Antitrust Law Daily Wrap Up, RICO NEWS: Supreme Court denies drug makers’ petition for review of RICO proximate causation issue, (Dec 9, 2013)

Pharmaceutical company Pfizer Inc. and its subsidiary Warner-Lambert Co., LLC have been denied U.S. Supreme Court review of a determination by the U.S. Court of Appeals in Boston that plaintiffs in RICO actions based on Pfizer’s allegedly fraudulent misrepresentation of the efficacy of one of its drugs for off-label uses could satisfy RICO’s proximate cause requirement and that the plaintiffs could demonstrate causation and damages through aggregate evidence of doctors’ reliance on Pfizer’s marketing, without any showing of individualized causation. Today, the Court denied Pfizer’s petition for certiorari, which was filed on August 30 (Pfizer Inc. v. Kaiser Foundation Health Plan, Inc., Dkt. No. 13-289).

In Kaiser Foundation Health Plan, Inc. v. Pfizer, Inc., a district court concluded that Pfizer had engaged in mail and wire fraud by misrepresenting the efficacy of its brand-name drug Neurontin for off-label uses. On appeal (712 F.3d 21 (2013)), the First Circuit held that plaintiffs could satisfy the RICO Act’s “proximate cause ‘direct relation’ requirement” by supplying evidence that the harm to the plaintiff health maintenance organization from Pfizer’s alleged fraud “was plainly foreseeable and was in fact foreseen,” and that the plaintiffs satisfied this “foreseeability test” by showing that Pfizer had known that “because of the structure of the American health care system, physicians would not be the ones paying for the drugs they prescribed.” The petition observes that the First Circuit reached this conclusion even though the chain of events between Pfizer’s alleged misrepresentations and Kaiser’s injury involved “at least four steps,” and physicians may have considered factors other than Pfizer’s materials in reaching their prescribing decisions.

Moreover, the appeals court upheld the district court’s damages award based on a statistical analysis prepared by a health economist who “did not disaggregate expenditures on off-label marketing that was fraudulent, but simply assumed that such marketing had the same effect as Pfizer’s overall expenditures,” according to the petition. The appellate court held that it was not the plaintiff’s burden to show that doctors were influenced by Pfizer’s marketing, but rather Pfizer’s burden to show that they were not so influenced. In Harden Manufacturing Corp. v. Pfizer Inc., 712 F.3d 60 (2013), and Aetna, Inc. v. Pfizer Inc., 712 F.3d 51 (2103), the First Circuit relied on its decision in Kaiser to find that RICO’s proximate causation requirement could be satisfied by meeting the “foreseeability test,” and that the aggregate statistical evidence, combined with similar anecdotal evidence, was sufficient to overcome summary judgment.

Pfizer asserted that the First Circuit’s decisions conflicted with the Supreme Court precedents and the decisions of other federal appellate courts.

The petition asked specifically: (1) whether RICO’s proximate causation requirement may be satisfied by mere foreseeability or instead requires a direct causal relationship; and (2) whether plaintiffs may show fraud causation and damages by aggregate evidence of a correlation between the alleged fraud and doctors’ prescribing behavior without any showing of actual individualized causation.

Attorneys: Kathleen M. Sullivan (Quinn Emanuel Urquhart & Sullivan, LLC) for Pfizer Inc. Richard W. Cohen (Lowey Dannenberg Cohen & Hart, P.C.) for Aetna, Inc. David C. Frederick (Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C.) for Kaiser Foundation Health Plan, Inc. Thomas M. Greene (Greene LLP) for Harden Manufacturing Corp.

Companies: Pfizer Inc.; Warner-Lambert Co., LLC; Kaiser Foundation Health Plan, Inc.; Harden Manufacturing Corp.; Aetna, Inc.

News: RICO