Sergeants Benevolent Ass'n Health & Welfare Fund v. Sanofi-Aventis U.S. LLP

• Decision Date: 12 May 2014
• Docket Number: No. 08–CV–179 (SLT)(RER).,08–CV–179 (SLT)(RER).
• Citation: 20 F.Supp.3d 305
• Parties: SERGEANTS BENEVOLENT ASSOCIATION HEALTH AND WELFARE FUND, et al., Plaintiffs, v. SANOFI–AVENTIS U.S. LLP, et al., Defendants.
• Court: U.S. District Court — Eastern District of New York

20 F.Supp.3d 305

SERGEANTS BENEVOLENT ASSOCIATION HEALTH AND WELFARE FUND, et al., Plaintiffs,

v.SANOFI–AVENTIS U.S. LLP, et al., Defendants.

No. 08–CV–179 (SLT)(RER).

United States District Court, E.D. New York.

Signed May 9, 2014

Filed May 12, 2014

Report and recommendation adopted in part. Christopher A. Seeger, David R. Buchanan, Seeger Weiss, LLP, New York, NY, Douglas R. Plymale, James R. Dugan, Murray Law Firm, New Orleans, LA, Scott A. George, Seeger Weiss LLP, Philadelphia, PA, Albert M. Myers, III, Kahn Swick & Foti, LLC, New Orleans, LA, Justin Bloom, Justin Bloom, Esq., New York, NY, Lauren G. Barnes, Thomas M. Sobol, Hagens Berman Sobol Shapiro, LLP, Cambridge, MA, for Plaintiffs.

Alison A. Grounds, Amanda Rachel Gaynor, Dominic Kouffman, Troutman Sanders LLP, New York, NY, Lindsey B. Mann, Lynette E. Smith, William N. Withrow, Troutman Sanders LLP, Atlanta, GA, Stephen George Rinehart, Jenkens & Gilchrist Parker Chapin LLP, New York, NY, for Defendants.

MEMORANDUM AND ORDER

TOWNES, District Judge:

In January 2008, plaintiffs Sergeants Benevolent Association Health and Welfare Fund (“SBA”), New England Carpenters Health Benefits Fund (“NEC”) and Allied Services Division Welfare Fund (“ASD”) (collectively “Plaintiffs”) and others commenced this action on behalf of themselves and others similarly situated, principally alleging that defendants sanofi-aventis U.S. LLP and sanofi-aventis U.S., Inc. (collectively, “Defendants”) violated the Racketeer Influenced and Corrupt Organizations Act “(RICO”), 18 U.S.C. § 1961 et seq., and various state laws by misrepresenting the safety and efficacy of Ketek, a prescription antibiotic marketed by Defendants. In December 2011—after this Court denied Plaintiffs' motion to certify a nationwide class—Defendants moved for summary judgment. By order dated January 4, 2012, this Court referred the motion to Magistrate Judge Ramon E. Reyes (“Judge Reyes”) for a report and recommendation.

On September 17, 2012, Judge Reyes issued his report and recommendation (the “R & R”)— Sergeants Benev. Ass'n Health & Welfare Fund v. Sanofi–Aventis U.S., LLP, No. 08–CV–0179 (SET) (RER), 2012 WL 4336218 (E.D.N.Y. Sept. 17, 2012) (“ Sergeants III ”)—which recommends that Defendants' motion for summary judgment be granted in its entirety. On October 4, 2012, Plaintiffs collectively filed objections to almost every aspect of the R & R. For the reasons set forth below, this Court, having conducted a de novo review of those portions of the R & R to which Plaintiffs object, now adopts Judge Reyes' R & R except to the extent that it recommends limiting Plaintiffs' cause of action for violations of various consumer protection statutes to claims brought pursuant to the laws of Plaintiffs' home states of New York, Massachusetts and Illinois. However, Defendants are granted leave to file a second motion for summary judgment once Plaintiffs clarify the scope of their state-law claims under Counts III and IV of the Second Amended Complaint.

BACKGROUND

In setting forth the facts of this case, the R & R incorporates by reference a much more detailed statement of facts contained in Judge Reyes' report and recommendation on Plaintiffs' motion for class certification (the “Prior R & R”): Sergeants Benev. Ass'n Health & Welfare Fund v. Sanofi–Aventis U.S., LLP, No. 08–CV–0179 (SLT) (RER), 2011 WL 824607 (E.D.N.Y. Feb. 16, 2011) (“ Sergeants I ”), adopted, 2011 WL 1326365 (E.D.N.Y. Mar. 30, 2011) (“ Sergeants II ”). The Prior R & R itself largely relied on facts set forth in Plaintiffs' Second Amended Complaint and Plaintiffs' Proffer of Facts in Support of the Motion for Class Certification (“Plaintiffs' Proffer”).

The following summary of the facts in this case relies, in part, on the Prior R & R. As indicated by the citations contained in the Prior R & R, not all of these facts may be undisputed. However, to the extent that the facts are disputed, the following summary is based on Plaintiffs' version of events.

Defendants are United States subsidiaries of sanofi-aventis SA, a French pharmaceutical firm (Sec. Am. Complt., ¶¶ 5–6; Answer, ¶¶ 5–6). According to Defendants, the corporation named by Plaintiffs as Sanofi–Aventis U.S., Inc. is actually named sanofi-aventis U.S. Inc. and is not a proper party to this action (Answer, p. 2); the entity named by Plaintiffs as Sanofi–Aventis U.S., LLP, is actually a limited liability company, sanofi-aventis U.S. LLC ( id., at 1); and some of the acts which Plaintiffs attribute to Defendants were actually committed by a related entity, Aventis Pharmaceutical, Inc. (“API”) ( see id., ¶¶ 5, 14–16). For purposes of this memorandum and order, this Court will attribute acts and omissions on the part of one or more of these related entities to Defendants so as to avoid unnecessary complexity.

