Commonwealth v. Tap Pharm. Prods., Inc.
| Citation | 36 A.3d 1197 |
| Court | Pennsylvania Commonwealth Court |
| Decision Date | 31 August 2011 |
| Parties | COMMONWEALTH of Pennsylvania, Plaintiff v. TAP PHARMACEUTICAL PRODUCTS, INC.; Abbott Laboratories; AstraZeneca PLC; AstraZeneca, Holdings, Inc.; AstraZeneca Pharmaceuticals LP; AstraZeneca LP; Bayer AG; Bayer Corporation; SmithKline Beecham Corporation d/b/a GlaxoSmithKline; Pfizer, Inc.; Pharmacia Corporation; Johnson & Johnson; Alza Corporation; Centocor, Inc.; Ethicon, Inc.; Janssen Pharmaceutical Products, L.P.; McNeil–PPC, Inc.; Ortho Biotech, Inc.; Ortho Biotech Products; L.P.; Ortho–McNeil Pharmaceutical, Inc; Amgen, Inc.; Immunex Corporation; Bristol–Myers Squibb Company; Baxter International Inc.; Baxter Healthcare Corporation; Immuno–U.S., Inc.; Aventis Pharmaceuticals, Inc.; Aventis Behring, L.L.C.; Hoechst Marion Roussel, Inc., Boehringer Ingelheim Corporation; Boehringer Ingelheim Pharmaceuticals, Inc.; Ben Venue Laboratories; Bedford Laboratories; Roxane Laboratories; Schering–Plough Corporation; Warrick Pharmaceuticals Corporation; Schering Sales Corporation; Dey, Inc., Defendants. |
36 A.3d 1197
COMMONWEALTH of Pennsylvania, Plaintiff
v.
TAP PHARMACEUTICAL PRODUCTS, INC.; Abbott Laboratories; AstraZeneca PLC; AstraZeneca, Holdings, Inc.; AstraZeneca Pharmaceuticals LP; AstraZeneca LP; Bayer AG; Bayer Corporation; SmithKline Beecham Corporation d/b/a GlaxoSmithKline; Pfizer, Inc.; Pharmacia Corporation; Johnson & Johnson; Alza Corporation; Centocor, Inc.; Ethicon, Inc.; Janssen Pharmaceutical Products, L.P.; McNeil–PPC, Inc.; Ortho Biotech, Inc.; Ortho Biotech Products; L.P.; Ortho–McNeil Pharmaceutical, Inc; Amgen, Inc.; Immunex Corporation; Bristol–Myers Squibb Company; Baxter International Inc.; Baxter Healthcare Corporation; Immuno–U.S., Inc.; Aventis Pharmaceuticals, Inc.; Aventis Behring, L.L.C.; Hoechst Marion Roussel, Inc., Boehringer Ingelheim Corporation; Boehringer Ingelheim Pharmaceuticals, Inc.; Ben Venue Laboratories; Bedford Laboratories; Roxane Laboratories; Schering–Plough Corporation; Warrick Pharmaceuticals Corporation; Schering Sales Corporation; Dey, Inc., Defendants.
Commonwealth Court of Pennsylvania.
Argued May 9, 2011.Decided Aug. 31, 2011.
[36 A.3d 1207]
Donald E. Haviland, Jr., Philadelphia, and William O. Crutchlow, Edison, NJ, for plaintiff.
Allen S. Loney, Jr., Philadelphia, Steven M. Edwards, New York, NY, and Michael C. Moore, Dallas, TX, for defendant Bristol–Myers Squibb.
