State v. Purdue Pharma
| Decision Date | 18 February 2022 |
| Docket Number | C. A. PC-2018-4555 |
| Parties | STATE OF RHODE ISLAND, by and through, PETER NERONHA, ATTORNEY GENERAL, Plaintiff, v. PURDUE PHARMA L.P.; PURDUE PHARMA INC.; THE PURDUE FREDERICK COMPANY, INC; RHODES PHARMACEUTICALS L.P.; RHODES TECHNOLOGIES; RHODES TECHNOLOGIES INC; RICHARD S. SACKLER; TEVA PHARMACEUTICALS USA, INC; CEPHALON, INC.; WATSON LABORATORIES, INC.; WARNER CHILCOTT COMPANY, LLC; ACTAVIS PHARMA, INC. F/K/A WATSON PHARMA, INC.; ACTAVIS SOUTH ATLANTIC LLC; ACTAVIS ELIZABETH LLC; ACTAVIS MID ATLANTIC LLC; ACTAVIS TOTOWA LLC; ACTAVIS LLC; ACTAVIS KADIAN LLC; ACTAVIS LABORATORIES UT, INC, F/K/A WATSON LABORATORIES, INC.-SALT LAKE CITY; ACTAVIS LABORATORIES FL, INC, F/K/A WATSON LABORATORIES, INC.-FLORIDA; MALLINCKRODT PLC; MALLINCKRODT, LLC; SPECGX, LLC; CARDINAL HEALTH, INC; MCKESSON CORPORATION d/b/a MCKESSON DRUG COMPANY; and AMERISOURCEBERGEN DRUG CORPORATION, Defendants. |
| Court | Rhode Island Superior Court |
For Plaintiff: Etie-Lee Schaub, Esq.; Robert McConnell, Esq. Fidelma Fitzpatrick, Esq.; Vincent Greene, Esq.; Kristin Hermiz, Esq.; Katie Menard, Esq.
For Defendant: Wendy West Feinstein, Esq.; Tinos Diamantatos Esq.; Chip Palmer, Esq.; Brian Ercole, Esq.; Adam Teitcher Esq.
DECISION
For nearly a quarter of a century, our nation has faced a scourge that has been labeled "the Opioid Crisis." The National Institute on Drug Abuse provides a recent snapshot of the crisis:
[2] https://www.nida.nih.gov/drug-topics/opioids/opioid-overdose-crisis 1/20/22.
Rhode Island has not escaped this plague. Quite the opposite, in 2020 over 384 Rhode Islanders died from accidental overdose on drugs, including opioids. This makes 2020 the deadliest year for accidental overdose deaths in the state's history, [3] and while the final total for 2021 is still being tabulated, it is on pace to shatter that record.[4]
As of 2018, Rhode Island had the ninth highest ranked overdose rate in the country.[5] The toll exacted by this epidemic has been devastating, not only for those lost, but on family, friends, the medical community, law enforcement, and providers of social services.
As one consequence of this epidemic, states, counties, cities, large employers, and health insurers have brought over 3, 000 suits seeking to hold pharmaceutical manufacturers, distributors, and even large pharmacy chains responsible for this epidemic.
In our state, the Attorney General, as Plaintiff, who is referred to as the State, brought the instant action against numerous defendants, who are (or were) pharmaceutical manufacturers or distributors claiming that they "created, perpetuated, [and] maintained"[6] the opioid epidemic through deceptive marketing practices and by shipping opioids into Rhode Island without adequate systems to detect and prevent diversion of those drugs.
More specifically, the State has filed a 143-page Second Amended Complaint (the Complaint or SAC) with its allegations embodied in 432 paragraphs. The causes of action are (1) Public Nuisance; (2) Fraud and Fraudulent Misrepresentation; (3) Negligence; and (4) Unjust Enrichment.
This case has been vigorously litigated with extensive discovery and a vibrant motion practice. Over the last several years, the number of extant defendants has dwindled through bankruptcy and/or settlement. The remaining fourteen defendants are (1) Teva Pharmaceutical USA, Inc. (Teva USA); (2) Cephalon (Cephalon), an affiliated company to Teva USA; (3)Warner Chilcott Company, LLC, another affiliated company to Teva USA; and eleven other corporations[7]which are subsidiaries of Teva USA. These eleven corporations, along with Warner Chilcott, are manufacturers of generic medications and are referred to as the "Actavis Entities." All fourteen defendants are owned (either directly or indirectly through a subsidiary) by a non-party, Teva Pharmaceuticals Industries, Ltd. (Teva Parent).
