Off-Label Use And The Hall Of Fame

On the MLB (that’s baseball) website the other day was a story about the threat of various elected members of the Baseball Hall of Fame to boycott Cooperstown (the very location is a phony story cooked up about a century ago) if any of the so-called “dirty” players − those who allegedly used steroids off-label − were also elected.  So far Mark McGwire (of his almost 600 home runs) and Rafael Palmiero (of his 3000+ hit and 500+ home runs) haven’t made it, but next year’s crop includes Barry Bonds (probably the best (and maybe the most) offensive player ever); and Roger Clemens (probably the best pitcher since the advent of the lively ball) are up.  Neither of them ever tested positive for the stuff − and steroids weren’t even against baseball rules when they (mostly) played (why they weren't tested at all).


But off-label use of steroids for the purposes of performance enhancement was against federal law, and both of them were unsuccessfully prosecuted for their alleged use.

Why all the furor over violations of federal law?  How many times did Babe Ruth violate federal law (the Volstead Act − otherwise known as Prohibition), or Jimmie Foxx, or Grover Cleveland Alexander, or others from baseball’s Jim Crow years (a major argument why Bonds was better, in the context of better opposition, than Ruth or Ted Williams)? Nor did Paul Molitor’s admitted cocaine use keep him out of the Hall.

Of course, none of them used banned substances for performance enhancement − althougn nobody can be sure what they would have done if they had the chance.

Wait a minute.

Why is it worse to use a substance, one that’s illegal under federal law, but not (then) banned by baseball, for performance enhancement rather than performance degradation?  Wasn’t there a “best efforts” clause in the standard baseball contract?  There’s a legitimate argument that it’s worse to engage in illegal conduct that makes you play poorly than illegal conduct that makes you play better.  As fans, we know which way we’d go on that.  The players we boo (at least us Philly fans) are those who dog it, not those who give their all to win.

After all, using a substance banned by baseball − but not illegal − for performance enhancement isn’t considered a disqualification for the Hall of Fame.  Just ask Gaylord Perry (spit) … or George Brett (pine tar) … or Whitey Ford (mud − can a belt buckle be considered a substance?).

But breaking the law − especially federal law − to better one’s performance is somehow considered beyond the pale by a significant portion of both the Hall of Fame electorate and membership.  They should look in the mirror, or better yet in the Hall.  What is Adrian Constantine Anson doing in the Hall?  Nobody damaged baseball more than old Cap, who more than any other person was responsible for banning black players from National Agreement baseball in the 1880s.

Preventing maybe 60 Hall of Fame caliber players from ever getting to play − that’s OK for the Hall.  Breaking the law to better one’s performance?  That’s supposedly a no-no.

Sort of reminds us of all the litigation about “illegal” promotion of off-label use.  That’s breaking the law − even if everything that the company allegedly said or did was entirely truthful.  The off-label information may well be very useful, even critical, to physicians trying to save lives and preserve health.  So there’s really no basis for arguing that truthful promotion of off-label use in general degrades the public health, and in many cases it probably enhances it.

But it’s illegal.

So our clients get sued, a lot, for allegedly doing it.

And time and time again, the plaintiffs seek recovery, not because there’s anything wrong with the information itself, but simply because it’s “illegal.”

But off-label promotion, without more − the same sort of “more” that we agree should keep Pete Rose out of the Hall of Fame (at least until he serves every day of his lifetime suspension), but not Bonds or Clemens (or a number of others) − is not a fraud, because it’s not false or misleading.  “Illegal” promotion can be perfectly truthful:

Critically, in order to establish a misdemeanor misbranding violation, the government need not adduce any evidence that the individual or entity that promoted the product off-label did so with an intent to defraud. An article may be misbranded pursuant to the misdemeanor provision without any conscious fraud at all,’ thus creating a form of strict criminal liability.

