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The following post is exclusively the work of the Reed Smith side of the blog.

Sometimes the smallest, least significant type of lawsuit can illustrate cracks in the edifice of the largest, most consequential litigation.  So, in our opinion, it is with Neurontin.  In this version of the story, the role of “Mack” is played by Herricks v. Pickaway Correctional Institute, 2013 WL 4804983 (S.D. Ohio Sept. 9, 2013).  That’s prisoner litigation − mostly convicts with nothing better to do with their time than try to sue their jailers.  The great majority of these cases get the back of the judicial hand.  There aren’t many litigation genres of less significance than that.

Playing the role of “Yertle” is the First Circuit’s circuit-splitting trilogy, Kaiser Foundation Health Plan, Inc. v. Pfizer, Inc., 712 F.3d 21 (1st Cir. 2013), Aetna, Inc. v. Pfizer, Inc., 712 F.3d 51 (1st Cir. 2013), and Harden Manufacturing Corp. v. Pfizer, Inc., 712 F.3d 60 (1st Cir. 2013) – all of which also travel under the heading, In re Neurontin Marketing and Sales Practices Litigation.  Not so coincidentally, the defendants filed a petition for certiorari in the Neurontin trilogy the other day.  Big cases – high courts.

The Neurontin cert. petition didn’t cite Herricks, of course, but we think that what went on in Herricks is as good an illustration as any why the First Circuit got it spectacularly and loudly wrong when it allowed the plaintiffs in the Neurontin trilogy to proceed with what amounts to an aggregate trial by formula that deprives the defendants of contesting the individual merits of any of the thousands – heck, millions – of individual claims at issue.  Can you say “due process violation”?

First, Herricks.  Prisoner plaintiffs can’t sue prison doctors for ordinary malpractice, at least not in federal court, where most of these cases seem to end up.  Instead, they must meet a higher constitutional (Eighth Amendment) standard of “deliberate indifference.”  Needless to say, most prisoner cases can’t meet that standard.  But the inmate-plaintiff in Herricks did.  What did the court (actually, a magistrate) find could meet that standard?

The prison doctor’s refusal to treat the plaintiff-prisoner off-label with Neurontin.

The prisoner has a serious, painful medical condition.  He had seen a specialist for it.  The specialist had prescribed Neurontin as a pain-killer, apparently quite successfully – and equally apparently (it was not disputed in Herricks) as an off-label use.  But the prison doctor refused to continue the Neurontin because it was off-label, instead (it was alleged) prescribing a drug that was ineffective:

[Plaintiff] was seen by a neurologist.  In the consultation report of the neurologist states: “Neurontin is wholly appropriate in this patient.  Motrin will not work. . . .  [The prison doctor] signed the consultation report.  Here, there is a question of fact as to whether [the prison doctor] was deliberately indifferent to plaintiff’s serious medical needs.  Although [the prison doctor] maintains that she was concerned about the off label use of Neurontin . . ., plaintiff maintains that she purposefully denied him pain relief even though she was aware that he was in significant pain.  [The prison doctor] acknowledged that she did not follow the recommendation of plaintiff’s treating neurologist. . . .  Instead, she ignored his recommendation and continued to prescribe ibuprofen despite the neurologist’s statement that ibuprofen would not be effective in controlling plaintiff’s pain.

Herricks, 2013 WL 4804983, at *7.  Summary judgment denied.  The plaintiff’s evidence created a genuine issue of fact that the prison doctor’s failure to provide him with Neurontin off-label, as duly prescribed, could constitute “deliberate indifference” to the prisoner’s pain – sufficient to constitute “cruel and unusual punishment” under the Eighth Amendment.

Take the facts of Herricks out of the prison context, multiply them a million-fold (“stack ‘em to heaven”), and one has what the First Circuit ignored in its Neurontin trilogy.  We assume (for the purposes of this post) that every bad thing that these opinions recount about the defendant’s off-label promotion was true.

That doesn’t matter.  By itself, off-label promotion is no more causal than, as we commented the other day, a “video of a company employee kicking his dog.”

The simple fact of the matter is that, while a drug (or device) company supposedly might be able to fool some of the medical community some of the time, it’s simply not possible to fool all of the medical community all of the time.  Herricks confirms what the simple fact of the alleged eight-year (1995 to at least 2003) “apparently” successful off-label promotion campaign also establishes.  Kaiser, 712 F.3d at 28.  No promotional campaign (off- or on-label) can work for that long if the drug in question doesn’t work.  And the fact that the off-label use worked – at least a significant portion of the time, as in Herricks – puts the lie to the statistically-driven, artificial, no-proof “proof” that the First Circuit allowed in the Neurontin trilogy.

Here’s what the First Circuit allowed as proof of RICO “causation” in Neurontin:

The primary evidence was . . . expert testimony. . . .  [The expert] used aggregate data and statistical approaches to link patterns in promotional spending to patterns in prescribing for the drug.  Her regression analysis found a causal connection between the fraudulent marketing and the quantity of prescriptions written for off-label indications. . . .

As is customary for such experts . . . her assignment was only to calculate the percentage of prescriptions caused by [defendant’s] fraudulent off-label marketing. . . .  [The expert] explained the difference between correlation and causation and stated that her analysis established causation by performing a regression analysis on sales information against promotional spending on detailing, professional journal advertising, and the retail value of samples, while controlling for other variables.  Her analysis excluded the many off-label prescriptions by physicians who received legitimate on-label promotion. . . .  [The expert] testified that it was her opinion to a reasonable degree of scientific certainty that these calculations are the best way to estimate the number of prescriptions and the share of prescriptions that were affected by the alleged misconduct.

