Tuesday, July 07, 2015

Be Careful What You Ask For

            This post is from the non-Reed Smith side of the blog only.

            That’s an admonition that plaintiffs in Cales v. Medtronic, Inc. should have heeded.  Last November, they became another of the many InFuse plaintiffs to have the bulk of their claims dismissed with prejudice on the grounds of preemption, with non-preempted claims dismissed without prejudice for failure to plead with sufficient particularity.  See Cales v. Medtronic, Inc., 2014 WL 6600018 (Ky. Cir. Ct. Nov. 21, 2014).  Rather than spending their time drafting a well-pleaded amended complaint for their remaining causes of action, plaintiffs moved for reconsideration.  Cales v. Medtronic, Inc., No. 14-CI-1774, slip op. (Ky. Cir. Ct. Jul. 1, 2015).  Not only was their motion denied -- the court found a few other things that had slipped through the cracks that should have been dismissed as well.  In other words, plaintiffs aren’t any better off for their motion; in fact, their worse.

            The crux of plaintiffs’ motion for reconsideration is that the court applied the federal TwIqbal standard of pleading rather than Kentucky’s “notice” pleading standard.  It turns out that plaintiffs’ complaint was so poorly crafted that the error was harmless – plaintiffs’ complaint failed even the less-demanding requirements. 

            But plaintiffs’ complaint wasn’t the only thing poorly crafted.  So too were plaintiffs’ arguments on reconsideration.  The court spends pages of its decision admonishing plaintiffs for “selectively cherry-pick[ing] quotes from a number of unpublished appellate decisions and out-of-context dictum to support their argument that merely pleading bald, legal conclusions satisfies Kentucky’s liberal pleading standard.”  Cales, slip op. at 5.  Challenging plaintiffs’ “Frankenstein-esque construction of notice pleading,” id. at 7, the court is clear that notice pleading does not “relieve [plaintiffs] of a responsibility to produce some factual basis to support the elements of their various claims.”  Id. 

            While plaintiffs’ argument seemed to be full of incomplete quotes and allusions, in sum their position was that “so long as the defendant is given notice of the claim, it does not matter whether the Complaint includes facts or conclusory allegations.”  Id. at 7n.6.  But what do unsupported allegations give a defendant notice of?  Nothing.  So agreed the court.  Neither the court nor the defendant should have to “imaginatively conjure up” a provable factual scenario.  While on a motion to dismiss material facts are to be construed as true – there must be some material facts (court can’t “liberally construe nonexistent facts”).  Id. at 8.  Nor does sheer volume save the day:

It would be antithetical for this Court to allow Plaintiffs to proceed solely based on the fact that somewhere in their 965 paragraph Complaint they “surely” must have alleged enough “facts which could be proved” to eschew Defendant’s Motion to Dismiss. 

Id. at 8-9.  Same issue, but we couldn’t leave this quote out:

[I]t is not the Court’s job to endlessly sift through Plaintiffs’ Complaint, which includes by reference, thousands of pages of irrelevant information that is wholly irrelevant to various claims.  Plaintiffs seemingly sought to obfuscate their claims’ lack of merit by barraging the court with voluminous paperwork, and oft-repeated, misconstrued legal analysis, with the misguided hope that the Court will respond in Pavlovian fashion.

Id. at 9n.7.  “Particularity and prolixity are not synonymous.”  Id. at 9.  This is good stuff.  The kind we can see slipping into our own briefs.

            Even better, the court got specific.  Footnote 7 goes on in some detail about all the various allegations that plaintiffs seek to incorporate by reference even though not relevant to the particular cause of action – a lack of clarity the court would not overlook.  The opinion also notes plaintiffs’ misplaced reliance on many, many events that post-date plaintiffs’ alleged injury.  We see this approach all the time – throw in anything and everything and hope something sticks.  This time the court wasn’t interested. 