In re Actimmune Marketing Litigation, 2010 WL 3463491, at *7 (N.D. Cal. Sept. 1, 2010) (citations and quotation marks omitted).  So in honor of the Hall of Fame, and to underscore the distinction between “illegal” and “wrong”, we thought we’d discuss those cases holding that off-label promotion, legal or not, isn’t fraud.

Instead, what such claims amount to is “legally unsupportable attempt[s] to bring a private cause of action . . . for . . . off-label promotion violations of the Federal Food, Drug and Cosmetics Act.”  Central Regional Employees Benefit Fund v. Cephalon, Inc., 2010 WL 1257790, at *6 (D.N.J. March 29, 2010).  “[I]nsofar as Plaintiffs’ claims are based solely on allegations that Defendants promoted [a drug] for off-label purposes, they constitute an impermissible attempt to bring a private suit for violations of the FDCA.”  In re Epogen & Aranesp Off-Label Marketing & Sales Practices Litigation, 590 F. Supp.2d 1282, 1292 (C.D. Cal. 2008).

While off-label marketing is illegal, there is no private right of action to enforce it.  Rather, a plaintiff must base his/her cause of action through some other recognized legal claim.

Clark v. Pfizer, Inc., 990 A.2d 17, 21 n.1 (Pa.Super. 2010) (rejecting fraud claim concerning promotion “for off-label uses for which the effectiveness had not been scientifically demonstrated”).  “[A]s condemnable as [the] flouting of FDA regulations may be, the off-label promotion of a pharmaceutical product in violation of the FDCA simply does not give rise to fraud-based rights of action.”  In re Schering-Plough Corp. Intron/Temodar Consumer Class Action, 2009 WL 2043604, at *10 (D.N.J. July 10, 2009).

Even in the context of FDA criminal prosecutions, it’s been established that “[p]romotion of off-label uses is not inherently misleading simply because the use is off-label.”  United States v. Caronia, 576 F. Supp.2d 385, 397 (E.D.N.Y. 2008); accord United States v. Caputo, 288 F. Supp.2d 912, 921 (N.D. Ill. 2003) (“[g]iven the sophistication of the audience [physicians] to whom the off-label uses were promoted”).  Thus, FDA criminal penalties do not establish anything more than a non-actionable FDCA violation:

[O]ff-label marketing and promotion is not inherently fraudulent, and the plaintiffs may not rely on [defendant’s] alleged past statutory or regulatory violations to state a common law claim for fraud. In the absence of any specific allegations of fraud, as opposed to the mere fact of off-label marketing, the plaintiffs' common law fraud claims must be dismissed.

Central Regional Employees Benefit Fund v. Cephalon, Inc., 2009 WL 3245485, at *4 (D.N.J. Oct. 7, 2009) (footnote concerning “exclusive” federal enforcement omitted).  “Moreover, courts have routinely refused to find promotional marketing of off-label uses fraudulent when they are directed at sophisticated audiences, like physicians.”  In re Actimmune Marketing Litigation, 614 F. Supp.2d 1037, 1055 (N.D. Cal. 2009) (following Caronia, 576 F. Supp.2d at 397-98).

The same phony equivalence between illegal and fraudulent has probably been shot down in federal RICO actions enough times to qualify the courts for “ace” status.  “Promotion of off-label uses is not inherently misleading simply because the use is off-label.”  Epogen/Aranesp, 590 F. Supp.2d at 1289 (citation and quotation marks omitted).

[M]any of plaintiffs’ allegations conflate a false and misleading statement under the FDCA, i.e., one that occurs when the drug label does not match the promoted assertion about the drug, and a false and misleading statement about the drug itself that can give rise to a claim under RICO. The two types of statements are not the same. . . . off-label marketing of an approved drug is itself not inherently fraudulent.

Actimmune, 614 F. Supp.2d at 1051 & n.6 (citations omitted).

Plaintiffs could not predicate RICO and state consumer fraud claims on what are, in essence, misbranding claims, absent allegations that [defendant] made false or deceptive statements. This is because off-label promotion is not inherently fraudulent; truthful off-label promotion of drugs does not violate RICO or state consumer protection laws.

