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In Bertini v. Smith & Nephew, Inc., 2014 U.S. Dist. LEXIS 35837 (E .D.N.Y. March 17, 2014), the Eastern District of New York applied preemption to a device case that involved off-label use, even though the device didn’t receive FDA Pre-Market Approval (“PMA”) and wasn’t really used off-label.  Confusing?  Maybe. But once untangled, it’s very, very good.

The plaintiff had a total hip replacement.  Id. at *4.  His doctor implanted the Smith & Nephew R3 System, which had received FDA §510(k) clearance.  Id.  The R3 System ultimately failed, and the plaintiff had revision surgery.  Id. The plaintiff and his wife then sued, claiming that the R3 device’s liner had loosened from the device’s acetabular shell.  Id. But §510(k) clearance of the R3 System does not trigger preemption.  Only PMA does.  So where does preemption enter the story?

Well, it enters through the approval of another Smith & Nephew device: a hip resurfacing system. Id.  Unlike the R3 System, the hip resurfacing system received PMA.  Id. More important, the liner from the R3 System also did – for use with the hip resurfacing system.  Id. at *3-4.  In other words, although the R3 System itself did not receive PMA, its liner later received PMA to be used with another system.

And that’s how preemption enters.  The plaintiffs’ claims targeted the R3 liner.  It had loosened.  The plaintiffs also pointed toward a locking mechanism that was intended to keep the liner in place inside the acetabular shell.  Id. at *13.  While multiple parts of the R3 System are implicated in plaintiffs’ claims – the liner, the acetabular shell and the locking mechanism – the court determined that preemption was in play because the R3 liner, which had gone through the PMA process, was integral to each of those claims:

[P]laintiffs would be unable to show that the R3 acetabular shell and its locking mechanism alone proximately caused plaintiffs’ injuries, because plaintiffs have plead that the R3 System and the R3 metal liner together were the cause of plaintiff’s injuries.  Plaintiffs would have to prove that the R3 acetabular shell did not stay attached to the R3 metal liner, without being able to argue, as they have repeatedly throughout this litigation, that this failure to attach was due in large part to the R3 metal liner improperly loosening from the R3 acetabular shell.  Therefore, if a claim involving the R3 metal liner’s alleged defect is preempted, the entire claim should be dismissed because plaintiffs will be unable to sufficiently plead the remainder of that claim.

Id. at *14 (emphasis added).

With that, plaintiffs’ design defect, warning, implied warranty, and negligence claims were preempted – not a bad result for a device that did not receive PMA.  The plaintiffs’ fraud claims were also dismissed for failure to plead sufficient facts.

And how did off-label use play a role in this decision?  Well, the plaintiffs argued that preemption shouldn’t apply because the R3 liner received PMA only for the hip resurfacing system, not the R3 System implanted in plaintiff. In other words, even though the R3 device had received §510(k) clearance, the liner’s use in the R3 System was off-label from the use for which it had received PMA.  But preemption doesn’t focus on use.  It focuses on whether the FDA approved and regulates the device.  More important, there’s simply nothing wrong with off-label use.  It’s necessary for the practice of medicine.  The FDA recognizes that and knows it when it approves a device:

Plaintiffs stress that although the R3 metal liner was approved through the PMA process, it was only approved for use with the [hip resurfacing system], but defendant nonetheless marketed the R3 metal liner to be used with the R3 System.  However, preemption analysis is not concerned with how a particular device is used or whether there are federal requirements imposed on a particular use of the device.  Rather, preemption is focused on whether there are federal requirements applicable to the device itself.  Indeed, “‘off-label’ usage of medical devices (use of a device for some other purpose than that for which it has been approved by the FDA) is an accepted and necessary corollary of the FDA’s mission to regulate . . . without directly interfering with the practice of medicine,” Buckman Co., 531 U.S. at 350, 121 S. Ct. at 1018; see also United States v. Caronia, 703 F.3d 149, 153 (2d Cir. 2012) (“Once FDA-approved, prescription drugs can be prescribed by doctors for both FDA-approved and – unapproved uses; the FDA generally does not regulate how physicians use approved drugs.”).  That the R3 metal liner was approved for use with the [hip resurfacing system] does not affect defendant’s preemption argument under the MDA, since the specific component at issue received PMA.

Id. at *17-18 (certain citations omitted).

So the court applied preemption to device claims that involved a device that hadn’t received PMA and off-label use that wasn’t all that off-label.  In more practical terms, the Bertini decision illustrates that claims can still be preempted, even if the device received only §510(k) clearance, so long as the alleged defect involves a part of the device that received PMA.  It’s also another opinion that forcefully states that off-label is appropriate and shouldn’t alter the preemption analysis.

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We do this blog not just to tout good results, slam bad decisions, and relay our likes and dislikes on various subjects, but to provide information that can help drug and device manufacturer defendants get better results in the litigations they face.  We do not presume, except facetiously, that our posts really do move the needle much on how courts decide the issues we tend to highlight in our posts. Courts pay attention to what other courts have done, though, so we like to do our part in passing on good decisions to use and ways to work around bad decisions.  When it comes to yesterday’s decision from the Arkansas Supreme Court in Ortho-McNeil-Janssen Pharms., Inc. v. State, 2014 Ark. 124 (Ark. 2014), slip op., there is not much need for us to publicize the result.  A verdict for $1.2 billion going away will get some attention on its own.  We look at the decision, however, with an eye or two toward what it means for other cases. While the reversal is clearly the right result and spells the end of actions against drug and device companies based on the Arkansas Medicaid Fraud False Claims Act (“MFFCA”), the bases for the decision may be too sui generis (or “sooie” generis) to have as broad of implications as we had hoped.

