Pigs Get Fat, Mississippi Got Slaughtered
The top of the agenda, of course, is a review of Judge Weinstein’s Zyprexa decision (now online at 2009 WL 4260857) that we threw up a post about the other day (so we could say we were first on the web) and promised our readers our thoughts later. Our thanks to the folks at Pepper Hamilton for forwarding it.
Well, now is later.
Our first thought is that the opinion sounded unusually like a valedictory. Not only does it contain an extensive recounting of all the things that Judge Weinstein’s done in the Zyprexa MDL, slip op. at 10-11, 12-16 (something that’s not unusual in his recent opinions), but it takes an almost fond look back over the court’s prior views on the use of statistical evidence to facilitate mass adjudication of claims that (in Judge Weinstein’s view, unfortunately) aren’t capable of mass adjudication under the substantive law. Slip op. at 65.
Judge Weinstein may be waxing nostalgic because, in the opinion, as a proper district court judge should, he acknowledges that his liberal view of statistical evidence is not shared by a large majority of courts - particularly appellate courts, and especially his own appellate court - which instead follow an “individualized proof rule.” Slip op. at 66-84. He recognizes that “the Fifth Circuit Court of Appeals [including Mississippi] is inclined to be at least as restrictive in its approach to aggregate proof in mass tort cases as is the Second Circuit [the circuit in which Judge Weinstein sits].” Id. at 78. The Second Circuit in McLaughlin v. American Tobacco Co., 552 F.3d 215 (2d Cir. 2008) (our post about it here), and other cases has “rejected any fluid recovery theory.” Slip op. at 83. These decisions led to the rejection of the same evidence by the same expert that Mississippi used in the Zyprexa litigation. Id. at 84 (discussing In re Neurontin Marketing, Sales Practices, and Liability Litigation, 257 F.R.D. 315, 327-33 (D. Mass. 2009) (our post about it here)).
Judge Weinstein found only one exception to the individualized proof rule – the recent decision in In re Pharmaceutical Industry Average Wholesale Price Litigation, 582 F.3d 156 (1st Cir. 2009) (“AWP”). Judge Weinstein thoroughly and sympatheticly discussed the rationale in AWP, observing that it “seems so persuasive” to him. Slip op. at 84-89. The court yearned for something to fill “the continuing need to find a procedurally convenient and fair way to try these kinds of mass product liability cases." Id. at 90.
However, the court was constrained to agree that AWP wasn’t a product liability mass tort, and indeed wasn't a tort case of any sort (which is why we didn't blog about it). AWP involved causes of action entirely different from Mississippi’s claims, which implicated not only the learned intermediary rule, but also state-law issues of reliance and causation.
Through its PLA [product liability] CPA [consumer fraud], fraud, and negligence claims, Mississippi seeks recovery of other damages, such as amounts paid to treat diseases caused by Zyprexa. These theories do not fall within [any] exception to the Individualized Proof Rule. Because the State relies on aggregate proof to establish these claims, they are barred.
Slip op. at 97. Specifically:
- As to product liability, (1) the claims were subject to the economic loss rule, and (2) the individual claims were highly variable. Id. at 98. Allegations of injuries that would not have been sustained “but for” supposed illegal promotion were not subject to any statistical means of proving reliance by prescribing physicians as required by the learned intermediary rule. Id. at 99-100. “[E]ach prescribing decision and each patient’s injuries would have to be considered individually." Id. at 101.
We might also add, that because Mississippi was seeking reimbursement for its own increased medical treatment costs for patients allegedly suffering Zyprexa-caused adverse reactions, recovery of these purely governmental expenses would also be barred by the municipal cost recovery rule that we discussed earlier, here. But that only makes the rubble bounce.
- As to Medicaid fraud, and so-called “unjust enrichment,” allegations of submission of reimbursement claims for off-label use involve “the reliance of prescribing physicians on the absence of proper warnings.” Slip op. at 102. Reliance is individualized. The notion of off-label prescriptions as “not medically necessary” wasn't persuasive in the face of evidence that Zyprexa provided benefit to many patients in off-label situations. Id. at 103-04. “Medical necessity” “must take into account all the information available to the prescribing physician about the risks and benefits with respect to the individual patient in question and the myriad factors affecting [that patient], his family, and his associates. Id. at 103-04.