In re Epogen & Aranesp Off-Label Marketing & Sales Practices Litigation, 2009 WL 1703285, at *7 (C.D. Cal. June 17, 2009).  Accord In re Schering Plough Corp. Intron/Temodar Consumer Class Action, 2010 WL 2346624, at *8 n.6 (D.N.J. June 9, 2010) (“[o]ff-label promotion may run afoul of the FDCA, but it does not by itself necessarily constitute fraudulent conduct”), aff’d, 678 F.3d 235, (3d Cir. 2012); Central Regional Employees, 2010 WL 1257790, at *3 (“[o]ff-label marketing activities, including [defendant’s] alleged payment . . . for studies, are not inherently fraudulent”); Schering-Plough, 2009 WL 2043604, at *10 (“[plaintiffs’] theory of injury requires the Court to assume that off-label promotion is, by its very nature, fraudulent conduct. This is not reality.”).

The improper equation of “fraud” with allegedly illegal off-label promotion has, not surprisingly, raised its ugly head in claims that allege fraud or misrepresentation.  In such cases, “it is well-established that off-label marketing of an approved drug is itself not inherently fraudulent.”  Central Regional Employees, 2010 WL 1257790, at *5.  Accord Rohlik v. I-Flow Corp., 2011 WL 2669302, at *3 n.4 (E.D.N.C. July 7, 2011) (“there is nothing inherently fraudulent or misleading about promotion of off-label uses for medical devices”); Central Regional Employees, 2009 WL 3245485, at *4 (“[m]erely alleging that [defendant] marketed the drugs at issue for off-label purposes does not state a claim for fraud”); Hood v. Ortho-McNeil-Janssen Pharmaceuticals, Inc., 2009 WL 561575, at *2 (N.D. Miss. March 4, 2009) (“it is not the act of causing the submission of a claim for a non-medically accepted indication that creates liability under state law causes of action, but rather the act of causing the submission of a false or fraudulent claim”); Pennsylvania v. Elli Lilly & Co., 511 F. Supp.2d 576, 582 (E.D. Pa. 2007) (quoted in Hood).

We’ve also come across repeated holdings that “illegal” doesn’t mean “fraud” in the context of False Claims Act litigation, where it seems that relators can’t get it through their heads that “false” actually means false.”

[T]he mere fact that [defendant] may have been violating FDA regulations [regarding promotion of off-label use] does not translate into liability for causing a false claim to be filed.  Violations of laws, rules, or regulations alone do not create a cause of action under the FCA.  It is the false certification of compliance which creates liability. . . .  Thus, some request for payment containing falsities made with scienter (i.e., with knowledge of the falsity and with intent to deceive) must exist.

U.S. ex rel. Polansky v. Pfizer, Inc., 2009 WL 1456582, at *7 (E.D.N.Y. May 22, 2009) (emphasis original).  Accord U.S. ex rel. Bennett v. Medtronic, Inc., 747 F. Supp.2d 745, 779 (S.D. Tex. 2010) (“relator has alleged a number of unlawful promotional tactics.  The cases recognize that “even if a drug or device manufacturer’s marketing or promotion activities violate FDA regulations, that is insufficient to plead that the manufacturer caused physicians or hospitals to submit false claims.”); U.S. ex rel. Bennett v. Boston Scientific Corp., 2011 WL 1231577, at *29 (S.D. Tex. March 31, 2011) (same court dismissing almost identical claim by same repeat relator against different defendant); Smith v. C.R. Bard, Inc., 730 F. Supp.2d 783, 803 (M.D. Tenn. 2010) (“a violation of a law or a regulation standing alone is not proof of a false claim” because “physicians may prescribe drugs for off-label use”); see U.S. ex rel. Rost v. Pfizer, Inc., 507 F.3d 720, 732-33 (1st Cir. 2007) (off-label promotion “while illegal, [is] not a sufficient basis for an FCA action”; plaintiff must “establish that false claims were submitted”).