Kaiser, 712 F.3d at 30 (citations, quotation marks, and footnotes omitted).  This kind of analysis is what causes “statistics” to be ranked up their with “lies” and “damn lies.”  Among other things it gives no weight at all to any physician’s clinical experience – that is to say, the kind of success in practice that is what the constitutional claim in Herricks was all about.  Even assuming that this or that physician might have first been induced to try an off-label use because of supposedly “fraudulent” promotion, nobody’s going to keep using a drug, “apparently” for years, for that use if doesn’t work.  This sort of statistical mumbo-jumbo assumes the implausible – that doctors don’t pay attention to what happens right before their eyes to their own patients.  It puts the “regress” in “regression analysis” – we won’t touch the second word of that phrase with a ten-foot pole.

And we think that kind of statistical abuse is garbage – it’s more “fraudulent,” we’re sure, than any allegedly manufacturer-influenced article that ever appeared in a peer-reviewed journal.  That’s because it isn’t peer-reviewed at all.  Rather, this kind of stuff is lawyer influenced, indeed probably lawyer-created, and usable only for litigation.  There’s not a pretense of correspondence to what goes on in the real world.

So this “expert” evidence purports to determine how much off-label use was “caused” by off-label promotion without any attention being given to how drugs are actually prescribed – based upon each prescribing physician’s best professional judgment about what drug works for what condition.  Not only that, the expert purported to opine on these physicians’ credibility, which is ordinarily a no-no.  That’s because “no physician in this case, or in the Neurontin MDL as a whole, testified that he or she prescribed Neurontin because of defendants’ fraudulent off-label marketing.”  Kaiser, 712 F.3d at 29.

[The expert] testified as to the well-recognized unreliability . . . of asking doctors individually whether they were influenced by the many methods of off-label marketing.  She said that self-reporting from physicians about patterns of practice that may be controversial shows both conscious reluctance and unconscious bias, which lead them to deny being influenced.  As a result, it is preferable to examine objectively the causal association between promotion and sales using econometric models. . . .  [The expert] testified that it was neither standard nor appropriate to look physician by physician.

Id. at 30 (citation and quotation marks omitted) (emphasis added).  In other words, the trial court allowed – and the First Circuit considered it just fine on appeal – an expert witness to give testimony that other witnesses’ testimony was “unreliable” and “biased” and therefore should not be believed.  Heck, isn’t that what Frye v. United States, 293 F. 1013 (D.C. Cir. 1923), excluding lie detector evidence, was really all about?  We don’t submit witnesses to lie detectors, or allow “experts” to testify on things like eyewitness identification, because expert testimony attacking or bolstering the credibility of other witnesses is improper.  E.g., United States v. Lespier, 2013 WL 3988769, at *10 (4th Cir. Aug. 6, 2013) (“Rule 702 renders inadmissible expert testimony on issues of witness credibility”); United States v. Charley, 189 F.3d 1251, 1267 (10th Cir. 1999) (“expert testimony which does nothing but vouch for the credibility of another witness encroaches upon the jury’s vital and exclusive function to make credibility determinations”); United States v. Scop, 846 F.2d 135, 142 (2d Cir. 1988) (“expert witnesses may not offer opinions on relevant events based on their personal assessment of the credibility of another witness’s testimony”; “witnesses may not opine as to the credibility of the testimony of other witnesses at the trial”); see Advisory Committee Notes to Fed. R. Evid. 704 (1972) (rules of evidence “afford ample assurances against the admission of opinions . . . in the manner of the oath-helpers of an earlier day”).

In effect, what the First Circuit did was create an irrebuttable heeding presumption hidden as an “assumption” in expert’s testimony.  We’ve posted quite a bit about the heeding presumption – the proposition that, in a case turning on warnings (or other information) a jury may presume that “adequate” information would have been heeded by the plaintiff/plaintiff’s physician.  But as much as we don’t like it, in every jurisdiction, the presumption is rebuttable.  That is, testimony by the actor in question (in our cases, the prescriber) denying reliance on the allegedly “inadequate” information defeats causation.  See In re St. Jude Medical, Inc., 522 F.3d 836, 839-40 (8th Cir. 2008 rejecting generalized proof of causation where the defense could challenge “the reliance or non-reliance of individual physicians and patients”).

But not in the First Circuit, or at least not in RICO cases.  An expert’s “assumption” in Kaiser was allowed to override the unequivocal testimony of every prescribing doctor that testified in the case.  That is an unprecedented ruling, and effectively eliminates the causation element in RICO.  The Kaiser opinion doesn’t even bother to deny it:

The fact that some physicians may have considered factors other than [defendant’s] detailing materials in making their prescribing decisions does not add such attenuation to the causal chain as to eliminate proximate cause.  Rather than
showing a lack of proximate causation, this argument presents a question of proof regarding the total number of prescriptions that were attributable to [defendant’s] actions. This is a damages question.

712 F.3d at 39.  That’s just wrong, as every warning causation case in the history of pharmaceutical product liability litigation, and every non-First-Circuit third-party payer case whatever the theory, demonstrates.  If the prescriber did not rely upon what the defendant said, but rather on other factors such as the prescriber’s own clinical experience, then there’s no causation of anything that follows from that prescriber’s decision, whether personal injury or purely economic loss.

Indeed, we’ve pointed out that in product liability cases, expert testimony isn’t even admissible as to what “reasonable” physicians might do – particularly in the face of explicit testimony by the actual prescriber to the contrary.

Likewise irrelevant is plaintiff’s argument regarding what a reasonable physician would do.  The question in the learned intermediary context is not what an objective physician would decide, but rather what plaintiff’s doctor would determine based on his knowledge of the drug in question and the plaintiff’s risk factors.

Stafford v. Wyeth, 411 F. Supp. 2d 1318, 1322 (W.D. Okla. 2006).  Accord Sauls v. Wyeth Pharmaceuticals, 846 F. Supp.2d 499, 503-04 (D.S.C. 2012); In re Zyprexa Products Liability Litigation, 2011 WL 182489, at *2-3 (E.D.N.Y. Jan. 20, 2011) (expert reports that “had ‘defendant] provided full disclosure . . . a reasonably prudent doctor would not  choose” the drug “do not address [plaintiff’s] situation”); Schilf v. Eli Lilly & Co., 2010 WL 4024922, at *4 n.3 (D.S.D. Oct. 13, 2010); Nix v. SmithKline Beecham Corp., 2007 WL 4219157, at *2-3 (D. Ariz. Nov. 28, 2007); Dyer v. Danek Medical, Inc., 115 F. Supp.2d 732, 742 (N.D. Tex. 2000) (rejecting “objective” learned intermediary causation standard where contrary to actual conduct of prescriber); Woulfe v. Eli Lilly & Co., 965 F. Supp. 1478, 1484 (E.D. Okla. 1997) (would be “curious . . . [to] ignor[e] what the treating physician says he would have done . . . for no other reason than the fact that he is not an ‘objective’ physician”); Fraley v. American Cyanamid Co., 589 F. Supp. 826, 828 (D. Colo. 1984) (“acts of the treating physician, not the average or ‘reasonable’ physician, are the acts relevant to proximate cause”); Gronniger v. American Home Products Corp., 2005 WL 3766685, at *5 (Pa. C.P. Oct. 21, 2005).  No case anywhere else in the country (that is to say, outside the First Circuit in economic loss prescription medical product litigation) allows expert testimony to override the explicit testimony of actual prescribers.

The evidence allowed in Kaiser (and the two other decisions that piggy-back on its rationale) doesn’t relate to causation in any sense that prior precedent has understood it.  Rather, it’s another example “fraud on the market” – indeed, this same expert has offered the same opinions repeatedly in other jurisdictions and had them rejected for precisely this reason. Relevant causation principles require that a prescriber respond in some causal fashion to information disseminated by the manufacturer defendant.

The same expert offered the same broad foreseeability-based testimony in support of a similar third-party payer overpayment claim in International Union of Operating Engineers Local No. 68 Welfare Fund v. Merck & Co., 929 A.2d 1076 (N.J. 2007) (“IUOE”).  The court, applying a consumer fraud statute, flatly rejected fraud on the market as a viable causation theory in prescription medical product litigation.  Plaintiffs claimed that the “defendant’s marketing scheme created an effect on the price” of a drug that allowed them to establish loss without any showing of reliance.  Id. at 1088.  The court rejected plaintiffs’ “fraud on the market” theory as “a creature of federal securities litigation” and “inappropriate in any context other than [that].”  Id. at 1088 (citations omitted).  The manner by which insurers and other third-party payers selected which prescription medical products to cover was, by contrast to securities markets, highly individualized:

The record speaks loudly in its demonstration that each third-party payor . . . made individualized decisions concerning the benefits that would be available to its members for whom [the product] was prescribed.  The evidence about
separately created formularies, different types of tier systems, and individualized requirements for approval or reimbursement imposed on various plans’ members and, to some extent, their prescribing physicians, are significant.

Id. at 1087.  A fraud on the market theory, based on a single expert’s analysis of price, isolated from any plaintiff’s decisionmaking process “must fail”:

Therefore, to the extent that plaintiff seeks to prove only that the price charged for [the drug] was higher than it should have been as a result of defendant’s fraudulent marketing campaign, and seeks thereby to be relieved of the usual requirements that plaintiff prove an ascertainable loss, the theory must fail. . . .  To the extent that plaintiff intends to rely on a single expert to establish a price effect . . . [t]hat proof theory would indeed be the equivalent of fraud on the market.

Id. at 1088 (citation omitted).

IUOE relied upon (id.) New Jersey Citizen Action v. Schering-Plough Corp., 842 A.2d 174 (N.J. Super. A.D. 2003) (“NJCA”),
which rejected a consumer fraud challenge to direct-to consumer drug advertising.  NJCA found “an essential difference between the pharmaceutical industry and others” – “the products in question [are] subject to the strict regulation of the FDA.”  Id. at 177.  The presence of learned intermediary prescribers also precluded any presumption of reliance:

Moreover, as a practical matter, the products remain available only through a physician’s prescription. . . .  [T]he intervention by a physician in the decision-making process necessitated by his or her exercise of judgment whether or not to prescribe a particular medication protects consumers. . . .  In this context, that is, within a highly regulated industry in which the ultimate consumer is not in fact free to act on claims made in advertising in any event, the relationship between words used in the advertising and purchase of the product is at best an attenuated one.

