Private plaintiffs love to scream “fraud on the FDA”!  Agency fraud is their magic potion for dissolving any FDA action that they don’t like.  Just assert that the FDA was bamboozled and invite some jury somewhere to ignore what the FDA actually did.  Unfortunately for the other side, Buckman Co. v. Plaintiffs Legal Committee, 531 U.S. 341 (2001), precludes private plaintiffs from bringing such allegations bases on state tort law.  The FDCA is quite clear, in 21 U.S.C. §337(a), that only the government – not private plaintiffs – may seek to enforce the Act.

In Buckman, the Court held (unanimously), first, that “fraud-on-the-FDA claims inevitably conflict with the FDA’s responsibility to police fraud consistently with the Administration’s judgment and objectives.”  Id. at 350.  That’s rather obvious, because the logic of any agency fraud claim is that “fraud” allows a factfinder to conclude that, if not defrauded, the agency wouldn’t have done what it did.  That presents a rather raw conflict with whatever the agency actually did, which (unless revoked by the affected agency) is a federal decision presumably still in effect.

Second, in the context of the FDCA specifically, the Court recognized that Congress did not want private individuals running around purporting to enforce any of the many requirements imposed by the FDA under the Act.  That’s the §337(a) aspect:  “The FDCA leaves no doubt that it is the Federal Government rather than private litigants who are authorized to file suit for noncompliance with the medical device provisions:  ‘[A]ll such proceedings for the enforcement, or to restrain violations, of this chapter shall be by and in the name of the United States.’”  531 U.S. at 349 n.4 (quoting §337(a)). “[W]e have clear evidence that Congress intended that the MDA be enforced exclusively by the Federal Government.”  Id. at 352 (again citing §337(a)).

But Buckman involved only state-law claims and thus preemption was easily invoked to prevent both the inherent conflict and the private enforcement problems identified by the Court.  So Buckman does not directly prohibit private litigants from using a federal statute to assert purported fraud-on-the-FDA claims.  One federal statute does not preempt another.  POM Wonderful LLC v. Coca-Cola Co., 573 U.S. 102, ___, 134 S. Ct. 2228, 2236 (2014) (“the alleged preclusion of a cause of action under one federal statute by the provisions of another federal statute” “is not a pre-emption case”).  There are at least four types of federal statutes that we expect plaintiffs to use to attempt private enforcement of fraud-on-the-FDA claims:  the False Claims Act (“FCA”), the Lanham Act, RICO, and antitrust statutes.  Most of the action, particularly recently, has involved the FCA.

There are other types of wanna-be private FDCA enforcement than fraud on the FDA – that’s what POM Wonderful was about (FDA-permitted food labels that allegedly deceived the public, not the FDA) – but we’re more interested in Buckman than anything else, so we wanted to see how fraud-on-the-FDA claims specifically have fared, when asserted under these other federal statutes.

Most recently, in a FCA decision that we discussed here, the First Circuit rejected allegations that were little different, substantively, from those that had produced Buckman itself.  Plaintiff alleged that the defendant “made a series of false statements to the FDA . . ., but for which the FDA would not have approved the [product] or would have withdrawn that approval.”  United States ex rel. Nargol v. DePuy Orthopaedics, Inc., 865 F.3d 29, 31 (1st Cir. 2017).  Based on those allegations, the Nargol plaintiffs claimed the every use of the product was as false claim – without the FDA’s (allegedly fraudulently obtained) approval, “doctors would not have certified the devices for government reimbursement.”  Id.  The First Circuit held, in effect, “hell, no.” The FDA was aware of all the mud the plaintiffs threw against the wall and did not rescind its decision:

Such very strong evidence [of immateriality] becomes compelling when an agency armed with robust investigatory powers to protect public health and safety is told what Relators have to say, yet sees no reason to change its position.  In such a case, it is not plausible that the conduct of the manufacturer in securing FDA approval constituted a material falsehood capable of proximately causing the payment of a claim by the government.  Ruling otherwise would “turn the FCA into a tool with which a jury of six people could retroactively eliminate the value of FDA approval and effectively require that a product largely be withdrawn from the market even when the FDA itself sees no reason to do so.”  [T]here is no allegation that the FDA withdrew or even suspended product approval upon learning of the alleged misrepresentations.

Id. at 35 (citations omitted).  Thus, “the FDA was paying attention,” but the Agency “viewed the information . . . differently than [plaintiffs] do.”  Id.

The government, having heard what [plaintiffs] had to say, was still paying claims not because of what was said to or by the doctors, but because the government through the FDA affirmatively deemed the product safe and effective.  And, absent some action by the FDA, we can see no plausible way to prove to a jury that FDA approval was fraudulently procured.

Id. at 36.  So, rather than preemption, Nargol disposed of fraud on the FDA-based FCA claims on materiality grounds, as long as the FDA (as is 95%+ the case) did not act on the purported fraud.  That’s basically Buckman modified by that decision’s two-justice concurrence that a different result might occur had the FDA itself found fraud.  531 U.S. at 353-55 (Stevens & Thomas, JJ. concurring).

The omitted citations in our quote from Nargol were to an earlier First Circuit decision that reached a similar result, D’Agostino v. ev3, Inc., 845 F.3d 1 (1st Cir. 2016).  In D’Agostino (which we previously discussed here), the First Circuit saw FCA-based fraud-on-the-FDA claims for what they really were, an attempt to hijack the FCA and turn it into a vehicle for second-guessing FDA decisions:

To rule otherwise would be to turn the FCA into a tool with which a jury of six people could retroactively eliminate the value of FDA approval and effectively require that a product largely be withdrawn from the market even when the FDA itself sees no reason to do so.  The FCA exists to protect the government from paying fraudulent claims, not to second-guess agencies’ judgments about whether to rescind regulatory rulings.

