Southeast Laborers Health and Welfare Fund v. Bayer Corporation

• Decision Date: 30 July 2009
• Docket Number: Case No. 08-1928-MD.
• Parties: SOUTHEAST LABORERS HEALTH AND WELFARE FUND, On behalf of itself and all others similarly situated, Plaintiffs, v. BAYER CORPORATION, Bayer Healthcare Pharmaceutical, Inc., Bayer Healthcare, LLC, Bayer Healthcare, A.G., Defendants. This Order relates to Case No. 08-80873.
• Court: U.S. District Court — Southern District of Florida

655 F.Supp.2d 1270

SOUTHEAST LABORERS HEALTH AND WELFARE FUND, On behalf of itself and all others similarly situated, Plaintiffs, v. BAYER CORPORATION, Bayer Healthcare Pharmaceutical, Inc., Bayer Healthcare, LLC, Bayer Healthcare, A.G., Defendants.

This Order relates to Case No. 08-80873.

Case No. 08-1928-MD.

United States District Court, S.D. Florida.

July 30, 2009.

COPYRIGHT MATERIAL OMITTED

Edith M. Kallas, Whatley Drake & Kallas LLC, Joe R. Whatley, Jr., Whatley Drake & Kallas LLC, New York, NY, J. Gerard Stranch, IV, James G. Stranch, III, Joe P. Leniski, Randall C. Ferguson, Branstetter Stranch & Jennings PLLC, Nashville, TN, W. Tucker Brown, Whatley Drake & Kallas LLC, Birmingham, AL, Patricia Elaine Lowry, Squire Sanders & Dempsey LLP, West Palm Beach, FL, William Charles Wright, Leopold Kuvin, P.A., Palm Beach Gardens, FL, Nancy A. Mismash, Robert J. DeBry & Associates, Salt Lake City, UT, for Plaintiffs.

Rebecca Lee Wiggs, William F. Goodman, III, C. Alleen McLain, Watkins & Eager, Jackson, MS, Terry R. Lueckenhoff, Katherine M. Fowler, Fox Galvin LLC, St. Louis, MO, Richard K. Dandrea, Timothy S. Coon, Eckert Seamans Cherin & Mellott, Pittsburgh, PA, Victoria Davis Lockard, Bernard Taylor, Sr., Alston & Bird, Seth A. Litman Alembik Fine & Callner PA, Atlanta, GA, Alan G. Schwartz, Wiggin & Dana, New Haven, CT, Albert G. Bixler, Eckert Seamans Cherin & Mellott LLC, Philadelphia, PA, Tara L. Lattomus, Ronald S. Gellert, Brya Keilson, Margaret Fleming England, Eckert Seamans Cherin & Mellott LLC, Michael P. Kelly, Katharine L. Mayer, McCarter & English LLP, Wilmington, DE, Amy Sherry Fischer, Larry D. Ottaway, Foliart Huff Ottaway & Bottom, Oklahoma City, OK, Brian A. Wahl, Darrell C. Tucker, II, Fred M. Haston, III, Bradley Arant Boult Cummings LLP, Birmingham, AL, Catherine Valerio Barrad, Christine Kim Son, Catherine Marie Valerio Barrad, James Paul Pecht, Sidley & Austin, Los Angeles, CA, Craig Allen Knot, Elizabeth Catherine Curtin, Eugene A. Schoon, Gary Feinerman, Michael L. Lisak, Jana D. Jobes, Sherry A. Knutson, Gretchen Marie Paine, Sidley Austin LLP, Nahrin Sapper Marino, Dykema Gossett PLLC, Shayna S. Cook, Steven E. Derringer, Matthew W. Brewer, Rebecca Weinstein Bacon, Bartlit Beck Herman Palenchar & Scott, Chicago, IL, Charles P. Blanchard, Peter J. Rotolo, III, John F. Olinde, Chaffe McCall Phillips Toler & Sarpy, New Orleans, LA, Daniel B. White, Laura T. McDonald, Gallivan White & Boyd PA, Greenville, SC, Daniel G. Wyllie, Susan Artinian, Dykema Gossett, Detroit, MI, Daniel J. Stephenson, Dykema Gossett PLLC, Ann Arbor, MI, William C. McGowin, Philip J. Butler, Bradley Arant Boult Cummings LLP, Montgomery, AL, Douglas M. Schreiner, Eric Anielak, Leanne DeShong, Shook Hardy & Bacon, Kansas City, MO, Michelle R. Mangrum, Shook Hardy & Bacon LLP, Frank R. Volpe, Richard H. Menard, Jr., Sidley Austin LLP, Washington, DC, Erik W. Legg, Michael J. Farrell, Farrell Farrell & Farrell PLLC, Huntington, WV, Frances Fenelon, James M. Doran, Jr., S. Keenan Carter, Sarah C. McBride, Waller Lansden Dortch & Davis, Nashville, TN, Julie A. Hardin, Gerry Lowry, Fulbright & Jaworski LLP, Houston, TX, Ronn B. Kreps, Olufemi 0. Solade, Andre T. Hanson, Fulbright & Jaworski, Minneapolis, MN, Glen M. Darbyshire, Inglesby Falligant Horne Courington & Chisholm PC, Savannah, GA, John S. Phillips, Bartlit Beck Herman Palenchar & Scott, Denver, CO, Joyce Dee Edelman, Porter Wright Morris & Arthur, Columbus, OH, Leslie C. O'Toole, Richard W. Ellis, Stephen D. Feldman, Ellis & Winters LLP, Raleigh, NC, Lorna A. Dotro; Coughlin Duffy LLP, Morristown, NJ Maria Jose Moncada, Guy Edward Motzer, Patricia Elaine Lowry, Squire Sanders & Dempsey LLP, West Palm Beach, FL, Mauricio M. Rodriguez, Squire Sanders & Dempsey LLP, Tampa, FL, Melissa S. Caulum, Michael Best & Friedrich LLP, Madison, WI, Paul E. Benson, Michael Best & Freidrich, Milwaukee, WI, Renee N. Sewchand, Goodell DeVries Leech & Dann LLP, Baltimore, MD, Robert J. Curtis, Civerolo Gralow Hill & Curtis PA, Albuquerque, NM, Robert G. Weddle, Tabbert Hahn Earnest & Weddle LLP, Indianapolis, IN, for Defendants.