Id. at 177-78.  Thus, a causation theory that presumed uniform reliance could not be permitted.  “[A] general fraud on the market or price inflation theory . . . ha[s] no place as a part of the proofs required of plaintiffs in the [consumer fraud] context.”  Id. at 178.  “[T]he theory on which plaintiffs seek to rely would virtually eliminate the requirement that there be a connection between the misdeed complained of and the loss suffered.”  Id.

The price inflation theory pursued in IUOE and NJCA has been rejected in other cases involving prescription medical
product litigation:

Plaintiffs attempt to explain away this [proof] deficiency with their “price inflation” or “fraud on the market” theory.  In this context, though, such a theory is patently absurd.  It depends on the totally implausible predicate that, had some adverse information about side effects derived from the [scientific] studies been more widely disseminated, the Plaintiffs would have paid less for [the prescription drugs].  However, (at the risk of stating the obvious) there is no prescription drug “market,” at least as that term is understood in the securities context.

Heindel v. Pfizer, Inc., 381 F. Supp.2d 364, 380 (D.N.J. 2004) (applying Pennsylvania and New Jersey law).  Accord Southeast Laborers Health and Welfare Fund v. Bayer Corp., 655 F. Supp.2d 1270, 1287-88 (S.D. Fla. 2009) (rejecting fraud on the market theory on strength of IUOE and NJCA) (applying New Jersey law), aff’d, 444 F. Appx. 401 (11th Cir. 2011); Scott v. GlaxoSmithKline Consumer Healthcare LP, 2006 WL 952032, at *3 (N.D. Ill. April 12, 2006) (price inflation is “an impermissible market theory of causation”); Williams v. Purdue Pharma Co., 297 F. Supp.2d 171, 177 (D.D.C. 2003) (complaint fails because “[w]hile it asserts that defendants engaged in false and misleading advertising, it does not plead that these defendants were in any way deceived − or even saw − any of that advertising”) (applying District of Columbia law).

The Illinois consumer fraud act was similarly interpreted in De Bouse v. Bayer AG, 922 N.E.2d 309 (Ill. 2009).  The plaintiff’s “indirect deception” theory” – that merely offering a product for sale “is a representation that the product is safe” – was rejected.  That theory failed because a prescription medical product’s risks required a doctor’s prescription as a prerequisite to use.  The same policy arguments that animated Restatement (Second) of Torts §402a, comment k (1965) also defeated this implied representation theory:

[W]e find comment k instructive in this context as well.  The risks associated with pharmaceuticals are a large part of the reason why a doctor’s prescription is required for these medications.  A drug often can affect different patients differ­ently, causing adverse side effects in one but not another.  The Restatement approach reflects the reality that even in their intended and ordinary use, prescrip­tion drugs may nonetheless cause harmful side effects in some patients.  A drug manufacturer cannot say with complete certainty that its product, when used as intended, will be reasonably safe for all patients.  As a result, the mere sale of a prescription medication cannot be a representation which serves as the basis for a consumer fraud claim.

Id. at 317-18.

Improperly diluted causation theories “allege[] that, regardless of whether or not Plaintiff was actually deceived by the statements, she was injured by the effect that those state­ments had on the marketplace for the product.”  Scott, 2006 WL 952032, at *3.  Such a claim, seeking to stretch Restate­ment (Second) of Torts §310 (1965) (third party reliance) to impersonal marketing, was rejected in a prescription medical product case involving a vaccine:

[A] plaintiff claiming fraud on the marketplace is relieved of the burden of demonstrating their [sic] personal reliance on any alleged misrepresentations.  The theory of fraud on the marketplace presumes reliance, while common law fraud requires proof of actual reliance.  Maryland courts have consistently held that under Maryland law, there is no fraudulent misrepresentation cause of action for statements made to third parties.

Agbebaku v. Sigma Aldrich, Inc., 2003 WL 24258219, at *10 (Md. Cir. June 24, 2003).

Similar non-physician-specific causation theories have been rejected in the product liability context.  In Beale v. Biomet, Inc., 492 F. Supp.2d 1360 (S.D. Fla. 2007), the plaintiff claimed, in product liability litigation involving a knee implant, that his prescriber “may have been influ­enced by [defendant] without his knowledge” by reading medical articles, “the sponsorship [of which] was not disclosed.”  Id. at 1371.  In the face of contrary prescriber testimony, this claim was rejected as “speculative”:

This assertion is mere conjecture and speculation; it has no basis in fact.  The Plaintiffs have provided no proof that such a scenario occurred, they merely suggest that it might have.  Speculation and hypothesizing will not suffice to create a genuine issue of fact.


In Staudt v. Artifex, Ltd., 16 F. Supp.2d 1023 (E.D. Wis. 1998), “the plaintiff saw no advertising or any other representations” concerning a medical device.  Id. at 1031.  He asserted “that reliance is presumed where a party claims fraudulent concealment,” relying on precedent that was “not applicable as it involved the interpretation of federal securities, law not a claim for fraudulent concealment.”  Id.  The court found reliance an “essential element” and dismissed the claim.  Id.  Accord In re Avandia Marketing, Sales Practices & Products Liability Litigation, 2011 WL 4007886, at *1 (E.D. Pa. Sept. 7, 2011) (“where a plaintiff alleges that a defendant has engaged in deceptive advertising, but does not allege to have seen or been aware of such advertising, the plaintiff has not sufficiently pled a claim”) (applying New York law).

