DePriest v. Astrazeneca Pharms. L.P.

• Decision Date: 05 November 2009
• Docket Number: No. 08–1257.,08–1257.
• Citation: 351 S.W.3d 168,2009 Ark. 547
• Parties: Louise DePRIEST, Iva Duncan, Gladys Eaton, Carolyn Knight, Geraldine Harris, Bernice Milam, Wanda Hamilton, Eddie Lou Sanders, and Lisa Sanders, Appellants, v. ASTRAZENECA PHARMACEUTICALS, L.P.; AstraZeneca, PLC; Zeneca, Inc.; and AstraZeneca U.S., Appellees.
• Court: Arkansas Supreme Court

2009 Ark. 547

351 S.W.3d 168

Louise DePRIEST, Iva Duncan, Gladys Eaton, Carolyn Knight, Geraldine Harris, Bernice Milam, Wanda Hamilton, Eddie Lou Sanders, and Lisa Sanders, Appellants,

v.ASTRAZENECA PHARMACEUTICALS, L.P.; AstraZeneca, PLC; Zeneca, Inc.; and AstraZeneca U.S., Appellees.

No. 08–1257.

Supreme Court of Arkansas.

Nov. 5, 2009.

Mitch Cash, Marshall; Brian Bishop, Billings, MT; and David A. Hodges, Little Rock, for appellants.

Sidley Austin, LLP, by; Mark E. Haddad and David R. Carpenter, Los Angeles, CA, and Quattlebaum, Grooms, Tull & Burrow, PLLC, by: Steven W. Quattlebaum, Little Rock, for appellees.

ELANA CUNNINGHAM WILLS, Justice.

This appeal arises from a lawsuit filed by nine named plaintiffs (hereinafter “Appellants”) against drug manufacturer AstraZeneca Pharmaceuticals, L.P., alleging that AstraZeneca fraudulently marketed its drug Nexium. The Searcy County Circuit Court granted AstraZeneca's motion to dismiss the Appellants' complaint on August 7, 2008. We find no error and affirm.

AstraZeneca's drug Nexium (esomeprazole) and its predecessor medication, Prilosec (omeprazole), are both so-called proton pump inhibitors (PPIs) that are used in the treatment of gastro-esophageal reflux disease (GERD), or heartburn. Prilosec, which had been long advertised as “the Purple Pill,” was AstraZeneca's most profitable drug by the time its patent expired in 2001.¹ Facing the expiration of that patent, AstraZeneca sought approval from the Food and Drug Administration (FDA) for a new PPI drug, Nexium. In 2001, the FDA approved AstraZeneca's request to market Nexium for three GERD-related conditions: the healing of erosive esophagitis (“EE,” or damage to the lining of the esophagus), maintenance of healing esophagitis, and the treatment of symptomatic GERD.

The original plaintiffs—Wanda Hamilton, Eddie Lou Sanders, and Lisa Sanders—filed their initial complaint against AstraZeneca in Searcy County Circuit Court on November 30, 2004, alleging that AstraZeneca's actions in marketing Nexium as a superior product to Prilosec were fraudulent and violated the Arkansas Deceptive Trade Practices Act, Arkansas Code Annotated section 4–88–107 (Repl.2001). In addition, Appellants raised claims for common-law fraud, breach of contract, promissory estoppel, unjust enrichment, and violations of the Arkansas Unfair Practices Act and Arkansas Medicaid Fraud False Claims Act.

In essence, Appellants alleged that AstraZeneca had falsely marketed Nexium as “new” and “better” than Prilosec, when the two drugs were, in fact, very similar and had similar therapeutic results. Moreover, Appellants contended that AstraZeneca had positioned Nexium as a “new” drug in order to cause purchasers to pay a higher price for it than they had been paying for Prilosec.

Appellants filed first, second, and third amended complaints on December 2, 2004, January 14, 2005, and January 20, 2005, adding and dropping various named plaintiffs and including additional allegations. AstraZeneca removed the action to federal district court on January 21, 2005, but Appellants moved to remand the action, and the federal district court granted that motion on September 21, 2005. On October 11, 2005, AstraZeneca then filed a motion to dismiss the third amended and substituted complaint pursuant to Ark. R. Civ. P. 12(b)(6), contending that Appellants had failed to state a cause of action. The circuit court held a hearing on AstraZeneca's motion to dismiss Appellants' third amended complaint on May 15, 2006. Before the court could render a ruling, however, Appellants filed their fourth amended complaint on May 15, 2006. This complaint added five new plaintiffs.

In a letter opinion dated May 24, 2006, and filed on May 31, 2006, the circuit court granted AstraZeneca's motion to dismiss the third amended complaint. The court noted that

[t]he crux of the plaintiffs' complaint is not that this new Nexium product is harmful, ineffective, or of poor quality, but rather that it is inappropriately marketed as “new,” when in fact there is nothing new chemically about it and when it was not actually superior to the previous AZ product.