Id. at 8 (citation omitted).  Thus, the same policy reasons the Supreme Court gave for preemption in Buckman all counseled against recognizing agency fraud claims under a federal statute:

The collateral effects of allowing juries in qui tam actions to find causation by determining the judgment of the FDA when the FDA itself has not spoken are akin to those practical effects that counsel in favor of not allowing state-law fraud-on-the-FDA claims.  See Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341, 349-51 (2001).  If jurors in a single qui tam case could determine precisely what representations were essential to approval, which experts to believe, and how the FDA interpreted submissions made to it, some potential applicants who would otherwise seek approval for new products might be deterred, others might swamp the FDA with more data than it wants, and the “FDA’s responsibility to police fraud consistently with the Administration’s judgment and objectives” might be undercut.  Id. at 350.

Id. at 8-9.

Additionally, as already mentioned in connection with Nargol, the D’Agostino decision also relied upon the “demanding” materiality standard for “implied certification” FCA claims.  Id. at 7.  That agency fraud supposedly “could have” influenced FDA approval wasn’t enough.  “[C]ould have . . . falls short of pleading a causal link between the representations made to the FDA and the [false claim] payments.”  Id.

If the representations did not actually cause the FDA to grant approval it otherwise would not have granted, [the government] would still have paid the claims. In this respect, [relator’s] fraudulent inducement theory is like a kick shot in billiards where the cue ball “could have” but did not in fact bounce off the rail, much less hit the targeted ball.

Id.  Moreover, the D’Agostino fraud-on-the-FDA allegations failed for lack of causation.  If the FDA’s response to the fraud allegations is “doesn’t impress me much,” and the FDA thus doesn’t rescind its decision, then causation is impossible – and that’s what happened in D’Agostino:

In the six years since [relator] surfaced the alleged fraud, the FDA has apparently demanded neither recall nor relabeling of [the product] − this notwithstanding the agency’s [list of enforcement options].  The FDA’s failure actually to withdraw its approval . . . in the face of [plaintiff’s] allegations precludes [plaintiff] from resting his claims on a contention that the FDA’s approval was fraudulently obtained.

Id. at 8.  “[C]ausation is an element of the fraudulent inducement claims [plaintiff] alleges and . . . the absence of official action by the FDA establishing such causation leaves a fatal gap.”  Id. at 9.

In Southeast Laborers Health & Welfare Fund v. Bayer Corp., 444 F. Appx. 401, 410 n.2 (11th Cir. 2011), the court held that plaintiffs could not pursue a fraud on the FDA-based RICO causation theory.  However, the court’s discussion of RICO simply referred back to its prior discussion of why a similar state-law claim could not survive:

A theory of causation relying solely on an allegation that the medication in question would not have been on the market absent the alleged fraudulent conduct is no more than a state law “fraud on the FDA” theory, a theory that has been specifically rejected by the Supreme Court. . . .  Accordingly, [our prior decision] could not have implicitly approved of a state law “fraud on the FDA” theory of causation . . . whereby a third-party payor is permitted to state a causal nexus between the alleged fraudulent conduct and the payor’s ascertainable loss by simply asserting that absent the allegedly fraudulent conduct, the FDA would not have approved the medication to be on the market.

Id. at 407 (Buckman discussion omitted).

Those are all the appellate cases having anything to do with agency fraud that cite Buckman in the same paragraph as one of the four federal statutes we earlier identified.  As for district courts, United States ex rel. v. Medtronic, Inc., 2017 WL 4023092 (C.D. Cal. Sept. 11, 2017), likewise rejected a fraud on the FDA-based FCA claim:

[C]laims of fraud are disfavored if made by third parties who seek to second guess a decision by the FDA to certify a device.  Relator’s claims are in effect such a challenge as to the decision of the FDA to grant §510(k) clearance for the Subject Devices. Alleged fraudulent conduct directed to the FDA, without more, is inadequate to support an FCA claim.  [discussion of Buckman omitted]

Given the resources available to the FDA to investigate and approve medical devices, and to pursue remedies for alleged violations that arise in connection with the process, the policy concerns expressed in [Buckman] are material here.  The premise of the alleged fraud in the FAC is that Defendants misled the FDA during the §510(k) certification process.  However, an FCA action is not the proper way to bring such a claim.

Id. at *7 (citing inter alia the district court opinion in D’Agostino, 153 F. Supp.3d 519).

On the other side, we have also found a couple of district court FCA cases that have allowed the sort of fraud on the FDA-based allegations that Nargol and D’Agostino reject.  See United States ex rel. Brown v. Pfizer, Inc., 2016 WL 807363, at *9 (E.D. Pa. March 1, 2016) (“The claims in Buckman were state law tort claims, not claims brought under the FCA.  Defendant has provided no authority, and we are aware of none, that has extended the holding in Buckman to FCA claims.”); United States ex rel. Krahling v. Merck & Co., 44 F. Supp. 3d 581, 593 (E.D. Pa. 2014) (“alleg[ations] that Defendant consistently and deliberately withheld pertinent information as to the safety and efficacy of a medication from the government . . . is [a] grounds for FCA liability.”).  Neither of these cases had the benefit of Nargol or D’Agostino, and neither addressed causation/materiality, so it is questionable whether they would be decided in the same fashion today.

