This post comes solely from the Cozen O’Connor side of the blog.

The MDL court in the Testosterone Replacement Therapy (“TRT”) litigation involves more than just individual product liability cases. It includes a class action. In particular, a single named plaintiff, Medical Mutual of Ohio (“MMO”), seeks to represent a class of third-party payers

We’ve previously written several posts (not recently) on Medicare secondary payer (“MSP”) issues – which we characterized as “boring.”  The recent MSP decision, Humana Insurance Co. v. Paris Blank LLP, 2016 WL 2745297, 187 F. Supp.3d 676 (E.D. Va. 2016), is a lot less boring.  That’s because of the defendant – a plaintiff-side law firm.

And the law firm lost.

What’s going on? To start with, in addition to the government itself, certain private entities, “Medicare Advantage Organizations” (“MAO”) (abbreviations are ubiquitous in this area) are allowed to bring suits to recover as MSPs (that was what one of our earlier posts was about).  The MSP statute is quite broad as to who can be legally liable for not ensuring that Medicare is treated as a secondary payer:

any or all entities that are or were required or responsible (directly, as an insurer or self-insurer, as a third-party administrator, as an employer that sponsors or contributes to a group health plan, or large group health plan, or otherwise) to make payment with respect to the same item or service (or any portion thereof) under a primary plan.

42 U.S.C. §1395y(b)(2)(A)(iii). Recovery in an amount double the actual Medicare outlay is available in litigated cases. Id.

In our neck of the woods (PA & NJ, anyway), a MAO’s ability to sue as if it were the government is already established. In re Avandia Marketing, Sales Practices, & Products Liability Litigation, 685 F.3d 353 (3d Cir. 2012).  (We note that our CA blogger would view this issue differently, see Parra v. PacifiCare of Arizona, Inc., 715 F.3d 1146, 1154 (9th Cir. 2013)).  So the fact that Humana held that an MAO had standing to sue, 2016 WL 2745297, at *4, would not have resulted in this post.

What interests us is the holding that a lawyer and his law firm – thankfully, a plaintiff law firm − can be an “entity” “responsible (directly . . . or otherwise)” for making a MSP payment.  The allegations in Humana were not kind to the defendants.  They represented a plaintiff in an auto accident.  Supposedly, they received a one settlement check made out jointly to it and the plaintiff MAO, but “ultimately deposited the check without [the MAO’s] endorsement.”  Id. at *2.  Allegedly, certain other settlement checks “from several insurance companies” were also received and deposited, without joint the joint payor issue. Id. All told, the settlements totaled $475,600.  Id.


Continue Reading

July in D.C. is hot and sticky.  When scorching day follows scorching day, area residents look forward to evening thunderstorms, not just to water otherwise thirsty lawns and gardens but to cool things down.  Lightning can be frightening—that the words almost rhyme is no accident—but it seems to always accompany our rain during the swampiest part of our summers.

The decision in Sidney Hillman Health Ctr. v. Abbott Labs., No. 13 C 5865, 2016 U.S. Dist. LEXIS 84662 (N.D. Ill. June 29, 2016), is not as dramatic as a flash of lightning or as stirring as a thunderclap.  To us, though, it provides some welcome relief and suggests that a larger storm is coming for cases like this.  (Like awkward cocktail party banter, we will keep our discussion of weather brief.) Hillman is one of many third payor cases based on alleged off-label promotion of a prescription drug.  It is of the variant where benefit plans principally used RICO as the vehicle to try to get damages for past payments for members’ prescriptions for unapproved indications.  We sometimes lump such cases together with those using the False Claims Act or various state fraud statutes to try to recover for amounts paid as a result of allegedly improper marketing, often with large fines or a damages multiplier in the mix.  Sometimes these cases are class actions on behalf of lots of payors around the country.  Sometimes they are pursued by governmental entities, which occasionally outsource the work to contingency fee lawyers.  In their various forms, these TPP cases have caught our attention.  We have been particular perturbed by some courts’ blithe acceptance of collective proof of causation in these cases, the point of which is to lump together as many purported actionable claims or implicated payments as possible without having to generate proof as to why each prescription was written or paid.  We have also questioned whether statutes like RICO (enacted to combat organized crime) or the False Claims Act (enacted to combat war profiteering) are being stretched beyond their legitimate bounds to accommodate these cases, simply because the defendants are unpopular or the coffers of the governmental or benefit plan plaintiffs need an infusion of cash.