            Moving on to applying the proper notice pleading standards to the non-preempted remaining claims, the court found that both plaintiffs’ fraud and breach of express warranty claims missed the mark completely.  Kentucky, like federal courts, requires fraud to be pleaded with particularity.  Id. at 10.  Plaintiffs, however, argued that under federal law that standard is “relaxed” “when the necessary information is under the exclusive control of the defendant.”  Id.  The court was not amused that after moving for reconsideration on the ground that the court improperly applied the federal pleading standard, plaintiffs urged application of a “federal interpretation of a federal rule.”  Id.  Not only was there no support for plaintiffs’ position under Kentucky law, but the court pointed to the amount of publicly available information cited in plaintiffs’ complaint as evidence that the information is not within the “exclusive control” of the defendant.  Id. at 10-11.  Finally, because plaintiffs “have not alleged with any modicum of specificity the contents of the misrepresentations, why the misrepresentations were false, or that Plaintiffs’ physician relied upon any specific misrepresentations,” the fraud claims remained dismissed.        Id. at 12.

            As for breach of express warranty, the court got directly to the point – “Plaintiffs’ Complaint does not identify any warranty that Medtronic allegedly made, let alone breached.”  Id. at 14. 

            Plaintiffs also alleged that the court improperly dismissed their negligent misrepresentation claim as the same as failure to warn and therefore preempted.  Id. at 14.  Once again, plaintiffs got less than they were hoping for.  Under Kentucky law, a negligent misrepresentation claim requires “an affirmative false statement; a mere omission will not do.”  Id.  So, the court reasoned that the portion of plaintiffs’ negligent misrepresentation claim that was based on “omitted material information” is in fact failure to warn in disguise and therefore preempted.  Id. at 15.  To the extent plaintiffs were alleging negligent misrepresentation based on an affirmative misstatement – Kentucky has not recognized such a claim outside the context of pecuniary loss.  The cause of action has not been adopted for economic loss or physical harm and therefore, plaintiffs’ claim was dismissed this time as having no basis in Kentucky law.  Id. at 15-16. 

            Finally, there is the additional ruling that plaintiffs hadn’t bargained for when they sought reconsideration.  The court had dismissed as preempted plaintiffs’ failure to warn claims based on off-label promotion and based on alleged failure to submit adverse event reports.  But, in the original decision, the court inadvertently allowed plaintiffs to amend their complaint on this claim.  While this probably would have been caught on its own when plaintiffs filed their amended complaint – having sought reconsideration, this portion of the decision was reconsidered too.  No leave to amend on failure to warn.  Id. at 3.

            So, plaintiffs went in hoping to resurrect their fraud, breach of express warranty and negligent misrepresentation claims.  They came out with a second dismissal of negligent misrepresentation on new grounds; re-dismissal of fraud and breach of express warranty with a lengthy opinion on just how lacking the court found both their argument and their complaint; and a dismissal with prejudice on failure to warn that wasn’t on the table.  You know that fun, old chestnut “there’s no harm in asking.”  Well, sometimes there is.   

Monday, July 06, 2015

The Court Will Hear Oral Argument Tomorrow Morning on Amarin’s First Amendment Challenge to FDA Off-Label Regulation

The briefing is complete on Amarin’s motion for preliminary injunction.  The parties and several amici have all weighed in, and the court will hear oral argument tomorrow.  

To this point, there has been significant back and forth between the FDA and Amarin.  Here is some of it.  The FDA argued that it mooted much of Amarin’s preliminary injunction request by sending its June 5 letter to Amarin.  We all saw that argument coming.  Even though Amarin never asked for an FDA response to its proposed off-label promotion, it got one anyway.  In the June 5 letter, the FDA said that it “does not have concerns with much of the information [that Amarin] proposed to communicate.”  The FDA’s decision to send this unsolicited response appeared litigation driven and, unsurprisingly, it led off the FDA’s response brief:
The June 5 Letter makes clear that FDA does not object to Amarin’s distribution of summaries and reprints of the ANCHOR trial and journal article reprints, if Amarin takes the reasonable steps outlined in the Letter and ensures that such dissemination is truthful and non-misleading. June 5 Letter at 10.  Assuming Amarin takes those steps, then for all but one of the communications proposed in the Complaint, FDA would not rely on such communications in an enforcement action against Amarin.