Beyond the FCA, we found a magistrate’s opinion, Meijer, Inc. v. Ranbaxy Inc., 2016 WL 4697331 (Mag. D. Mass. Sept. 7, 2016), that the case “present[ed] an issue of apparent first impression: whether Sherman Act claims . . . may be predicated on an underlying fraud on the [FDA].”  The Magistrate effectively gave antitrust plaintiffs free rein to assert fraud-on-the-FDA claims:

The FDA’s enabling statute does not entrust it with policing antitrust or RICO; therefore, Plaintiffs’ claims do not usurp the agency’s statutory right to… calibrate a measured response to alleged fraud committed against it.  The question of whether or not particular acts of regulatory gaming harm competition is and should be an antitrust question

Id. at *11 (citations and quotation marks omitted).  See Id. at *19 (“these claims sound in antitrust, not violations of the FDCA”).  We note that Meijer evidently differs from the vast majority fraud-on-the-FDA pleadings, in that the plaintiffs allege that the FDA actually did determine that it had been misled and took affirmative corrective action.  Id. at *5, 13.  Perhaps that is the reason that Meijer nowhere cited the otherwise extremely pertinent D’Agostino district court decision.  Also of interest, permission for an interlocutory appeal has been granted, Meijer, Inc. v. Ranbaxy Inc., 245 F. Supp.3d 312 (D. Mass. 2017), and that appeal in pending in the First Circuit.  In the interim, of course, the First Circuit has decided both Nargol and D’Agostino since the district court originally decided Meijer.

Finally, we expected to find agency fraud claims brought under the Lanham Act, but didn’t.  There are certainly enough other types of attempted private FDCA enforcement that have been asserted under the Lanham Act.  But our search (which required the term “Lanham” to appear in the same paragraph as “Buckman” or several variants of “fraud on the FDA”) didn’t produce anything directly on point.  The closest approximation was Intra-Lock International, Inc. v. Choukroun, 2015 WL 11422285 (S.D. Fla. May 4, 2015), which alleged the sale of a “medical device” without getting any form of FDA pedigree.  There was no fraud on the FDA, because there were no interactions with the FDA at all. The Lanham Act claim in Intra-Lock was dismissed because plaintiff’s theory of selling a medical device without a license was purely a violation of the FDCA.  Id. at *7.  But the case wasn’t – at least overtly – a true agency fraud claim.  Cf. Organ Recovery Systems, Inc. v. Preservation Solutions, Inc., 2012 WL 116041, at *7-8 (N.D. Ill. Jan. 16, 2012) (allowing non-FDA-related Lanham Act claims while making clear that plaintiff’s preempted agency fraud claims were not based on the federal statute).

So far, there hasn’t been an appellate court in the country that has allowed a private plaintiff to avoid Buckman by bringing a fraud-on-the-FDA claim disguised as a federal statutory claim.  While we’re not out of the woods, yet, the current trend can be described as favorable.

Today’s post is an update to our post from just a few weeks ago regarding McWilliams v. Novartis AG, No. 2:17-CV-14302 (S.D. Fla.). At that time, the court denied summary judgment on plaintiff’s failure to warn claims, but applying New Jersey law dismissed plaintiff’s claim for punitive damages. Since the case involves an FDA-approved prescription drug, having found that New Jersey law applied to the punitive damages claim, the decision to dismiss seems very straightforward to us because according to the New Jersey Products Liability Act (“NJPLA”):

Punitive damages shall not be awarded if a drug or device or food or food additive which caused the claimant’s harm was subject to premarket approval or licensure by the federal Food and Drug Administration.

N.J. Stat. Ann. § 2A:58C-5. But plaintiff didn’t think that was where the story should end, so she filed a motion for reconsideration. Look before you leap. Be careful what you ask for. You don’t always get what you want. Whatever adage you want to use, the bottom line is still no punitive damages.

Plaintiff’s argument was solely focused on the exception to the NJPLA’s ban on punitive damages for prescription drugs. That exception says that the prohibition on punitive damages does not apply “where the product manufacturer knowingly withheld or misrepresented information required to be submitted under the agency’s regulations, which information was material and relevant to the harm in question.” N.J. Stat. Ann. § 2A:58C-5. In its decision last month, the court held that plaintiff had not argued that the exception applies and so the court did not have to address it. McWilliams v. Novartis AG, 2018 U.S. Dist. LEXIS 113862, *22 n.3 (S.D. Fla. Jul. 9, 2018).

In her motion for reconsideration, plaintiff pointed to a footnote in her opposition to the motion for summary judgment in which she did argue that she had adduced evidence of information withheld from or misrepresented to the FDA that made whether the exception applied a triable issue of fact. McWilliams v. Novartis AG, 2018 WL 3637083, *2 (Jul. 31, 2018). That footnote also stated plaintiff’s belief that “punitive damages under New Jersey law are not preempted.” Id. (citations omitted).

The court agreed that it had not considered plaintiff’s argument regarding the punitive damages exception and so granted plaintiff’s request to consider it. Id. And upon considering it, promptly concluded that it was indeed preempted.

If we’re talking about a misrepresentation to the FDA, we’re talking about fraud-on-the-FDA, so we’re talking about Buckman. It feels like a direct line to us. An express even. No stops, twists, turns, or curves. The exception to the punitive damages ban in the NJPLA is a fraud-on-the-FDA claim and Buckman says those are not allowed.  The federal circuit courts that have considered the issue (in the context of similar provisions of Michigan and Texas law) are split with the Fifth and Sixth Circuits finding the exception preempted and the Second Circuit not. Compare Garcia v. Wyeth-Ayerst Labs., 385 F.3d 961 (6th Cir. 2004) and Lofton v. McNeil Consumer & Specialty Pharmaceuticals, 672 F.3d 372 (5th Cir. 2012) with Desiano v. Warner-Lambert & Co., 467 F.3d 85 (2d Cir. 2006), aff’d by equally divided court, 552 U.S. 440 (2008). We discuss the split in more detail here, and we’re guessing we don’t need to tell you on which side of the issue we come down.

Fortunately the court in this case was persuaded that the punitive damages exception is “substantially the same” as fraud-on-the-FDA and therefore preempted by Buckman – noting that that was in fact the position of the majority of courts to have considered the issue. McWilliams, 2018 WL 3637083, *3. Another notch on the Garcia/Lofton side of the divide.

With Bexis having originally conceived the preemption argument that became Buckman Co. v. Plaintiffs Legal Committee, 531 U.S. 341 (2001), we are always on the lookout for ways in which plaintiffs attempt to circumvent Buckman’s result and thus  to pursue private litigation over fraud on the FDA.