Many of these cases have also been predicated on the idea that promotion of off-label use is inherently wrong.  Over the last year or so, largely because of Amarin, the underpinnings of that idea have been eroding fast.  The First Amendment’s prohibition on laws “abridging the freedom of speech” applies to commercial speech, including commercial speech by and on behalf of drug companies about uses of their products that are off-label.  If truthful statements about unapproved uses of the drug—like those that accurately represent the information on risks and benefits and make clear what the label says—are protected, then civil liability should not be based on them.  That would go for cases under the FCA, RICO, or various state laws—with the Fourteenth Amendment making the First Amendment applicable to states.  To our eyes, some of the notorious cases imposing massive liability for alleged off-label promotion of prescription drugs seem to have relied in large part on vilifying truthful off-label promotion.  (Keep in mind that even pre-Amarin FDA regs allowed drug companies to provide information about off-label uses under certain circumstances without it being considered “promotion.”)  So, a First Amendment storm is brewing for these cases, both in terms of the precedential value of decisions in cases that did not differentiate between truthful and false statements about off-label uses and the viability of complaints drafted with the expectation that no such differentiation would be necessary.

This brings us back to Hillman, which had an interesting litigation history of its own.  It followed FCA and related actions based on alleged off-label promotion by the manufacturer of a prescription seizure and migraine medication.  A large settlement of civil and criminal claims, with attendant press coverage, followed.  The Hillman plaintiffs filed a putative class action over a year later, alleging overpayments for off-label prescriptions between 1998 and 2012.  The trial court dismissed on statute of limitations and the Seventh Circuit reversed.  The plaintiffs amended and the defendants moved to dismiss.  Along the way, there have been a number of product liability claims with the same drug, complete with off-label promotion allegations and preemption of some warnings claims.  (As an aside, it would be interesting if some of the alleged misrepresentations about safety in the Hillman complaint were about the same issues about which it would have been impossible for the defendants to warn.  There is no preemption for RICO claims, because preemption only applies to state law, but it should be hard to misrepresent a drug’s safety by accurately repeating the contents of a label that could not have been changed as to a particular risk.)


Continue Reading

In third party payor litigation over prescription medical products, we have often marveled at the causation arguments that plaintiffs have offered and the willingness of some courts to accept collective proof over what really should involve individualized proof. Like here, here and here. (This same dynamic plays out when governmental entities seek reimbursement for such products too.) Usually, though, the plaintiffs allege that the manufacturer’s fraud—under whatever particular statutes or headings it is pursued—was unknown to them during the time for which they seek damages for amounts paid for the product and that the damages stopped once they found out. In Teamsters Local 237 Welfare Fund v. Astra-Zeneca Pharms. LP, No. 415, 2015, 2016 Del. LEXIS 236 (Del. Apr. 12, 2016), the plaintiff payors were undone by their concession that they knew about the alleged fraud and kept paying for the drug at issue anyway. Based on its self-described common sense analysis, the Delaware Supreme Court affirmed the dismissal for lack of causation without weighing in on the Superior Court’s rejection of causation where individual physicians made individual decisions about what to prescribe. This is a good result, but we are concerned about the implications for the practices of payors who seem increasingly interested in signing up with contingency fee lawyers to sue medical product manufacturers. (In case you were wondering, that was a teaser, designed to get you to read all the way to the end of the post.)