The case started with “outside law firms and other states’ Attorney General offices” approaching the Arkansas AG about suing the manufacturers of second-generation antipsychotics, which had been the subject of FDA-mandated labeling changes and Dear Doctor Letters about the risk of hyperglycemia and diabetes back in 2003.  Slip. Op at 2-3 & 7.  The letters that were sent out on Risperdal included language discussing how its risk of diabetes compared with the risk of diabetes with conventional psychotics and other atypical antipsychotics, which DDMAC deemed “false and misleading” in a Warning Letter it sent five months later.  Id. at 3-4.  The Warning Letter led to a correction being sent out three months later, which DDMAC accepted as fully addressing the issue.  Id. at 4-7.  Based on this basic fact pattern, the Arkansas AG sued Risperdal’s manufacturer under the theories that:  1) the MFFCA was violated by every Risperdal prescription filled in the State and submitted to Arkansas Medicaid for payment over a 43 month period when the drug’s labeling allegedly failed to comply with FDA’s prescription drug labeling requirements; and 2) the Arkansas Deceptive Trade Practices Act (“DTPA”) was violated by every copy of the first Dear Doctor Letter sent to a healthcare provider in the state.  Id. at 7-8.  Based on the plaintiff verdict at trial, the results of a civil penalties hearing, and the denial of all the expected defense motions, the result was $1,194,370,000 on the first theory ($5000 times 238,874 prescriptions) and $11,422,500 on the second theory ($2500 times 4,569 letters).  Id. at 8.

The appeal challenged both theories, but according to the court’s opinion, did not raise some of the fundamental problems with them addressed in some of our prior posts on this sort of case.  Because the court reversed on the first argument it considered as to each theory, potentially broader issues were not resolved.  For instance, we would certainly question how a link between inadequate labeling, the writing/filling of prescriptions, and the submission of false claims could be presumed.  We would also wonder how a cause of action expressly based on a violation of the FDCA and an FDA regulation could escape preemption and how the mere sending of a letter, even if misleading in the abstract, could create liability without some proof that some relevant readers of the letter were misled by it.  Those questions were not answered in O-M-J.

The question that was answered as to the MFFCA was whether the trial court’s interpretation of it was “erroneous, overbroad, and untenable” in allowing it to be the basis of liability for claims for payment of a prescription drug with labeling allegedly in non-compliance with federal law.  In coming up with a resounding “hell yes” to that question, the court did something we do not think we have ever seen before:  it found the law had been miscodified by the Arkansas Code Revision Committee after it had been passed by the Arkansas General Assembly.  Id. at 13-15.  Essentially, a subsection of the Act the legislature passed that was clearly about statements in connection with (re)certifying hospitals and other healthcare facilities was later broken up into two subsections, with the latter reading “information required pursuant to applicable federal and state law, rules, regulations, and provider agreements” without a mention of certification. The State, represented by outside contingent fee counsel more interested in big bucks than in what Arkansas statutes really meant, sued under this subsection and claimed it could impose broad liability for claims for the cost of prescriptions of drugs with allegedly bad labeling.  Looking past the miscodification (and applying a strict construction in favor of the party to be penalized), the court interpreted the provision of the MFFCA under which the State had sued as only creating liability for false statements made in connection with (re)certification of hospitals and other healthcare facilities. Id. at 15-16.  In other words, this provision did not cover drugs or drug labeling at all.

We sometimes think of the state versions of the (federal) False Claims Act as being the same.  The False Claims Act is sometimes referred to as the Lincoln Law, because it was enacted during the Civil War to deal with contractors gouging the Union when it was busy with more important things.  Over the years, the False Claims Act has been used with regard to a range of claims for payment to the federal Government, not just the Medicare and Medicaid claims we have posted on before.  State versions of the False Claims Act do not all look the same and are not always addressed solely to preventing (and recouping for) Medicaid fraud. We do not know why the MFFCA—at least the part of it that the AG sued under here—was so focused on the part of the Medicaid world relating to certifying healthcare facilities, but it was. So, the main part of the AG’s case was never even conceivably tenable—it should have gone away on motion to dismiss—and $1,194,370,000 of the judgment for the State vanishes.  (With remand of the companion case on $480,000 attorney’s fees and costs, in light of the defendant’s win on appeal, the State may even end up in the hole.)  The result should mean that MFFCA suits against manufacturers are gone – the court did make sure the AG’s office could not do this again − but it is hard to project the highly specific nature of the decision outside of The Natural State. By contrast, the decision in Caldwell has broader implications.

The decision on the DTPA claim also involved a rarity and may not affect similar cases in other states.  The reversal was based solely the finding that the trial court abused its discretion in admitting a single document, the DDMAC Warning letter.  The ASC held that letter was inadmissible hearsay because Arkansas’s version of the public records exception, unlike Fed. R. Evid. 803(8), expressly carves out “factual findings resulting from special investigation of a particular complaint, case, or incident” from the exception to hearsay.  Id. at 19.  Thus, the inquiry under Ark. R. Evid. 803(8), which we think is fairly distinctive, was whether the DDMAC Warning Letter was the result of a “routine investigation” or “special investigation.”  As you would expect, the Warning Letter said it was because of the original Dear Doctor Letter, the AG’s expert (the pliable Laura Plunkett) testified that it was because of the original Dear Doctor Letter, and the close out letter from DDMAC said the Warning Letter was because of the original Dear Doctor Letter.  This was enough for a majority of the panel to conclude this was not sort of routine document that counts as an admissible public record under Arkansas law.  Id. at 24-27.  It is easy to see that just about every DDMAC letter that criticizes Dear Doctor Letters or promotional materials would be inadmissible hearsay under this particular standard.  So the heart of the AG’s case was inadmissible.

As an additional ground for excluding the Warning Letter, the majority of the panel also concluded that it was unduly prejudicial (and admitted in an abuse of discretion).  Id. at 26.  Part of its prejudice was because it was “referred to repeatedly throughout trial” and “was mentioned at least fifteen times” in closings.  In addition, “Reports issued by government agencies, because of their ‘official’ nature, may well carry inordinate weight in the minds of jurors.”  Id. (quoting Boude v. Union Pac. R. Co., 277 P.3d 1221, 1225 (Mont. 2012)).  This analysis, while brief, can certainly apply beyond Arkansas.  It also gives a hint about what may happen next in this case.  The remaining $11,422,500 of the verdict was knocked out, but the DTPA claim (unlike the MFFCA claim) was not dismissed.  Maybe the AG (or rather those outside law firms who started the whole thing) will re-try the case without the key piece of evidence used in the first case.  Then again, maybe the AG will look at the somewhat extraneous comments in the decision about the drug being “highly beneficial,” “a tremendous breakthrough,” and a “miracle drug”—the last is a quote from the State’s expert—as suggesting what the Arkansas Supreme Court might do if it tackles preemption or another unresolved issue on the DTPA claim down the road.

