Sidney Hillman Health Ctr. v. Abbott Labs.
| Decision Date | 14 August 2014 |
| Docket Number | No. 13 C 5865,13 C 5865 |
| Citation | 64 F.Supp.3d 1146 |
| Parties | Sidney Hillman Health Center, of Rochester, Teamsters Health Services and Insurance Plan Local 404, and United Food and Commercial Workers Unions and Employers Midwest Health Benefit Fund, on behalf of themselves and all others similarly situated, Plaintiffs, v. Abbott Laboratories and AbbVie Inc., Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Catherine Jeanne Osuilleabhain, Edmund S. Aronowitz, Adam J. Levitt, Grant & Eisenhofer P.A., Jonathan D. Karmel, The Karmel Law Firm, Chicago, IL, Mary S. Thomas, Grant & Eisenhofer P.A., Wilimington, DE, Frank R. Schirripa, Hach Rose Schirripa & Cheverie LLP, New York, NY, for Plaintiffs.
William F. Cavanaugh, Jr., Adeel Abdullah Mangi, Jonah Moses Knobler, Scott C. Caplan, Patterson Belknap Webb & Tyler LLP, New York, NY, Jonathan Richard Lahn, Kirkland & Ellis LLP, Chicago, IL, for Defendants.
Sidney Hillman Health Center of Rochester, Teamsters Health Services and Insurance Plan Local 404, and United Food and Commercial Workers Unions and Employers Midwest Health Benefit Fund (collectively, “the Funds”) are multi-employer benefit plans and health services funds that provide health benefits, including prescription drug coverage, to their members. The Funds seek to represent a nationwide class of such third-party purchasers or third-party payors (“TPPs”) who from 1998 to 2012 reimbursed and paid all or some of the purchase price for Depakote
, a drug developed and marketed initially by Abbott Laboratories (“Abbott”) and later by AbbVie, Inc. (“AbbVie”) (collectively, “Abbott”), for indications not approved by the Food and Drug Administration (“FDA”).2 Plaintiffs also seek to represent three subclasses of TPPs in Illinois, New York, and Massachusetts. The Funds bring claims for violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), conspiracy to violate RICO, violation of the Illinois and New York deceptive business practices acts, and unjust enrichment. Abbott has moved to dismiss the Complaint. Because the Court finds the Funds' claims are barred by the statute of limitations, Abbott's motion [26] is granted.
(divalproex sodium) was developed by Abbott and approved by the FDA for the treatment of epileptic seizures
, acute mania or mixed episodes associated with bi-polar disorder, certain absence seizures, adult migraine prevention and prophylaxis, and pediatric patients over ten years old for certain absence seizures. Depakote has never been approved for treatment of dementia, including agitation associated with dementia, schizophrenia, ADHD, narcotic drug withdrawal, or any other uses.
Between 2007 and 2012, four sealed qui tam actions were filed against Abbott pursuant to the False Claims Act, 31 U.S.C. § 3730(b), asserting illegal marketing of Depakote
for non–FDA approved uses. In November 2009, Abbott disclosed in a public Securities and Exchange Commission filing that the United States Department of Justice was investigating its sales and marketing of Depakote. This was widely reported in the press at that time.4 On February 1, 2011, the qui tam actions were unsealed as the United States and fifteen state governments intervened. Another state followed two months later. After the consolidation of those actions, on May 7, 2012, Abbott agreed to pay $1.6 billion to resolve the criminal and civil claims against it. As part of that settlement, Abbott admitted to knowingly promoting the sale and use of Depakote for uses that the FDA had not approved as safe and effective, including behavioral disturbances in dementia patients, ADHD, schizophrenia, and other psychiatric conditions. Abbott also admitted this unapproved use promotion included making false and misleading statements about the safety, efficacy, dosing, and cost-effectiveness of Depakote for some of those uses, and specifically marketing Depakote to nursing homes to control behavioral disturbances in dementia patients (as an alternative to antipsychotic medications that carried additional federal regulatory restrictions). Abbott also admitted to paying illegal remuneration to health care professionals and long-term pharmacy providers to induce them to promote or prescribe Depakote.
The Funds filed the current suit on August 16, 2013 alleging Abbott perpetrated a scheme designed to cause the Funds and other TPPs to pay for Depakote
prescriptions to treat non-FDA approved conditions and conditions for which there is no reliable scientific evidence that Depakote is effective. The Funds claim their member-patients received no additional benefit from the drug (versus a placebo) and member-patients were sometimes subjected to additional side effects, despite alternative medicines that were cheaper, more effective, or had fewer side effects.
