Aetna, Inc. v. Pfizer, Inc. (In re Neurontin Mktg. & Sales Practices Litig.)

• Decision Date: 03 April 2013
• Docket Number: No. 11–1595.,11–1595.
• Citation: 712 F.3d 51
• Parties: In re NEURONTIN MARKETING AND SALES PRACTICES LITIGATION. Aetna, Inc., Plaintiff, Appellant, v. Pfizer, Inc.; Warner–Lambert Company, LLC, Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

712 F.3d 51

In re NEURONTIN MARKETING AND SALES PRACTICES LITIGATION.

Aetna, Inc., Plaintiff, Appellant,

v.Pfizer, Inc.; Warner–Lambert Company, LLC, Defendants, Appellees.

No. 11–1595.

United States Court of Appeals,First Circuit.

April 3, 2013.

Peter D. St. Phillip (argued), with whom Richard W. Cohen, Gerald Lawrence, and Uriel Rabinovitz of Lowey Dannenberg Cohen & Hart, P.C. were on brief, for appellant.

Mark S. Cheffo, with whom Katherine A. Armstrong and Skadden, Arps, Slate, Meagher & Flom LLP were on brief, for appellees.

Before LYNCH, Chief Judge, SOUTER,^* Associate Justice, and LIPEZ, Circuit Judge.

LYNCH, Chief Judge.

In Kaiser Foundation Health Plan, Inc. v. Pfizer, Inc. ( Kaiser ), 712 F.3d 21, Nos. 11–1904, 11–2096, 2013 WL 1320408 (1st Cir.2013), a related appeal in which we also issue an opinion today, we affirmed a court and jury verdict against Pfizer, Inc. (“Pfizer”), under section 1962 of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961–68, and a state statute, for fraudulent marketing of off-label uses of its drug Neurontin. The arguments presented in Kaiser and in anotherrelated appeal in which we issue an opinion today, Harden Manufacturing Co. v. Pfizer, Inc., No. 11–1806 (1st Cir.2013), on most issues are the same as or parallel to those presented in this appeal, which concerns the claims of Aetna, Inc. (“Aetna”) against Pfizer. Many of the arguments made by Pfizer against Aetna in this case were rejected in Kaiser.

This case comes to us on Aetna's appeal from a grant of summary judgment in favor of Pfizer and against Aetna. In the Kaiser case, after trial, Pfizer lost. While the trial record in Kaiser was somewhat larger than the record here, the record on summary judgment in this case was very similar and included much the same expert and other evidence as to causation.

The outcome of this case turns on whether Aetna, a health insurer which makes claims of harm from third-party payments for its insureds' fraudulently induced prescriptions, is so differently situated from Kaiser that summary judgment was correctly entered against it, thus precluding it from proving its case to a jury. The district court largely distinguished this case from Kaiser's on the basis that Kaiser had much stronger evidence of misrepresentations made directly to Kaiser and reliance by Kaiser on those misrepresentations in its formulary decisions.

We conclude that Aetna presented evidence of causation and damages sufficient to survive summary judgment on its RICO claim, and reverse the dismissal of this claim. We vacate the district court's dismissal of Aetna's claim under the Pennsylvania Insurance Fraud Statute (PIFS), 18 Pa. Cons.Stat. § 4117.

I.

We assume familiarity with the description of this case's procedural history and facts set forth in Kaiser, 712 F.3d at 25–33. On February 1, 2005, Aetna filed a coordinated complaint with Kaiser Foundation Health Plan, Inc. and Kaiser Foundation Hospitals (together, “Kaiser”) and Guardian Life Insurance Company of America (“Guardian”) in the U.S. District Court of Massachusetts against Pfizer and Warner–Lambert Company (together, “Pfizer”). The coordinated plaintiffs asserted that they had suffered injury from the fraudulent marketing of Neurontin for off-label uses, and alleged violations of, inter alia, RICO and the PIFS. The coordinated complaint was part of a multidistrict litigation (“MDL”) which had been consolidated in the District of Massachusetts on November 24, 2004.

On March 2, 2009, Pfizer filed a motion seeking summary judgment on all of the coordinated plaintiffs' pending claims. On January 8, 2010, the district court granted Pfizer's motion in part, dismissing the claims of Guardian and Aetna, but denying summary judgment as to Kaiser's claims. See In re Neurontin Mktg. & Sales Practices Litig. ( Neurontin Coordinated SJ ), 677 F.Supp.2d 479, 499 (D.Mass.2010). The court entered judgment against Guardian and Aetna and in favor of Pfizer on February 9, 2011, and on April 20, 2011, the court denied Aetna's motion to alter or amend judgment and motion for reconsideration. On May 19, 2011, Aetna timely filed a notice of appeal as to the district court's judgment against Aetna and the court's denial of Aetna's motion for reconsideration.

II.