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We are still trying to get our hands on the opinion [update – here it is], but we understand that the $1.2 billion verdict for the State of Arkansas over marketing of the antipsychotic drug Risperdal has been reversed.  We told you in our summary of the top cases of 2013 that we were following this appeal. Because we cannot yet quote from the Arkansas Supreme Court, we quote from an equally august group, ourselves.  In touting the reversal of a very similar suit in Louisiana  based on the criticisms we had made about the lower court decision, including basically presuming injury and causation from an allegedly misleading communication, we said “We hope that other courts will follow the lead of the Louisiana Supreme Court in requiring that plaintiffs prove the claims they assert. Even statutes with avowed remedial purposes are not supposed to be mere vehicles for ringing up damages against deep pockets defendants.  We also hope that the state AGs who outsource their work to plaintiff lawyers, or other governmental lawyers who get in bed with plaintiff lawyers in the hopes of big settlements and verdicts, give a little more thought to the process going forward.”  It looks like the Arkansas Supreme Court did its part.  Now for the state AGs to get the message.

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This post is a little different.  For one thing it’s more or less a rehash of a post by Jeff Orenstein, one of Reed Smith’s regulatory enforcement types, on one of the firm’s “branded” blogs.  DDL by contrast, is notoriously unbranded, since we have bloggers from different law firms.

Still, when we heard Jeff give an oral presentation recently on his top ten list of “country of origin” issues for pharmaceutical products (a lot of which is also relevant to medical devices), we thought, first, “we didn’t know that,” and second, that if we didn’t, our readers might not know it either.  As we listened to the presentation and learned about all the nasty problems that could befall a manufacturer that didn’t get these complicated “country of origin” (which we’re abbreviating “COO” from now on) rules right in its product information, we couldn’t help harking back to a phrase from our (or at least Bexis’) misspent youth – COO sounds like a “nexus of the crisis, and the origin of storms.”

So we thought we’d pass along to our readers ten things that you ought to know (but may well not) about COO in the pharmaceutical context:

1.         COO means different things to different federal agencies.

What the FDA requires drug labels to state about where a drug/device is manufactured isn’t going to help much with other federal agencies.  Except for prescription medical products produced essentially entirely in the United States, U.S. Customs and Border Protection (which we’ll call “Customs” for short) requires COO designations (technically referred to as “markings”).  For Customs purposes, a product’s COO isn’t what the FDA considers its place of manufacturer, but rather the country where all the various components (which may be a lot or a little) are “substantially transformed” into a new product.  What does that mean?  Basically, what comes out must have a different character and use from what went in.  So, a company might do a lot to a product, but if the aspect (for drugs, it’s called the “active pharmaceutical ingredient” or “API”) that creates the product’s medical benefit wasn’t changed, then the COO for Customs purposes remains the country from which that key aspect/API was imported.  Over-reliance on processing that doesn’t “substantially transform” APIs is the single most significant source of pharmaceutical COO mistakes.

There’s more, the COO for Customs purpose can differ from the COO for purposes of selling the product to the government.  “Made in the USA” claims involve yet another standard.  Finally, selling the product abroad can require a COO certificate based on still other standards imposed by foreign governments.  This stuff is important.  Mess it up, and the fines can be pretty big (although, again they vary).  See below.

2.         For Customs purposes the COO usually follows the source of clinical benefit/API.

The “essence” of a drug (less clear with devices) for customs purposes is its API.  That ingredient may be imported in raw form, and undergo all sorts of costly processing before being suitable for human consumption, but if it still does the same thing (has the same biological effect) then all that processing doesn’t amount to a hill of beans from the Customs standpoint.  For processing to cause a “substantial transformation” means that the character of the active ingredient must actually change.  That’s about as much as we can say, since more detailed analysis is very fact-sensitive, and varies from product to product, so manufacturers need somebody who understands both the law and the specifics of the particular product’s manufacture.

3.         The more things change, the more they change; changing suppliers often changes the COO.

Found a lower-cost supplier?  One better able to ship to your location?  Great, but remember to watch your COO.  If your new supplier is in a different country, and is supplying your active ingredient/API, the proper COO marking for the finished product probably changed too.  And God help you (or at least get legal help) if you buy the same API from multiple suppliers in different countries.  In that case, the proper COO for the product could vary from week to week, or from batch to batch – with all the attendant legal consequences of getting it wrong.  Customs doesn’t care about an importer’s logistics.  It requires each product, in the form it is shipped to the “ultimate purchaser,” to be marked with the proper COO.

4.         NAFTA has its own COO marking standard.

NAFTA – the North American Free Trade Agreement – has special COO marking rules for products originating in its member countries (United States, Canada and Mexico).  The “substantial transformation” test doesn’t apply.  NAFTA rules can be complex, but generally, where a product is manufactured from components originating in different countries, the COO will be a NAFTA country if all “foreign” (that is, non-NAFTA) materials used to make it have undergone processing that changed their tariff classification (another point where things can get complicated, but a change from a raw to a finished product usually does the trick).  For example, if the active ingredient/API is a German raw material, but it’s processed into a finished product in Mexico, then the NAFTA COO will most likely be Mexico, assuming other applicable requirements are met.

5.         Products with the wrong COOs are subject to high penalties.

Customs can penalize a manufacturer that marked its products with the wrong COO with extra duties of 10% percent of the appraised value of the finished products – not the raw material that caused the error.  Customs can go back and audit products for five years.  And these penalties, unlike most other Customs violations, aren’t waivable.  Fessing up and filing a “prior disclosure” (that is, before getting caught) of the violation with Customs doesn’t help.  The only way to avoid these big fines is to get the COO right in the first place.  You only get one chance – it better be right.