Jack Mentzer Stover, Harrisburg, for defendants Bristol–Myers Squibb and Johnson & Johnson.BEFORE: LEADBETTER, President Judge, and SIMPSON, Judge (P), and FEUDALE, Senior Judge.+-----------------+
¦TABLE OF CONTENTS¦
+-----------------+
I. BACKGROUND 1210
A. Opening 1210
B. History 1211
1. Average Wholesale Price—Origin & Evolution 1211
2. Plaintiff Agencies 1214
a. DPW/Pennsylvania Medicaid 1214
b. Department of Aging/PACE 1215
3. BMS 1216
C. Procedural History 1216
II. BMS' CHALLENGE TO STATUTORY 1219
INJUNCTION
A. Summary of BMS' Argument 1219
B. Sufficiency of Evidence 1220
1. Contentions 1220
2. Analysis 1220
C. Alleged Irreparable Harm to Others 1223
1. Alleged Irreparable Harm to Innocent Third Parties 1223
a. Contentions 1223
b. Analysis 1224
i. Waiver 1224
ii. Failure of Proof 1225
iii. Modification of Injunction 1225
iv. Failure of Legal Support 1226
2. Alleged Procedural Defect 1228
a. Contentions 1228
b. Analysis 1228
3. Alleged Interference with Statutory/ Regulatory 1229
Schemes
a. Contentions 1229
b. Analysis 1230
4. Alleged Irreparable Harm to BMS 1231
a. Contentions 1231
b. Analysis 1231
5. Alleged Commerce Clause Violation 1233
a. Contentions 1233
b. Analysis 1233
6. Balancing the Harm 1235
a. Contentions 1235
b. Analysis 1235
D. Alleged Lack of Urgent Necessity 1236
1. Alleged Inconsistency in the Decision 1236
a. Contentions 1236
b. Waiver 1236
c. Standard for Injunction under CPL 1236
d. Urgent Necessity 1238
2. Alleged Lack of Ongoing Injury 1243
a. Contentions 1243
b. Analysis 1244
3. Alleged Failure to Provide Meaningful Relief 1244
a. Contentions 1244
b. Analysis 1245
i. Waiver 1245
ii. AWP Confusion 1245
iii. OIG Reports, Surveys and Price Audits 1249
iv. AMPs and ASPs 1249
v. Conclusion 1249
4. Alleged Harm Compensable by Monetary Damages 1250
a. Contentions 1250
b. Analysis 1250
E. Alleged Lack of Clear Right to Relief 1251
1. Alleged Inconsistency with Jury Verdict 1251
a. Contentions 1251
b. Analysis 1252
2. Alleged Lack of Fraudulent or Deceptive Conduct 1255
a. Contentions 1255
b. Analysis 1255
3. Alleged Inconsistency of Decision with MDL 2007 1256
Opinion
a. Contentions 1256
b. Analysis 1257
4. Alleged Lack of Proof of Overpayment 1259
a. Contentions 1259
b. Analysis 1260
5. Alleged Lack of Proof of Spread Marketing 1261
a. Contentions 1261
b. Analysis 1261
III. BMS' CHALLENGE TO STATUTORY 1262
RESTORATION
A. Alleged Lack of Statutory Basis for Restoration 1262
1. Contentions 1262
2. Analysis 1263
B. Alleged Inconsistency with Dismissal of Unjust 1264
Enrichment Claim
1. Contentions 1264
2. Analysis 1264
C. Alleged Absence of Overpayment 1265
1. Contentions 1265
2. Analysis 1265
D. Alleged Flawed Damage Estimate 1266
1. BMS Contentions 1266
a. Drugs Not in the Case 1266
b. Challenge to “But For” Methodology 1266
c. Rebates 1266
2. Analysis 1267
a. Generally 1267
b. Drugs Not in the Case 1267
c. Challenge to “But For” Methodology 1268
d. Rebates 1269
E. Alleged Inconsistency with Jury Verdict 1269
1. Contentions 1269
2. Analysis 1269
F. Alleged Impropriety of Award in Suit on behalf of DPW 1270
and PACE
1. Contentions 1270
2. Analysis 1271
IV. OTHER EVIDENTIARY ISSUES 1273
V. BMS' REQUEST FOR STAY 1273
A. Generally 1273
B. Likely to Prevail on Merits 1273
C. Irreparable Injury without Stay 1274
D. Stay Not Harm Other Parties 1275
E. Stay Not Adversely Affect Public 1275
F. Conclusion 1275
VI. COMMONWEALTH'S CHALLENGE TO 1275
VERDICT ON COMMON LAW CLAIMS
A. Standards for Analyzing Motions for JNOV and New Trial 1275
Elements of Negligent Misrepresentation Claim/Section
B. 552 of the Restatement (Second) of Torts 1276
C. Preliminary Matters 1277
D. JNOV–Negligent Misrepresentation 1278
1. Waiver 1278
a. Contentions 1278
b. Analysis 1278
2. Merits 1279
a. Entitlement to JNOV based on the sufficiency 1279
of the evidence
i. Contentions 1279
ii. Analysis 1279
b. JNOV “as a matter of law” 1281
i. Contentions 1281
ii. Analysis 1281
c. Practical Considerations 1282
E. New Trial–Negligent Misrepresentation 1283
1. General, non-particularized evidence regarding 1283
knowledge
a. Contentions 1283
b. Analysis 1283
2. Reasonable reliance evidence 1284
a. Contentions 1284
b. Analysis 1284