Moreover, since off label use is often paid for by the government, its promotion isn’t automatically a false claim for similar reasons:

To state a claim under FCA . . . Relators must sufficiently plead that the Medicaid reimbursement claims filed as a result of [defendant’s] conduct (here, its off-label promotion of [the drug]) were “false or fraudulent.”  [Defendant] contends that if a state Medicaid program chooses to reimburse a claim for a drug prescribed for off-label use, then that claim is not “false or fraudulent,” and liability cannot therefore attach for reimbursement.  The court agrees.

U.S. ex rel. Banignan v. Organon USA, Inc., ___ F. Supp.2d ___, 2012 WL 1997874, at *12 (D. Mass. June 1, 2012) (emphasis added).

Class actions proponents have also been hammered for improperly “assum[ing] that all off-label promotion was fraudulent”:

[T]he Court [has] differentiated between off-label promotion and fraudulent promotion. . . .  [P]laintiffs must show that the defendants’ alleged fraud caused the treating physician to prescribe [a drug] when he or she otherwise would have used alternative treatments.  Thus, in order to differentiate those prescriptions that were caused by fraud from those that were attributable to non-fraudulent off-label marketing or other independent factors, a factfinder would have to perform a granular doctor-by-doctor analysis.  This would be unmanageable.

In re Neurontin Marketing & Sales Practices Litigation, 2011 WL 1882870, at *4-5 (D.Mass. May 17, 2011).  Accord In re Neurontin Marketing & Sales Practices Litigation, 754 F.Supp.2d 293, at 310-11 (D. Mass. 2010) (rejecting class expert for “not . . . demonstrat[ing] the extent of harm caused by the fraud, as opposed to run-of-the-mill off-label detailing”); In re Neurontin Marketing, Sales Practices & Products Liability Litigation, 257 F.R.D. 315, 229-31 (D. Mass. 2009) (rejecting methodology of litigation expert who “has assumed on instruction of counsel that all detailing during the class period was both off-label and fraudulent”).

Finally, we’ve found one instance of a court in a Lanham Act case also pointing out that off-label promotion isn’t enough to establish fraud:

[T]he Court notes that [plaintiff] cannot prove falsity simply by relying on statements made in FDA letters that apply FDA standards.  A Lanham Act plaintiff must do more than assert that the challenged claims are inadequately substantiated under FDA guidelines; the plaintiff must also show that the claims are literally false or misleading to the public.

Bracco Diagnostics, Inc. v. Amersham Health, Inc., 627 F. Supp.2d 384, 471 (D.N.J. 2009) (citation and quotation marks omitted).

All in all, we think it’s pretty clear that the courts understand the distinction between “illegal” and “false” promotion in the off-label context.  Many plaintiffs in various contexts have tried, but failed, to blur that distinction.  Thank goodness we don’t select our judges from the Baseball Writers’ Association.

Why Agency Fraud Is Like Fraud On The FDA

In our rather terse (due to firm involvement) post on Monday concerning Merck & Co. v. Ratliff, ___ S.W.3d ___, 2012 WL 413522 (Ky. App. Feb. 10, 2012) – beating both BNA and 360 by two days, BTW – we mentioned the “interesting” aspects of that case.  Having noodled it a bit more, we’ve concluded that one of these deserves a little more attention.


We noted that, in Ratliff, the court recognized similarities between “fraud on the market” and agency fraud theories such as fraud on the FDA.  Id. at *7.  We agree, and we’d like to explain a bit why this is so.

