City of Chi. v. Purdue Pharma L.P.
| Citation | 211 F.Supp.3d 1058 |
| Decision Date | 29 September 2016 |
| Docket Number | Case No. 14 CV 4361 |
| Parties | CITY OF CHICAGO, a municipal corporation, Plaintiff, v. PURDUE PHARMA L.P., Purdue Pharma Inc., the Purdue Frederick Company Inc., Teva Pharmaceuticals USA Inc., Cephalon, Inc., Johnson & Johnson, Janssen Pharma-Ceuticals, Inc., Ortho-McNeil-Janssen Pharmaceuticals, Inc., n/k/a Janssen Pharmaceuticals, Inc., Janssen Pharmaceutica, Inc., n/k/a Janssen Pharma-Ceuticals, Inc., Endo Health Solutions Inc., Endo Pharma-Ceuticals, Inc., Allergan PLC, f/k/a Actavis PLC, Actavis, Inc., f/k/a Watson Pharmaceuticals, Inc., Watson Laboratories, Inc., Actavis LLC, and Actavis Pharma, Inc. f/k/a Watson Pharma, Inc., Defendants. |
| Court | United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois) |
Anthony Raymond Juzaitis, Joshua Dubin Glickman, Linda Singer, Brian E. Bowcut, Cohen Milstein Sellers & Toll PLLC, Washington, DC, Fiona A. Burke, Michael J. Dolesh, Mary Eileen Cunniff Wells, City of Chicago Department of Law, Adam Michael Prom, Bethany R. Turke, Justin Nicholas Boley, Kenneth A. Wexler, Wexler Wallace LLP, Thomas P. McNulty, City of Chicago Department of Law, Chicago, IL, for Plaintiff.
Carolyn June Kubota, Charles C. Lifland, Ivana Cingel, O'Melveny & Myers LLP, Los Angeles, CA, Michael P. Doss, Scott David Stein, Sidley Austin LLP, R. Ryan Stoll, Patrick Joseph Fitzgerald, Skadden, Arps, Slate, Meagher & Flom LLP, Nicholas A. Gowen, Burke, Warren, MacKay & Serritella, P.C., Peter Vincent Baugher, Honigman Miller Schwartz and Cohn LLP, Tinos Diamantatos, Morgan, Lewis & Bockius LLP, Jonathan William Garlough, Foley & Lardner, Chicago, IL, Joshua M. Davis, Steven G. Reade, Joanna G. Persio, Melissa A. Ku, Arnold & Porter LLP, Washington, DC, J. Gordon Cooney, Jr., Steven A. Reed, Morgan, Lewis & Bockius LLP, Philadelphia, PA, James W. Matthews, Jason L. Drori, Katy E. Koski, Foley & Lardner LLP, Boston, MA, for Defendants.
Linda Singer, pro se.
Cohen Milstein Sellers & Toll PLLC, pro se.
On May 8, 2015, the Court issued a Memorandum Opinion and Order ("May Order") [288] granting most defendants' motions to dismiss. All that remained from plaintiff's first amended complaint were Counts I and II (consumer fraud claims) against the Purdue entities. Plaintiff filed its second amended complaint [328] in August 2015 against all defendants alleging consumer fraud, misrepresentation, false statements, false claims, insurance fraud, and unjust enrichment, and seeking cost recovery for services provided. Plaintiff also alleges conspiracy to defraud as to some defendants. Defendants' motions to dismiss followed. Currently before the Court are: (1) Cephalon, Inc. and Teva Pharmaceuticals USA, Inc.'s ("Cephalon defendants") motion to dismiss [401]; (2) Allergan plc, Actavis Inc., Actavis LLC, Actavis Pharma, Inc., and Watson Laboratories, Inc.'s ("Actavis defendants") motion to dismiss [404]; (3) Endo Health Solutions Inc. and Endo Pharmaceuticals Inc.'s ("Endo defendants") motion to dismiss [407]; (4) Purdue Pharma L.P., Purdue Pharma Inc., and Purdue Frederick Company's ("Purdue defendants") motion to dismiss [411]; (5) Janssen Pharmaceuticals Inc. and Johnson & Johnson's ("Janssen defendants") motion to dismiss [416]; (6) defendants' joint motion to dismiss or stay under the primary jurisdiction doctrine [415]; and (7) defendants' joint motion to dismiss for failure to state a claim [423]. For the foregoing reasons, defendants' joint motion to dismiss or stay under the primary jurisdiction doctrine is denied. The other six of defendants' motions are granted in part and denied in part.
Plaintiff, the City of Chicago, alleges as follows. The defendant pharmaceutical companies, through a deceptive and unfair marketing campaign, reversed the medical understanding of opioids so that prescribing opioids to treat chronic pain long-term would be commonplace. (Second Am. Compl. ("SAC") ¶ 7.) The City alleges that, to accomplish this goal, defendants, among other tactics, deployed sales representatives to doctors and other prescribers to deliver misleading messages about the use of opioids. (Id. ¶ 8.) These messages were designed to convince doctors that the benefits of using opioids to treat chronic pain outweighed the risks and that opioids could be used safely by most patients. (Id. ¶ 9.)