Sometime prior to March 2000, Defendants developed a prescription antibiotic, telithromycin, which was marketed under the brand name Ketek (Sec. Am. Complt., ¶ 10; Answer, ¶ 10). Early in 2000, Defendants submitted a New Drug Application (“NDA”) to the Office of New Drugs at the United States Food and Drug Administration (“FDA”), seeking approval to sell Ketek in the United States (Sec. Am. Complt., ¶ 12; Answer, ¶ 12). That NDA sought to have Ketek approved for the treatment of four specific conditions or “indications”: acute bacterial sinusitis (“ABS”), acute exacerbation of chronic bronchitis (“AECB”), community-acquired pneumonia (“CAP”), and tonsillopharyngitis ( id.).

In June 2001, the FDA determined that it would not approve Ketek for treatment of tonsillopharyngitis and would only approve Ketek for the treatment of the other three indications if Defendants provided more evidence of Ketek's safety and efficacy ( Sergeants I, 2011 WL 824607, at *1 (citing Plaintiffs' Proffer at 28)). To provide this evidence, Defendants commissioned a large clinical study known as “Study 3014” (Sec. Am. Complt., ¶ 14; Answer, ¶ 14). Defendants hired Pharmaceutical Product Development, Inc. (“PPD”), a contract research organization, to monitor the study and contracted with another entity, The Copernicus Group, Inc. (“Copernicus”), to monitor patient safety ( Sergeants I, 2011 WL 824607, at *2).

Early in the course of its evaluation, PPD raised concerns regarding the integrity of data collected by the office of Dr. Marie Anne Kirkman Campbell, a physician who treated the largest number of patients in the study ( Sergeants I, 2011 WL 824607, at *2 (citing Plaintiffs' Proffer at 31)). Thereafter, the FDA's Office of Criminal Investigation (“the OCI”) determined that there had been misconduct and protocol violations at several other sites with high patient enrollment ( id. (citing Plaintiffs' Proffer at 38–39)). However, after the FDA again declined to approve Ketek and requested more information regarding Study 3014, Defendants issued a report that, Plaintiffs claim, not only omitted any mention of the study's problems but falsely represented that the study had been conducted in accordance with good clinical practice ( id. (citing Sec. Am. Complt., ¶ 26)). According to Plaintiffs, Defendants also claimed Ketek's safety and efficacy profile matched that of other antibiotics, even though they (i) knew “that Study 3014 actually showed that Ketek was almost three times more likely to result in a possibly medication-related, serious adverse event; (ii) knew that Ketek was neither more efficacious nor as safe as widely available alternatives; and (iii) knew that claims that Ketek did better against antibiotic resistant pathogens were not scientifically supported” ( id. (citing Plaintiffs' Memorandum In Support Of Class Certification at 3, nn. 10–14)).

In April 2004, after receiving Defendants' report, the FDA approved Ketek for three indications: ABS, AECB and CAP (Defendants' Statement of Undisputed Material Facts in Support of their Motion for Summary Judgment (“Defendants' 56.1”), ¶ 1; Plaintiffs' Response to Defendants' Local Rule 56.1 Statement of Undisputed Facts (“Plaintiffs' 56.1”), ¶ 1). Immediately thereafter, Defendants launched a marketing campaign, seeking to have Ketek prescribed for “off-label” uses in addition to the three indications for which it was approved ( Sergeants I, 2011 WL 824607, at *3). The parties agree that physicians are legally permitted to prescribe Ketek for an indication for which it was never approved, and that physicians frequently did so (Defendants' 56.1, ¶ 50; Plaintiffs' 56.1, ¶ 50).

That marketing campaign, which was aimed at physicians and other members of the healthcare community, initially proved successful. According to the Prior R & R, Ketek was prescribed over 3 million times in 2005 and had been prescribed over 6.1 million times by 2006 ( Sergeants I, 2011 WL 824607, at *3). However, Ketek sales began to decline in January 2006 after the FDA released a public health advisory that warned physicians to monitor Ketek patients for potential liver problems ( id.). In June 2006, after “[twenty-three] cases of acute severe liver injury and [twelve] cases of acute liver failure, [four] of them fatal, had been linked to Ketek,” Defendants changed Ketek's label to include additional warnings, precautions, contraindications, and adverse reactions pursuant to FDA requirements and sent letters to healthcare professionals about these risks ( id. (citing Plaintiffs' Proffer at 81) (brackets in Sergeants I )). In early February 2007, after Ketek had been “implicated in [fifty-three] cases of hepatotoxic effects” ( id. (brackets in Sergeants I )), the FDA withdrew its approval for two indications: ABS and AECB (Defendants' 56.1, ¶ 3; Plaintiffs' 56.1, ¶ 3). Even though Ketek remained an FDA-approved drug for the treatment of CAP, Defendants thereafter ceased actively promoting Ketek in the United States (Defendants' 56.1, ¶¶ 4–5; Plaintiffs' 56.1, ¶¶ 4–5).

The Plaintiffs Herein

Plaintiffs are health benefit providers (“HBPs”), which...