Thursday, March 26, 2015

Let’s Talk InFuse

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

            The InFuse litigation has certainly given us quite a lot to talk about – and almost all of it positive.  It has been a treasure trove for defendants on off-label marketing and promotion claims.  We’ve collected this bounty of riches here.  While each case has its own nuances, they are all really slight variations on a theme – the almost unanimous rejection of plaintiffs’ attempts to use off-label marketing to thread the preemption needle.  While the reasoning varies from court to court, the over-arching message is the same – off-label marketing does not change the preemption analysis.  The InFuse device, regardless of how it was used by a particular surgeon in a particular surgery, is a PMA-approved, Class III device and therefore covered by both Riegel express preemption and Buckman implied preemption.  Very little slips through the small space between the two. 

            If you want a more complete history of the InFuse litigation, we point you to our collection referenced above.   For even casual readers of our blog, we think you’ve probably seen some of our writings on the topic and so we aren’t going to wade back through the details.  Today’s post is more of an update.  Here are the latest four InFuse victories.

Truthful v. Untruthful Promotion

            First up is Byrnes v. John Small, 2015 U.S. Dist. LEXIS 33555 (M.D. Fla. Mar. 18, 2015).  This case is fairly typical for InFuse.  Failure to warn and design defect claims are preempted, id. at *13-14, *17-19.  We will point out that this is another court that understands that the FDA approves devices, not “specific uses” of devices.  Id. at *18.  More importantly, Byrnes is also another outright rejection of our least favorite InFuse case, Ramirez, and points out the poor logic of that ruling.  Id. at *18-19.   

            That leaves fraud and misrepresentation based claims which most courts, present company included, hold are not preempted.  The reasoning however is very important to understanding why allegations of off-label promotion in and of themselves don’t trigger a shift in the preemption analysis:

The Court emphasizes that is ruling applies only to untruthful off-label promotion. . . .  To the extent that Plaintiffs are suggesting that a claim premised on truthful off-label promotion is not preempted, the Court disagrees.  Such a claim would be impliedly preempted because, even if off-label promotion were prohibited under the FDCA, Plaintiffs have failed to identify a state law duty to refrain from off-label promotion. 

Id. at *15-16, n.2 (emphasis in original).   This court places the focus on the right thing – not whether the promotion by the defendant was on-label or off-label, but rather whether it was truthful or untruthful.  The FDCA prohibits false and misleading promotion and it is in this context that there is the possibility for a state law claim to run parallel to (not conflict with) a federal requirement.  We stress “possibility” because outside of preemption, the reason most of the InFuse claims fail is because plaintiffs can’t meet the heightened pleading standards for fraud.  For instance, in Byrnes, plaintiff’s fraud claim was dismissed because plaintiff “only allege[s] in a vague and conclusory manner that Medtronic ‘fraudulently concealed and misrepresented’ the dangers of the off-label use.”  Id. at *16.  Plaintiff’s misrepresentation and express warranty claims suffered the same fate.  Id. at *21, *24-25.

No Causation; No Plaintiff-Created FDCA Requirements

            In Jones v. Medtronic, 2015 U.S. Dist. LEXIS 29827 (D. Ariz. Mar. 6, 2015) we focus on two primary takeaways – well, three if you include yet another complete rejection of Ramirez, which we certainly do.  Id. at *29.  Our first takeaway was the dismissal of plaintiff’s claim that Medtronic should have provided additional safety information, beyond that required by the FDCA, specific to the off-label use.  The court correctly interpreted this as an attempt by plaintiff to “write in a new provision and add to the requirements provided by the FDA.”  That’s definitely a conflict with federal requirements and so no question it was preempted.  Id. at *27.

            Second, like we mentioned above, often fraud claims get by preemption, but fail just as quickly on other grounds.  Here that ground was causation:  “Missing from [plaintiff’s] allegation is that Defendant fraudulently induced her doctor to use Medtronic products in her surgeries.”  Id. at *22 (emphasis in original).  Usually, courts give plaintiffs an opportunity to fix this type of deficient pleading, but here plaintiff’s causation problems were too large to surmount.  In her complaint, plaintiff actually alleged “she has no idea of what specifically caused her injuries” and that it may be impossible to establish which of the specific devices used in her surgery caused her injuries.  Id. at *23-24.  Sounds to us like this could have been the start, middle, and end of the decision on all counts, but we won’t argue that point since the court ultimately came to the right conclusion and dismissed this case in its entirety.

Round 2 Goes to Medtronic

            Our last two cases are truly updates because we’ve seen them both before.  We previously reported on Scovil here and Schouest here.  And we are happy to report, both cases stay in the win column. 