Plaintiffs love to claim fraud on the FDA. It’s their all-purpose response to any FDA action that they don’t like.  For over fifteen years, now, Buckman has severely cramped their style.

One group of plaintiffs thought they had found their way around Buckman – relators bring cases under a federal statute, the False Claims Act, 31 U.S.C. §3729 (“FCA”).  Since the FCA is a federal statute, the preemption rationale by which the FDCA, and specifically 21 U.S.C. §337(a), prohibiting private enforcement, bars conflicting state-law theories would not apply.  These plaintiffs thought they had reached the promised land.

Not so fast.

Actually, all they’d come up with were a few bits of legal trumpery. The Oxford Dictionary offers four definitions for trumpery:

  • “Attractive articles of little value or use.”
  • “Practices or beliefs that are superficially or visually appealing but have little real value or worth.”
  • “Showy but worthless.”
  • “Delusive or shallow.”

When the word fits, use it. All the definitions (the first two are nouns; the last two adjectives) fit here.

We saw the end coming, in this post, discussing United States ex rel. D’Agostino v. EV3, Inc., 153 F. Supp.3d 519 (D. Mass. 2015), and it has now drawn nigh.  First, D’Agostino was affirmed. D’Agostino v. ev3, Inc., 845 F.3d 1 (1st Cir. 2016).  We discussed that decision, with great glee, here.  Fraud on the FDA, unless the FDA actually found fraud, didn’t cut it under the FCA, because causation would be entirely speculative – plaintiffs would have to prove a counterfactual hypothesis, that the FDA would have done something other than what it in fact did:

If the representations did not actually cause the FDA to grant approval it otherwise would not have granted, [the government] would still have paid the claims.  In this respect, [relator’s] fraudulent inducement theory is like a kick shot in billiards where the cue ball “could have” but did not in fact bounce off the rail, much less hit the targeted ball.

Id. at 7.  Where the FDA didn’t act on an FCA plaintiff’s allegations, those claims are mere trumpery.  The materiality standard for FCA claims is tough – “[i]t is a ‘demanding’ standard.”  Id. (quoting Universal Health Services, Inc. v. United States, 136 S.Ct. 1989, 2003 (2016)).  If it’s not enough to impress the FDA directly under the FDCA, purported fraud on the FDA is certainly not enough to move the needle under the FCA.

D’Agostino was good, but a more recent case, United States ex rel. Nargol v. DePuy Orthopaedics, Inc., 865 F.3d 29 (1st Cir. 2017), is even better.  The allegations in Nargol were practically indistinguishable from what the Bone Screw plaintiffs alleged two decades ago in Buckman itself.  The plaintiff, a pair of doctors who “claim to be experts in hip-replacement techniques and devices,” id. at 31, claimed that the manufacturer of a such a device “made a series of false statements to the FDA . . ., but for which the FDA would not have approved the [product] or would have withdrawn that approval.”  Id. at 32.  Sounds like a broken record to us:

Plaintiffs say petitioner made fraudulent representations to the Food and Drug Administration (FDA or Administration) in the course of obtaining approval to market the [product]. . . .  Had the representations not been made, the FDA would not have approved the devices, and plaintiffs would not have been injured.

Buckman, 531 U.S. at 343.  This plaintiff-side trumpery also reminds us of an advertising “slogan” from the Onion.  The only difference between Nargol and Buckman were the purported damages – while Buckman invoked fraud on the FDA to allege that every use of the device in question was automatically a tort, Nargol pushed the same theme to claim that every such use (on Medicare and certain other patients) was automatically a false claim.

Talk about allegations “of little use or value.”

Focusing on the claims, “whether direct or indirect, that rest on the allegation that [defendant] misrepresented the safety and effectiveness of the product’s design in order to secure or maintain FDA approval,” the panel “appl[ied and extend[ed]” D’Agostino to affirm dismissal.  Id. at 31, 34.  Unlike D’Agostino, which had involved a PMA medical device, Nargol involved a device that had been cleared for marketing as “substantially equivalent” under so-called “§510(k) clearance.” Id. at 34.  That difference didn’t matter, since the claims in both cases sought to attack the integrity of the process by which the FDA allowed the products in question to be marketed.

The claim in this case is not quite on all fours with the claim we confronted in D’Agostino because the FDA does not independently assess the safety and effectiveness of a [510(k)] medical device. . . .

Nevertheless, the process constitutes the government’s method of determining whether a device is safe and effective as claimed.  That determination is what makes the product marketable, and Relators offer no suggestion that government reimbursement rules require government health insurance programs to rely less on section 510(k) approval than they do other forms of FDA approval.

Id. (emphasis added) (citations to Lohr and Buckman omitted).  We would be remiss if we failed to note that, in this respect Nargol is congruent with what the FDA itself said earlier this year – that, yes, the 510(k) process does involve determinations of device safety and effectiveness.  Lohr is anachronistic on this point, and will eventually be reconsidered.

But we digress.  Back to fraud on the FDA, where Buckman, by comparison, isn’t out-of-date at all.

The FDA, as Buckman observed, wields plenty of tools to protect itself from being defrauded and to punish anyone so bold as to try.  531 U.S. at 349 (listing administrative powers).  Its lack of exercise of such powers in Nargol demonstrates the trumpery nature of the plaintiffs’ claims:

The FDA, in turn, possesses a full array of tools for “detecting, deterring, and punishing false statements made during . . . approval processes.”  Its decision not to employ these tools in the wake of Relators’ allegations so as to withdraw or even suspend its approval of the . . . device leaves Relators with a break in the causal chain between the alleged misstatements and the payment of any false claim.

865 F.3d at 34 (emphasis added) (Buckman citation omitted).  For this reason, the FDA’s decision not to act “also renders a claim of materiality implausible.”  Id.