Non-reliance fraud theories also have been rejected almost everywhere but the First Circuit.  Perhaps the most analogous allegations to Kaiser were asserted in DeBouse, where in addition to indirect causation, plaintiffs argued for a no-communication-at-all theory.  922 N.E.2d at 314 (conceded lack of any pre-prescription exposure to defendant’s promotion).  As in Kaiser, the plaintiffs argued that causation should be divorced from what any particular prescribing doctor actually did.  The Illinois Supreme Court had none of it:

[Plaintiff] has not alleged any similar statements or communication from [defen­dant].  Indeed, [plaintiff] has acknowledged that she did not rely on any state­ments from [defendant] in purchasing [the drug]. . . .  [W]e have repeatedly emphasized that in a consumer fraud action, the plaintiff must actually be deceived by a statement or omission.  If there has been no communication with the plaintiff, there have been no statements and no omissions. In such a situation, a plaintiff cannot prove proximate cause.

DeBouse, 922 N.E.2d at 316.

Similarly attenuated causation claims failed in a parens patriae action brought by a state attorney general:

[Plaintiffs] argue that they are entitled to recover because defendants misled patients and the medical community concerning the safety and efficacy of [the drug] in consequence of which, they claim, [the state] was called upon to reim­burse for prescriptions that otherwise would not have been written at prices that otherwise could not have been charged.  This, as defendants maintain, is “a quint­essential fraud-on-the-market” theory.  The fraud-on-the-market theory is a crea­ture of the federal securities laws [and] courts repeatedly have refused to apply the fraud on the market theory to state common law cases.

In re Rezulin Products Liability Litigation, 524 F. Supp.2d 436, 441 (S.D.N.Y. 2007) (citation and quotation marks omitted) (applying Louisiana law).  Causation fails where “plaintiffs allege that they were injured because patients and the medical community were misled.”  Id.

Indeed, fraud on the market has been widely disallowed even with respect to state securities claims, even though allowed in federal securities actions on essentially identical facts.  Securities cases involving against drug/device manufacturers have rejected parasitic state-law claims because “[f]raud on the market theories of reliance have not been developed in state courts.”  Snider v. Upjohn Co., 115 F.R.D. 536, 542 (E.D. Pa. 1987) (multiple state laws).  Accord Stichting Pensioenfonds ABP v. Merck & Co., 2012 WL 3235783, at *17 n.11 (D.N.J. Aug. 1, 2012) (“the fraud-on-the-market theory of reliance is not available under New Jersey law”); In re Medimmune, Inc. Securities Litigation, 873 F. Supp. 953, 968 (D. Md. 1995) (“Most state courts have rejected the fraud on the market concept in connection with common law fraud claims, and there is no reason to suppose that Maryland courts would do otherwise”); In re Allergan Inc. Securities Litigation, 1993 WL 623321, at *23 (C.D. Cal. Nov. 29, 1993) (“fraud-on-the market theory is not recognized under California law and plaintiffs have failed to allege individual reliance”) (applying California law); Manzo v. Rite Aid Corp., 2002 WL 31926606, at *4 (Del. Dec. 19, 2002) (improper marketing of drugs by a pharmacy; “Plaintiff cannot rely on a presumption of reliance based on a type of ‘fraud on the market’ theory”), aff’d, 825 A.2d 239 (Del. 2003).

Kaiser made much of the defendant’s alleged off-label promotion – but that’s a distinction without a difference.  The same diluted causation theories that have overwhelmingly failed elsewhere have also been rejected in off-label promotion litigation on similar types of allegations.  Most near and dear to our hearts, such theories have been rejected product liability cases. Actual reliance by the plaintiff’s sur­geon on off-label promotion is mandatory in product liability.  In Bruzer v. Danek Medical, Inc., 1998 WL 1048225 (D. Minn. Oct. 1, 1998), plaintiffs alleged that a medical device company and physicians teaching medical education conspired to misrepresent both off-label use and the purported conspirators’ “financial arrangements,” but plaintiffs “fail[ed] to show that such concealment had any effect on the damages suffered by them.”  Id. at *7.

[T]he Court need not resolve the parties’ argument over whether or not the Plaintiffs are attempting to allege a theory of “fraud on the market”. . . .  Such a theory has not been accepted by any court outside of the context of securities fraud, and the Plaintiffs clearly are no longer relying on it, if indeed they ever were.  Put simply, Minnesota law requires that the Plaintiffs show reliance on the fraudulent misrepresentation or concealment by their surgeons, and causation of their injuries resulting from such reliance.

Id. (emphasis original).

In another opinion from the same litigation, the plaintiff argued unsuccessfully that “she need not prove that [the prescriber] specifically relied on anything that was said or not said . . . by defendants since the defendants essentially defrauded the entire [medical] community.”  Cole­man v. Danek Medical, Inc., 43 F. Supp.2d 629, 635 n.4 (S.D. Miss. 1998).  The court likewise refused to expand this “fraud on the market” causation theory to the product liability context:

[S]ince any fraud which occurred at the seminars [promoting off-label use] visited plaintiff, if at all, through her [prescriber], then she must prove that her [pre­scriber] was defrauded in that he was misled by some fact concealed by defen­dants at these seminars, was otherwise ignorant of such fact, and that had the fact been disclosed by defendants at the seminars, he would have altered his treatment of plaintiff.