            The new Scovil can be found at 2015 U.S. Dist. LEXIS 25708 (D. Nev. Mar. 2, 2015).  The prior decision was entered when the case was jointly filed by the two Scovil brothers (Leigh and Brett) and was pending in Arizona.  The Arizona court dismissed certain of plaintiffs’ claims as preempted but as to those that remained, it severed Brett Scovil’s claims and transferred them to Nevada.  After an amended complaint was filed in Nevada, Medtronic again moved to dismiss.  Id. at *2-3.  To the extent plaintiff re-pleaded claims that were previously dismissed by the Arizona decision – the result was no different, the claims were dismissed.  What that boils down to is that plaintiff is left with a Stengel failure to advise the FDA of adverse events claim, a fraud and misrepresentation claim, and possibly an express warranty claim.  On that last one, plaintiff has to amend his complaint with allegations of the specific affirmations made by defendant to him or his surgeon and how those affirmations became part of the basis of the bargain.  Id. at *32. 

            And the new Schouest opinion can be found at 2015 U.S. Dist. LEXIS 34673 (S.D. Tex. Mar. 20, 2015).  It is exactly what we hope for when a court gives a plaintiff a do-over – a complete dismissal. 

            The first decision left open three claims that could possibly survive preemption.  On negligence, plaintiff couldn’t demonstrate a state law duty to report adverse events to the FDA and didn’t point to any reporting regulation allegedly violated.  Id. at *4.  No Stengel claim.  On express warranty, plaintiff had to identify the specific warranties made to plaintiff or her physician.  Plaintiff made all her same general allegations but added:  “Medtronic made express warranties regarding the safety and efficacy of the Infuse Bone Graft in off-label uses.”  Id. at *5.  Finding this new allegation even broader and less-specific, the court dismissed the warranty claim.  Finally, plaintiff was given a chance to keep her Texas Consumer Protection Law claim if she pleaded which specific statutory duties defendant allegedly violated.  She didn’t do so yet again, so that claim failed too. 

            On fraud and misrepresentation, the court applied the heightened pleading standard and found all plaintiff’s claims lacking.  As to her general fraud claim, the Fifth Circuit requires plaintiff to identify the speaker of the allegedly fraudulent statements as well as when and where the statements were made.  Id. at *12.   Plaintiff failed to satisfy those requirements by not identifying the Medtronic employee who spoke to plaintiff’s physician and/or not identifying a single piece of literature that contained a false statement.  Id.   On constructive fraud, plaintiff failed to allege how Medtronic violated a legal or equitable duty to plaintiff.  Again, plaintiff alleged misstatements of material facts, but “never specifies what those material facts are or how they misrepresented the truth.”  Id. at *15.  And plaintiff’s misrepresentation claim suffered the same fate – no specific misrepresentations.  As to off-label allegations, the court found plaintiff’s allegations that defendant misrepresented the safety of off-label to be “conclusory and general.” 

            Bottom line -- Scovil and Schouest stumbled into Round 2.  Scovil is on the ropes but still standing.  Schouest is down for the count.   

Wednesday, March 25, 2015

Pruning 'Expert' Opinions on Risk-Benefit and Corporate Knowledge

“Ignorance is like a delicate fruit; touch it and the bloom is gone.”  - Oscar Wilde


March 25 is a significant day in legal history.  On this date in 1911, the Triangle Shirtwaist factory in New York City caught on fire, killing 146 workers.  (One of those lost souls was the great-grandmother of a member of the DDL blogging team.)  The factory owners were charged with manslaughter on the theory that they had locked the fire exits to keep the workers from taking smoking breaks on the fire escapes.  The formidable trial lawyer Max Steuer represented the owners and secured a defense verdict by showing that a key plaintiff witness had rehearsed her story a little too well.  Two decades later, on March 25, 1931, the Scottsboro Boys were arrested for rapes they never committed.  Witnesses made up inculpatory testimony.  The trials were a sorry, sordid affair, resulting in death sentences, followed by multiple U.S. Supreme Court decisions on the issues of effective assistance of counsel and racial exclusion of jurors.  To Kill a Mockingbird might have drawn on some aspects of the Scottsboro Boys case, but the real life matter was much more complicated and dramatic.  One of the defendants escaped and was later (much later: 1976) pardoned by, of all people, Governor George Wallace.    


Today’s case is not nearly so epic, but it is nevertheless notable for the trial court’s smart and stout decision to stop a plaintiff expert witness from testifying about things she had no business talking about.  The case is Heineman v. American Home Products Corp., 2015 U.S. Dist. LEXIS 30445 (D. Col. March 11, 2015).  We were far less happy about the Heineman case when we wrote about it here last Summer, when the court missed an opportunity to end the case on clean learned intermediary grounds because it overcomplicated the issue of identifying who was the prescriber.  This time, the court was confronted with the plaintiffs’ proffer of opinions by an expert to the effect that (1) the risks of diet drugs outweighed their benefits, and (2) the defendant’s post-marketing surveillance stunk and it knew its labelling was inadequate.  The expert was Dr. Cheryl Blume.  She is a pharmacologist.  We have blogged about several other cases involving Dr. Blume.  Here, for example.  And here.  And here.  There are others.  You get the idea.  Since, as Dr. Parisian told us at a deposition last year, she is retiring soon, we suppose that Dr. Blume will become the go-to expert for saying what needs to be said, at least as far as DDL plaintiff lawyers are concerned.  We are reminded of something Bill Buckley once said about a former ambassador: “He knows a lot about the Soviet Union, all of it wrong.”   Dr. Blume comes into every case knowing A Lot.       