While the plaintiffs' entire complaint appears to be well researched, it is convincing only to the point that a giant corporation has flexible power to control and enhance its own profits. It offers little or no proof that the defendants committed an actionable tort against the plaintiffs in Searcy County, Arkansas, or anywhere. The complaint would perhaps make an excellent article in a scientific magazine, but it fails as a legal pleading.

Accordingly, citing Ark. R. Civ. P. 12(b)(6), the court found that the complaint “should be dismissed for failure to meet the prima facie elements of any of the causes of action stated in the pleadings and for failure to state any claim for relief that could be granted.”

Appellants filed a motion for reconsideration on May 31, 2006, contending that the circuit court had not yet considered their fourth amended complaint. In addition, Appellants filed a motion asking the trial judge to recuse on June 6, 2006, suggesting that the court's language in the letter opinion “reflect[ed] the appearance of having a mind-set that cannot be reconciled with the proposition that the trial judge is committed to hear and decide all issues that are relevant, weighing the issues, and arriving at a judicious result.” Appellants also filed a second motion to recuse on June 16, 2006, which the court also denied.

On June 7, 2006, Appellants filed their 290–page fifth amended complaint. AstraZeneca again moved to dismiss the complaint pursuant to Ark. R. Civ. P. 12(b)(6). In addition, AstraZeneca argued that Appellants' claims were preempted by federal law. After an October 31, 2006 hearing on the motion to dismiss, the circuit court issued a letter opinion stating that it would grant AstraZeneca's motion to dismiss.

The court's letter opinion was formalized in an order entered on August 7, 2008. The court found that Appellants' claim for violation of the Arkansas Deceptive Trade Practices Act was barred by that statute's “safe harbor” provision, Ark.Code Ann. § 4–88–101 (Repl.2001). The court further found that Appellants' price-fixing claims and claims under the Arkansas Unfair Practices Act and the Arkansas Medicare Fraud False Claims Act failed because those statutes do not afford a private right of action. In addition, the court rejected Appellants' claims for common-law fraud, breach of contract, promissory estoppel, and unjust enrichment. Finally, the court found, as independent grounds for dismissal, that all of Appellants' claims were preempted by federal law and that Appellants had failed to plead the required elements of their claims, “including that AstraZeneca's alleged misconduct caused them to purchase Nexium and that they were injured as a result.” ² Appellants filed a timely notice of appeal on August 26, 2008.

We review a trial court's decision on a Rule 12(b)(6) motion to dismiss by treating the facts alleged in the complaint as true and by viewing them in the light most favorable to the plaintiff. Sluder v. Steak & Ale of Little Rock, Inc., 361 Ark. 267, 206 S.W.3d 213 (2005); Branscumb v. Freeman, 360 Ark. 171, 200 S.W.3d 411 (2004).³ In viewing the facts in the light most favorable to the plaintiff, the facts should be liberally construed in plaintiff's favor. Sluder, supra. Our rules require fact pleading, however, and a complaint must state facts, not mere conclusions, in order to entitle the pleader to relief. Ark. R. Civ. P. 8(a)(1); Faulkner v. Ark. Children's Hosp., 347 Ark. 941, 69 S.W.3d 393 (2002).

Because our standard of review requires us to examine the facts that were alleged in the complaint, we set out the pertinent allegations here. At the heart of Appellants' complaint was their contention that AstraZeneca, when faced with the patent expiration on their “blockbuster” drug Prilosec, set out to replace Prilosec with Nexium. Appellants alleged that AstraZeneca's strategy was to aggressively market Nexium as a new and improved medication for heartburn that was more effective than Prilosec, despite studies and medical reviews that showed the two drugs offered similar benefits. Advertising associated with the launch of Nexium touted the new drug as “more powerful” than Prilosec and declared that it was “clinically proven to heal more reflux esophagitis patients in a shorter period of time compared to [Prilosec].”

AstraZeneca initially offered Nexium at a lower price than Prilosec and offered large quantities of free samples to physicians. In addition, as part of the marketing campaign, AstraZeneca conducted direct-to-consumer advertising that offered a seven-day free trial of Nexium with a prescription from a physician. Sales of Nexium quickly eclipsed sales of Prilosec, and AstraZeneca raised the prices of Nexium. By the time Appellants filed their complaint, one Nexium pill cost an average of $4.46, while the over-the-counter version of Prilosec sold for $0.59 per pill.

According to the complaint, the success of Nexium was due to AstraZeneca's allegedly “false and misleading” advertising campaign that, as noted above, promoted Nexium as superior to Prilosec. Appellants contended, however, that clinical trials of Nexium showed that it was not significantly better than Prilosec. They pointed to statements from an FDA medical review of Nexium that concluded that there was “no scientific basis for [AstraZeneca's] statement that, compared to [Prilosec], [Nexium] offers a faster and improved resolution of heartburn symptoms and higher rates of healing in the treatment of erosive esophagitis.”

Appellants alleged that they had been harmed by AstraZeneca's conduct in various ways. For example, plaintiff Geraldine Harris alleged that, after seeing advertisements for Nexium on television, she asked her doctor for a prescription for her heartburn. Harris filled the...