- As to consumer fraud, the state would have to prove “ascertainable loss.” Depending on what that meant (which the state never made clear) it could fail for the same reasons (or not) as the other claims. Id. at 106.
- As to common-law fraud and negligence, they “both require a showing of causation by reliance of prescribing physicians." Id. at 108. The fraud claim also looped back to the concept of medical necessity. Id. All such claims would require examining the reactions to the defendant’s alleged actions of a “heterogeneous population of. . .patients and physicians.” Id. at 109.
The Court’s decision was, at times, visibly reluctant. It concluded that the claims brought by Mississippi couldn’t be adjudicated on a mass basis and – since the state was unable or unwilling to prove them one-by-one – there was no evidence on critical causation, reliance, and injury points, which required entry of summary judgment.
Despite this court’s view to the contrary, appellate decisions have held that issues of reliance, loss causation, and injury are inappropriate for aggregation, due to the need to prove these elements on an individualized basis for each victim or injured party.
Slip op. at 65 (collecting cases).
One claim survived summary judgment – based upon a “theory that patients who were given [the drug] for unapproved uses received less benefit. . .and therefore the difference for those patients from the market price. . .and value received was greater.” Slip op. at 94. However, a major (if not sole) reason that this theory survived was because the court had already decided that exact issue in an earlier class action ruling and it was already on appeal from a prior Zyprexa decision. Id. at 95-96 (see our post about that, here). The value difference liability claims were stayed pending the outcome of that appeal. Slip op. at 108-09. Everything else went down to defeat.
There’s another thread, too. Judge Weinstein discusses at some length how all of the other states who brought similar claims in the Zyprexa MDL had the good sense to settle them for what he called “rough[ly] equivalen[t]” amounts “relative to the size of each state.” Slip op. at 20; see generally id. at 17-20 (discussing state and federal government settlements). Mississippi was – again unable or unwilling – to come to such a settlement, so its claims, which were legally meritless in any event, come to naught. At one point, late in the opinion, the court characterized Mississippi’s stance as “slash and burn” litigation. Slip op. at 116. The state was demanding billions (fines of up to $10,000 dollars for “almost one million” prescriptions, regardless of benefit or harm to any patient, id. at 97).
The court firmly rejected the notion of multiplied statutory penalties, and stated, in dictum, that such penalties were probably unconstitutional as “excessive fines.” Slip op. at 114-16. Assessing a penalty was in the “discretion” of the court, and that discretion turned on many factors: off-label use, medical necessity, benefit to the patient, harm to the patient, what the medical community knew at the time, and particular allegations of misconduct. Id. at 107. The court wasn’t about to undertake such an exercise:
Regardless of the lack of individualized evidence, imposition of civil penalties on a per-violation basis would entail separate examination of each of hundreds of thousands of claimed violations for purposes of determining the appropriate fine. Such an inquiry is impractical and beyond the resources of any court.
Slip op. at 107-08.
So by taking and sticking with an extreme position, Mississippi ended up getting essentially nothing. The court pointed out that the only money Mississippi received was less than several hundred thousand dollars in “holdbacks” from individual settlements that included Medicaid reimbursements. Slip op. at 20-21.
Here’s also where “other considerations” came into play. For one thing, the state knew full well that for years Zyprexa (and other similar drugs) was widely prescribed off label. Even if the state could take advantage of its governmental status to avoid the statute of limitations, slip op. at 62, it plainly sat on known information – just like (Judge Weinstein pointed out) Alabama had. See AstraZeneca LP v. State of Alabama, 2009 WL 3335904 (Ala. Oct. 16, 2009) (see our discussion here). While the court did not “rely" on this basis, it correctly chastised the state for its opportunism. Slip op. at 113 (“the State has. . .a special obligation to understand the benefits and dangers of widely prescribed drugs” used in its programs).
For another thing, the court didn’t share the state’s attitude towards the drug in question. A significant source of the court’s irritation with Mississippi (and presumably any other state, had any been so foolish not to settle claims that would have suffered similar fates) is the simple fact that Zyprexa (and other similar drugs) works – it brings about favorable outcomes – for both on-label and off-label uses. Judge Weinstein spends a great deal of time describing the benefits of the drug in the opinion. Slip op. at 6, 21-30, 31-33, 45-47, 113-14. Just a little of the flavor:
- Numerous articles in medical journals and periodicals have reported off-label uses of atypical antipsychotics; some have endorsed such uses. Slip op. at 32.