“Fraud on the market” as our posts on that subject have discussed, is a legal doctrine, so far (thankfully) unique to securities litigation, that waters down the traditionally rather stringent standards for proving fraud by creating a “presumption” of reliance in certain limited circumstances.  See Basic, Inc. v. Levinson, 485 U.S. 224 (1988) (4 justice majority of 7-justice court).  “Fraud on the market” isn’t a state-law claim.  Neither the Supreme Court nor any state high court has extended the “fraud on the market” presumption to any state-law action, even in the securities realm.  That proposition was what our 50-state fraud on the market post was intended to (and we think, did) establish.

In Basic, Inc., the Supreme Court bought a questionable proposition – that securities markets are uniquely “efficient” and “developed.”  In other words, because there are so many participants in national stock markets, and those participants have such a voracious appetite for information, then anything about a particular stock is essentially instantaneously reflected in that stock’s price.  Because of that (rather questionable) conclusion, any plaintiff in a securities fraud suit is “presumed” to rely on any material disinformation.

Even assuming that’s true in the securities arena – a proposition we don’t really accept – it’s certainly not true where prescription medical products are concerned.  Prescription products, being available only by prescription, necessarily require medical approval before their use.  Doctors’ knowledge and attitudes span a vast spectrum. We see that all the time in making causation motions under the learned intermediary rule.  We can beat causation in a prescription medical product case by:  (1) showing that the highly educated and motivated prescriber knew all about the risk from independent continuing review of relevant literature, or conversely, (2) that the prescriber isolated him or herself from the influence of our client by not reading warnings at all and not paying attention to pharmaceutical detailing.

Thus, there’s absolutely no basis for a Basic, Inc. presumption of reliance on any different information that might have been disseminated by a pharmaceutical or medical device manufacturer.  Any given prescriber might already know it – or might never rely on that source – or even both at the same time.

[T]here is no prescription drug “market,” at least as that term is understood in the securities context. . . .  [T]he only “market” for a prescription drug is the potential group of patients who will be prescribed it by their physician, and if the side effects of the drug make it overly risky to ingest, the doctor will either not prescribe it or the patients will decide not to take it. . . .  [T]he decision to take a particular drug is a medical one, not one based on an comparative analysis of risk versus price.

Heindel v. Pfizer, Inc., 381 F. Supp.2d 364, 380 (D.N.J. 2004).  For these reasons, differing degrees of physician reliance have consistently defeated any presumption of reliance in learned intermediary situations.  See De Bouse v. Bayer, 922 N.E.2d 309, 319 (Ill. 2009) (rejecting “market theory” of causation; plaintiff “fails to allege that her particular doctor was actually deceived by any of [defendant’s] advertisements or statements”); International Union of Operating Engineers Local No. 68 Welfare Fund v. Merck & Co., 929 A.2d 1076, 1087-88 (N.J. 2007) (“to the extent that plaintiff seeks to prove only that the price charged for [the drug] was higher than it should have been as a result of defendant’s fraudulent marketing campaign, and seeks thereby to be relieved of the usual requirements that plaintiff prove an ascertainable loss, the theory must fail”); Clark v. Pfizer, 990 A.2d 17, 27 (Pa. Super. 2010) (“statistical probability does not substitute for actual inquiry, as a general showing of percentages does not tend to prove that the class members’ specific doctors relied upon Defendants’ statements or that Defendants’ statements were the proximate cause of an injury”); New Jersey Citizen Action v. Schering-Plough Corp., 842 A.2d 174, 177-78 (N.J. Super. A.D. 2003) (“the intervention by a physician in the decision-making process necessitated by his or her exercise of judgment whether or not to prescribe a particular medication protects consumers in ways respecting efficacy that are lacking in advertising campaigns for other products”); Commonwealth v. Ortho-McNeil-Janssen Pharmaceuticals Inc., 2010 WL 3548474 (Pa. C.P. June 25, 2010) (“application of the fraud on the market theory was rejected”; citing “evidence that doctors . . . prescribed off-label use of [the drug] to class members for reasons wholly unrelated to defendants’ alleged fraudulent marketing”); UFCW Local 1776 v. Eli Lilly & Co., 620 F.3d 121, 133-34 (2d Cir. 2010) (“prescribing doctors do not generally consider the price of a medication when deciding what to prescribe for an individual patient”); In re St. Jude Medical, Inc., 522 F.3d 836, 839-40 (8th Cir. 2008) (“evidence concerning the reliance or non-reliance of individual physicians and patients” defeats generalized proof of causation); Zafarana v. Pfizer, Inc., 724 F. Supp.2d 545, 558 (E.D. Pa. 2010) (“there could be no justifiable reliance in general due to the operation of the learned intermediary doctrine”); In re Zyprexa Products Liability Litigation, 671 F. Supp.2d 397, 453-54 (E.D.N.Y. 2009) (“almost one million [drug] prescriptions, or . . . over one hundred thousand ‘episodes of care’ would necessarily require individualized consideration of the circumstances of each case”); In re Neurontin Marketing, Sales Practices & Products Liability Litigation, 257 F.R.D. 315, 326 (D. Mass. 2009) (given “individualized requirements for approval or reimbursement imposed on various plans' members and, to some extent, their prescribing physicians,” “questions . . . regarding individual doctor's exposure to defendants’ misrepresentations and the causal nexus between those misrepresentations and plaintiffs’ injuries” involved “millions of disparate and varied human interactions”).

