In re Schering Plough Corp. Intron/Temodar Consumer Class Action
Citation | 678 F.3d 235 |
Decision Date | 16 May 2012 |
Docket Number | 10–3047.,Nos. 10–3046,s. 10–3046 |
Court | United States Courts of Appeals. United States Court of Appeals (3rd Circuit) |
Parties | In re SCHERING PLOUGH CORP. INTRON/TEMODAR CONSUMER CLASS ACTION. Angela Montgomery, Appellant in No. 10–3046 International Brotherhood of Teamsters Local No. 331 Health & Welfare Trust Fund, Appellant in No. 10–3047. |
OPINION TEXT STARTS HERE
Donald E. Haviland, Jr., Esq. (Argued), Michael J. Lorusso, Esq., Haviland Hughes, Philadelphia, PA, for Plaintiff–Appellant Angela Montgomery.
Stephen G. Grygiel, Esq. (Argued), John E. Keefe, Jr., Esq., Stephen T. Sullivan, Jr., Esq., Keefe Bartels, Red Bank, NJ, for Plaintiff–Appellant International Brotherhood of Teamsters Local No. 331 Health & Welfare Trust Fund.
Douglas S. Eakeley, Esq., Natalie J. Kraner, Esq., Alan S. Modlinger, Esq., Kristin A. Muir, Esq., Gavin J. Rooney, Esq. (Argued), Lowenstein Sandler, Roseland, NJ, for Defendant–Appellee Schering Plough Corp.
Before: SLOVITER, VANASKIE and GREENBERG, Circuit Judges.
At issue in these consolidated appeals is the standing of third-party payors of drugs prescribed for “off-label” purposes, i.e., uses not approved by the Food and Drug Administration (“FDA”), as well as the standing of individual patients prescribed drugs for off-label purposes, to pursue claims against a pharmaceutical company and its affiliated marketing entities under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961, et seq., the New Jersey RICO statute, N.J.S.A. § 2C:41–1, et seq., as well as other state statutory and common law causes of action. Both groups of plaintiffs claim that the defendants pursued illegal marketing campaigns to persuade physicians to prescribe certain drugs for off-label uses. The District Court found that both groups of plaintiffs lacked standing because, inter alia, they did not allege a plausible nexus between the assailed marketing campaign and the physicians' decisions to prescribe certain drugs for off-label use. Having carefully considered the parties' contentions in the context of the entire record, we agree that dismissal of both actions for want of standing is warranted. Accordingly, we will affirm the District Court's well-reasoned decisions.
There are two sets of plaintiffs in these consolidated appeals. One set of Plaintiffs consists of a putative nationwide class of third-party payors (“TPPs”).1 The other set of Plaintiffs is comprised of a putative nationwide class of individual patient-consumers who paid for prescriptions of certain drugs for off-label uses, with the named class representative being Angela F. Montgomery.2 Separate Amended Complaints were filed on behalf of each set of Plaintiffs. The Defendants common to both Amended Complaints are the Schering–Plough Corporation, a manufacturer of pharmaceutical products, and its affiliated marketing and sales companies, the Schering Sales Corporation and Schering Corporation. The TPP Amended Complaint also names as defendants another Schering subsidiary, Integrated Therapeutics Group, Inc., individual Schering executives Richard J. Kogan, William K. Heiden, and Mary Naughton, as well as unnamed individuals (“John Doe” and “Jane Doe” defendants), and unknown business entities (“ABC Corporations”), who purportedly participated in the alleged illegal and false sales and marketing campaigns. For sake of simplicity, we shall refer to the Defendants collectively as “Schering.” Both sets of Plaintiffs assert that they paid for Schering drugs that were ineffective or unsafe for the off-label uses for which they were prescribed.
The off-label marketing claims are at least partially predicated on Schering's alleged violations of the labeling and marketing restrictions of the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 301 et seq. (“FDCA”). The FDCA regulates the manufacturing, marketing and sale of prescription drugs, and provides that a drug cannot be sold in interstate commerce unless it is approved by the FDA for the specific medical use, or “indication,” listed on the drug's labeling. See21 U.S.C. § 355(a) (). To obtain FDA approval, drug companies generally must submit evidence from clinical trials and other testing that evaluate the drug's risks and benefits and demonstrate that it is safe and effective for all of the indications “prescribed, recommended, or suggested” on the drug's label. See id. at § 355(d).