3. Evidence beyond the relevant time period 1285
a. Contentions 1285
b. Analysis 1286
4. Evidence of wrongful conduct 1287
a. Contentions 1287
b. Analysis 1287
5. Practical Considerations 1287
F. Conspiracy–Motions for JNOV and New Trial 1287
1. Contentions 1287
2. Analysis 1288
a. Waiver 1288
b. Merits 1289
3. Alleged Evidentiary Errors 1290
VII. COMMONWEALTH'S REQUEST FOR MODIFICATION OF DECISION REGARDING 1290
CPL
A. Contentions 1290
1. Costs 1291
2. Attorney Fees 1291
3. Civil Penalties 1291
B. Analysis 1292
1. Costs 1292
2. Attorney Fees 1293
3. Civil Penalties 1293
VIII. CONCLUSION 1294
[36 A.3d 1210]
This complex original jurisdiction action, which comes before a panel of this Court for a third time, involves the pricing of pharmaceuticals reimbursed by the Pennsylvania Department of Public Welfare (DPW), which administers Pennsylvania's Medicaid program, and by the Department of Aging, which administers the Pharmaceutical Assistance Contract for the Elderly (PACE) program, based on Average Wholesale Price (AWP) between 1991 and 2008.
In particular, the Commonwealth, through its Attorney General, filed suit against numerous pharmaceutical companies, including defendant Bristol–Myers Squibb Co. (BMS), which, the Commonwealth claimed, engaged in improper conduct that caused DPW and PACE (collectively, “Plaintiff Agencies”) to pay inflated prices for pharmaceuticals the defendant pharmaceutical companies manufactured, marketed and sold. Among other things, the Commonwealth alleged the defendant pharmaceutical companies, including BMS, reported or contributed to the reporting of inflated AWPs for certain specified drugs that are published in commercial publications and that these inflated prices caused overpayment by DPW and PACE, which relied on these reported prices.
Central among the Commonwealth's claims is that the published AWPs for BMS' drugs are fictitious because they do not reflect an accurate average wholesale price charged by wholesalers to providers,
[36 A.3d 1211]
including physicians and pharmacists. Because AWP was the predominant benchmark for reimbursement by government and third-party payors, including DPW and PACE, the Commonwealth asserted BMS and other pharmaceutical companies inflated or contributed to the inflation of each drug's AWP to create a “spread” between a provider's actual acquisition cost and the fictitious, published AWP, and that pharmaceutical companies, including BMS, market this spread in order to gain market share over a competitor's drug.
The Commonwealth's suit against Defendant BMS, which asserted claims of common law fraud or misrepresentation and civil conspiracy, as well as violations of the Unfair Trade Practices and Consumer Protection Law (CPL),1 culminated in a five-week jury trial. After the close of evidence, issues relating to the Commonwealth's claims of fraud or misrepresentation and civil conspiracy were submitted to the jury, while issues relating to the statutory claims were submitted to the trial judge for non-jury decision.
Ultimately, the jury returned a verdict in favor of BMS on the common law claims. Shortly thereafter, the trial judge issued a Decision Awarding Injunction and Restoration (Decision) against BMS, finding that BMS violated the CPL. As to the remedy for the CPL violations, the Decision provided for injunctive relief, which essentially restrains BMS from contributing to the reporting of inflated AWPs for its drugs and from creating, marketing or promoting the spread for its drugs. In addition, the trial judge ordered BMS to restore to the Commonwealth the amount of $27,617,952.
Both the Commonwealth and BMS filed post-trial motions. For its part, the Commonwealth seeks judgment non obstante veredicto (JNOV) or, alternatively, a new trial on its negligent misrepresentation and civil conspiracy claims as well as modification of the trial judge's Decision on its statutory claims, to provide for relief in addition to that granted by the trial judge.
On the other hand, BMS challenges the Court's determinations that it violated the CPL. It therefore requests the Court vacate its Decision awarding...
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