The basic facts are that the plaintiff filed a purported nationwide class action on behalf of third-party payors in Delaware state court in 2004, alleging that the defendant violated state consumer fraud laws by falsely marketing Nexium as being more effective than Prilosec, an older product with allegedly one-half of the same active ingredient per dose. Adding some facts omitted in the opinion, the initial NDA for Prilosec had been approved in 1989 (under the name Losec) and lost exclusivity in 2001, around which time FDA approved the NDA for Nexium, which had an enantiomer (here, the left hand chiral image) of the Prilosec’s active ingredient as its active ingredient. The indications for both drugs were expanded through the years, with Prilosec going over-the-counter in 2015. These drugs together accounted for a large chunk of the prescriptions written for heartburn, gastroesophageal reflux disease, and related complaints. Plaintiffs claimed that the development of Nexium and the marketing campaign after its introduction were designed to get the defendant paid a high price for its newer branded product instead of money going to pay for cheaper generic versions of the older product. They claimed they had been harmed by paying for the Nexium prescribed by physicians for the patients participating in their plans. The same group of lawyers apparently filed other “essentially identical class actions” with different sets of named plaintiffs, including one in Delaware federal court that resulted in the dismissal of a New York consumer fraud claim. Ignoring some history and details much like the plaintiffs ignored the marketing for Prilosec over the last fifteen years and the difference between a racemic mixture and an enantiomer, the Delaware state court action woke up from a long slumber in 2014 with its second amended complaint asserting the same claims the federal court had disposed of a few years before.

The Superior Court first determined that the law of New York, where the named plaintiffs were based, applied instead of the law of Delaware, where the defendant was based, or the laws of thirteen other states. Id. at *9. The court found that plaintiffs had not alleged the causation required for a consumer fraud claim: the “purported chain of causation that runs from the allegedly deceptive advertisements that may have influenced the decisions of individual doctors to prescribe a drug to their patients to causally affect the payer unions in this case is simply too attenuated,” as the doctors would be “presumed to go beyond advertising medium and use their independent knowledge in making medical decisions.” Id. at **9-10. We certainly like this reasoning, which would apply to a bunch of these cases. We also like that the court did not give plaintiffs a fourth chance to frame a complaint that stated a claim.


Continue Reading

Here is another guest post, one expressly not emanating from the Dechert side of the blog. Rather it is written by Reed Smith’s Elizabeth Graham Minerd.  As always with our guest posts, she is entitled to all the credit from her shared wisdom, as well as any blame.  So, without further ado:

***********
I recently had a partner ask me:  Will the court consider our client’s actions (not in any FDA safe harbor) to be off-label promotion—i.e., were their actions “promotional” in nature even though they were not advertising the product for off-label uses.  After extensive research, I returned to him more or less empty-handed.  I explained the arguments for and against our client’s actions being considered “promotion” of off-label uses, but I could not provide a definitive answer because there was simply no case law on point.
Over the last several years, there have been numerous cases discussing the legal ramifications of promoting drugs or medical devices for off-label uses from seemingly every angle. Indeed, this blog has a handy tag “Off-Label Use” that discusses many of these cases. But this basic question—what counts as off-label promotion?—has largely gone unanswered.  Recently, however, the Court in United States ex rel. King v. Solvay S.A., 2016 U.S. Dist. LEXIS 14804 (Feb. 8, 2016 S.D. Tex.), laid out a few examples of what is not off-label promotion.