The Purdue defendants manufacture, promote, and distribute in Chicago, among other places, OxyContin, Butrans, and Hysingla ER. (Id. ¶¶ 28-29.)1 The Cephalon defendants manufacture, sell, and distribute in Chicago, among other places, Actiq and Fentora. (Id. ¶¶ 34-35.)2 The Janssen defendants manufacture, sell and distribute in Chicago, among other places, Duragesic, Nucynta, and Nucynta ER. (Id. ¶¶ 39-41.)3 The Endo defendants develop, market, and sell in Chicago, among other places, Opana ER and Opana. (Id. ¶¶ 44-45.)4 The Actavis defendants market and sell, in Chicago, among other places Kadian. (Id. ¶¶ 47-48.)5
Opioids have been regulated by the U.S. Drug Enforcement Administration ("DEA") since 1970 and "carry black box warnings of potential addiction," among other things. (Id. ¶ 58.) Studies from the 1970s and 1980s noted negative outcomes from long-term opioid therapy for pain management. (Id. ¶ 81.) Defendants' marketing overstated the benefits and downplayed the risks of long-term opioid therapy to expand the chronic pain market. (Id. ¶¶ 85-87.) Through their sales representatives and physician speakers, defendants disseminated their misrepresentations to Chicago-area prescribers, thereby generating more prescriptions and profits. (Id. ¶¶ 85, 88-117, 260-340, 376-89, 392-426, 476-92, 496-515, 545-79, 623-32.)
Defendants acted in concert with key opinion leaders and front groups to create, promote, and control the unbranded marketing of opioids to treat chronic pain, both nationally and in Chicago. (Id. ¶¶ 118-213, 260, 341-75, 391, 427-75, 494, 516-44, 559, 580-622.)6 Defendants knowingly disseminated unbranded marketing messages that were inconsistent with information on defendants' branded marketing materials. (Id. ¶ 127.) Specifically, plaintiff asserts that each defendant and the third parties with which they conspired: (1) misrepresented that opioids improve function; (2) concealed the link between long-term use of opioids and addiction; (3) misrepresented that addiction risk can be managed; (4) masked the signs of addiction by calling them "pseudoaddiction"; (5) falsely claimed that withdrawal is easily managed; (6) omitted the greater dangers from higher doses of opioids; (7) minimized the adverse effects of opioids and overstated the risks of NSAIDs; and (8) in the case of Purdue, that OxyContin provides a full twelve hours of pain relief. (Id. ¶¶ 215-59.)7
Because of defendants' misleading and fraudulent direct marketing, doctors prescribed opioids to treat chronic pain. (Id. ¶¶ 634, 636.) As a result, doctors and pharmacies submitted false claims for opioid prescriptions to the City's health plans that were paid for by the City as medically necessary, and the City spent over $13 million on fraudulent claims for opioid prescriptions. The claims submitted for opioids to treat chronic pain were ineligible for payment because of defendants' deceptive and unfair conduct. (Id. ¶ 663.)
Additionally, the City states that it has remedied all defects from the first amended complaint, with respect to each defendant, by identifying Chicago-area prescribers who received deceptive marketing messages and wrote opioid prescriptions for which the City paid, as well as specifying each defendant's editorial control over the deceptive and misleading marketing materials. Finally, plaintiff states that its second amended complaint alleges conspiracy claims between defendants and third parties and adds an unfair practices claim.
"A motion under Rule 12(b)(6) tests whether the complaint states a claim on which relief may be granted." Richards v. Mitcheff , 696 F.3d 635, 637 (7th Cir. 2012). Under Rule 8(a)(2), a complaint must include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). The short and plain statement under Rule 8(a)(2) must "give the defendant fair notice of what the claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (ellipsis omitted). Under federal notice-pleading standards, a plaintiff's "[f]actual allegations must be enough to raise a right to relief above the speculative level." Id. Stated differently, "a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955 ). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ). "In reviewing the sufficiency of a complaint under the plausibility standard, [courts must] accept the well-pleaded facts in the complaint as true, but [they] ‘need[ ] not accept as true legal conclusions, or threadbare recitals of the elements of a cause of action, supported by mere conclusory statements.’ " Alam v. Miller Brewing Co. , 709 F.3d 662, 665–66 (7th Cir. 2013) (quoting Brooks v. Ross , 578 F.3d 574, 581 (7th Cir. 2009) ).
Rule 9(b) requires a party alleging fraud to "state with particularity the circumstances constituting fraud." Fed. R. Civ. P. 9(b). This "ordinarily requires describing the ‘who, what, when, where, and how’ of the fraud, although the exact level of particularity that is required will necessarily differ based on the facts of the case." AnchorBank, FSB v. Hofer , 649...
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