLF amicus brief on this issue, so it’s not as if we’re disinterested.)
There have been tens of thousands of cases filed claiming that atypical antipsychotics, such as Risperdal, aren’t all they’re cracked up to be and that they can cause weight gain and diabetes. The trouble with those cases is that every time there’s a real, live plaintiff — someone who actually took the atypical antipsychotic — it looks like the medicine did confer a benefit. Plus there’s no way to say with any scientific rigor that the alleged harm was caused by the drug. Newsflash: weight gain and diabetes are common in our society. That is particularly true among the mentally ill. It’s also hard to show that a prescriber’s decision was affected in any way by whatever alleged misrepresentation, or nondisclosure, or item of unattractive conduct dredged up by plaintiff lawyers after trolling through millions of documents. (Further disclosure: some of the authors of this blog represent another manufacturer of atypical antipsychotics.)
But file an action on behalf of a third-party payor, such as a state, and that pesky plaintiff problem might go away. Adios causation and reliance. And the state probably doesn’t have a criminal record, or a nasty streak that will scare jurors, or any of those other features that can make actual plaintiffs so … inconvenient. So goes the thinking anyway.
The Commonwealth’s case against Janssen was an effort to cobble something out of nothing. And after one trial week (or one weak trial), it became clear that the Commonwealth had less than nothing. Plaintiff’s theory was that “Janssen fraudulently represented that Risperdal was superior (safer and more effective) than both conventional antipsychotic drugs (first generation, ‘FGA’), as well as newer antipsychotic drugs (second generation, ‘SGA’ or ‘atypical’).” Slip op. at 6. Plaintiff asserted that absent those misrepresentations, doctors would have prescribed cheaper drugs. To the extent the state paid for Risperdal, it now wanted the amount of overpayment back. That added up to $289 million. Or $148.8 million. Plaintiff offered “a patchwork of changing damage claims.” Id. at 24. Anyway, it’s a lot. This clumsy money-grab was dressed up in fraud and unjust enrichment claims.
At trial, the Commonwealth brought in government witnesses plus a couple of professional experts. Dr. Plunkett showed up. (It really wouldn’t be a drug-or-device case without Dr. Plunkett, would it?) One problem: as Al Pacino says in his notorious opening statement in And Justice for All, plaintiff forgot to bring a case. Plaintiff offered no evidence that the defendant had uttered any alleged misrepresentation to anyone in Pennsylvania, or that any prescription had been affected by such nonexistent misrepresentation.
Plaintiff’s approach was simple: we don’t need any of that stuff. Don’t need a misrepresentation, because, in one of many theory-shifts in the case, (the case originally focused on the off-label issue, which apparently went nowhere) there was a duty to disclose an FDA untitled letter griping about some marketing. Why was there a duty? Because there was a confidential relationship between Janssen and the Commonwealth. Why was there a confidential relationship? Because the company and the state exchanged some confidential pricing information about the “unit rebate amount” and because plaintiff’s experts kept inserting the word “confidential” into their canned testimony. Id. at 9.
The Judge easily discounted this nonsense. This was not an arrangement between a big, bad company and some poor vulnerable, dependent party. We’re talking about a state for crying out loud. “[T]he parties here are independent, sophisticated business and government entities entrusted with equal knowledge of the complicated federal and state mandates.” Id. at 11.
The FDA’s untitled letter is probative of pretty much nothing. It applied regulatory concepts that have nothing to do with the materiality requirement for a fraud claim. And why exactly did the company have a duty to disclose that the FDA disapproved of a claim when there’s no evidence that such claim was ever made to anyone in Pennsylvania?
In addition, the judge held that the learned intermediary doctrine still applied, even if it was a third-party payor case. “Absent proof that if the defendant manufacturer had issued the proper warning or a different warning then the prescribing physicians would change his or her prescription habits, thus causing a different and lower price, this plaintiff cannot meet its burden and the case cannot go forward to the jury.” Slip op. at 18. Pennsylvania law does not presume that doctors turn themselves into dupes. Sometimes facts are stubborn. Different antipsychotics work differently for different people on different problems. There was no evidence that the cheaper drug could be a substitute for every Risperdal prescription. Plaintiff’s theory was mindless. Risperdal was the better option for some patients, and why shouldn’t it cost more?
Plaintiff insisted it didn’t need any proof from any doctors. Instead, it argued that “aggregate proof” could support its claims. The Commonwealth relied on In re Zyprexa Products Liability Litigation, 671 F Supp 2d 397 (EDNY 2009). That’s amusing, because in that case Judge Weinstein acknowledged that permitting aggregate proof would likely not survive Second Circuit scrutiny: “There is some doubt in that case about the appellate court’s willingness to accept aggregate proof….”. Id. at 460. Judge Weinstein then stayed proceedings pending appeal.
In the end, the Commonwealth was pursuing a fraud-on-the-market theory, and the judge refused to extend that theory beyond the securities area. There was simply no evidence that the Risperdal market was “responsive in terms of numbers of sales to adverse information.” Slip op. at 14. Because the Commonwealth “failed to present economic analysis, aggregate statistical proof, or any other expert evidence … the Commonwealth was not entitled to a presumption of reliance and causation.” Id. at 15.
Nor did plaintiff present any expert testimony as to calculation of damages. Because the case involved more than the “basic arithmetic” promised by the Commonwealth, the absence of damages experts was fatal. Id. at 21. There wasn’t even the pretense of a survey of doctors. Plaintiff did not ask any doctors in Pennsylvania why they prescribed Risperdal and if they would have switched to Haldoperidol.
Let’s see: no misrepresentation, no reliance, no causation, and no damages. Not much of a fraud case, is it?
As for the unjust enrichment theory, it fared no better because “Pennsylvania law precludes the availability of this equitable doctrine where as here, ‘the relationship between the parties is founded on a written agreement or express contract.'” Slip op. at 25-26 (citing cases). That’s right. The state had entered into a contract. And all the evidence suggests that it did just fine under that contract.
Certainly better than it did under the contingent fee contract for this ill-conceived, misbegotten litigation.