6.         An FDA manufacturing place of business most likely isn’t a product’s COO.

It’s rare that you hear on this blog that what the FDA wants doesn’t matter.  This is one of those times.  Yes, the FDA requires the “conspicuous” inclusion of the “place of business of the manufacturer, packer, or distributor.”  Customs, like the honey badger, doesn’t care.  What suffices for FDA purposes may or may not be the same country as the COO required by Customs.  An FDA “manufacturer” is a person performing “mixing, granulating, milling, molding, lyophilizing (look it up yourself if you don’t know), tableting, encapsulating, coating, sterilizing,” or certain other things.  A drug molded into tablets in the United States carries an FDA principal place of business in the US.  But if the API is imported (from a non-NAFTA country), then the “substantial transformation” test applies.  Tableting doesn’t usually change what the active ingredient does, so the Customs COO remains wherever the active ingredient was imported from.  Make sure to keep the two separate and distinct.  Use of the Customs COO in place of the FDA principal place of business might make the product “misbranded” under the FDCA.  The FDA can levy fines and seize the product, too.

7.         Still other COO standards come into play when a drug or device is sold to the U.S. government.

We’re not done yet.  The United States government buys lots of prescription medical products, and something called the “Trade Agreements Act (‘TAA’)” requires all goods sold to the government have been made in the United States or in certain designated countries.  The TAA follows Customs’ “substantial transformation” test but beware; big players such as China and India aren’t “designated.”

There’s still another distinction.  The “substantial transformation” test – for government procurement purposes – only applies to supply contracts for product purchases exceeding $202,000 (strange number, but that’s the law).  Under $202,000, and the procurement contract is instead subject to the Buy American Act (“BAA”).  The BAA has yet a different COO standard.  It gives preference to “domestic” products, which means goods both:  (1) manufactured in the United States and (2) consisting of components, 50% or more (by cost) of which are also are manufactured in the United States.

8.         Non-compliance with TAA/BAA in government procurement also has severe consequences. 

Ever heard of the False Claims Act?  A prescription medical product manufacturer/seller supplying the federal government with products falsely identified as TAA/BAA-compliant can be sued under the FCA.  In addition, it can lose its contract and, if things really go south, be subject to suspension, debarment, and/or criminal penalties.

9.         “Made in USA” should be handled with care.

Even if the correct COO of a product under the Customs’ tough “substantial transformation” test is the United States, be careful.  Manufacturers may understandably be eager to emphasize a product’s U.S. origin on the packaging or in marketing materials.  An even higher standard applies for “Made in the USA” claims (and equivalent statements).  These are governed by consumer protection laws administered by the FTC, and state attorneys general.  Only manufacturers of products “all or virtually all” made in the United States may legally represent those products as U.S.-made.  Customs only requires a COO when the product is foreign-made under its “substantial transformation” test.  The COO of a United States-origin (for Customs purposes) product can be left blank.  For prescription medical products that, while substantially transformed in the United States, aren’t “all or virtually all” U.S.-made, it’s probably best to do that – leave it blank.  Just as Customs doesn’t care about FDA standards, the FTC and state enforcement officers don’t care about Customs standards.

10.       Exports of prescription medical products require COO statements meeting the relevant foreign trading partner’s standards.

Exports (as opposed to imports) of prescription medical products also require compliance with the COO standards of the countries to which the products are being exported.  Foreign importers and customs authorities frequently demand their own “certificates of origin” − usually to establish eligibility for preferential tariffs under a particular free trade agreement  with the United States.  Here, exporters are at the mercy of each country’s divergent COO requirements. Each free trade agreement is different.  Different standards for various categories of products have been negotiated by the signatory countries.  Even if there’s no free trade agreement at all, the country of export may still impose its own COO standard for some other reason.  The most common (but by no means universal) standard for many countries is that they accept COOs for the “United States” if at least 50 percent of the product’s production costs originate in the United States.

*          *          *          *

Companies making prescription medical products are especially vulnerable to COO errors for several reasons.  First, they are typically subject to all these different (FDA, Customs, NAFTA, government procurement, and export) regulatory regimes.  Applicability of multiple, divergent standards greatly increases the risk of error.  Second, prescription medical product (and particularly pharmaceutical) manufacturers often get their active ingredients/APIs from multiple sources in different countries, and switch suppliers of such ingredients frequently.  That makes the proper COO (particularly for Customs purposes) something of a moving target.  It is essential that such companies update their COO determinations constantly, to make sure that their current determinations correctly reflect supply chain changes and that labeling, packaging, and marketing materials are up to date.  Third, and finally, compliance programs must be sufficiently robust to ensure the appropriate standards are applied, are applied correctly, and are updated in timely, ongoing fashion to account for supply chain changes.

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Ever since Mutual Pharmaceutical Co. v. Bartlett, 133 S. Ct. 2466 (2013), was decided, we’ve pointed out at every opportunity that its basic principle – that an immediate state-law “duty” is incompatible with an FDA pre-approval requirement, and therefore subject to impossibility preemption – should apply to any FDA (and probably other government agency) pre-approval requirement for any product, not just generic drugs.

We’ve highlighted some success, see Thompson v. Allergan USA, Inc., ___ F. Supp.2d ___, 2014 WL 308794 (E.D. Mo. Jan. 28, 2014) (non-generic dosage claim preempted); Guenther v. Novartis Pharmaceutical Corp., 2013 WL 4648449 (M.D. Fla. Aug. 29, 2013) (non-generic black box, dosage, comparative labeling claims either preempted or probably preempted), but we hadn’t seen any case actually taking on a design defect claim in the non-generic context.  Now we have.  See Cassel v. ALZA Corp., 2014 WL 856023 (W.D. Wis. March 5, 2014).  While Cassel contains some hopeful signs, the bottom line was not good – preemption motion denied.  However, in order to avoid preemption, Cassel was forced to contort state law in novel ways that we don’t think most courts would countenance.