- An extensive list of the uses (on- and off-label) for which atypical antipsychotics have become “first line agents.” Id.
- "Atypical antipsychotics are routinely prescribed off-label." Id. at 33.
- "Even for those medications associated with an increased risk of metabolic side effects the benefit to specific patients could outweigh the potential risks. For example [a drug] has unique benefits for treatment refractory patients and those at significant risk for suicidal behavior." Id. at 6 (quoting ADA consensus statement).
- "[Defendant]. . .has created a product with substantial benefits that even now – after many years of litigation, research, testing, and controversy – is still favored by many physicians and patients. . .for some of the most serious psychological conditions that afflict millions of people worldwide. Courts cannot ignore the substantial benefits accruing. . .from use of [the drug]. . .[which] [p]revent[s] users with serious mental problems from requiring hospitalization. . .and allow[s] them to become productive taxpayers and participants in the economy." Id. at 113.
Even the court’s discussion of the defendant’s off-label promotion is loaded with laudatory descriptions of clinical benefits, slip op. at 35-42 – comments that the opinion implicitly endorses as a matter of substantive medical (as opposed to legal) judgment. “Viva Zyprexa” (id. at 37), indeed.
Beyond all that, the court concluded as a matter of law that the “various deleterious metabolic effects,” which are primarily what's at issue in the litigation, slip op. at 47, were commonly known risks by the medical community since March 1, 2004. Id. at 48-49. And “the facts in many individual cases indicate a much earlier date of discovery." Id. at 49.
Query: Would it be off-label promotion for drug companies to distribute these parts of Judge Weinstein’s opinion? Just kidding – don’t try it, folks, even though it would almost surely be First Amendment protected speech (see below, at part 4).
Finally there’s more grist for the mill of aggregate litigation theorizing. Judge Weinstein, who has probably thought about mass tort issues as much or more than any other sitting judge, coins another new term to describe claims like Mississippi’s – “a structural class action.” Slip op. at 65. These are cases that:
Conceptually and structurally. . .[are] predicated on numerous acts. . .alleged to have affected a statewide population. . . . In effect Mississippi’s individual claim is structured on the foundation of many thousands of conceptually separate claims, coordinated and aggregated by the State for purposes of recovering a portion of its overall [drug]-related costs through its Medicaid reimbursement program.
Slip op. at 64-65. In “structural class actions” the law developed in the Rule 23 context “regarding the uses and limitations of aggregate evidendce” is so analogous as to be binding. Id. at 65.
We don’t know how much longer Judge Weinstein intends to remain on the bench, but with this latest Zyprexa opinion, he’s surely given everyone – the plaintiffs’ side, the defense side, industry, other courts, the academy, and folks like us – something to talk about for a long time to come.
Preemption and Twombly/Iqbal – Funkadelic Together
We could just say “get the Funk out my face” (but we’d be dating ourselves). Thanks to Scott Michelman over at Shook Hardy, we put Funk v. Stryker Corp., 2009 WL 4281389, slip op. (S.D. Tex. Dec. 1, 2009), in our medical device preemption scorecard the other day. But Funk deserves better than that.
Funk is yet another post-Riegel PMA device preemption case, but with a three twists that defense counsel can use. Only one of them directly concerns preemption. The first point of interest involves judicial notice. Funk was decided on motion to dismiss, and since plaintiffs rarely allege PMA approval themselves (they're smarter than that), there’s always the procedural issue of getting the fact of PMA before the court. This proved especially difficult in Funk because the plaintiff resisted, “express[ing] uncertainty as to the type of FDA approval.” Slip op. at 11. The court found the type of PMA approval to be a matter of “public record” subject to judicial notice and went on to apply PMA preemption:
First, such a conclusion is consistent with both parties’ pleadings. [Plaintiff] states that the [device] underwent either the §510(k) or the PMA approval process. In stating the device received PMA approval, [defendant] does not dispute Funk’s contention but rather confirms its accuracy and specifies which of the alternatives is correct. Second, in support of its motion to dismiss, [defendant] has attached a letter from the FDA to [it] indicating that the [device] underwent the PMA process. In his response to the motion to dismiss, Funk seemed to object to [defendant’s] attachment of the letter; however, he did not question the letter’s validity.