So how does this precedent relate to fraud on the FDA?  There isn’t as much law because Buckman Co. v. Plaintiff’s Legal Committee, 531 U.S. 341 (2001), held such claims preempted and thereby eliminated the need to come up with other defenses, but when one thinks about it, the theories bear considerable resemblance.

The fraud on the FDA theory in Buckman was typical. It alleged that “but for” the defendant’s “fraud” committed on the agency, the product in question would not have been granted approval and therefore could not have been sold:

Plaintiffs say petitioner made fraudulent representations to the Food and Drug Administration (FDA or Administration) in the course of obtaining approval to market the [devices]. Plaintiffs further claim that such representations were at least a “but for” cause of injuries that plaintiffs sustained from the implantation of these devices:  Had the representations not been made, the FDA would not have approved the devices, and plaintiffs would not have been injured.

531 U.S. at 343.  Note the resemblance to the fraud on the market cases – no mention whatever of the intervening medical decisions of the prescribing/implanting physicians.

Just as “fraud on the market,” through the imposition of a “presumption” of reliance, seeks to take the “learned intermediaries” out of the causation picture, so does fraud on the FDA.  Instead of presuming reliance, fraud on the FDA presumes that the FDA would not have taken the regulatory step it was purportedly fraudulently induced to take – in most cases approval of a product.  By so presuming that the FDA would have acted differently than it actually did (also why such claims inherently conflict with government decisions and must be preempted), fraud on the FDA would take the learned intermediary physicians out of the causal chain.  If the product could not be legally marketed, then it would never have been available to the doctors in the first place.

Both fraud on the market and fraud on the FDA thus seek to bypass the individualized decision-making of prescribing physicians through use of generalized presumptions that don’t correspond to the way things really work.  Just as physicians have varied reactions to allegedly withheld information, so does the FDA.  Revocation of approval of a drug or device is a serious step that the FDA rarely takes.  It never revoked approval of any of the bone screws involved in Buckman.  Not even a recall constitutes the revocation of approval:

[T]he argument is predicated on the faulty assumption that the recall invalidated the [products’] PMA [pre-market approval].  Plaintiffs have cited no authority for that proposition, and [defendant] correctly notes that the PMA process is governed by a completely separate statutory and regulatory regime than that governing withdrawal of a PMA – a process to which the [products] have never been subjected.