Id.  See also In re Sofamor Danek Group, Inc., 123 F.3d 394, 403-04 (6th Cir. 1997) (“[w]e believe the Tennessee Supreme Court . . . would require a showing of actual reliance as a condi­tion of recovery for common law fraud or negligent misrepresentation”; affirming dismissal of securities claims in litigation arising from same off-label promotion allegations as Bruzer and Coleman); Conger v. Danek Medical, Inc., 27 F. Supp. 2d 717, 723 (N.D. Tex. 1998) (rejecting use of “fraud on the market . . . to overcome [plaintiffs’] lack of proof of reliance and causation”).

The Second Circuit, in litigation under the same statute – RICO – and involving analogous allegations of off-label promotion of a prescription drug, explained how diluted causation theories ignore the realities of the market for prescription drugs.  The drug market was intensely personal and individualistic:

[N]egotiations over price . . . do not intersect with the therapeutic choice of what drug a patient should take, which is a decision made by a physician. . . .  Physicians generally do not take the price of a drug into account when deciding among treatment options, and often do not even know the price of the drugs they prescribe.  This is particularly true in the treatment of mental disorders, which is an extremely individualized process.

UFCW Local 1776 v. Eli Lilly & Co., 620 F.3d 121, 126-27 (2d Cir. 2010), cert. denied, 131 S.Ct. 3062 (2011).  Thus, the “chain of causation” in a prescription drug case was lengthy, with independent physicians separately evaluating any alleged off-label promotion:

[I]f plaintiffs’ factual allegations are correct, the chain of causation runs as follows:  [defendant] distributes misinformation about [the drug], physicians rely upon the misinformation and prescribe [it], [plaintiffs] relying on the advice of [outside advisors] place [the drug] on their formularies as approved drugs, [plaintiffs] fail to negotiate the price . . . below the level set by [defendant], and [plaintiffs] overpay. . . .  Plaintiffs’ theory of liability rests on the independent actions of third and even fourth parties.

Id. at 134 (citation and quotation marks omitted).  “Crucially . . . the misrepresentations at issue were directed through mailings and otherwise at doctors.”  Id. (citation and quotation marks omitted).  Thus, “generalized proof of reliance by doctors cannot complete the causation chain.”  Id. Where “causation is interrupted by the independent actions of prescribing physicians, [that] thwarts any attempt to show proximate cause through generalized proof.”  Id. at 135.  Different doctors rely upon different sources of information:

[Defendant] was not, however, the only source of information on which doctors based prescribing decisions.  An individual patient’s diagnosis, past and current medications being taken by the patient, the physician’s own experience with prescribing [the drug], and the physician’s knowledge regarding the side effects of [the drug] are all considerations that would have been taken into account in addition to the alleged misrepresentations distributed by [defendant].


The same generalized allegations about off-label promotion failed to establish causation of economic harm in another RICO (with tag-along state-law claims) action in Ironworkers Local Union 68 v. AstraZeneca Pharmaceuticals, LP, 634 F.3d 1352 (11th Cir. 2011).  Once again, the court emphasized the central role of the prescribing physician in affirming dismissal of the entire case on the pleadings:

In light of physicians’ exercise of professional judgment, a patient suffers no economic injury merely by being prescribed and paying for a more expensive drug; instead, the prescription additionally must have been unnecessary or inappropriate according to sound medical practice − i.e., the drug was either ineffective or unsafe for the prescribed use.  This is true even when the physician’s decision to prescribe the more expensive drug in lieu of a cheaper alternative is the product of fraud.  To allow recovery based purely on the fact that the prescription was comparatively more expensive than an alternative drug − but otherwise safe and effective − would mean that physicians owe their patients a professional duty to consider a drug’s price when making a prescription decision.  No such duty exists. . . . Rather, to assert an economic injury, the plaintiff must allege that her purchase payments were the product of a physician’s medically unnecessary or inappropriate prescriptions.

Id. at 1363 (citations and quotation marks, including a long quote from UFCW 1776, omitted).

Similar allegations about the global effect of off-label promotion on the medical commu­nity failed to establish causation in yet another RICO appeal.  In re Schering Plough Corp. Intron/ Temodar Consumer Class Action, 678 F.3d 235 (3d Cir. 2012).  A generalized assertion that “the [defendant’s] claims . . . are what caused the doctors to prescribe [the drug] for off-label uses is inadequate to establish causation.”  Id. at 248.  Without physician-specific facts, such allegations are “pure conjecture”:

It is pure conjecture to conclude that because [defendant’s] misconduct caused other doctors to write prescriptions for
ineffective off-label uses for other products, [plaintiff] ended up paying for [the drug] due to the same kind of misconduct.
Accordingly, [plaintiff] has failed to show the requisite causal relationship between the alleged misconduct and its alleged injury.