Cassel involved a peculiar sort of non-generic drug – at least that’s what we glean from the opinion – a fentanyl analgesic patch.  Such a product has some of the characteristics of a drug, in that there’s fentanyl in it, and that’s a substance that meets the observation in Bartlett that “as a matter of “basic chemistry,” “because of [the drug’s] simple composition, [it] is chemically incapable of being redesigned.”  133 S. Ct. at 2475.  On the other hand, the product’s mode of administration, being a patch, is capable of being redesigned, and in fact had been.  See Cassel, 2013 WL 4648449, at *1 (discussing 2009 design change).

Continue Reading Nice Try, But No Brass Ring

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This post is from the non-Reed Smith side of the blog.

Have you ever told someone, “I’ll put it in the vault” or “not that there’s anything wrong with that”?  Or yelled “Serenity Now!” in a chaotic situation.  How about offered someone a “you are so good looking” after a sneeze?  If not, you probably still know who we mean by Jerry, Elaine, George and Kramer.  But, if you did answer yes to anyone of those questions, you probably also know Newman, Frank and Estelle, Tim Whatley, Mr. Pitt, Puddy, Jackie Chiles, Crazy Joe Davola, and Uncle Leo with no further introduction.

It’s been off the air for 15 years, but Seinfeld left such an indelible mark on pop culture that certain phrases and quotes bring us right back to the mid-1990s:  Soup Nazi, The Human Fund, shrinkage, stopping short.  We all became much more familiar with the babka and the marble rye.  And, after seeing them on the show, we knew we had met one of these people in real life: the close talker, the high talker, the low talker, the re-gifter, and the double-dipper.  Thanks to Seinfeld we know about anti-dentites, that soup isn’t really a meal, and that “schmoopie” married George Stephanopoulis.

And when it comes to skimming over part of a story, nothing is as effective as “yada yada yada.”  Of all the famous Seinfeldisms, the Paley Center named “Yada Yada Yada” the No. 1 funniest phrase on “TV’s 50 Funniest Phrases.”  So how did Seinfeld propel this rather ordinary saying that dates back to at least vaudevillian times into a pop culture phenomenon?   Because the gag on Seinfeld was what was being yada yada’d.  To most people, the phrase was used to skip mundane, uninteresting or repetitive details in a story.  But George’s girlfriend used it to gloss over habits such as shoplifting and skipping out on checks.  Ah, the beauty of Seinfeld.

Well, we are doing some yada, yada’ing ourselves today in the context of discussing the latest InFuse decision – Harris v. Medtronic, Inc., 2014 WL 866063 (Cal. Super. Feb. 27, 2014) (no pagination provided).  And, in our case we’ll come right out and tell you what we’re skipping – another discussion of Coleman v. Medtronic, Inc. You can read all our thoughts on that case here.    Taking a lesson from Seinfeld and George’s succinct girlfriend, we’re opting not to re-hash the many reasons we don’t like Coleman.  And, instead focus on some of the good we found in Harris; namely its rejection of our other two least favorite Infuse decisions — Ramirez v. Medtronic, Inc., 2013 WL 4446913 (D. Ariz. Aug. 21, 2013) and  Alton v. Medtronic, Inc., 2013 WL 4786381 (D.Or. Sep. 6, 2013).

Harris, being a California trial court decision, is of course bound by that state’s appellate court decision in Coleman.  So, plaintiff Harris got to keep her negligence and strict liability claims premised on a failure to file adverse event reports and her negligence claim premised on off-label promotion, but not her strict liability off-label promotion claim.  Yada, yada, yada.

The Harris court was faced with additional claims, however, not considered in Coleman.  First up – design defect.  Here, the plaintiffs relied heavily on Ramirez, which the court noted is the only Infuse decision to allow a design defect claim to proceed as not preempted.  Recognizing it as the outlier it is, the Harris court rejected the underlying premise of Ramirez that when a device is used off-label it is “effectively a different device than the one for which a PMA had been secured” and therefore the FDA has not established requirements applicable to the specific device at issue (the first step in Riegel preemption).  Instead, the court ruled:

Allowing Plaintiffs’ strict products liability design defect claim to proceed would permit a finding that a design defect rendered the Infuse device unreasonably dangerous even if Medtronic complied with all FDA regulations addressed to design. That would constitute imposition of requirements on the design of the device in addition to those mandated by the FDA through the PMA process.

The clear rejection of Ramirez in California is good news.

Next – fraud.  Again the Harris court refused to follow Ramirez, opting instead to apply the analysis used in Caplinger v. Medtronic, Inc., 921 F.Supp.2d 1206 (W.D. Okla. 2013) – discussed in our Infuse post here.   That’s more good news.

To the extent Plaintiff’s fraud claims are based on alleged misrepresentations and omissions in the actual warnings and labels accompanying the Infuse device, such claims are expressly preempted.  . . . To the extent Plaintiffs’ fraud claims are based on alleged misrepresentations and/or omissions regarding its practice of marketing off-label applications of the Infuse device, such as in reports to the FDA, such claims are impliedly preempted under Buckman, as such a claim is in substance a claim for violating the FDCA.

(citations omitted).  Even more good news, the court was unwilling to adopt the reasoning of Alton. Part of the ruling in Alton was that plaintiff’s fraud claim escaped preemption because it fit in “the second category of parallel claims contemplated in Lohr and its progeny, as a claim premised on conduct that contravenes state-law duties of such generality as not to present any risk of interference with the federal medical-device regulatory scheme.”  Alton, 2013 WL 4786381 at *27.  The Harris court disagreed with this reading of Lohr:

The court is unaware of any other decision in which Lohr has been interpreted as establishing two separate categories of parallel claims. . . .  Lohr does state that U.S.C. section 360k does not preempt State or local requirements that are “equal to, or substantially identical to, requirements under the act.”  This language comes directly from 21 CFR sections 808.1(d)(2) and 808.5(b)(l)(i), both of which have to do with the procedures to be followed by States and localities in applying for an exemption from Federal preemption for a particular requirement. Section 360k itself says only that a requirement “which is different from, or in addition to, any requirement applicable under this chapter to the device, and which relates to the safety or effectiveness of the device or to any other matter included in a requirement applicable to the device under this chapter” is preempted. In fact, the Lohr court’s discussion of the regulations was to illustrate that there were no State or local requirements at issue in that case that fell within the intended preemptive scope of section 360k(a). This portion of Lohr, however, cannot reasonably be read to mean that a requirement must be “substantially identical” in order to be “parallel.” Nor can the so-called “second category of parallel claims” articulated by the Alton court be reconciled with Riegel, which, while not expressly disapproving Lohr, clearly held that the concept of State or local “requirements” includes common law duties.  Accordingly, the court will not follow the trail blazed in Alton to decide whether Plaintiffs’ fraud claims are “genuinely equivalent” to applicable federal requirements for purposes of the express preemption analysis.