The Heineman judge conducted a Daubert hearing and took testimony from Dr. Blume.  In its opinion, the court gives a nice blow-by-blow account of the hearing.  First, we learn that “[a]fter several hours of general direct examination of Dr. Blume, the Court called counsel to the bench and observed that, thus far, the Plaintiffs’ questioning of Dr. Blume, though extensive, had not begun to approach the Defendant’s foundational challenges to the recited opinions.  With the consent of counsel, the Court took over the examination of Dr. Blume.”  Heineman, 2015 U.S. Dist. LEXIS 30445 at *13.   Now that’s an involved judge.  Most of the time, from our defense hack perspective, an involved judge is a very, very good thing at a Daubert hearing.  That proved to be the case here.    The judge issued an oral opinion excluding the two opinions at issue, though other of Dr. Blume’s opinions might have been admissible.  If a trial happened, a big part of the defense job  would be making sure that plaintiffs’ lawyers and expert would not smuggle the excluded opinions back into the case. 

Not surprisingly, the plaintiffs were unhappy with the exclusion of the risk-benefit and company conduct opinions.  They moved for reconsideration.  The court took a second-look at the record, then seized the opportunity “to clarify and amplify that ruling.”  Id. at *24.  It made things, if anything, a bit worse for the plaintiffs.  (This reminds us of a high school teacher who, when challenged on the grade for a particular answer on a test, would insist on regrading the entire test.  Invariably,  the supplicant would end up with an overall worse grade.  We did not know it at the time, but this teacher had a very judicial approach to motions for reconsideration.)        


The Court asked Dr. Blume whether a retrospective risk-benefit review was something that she typically did.  You know, as opposed to a litigation-driven, result-oriented piece of hocus-pocus.  Dr. Blume is nothing if not savvy.  She told the court that as part of her corporate practice, “she would occasionally conduct retrospective risk-benefit reviews for existing drugs, such as when her company purchased the rights to domestically distribute a drug that was already in use overseas.  She explained that ‘we would be given opportunities to license products, the same drill that I gave you in such detail was also undertaken, and at the end of it, the pencil went down and we said ‘we can’t take the risk.’  The benefits sometimes were great, but for our size company and the goals of our company, we couldn’t take the risk of what we saw lurking in there.’”  Id. at *16.  That’s pretty clever.  It can be tougher to test an opinion based on experience than one based on, say, peer-reviewed literature.  But it was not clever enough. 


The court saw that Dr. Blume’s “assessment as to risk-benefit is not tied to any objective standard.  It is instead, a function of her experience and expertise.”  Id. at *22-23.  Of course, Rule 702 does permit an expert to rely upon experience and expertise in formulating an opinion.  Still, when an expert is relying primarily on experience, the witness is required to explain how that experience leads to the conclusion reached, why that experience is a sufficient basis for the opinion, and how that experience is reliably applied to the facts.  The problem in this case is that the corporate risk-benefit analysis that Dr. Blume relied on – which had a heavy business component - was utterly different from the health and safety risk-benefit opinions being offered in this case.  Basically, Dr. Blume said that the diet drugs could, at most, produce a loss of a couple pounds, which she characterized as a “de minimis” benefit.  Dr. Blume did not identify any specific or generally accepted measure that experts in the field use to quantify the “benefit” associated with a drug, or how “benefits” and “risks” are compared. She did not compare the weight loss benefits among different drugs.  She did not consult with the other experts about the  medical benefits of the weight loss.  In sum, in “determining the benefits of the drugs, it does not appear that Dr. Blume brought any more expertise to bear on the question than would any layperson (or, at least, any layperson advised of the weight loss data for the drugs.)”  Id. at * 27-28. Moreover, Dr. Blume conceded that she could not make a risk-assessment for any particular patient. 


So much for the risk-benefit opinion.