(FDA Br. at 15.) 
Amarin saw it quite differently, arguing in its reply brief that the June 5 letter clarified that the FDA has every intent on criminally prosecuting Amarin if it has a full and truthful dialogue with health care providers on off-label uses of Vascepa:

[T]he Complaint states—in the most straightforward manner—that Amarin not only wishes to communicate with healthcare professionals “through written materials and digital media about its product” but also to “proactively engag[e] in a dialogue with doctors and other healthcare professionals about Vascepa®” in a truthful and non-misleading manner. 

Nothing in FDA’s June 5 letter to Amarin or in its brief to this Court recognizes the company’s First Amendment right to do or say any of these things.  The letter contemplates no such dialogues or discussions at all, but only academic presentations in what FDA refers to as educational or scientific settings.  . . .  Neither FDA’s letter nor its brief acknowledges the right of Amarin’s representatives to seek to promote Vascepa®, truthfully and in a non-misleading manner, to doctors in their offices.  In fact, it is now clear (if there were any previous doubt about it) that such activities could subject Amarin to significant risk of criminal prosecution.  FDA’s brief to this Court is unambiguous that any dissemination of “the reprints and summaries about unapproved uses in a manner not described in the June 5 letter” may be considered by FDA “as evidence of intended use,” and thus potentially criminal.  And FDA asserts that only if the “journal reprints and summaries of the ANCHOR trial results” are disseminated in the particular manner set forth in its June 5 letter—which says not a word about dialogue or discussions, let alone meetings in which Amarin sales representatives proactively discuss Vascepa®—would Amarin be free of significant risk.

(Amarin Reply Br.at 2-3.)

Underlying the parties’ different understandings of the effect of the letter is the FDA’s continuing argument that it does not prohibit off-label speech but rather uses it as evidence that a manufacturer is marketing a drug for an unapproved use:
[T]he role of truthful speech regarding unapproved uses is strictly an evidentiary one. . . . Under the FDCA a manufacturer’s intended uses for a drug “may be derived or inferred from labeling, promotional material, advertising, and ‘any other relevant source.’”  Nat’l Nutritional Foods, 557 F.2d at 334.  Thus, when a manufacturer engages in speech regarding an unapproved use, such speech is potentially relevant to determining whether the unapproved use is an intended one, with the regulatory consequences for the distribution of the drug that flow from such a determination.

(FDA Br. at 20.)

If this argument seems familiar, it is.  The same government made the same argument on the same issue in Caronia—and lost.  To read the FDA’s brief, though, you’d come away with the impression that Amarin is facing an entirely different government and regulatory regime than those that were scrutinized in Caronia less than two years ago:

[T]he outcome in Caronia is not controlling.  Caronia did not involve speech that was shown at trial to be potentially false or misleading and did not involve the use of speech as evidence of intent.  Instead, it involved the constitutionality of a ‘complete and criminal ban on off-label promotion.’  703 F.3d at 167.

(FDA Br. at 25.)  

If there has been a sea change in the FDA’s regulation of off-label promotion in the last year-and-a-half, we’re not aware of one.  Put another way, the FDA seems to be arguing that a different regulatory regime was at issue in Caronia, one created only for the purpose of that litigation, and that, here, Amarin is facing the real regulatory regime.  This seems a bit odd.  More important, it highlights the longstanding difficulty in predicting or articulating the FDA’s regulation of off-label promotion.

The FDA’s “speech as evidence” argument doesn’t fare well when subjected to real scrutiny.  No matter how argued, this notion runs up against the reality that it involves a regulatory regime that bases criminal liability, in many instances, solely on truthful, non-misleading speech.  In Caronia, the off-label promotion was the sole act that constituted the criminal violation.  The same would be true here if the FDA were to prosecute Amarin for the type of off-label promotion proposed in its complaint.  The speech results in the prosecution and, unless the FDA adopts a new regulatory approach, it always will. 