(citations omitted).  That’s a mouthful, but we like it.

But here is where we can get back to more yada yada’ing.  The court ultimately decides that “a state law fraud claim based on fraudulent statements made to promote off-label uses of a device are genuinely equivalent to a claim of misbranding under applicable federal law” and that therefore there is the possibility plaintiff could state a claim for fraud that is not preempted.  This is in line with the majority of Infuse decisions.  So, the last question is whether plaintiff pled this fraud claim with sufficient particularity to withstand a motion to dismiss.  The Harris court, somewhat hesitantly, said yes. Noting it was a “close call,” that the allegations of reliance “are far weaker,” and admonishing that success on the claim will require “proof of an actual link between [plaintiff and/or her surgeon] and the allegedly fraudulent promotional information and materials,” the court nevertheless ruled that for pleading purposes, plaintiff’s allegations were sufficient.

Following Coleman we have to look for bright spots in California where we can, and this is one of them.  The detailed reasoning by the Harris court and its rejection of the Infuse outliers leaves us feeling somewhat satisfied.   We may not be celebrating a Fesitvus quite yet, but the decision is also no Urban Sombrero.

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Maybe I can start a class action.  I mean, I find it annoying that convenience stores don’t carry cold 12-ounce soda cans anymore.  They don’t even carry the 16-oz bottles that existed years ago.  Nowadays, everything’s in a 20-ounce bottle.  But I don’t need 20 ounces of soda.  A twelve-ounce can is fine.  Heck, sometimes even an 8-ounce can is enough.  But at a convenience store, 8-ounce cans are kept next to the unicorn aisle.  Or try getting a 12-ounce cup of soda at a movie theater.  A half-filled “small” cup holds that much.  The cups should come with handles.  And how about the muffins we all now have in the morning?  At my local coffee/tea shop, they’re the size of Volkswagens.  They’re twice the size they were 5 years ago.  The muffin-top is bigger than the whole muffin used to be.

Class action plaintiffs to the rescue.  Well, it’s not a soda or muffin class action.  It’s prescription eye drops.  But the idea is the same.  In Carter v. Alcon Labs., Inc., 2014 U.S. Dist. LEXIS 32381 (E.D. Mo. Mar. 13, 2014), plaintiffs sought to certify a class under Missouri’s common law and Merchandising Practice Act because the smallest bottles of prescription eye drops contained more medication than the dosage for the recommended course of treatment.  For instance, the recommended seven-day course of treatment for Vigamox requires .8 mL, while the smallest bottle of Vigamox holds 3 mL of medication.

So they filed a class action.

And they lost. Fast.  It got only as far as a motion to dismiss.

Why?  In short, the plaintiffs got the benefit of the bargain.  They got what they paid for.  They had no loss:

Under the benefit-of-the-bargain test, which awards a prevailing party the difference between the value of the product as represented and the actual value of the product as received, Plaintiff has not suffered an ascertainable loss.  Plaintiff does not allege that the medication she purchased was anything other than represented or that it did not perform as intended.

The Court concludes that even without applying the benefit-of-the-bargain test for loss under the MMPA, Plaintiff has failed to state a claim.  Plaintiff’s theory of her loss is the difference between what Defendants charge for the medication bottle available to consumers and the price they would charge for a bottle with less medication.  However, even if Defendants sold bottles with less medication, Plaintiff has not suggested there is anything to preclude them from charging what they now charge for the bottles currently available for purchase. Plaintiff has cited no authority from any jurisdiction suggesting that a drug manufacturer’s choice of volume fill is an unfair practice, and this Court concludes that the Missouri Supreme Court would find that absent fraud or duress or price gauging, none of which were alleged here, no such cause of action exists under the MMPA.

Similarly, Plaintiff’s claims for unjust enrichment and money had and received also fail. . . .

Id. at *11-12.

When medication is involved, this makes a whole lot of sense.  Certainly for a branded manufacturer, there’s nothing to suggest that a bottle with less medication would cost meaningfully less.  Even we lawyers know that the vast amount of the cost of a distributing medication comes from developing it.  Even generic manufacturers have significant costs other than the medication itself.  Frankly, there seems to be a whole lot of other things that would be wrong with this type of claim.  But the court got rid of it in the simplest way.  Plaintiffs got what they paid for.

There was also a preemption issue here.  The defense argued that it couldn’t relabel or redesign the bottles for these generic eye drops because it needed FDA approval to do that.  The defense lost this argument, but only because it hadn’t sufficiently established the need for prior FDA approval.  We suspect that, if another defendant in another class action makes such a showing, there will be preemption.

In any event, these “overfill” class actions seem to be going nowhere.  Oh, well.  It seems that the next time we’re reading one of these opinions, we’ll still be doing it while gulping a 20-ounce soda and hacking away at a huge peach-apple-crumb muffin.  Things could be worse.

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We have been informed that Judge Carol Higbee, long-time Mass Torts judge for Atlantic County, announced yesterday that, effective sometime in late April/early May, she was being temporarily assigned to the Appellate Division of the New Jersey Superior Court.  It is possible that the assignment could become permanent, with that decision being made in or around September, 2014.

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Safe harbor.  We like the sound of that.  The term connotes a level of calmness and predictability that we find appealing in the regulation of drugs and medical devices, and we find ourselves writing about safe harbors a lot lately.  Bexis recently gave us his survey of safe harbors against state consumer fraud claims, and we commented just the other day that perhaps a safe harbor should apply in a class action alleging California consumer fraud claims based on purported overrepresentation of an antidepressant’s efficacy.  We doubted a safe harbor actually would apply in that case, but maybe we spoke too soon.

