Antitrust Law Daily Wrap Up, RICO—1stCir: Aetna Can Pursue RICO Claim Against Pfizer for Falsely Marketing Neurontin , (Apr 4, 2013)

By Jody Coultas

Aetna, Inc. presented evidence of causation and damages sufficient to survive summary judgment on its RICO claim against Pfizer, Inc. for allegedly false marketing of its epilepsy drug Neurontin, the U.S. Court of Appeals in Boston has held (Aetna, Inc. v. Pfizer, Inc., April 3, 2013, Lynch, S.).

Pfizer, knowing that third-party payors like Aetna would help determine demand for Neurontin by managing access to formularies, or lists of drugs for which third-party payors would pay, and ultimately pay for most prescriptions of Neurontin, targeted its marketing towards third-party payors. Aetna filed a coordinated complaint with Kaiser Foundation Health Plan, Inc. against Pfizer claiming that they had suffered injury from the fraudulent marketing of Neurontin for off-label uses, and alleged violations of RICO.

A district court found that Aetna presented sufficient evidence that Pfizer’s statements were actionable under RICO and that it sustained an injury from paying for off-label prescriptions of Neurontin. However, the district court granted Pfizer summary judgment on the basis that Aetna could not show that Pfizer made misrepresentations directly to Aetna or that Aetna relied on those misrepresentations in its formulary decisions.

Aetna was able to show but-for causation between Pfizer’s alleged violations of RICO and its overpayment for Neurontin prescriptions, according to the court. As the court noted in Kaiser Foundation Health Plan, Inc. v. Pfizer, Inc., the Supreme Court has held that the civil RICO contains a but-for causation requirement, such that Aetna needed to show that it would have paid for fewer off-label Neurontin prescriptions had Pfizer not falsely marketed Neurontin for off-label uses. Aetna's evidence of but-for causation included aggregate statistical evidence and circumstantial evidence, such as the increase in off-label prescriptions of Neurontin following the initiation of Pfizer's alleged fraudulent marketing efforts, and the fact that Pfizer embarked on these efforts in order to increase sales of Neurontin for off-label uses. Aetna was not required, as Pfizer argued, to present evidence from individual doctors to survive the motion to dismiss. The court noted that it was up to a jury to determine the aggregate and circumstantial evidence of causation against any failure to present individualized testimony from doctors.

The court found that Aetna presented sufficient evidence of a proximate cause between the alleged RICO violations and the alleged injury and reversed the district court’s ruling. The civil RICO causation provision also contains a proximate cause requirement. Pfizer’s argument that was required to show direct reliance on its marketing to prove proximate cause was rejected because direct reliance is not required in a private RICO claim predicated on mail fraud. A reasonable jury could have concluded that Pfizer' scheme relied upon the expectation that fraudulent off-label marketing to doctors would induce them to write off-label prescriptions for Neurontin that would be paid for by Aetna.

The court rejected Pfizer’s argument on appeal that Aetna was required to prove that Neurontin was always ineffective for the off-label uses at issue in order to establish a RICO injury. The district court correctly found that a reasonable jury could conclude that Neurontin was ineffective based on multiple clinical trials that demonstrated that Neurontin was no more effective than placebo in treating the off-label conditions at issue.

The case is No. 11-1595.

Attorneys: Peter D. St. Phillip (Cohen & Hart, P.C.) for Aetna, Inc. Mark S. Cheffo (Skadden, Arps, Slate, Meagher & Flom LLP) for Pfizer, Inc.

Companies: Aetna, Inc.; Pfizer, Inc

Cases: RICO