Id.  Intron/Tremodar, went further, however, and held that plaintiff’s failure to plead causation meant that it lacked standing to sue.  Id.  See also Haley v. Merial, Ltd., ___ F.R.D. ___, 2013 WL 1339058, at *16 n.11 (N.D. Miss. April 1, 2013) (“fraud on the market is not tenable in RICO litigation” involving animal drug); District 1199P Health & Welfare Plan v. Janssen, L.P., 784 F. Supp. 2d 508, 524 (D.N.J. 2011) (allegations that defendant’s off-label promotion “corrupted the information process relied upon by physicians in their medical decision-making and thereby caused [them] to write off-label prescriptions” dismissed as “too remote to satisfy the causation prong because they noticeably fail to allege that physicians . . . relied on any specific misrepresentation made by Defendants”); Health Care Service Corp. v. Pfizer, Inc., 2012 WL 2505555, at *4 (Mag. E.D. Tex. April 23, 2012) (complaint dismissed for “not contain[ing] any allegation that any doctors or other health care professional relied on any [defendant] misrepresentation promoting an off-label use, as opposed to relying on the professional’s own judgment and expertise, when prescribing the drugs”), adopted, 2012 WL 2504884 (E.D. Tex. June 28, 2012); Health Care Service Corp. v. Olivares, 2011 WL 4591913, at *7 (Mag. E.D. Tex. Sept. 2, 2011) (same holding on earlier iteration of complaint in same litigation), adopted, 2011 WL 4591915 (E.D. Tex. Sept. 30, 2011); In re Yasmin & Yaz (Drospirenone) Marketing, Sales Practices & Products Liability Litigation, 2010 WL 3119499, at *7 n.8 (S.D. Ill. Aug. 5, 2010) (“[t]he Court agrees that the fraud on the market doctrine is limited to securities fraud cases and would not be appropriate in a RICO case involving the prescription drug market”); Southern Illinois Laborers’ & Employers Health & Welfare Fund v. Pfizer Inc., 2009 WL 3151807, at *6 (S.D.N.Y. Sept. 30, 2009) (“Plaintiffs do not cite a single instance in which a physician received the fraudulent information and decided to prescribe [the drug] based on the information she received. . . .  Accordingly, this causation argument fails as currently pled”).  Obviously, the First Circuit is an extreme outlier in how it views this type of litigation.

Plaintiffs did not appeal dismissal of their New Jersey state-law causes of action in Intron/Tremodar.  The district court had rejected similar “indirect reliance” theories in the context of state-law claims for fraud and misrepresentation:

Plaintiffs make sweeping allegations concerning Defendants’ alleged off-label promotion of the Subject Drugs.  Yet, Plaintiffs do not plead a single instance in which they, themselves, or any of their prescribing doctors received a misrepre­sentation of fact from Defendants and relied upon that misrepresentation in decid­ing to prescribe one of the Subject Drugs to Plaintiffs.  In fact, the only colorable allegations by Plaintiffs of receipt and reliance concern the generic allegations, repeated throughout the Complaint, that unnamed doctors, not Plaintiffs, relied on [defendant’s] misrepresentations in prescribing the Subject Drugs to unnamed patients. Plaintiffs cannot argue indirect reliance in this case.

In re Schering-Plough Corp. Intron/Temodar Consumer Class Action, 2009 WL 2043604, at *33 (D.N.J. July 10, 2009).  Accord Zafarana v. Pfizer, Inc., 724 F. Supp. 2d 545, 556 (E.D. Pa. 2010) (off-label promotion allegations “ignore the role played by the prescribing physician”; “[d]ue to the discretion of the prescribing physician, the injury alleged [that cheaper drugs may have been prescribed] is entirely hypothetical”) (applying New Jersey law).

In the same multi-district litigation that produced UFCW Local 1776, the trial court, in a separate decision dismissing a state attorney general’s product liability-based consumer fraud claims, held that the prescription-only nature of the pharmaceutical market precluded generalized proof of reliance.

Individualized proof is needed in the instant case to overcome the possibility that a . . . patient was prescribed [the drug] for some reason other than belief in the accuracy of defendant’s warnings or representations.  Whether a more
adequate warning by [defendant] would have prevented any particular patient’s injuries requires consideration of what the prescribing physician knew and the cost-benefit analysis that applied to the individual patient suffering from a variety of serious mental problems observed by the physician to be affected by the drug to varying degrees.

In re Zyprexa Products Liability Litigation, 671 F. Supp. 2d 397, 454-55 (E.D.N.Y. 2009) (applying Mississippi law). “[G]eneralized expert analysis” opining that off-label promotion “exploit[ed ]various sources from which doctors derive prescription drug information” and “had “a substantial effect on the prescribing behavior of doctors” generally, id. at 455, was no substi­tute for physician-specific proof under state law:

In order for the State to recover damages under its [product liability] theory, each prescribing decision and each patient’s injuries would have to be considered individually.  . . .[E]ach case is fact-specific, making categorization almost impos­sible.  In the absence of such individualized showings, the [product liability] claim cannot survive summary judgment.

Id.  In a lengthy discussion of what it called the “individualized proof rule,” the court demonstrated the every circuit except . . . you got it . . . the First Circuit rejected expert-based generalized theories of causation in cases involving prescription drugs.  Id. at 434-43 (discussing McLaughlin v. American Tobacco Co., 522 F.3d 215, 223-30 (2d Cir. 2008); Fotta v. Trustees of United Mine Workers, 319 F.3d 612, 619 (3d Cir. 2003); Doe v. Chao, 306 F.3d 170, 183-84 (4th Cir. 2002); McManus v. Fleetwood Enterprises, Inc., 320 F.3d 545, 549 (5th Cir.2003); Oshana v. Coca-Cola Co., 472 F.3d 506, 513-514 (7th Cir. 2006); St. Jude Medical, 522 F.3d at 838-39; Poulos v. Caesars World, Inc., 379 F.3d 654, 658, 666 (9th Cir. 2004); Heffner v. Blue Cross & Blue Shield, Inc., 443 F.3d 1330, 1344 (11th Cir. 2006)).

