Antitrust Law Daily Wrap Up, RICO—1stCir: Third-Party Payors Can Pursue RICO and Consumer Protection Claims against Pfizer for Off-Label Marketing of Neurontin , (Apr 4, 2013)

By Jody Coultas, J.D.

A district court erred in granting summary judgment in favor of Pfizer as to federal RICO and New Jersey Consumer Fraud Act (CFA) class action claims filed by third-party payors against Pfizer, Inc. for falsely marketing its epilepsy drug Neurontin for off-label use of treating bipolar disorder, according to the U.S .Court of Appeals in Boston (Harden Manufacturing Co. v. Pfizer, Inc., April 3, 2013, Lynch, S.).

Harden Manufacturing Company sought to bring RICO and CFA claims on behalf of itself and other third-party payors, who pay for the costs of drugs prescribed to their members, against Pfizer. However, the district court found that it failed to present a genuine issue of material fact as to whether their injuries were caused by Pfizer's conduct, and denied certification on the basis that individual issues of causation and damages would predominate.

The third-party payors presented sufficient evidence to warrant a trial as to whether they were harmed by Pfizer’s false marketing, according to the court. Although the district court found that Harden presented adequate evidence that Pfizer fraudulently promoted Neurontin for off-label treatment of bipolar disorder and that Pfizer’s conduct likely caused a foreseeable harm to the plaintiff. Based on the reasoning outlined in Kaiser Foundation Health Plan, Inc. v. Pfizer, Inc., the court found that Harden could show the injury to the third-party payors was caused by Pfizer. The third-party payors did not need to show direct reliance on the misrepresentations, as direct reliance is not an element of proximate cause in a civil RICO cause of action based on mail fraud. Harden was also able to show that damages attributable to Pfizer could be calculated.

The court held that Harden submitted sufficient evidence to show but-for causation between Pfizer’s actions and the alleged injury. The but-for causation question was whether Pfizer's allegedly fraudulent marketing campaign caused the third-party payors to pay for more Neurontin prescriptions for bipolar disorder than they otherwise would have paid for. Harden was not required to prove causation through the testimony of individual doctors. Rather, the combination of the aggregate evidence and the circumstantial evidence was enough to overcome summary judgment.

Harden was not required to prove the individual, subjective ineffectiveness of each off-label prescription in order to establish injury, according to the court. Pfizer argued that because Harden did not prove that Neurontin was always ineffective for all bipolar patients, it could not show any injury. The court noted that whether the third-party payors suffered an injury was for a jury to decide. Clinical trial evidence that Neurontin was ineffective for bipolar disorder was sufficient to raise a genuine issue of fact on the effectiveness issue.

The court found it to be in the best interest of justice to vacate the district court’s ruling on the CFA claim and class certification. Harden argued that the court erred in denying class certification on the CFA claims, while Pfizer argued for the first time that the state claims failed as a matter of law. Thus, the court remanded the claims to the district court to determine any state law issues.

The case is No. 11-1806.

Attorneys: Thomas M. Greene (Greene LLP) for Harden Manufacturing Corporation. John H. Beisner (Skadden, Arps, Slate, Meagher & Flom LLP) for Pfizer, Inc.

Companies: Harden Manufacturing Corporation; Pfizer, Inc.

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