United States: Another Off-Label Promotion Third Party Payor Case Lacks Causation

Last Updated: July 18 2016
Article by Eric Alexander

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

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

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

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

With this background, Hillman alleged that defendant actively promoted the drug to be prescribed by physicians for several uses beyond its three approved indications. It is not clear when the defendant was supposed to have launched its various alleged schemes, but the drug had been on the market for 15 years before the alleged damages started. The alleged schemes were complicated, involving medical education programs, direct sales representative promotion to physicians, kickbacks to physicians, development of practice guidelines, and publications in medical journals.2016 U.S. Dist. LEXIS 84662, **5-8.The suggestion that the marketing involved some misrepresentations was that there was "no reliable evidence of [the drug's] safety or efficacy for the treatment of these off-label conditions and, in some cases, having evidence that it was actually ineffective or unsafe for those conditions," referring to studies failing to show efficacy for one potential indication. Id. at **8-9.Starting around 2002, some portion of the prescriptions filled for the drug were allegedly written for various off-label uses. Id. at **9-10.There was no allegation as to any communications were made to the plaintiffs or even what portion of their payments for the drug were for off-label uses.

The Supreme Court has interpreted RICO's causation requirement that injuries arise "by reason of" violations as an inquiry of "whether the alleged violations led directly to the plaintiff's injuries." Id. at *13 (quoting Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 461 (2006)).One might think that the Hillman allegations, like those in many of these cases, specify indirect causation at best, so the inquiry should be simple. However, the cases on such causation allegations are split and the Supreme Court has declined to resolve the split. Id. at **14-16 & n.5.Plaintiffs argued that the court should follow the reasoning of the First Circuit in In re Neurontin Mktg. & Sales Practs. Litig., 712 F.3d 51, 58 (1st Cir. 2013) (our #1 worst case of that year), which finds sufficient causation without direct representations to the fund as long as it would be foreseeable that some funds would pay for off-label scrips written as a result of off-label promotion. The Supreme Court cases, however, rejected a foreseeability test in requiring a direct relationship. Id. at **17-18.

A direct relationship would require that "the drug manufacturer directly made misrepresentations to the TPP because otherwise intervening factors—such as a physician's independent medical judgment or a patient's decisionmaking—interrupts the chain of causation." Id. at *19.Plaintiffs did not alleged any "direct misrepresentations to them so as to cause them to place [the drug] on their formularies or pay for [the drug] when prescribed." Id. at 20. They only made allegations about representations concerning the drug's "safety and efficacy for off-label uses to doctors, patients and caregivers."To proceed under these allegations "would require individualized inquiries into the prescribing physician's and individual patients' decisionmaking processes, creating difficulties in assessing damaged that the directness requirement was intended to prevent." Id. at *23.This meant the motion to dismiss was granted, although the dismissal was without prejudice—only the second strike, we guess.

We wonder how direct causation would work in a prescription drug TPP case where truthful statements about off-label use are not actionable. For there to be any payment for a prescription, there would need to be (1) a prescription written by a physician (2) that is filled by the patient, and (3) a claim for that prescription that is paid by the TPP. Just inducing the TPP to put a drug on its formulary to for an unapproved use would not cause any payment. We expect that any TPP, with access to drug labels and medical literature and presumably with a protocol in place on how to set its formulary, could not be confused by any representation about whether a particular use was approved. We also expect that claims about safety or efficacy would need to be backed up by data, probably published data. Sure, it would be easy to make up allegations—plaintiffs almost never suffer consequences from having no basis for what they allege in a complaint—that there were direct misrepresentations and they fooled the TPP into paying claims for off-label prescriptions. The same way TPP plaintiffs can claim that thousands of doctors were induced to write off-label prescriptions without ever having information on why a single prescription was written. Proving such allegations, though, is quite different than what plaintiffs had to prove when they could rely on truthful off-label promotion as a predicate act for RICO.

This article is presented for informational purposes only and is not intended to constitute legal advice.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions