Dist. 1199p Health v. Janssen

• Decision Date: 21 March 2011
• Docket Number: Civil Action No. 10–2021 (FLW).
• Parties: DISTRICT 1199P HEALTH AND WELFARE PLAN, et al., Plaintiffs,v.JANSSEN, L.P., et al., Defendants.
• Court: U.S. District Court — District of New Jersey

784 F.Supp.2d 508

DISTRICT 1199P HEALTH AND WELFARE PLAN, et al., Plaintiffs,

v.JANSSEN, L.P., et al., Defendants.

Civil Action No. 10–2021 (FLW).

United States District Court, D. New Jersey.

March 21, 2011.

Brian J. McCormick, Jr., Sheller, PC, Philadelphia, PA, Rosalee B. Connell, Finkelstein Thompson LLP, Washington, DC, Joseph G. Sauder, Chimicles & Tikellis, LLP, Haverford, PA, for Plaintiffs.Gregg W. Mackuse, William L. Carr, Drinker Biddle & Reath LLP, Philadelphia, PA, Thomas F. Campion, Jr., Drinker, Biddle & Reath, LLP, Florham Park, NJ, for Defendants.

OPINION

WOLFSON, District Judge.

Presently before the Court is a motion filed by Defendants, Janssen, L.P. and Johnson & Johnson (collectively, “Defendants”),¹ to dismiss all counts (I–X) of the Consolidated Class Action Complaint (“Complaint”) pursuant to Fed.R.Civ.P. 12(b)(6). This putative class action involves Risperdal, a prescription medication currently marketed and sold by Defendants for the treatment of schizophrenia, bipolar mania, and autistic disorder. Plaintiffs, District 1199P Health and Welfare Plan, Ironworkers Local Union No. 399 and Participating Employers Health and Welfare Funds, International Brotherhood of Electrical Workers Local 98, and Southeastern Pennsylvania Transport Authority (collectively “Plaintiffs”), ² are third party payors who seek to recover under the federal RICO statute and state law, expenses they have incurred, and continue to incur, due to alleged “off-label” marketing and sales of Risperdal. The Court previously dismissed Plaintiffs' consolidated amended class action complaint filed in 2008 and provided Plaintiffs an opportunity to amend their complaint consistent with the Court's Opinion dated December 23, 2008.³ In this new Complaint, Plaintiffs re-allege that Defendants engaged in a fraudulent scheme to promote the off-label use of Risperdal, thereby violating: (1) 18 U.S.C. § 1962(c), Conducting the Affairs of the Enterprise Through a Pattern of Racketeering Activity (“RICO”); (2) 18 U.S.C. § 1962(d) by conspiring to violate 18 U.S.C. § 1962(c); and (3) N.J.S.A. 2C:41–1, New Jersey's RICO statute (“NJ RICO”). In addition, Plaintiffs assert various new causes of action pursuant to state law. In the instant matter, Defendants move to dismiss the Complaint arguing that the RICO related claims, Counts I–III, are substantively flawed and have not met the strictures of the Court's Opinion, and that the remaining state law claims, Counts IV–X, fail for a lack of causation and/or reliance. This second time around, Plaintiffs' new Complaint fares no better than its predecessor, and therefore, for the reasons that follow, the Court grants Defendants' motion to dismiss.

I. Background and Procedural History

Since Defendants have moved to dismiss Plaintiff's claims pursuant to Fed.R.Civ.P. 12(b)(6), the following relevant facts assume the allegations in the Complaint to be true. Plaintiffs initially filed a complaint in 2008 (“2008 Complaint”), which was dismissed without prejudice by this Court. See Dist. 1199P Health & Plan v. Janssen, L.P., No. 06–3044, 2008 WL 5413105, 2008 U.S. Dist. LEXIS 103526 (D.N.J. Dec. 23, 2008) (hereinafter “ District 1199P I”). The 2008 Complaint alleged that Defendants violated: (1) the RICO Act; (2) RICO conspiracy; and (3) the New Jersey RICO Act. Among other deficiencies, this Court explained that the 2008 Complaint failed to sufficiently allege a cognizable RICO injury under federal or New Jersey law. The Complaint in the instant matter attempts to cure the defects of the 2008 Complaint, and asserts new claims under state law.⁴ In deciding the present motion, this Court will refer to its previous Opinion.

The Complaint alleges that Defendants illegally promoted Risperdal for off-label purposes through a comprehensive and carefully orchestrated scheme. ( See Compl. ¶ 2). The Complaint avers in detail that the scheme involved a fraudulent and deceptive marketing program that led Plaintiffs and other third party payors (“TPPs”) to suffer direct economic harm. Id. at ¶¶ 2, 5. Specifically, Plaintiffs alleged that they were paying approximately 80% of the purchase price of Risperdal—a drug nearly ten times as expensive as other, more effective, safer and more tolerable drugs—for their insureds. Id.

Risperdal is currently sold and marketed by Defendants, see Id. at ¶¶ 14, 15, to patients suffering from schizophrenia, bipolar mania, and autistic disorder under strict regulation by the Food and Drug Administration (“FDA”). See Id. at 31–33. For off-label purposes, ⁵ Risperdal has been prescribed to adults for dementia, Alzheimer's disease, some forms of depression, Obsessive–Compulsive Disorder, Post–Traumatic Stress Disorder, Personality Disorders, anxiety, sleep disorders, anger management, mood enhancement or mood stabilization, and behavioral disorders not caused by adult schizophrenia or bipolar I disorder. Id. at ¶ 47. The drug has also been prescribed off-label to treat children and adolescents for general mood and behavior disorders. Id. In 2006, Risperdal was used off-label 66 percent of the time. Id. at ¶ 48.

Plaintiffs assert that Risperdal, as well as other second-generation antipsychotics (“SGAs”) are neither more effective nor safer than older, cheaper antipsychotics.⁶Id. at ¶ 50. However, to make Risperdal marketable and profitable, Defendants aggressively marketed the drug by overstating the drug's uses and understating or concealing the seriousness and frequency of Risperdal's potentially life-threatening side effects.⁷Id. at ¶ 51. Plaintiffs further allege that Defendants' aggressive and fraudulent marketing was due to Defendants' understanding that schizophrenia represented only 35 percent of antipsychotic prescriptions, and therefore, “[a]ggressive expansion of Risperdal use in other indications [was] therefore mandatory.” Id. at ¶ 54 (citing a 2010 Bloomberg article). As part of this aggressive expansion, Defendants conducted meetings and adopted strategies to expand Risperdal for off-label uses. Id. at ¶¶ 56–57. Indeed, Plaintiffs cite to a J & J internal report, which indicated that names were provided to the company in an effort to increase the call frequency on resistant prescribers in order to influence them to use more Risperdal for off-label purposes; in particular, for elderly patients with dementia,⁸ Psychosis in Alzheimer's Disease (“PAD”), autism (prior to its FDA approval in 2006), ADHD, disruptive behavior and agitation in children, mood and anxiety disorders, bipolar disorders in children and adolescents, post-traumatic stress disorder (“PTSD”), and refractory depression. Id. at ¶¶ 70, 82, 89–94, 101. Because Defendants allegedly withheld or provided false information regarding the true effects and safety of Risperdal, prescribing physicians did not have the necessary information to make informed decisions about prescribing Risperdal for off-label purposes. Id. at ¶ 106. Ultimately, according to Plaintiffs, Defendants knew that Plaintiffs and other TPPs would bear the responsibility of paying for Risperdal prescriptions, rather than other more efficacious, safe, and less expensive medications (or no medicine at all). Id. at ¶ 116. Plaintiffs claim that the injury they suffered—the excess money Plaintiffs paid Defendants for the Risperdal that they would not have purchased “but for” Defendants' fraud—is unaffected by whether any patient who took Risperdal became ill or suffered any harm as a result of ingesting the drug. Id. at ¶ 117.

To support their assertion that Risperdal is harmful for its off-label uses, Plaintiffs aver that in 2003, a researcher at the FDA identified 131 cases of risperdone-associated diabetes or hyperglycemia in an FDA reporting database. Id. at ¶ 160. Of the 131 cases, 78 were newly diagnosed hyperglycemia, 46 were exacerbations of a preexisting disease, and 7 were unclassifiable.⁹ Id. Plaintiff's argue that Defendants knew, or should have known, that the risk of new-onset diabetes mellitus or hyperglycemia associated with Risperdal is significantly higher than with older, cheaper, and equally effective “typical” antipsychotic drugs. Id. at ¶ 169.

Plaintiffs also allege that Defendants “caused” Plaintiffs and other TPPs to list Risperdal on their formularies—a list of approved drugs for which payment will be made—as part of their scheme to make Plaintiffs pay for expensive Risperdal prescriptions.¹⁰ Id. at ¶ 104. Formularies are prepared by Pharmacy Benefit Managers (“PBMs”), who act as agents for TPPs, see Id. at ¶ 108, and Plaintiffs rely almost exclusively on their PBMs to make formulary decisions. Plaintiffs claim that if they had been aware that Defendants were illegally promoting Risperdal for off-label uses that were unsafe and/or ineffective for their beneficiaries, they would have requested that Risperdal either be placed on a restricted formulary that would require prior authorization, or be removed from the formulary entirely.¹¹ See Id. at ¶¶ 114, 115, 285.

Regarding Defendants' marketing tactics, Plaintiffs allege that Defendants employed the services of a network of third-party marketing firms to effectuate their scheme to market Risperdal for off-label uses. Id. at ¶ 204. Indeed, Defendants allegedly controlled the marketing firms' activities, which consisted of physicians disseminating information about off-label uses of Risperdal in Continuing Medical Events (“CME”), consultants' meetings, speaking engagements and other programs. Id. In addition, Plaintiffs allege that Defendants employed publication strategies to generate favorable articles promoting the off-label uses of Risperdal.¹²Id. at ¶¶ 205, 230, 247. Plaintiffs claim that to lure doctors to participate in such marketing strategies, Defendants offered substantial funding to doctors willing to speak favorably about Risperdal.¹³Id. Plaintiffs also claim that the key strategy to promote Risperdal was through “thought leaders,” who...