Now on to the sort of expert opinion that is not aimed to help the jury, but, rather, is aimed to supplant the jury.  We hardly see a case where plaintiffs do not produce an expert armed with little more than literacy and indignation, who reads company documents with a certain point of view,  and who pronounces the company to be a bad actor.  In Heineman, Dr. Blume read company documents and did not like them even a little.  (Or maybe she liked them a lot.)  According to her, the corporate documents demonstrate that people in the company’s safety surveillance department did a poor job and also knew that the product labelling was inadequate.  (At least, we think that is what the proffered opinion was.  As the court remarked, this opinion varied and was hardly pellucid.)  The court saw this opinion for what it was, and for what it was not:  “the opinion really isn’t that [the Defendants] failed to conform with the standard of care: it is that corporate documents demonstrate that [the Defendants] failed to conform as to the standard of care….I find that Dr. Blume has no methodology that is reliable for determining what the documents demonstrate.  Ultimately, the plaintiffs will be able to put on the documents at trial, and the jury will decide what the documents demonstrate.”  Id. at *32.  Dr. Blume offered no “specialized knowledge” that would “help the trier of fact to understand” the corporate documents themselves.  Id. at *32-33.  There was no evidence that the company documents “themselves are so opaque or incomprehensible that the trier of fact requires Dr. Blume’s assistance to parse them.”  Id. at *33.  The usual payoff point for the plaintiffs would have been for an expert to race through a carefully culled set of documents, assisted by PowerPoint slides with colorful call-outs, with the expert sorrowfully/angrily concluding that the company knew better, but decided to value dollars over lives.  It is a closing argument masquerading as an expert opinion.  At the heart of the opinion is a perusal of documents followed by a Vulcan mind-meld as to what people at the company truly knew and believed.  The Heineman court joined “a number of the other courts in finding that Dr. Blume may not testify as to what [the Defendant] knew or didn’t know.”  Id. at *41.


Dr. Blume’s opinions were offered to help the plaintiffs, not the jury.  As a result, they were not able to do either.


Tuesday, March 24, 2015

New Jersey Casts a Broader Net (Opinion Rule)

It wasn’t too long ago that, down the shore, New Jersey hosted one of the most notorious litigation hellholes in the country.  That’s not the case anymore, as the current (2014-15) ATRA Judicial Hellholes report explains in a suitably defense-oriented way.  That’s good news because so many of our clients are headquartered in New Jersey.

But the substantive law, as well, played a part in Joisey gaining a reputation as an unusually pro-plaintiff forum.  That’s been changing too – for some time, as we pointed out here.  Earlier this month we reported that the Accutane mass tort in New Jersey finally went to ground (or to the dogs), as the state court belatedly recognized what federal judges applying Daubert had known for years – allegations that the drug caused intestinal injuries were scientifically bogus from beginning to end, and at all points in between.  See In re Accutane Products Liability, 511 F. Supp.2d 1288 (M.D. Fla. 2007).

Last week, the New Jersey Supreme Court took another step in the right direction on the expert front in Townsend v. Pierre, ___ A.3d ___, 2015 WL 1058036 (N.J. March 12, 2015), by reaffirming and strengthening the state’s “net opinion rule” for expert witnesses.

The what you say?

For those of you not steeped in New Jersey law, think back to the most memorable (or at least the most quoted) statement in General Electric Co. v. Joiner, 522 U.S. 136 (1997) – “nothing in either Daubert or the Federal Rules of Evidence requires . . . admi[ssion of] opinion evidence that is connected to existing data only by the ipse dixit of the expert.”  Id. at 146.  Well, the New Jersey net opinion rule is a lot like that – a ban on ipse dixit − and just as important in the perpetual struggle against the other side’s hordes of junk scientists.

Townsend wasn’t a prescription medical product case.  Heck, it wasn’t even a product liability case.  Its expert analysis, however, will be equally applicable to all civil litigation in the Garden State for years to come.  Townsend involved an accident where a left turning car (Pierre) collided with a motorcycle driven by the plaintiff (Townsend).  Who sues whom in this situation is essentially determined by the laws of physics.  Motorcyclists tend to come off worse in collisions with four (or more) wheeled vehicles.  See Duane Allman and Berry Oakley.

Also named as a defendant was a property owner on the corner where the collision happened, on a theory that “overgrown shrubbery” on the property obscured the driver defendant’s view of the approaching motorcycle.  Townsend, 2015 WL 1058036, at *1.  Trouble was, there was no evidence to support that theory, and affirmative evidence against it:

[Driver] testified that shrubbery on the property initially obscured her view when she was stopped at the stop sign at the intersection, but that she edged forward, starting and stopping four times until her view of oncoming traffic was unimpeded.  A passenger in [driver’s] vehicle corroborated [this] testimony that when she turned left, she had an unobstructed view of approaching traffic.  The record contains no testimony to the contrary.


Did plaintiff drop this factually unsupported theory of liability?  Of course not.  This is Joisey.  Evidence?  I don’t need no stinkin’ evidence!  I have an expert.

Umm….  Not so fast.

The expert’s first ploy was to “assume” the wrong thing – that the “relevant location . . . was behind the stop sign,” even though three people had testified that the car had inched forward well past the sign.  Townsend, 2015 WL 1058036, at *3.  The expert followed that up by simply disregarding testimony that got in the way of his opinion:

I am mindful of the testimony of [the driver] regarding her allegedly stopping four (4) times before proceeding.  However, given . . . that she never saw the approaching motorcycle, I reasonably conclude that she did not have an unobstructed view . . .  when she proceeded into the roadway.