Id. at 12. We’ve dedicated an entire post just to use of judicial notice to prove FDA regulatory matters, so readers should add Funk to that list. We’d also like to remind everyone that in that prior post, we detailed how to create lasting URLs to device approval information on the FDA’s website - so there’s a way for defendants to present this kind of approval information directly from the FDA to the court electronically.
The second interesting point about Funk has to do with pleading and Twombly/Iqbal. Maybe it’s come up before, but this is the first time we’ve noticed it in drugs/devices. This has to do with pleading by “information and belief.” Does information-and-belief pleading survive Twombly/Iqbal? The Funk court suggests that it does not, at least in the context of things like FDA approval:
Whether an allegation based solely on information and belief is sufficient, after Twombly, to survive a motion to dismiss is unclear. . . . Prior to Twombly, the Fifth Circuit held that “‘information and belief’ pleadings are generally deemed permissible. . . . However, in Twombly, the plaintiffs based one of their allegations. . .“upon information and belief,” and the Supreme Court held that this allegation, without more, failed to provide sufficient facts “to state a claim to relief that is plausible on its face.” 550 U.S. at 551. Moreover, the court notes that allegations based upon information and belief are particularly inappropriate in cases where the allegations are based on matters of public record.
Funk, slip op. at 3-4 (citations we don't care about omitted). Defense counsel should keep in mind, in filing post-Twombly/Iqbal motions to dismiss, that “information and belief” pleading is now of questionable validity.
Third, and finally, since the plaintiff in Funk had absolutely nothing, not even a warning letter, on which to base an arguably unpreempted “parallel violation” claim, he resorted to “res ipsa loquitur” – that simply from the device’s claimed failure, he was permitted to infer a regulatory violation. No way, José. That doctrine is “soundly refuted by Riegel." Funk, slip op. at 14.
As the Supreme Court recognized, the PMA process does not demand that an innovation be risk free; instead, the law amounts to a federal declaration that the product, if manufactured according to specifications, is not unreasonably dangerous in light of its potential benefits. Riegel, 128 S. Ct. at 1004. It would follow that one may not infer a defect in the product simply because a patient encountered negative side effects in using it.
Id. Thus the res ipsa loquitur argument was “circular” and its “reasoning is contrary to the holding in Riegel.” Funk, slip op. at 15.
Three useful holdings in the same opinion – that’s some funky music to our ears.
More on Twombly/Iqbal
While on the subject of Twombly/Iqbal, we’re aware the Senate Judiciary Committee hearing that took place yesterday. Like the prior congressional hearing on preemption (oh-so neutrally entitled “Protecting Patients from Defective Medical Devices”), this one was rather much of a kangaroo court. For the general tenor, check out the Legal Times Blog and AMLaw. The Lawprofessors have more links here.
As per usual the kangaroos only allowed our side one witness while the other side got more. Our side’s Daniel in this lion’s den was Gregory Garre, who, as Solicitor General, won Iqbal. We wouldn’t think of stealing his thunder, but we don’t mind borrowing a bit of it. For anybody who’s interested, here’s a copy of Mr. Garre’s prepared testimony before the Committee. It’s as fine a defense of Twombly/Iqbal as we’ve seen, so we recommend it.
All of the testimony before the committee is available here. Note that Penn’s Professor Burbank testified for the other side. So remember, when we face off with Prof. Burbank on PENNumbra over the coming month, it’s a couple of bloggers against a guy who was preparing congressional testimony at the same time.
We think we’ll hold our own, though.
And Finally, the First Amendment
We posted not too long ago about Allergan's suit against the FDA that contends that the Agency's restrictions on off-label promotion violate the First Amendment. We’re pleased, but not at all surprised, that the Washington Legal Foundation (and some others) has jumped into that fray with an excellent amicus brief. We’re not so pleased that WLF didn’t let us know about that brief, which they filed two weeks ago.
Anyway, for anybody interested in pursuing the First Amendment argument in the off-label context, give this thing a read. The first fifteen pages of the WLF brief are all policy, which we think (having some experience in the area) is harder to put together than the actual constitutional arguments. We've seen the constitutional arguments before, and posted about them several times, here, here, here, and here. We’d just be wasting our (and your) time going over them again. We’ll simply note that on page 19 of its brief, WLF quotes one of Bexis’ articles on the subject.
Just to be sure we weren’t missing anything else in the Allergan case, we checked PACER. We weren’t.
Suffice it to say that this is one that definitely warrants watching.