We review a district court's grant of summary judgment de novo, “drawing all reasonable inferences in favor of the non-moving party while ignoring ‘conclusory allegations, improbable inferences, and unsupported speculation.’ ” Sutliffe v. Epping Sch. Dist., 584 F.3d 314, 325 (1st Cir.2009) (quoting Sullivan v. City of Springfield, 561 F.3d 7, 14 (1st Cir.2009)). We must reverse a grant of summary judgment if we find that “the nonmovant has ‘established a genuine issue of material fact that a reasonable jury could resolve in their favor.’ ” Rockwood v. SKF USA Inc., 687 F.3d 1, 9 (1st Cir.2012) (emphasis omitted) (quoting Collins v. Univ. of N.H., 664 F.3d 8, 19 (1st Cir.2011)). We assume familiarity with the background facts concerning Neurontin's development and FDA approval described in Kaiser, 712 F.3d at 27–28. These were not disputed at summary judgment. We describe only the facts relevant to Aetna's appeal.

A. Neurontin's Effectiveness for Off–Label Uses

As the district court noted, Aetna presented studies showing that Neurontin was not more effective than a placebo in treating certain off-label indications. These studies included: four clinical studies regarding bipolar disorder, Neurontin Coordinated SJ, 677 F.Supp.2d at 489; six clinical trials regarding neuropathic pain, id.; four clinical trials regarding nociceptive pain, id. at 490; three studies regarding migraine, id.; and three clinical trials regarding doses above 1800 mg per day, id. at 490–91.

B. Defendants' Marketing of Neurontin for Off–Label Uses

Beginning in late 1995 and early 1996, Parke–Davis, a subsidiary of Warner–Lambert, began marketing Neurontin as an effective treatment for bipolar disorder and other mood disorders, neuropathic and nociceptive pain, migraines and other headaches, and doses above 1800 mg per day, though the FDA had not approved Neurontin for these off-label uses. These marketing efforts continued after Pfizer purchased Parke–Davis in 2000, through at least 2001, and are described in Kaiser, 712 F.3d at 27–28.

As the district court stated, Aetna “presented evidence that Defendants communicated half truths that are actionable under the RICO statute” in conducting this marketing, including by “suppressing negative information while submitting for publication in monographs positive information about off-label indications.” Neurontin Coordinated SJ, 677 F.Supp.2d at 492;see also id. at 495, 498–99. Pfizer does not argue to the contrary on appeal.

C. Defendants' Targeting of Third–Party Payors (“TPPs”), Including Aetna

Defendants' efforts to promote Neurontin, for both on-label and off-label uses, demonstrated their understanding that TPPs, including Aetna, would both play a role in determining demand for Neurontin (by managing access to formularies, or lists of drugs for which TPPs would pay) and ultimately pay for most prescriptions of Neurontin.

In 1993, Parke–Davis listed Aetna as the number four managed care plan it intended to target to encourage the use of Neurontin as an anticonvulsant. In 1994, Parke–Davis commissioned a survey of the pharmacy directors of ten managed care plans, including Aetna. This study concluded that these plans, including Aetna, were unlikely to place formulary restrictions on anticonvulsants. A 1998 Parke–Davis business plan stated that, “[i]n general, formulary access is not an issue for Neurontin so share building programs can be carried out unrestricted.” Pfizer prepared a marketing business plan regarding Aetna in 2002 that noted that Pfizer's “sales representatives have open access to the providers” in Aetna's network. That same year, Pfizer established a NeurontinOutcomes Research Task Force that sought to support the marketing of Neurontin for neuropathic pain and to prepare “for a more vigorous defense of reimbursement” to managed care plans. In 2003, as Neurontin's patent neared expiration, defendants commissioned a study by a market research company of how TPPs would react to a new tablet form of the drug intended to compete with generic forms of the drug. The market research company conducted focus groups with TPP representatives, including representatives from Aetna. Pfizer prepared “HMO Opportunity Reports” for Neurontin that tracked formulary status, projected annual sales and prescriptions, potential profits, and market share for various HMOs, including Aetna. Pfizer also tracked sources of revenue for Neurontin sales; in 2001, Pfizer recorded that 69% of its Neurontin revenues came from TPPs.

D. Aetna's Decision to Pay for Neurontin Prescriptions

Aetna, a large TPP, provides health payment benefits to more than 13 million people across the country. Aetna added Neurontin to its formulary—a list of drugs it agreed to pay for under its member contracts—soon after the FDA approved Neurontin in 1993 for use as an add-on therapy in the treatment of epilepsy.

Aetna had a formulary development team comprised of pharmacists who developed clinical reviews of drug classes to present to Aetna's Pharmacy and Therapeutics Committee (“P & T Committee”). These reviews presented all the clinical information available to Aetna about a drug class, and included all the drugs within a class used for a particular therapeutic purpose. The formulary development team looked at package inserts, drug compendia, and online collections of clinical research, and also met with drug manufacturers to get information that had not been published.

Aetna's P & T Committee met monthly to determine what would be included on formularies, as well as appropriate coverage restrictions on drug classes, by majority vote. The Committee reviewed clinical drug reviews,...