Id. at *4.  All the uncontradicted testimony to the contrary “must have been mistaken.”  Id.  For support, “[t]he expert offered neither factual evidence nor expert analysis contradicting [driver’s] recollection.”  Id.

That led to multiple defense motions to strike the expert’s proposed testimony as a “net opinion,” which the trial court granted.  Id.  The New Jersey Appellate Division, however, reversed, holding that the driver’s testimony was subject to “credibility” challenge by virtue of the expert’s testimony, and therefore a jury question was created.  A “hypothetical question” to the expert, assuming facts that had no basis in the factual record, was enough, according to that court.   Townsend v. Pierre, 60 A.3d 800, 804 (N.J. Super. App. Div. 2013).

Umm….  Not so fast.

The New Jersey Supreme Court ruled – unanimously – that the expert’s opinion had no factual support, and therefore was an excludable net opinion.

The net opinion rule is a corollary of N.J.R.E. 703 which forbids the admission into evidence of an expert’s conclusions that are not supported by factual evidence or other data.  The rule requires that an expert give the why and wherefore that supports the opinion, rather than a mere conclusion.

Townsend, 2015 WL 1058036, at *7 (citations and quotation marks omitted).  The first takeaway is that the “net opinion” rule is alive and well in New Jersey.

Sounding like a Daubert court expounding on the evils of expert ipse dixit, Townsend further explained:

The net opinion rule . . . mandates that experts be able to identify the factual bases for their conclusions, explain their methodology, and demonstrate that both the factual bases and the methodology are reliable.  An expert’s conclusion is excluded if it is based merely on unfounded speculation and unquantified possibilities. . . .  [W]hen an expert speculates, he ceases to be an aid to the trier of fact and becomes nothing more than an additional juror.

Townsend, 2015 WL 1058036, at *8 (citations and quotation marks omitted).  A net opinion cannot satisfy a party’s burden of proof.  Id.

Invalid assumptions create a net opinion.  No testimony put the driver behind the stop sign.  “In an attempt to reconcile his opinion with the testimony, [the expert] reconstituted the facts.  He asserted that [the driver’s] testimony about her accident was wrong.  In this crucial respect, [his] proposed expert testimony is an inadmissible net opinion.”  Townsend, 2015 WL 1058036, at *10.

Nor could the proponent of this factually baseless opinion conjure up a basis through a hypothetical question.  “Expert opinion is valueless unless it is rested upon the facts which are admitted or are proved.”  Id. at *11 (citation and quotation marks omitted).  A hypothetical cannot be used to “supply” facts that don’t exist.  Id.

[A] hypothetical question . . . in which the expert would be asked to assume that [the driver’s] account of the accident was mistaken − not only lacks the requisite foundation in the facts, but is premised on a rejection of uncontroverted testimony.  On this record, no hypothetical question that conforms to our standard can salvage the causation opinion.

Id. at *11.

From now on (if not before), any New Jersey expert opinion needs to be analyzed in accordance with the strengthened net opinion rule.  The court in Townsend found no fault with either the expert’s qualifications or his opinion on duty, id. at *9, but defeating the causation opinion was all that was necessary to a grant of summary judgment.  Id. at *11.  Similarly, in drug and device cases, causation claims are often bases on “assumptions” – particularly about what is stated in medical literature – that turn out to be contrary to fact.  Experts in broken device cases often pile one factually unsupported statement on top of another.  As occurred in Townsend, inconvenient facts are frequently ignored without any basis for doing so during bogus “differential diagnoses.”

The net opinion rule in New Jersey should now cast a wider net – removing ipse dixit expert opinions from litigation in that state similarly to federal court practice under Daubert.

Monday, March 23, 2015

Zogenix’s Battle with the Commonwealth of Massachusetts Continues

Last week, the District of Massachusetts issued its decision on Round 3 of the battle between Zogenix, Inc. and the Commonwealth of Massachusetts over Zohydro ER, an extended release hydrocodone drug product that was approved by the FDA in 2013.  See Zogenix, Inc. v. Baker, 2015 U.S. Dist. LEXIS (D. Mass. Mar. 17, 2015).  This is a year-long battle in which Massachusetts has tried to regulate the use of Zohydro, first banning it entirely and later implementing a series of regulations intended to restrict its use.  

First, a history of the earlier rounds: In Round 1, the Massachusetts governor declared opioid abuse and overdosing to be a public health emergency and authorized the department of health to issue an emergency order that banned prescribing, ordering, dispensing or administering Zohydro (it didn’t mention Zohydro specifically, but described a category of drugs that included only Zohydro).  Zogenix moved for a preliminary injunction and won.  The FDA had already approved Zohydro for marketing.  And so Massachusetts’s ban failed, as we put it, the “you can’t do that” test.  The emergence order was preempted.   