In re Medtronic, Inc. Sprint Fidelis Leads Products Liability Litigation, 592 F. Supp.2d 1147, 1155 (D. Minn. 2009), aff’d, 623 F.3d 1200, 1205 n.4 (8th Cir. 2010) (affirming for reasons stated by district court).  Accord Blanco v. Baxter Healthcare Corp., 70 Cal. Rptr.3d 566, 579 (Cal. App. 2008) (“The fact the FDA implemented a Class I recall of the [product] does not alter our conclusion. . . . we have found no evidence in the record to support the conclusion the FDA revoked the [product’s] PMA”); Erickson v. Boston Scientific Corp., 2011 WL 7036060, at *6 (C.D.Cal. Dec. 12, 2011) (recall not equivalent to revocation of approval); Theofanis v. Boston Scientific Corp., 2003 WL 24049229, at *2 ¶16 (S.D. Ind. 2003) (same). Thus, even if the FDA did determine that it had been defrauded, there’s no reason to assume that revocation of approval would be the responsive action of the Agency.

Thus, no presumption of revocation is valid in fraud on the FDA cases.  What happens when that presumption is eliminated?  The same as with fraud on the market, that’s what.  Fraud on the FDA plaintiffs face exactly the same conundrum – non-reliance of most prescribing physicians on information directed to the FDA but not to them.  That, too, arose in Bone Screw cases prior to Buckman.  For example, a dozen or more opinions in Tennessee refused to apply any fraud on the FDA presumption, and threw out the claims on causation grounds, citing that state’s rejection of fraud on the market presumptions:

[E]ven Tennessee did recognize “third party” fraud, [plaintiff] cannot prove several necessary elements of his claim – reliance and proximate cause.  Similar to negligent misrepresentation, reliance is an essential element of any action for fraudulent misrepresentation. Carter had provided no evidence that his physician . . . relied upon any misrepresentations to the FDA in deciding whether to use the . . . device in his spinal fusion surgery.

Carter v. Danek Medical, Inc., 1999 WL 33537317, 5 (W.D. Tenn. June 3, 1999) (citing In re Sofamor Danek Group, Inc., 123 F.3d 394 (6th Cir. 1997), and analogizing to Tennessee’s refusal to dispense with “actual reliance” through “a fraud-on-the-market theory of fraud”); accord, e.g., Ponthieux v. Danek Medical, Inc., 1999 WL 33486689, at *8 (W.D. Tenn. May 28, 1999) (same).  There are another half-dozen or more cases cases decided by the same judge employing he same rationale.

Thus, we think that the court in Ratliff was indeed onto something when it analogized between fraud on the market and fraud on the FDA.  Both are theories that seek to avoid the disparate medical decisions made by numerous treating physicians.  Both do so by invoking presumptions that don’t reflect what actually happens in the real world (at least in the world of drug and device litigation).  Thus, if Buckman had never happened, many of the same reasons why courts reject fraud on the market in prescription medical product litigation would also apply to bar fraud on the FDA claims as well.

Fraud on the Market Takes It on the Chin – Again

We can’t say all that much about Merck & Co. v. Ratliff, ___ S.W.3d ___, 2012 WL 413522 (Ky. App. Feb. 10, 2012), because of our involvement in the Vioxx litigation, but we’d be remiss not to point out that the Kentucky appellate court joined the vast majority of other jurisdictions in rejecting “fraud on the market” outside of the securities area while reversing (overcoming a tough abuse of discretion standard) class certification in Ratliff.  Id. at *7.  No fraud on the market theory was appropriate for:  (1) consumer fraud, (2) regular fraud, (3) negligent misrepresentation, and (4) unjust enrichment.

Three other points of interest about Ratliff:  First the court recognized that “class certification is typically not granted in prescription drug cases because of the individualized inquiries such litigation typically involves.”  Id. at *6 n.6.  Our class action cheat sheets – state and federal – underscore the accuracy of this point.  Second, the court recognized the similarities between fraud on the market and agency fraud theories such as fraud on the FDA.  Id. at *7.  Third, the court held that the “inequitable conduct” element of unjust enrichment would require an individualized determination of medical risk and benefit for every user of the drug.  Id.