Even in an ordinary situation not involving a misrepresentation of regulatory compliance made directly to the agency paying a claim, when “the Government pays a particular claim in full despite its actual knowledge that certain requirements were violated, that is very strong evidence that those requirements are not material.”

Id. at 34-35 (quoting UHS, 136 S. Ct. at 2003).  Such evidence is not just “strong,” but “compelling” when “an agency armed with robust investigatory powers to protect public health and safety is told what Relators have to say, yet sees no reason to change its position.”  Id. at 35.

Thus, without an FDA finding that it was defrauded, fraud on the FDA allegations by FCA relators are both too speculative to plead causation plausibly and not material.  That’s not quite preemption but is satisfyingly close.  Fraud on the FDA allegations, without support from the FDA itself, amount to trumpery:

[T]here is no allegation that the FDA withdrew or even suspended product approval upon learning of the alleged misrepresentations.  To the contrary, the complaint alleges that Relators told the FDA about every aspect of the design of the . . . device that they felt was substandard, yet the FDA allowed the device to remain on the market. . . .  Such evidence does show that the FDA was paying attention.  But the lack of any further action also shows that the FDA viewed the information, including that furnished by Relators, differently than Relators do.

Id. at 35 (emphasis added).  Right.  The FDA considered these allegations to be fake news.

Plaintiffs had a fallback position – that even after the device was approved, its mere use could constitute a “false claim.”  To wit:  “In theory, a product may be sufficiently ‘safe’ and ‘effective’ to secure FDA approval for a given use, yet its use might nonetheless not be sufficiently ‘reasonable and necessary’ for patient care to warrant Medicare reimbursement.”  Id.  More trumpery, held Nargol.  The “complaint was devoid of particularized allegations,” the differences being claimed were within the “maximum failure rate provided under industry guidelines,” and ultimately “simply runs Relators back into” their fraud on the FDA claims.  Id. at 36.  Thus, no causation and no materiality:

We see no reason, though, why such a likely and customary repetition of the statements made to the FDA renders it more plausible that a materially false statement caused the payment of a claim that would not have been made otherwise.  The government, having heard what Relators had to say, was still paying claims . . . but because the government through the FDA affirmatively deemed the product safe and effective.

Id..  Yes, a 510(k) clearance means “the FDA affirmatively deemed the product safe and effective.”

Ultimately D’Agostino prevailed.  Plaintiffs “offer[ed] no rebuttal at all to D’Agostino’s observation that six jurors should not be able to overrule the FDA.”  Id.  Their arguments “offer[ed] no solution to the problems of proving that the FDA would have made a different approval decision in a situation where a fully informed FDA has not itself even hinted at doing anything.”  Id.

Between them, D’Agostino and Nargol should slam the door on plaintiffs’ attempt to assert fraud on the FDA under the guise of FCA claim (unless the FDA itself has reached the same conclusion).  See In re Plavix Marketing, Sales Practice & Products Liability Litigation (No. II), 2017 WL 2780744, at *21-23 (D.N.J. June 27, 2017) (rejecting similar FCA fraud on the FDA allegations against prescription drug).  Moreover, the emphasis in these cases on the speculative nature of attempting proof of what the FDA might have done if presented with a different set of facts also casts doubt on the Third Circuit’s terrible Fosamax decision, which, as we have pointed out, would saddle juries with the task of doing just that.

Ever since Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001), held that state-law claims alleging fraud on the FDA are preempted, plaintiffs have been attempting to find some other way of bringing claims that attribute FDA actions to a defendant’s false pretenses.  Since preemption is based on the Supremacy Clause, and the constitutional relationship between the federal and state legal systems, the doctrine doesn’t apply where recovery is sought under a federal statute.  Since the False Claims Act (“FCA”) is a federal statute, sporadic attempts have been made to bring private fraud-on-the FDA-claims under that statute.  Bexis, who invented what became the Buckman fraud-on-the-FDA/implied-preemption defense in the Bone Screw litigation, even worked on an amicus brief in one such case, United States ex rel. Gilligan v. Medtronic, Inc., 403 F.3d 386 (6th Cir. 2005), that was ultimately decided (favorably to the defense) on other grounds.

A little less than a year ago we reported on an excellent FCA result in United States ex rel. D’Agostino v. EV3, Inc., 153 F. Supp.3d 519 (D. Mass. 2015).  Ever since we’ve been holding our breath, because the First Circuit has been known for pro-plaintiff rulings in cases against our drug and medical device clients.  Indeed, the First Circuit once led our list the worst drug/medical device cases of the year for two years running – in 2012 and 2013.  Whether something’s changed since then in the First Circuit, we can’t say.  But we can report that the district court’s dismissal of fraud-on-the-FDA-based FCA claims in D’Agostino has just been affirmed with an excellently reasoned decision.  See D’Agostino v. EV3, Inc., ___ F.3d ___, 2016 WL 7422943 (1st Cir. Dec. 23, 2016).

The facts in D’Agostino were thoroughly explained in our prior post.  Briefly, the relator (a fired sales rep) alleged that the defendants pulled fast ones on the FDA with respect to the approvals/supplemental approvals of two medical devices, one called “Onyx” and the other “Axium” (these defendants evidently like “x” as much as did the former Standard Oil of New Jersey).  The relator-plaintiff claimed that the defendants:  (1) sought approval of Onyx for a narrow indication, but intended to promote it more broadly off-label (exactly the claim in Buckman); (2) failed to live up to promises made to the FDA concerning extensive surgeon training in using Onyx (also a form of fraud on the FDA); (3) concealed the failure of Onyx’s active ingredient in a different device (ditto); and (4) failed to recall earlier versions of Axium after obtaining FDA approval (not fraud on the FDA, but a theory that could dangerously penalize innovation).  See D’Agostino, 2016 WL 7422943, at ??? (for some reason WL has omitted star paging, so we’ll also cite to the slip opinion), slip op. at 4-8.  Critically, although the FDA was informed of all of these claims, the Agency never instituted any enforcement action, nor did the government elect to join the D’Agostino FCA action.  Id. at 9, 15.  As discussed in the prior post, the district court dismissed all of these claims with prejudice as futile.

Continue Reading Fraud on the FDA Doesn’t Fly Under the FCA Either

It wasn’t a complete win, but the summary judgment outcome in Rheinfrank v. Abbott Laboratories, Inc., ___ F. Supp.3d ___, 2015 WL 4743056 (S.D. Ohio Aug. 10, 2015), has to put a spring in the step of the defendants as they approach trial.  What’s left doesn’t strike us as a very good warnings case.  Rheinfrank involved claims that the antiepileptic drug Depakote caused the minor plaintiff’s birth defects.  Make no mistake about it, Depakote has a known association with such injuries.  First approved in 1983, it’s been a Pregnancy Category D drug since 1988, meaning, according to FDA regulations, that:

there is positive evidence of human fetal risk based on adverse reaction data from investigational or marketing experience or studies in humans, but the potential benefits from the use of the drug in pregnant women may be acceptable despite its potential risks.

21 C.F.R. §201.57(c)(9)(i)(A)(4).  Not only that, since 2003, this drug has carried a black box “teratogenicity” warning, as well as other quite explicit, and all-caps, language to the same effect.  For details, see 2015 WL 4743056, at *2-3.

Plaintiff-mother had used Depakote for years, through four previous uneventful pregnancies.  Id. at *1.  On her fifth pregnancy, even though Depakote came with all these warnings, she continued to take it.  Id.  Her allegations did try to change the subject, however.  In addition to claiming that the black box warning (more about that later) and all the other teratogenicity language were inadequate, she asserted that the defendants failed to warn altogether about “developmental delay.”  Id. at *5.

Continue Reading Preemption (and Other Things) Defanging Depakote Claims

Reed Smith won two separate decisions in New Jersey yesterday. One of them, In re NuvaRing Litigation, No. Ber-L-3081-09, slip op. (N.J. Super. L.D. April 19, 2013), we’re not at liberty to discuss, but if you’re on our side, you won’t be disappointed reading it – in all its 91-page splendor.

The other, decision, Nelson v. Biogen Idec Inc., C.A. No. 12-7317, slip op. (D.N.J. April 19, 2013), was won on a Rule 12(b)(6) motion to dismiss with a combination of TwIqbal and preemption under Buckman Co. v. Plaintiffs Legal Committee, 531 U.S. 341 (2001).  Nelson involved the drug Tysabri, and the plaintiff’s complaint was almost totally conclusory.  The design defect claim failed to allege a feasible alternative design (not surprising; it’s a drug), and that killed the claim under New Jersey law.  Slip op. at 2.  The warning claim got the boot because it pleaded everything against “defendants” collectively, another TwIqbal no-no.  Id. at 4-5.  Several other claims didn’t even get that far, being subsumed by the New Jersey Product Liability Act.  Id. at 3. Punitive damages were also barred by the Act:

[T]he PLA provides − in no uncertain terms − that punitive damages “shall not be awarded” in a products liability case based on an FDA-approved drug. Plaintiff does not dispute that [the drug] was subject to FDA approval and was, in fact, approved – twice − by the FDA. Thus, as a general matter, the PLA precludes an award of punitive damages in this case.

Id. at 3-4.  There is, of course, a fraud on the FDA exception to the Act, but following established New Jersey law (albeit on a federal question), the court held that it was Buckman preempted:

Although the PLA has provided for one exception to this general rule, the New Jersey Appellate Division subsequently found this exception − which requires, inter alia, a showing that the product manufacturer committed a fraud on the FDA − to be preempted by federal law. Defendants’ motion to dismiss this claim is, therefore, granted.

Slip op. at 4.  That count was dismissed with prejudice. The other claims, being TwIqballed, were dismissed with leave to amend, but we doubt there’s anything (truthful) that plaintiffs can plead to avoid dismissal, which is why they made only boilerplate allegations in the first place.

One of the ironies of blogging is that we often can’t praise our own wins as much as those of other firms. That doesn’t make us any less proud, though, when the home team comes through.  Congrats to Mike Scott, and a cast of dozens on NuvaRing win, and to new partner Steve Scheve on the Tysabri victory.

In a pair of cases, the Maryland Court of Appeals (the state’s highest court) rumbled through more than $1 billion in verdicts in a gasoline spill case, reducing them to nothing (although one plaintiff managed a new trial on one issue unrelated to this post).  See Exxon Mobil Corp. v. Albright, ___ A.3d ___, 2013 WL 673738 (Md. Feb. 26, 2013); Exxon Mobil Corp. v. Ford, ___ A.3d ___, 2013 WL 673710 (Md. Feb. 26, 2013).  While a lot of the analysis in these opinions is devoted to property damage issues (purportedly from groundwater contamination) that we don’t see much in our drug/device sandbox, they also dealt with a couple of issues that are near and dear to our hearts – medical monitoring and fraud on the FDA.

A Tough Medical Monitoring Standard

First, we’re sorry to report, Albright (the lead opinion) did recognize a cause of action for medical monitoring by presently uninjured plaintiffs.  2013 WL
673738, at *26, 31.  That being said, we’re pleased to report that the court attached rigorous requirements to the monitoring cause of action – a “proven necessary medical costs” requirement as tough as any state we’ve seen.

What do we mean?  Well, first, medical monitoring is a “remedy”; thus plaintiffs must first prove some underlying cause of action.  Albright, 2013 WL 673738, at *26-27.  Second, medical monitoring costs must be both “necessary and reasonable.”  Id. at *27 (emphasis original).  “Necessity for medical monitoring . . . must be reasonably certain, rather than merely possible.”  Id. Third, a plaintiff must “experience[] direct and hence discrete exposure.”  Id. at *28 (emphasis original).  Fourth, the condition for which monitoring is allegedly needed must be “related specifically and tangibly to that exposure.”  Id.  Fifth and finally, the risk must be “a direct and proximate result of th[at] exposure.”  Id. (emphasis original).