In Round 2, with the department of health licking its wounds, various Massachusetts boards of registration stepped into the battle.  Two boards, the Board of Registration in Medicine and the Board of Registration of Physicians Assistants, promulgated emergency regulations that required prescribers, before they could prescribe Zohydro, to provide a Letter of Necessity stating that all other pain management treatments had “failed.”  Also, Massachusetts’s Board of Registration of Pharmacy created certain “handling” requirements, including prohibiting anyone at a pharmacy who wasn’t the actual pharmacist from handling Zohydro.  Zogenix once again sought injunctive relief, arguing that these regulations were preempted.  It won a partial victory.  The court agreed to enjoin the regulation requiring the Letter of Necessity from prescribers.  Its requirement that other pain-management options have “failed” differed from the treatment indication for which the FDA had already approved Zohydro.  And so it was preempted.  The pharmacy regulations restricting the handling of Zohydro stood.  The court did suggest, however, that Zogenix’s challenge to those regulations could be successful if Zogenix were later able to develop facts proving that the regulations would alter pharmacies’ willingness to carry Zohydro.  We blogged about Round 2 here.

After Round 2 but before Round 3, a bit of adjusting happened.  The medicine board and the physicians assistants board changed their regulations.  They no longer require that other pain-management options have “failed” before Zohydro can be prescribed.  Instead, the prescriber must only deem other options to be “inadequate.”  This more closely mirrors the indication for which the FDA approved Zohydro and, with Zogenix putting up little fight, the court lifted its injunction on the Letter of Necessity.  The pharmacy board also changed its regulations.  They now allow pharmacist interns, not just pharmacists, to handle Zohydro.  The other pharmacy board regulations on the handling of Zohydro remained in place.  See Zogenix, 2015 U.S. Dist. LEXIS, at *7-11.

That takes us to Round 3.  Zogenix believed that the pharmacy board’s regulations were still improper, and so it filed a third amended complaint.  Id. at *11.  Massachusetts moved to dismiss.  The court issued its opinion last week.  Zogenix made a number of Constitutional claims based on the commerce, equal protect and contracts clauses, but we won’t address them here.  In short, the court dismissed those claims.  

But Zogenix also claimed that the pharmacy board’s “handling” regulations were preempted.  It argued that “[t]aken together, these requirements continue to impose draconian restrictions on pharmacists’ abilities to stock or dispense Zohydro ER that . . . amount to an effective ban of the drug in Massachusetts.”  Id. (quoting the third amended complaint).  

In support of this argument, it’s important to understand that the pharmacy board’s regulations did more than restrict the handling of Zohydro to only pharmacists and pharmacist interns.  It required Zohydro to be stored in a locked cabinet at all times.  The container for the drug must be child proof.  The prescriber must have sent the pharmacy a Letter of Necessity that includes a diagnosis, treatment plan, verification that other pain-management options are inadequate, an indication that a risk assessment was performed, and an indication that the patient and doctor entered into a pain management treatment agreement or that the prescriber determined that no such agreement was unnecessary.  The pharmacy must also include with each prescription a warning approved by the pharmacy board and provide counseling to each patient on the risks of Zohydro.  Id. at *7-10 n.8.  

Massachusetts responded to Zogenix’s argument by “contending that the claim should be dismissed because it is facially absurd and unbelievable.”  Id. at *14-15. 

The court laid out the legal basis for Zogenix’s preemption claims:

[T]he issue is one of obstacle preemption, which occurs when, “under the circumstances of [the] particular case, [the challenged state law] stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.”  Hines v. Davidowitz, 312 U.S. 52, 67, 61 S. Ct. 399, 85 L. Ed. 581 (1941).  The obstacle preemption doctrine holds that “[i]f the purpose of the [federal] act cannot otherwise be accomplished--if its operation within its chosen field else must be frustrated and its provisions be refused their natural effect--the state law must yield to the regulation of Congress within the sphere of its delegated power.”  Savage v. Jones, 225 U.S. 501, 533, 32 S. Ct. 715, 56 L. Ed. 1182 (1912).

Id. at *15.  