Our occasional claims of dyspepsia may be attributed to various things.  Professional witnesses offering personal opinions from the stand, juries deciding based on emotion and bias, plaintiff lawyers being sleazy, and judges writing decisions driven by a predetermined result or just bad reasoning come to mind. Sometimes, we recognize that our discomfort stems, at least in part, from the subject matter of a case extending past the reasonable, yet wide and knowingly self-inflated, bounds of our expertise.  Among our hundreds of posts, more than a handful touch on Drug & Device Law in that they (1) involve cases with our clients’ products far from product liability or (2) involve issues we see in our cases being presented in very different types of cases.  While we may throw in some caveats about how we are treading beyond our usual bailiwick, we still offer our views and perhaps even a somewhat blind rant.  Here we are again—personally, this blogger has skipped the last three weeks for trial preparation and denouement—with a decision in a case that is far afield in some respects, but just does not feel right in about every respect.

The decision of the First Circuit in In re Nexium Antitrust Litig., Nos. 14-1521, 14-1522, 2015 U.S. App. LEXIS 968 (1st Cir. Jan. 21, 2015), affirming a class certification order from the District of Massachusetts is not too surprising if you just consider the courts involved and the name of a drug in the case caption. If you add that, broadly categorized, this is a third party payor case, then our view that the decision does not make much sense is even less surprising.  The allegation in the case, though, is something we find fairly novel and decidedly weird.  Plaintiffs are “union health and welfare funds that reimburse plan members for prescription drugs”—that is, a type of third party payor—and they claimed that the defendant branded manufacturer of a particular heartburn drug and three putative manufacturers of a generic form of the drug conspired to overcharge for the branded drug when they entered into settlements over patent infringement suits that paid the putative generic manufacturers to not try to get their ANDA approvals and sell their own versions for about six more years.  Are you with us so far?  Not being able to sue under federal antitrust laws because the Supreme Court says indirect purchasers are too remote to have a cognizable injury, the plaintiffs sued under state antitrust laws—adopted by half the union specifically to provide a claim not available under federal law—and state consumer protection laws.  They sued in one federal court (the E.D. Pa.) and the case was moved to another by the JPML. They sought a class on behalf of everybody in the U.S. or its territories who paid (or will have paid) any money for the drug, including generic versions not yet on the market, for their own use or use by anybody else.  With our caveat about the limits of our expertise, this lead in makes us start wondering about subject matter jurisdiction, personal jurisdiction post-Bauman (especially with the foreign defendants), how third party payors could be class reps for patients who bought their own drugs or for people who bought drugs for their relative, how a court-approved consent judgment could be considered anti-competitive behavior without running afoul of Noerr-Pennington doctrine,  and how there was not some preemption issue in basing state law liability on an assumption that FDA would have approved one to three ANDAs even if there were no patent issues.  Then we took a deep breath and realized that the Nexium decision did
not address any of that stuff.  It did note, however, that the defendants had already won a jury verdict at trial this past December, but “[t]his, of course, does not moot the case here given the possibility of further proceedings.”  Then we went back to bellyaching about what else was wrong with the basic premise of this case.  Then we had a drink.  And we don’t mean an antacid.


Continue Reading

As Bexis demonstrated yesterday, we can have strongly held views.  When we do, we are not always subtle about letting our readers know what those views are.  When a rant builds, it can pour like an avalanche coming down a mountain—with more vinegar than cinnamon or sugar.  When we read In re Actiq Sales and Marketing Practices Litigation, No. 07-4492, 2014 U.S. Dist. LEXIS 984411 (E.D. Pa. July 21, 2014), we felt the rant coming on.  The case involves Daubert in a case with outsourced
representation and collective causation evidence related to alleged off-label promotion of a prescription drug, so a few things we care about were brewing.

But it is now the first day of August and a tropical vacation is looming.  School for the kids and other rituals signaling the transition from summer to fall will be here soon.  Thus, we resolved to keep this post somewhat calm despite a bad result, questionable analysis, and a fundamental misunderstanding of the relationship between FDA regulation of drug companies and what doctors do with their own patients.  Rest assured, though, that we would have many more snarky comments about the opinion if not for our resolve to stay “chill,” as much as we ever do.