The court in Albright was determined that medical monitoring not become an excuse for crappy, unsupported claims:

[W]e are wary of damages for speculative claims resting on tenuous proof of risk of disease attributable to the type of exposure. . . . [W]e believe that . . . recovery for a latent disease due to toxic exposure involves necessarily somewhat nebulous forecasts of a potential risk to develop a disease in the
future. . . .  Requiring quantifiable and reliable proof, however, will assist courts in determining whether causation and significant risk are present in a plaintiff’s prima facie case.

Id. at *28 (emphasis original).  The medical monitoring standards that the court adopted are expressly intended to “inhibit[] damages awards for speculative, and thus unreliable, opinions as to a plaintiff’s potential risk of developing a future disease.”  Id. at *29.

Continue Reading Maryland Allows Medical Monitoring (Sort Of); Rejects Fraud On The FDA

The following is a guest post by Laura Mastrangelo at Reed Smith, who gets all the credit, and takes all the blame, for its contents.  Take it away Laura….

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There was a fair amount of preemption action on punitive damage statutes last week, at least with respect to those states that limit punitive damages for FDA approved drugs and devices.  John Sullivan provided excellent coverage of Zimmerman v. Novartis Pharmaceutical Corp., ___ F. Supp. 2d ___, 2012 WL 3848545 (D. Md. Sept. 5, 2012), yesterday here, so I won’t belabor that discussion further.  Flying more under the radar, though, the Sixth Circuit issued an opinion in Marsh v. Genentech, Inc., ___ F.3d ___, 2012 WL 3854780 (6th Cir. Sept. 6, 2012), which dovetails nicely with the District of Maryland’s analysis in Zimmerman.  In Marsh, the Sixth Circuit affirmed its previous holding in Garcia v. Wyeth-Ayerst Laboratories, 385 F.3d 961 (6th Cir. 2004), that the fraud exception to Michigan’s bar on products liability suits against drug manufacturers is preempted, even where Plaintiffs haven’t alleged fraud-on-the-FDA in the classical sense.

Plaintiffs brought consolidated products-liability actions against drug manufacturers Genentech, Inc. and Xoma (U.S.) LLC (collectively, “Genentech”) to recover for injuries allegedly sustained from use of the psoriasis medication Raptiva, alleging strict products liability under design-defect and failure-to-warn theories, negligence, breach of warranty, and fraud.  Id. at *1.  The action consolidated four different plaintiffs, but apart from their dates of use and alleged injuries, the allegations for the four were identical.  Id., n.2.

Continue Reading More Punitive Damages Preemption, Sixth Circuit Reaffirms Garcia

The scope of Mensing is one of the hotter issues in drug and device law these days. (The Bartlett appeal is one example.) To our defense-hack eyes, Mensing seems perfectly straightforward: a claim is preempted to the extent it alleges that the risks of a generic drug were not adequately disclosed. But the doctrinal landscape has quickly grown messy and treacherous. There is already a lot of legal kudzu out there, courtesy of plaintiff-lawyer ingenuity or judicial discontent with Mensing. Some attorneys and judges do not like preemption at all. Some do not smile upon the differential treatment between brandeds and generics. Accordingly, we get clever arguments and brittle analyses that limp along the page, proudly indifferent to the manner in which they manage to muck things up. It reminds us of what must surely be one of the most cynical observations of all time, when Thomas Hobbes wrote that “Reason scouts and spies for the passions.” Nice (in the sense of being foolish) distinctions are drawn to preserve bogus claims.

Still, every once in a while Reason seems to stand up quite well for itself. That is the case with Truddle v. Wyeth, LLC et al., 2012 WL 338715 (N.D. Miss. Aug. 14, 2012), where the court dealt with Mensing in as clean and fair and straightforward a fashion as could be expected. The case is sad. A nineteen year old man was treated for gastritis. The doctor prescribed metoclapramide. The young man began suffering from hallucinations, extreme restlessness (akathisia), and suicidal impulses. He eventually took his own life. His parents filed suit against both brand-name and generic manufacturers, alleging negligence, strict liability, breach of warranties, misrepresentation, fraud, and negligence per se, all grounded upon an alleged failure to warn of the risks of side effects. The plaintiffs’ counsel withdrew from the case (the opinion does not tell us why, prompting us to engage in all sorts of pointless speculation), the case was removed to federal court, and the generic defendants filed a motion to dismiss the case because of Mensing preemption.

The generic defendants argued exactly what we would expect them to argue — that Mensing governed the entire case because all of claims, no matter what the styling, were predicated on an alleged failure to warn, and the generic defendants lacked any power to add warnings. The generic defendants “anticipate[d] that the Plaintiffs would argue that the Generic Defendants should have used an additional means of communicating warnings to physicians, such as letters to health care providers, and suspended sales of the drug until the brandeds were changed.” Truddle, 2012 WL 3338715 at *3. The defendants also anticipated that the plaintiffs might try to assert “design defect or other legal theories to escape the preemptive reach of Mensing.” That’s certainly a lot of anticipation, especially against a pro se plaintiff. Maybe it is smart to trot out, and then knock down, the other side’s arguments, rather than wait for the court to endeavor to help out the pro se plaintiffs. In any event, the battle-lines are pretty well drawn in Mensing cases. The potential avenues for circumventing Mensing no longer arrive as a surprise.