Amarin’s reply brief pointed out the tautology of the government’s “speech as evidence” argument: 

This speech-as-evidence argument is, on its face, a charade.  By definition, a drug company’s promotion of its product for off-label use is, in and of itself, a reflection of its intent that its drug be used off-label.  The promotion— the speech—is the illegal act.  The government’s speech-as-evidence tautology with respect to off-label promotion has not been lost on commentators or courts.  Professor Smolla explains: 

The FDA and its prosecutors invoke a . . . circularity.  There is nothing illegal about promoting off-label drug uses.  But there’s a catch (there’s always a catch).  No drug may be promoted if it is misbranded.  Any drug promoted for use other than a use approved by the FDA (i.e., any drug promoted for an off-label use) is, by definition, “misbranded.”  And much like the military in Catch-22, which claims it is not penalizing the pilot merely for asking to be grounded, but rather is simply using “the ask” as evidence of the pilot’s sanity, the FDA claims it is not penalizing the promoter of off-label uses for the promotion itself, but rather as evidence of misbranding.  While seductively clever, the government’s argument is too clever by half.  Here is its flaw: the . . . evidentiary-use principle is valid only when the elements of the underlying crime or tort do not themselves require expressive activity.  In such cases it is possible to coherently separate the use of speech as evidence of a nonspeech element from the imposition of liability for the speech itself.  When expressive activity is a necessary element of the crime or tort, however, no such separation is possible. . . .  Unlike the racially motivated beating in [Wisconsin v.] Mitchell, [508 U.S. 476 (1993),] conduct that was not intrinsically linked to expression at all, it is impossible to conceive of a prosecution for the introduction of a misbranded drug into interstate commerce predicated on the promotion of the drug’s off-label uses without making the expressive promotion of the off-label use an element of the crime.

(Amarin Reply Br.at 5-6.) 
Finally, the FDA argued that its off-label regulatory regime is narrowly tailored to the governmental interest of promoting safe and effective drugs.  (FDA Br. at 38-42.)  In doing so, the FDA spent more time taking down alternative regulator regimes than it did supporting its current regulation of off-label promotion, a regime that still isn’t entirely clear.  As part of this discussion, the FDA rejected all the alternative regulatory regimes suggested (non-exclusively) by the Caronia court:

In discharging its regulatory responsibilities, however, FDA has reviewed other alternatives—including all of those identified in Caronia, 703 F.3d at 168—but has found them all inadequate to meet public health needs, and therefore not viable less restrictive alternatives to the regulatory approach adopted by FDA.

(FDA Br. at 38.) 

But do these litigation-driven conclusions really discharge the FDA’s regulatory responsibilities?  As Amarin argued in its reply brief, the say-so of one of the FDA’s senior officials does not establish that the FDA’s off-label regulations are so narrowly tailored as to satisfy the First Amendment:

Caronia concluded that “numerous” alternatives are available to the government and on that basis held that the government’s off-label promotion ban failed Central Hudson’s fourth prong.  The government now revisits these alternatives and—unsurprisingly—has “found them all inadequate.”

In support of that conclusion, the government has submitted a declaration from Dr. Janet Woodcock, with respect to the “numerous” Caronia alternatives.  Dr. Woodcock devotes a single paragraph (in one instance, two paragraphs) to each.  She makes no representations that FDA has explored these alternatives beyond the context of this litigation (which has been pending for less than two months), or who at FDA had input in any such considerations or authority over the conclusions reached.  She does not cite in her Declaration, or attach to it, any documentary evidence to support her conclusions. Once, she references—but does not provide or cite to—“studies” (id. ¶ 49) in support of a conclusion as to one alternative. . . . Indeed, she cites no concrete factual information at all in addressing the Caronia alternatives other than two brief anecdotes about specific drugs. Woodcock Decl. ¶ 47. She speculates as to certain outcomes, stating that they “would likely” (id. ¶¶ 43, 52); “may” (id. ¶ 44); or “could” (id. ¶ 49) occur.

(Amarin Reply Br.at 8-9.) 

The briefing hits on more issues than this, particularly a break-down of the Central Hudson First Amendment analysis. 

But tomorrow the litigation moves from briefing to oral argument.  That should be fascinating.  The case is pending in the Southern District of New York, part of the Second Circuit.  And so the FDA will be arguing in the very circuit that issued Caronia to marginalize its holding and reject its regulatory suggestions.  Somewhere along the line, either before the trial court or on appeal before the Second Circuit, that rubber is going to meet the road.