A Fraudulent Claim and Fumbled Opinion

Pennsylvanians have much to be proud of, including our history, sports, food, culture, and laws. We've got Valley Forge and Gettysburg. We've got the best (okay, after last night, maybe second-best) football team, and the best baseball and hockey teams. We might end up with the best college basketball team. We've got cheesesteaks and Primanti sandwiches. We've got the birthplaces of America's greatest actor, greatest composer, and greatest painter. And we've got pretty good case law. It's a pity when plaintiffs and judges get around that good case law by creating some really bad case law.

That's what happened in James v. Stryker Corp., 2011 U.S. Dist. LEXIS 7927 (E.D. Pa. Jan. 27, 2011). It's yet another pain pump case. The Complaint contained three causes of action: (1) negligence, (2) negligent misrepresentation, and (3) fraud. At issue here was the defendants' motion to dismiss the fraud claim. It turns out that the fraud claim is itself a fraud, because it didn't really allege any sort of fraud. The plaintiff alleged that the defendants "made material misrepresentations to Plaintiff, Plaintiff's physicians, and to the public that pain pumps and the anesthetics used in the pumps were safe for use following shoulder surgeries." Id. at *3. That's general, boilerplate stuff. It doesn't come close to satisfying Rule 9.

What exactly were the lies? Here's what the Complaint said by way of 'explanation': "The Defendants downplayed, understated, and/or disregarded their knowledge of the serious and permanent side effects associated with the use of their products, despite the existence of information available to Defendants that should have demonstrated that Stryker products were likely to cause serious injuries to product users." Id. More twaddle.

So at this point, the defendants figured out that there is less to this 'fraud' claim than meets the eye, and that it's merely a failure to warn claim. The court acknowledges that under Pennsylvania law, the plaintiff "would be required to demonstrate negligence to state a claim on the failure to warn theory." Id. at *6. (That's one of those bits of Pennsylvania law that's so much better than what we see in many other jurisdictions.) No such negligence is alleged in Count 3. So bye-bye bogus fraud claim, right? Nope. The judge bought the plaintiff's argument that the defendant might've "committed fraud by, inter alia, promoting their products for use that had been expressly rejected by the FDA." Id. at * 8. We still don't hear any fraud.

Does the Complaint lay out the deception? The court thinks so. We don't. Here is what the court relied on to find some hint of an off-label fraud:

-- "Defendants and their agents misrepresented to Plaintiff and her physicians that pain pumps and the anesthetics used in the pumps were safe for use following shoulder surgeries."

-- "Defendants knew that the FDA had not yet approved the pain pump for off-label uses, yet they continued to market the product for such uses."

-- "Plaintiff and her physicians relied on these misrepresentations, used Defendants' pain pump, and Plaintiff's injury resulted."

Id.

Now maybe we downed too many cans of Iron City last night, but we still don't know what the fraud is supposed to be. We can think of only two possibilities, both of which are utterly dopey: (1) Saying an off-label use is safe is inherently fraudulent; or (2) the defendants falsely said that the off-label use was on-label. The first theory is belied by the fact that there are many off-label uses that are not only safe but are standard medical practice. The second theory makes no sense, because it is inconceivable that a doctor could ever be misled into thinking an off-label use is on-label. Doctors have PDR's, labels, and the internet. Most of all, they have their education and training.

The court's opinion is bereft of logic. In a footnote, the court observes that "[w]here a manufacturer fraudulently markets a drug for 'off-label' uses, the marketing of that product is no longer justified in the way a drug marketed for its approved purposes is." Id. at *9 n. 3. There's nothing clear about that holding save for hostility to off-label use. The court seems to have made up some sort of new claim out of whole cloth, and that is particularly sketchy when it's a federal court presiding over a diversity case. We don't think a Pennsylvania state court would sign off on this silliness.

In short, there's no fraud in sight, except for the claim itself. By letting that claim go forward, the court gave us the equivalent of a dropped pass, a fumble, or a crazy penalty.

Oh well. Pitchers and catchers report in a week.