Given the unusual posture of this case, granting Massachusetts’ motion to dismiss would be a loss for preemption.  But the court denied the motion.  The court reiterated what it had stated in Round 2— that Zogenix could provide more facts as the litigation moved forward to support its argument that these regulations served essentially as a ban of Zohydro: 
On the record before me last summer, I could not allow Zogenix’s motion to enjoin the “pharmacist-only” BORIP regulation because Zogenix had not offered sufficient evidence of the regulations’ effect on Zohydro’s availability.  2014 U.S. Dist. LEXIS 92382, [WL] at *5.  But I did not foreclose the possibility that “a more detailed submission,” informed by a “record of enforcement,” might show “whether . . . an obstacle [to the FDCA’s objectives] exists.”  Id. Zogenix may be able to show, through survey evidence or third-party discovery from pharmacies and physicians, that Massachusetts pharmacies are not stocking its drug because of handling difficulties caused by the regulations and that their failures to stock the drug are affecting physicians’ prescribing practices.  Zogenix has alleged such facts in its Complaint, and I must take those allegations as true at this stage.  That the defendants are skeptical that the evidence will support those allegations is immaterial, because, if the allegations are proven, Zogenix will be entitled to relief.  The defendants’ motion to dismiss this count is therefore denied.
Id. at *15-16.

And so, the battle will continue.  But now it will be focused very much on preemption and the extent to which the pharmacy board’s regulations affect Massachusetts’ pharmacies’ willingness to carry and dispense Zohydro, an FDA approved drug.  While we’ve been through three rounds already, this battle is only starting to heat up and get interesting.  We’ll keep you posted. 

Friday, March 20, 2015

An Atypical View of Causation and Harm from South Carolina

We have had some time now to ruminate over the South Carolina Supreme Court’s opinion in State of South Carolina ex rel. Wilson v. Ortho-McNeil-Janssen Pharmaceuticals, Inc., No. 2012-206987, 2015 WL 775094 (S.C. Feb. 25, 2014).  In Wilson, the state attorney general brought an enforcement action against the manufacturer of the atypical antipsychotic Risperdal under the state’s Unfair Trade Practices Act (having the dysphonius acronym “SCUTPA” in the opinion) and recovered $327 million in civil penalties.  Although the Supreme Court reduced the award to $136 million, it mainly affirmed a verdict that, in our view, has multiple problems.  What problems?  Well, how about a nine-figure civil penalty for “deceptive” conduct when the state neither alleged nor proved that a single person was deceived or that the conduct had any adverse impact on anyone?  We call that a problem, but we’ll get back to that particular point in a moment. 

Those who read our 2014 Ten Best column and those who dialed into our teleseminar in January on those cases know a little about Risperdal and the various states’ lawsuits against the drug’s manufacturer.  What happened was that the FDA asked all manufacturers of atypical antipsychotics to review data on diabetes, which resulted in a new warning on diabetes being added to the labels.  The FDA also required a Dear Healthcare Provider Letter, which the manufacturer of Risperdal sent, but the letter included information that was technically off label. 

That resulted in an FDA warning letter in April 2004 stating that the DHCP Letter was “false or misleading” in violation of the FDCA, which in turn resulted in the manufacturer sending a corrective DHCP Letter.  Wilson, 2015 WL 775094, at **5-6.  That seems to be when various state attorneys general and their contingent-fee lawyers took interest.  Two of our Ten Best cases of 2014 were state false claims act cases arising out of these events where the states of Louisiana and Arkansas recovered very large judgments against this manufacturer.  Both verdicts were reversed on appeal, which was good news.

The Wilson case in South Carolina is decidedly bad news, maybe even a candidate for our 2015 Ten Worst, although it’s too soon to tell (Bexis doesn’t let us in on the lists until early December).  South Carolina sued not under a state false claims act, but under the state’s Unfair Trade Practices Act, and the state made two distinct claims:  (1) that the Risperdal labeling itself was unfair and misleading, presumably because it did not include sufficient information on diabetes (the Labeling Claim) and (2) that the company’s first DHCP Letter (aka Dear Doctor Letter or “DDL”) was unfair and misleading for reasons the FDA stated in its warning letter (the DDL Claim).  When you add up each alleged statutory violation—each copy of the DHCP Letter, each sales follow up, each product sample with the “misleading” package insert—even modest per-violation penalties can add up to very large numbers very fast.

That’s what happened in Wilson, and here is why we think it’s a problem.  First, it is difficult not to notice the court’s anti-industry tone.  Sure, we have a defense-side point of view, but the court seemed pained even to admit that Risperdal is an effective treatment that has helped millions of people.  Id. at *7 (“[O]ur review of the extensive record compels us to acknowledge that Risperdal has been an effective drug.”).  The opinion speaks of the manufacturer “thwarting” the FDA, “taking control” of the messaging surrounding the new diabetes warning, and engaging in “deceptive efforts” to protect market share.  Id. at **5-6.  We understand that the standard of review called for resolving all disputes of fact in favor of affirming the judgment, but that does not fully explain the court’s gratuitous disparagement of the manufacturer of this life-improving and potentially life-saving product.  But it was only a taste of things to come.