Prescription drugs frequently have therapeutic uses other than their FDA-approved indications. The FDCA, however, generally prohibits manufacturers from marketing, advertising, or otherwise promoting drugs for such unapproved or “off-label” uses. See21 U.S.C. § 331(a) and (d) ( ).
Because the FDCA does not regulate the practice of medicine, physicians may lawfully prescribe drugs for off-label uses. See Buckman Co. v. Plaintiffs' Legal Comm., 531 U.S. 341, 350, 121 S.Ct. 1012, 148 L.Ed.2d 854 (2001) ( ); Wash. Legal Found. v. Henney, 202 F.3d 331, 333 (D.C.Cir.2000) (). Thus, there is a certain “asymmetry” in the regulation of off-label uses: while physicians may lawfully prescribe drugs for off-label uses, the FDCA generally prohibits manufacturers from marketing these uses to physicians. See id. at 332–33 ( ). Indeed, the FDCA's regulatory regime prohibits manufacturers from directly advertising off-label uses, such as through labeling claims or explicit statements made by sales representatives. Moreover, it is also unlawful for manufacturers to engage in certain indirect methods of off-label marketing. For example, in certain circumstances it is unlawful for manufacturers to sponsor continuing medical education (“CME”) courses that focus on off-label uses. The FDCA does, however, permit manufacturers to distribute information about off-label uses in certain limited circumstances. See id. at 333.
The drugs involved in these consolidated appeals (the “Subject Drugs”) are certain oncology and Hepatitis drugs, including Intron®–A (“Intron–A”), PEG–Intron® (“PEG–Intron”), Rebetol® (“Rebetol”) and Rebetron® (“Rebetron”) (collectively the “Intron Franchise Drugs”), and Temodar® (“Temodar”). The FDA has approved these drugs for specific purposes.
In June 2001, the FDA's Division of Drug Marketing, Advertising, and Communications sent Schering Sales a letter notifying it that the FDA had “identified various promotional activities that [were] in violation of the [FDCA] and its implementing regulations.” (Information at 12–16, United States v. Schering Sales Corp., No. 06–CR–10250 (D.Mass. Aug. 29, 2006)). The letter cited a May 2001 American Society of Clinical Oncology Annual Meeting in San Francisco at which the FDA witnessed Schering sales representatives give purportedly “false or misleading efficacy information about Temodar to visitors at the commercial exhibit hall booth,” and “promote[ ] Temodar for the unapproved use in first line therapy of anaplastic astrocytoma.” ( Id. at 12–13). The FDA's letter requested that Schering “immediately cease making such violative statements and any other promotional activities or materials for Temodar that make the same or similar claims or presentations.” ( Id. at 13).
In August 2006, the United States Attorney for the District of Massachusetts charged Schering Sales with conspiracy to make false statements to the federal government, in violation of 18 U.S.C. § 371. ( Id. at 12–16). The Government's one-count Information alleged that “Schering Sales and its co-conspirators knowingly and willfully made material false statements to the FDA.” ( Id. at 8). It stated that Schering Sales' response to the FDA June 2001 letter specifically asserted that Schering's home office had “aggressively pursued sales of Intron A and Temodar for unapproved uses” through numerous methods, including training the sales force to seek off-label sales, requiring the sales force to “create business plans that emphasized detailed promotional goals to obtain off-label sales,” and compensating the sales force partly on their success in achieving off-label sales. ( Id.)
Schering Sales pleaded guilty to the one-count Information pursuant to a written Settlement Agreement. ( See Amended Judgment, United States v. Schering Sales Corp., 06–CR–10250 (D.Mass. Feb 7, 2007)). Under the Settlement Agreement, Schering Sales agreed to pay fine of $180 million. ( Id.) It also agreed to pay $255 million to resolve civil claims that it defrauded U.S. Government health benefit programs, including Medicare, Medicaid, and the Veteran's Administration. ( Id.)
Following Schering's settlement with the Government, various civil suits were filed across the country by consumer plaintiffs who were prescribed, consumed, and paid for the drugs, and by TPPs who paid for the Subject Drugs prescribed to their plan members. The Judicial Panel on Multi–District Litigation ordered the cases to be transferred to the District of New Jersey, where Schering is incorporated, and...
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