Antitrust Law Daily Wrap Up, RICO—N.D. Ill.: Biologics manufacturer's RICO claims against alternative funding provider partially survive dismissal, (Aug 20, 2025)

By Kenneth H. Ryesky, M.B.A., J.D.

Alternative funding provider alleged to have misrepresented patients' specialty drug coverage and directed pharmacy benefit managers to give drug manufacturer false information in benefit investigation process.

A federal district court judge in Chicago, Illinois has partially granted dismissal motions against a specialty drug manufacturer who sued an alternative funding provider that allegedly made deceptive representations to users of the drug manufacturer's drugs. The complaint alleged federal statutory RICO and Lanham Act claims, and Illinois statutory and common law claims. The drug manufacturer was granted leave to file a second amended complaint to address the deficiencies in the claims that were dismissed without prejudice (AbbVie, Inc. v. Payer Matrix, LLC, No. 1:23-cv-02836 (N.D. Ill. Aug. 15, 2025)).

Background. In addition to drugs manufactured through purely chemical laboratory processes, the pharmaceutical industry now produces biologic drugs, which are complex molecules derived from living organisms. The research, development, and administration leading to the production of biologic drugs, as well as the governmental approval processes, results in high prices for biologic drugs.

AbbVie, Inc. (AbbVie) researches, develops, manufactures, and markets biologic pharmaceuticals. With an obvious eye towards developing and maintaining markets for the products it produces, AbbVie has established a Patient Assistance Program (PAP) that provides its biologic pharmaceutical drugs to uninsured or underinsured patients at reduced or zero costs; AbbVie also donates hundreds of millions of dollars to non-profit organizations that promote equitable access to health care.

Payer Matrix, LLC (Payer Matrix) purports to provide advice, advocacy, and management to self-funded healthcare plans and patients to reduce expenses, notably the expenses associated with biologic pharmaceuticals.

AbbVie sued Payer Matrix, alleging that "Payer Matrix operates a fraudulent and deceptive scheme to enrich itself by exploiting AbbVie’s PAP through the enrollment of insured patients into a charitable program not intended for them." Payer Matrix moved to dismiss AbbVie's complaint as amended.

RICO claims. The judge denied Payer Matrix's motions to dismiss three of AbbVie's four claims brought under the Racketeer Influenced and Corrupt Organizations Act (RICO) [18 U.S.C. § 1961 et seq.]. Each of the three RICO counts on which dismissal was denied entailed a pharmacy benefit manager (PBM) entity. Payer Matrix's alleged interactions with each of these three PBMs was found to constitute an "enterprise" within the meaning of the RICO statute, reflecting "a high level of coordination between Payer Matrix and the PBMs."

Regarding the fourth PBM, which Payer Matrix touted as its "sister company," the court found that AbbVie's allegations did not plausibly plead that the sister company's employees were conducting the activities of the alleged enterprise as compared to their own activities; there was no allegation that the sister company received any portion of the alleged enterprise's gains. For this reason, dismissal of AbbVie's RICO claim on this count was granted, without prejudice.

The continuity and causation requirements under RICO were satisfied in AbbVie's amended complaint. In such regard, the court noted that "nothing in the complaint indicates that Payer Matrix would not have continued them had AbbVie not filed this lawsuit."

Lanham Act. The court partially denied Payer Matrix's motion to dismiss AbbVie's Lanham Act claims. AbbVie's claim of false association under the Lanham Act [15 U.S.C. § 1125(a)(1)(A)] was upheld with respect to Payer Matrix using AbbVie's logo in one of its presentations, pleading this was sufficient to survive a dismissal motion; AbbVie did not need to prove that its logo was a protected trademark at this stage of litigation.

AbbVie's contentions of likely consumer confusion regarding Payer Matrix's importation of medicines from Canada, however, did not survive the dismissal motion. AbbVie's complaint did not address whether AbbVie approved the importation of alternative medications, and thus gave no basis from which to infer that AbbVie could be held responsible for "any medicine shipping delays and any counterfeit, adulterated, mislabeled, ineffective, or spoiled product" received by patients through Payer Matrix's activities.

AbbVie's claim of false advertising under the Lanham Act [15 U.S.C. § 1125(a)(1)(B)] was upheld with respect to the statements made on Payer Matrix's website advertisements that customers have "no interruption in supply, no requirements to change brands or dosing, the only difference is the source of the medication, and of course the reduced costs." These statements were admittedly false, thereby exposing AbbVie to economic harm in the event that such promises to the patients are not fulfilled. The false advertising claims were also upheld regarding Payer Matrix's statements that AbbVie had "partnered with" Payer Matrix.

Payer Matrix's statements to physicians during Payer Matrix's drug conversion efforts, false as they may have been, were not made in a commercial setting and therefore not actionable under the Lanham Act. False statements made during Payer Matrix's alleged "disparagement campaign" against AddVie were not made to promote Payer Matrix's products or services, and likewise were not actionable under the Lanham Act. As for Payer Matrix's statements regarding the drugs it imported from Canada, these entailed generic words such as "valid" and "legitimate," which "cannot reasonably be construed as synonymous with 'FDA-approved' or 'FDCA-compliant,'" so dismissal was also granted regarding those statements.

State law claims. The court granted dismissal of AbbVie's claim under the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA) [815 ILCS 505 et seq.] because AbbVie was not a consumer and showed no "consumer nexus." This dismissal was with prejudice because the ""fundamental legal theory underlying" the claim cannot be cured through a repleading.

The Illinois Uniform Deceptive Trade Practices Act (IDTPA) [815 ILCS 510 et seq.] is analogous to the Lanham Act and construed accordingly. AbbVie's claims here were treated accordingly by partial grant and partial denial of Payer Matrix's dismissal motions.

AbbVie's common law tortious interference claim was dismissed only to the extent that it implicated Payer Matrix's importation of drugs from Canada, but otherwise survived the dismissal motion. The common law fraud claim also survived dismissal because "AbbVie plausibly states that Payer Matrix did misrepresent members’ insurance coverage in the process of facilitating PAP applications."

The Case is No. 1:23-cv-02836.

Judge: Alexakis, G.

Attorneys: Andrew Tutt (Arnold & Porter Kaye Scholer LLP) for AbbVie Inc. Calla N. Simeone (Richter & Hampton LLP) for Payer Matrix, LLC.

Companies: AbbVie Inc.; Payer Matrix, LLC

Cases: RICO Advertising StateUnfairTradePractices IllinoisNews