The same rationale was applied to reject attenuated causation theories brought under the rubric of “express warranty” and “unjust enrichment” in Pennsylvania Employees Benefit Trust Fund v. AstraZeneca Pharmaceutical LP, 2009 WL 2231686 (M.D. Fla. July 20, 2009) (applying Pennsylvania law).  Off-label promotion of a drug available by prescription could not cause any injury unless it was relied upon by physicians who, in turn, prescribed it to their patients:

The key independent factor in this case stems from the fact that consumers may only obtain [the drug] through a prescription from a physician.  Presumably, these physicians use their independent medical judgment to decide whether [the drug] 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 representation by a manufacturer as to a particular drug’s relative safety and efficacy.  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.

Id. at *5 (citation and quotation marks omitted).  Accord Pennsylvania Employees Benefit Trust Fund v. Eli Lilly & Co., 2009 WL 4768195 (Pa. C.P. Philadelphia Co. Dec. 10, 2009) (“case law is clear that the third party recipient of an express warranty must be aware of the specific terms of the warranty in order to sustain a claim”; plaintiff “cannot solely rely upon expert testimony and statistical evidence”).

Pennsylvania also rejected diluted causation theories in Neurontin litigation.  The action was “not one for securities fraud,” and plaintiffs were claiming “affirmative misrepresen­tation.”  Therefore, plaintiffs “were not entitled to a presumption of reliance/causation on their claims of misrepresentation, negligence, negligence per se, and breach of express warranty.”  Clark v. Pfizer, Inc., 990 A.2d 17, 26 (Pa. Super.), allocatur denied, 13 A.3d 473 (Pa. 2010).  Instead, plaintiffs

have to demonstrate doctor-by-doctor that defendants’ fraudulent misrepresenta­tions or omissions during the off-label promotion caused the doctor to prescribe the medicine. . . .  [A] statistical analysis cannot fulfill these requirements because it does not take into account any other factors that may have led doctors to prescribe [the drug] for off-label indications. . . .  In sum, statistical probability does not substitute for actual inquiry, as a general showing of percentages does not tend to prove that [plaintiffs’] specific doctors relied upon Defendants’ state­ments or that Defendants’ statements were the proximate cause of an injury.

Id. at 27 (citations and quotation marks omitted) (emphasis added).  Accord Commonwealth v. Ortho-McNeil-Janssen Pharmaceuticals, Inc., 13 Pa. D. & C.5th 187, 198-201 (Pa. C.P. 2010) (governmental plaintiff was “not entitled to a presumption of reliance and causation;” “the prescription drug industry is too dissimilar from the securities market to support applying a “fraud on the market” theory to establish a rebuttable presumption that physicians relied” on off-label promotion), aff’d on other grounds, 52 A.3d 498, 510 (Pa. Cwlth. 2012) (dilute causation issues waived).

An alleged “seven year effort to market [a drug]” to thousands of physicians and hun­dreds of thousands of patients,” leading to by a criminal conviction for off-label promotion did not excuse proof of causation in In re Actimmune Marketing Litigation, 2009 WL 3740648, at *13 (N.D. Cal. Nov. 6, 2009), aff’d, 464 F. Appx 651 (9th Cir. 2011) (“for the reasons set forth in the district court’s orders”) (applying California law):

[Plaintiffs] merely allege that their doctors were exposed generally to the marketing of [the drug] because of their membership in various medical organiza­tions and institutions and because they routinely received or had access to public­ations in which [the drug] was discussed.  Such allegations clearly do not meet plaintiffs pleading burden. Plaintiffs do not identify any particular article, sympo­sium, meeting, drug representative visit or any other vehicle for conveying infor­mation about pharmaceuticals from which they learned [about the off-label use].

Id. at *11. Causation required that “defendants were responsible for the information about [the drug] that the doctors received” and that the doctors “relied upon the information they received about [the drug] when deciding to prescribe [it].”  Id.

[P]laintiffs argued . . . that defendants “saturated” the market for information regarding [the drug], and thus plaintiffs’ doctors necessarily relied upon defen­dants’ misrepresentations when choosing to prescribe [it].  This “saturation” argu­ment is nothing more than a repackaging of the “fraud on the market” theory the court rejected in Actimmune I.  That plaintiffs’ doctors had access or were potentially exposed to defendants’ misrepresentations is not sufficient to establish causation; as defendants eloquently expressed at the hearing, “causation is not communicable.”

Id. at *14. Accord In re Actimmune Marketing Litigation, 614 F. Supp.2d 1037, 1054 (N.D. Cal. 2009) (“courts have routinely refused to find promotional marketing of off-label uses fraudulent when they are directed at sophisticated audiences, like physicians” ), aff’d, 464 F. Appx 651 (9th Cir. 2011) (“for the reasons set forth in the district court’s orders”).

The First Circuit has long been an outlier in pharmaceutical liability litigation.  It has been a haven for False Claims Act claims that would have no chance anywhere else.  However, when it sought to extend its peculiarly pro-plaintiff outlook into the product liability context the Supreme Court granted review and decisively rejected those theories.  See Mutual Pharmaceutical Co. v. Bartlett, 133 S. Ct. 2466 (2013).  Now, the same court of appeals has gone off on a similar frolic and
detour in the RICO context, ignoring what every other court – even in a lowly prisoner’s rights case − in the country has determined to be the attributes of prescription medical product marketing that do not allow the independent prescription decisions of learned intermediary physicians to be ignored for causation purposes by some purveyor of statistical hogwash.  Here’s hoping that the Supreme Court does the right thing a second time.