ORDER ON MOTION TO DISMISS

DONALD M. MIDDLEBROOKS, District Judge.

THIS CAUSE comes before the Court upon the Defendants' (hereinafter, collectively, "Bayer's") Motion to Dismiss Plaintiffs First Amended Class Action Complaint. The Court has reviewed the Motion and is otherwise fully informed of the premises.

Plaintiff, Southeast Laborers Health and Welfare Fund, brings this purported class action alleging violations of: (1) RICO, 18 U.S.C. § 1962(c); (2) New Jersey Consumer Fraud Act, N.J. STAT. ANN. §§ 56:8—1 et seq.; (3) common law fraud; (4) negligent misrepresentation; and (5) unjust enrichment. The class that Plaintiff purports to represent are all private, non-governmental entities in the United States that purchased, reimbursed and/or paid all or part of the cost for Trasylol for purposes other than resale from January 1, 1999, through November, 2007.

Background

The following facts are derived from the Plaintiffs First Amended Complaint (the "Complaint"). Trasylol is the trade name for the drug aprotinin. Aprotinin, developed some time in the 1950s, is derived from bovine lungs, and was originally used to treat pancreatitis. The drug assists the body in preventing excessive bleeding during surgical procedures. As such, it is ordinarily administered to patients during surgery. Bayer began researching Trasylol in the early 1980s, and early animal drug trials revealed severe kidney damage as a side effect of the drug, but despite these early indications of severe adverse reactions, Bayer sought, and was granted, approval for the use of Trasylol in Coronary Artery Bypass Graft Surgery ("CABG")in the early 1990s.

During a period of more than twentyplus years, Bayer, utilizing scores of doctors and scientists, whom the Plaintiff terms "Key Opinion Leaders" or "KOL," embarked on an aggressive marketing campaign which consistently espoused the effectiveness and safety of Trasylol for its approved CABG use as well as for various non-approved, or "off-label," uses. Trasylol costs in excess of $1,000.00 per dose, and ordinarily, multiple doses are required during the course of one surgery. Aminocaprioc acid and tranexamic acid are alternative drugs that similarly reduce the risk of excessive bleeding during surgery. They are considerably less expensive than Trasylol, and both are available in generic formulas.

The allegations relating to Bayer's knowledge are as follows: (1) "studies in the 1990s found a very high risk of renal failure associated with the use of aprotinin;" (2) a 1992 study not funded by Bayer revealed renal dysfunction in 13 out of 20 patients who had been administered aprotinin; (3) unspecified evidence indicates that Bayer routinely received reports of adverse incidents; (4) Bayer was so aware of the renal risks Trasylol presented that the company purposely declined to undertake a clinical study to evaluate renal risks because such studies would have "confirm[ed] its worst suspicions" about the drug; and (5) in 2006, two independent studies revealed a relationship between the use of Trasylol and increased risks of renal damage and other serious adverse reactions (the "2006 Studies" or the "Studies").

According to the Complaint, the 2006 Studies indicated that patients receiving aprotinin experienced much higher rates of renal failure or dysfunction than those receiving tranexamic acid, and also that discontinuing the use of the drug would: (1) prevent numerous deaths; and (2) save more than a billion dollars in dialysis costs, not to mention the exorbitant expense of the inflated cost of the drug. After the Studies, the FDA issued a public health advisory in February of 2006 and set an advisory committee meeting for September 21, 2006. Plaintiff claims that, despite the Studies and public health advisory, Bayer continued to aggressively market Trasylol and mislead everyone about the dangers associated with the drug. Bayer also then contacted Dr. Alexander Walker of i3 Drug Safety ("i3"), an independent medical research company, to commission him to undertake an independent, Bayerfunded, study to assess the veracity of the 2006 Studies. Bayer requested that the i3 study be completed in time for the September 21, 2006 advisory meeting.

The i3 study confirmed the 2006 Studies' findings that Trasylol users experienced a higher level of serious, adverse reactions than patients using either no drug or alternative drugs. The results of the i3 study were available to Bayer by September 14, 2006. Bayer did not bring up the results of, nor mention the existence of, the i3 study at the September 21, 2006 advisory committee hearing. According to Plaintiff, Dr. Walker, upon being informed that Bayer had not reported the i3 study results to the FDA during the September 21 meeting, phoned Bayer and inquired why Bayer had not presented the results of the study to the FDA. Bayer responded that it had concerns regarding the science of the study and the preliminary nature of the findings.

Plaintiff is a health and welfare fund responsible for paying a portion of or the entire purchase price of prescribed medications, including Trasylol, for health plan participants. It brings this suit on its behalf, and on the behalf of other similarly situated insurance funds, and alleges, that due to Bayer's fraudulent conduct—its failure to disclose that Trasylol was more dangerous than comparable drugs available in the market—it was forced to pay hundreds of millions of dollars for unnecessary and exorbitantly expensive doses of Trasylol. This is because "[p]roperly informed third party payers [sic] would never have agreed to pay for Trasylol had they known the true risk of the drug ... [and] would have insisted on the use of far cheaper and safer alternative drugs." (Comp. at ¶¶ 33-34).

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