In Marcus v. Forest Laboratories, Inc., No. 13-11343-NMG, 2014 WL 866571 (D. Mass. Mar. 5, 2014), the District of Massachusetts applying California law found that California’s safe harbor applied to—wait for it—a class action alleging California consumer fraud claims based on purported overrepresentation of an antidepressant’s efficacy.  The plaintiffs in Marcus alleged that the FDA approved an antidepressant for adolescent use based on two studies showing statistically significant improvements compared against placebo.  Id. at *2.  Placebo-controlled studies are the gold standard, but according to the plaintiffs, the FDA set the bar too low.  It instead should have required a showing of “clinically significant” improvement over placebo, which would “examine whether the observed benefit of a drug outweighs the risks associated with the drug when compared to alternative, less risky treatments.”  Id. at *1.

In other words, the plaintiffs proposed a new, hypothetical standard under which the sale of the drug for adolescent use amounted to consumer fraud, even though the FDA had approved the drug for sale under the very real FDCA.  That sounds to us like plaintiffs attempting to apply California’s consumer statutes to condemn conduct that another law clearly permits.

It must have sounded that way to the district court too, because the count dismissed the complaint. As the court explained, the California safe harbor doctrine bars certain claims brought under California’s consumer statutes, and for the doctrine to apply,

another provision must actually “bar” the action or clearly permit the conduct. . . .  In other words, courts may not use the unfair competition law to condemn actions the legislature permits.

Id. at *3 (emphasis added) (quoting Cel-Tech Communications v. L.A. Cellular Tel. Co., 20 Cal. 4th 163 (1999)).  If the light is green, it cannot be consumer fraud to drive through the intersection. You get the idea.  In Marcus, the district court reasoned that Congress had entrusted the FDA to determine whether there is substantial evidence of efficacy for a particular purpose and whether a proposed label is false or misleading in any way.  Because the FDA had approved the antidepressant and its labeling, the safe harbor applied to bar claims that the labeling was false or misleading under California’s consumer laws.  Id. at *4.

It seems California’s safe harbor is more vital than we originally thought.  The court distinguished the case from cases involving food and homeopathic remedies, where the safe harbor did not apply, because prescription drugs are subject to greater and comprehensive federal regulation.  Id. at *4.  The court also distinguished cases involving alleged violations of federal law.  Id. at *5.  That seems obvious to us:  If federal law prohibited the conduct, it would not “clearly permit” the conduct and the safe harbor, by its own terms, would not be of any use.

Finally, the court rejected the novel argument that Wyeth v. Levine “calls into doubt” the viability of safe harbor provisions in state consumer protection statutes.  Id. at *5.  Plaintiffs sometimes treat Levine like is it some sort of all-purpose antidote to all they think is wrong with the law, but this argument can be seen only as a gargantuan stretch. The Supreme Court held in  Levine that FDA approval of prescription drug labeling does not necessarily result in implied federal preemption of state law failure-to-warn claims.  555 U.S. 555, 570 (2009).  Levine was about implied preemption, under which state-law gives way to federal law where it is impossible to comply with both.  (There are other forms of implied preemption, but “impossibility” preemption is the form most germane to prescription drugs.)  Implied preemption cannot be relevant where there is no state-law claim to begin with—for example, when a state-law creates a safe harbor into which the defendant can take refuge.  Kudos, we suppose, to the plaintiffs for thinking creatively, but we side the district court, which recognized that “Plaintiffs provide no justification to extend [Levine] to preclude state safe harbor defenses to claims arising under state consumer protection law and this Court has found no authority permitting it to do so.” Id. at *5.

So there you have it. The Marcus order is short and sweet, but it sure grabbed our attention. The present and future of drug and medical device class actions (to the extent there is any) will revolve around consumer protection statutes.  And while we will not shy away from opposing class certification in any class action, we should not forget that defenses may apply before a class certification motion is even a glimmer in counsel’s eye.  The defendants in Marcus did not forget, and they won.

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Howard v. Zimmer is an old case. It was filed in the Northern District of Oklahoma in 2002 and got transferred to the Northern District of Ohio for the Sulzer Hip and Knee MDL. In 2010, after not participating in a class action settlement in 2003 and having plaintiff’s claims carved up on summary judgment in 2006, Howard went up the Sixth Circuit, which held in 2010 that a claim for negligence per se—if Oklahoma law recognized it—would not be preempted.

Then the case was remanded back the original Oklahoma federal court, which referred to the Oklahoma Supreme Court the question of whether Oklahoma recognized negligence per se based on an alleged violation of the FDCA. The resulting “yes” to that question in March 2013 made #3 on our list of the worst decisions of 2013.  At that point, the case went back the Northern District of Oklahoma to see if plaintiff could actually offer admissible evidence to prove his remaining claim for negligence per se based on a violation of the FDCA. Howard surfaced again last week with Daubert challenge to a fair amount of plaintiff’s expert evidence. Somewhere in the interim, plaintiff had focused his negligence per se claim on the allegation that the Defendant’s manufacturing process allowed for some residue to remain on some portion of the particular knee implant used in plaintiff’s knee replacement surgery back in 2000. Howard v. Zimmer, Inc., No. 02-CV-0564-CVE-FHM, 2014 U.S. Dist. LEXIS 28758, ** 1-2 (N.D. Okla. Mar. 6, 2014). This claim sounds an awfully lot like manufacturing defect or negligent manufacturing and not really at like negligence per se based on a violation of the FDCA, but maybe a plaintiff in a case old enough to be reserving space for its bar mitzvah party should finally be showing whether he has any admissible evidence to support any claim linked to his injury.

Compared to what we have posted on in this case before, the Daubert decision was sound and not results-driven. The weakness of plaintiff’s experts could be viewed either as a shame given the judicial resources spent on the case or as a product of the particular non-preempted claim that plaintiff was left trying to prove. Either way, with plaintiff’s experts hamstrung, we expect Howard is nearing its end, especially if Defendant gets another shot at summary judgment.