The Truddle court granted the generic defendants’ motion and dismissed all claims on the grounds of Mensing preemption. Even though the plaintiffs asserted various theories of recovery, “all theories stem from the Generic Defendants’ alleged failure to warn of the side effects of the drug.” Truddle, 2012 WL 3338715 at *4. Even when the plaintiff complained of activities that might at first blush seem different from disclosing risks on the label, such as failure to investigate or test, any knowledge that would have been acquired from such investigation or testing “would have been helpful” only insofar as it would have been “communicated through labeling – which would not have made any difference as long as the Generic Defendants were following the FDA’s labeling regulations.” Id. The generic defendants could not have unilaterally improved the labeling even if they wanted to — that is the point of Mensing. The Truddle judge offers a healthy dose of clear-thinking, and we wouldn’t mind seeing that spread to other courts, including a couple we can walk to in ten minutes.

That ends that. Or at least, it could. But the plaintiffs’ fraud and misrepresentation claims attacked the defendants for fraud on the FDA, and the Truddle court seized the opportunity to bring some additional clarity on that issue. There was a need for clarity, because a couple of Fifth Circuit cases introduced some unnecessary puzzlement into the Buckman issue. In the first case, which we would like to call the “Bad case,” but which the official reporter calls Hughes v. Boston Scientific Corp., 631 F.3d 762 (5th Cir. 2011), the Fifth Circuit held that a state tort claim for negligence “that attempted to prove breach of a state law duty by asserting a violation of FDA regulations was not a fraud-on-the-FDA claim that would be preempted by Buckman.” Truddle, 2012 WL 3338715 at *6. The negligence claim in Hughes was predicated on the manufacturer’s failure to comply with the applicable federal statutes and regulations. Well, if there is no private right of action under the federal laws (and there isn’t) what exactly are we talking about in Hughes? The negligence claim, pled under Mississippi law, charged, inter alia, that the defendant manufactured and distributed the product inconsistently with its FDA PMA approval by failing to report serious injuries and malfunctions of the device as required by MDR regulations. The Hughes court said that this theory was different from a fraud-on-the-FDA theory that would be preempted under Buckman. Maybe – but that does not make it a valid action under state law. Hughes looks like sheer nonsense, but it is Fifth Circuit nonsense, so the Truddle court had to navigate around it.

The Truddle court did so by holding fast to another case, which we like to call the “Good case,” but which you will want to cite as Lofton v. McNeil Consumer & Specialty Pharmaceuticals, 672 F.3d 372 (5th Cir. 2012). In Lofton, the Fifth Circuit applied Buckman preemption, in contrast to the Hughes court’s unconvincing effort to dodge it. The plaintiff in Lofton alleged that the manufacturer of Motrin had not warned consumers of the risk of autoimmune reactions to the drug. The failure to warn claim was brought under Texas law, which establishes a rebuttable presumption that a drug manufacturer is not liable for failure to warn if the FDA approved the warnings in question. Texas law is specific that such a presumption can be rebutted if the defendant withheld information from the FDA. The issue is whether that fraud-on-the-FDA exception was preempted by Buckman. Sound familiar? We’ve written about this issue before, discussing another pair of cases, with the good one being Garcia v. Wyeth-Ayerst Labs., 585 F.3d 361 (6th Cir. 2004), and the bad one (wretched, awful, horrible, etc – we’re tempted to unload the thesaurus on this one) is Desiano v. Warner-Lambert & Co., 467 F.3d 85 (2d Cir. 2006), aff’d by an equally divided court sub nom. Warner-Lambert Co. LLC v. Kent, 552 U.S. 440 (2008). Desiano seems nutty in calling off Buckman preemption when fraud-on-the-FDA is part of an exception instead of the cause of action itself, and we would hate to see other courts latch onto the Desiano rationale. Mercifully, the Lofton court did not do so. In Lofton, the Fifth Circuit applied Buckman preemption because the relationship between the manufacturer and the federal regulator was central to the matter at issue.

The Truddle court, after being confronted with the sloppiness of Hughes and the sanity of Lofton, divined a unifying Buckman principle that it believed compelled preemption in the Truddle case: “It is likely that the Plaintiffs’ fraud-on-the-FDA theory would be preempted under Buckman, as the theory concerns the ‘inherently federal’ relationship between the FDA and the Generic Defendants, which are entities regulated by the FDA.” Truddle, 2012 WL 3338715 at *7. Now it may be that the Truddle court simply (and rightly)  preferred the interpretation of Buckman in Lofton, but it didn’t have to go there because Mensing answered the question.  Lofton versus Hughes made no difference since, in either case (or in neither case) where a generic product is involved the statutory “sameness” rationale of Mensing controls (neither Hughes nor Lofton involved generics).  Clearly, the Truddle court did not merely use reason to scout and spy for a preordained result. It returned to first principles. Those first principles result in more vigorous applications of Mensing and Buckman.

Does Buckman v. Plaintiff’s Legal Committee, 531 U.S. 341 (2001), apply any time that a plaintiff raises a fraud on the FDA allegation in litigation, or is it limited to causes of action denominated “fraud on the FDA?  Most courts have agreed with the Sixth Circuit that Buckman applies across the board.  See , 385 F.3d 961 (6th Cir. 2004).  A persistent minority, however, has limited Buckman to complete “fraud on the FDA” causes of action.  See Desiano v. Warner-Lambert & Co., 467 F.3d 85 (2d Cir. 2006).  The Supreme Court attempted, but failed, to close the split in Desiano, but failed – splitting 4-4.  See Warner Lambert LLC v. Kent, 552 U.S. 440 (2008). Garcia v. Wyeth-Ayerst Laboratories

Both Garcia and Desiano involved the “fraud on the FDA” exception to a Michigan tort reform statute that imposes a presumption of adequacy on warnings that are FDA approved – that is, just about every warning.  The Michigan statute was essentially dispositive.

Then Texas passed a similar presumption statute that is almost as dispositive in the ordinary case as Michigan’s.  It was only a matter of time before the Fifth Circuit would be called upon to decide the same question as in Garcia/Desiano.

Also in the mix is the Supreme Court’s later, extremely anti-preemption, decision in Wyeth v. Levine, 555 U.S 555 (2008).

Continue Reading Fifth Circuit Breaks Buckman Tie