Commonwealth v. Tap Pharm. Prods. Inc., 212 M.D. 2004

• Decision Date: 31 August 2011
• Docket Number: No. 212 M.D. 2004,212 M.D. 2004
• Court: Pennsylvania Commonwealth Court
• 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

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

No. 212 M.D. 2004

COMMONWEALTH COURT OF PENNSYLVANIA

Argued: May 9, 2011
FILED: August 31, 2011
Argued: October 18, 2010
FILED: December 7, 2010
FILED: October 14, 2010

BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge
HONORABLE ROBERT SIMPSON, Judge (P)
HONORABLE BARRY F. FEUDALE, Senior Judge

OPINION
BY JUDGE SIMPSON

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OPINION re POST-TRIAL MOTIONS of the COMMONWEALTH of PENNSYLVANIA and JOHNSON & JOHNSON DEFENDANTS
TABLE OF CONTENTS

I. BACKGROUND...........................................................................5

A. Opening..............................................................................5
B. Parties................................................................................8

1. Plaintiff Agencies...........................................................8

a. DPW/Pennsylvania Medicaid.....................................8
b. Department of Aging/PACE.....................................10

2. Johnson & Johnson Defendants.........................................12

C. Procedural History................................................................16

II. FINDINGS AND CONCLUSIONS: INFLATED "PRICES"................22

A. WAC and AWP – Generally...................................................22

B. AWP System and Confusion - Findings......................................25

C. CPL Violation.....................................................................34

1. Tendency to Deceive......................................................34

2. Materiality..................................................................35

3. "Government Knowledge"...............................................35

a. Generally............................................................35

b. "Government Knowledge" – Other Findings..................36

(1) Radke Testimony..........................................36
(2) Other DPW Evidence.....................................38
(3) PACE Evidence............................................43

c. "Government Knowledge" – Conclusions......................46

4. Reliance/"Government Choice".........................................46

a. Generally............................................................46

b. "Government Choice" – Findings...............................48

5. Causation....................................................................50

6. Restoration Amounts......................................................53

a. Generally............................................................53

b. Rebates – Findings.................................................54

D. Negligent Misrepresentation....................................................56

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E. Conspiracy.........................................................................58

III. FINDINGS AND CONCLUSIONS: MARKETING THE SPREAD......60

A. Procrit®...........................................................................60

B. Remicade®........................................................................64

C. Conclusions.......................................................................67

IV. J&J GLOBAL CHALLENGE: JUDICIAL ESTOPPEL.....................68

A. Contentions........................................................................68
B. Analysis............................................................................70

V. J&J GLOBAL CHALLENGE: NON-JUSTICIABLE POLITICAL QUESTION.................................................................................75

A. Contentions.........................................................................75
B. Analysis............................................................................76

VI. J&J CHALLENGES TO CPL AWARDS.......................................84

A. Plaintiff Agencies Not Consumers.............................................84

1. Contentions................................................................84
2. Analysis....................................................................84

B. Challenge to Meaning and Application of "AWP"..........................89

1. Contentions................................................................89
2. Analysis....................................................................91

a. "Plain Meaning" Construction of AWP........................91
b. Target Audience...................................................95
c. Sophisticated Parties..............................................95
d. Materiality.........................................................98
e. Causation of Harm.................................................98

C. Injunction Improper............................................................100

1. Contentions...............................................................100
2. Injunction Moot..........................................................101
3. Injunction Unnecessary.................................................105

a. Contentions.......................................................105
b. Standard for Injunction Under CPL...........................106
c. Urgent Necessity.................................................110

4. First Amendment.........................................................119

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D. Restoration Improper...........................................................122

1. Contentions................................................................122

2. Analysis – Generally....................................................123

3. No Basis for Injunction.................................................124

4. J&J Not "Acquire" Funds..............................................124

5. No Evidence of "Overpayment".......................................126

6. Challenge to Warren-Boulton's PBM Model........................127

a. Contentions.......................................................127

b. Analysis – Generally.............................................128

c. Global Challenges to "But For" Methodology...............129

d. Real-World Factors..............................................130

e. Improper Inclusions..............................................131

7. Restoration Before 1997................................................131

a. Contentions.......................................................131
b. Waiver.............................................................132

E. Civil Penalties Improper.......................................................132

1. Contentions...............................................................132
2. Evidence of Willfulness.................................................134
3. Changes to NDCs........................................................134

VII. COMMONWEALTH DEMAND FOR JNOV..............................136

A. Contentions......................................................................136
B. Analysis...........................................................................138

1. Generally..................................................................138
2. Negligent Misrepresentation...........................................141
3. Civil Conspiracy.........................................................144

VIII. COMMONWEALTH DEMAND FOR NEW TRIAL.....................145

A. Contentions......................................................................145
B.

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