The major part of the decision focused on the reliability of gas chromatography/mass spectrometry testing of the explanted device conducted by plaintiff’s expert to show residue—basically oil—was on the device when it was implanted. We know that our readers would appreciate an explanation of how gas chromatography and mass spectrometry work. Luckily, the internet is really cool, so we are not providing the explanation ourselves. Because the challenge here was to how the testing here was performed, as opposed to whether properly performed testing can ever be a reliable basis for expert opinions, the science behind the tests does not matter too much. Id. at **7-8. Also, the alleged methodologic failures were fairly basic when cast in laymen’s terms.

First, chain of custody for the implant was only established starting when the expert’s outfit got it, leaving open questions of what might have happened to it before then, innocently or otherwise. If what got tested was not what got explanted, then the testing can hardly be said to be useful to a jury. Second, part of the testing may have involved pouring a solvent into a plastic container, which itself could have produced some or all of the chemicals (hydrocarbons) that allegedly indicated possible residue oil from manufacturing the device. It was fairly obvious that some additional testing of the container should have been done to rule it out as a source of the chemicals. Third, although plaintiff contended only one part of the device had some post-manufacturing residue on it—and instructed the expert to only test it—the testing was done on the whole device together, including a plastic part that arguably could have produced the chemicals at issue when put in contact with the solvent. Following steps to avoid false results is fairly typical of good science. Fourth, the plaintiff’s expert never tested for the specific lubricants used in manufacturing the device, but only tested some generic mineral oil, which may or may not have the same mix of hydrocarbons.

Rather than resolving these questions or determining that success on any one challenge would have been sufficient to knock out the testing, the court held that “it is clear that the combination of the four errors is sufficient” to find the testing unreliable. Id. at ** 13-14. We might have preferred if the court had stated this as a failure of plaintiff to establish the reliability of the testing, as it was clearly plaintiff’s burden to do. The court had indirectly quoted Paoli for “any step that renders the analysis unreliable . . . renders the expert’s testimony inadmissible. This is true whether the step completely changes a reliable methodology or merely misapplies that methodology.” Id. at * 13 (quoting Mitchell v. Gencorp Inc., 165 F.3d 778, 783 (10th Cir. 1999)). Then the court found it “unclear” if the hydrocarbons found in the testing could have come from the lubricants used to manufacture the part at issue, as opposed to from the container, another part, or some post-explant contamination. Id. at * 14. So, this really does sound like the plaintiff not carrying his burden and we are content.

We were also pleased that all opinions based on the unreliable testing were excluded without any particular analysis. The tidy decision to exclude regulatory opinions from the expert who did the testing was also good. He denied expertise in FDA’s regulation of medical devices, but got a “general idea of what needs to be done” from internet research. Not enough. Id. at ** 16-17. Just like conducting the internet research we advocated above would not confer expertise in gas chromatography. Unfortunately, this expert did offer some opinions based neither on the testing or his non-existent regulatory expertise, so he was not excluded entirely.

That was not the case for Dr. Fred Hetzel, whom we have mentioned before. In addition to opinions based on the unreliable testing, he tried to offer legal conclusions about the meaning of FDA regulations on Good Manufacturing Practice regulations and speculation that metallic residue also could have been on the device when it was implanted. As to the first part, it was apparently “law of the case” from way back when the case was back in the MDL that Hetzel was “not competent to testify to legal conclusions about what the GMPs require.” Id. at * 18. This is an interesting limit to have in a case where the plaintiff was trying to proceed on the theory that the violation of those regulations constituted negligence per se. As to the second part, Hetzel basically admitted that he had no evidence of any metallic residue on plaintiff’s device, in part because relevant evaluating and testing was not performed. Id. at ** 18-19. This made it easy for the court to find opinions on metallic particulates unreliable—and obviously irrelevant.

The last part of the decision concerned the attempt of a treating opinion to ascribe the failure of plaintiff’s knee replacement surgery to an issue with the manufacture of the device based on his experience that he saw a similar course with another patient with the same device. Opinions based on “clinical experience” often get offered by plaintiff and defense experts, particularly surgeons, and it can be hard to sort out when an opinion is simply based on what amounts to a comparison to the expert’s own unpublished case report or on something more substantial. The court’s analysis was direct and logical, so we will just insert it:

There is no evidence that any further scientific inquiry was conducted to determine the extent of the similarities between [plaintiff’s] experiences and those of the other patient. The sole basis for Dr. Robertson[‘s] opinion appears to be that both [plaintiff] and the other patient had aseptic loosening and that both patients’ implants were easier to remove than anticipated. Plaintiffs have failed to establish that this comparison is reliable. Plaintiffs have not provided evidence that this comparison has been subject to peer review and publication, that there is an established rate of error for this comparison, or that this comparison has general acceptance. See Bitler v. A.O. Smith Corp., 400 F.3d 1227, 1233 (10th Cir. 2005). Dr. Robertson’s methodology for reaching the conclusion that [plaintiff] and his other patient’s experiences were substantially identical is insufficiently rigorous, and, as a result, his opinion should be excluded. See Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137 (1999) (“[The objective of Daubert’s gatekeeping requirement] is to make certain that an expert, whether basing testimony upon professional studies or personal experience, employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field.

Id. at * 22-23 (record cite omitted). That is dead on and even introduced the burden issue we harped about above. As its parting shot, the court dismissed the argument that cases providing for the admissibility of prior accidents (or ADEs or MDRs for our typical cases) do not support an expert’s reliance on a single prior patient for a causation opinion. Id. at ** 23-24.

We hope that we are nearing the end of Howard, as it seems to have been a long and expensive exposition of a principle we find self-evident: not every failed surgery with a medical device gives rise to a viable cause of action against the device’s manufacturer. With close to twelve years of litigating, including a bad preemption decision by the Sixth Circuit and a really bad negligence per se decision by the Oklahoma Supreme Court, it may be that the case was an exercise in futility from the start, because there was never anything wrong with the device. (And, much like Howards End, movies where Antony Hopkins does not play a psychopath can run a little long.)

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