Continue Reading

Today we have this guest post from Reed Smith‘s Andrew Stillufsen about a recent defense win in a third party payer (or is it”payor”?) case here in the Eastern District of Pennsylvania.  We hope you find it as interesting as we did.  As usual all credit and/or blame belong to the guest poster.

*************

Travelers Indemnity Co. v. Cephalon, Inc., is a third party payor case where plaintiffs – workers compensation insurers – claimed that they were injured by paying for prescriptions for defendant drug company’s  pain medications which were written as a result of its alleged off-label marketing of the drug.  2014 U.S. Dist. Lexis 95075 (E.D. Pa. July 14, 2014).  SPOILER ALERT:  as with similar cases, even after extensive discovery and an amended complaint, plaintiffs still failed to allege facts sufficient to establish standing or to support any of their fraud claims.  Motion to dismiss granted.

Before the court could address plaintiffs’ substantive claims, it first had to determine whether the allegations were sufficient to establish standing.    To establish standing, the plaintiff must show that they suffered a cognizable injury. Id. at *16-18.   “The contours of the injury-in-fact requirement, while not precisely defined, are very generous, requiring only that the claimant allege some specific, identifiable trifle of injury.”  Id. at *17.  (citations and internal quotations omitted).  Under the now-familiar TwIqbal analysis, plaintiffs failed to allege sufficient facts to show even a mere “trifle.”

In this case, plaintiffs essentially alleged two theories of injury.  First, they claimed they were injured because “they did not get what they paid for,” as plaintiffs paid for drugs that were not safe or effective due to defendant’s alleged fraudulent off-label marketing.  Second, but for the alleged off-label marketing, plaintiffs  claimed they were injured when they paid for more expensive drugs when less-expensive drugs were available.  Id. at *18-19.


Continue Reading

This post is not from the Dechert side of the blog, as Dechert handled the successful appeal of the case being discussed.

We haven’t really covered “Average Wholesale Price” (“AWP”) litigation very much because, while it is typically brought against pharmaceutical defendants, it’s about as far from product liability litigation as, say anti-trust or securities law.  But it’s hard to ignore when a state supreme court blows out such claims (as here).  It’s even harder to ignore when the state supreme court in question is ours.  So here’s what the Pennsylvania Supreme Court recently did to an AWP
“verdict.”

Briefly, and at the risk of oversimplification, “average wholesale price” is a term used to describe a much-tinkered-with basis for determining how much manufacturers may charge governmental purchasers of drugs used in public programs.  Governmental plaintiffs claim that drug manufacturers manipulated the AWP to overcharge them.  Manufacturer defendants counter that AWP is a misnomer, and was not intended or calculated to be as limited as the governmental plaintiffs claim.  Manufacturers also point out, with lots of evidence to back them up, that governmental units were at all times well aware of
what the drawbacks and complexities of what AWP quotation did (or did not) mean.  There are many other issues in AWP litigation, but these are the biggies.

First of all, we wish to point out that the trial result in Pennsylvania was not really a verdict.  In Commonwealth v. TAP Pharmaceuticals (Bristol Myers Squibb Appeal), No. 85 MAP 2011, slip op. (Pa. June 16, 2014), the jury had the good sense to enter a defense verdict on all the claims submitted to it.  Id. at 16.  However, Pennsylvania’s consumer protection statute is quirky, and does not provide for a jury trial.  So the trial judge got snookered.

Second, before we get accused of affording this decision too much significance, yes we know that it’s styled as an “opinion in support of reversal” by an evenly divided (3-3) court.  However, all six sitting justices agreed entirely with the rationale reversing the lower courts.  The only disagreement was that the OAJC would have dismissed the case outright and entered judgment n.o.v., whereas the concurring opinion – not an opinion in support of affirmance – wanted a remand.  So as not to have the bizarre result of a 3-3 split resulting in an affirmance by operation of law of a decision that nobody thought should stand, the OAJC gave in as to that outcome.  OAJC at 23.


Continue Reading