According to the Funds, Abbott perpetrated this scheme in direct violation of FDA regulations concerning the marketing and promotion of prescription drugs. The FDA requires pharmaceutical companies to present fair and balanced information about their products, meaning full disclosure of negative as well as positive information. Promotion of drugs for “off-label,” or unapproved uses, is also closely monitored by the FDA. In limited circumstances and following FDA guidelines, drug companies can provide information on off-label uses of their products. For example, companies may respond to physicians who specifically inquire about off-label uses, discuss these off-label uses with bona fide consultants for the purpose of retaining their services for the pharmaceutical company, and provide grants to independent continuing medical education program sponsors (that may discuss these uses), provided the drug company does not influence the content of those programs. Off-label prescription of drugs is not illegal and is a routine practice among physicians.
According to the Complaint, from 1998 to 2012, Abbott used intermediary marketing firms, allegedly independent entities, and paid physician spokespeople to aggressively market Depakote
for off-label uses. Abbott also used internal sales divisions to target physicians and institutions to increase off-label prescriptions. These efforts resulted in dramatically increased sales of Depakote, including to a high of $1.5 billion by 2007.
The Funds allege Abbott established and controlled three enterprises to promote off-label uses of Depakote
and to make misrepresentations about its safety and effectiveness for those uses. The “CENE Enterprise” was comprised of Abbott, associated physicians, and two other entities. One entity, the Council for Excellence in Neuroscience Education (“CENE”) was a purportedly independent continuing education medical group with undisclosed ties to Abbott. CENE disseminated webinars, meetings, and materials on off-label Depakote uses. CENE also had “faculty” and “council” physician members retained to promote Depakote for unapproved uses. The second entity, ACCESS Medical Group (“ACCESS”) was hired by Abbott to assist CENE by creating continuing education materials, including slide show presentations for use by doctors in Abbott's speakers' bureau. The “PharmaCare Enterprise” included Abbott, its sales representatives, and PharmaCare Strategies, Inc. (“PharmaCare Strategies”), a market development firm that trained Abbott employees to successfully promote Depakote for off-label uses. The third enterprise, the “ABcomm Enterprise,” was designed to funnel kickbacks to physicians to drive prescription writing habits and increase off-label sales of Depakote. The ABcomm Enterprise included the physicians and other medical professionals, Abbott, and ABcomm, Inc. (“ABcomm”), a medical continuing education provider that created training materials and provided live activities. The Complaint alleges Abbott controlled and participated in each of these enterprises with the goal of increasing the amount of off-label Depakote prescriptions purchased by the TPPs. The Complaint also states the predicate RICO acts were bribery, along with mail and wire fraud associated with the communications with physicians to induce additional prescriptions.
A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint, not its merits. Fed. R. Civ. P. 12(b)(6) ; Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir.1990). In considering a Rule 12(b)(6) motion to dismiss, the Court accepts as true all well–pleaded facts in the plaintiff's complaint and draws all reasonable inferences from those facts in the plaintiff's favor. AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir.2011). To survive a Rule 12(b)(6) motion, the complaint must not only provide the defendant with fair notice of a claim's basis but must also be facially plausible. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ; see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.
Rule 9(b) requires a party alleging fraud to “state with particularity the circumstances constituting fraud.” Fed. R. Civ. P. 9(b). This “ordinarily requires describing the ‘who, what, when, where, and how’ of the fraud, although the exact level of particularity that is required will necessarily differ based on the facts of the case.” AnchorBank, 649 F.3d at 615 (citation omitted). Rule 9(b) applies to “all averments of fraud, not claims of fraud.” Borsellino v. Goldman Sachs Grp., Inc., 477 F.3d 502, 507 (7th Cir.2007). “A claim that ‘sounds in fraud’—in other words, one that is premised upon a course of fraudulent conduct—can implicate Rule 9(b)'s heightened pleading requirements.” Id.
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Sidney Hillman Health Ctr. of Rochester & Teamsters Health Servs. & Ins. Plan Local 404 v. Abbott Labs. & Abbvie Inc.
...payors of drug expenses. (The parties call them TPPs; we prefer Payors.) The district court dismissed the suit as untimely. 64 F.Supp.3d 1146 (N.D. Ill. 2014). Civil RICO actions must be commenced within four years after injury was or should have been known. Agency Holding Corp. v. Malley-D......
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