Second, as prefaced above, the court applied a legal standard that excused the state from pleading or proving either causation or actual harmi.e., that the allegedly misleading conduct had any impact on anyone.  The manufacturer argued, with substantial justification, that this was a prescription drug and that prescribing physicians were well aware of the risk of diabetes.  Id. at *10.  To the extent that either the labeling or the DHCP Letter did not sufficiently explain that risk and related risks, it is highly doubtful that it made any difference to any prescribing physician (aka the learned intermediary).  Id.  That point fell on deaf ears, with the court drawing a sharp distinction between a civil action brought by a private citizen and an enforcement action brought by the AG under South Carolina’s statute: 

In an action brought by a citizen . . . , SCUTPA requires that a private claimant suffer an actual loss, injury, or damage, and requires a causal connection between the injury-in-fact and the complained of unfair or deceptive acts of practices. . . .

Conversely, an enforcement action brought by the Attorney General has no such actual impact requirement.

Id. at *7 (citations omitted, emphasis added).  This is the lynchpin of the court’s opinion:  Private citizens have to prove causation and actual harm in a civil action, but the AG bears no such burden in an enforcement action under the same statute.  The state has to prove only that the practice had the “tendency to deceive.”  Id. at *10.  We will repeat that for emphasis.  The state can bring an enforcement action and collect potentially hundreds of millions of dollars in civil penalties, and it is “not required to show actual deception or that those representations caused any appreciable injury-in-fact or adversely impacted the marketplace.  Id. (emphasis added).  
That is a low standard indeed.  When we are discussing causation in failure-to-warn claims, we routinely emphasize how the causation element protects against finding “negligence in a vacuum” because it requires the plaintiff to prove that the alleged inadequacy in the warnings actually impacted the physician’s prescribing physician.  This is a critical protection against arbitrary liability, and similar concepts should have come into play in Wilson, as the defendant urged.  The court instead read those requirements right out of the statute.  Maybe that is the law of South Carolina, but we question whether it ought to be.  At this point, it’s up to the South Carolina legislature to fix this, because the state’s highest court certainly isn’t so inclined.
Other major problems that we will highlight relate to the separate claims.  With regard to the Labeling Claim, the manufacturer sold Risperdal with FDA-approved labeling.  Yet, the state was able to exact a gargantuan civil penalty by proving that the labeling understated or did not properly describe certain risks.  Put another way, the state government penalized the manufacturer for failing to deviate from labeling regulated and approved by the FDA.  Even in the world of branded prescription drugs, where federal preemption can be difficult to come by, this is a pretty stark example of what should have been implied conflict preemption.
How did the court get around this point?  By relying on Wyeth v. Levine and its holding that FDA-approved warnings are a “floor” up which states could build.  Id. at **19-20.  We have reviewed Wyeth v. Levine a time or two, and it is a stretch, to say the least, to say that the Supreme Court was opening the door to direct state regulation of prescription drug labeling.  Sure, the Supreme Court held that FDA regulation of prescription drug warnings did not necessarily impliedly preempt state-law tort claims based on allegedly inadequate warnings.  But those are tort claims brought by individuals who bear real burdens of proof, including the burden of proving that some inadequacy in the warnings actually caused them injury.
The state of South Carolina bore no such burden in Wilson.  This was straight up regulation of prescription drug warnings:  Either prepare the warnings the way the state wants or pay a giant penalty, whether or not the warnings actually resulted in any harm, deception, or mischief of any kind.  Remember how stridently the court differentiated between an enforcement action brought by the state and a civil action brought by a private citizen when it excused the state from proving causation and injury?  That tells us that the South Carolina Supreme Court itself considered a claim brought by a consumer as different in nature from a claim brought by the state.  Yet, when it came to implied preemption, the court did a 180 and treated claims brought by consumers and the state as the same.  Id. at *20 (“[W]e reject [the defendant’s] argument that Wyeth is inapposite because this case involves an enforcement action by the Attorney General.”)  We cannot come up with an explanation for this internal contradiction.  The court’s holding is all the more problematic when considering that the South Carolina statute includes an exception for regulated activity, which the South Carolina Supreme Court brushed aside, again citing Levine and again explaining that the state could penalize the manufacturer for not doing more.  Id. at **13-14.  Needless to say, we disagree. 
The DDL Claim has its problems too, but we will keep it brief.  The claim was based on the 2004 FDA Warning Letter, but we believe that letter and others were inadmissible hearsay.  The Arkansas Supreme Court so held in reversing a judgment arising out of these same events and involving the same warning letters, in the case mentioned above.  We believe that was the correct result.  The South Carolina Supreme Court found otherwise in two sentences, where it ruled that the letters actually benefited the defendant with regards to the statute of limitations.  So the defendant gets a little help on limitations, and in return the state gets to show the jury out-of-court statements, by the federal government no less, referring to the defendant’s DHCP letter as “false or misleading” under the FDCA.  Other than that Mrs. Lincoln, how was the play? 
There are many other issues, but we have gone on long enough.  With federal preemption and constitutional issues lurking about, maybe this case still has legs and will make its way to the U.S. Supreme Court.  That would be a good fight, one that we will follow with great interest.