Thursday, July 02, 2015

No Innovator Liability: National Drug Code Saves the Day

This is a quick-hit post as we head into the Independence Day holiday weekend.  The Southern District of West Virginia’s order this week in McNair v. Johnson & Johnson, No. 2:14-17463, 2015 WL 3935787 (S.D. W. Va. June 26, 2015), dismissed claims against the seller of an innovator drug for precisely the right reason:  The defendant neither made nor sold the generic drug that the plaintiff ingested.  That is to say, there is no Conte-style “innovator liability” in West Virginia. 
It seems obvious, doesn’t it?  It has been seven years since the California Court of Appeal issued its wrongly reasoned and wrongly decided opinion in Conte v. Wyeth, where the court held that a plaintiff who used a generic drug could sue the manufacturer of the listed version.  As we like to say, the court took the “product” out of product liability and held a company potentially liable for injuries allegedly caused by a product that it did not make and did not sell.  The late Roger Traynor and his colleagues on the California Supreme Court, who presaged strict product liability way back in 1944 in Escola v. Coca-Cola Bottling Co., must have rolled in their graves. 
The Conte opinion has predictably become an outlier, and courts have rejected the opinion and its reasoning many times over, often expressly.  (Check out our Innovator Liability Scorecard here and our survey of innovator liability here.)  As we reported here, the Alabama legislature abolished innovator liability just a few months ago, and we believe the California Supreme Court overruled Conte in Crane v. O’Neill, 53 Cal. 4th 335 (2011), where it held that a manufacturer has no duty to warn of hazards in another manufacturer’s product due to “foreseeability.” 
So what about McNair?  The plaintiff took a generic antibiotic and sued the manufacturer of the listed version when she experienced acute respiratory distress.  First, how do we know she took a generic product?  The pharmacy records displayed the product’s National Drug Code, which is a unique number that identifies the manufacturer of a drug and other drug information.  McNair, 2015 WL 3935787, at *2.  National Drug Codes are ubiquitous, but we barely notice them.  Take a look at any drug product – cold medicine, contact lens solution, toothpaste – and you will almost always see a long number somewhere on the packaging.  That’s the NDC, and you can determine the manufacturer of the product by referring to the FDA’s web-based NDC Directory.  We have done that multiple times, but this is the first time we have seen a court cite the NDC database in an opinion. 
Second, if the plaintiff had pharmacy records showing that she used a generic product, why did she sue the innovator manufacturer?  She started by contesting whether the records actually revealed the product’s manufacturer, a credibility-blowing position if we ever saw one.  Maybe counsel should have checked the NDC Directory before investing in this lawsuit.  In any event, after Mensing and Bartlett, federal law preempts state-law claims against generic drug manufacturers for failure to warn and design defect.  McNair, 2015 WL 3935787, at **2-4.  So the plaintiff sued the innovator instead, asserting blithely that “‘[e]ven if [the defendants are] correct that plaintiff ingested a generic, that does not and should not relieve [them] of liability’ as a matter of law.”  Id. at *3. 
Actually, it does relieve them of liability and should relieve them of liability, which the district court readily found:

The question presented by this case and . . . McNair’s theory of liability is whether a plaintiff who consumes a generic may instead sue the brand-name manufacturer that produced the formula for the drug and warning label in the first instance.

The overwhelming answer is “no.” 

Id. at *5 (emphasis added).  That is about as direct a holding as you can get.  The district court went on to explain that the Fourth Circuit had long ago rejected the contention “that a name brand manufacturer’s statements c[ould] serve as the basis for liability for injuries caused by another manufacturer’s drug.”  Id. (citing Foster v. American Home Prods. Corp., 29 F.3d 165, 170 (4th Cir. 1994).  The court further noted that “every federal circuit court to consider the issue – both before and after the Supreme Court rendered its holdings in Mensing and Bartlett – has reached a similar conclusion, applying the law of several states.”  Id.  The string cite following this statement is impressive, owing we are sure to thorough briefing by the defendants, and we commend it to any of our readers who are researching innovator liability.  The district court therefore correctly declined to extend West Virginia law. 
So enjoy the holiday weekend.  Have a picnic with friends and family, watch fireworks (from a distance), go to a baseball game or watch one on TV, take a long walk, read that article in the New Yorker you have been meaning to get to, catch up on work that has been nagging at you, or do nothing at all.  By the time the weekend is over, we will have added McNair to our Innovator Liability Scorecard.  [Note from Bexis: The case has already been added to the list.]