The State refers to these fourteen defendants as the "Teva Defendants" who object to this characterization because they argue that each defendant is a separate legal entity. Therefore, for purposes of convenience and simplicity, the Court will use the term "Defendants" when referring to all named defendants in the aggregate. By doing so, the Court is not resolving any issue Defendants raise on motion.[8] Rather, it will address that issue at the appropriate time.
Teva USA, Cephalon, and the Actavis Entities have each moved separately for Summary Judgment. The State has objected and responded with one memorandum[9] opposing all three motions (the State's Opposition or Opposition). Since most issues are similar and, in some cases, identical in each motion, the Court will endeavor to decide all three motions in one Decision. Where it is necessary to distinguish between and among the various defendants, the Court will do so.
In 1971, Congress passed the Controlled Substances Act (CSA) to "reduce the widespread diversion of [controlled substances] out of legitimate channels into the illicit market[.]" (H.R. Rep. No. 91-1444 (1970) U.S.C.C.A.N. 4566, 4572). Congress expressly designed the CSA to "combat diversion by providing for a closed system of drug distribution, in which all legitimate handlers of controlled substances . . . must take reasonable steps to ensure" they are not acting "as a source for diversion." (Emphasis added.)[10] Both manufacturers (i.e., the makers of opioid prescriptions) and distributors (i.e., the "middlemen") must register with the DEA in order to sell opioids. As a condition of registration, manufacturers and distributors must undertake duties prescribed by the CSA to ensure they are not acting as a source of diversion. See 21 U.S.C. § 822. As it relates to these motions, the "heyday" of opioid prescription writing and marketing lasted roughly from the mid-1990s through 2012, when a confluence of factors led to a precipitous drop in opioid prescribing.[11]
In 2012, defendants Watson Pharmaceuticals, Inc. and Actavis, Inc. merged.[12] Prior to that merger, Actavis produced twelve different generic opioids, including generic OxyContin (Oxycodone I hydrochloride tablet), generic Opana ER (Oxymorphone tablet) and generic Duragesic (a fentanyl transdermal patch).[13]
Ultimately, the State offers two theories of wrongful conduct by the Defendants: (1) falsely marketing the risks and benefits of opioid medicines; and (2) failing to identify, report, and stop shipments of "suspicious [opioid] orders."[14] These two theories undergird each of the four common law claims alleged by the State.
For their part, the Defendants counter that every single one of the State's claims fails for: (i) lack of evidence of fraudulent marketing; (ii) lack of evidence that the Defendants failed to maintain effective, CSA-mandated suspicious order monitoring (SOM) controls; and (iii) absence of proof that the Defendants caused any injury whatsoever in Rhode Island, legally or proximally.
The Actavis Entities bring additional defenses reflecting their unique position as manufacturers of solely generic prescriptions (i.e., non-branded medication); namely, that (a) generic manufacturers do not market to the general, opioid-consuming public; (b) the federal "sameness" requirement mandates that they must label and/or market exactly like their branded equivalents; and (c) federal case law preempts state law tort claims against generic pharmaceutical manufacturers.[15]
"Summary judgment is a drastic remedy, and a motion for summary judgment should be dealt with cautiously." Employers Mutual Casualty Co. v. Arbella Protection Insurance Co. 24 A.3d 544, 553 (R.I. 2011) (internal quotations omitted). "[S]ummary judgment is appropriate when, viewing the facts and all reasonable inferences therefrom in the light most favorable to the nonmoving party, the Court determines that there are no issues of material fact in dispute, and the moving party is entitled to judgment as a matter of law." Quest Diagnostics, LLC v. Pinnacle Consortium of Higher Education, 93 A.3d 949, 951 (R.I. 2014) (internal quotations omitted).
The moving party bears the initial burden of establishing that no such issues exist. Heflin v. Koszela, 774 A.2d 25, 29 (R.I. 2001). If the moving party can sustain its burden, then the "litigant opposing a motion for summary judgment has the burden of proving by competent evidence the existence of a disputed issue of material fact and cannot rest upon mere allegations or denials in the pleadings, mere conclusions or mere legal opinions." American Express Bank, FSB v. Johnson, 945 A.2d 297, 299 (R.I. 2008) (internal quotations omitted).
"The motion justice must refrain from weighing the evidence or passing upon issues of credibility [as] . . . [u]ltimately the purpose of the summary judgment procedure is issue finding, not issue determination." DeMaio v. Ciccone, 59 A.3d 125, 130 (R.I. 2013) (internal quotations omitted) (emphasis added). Further, "[i]t is clear from our precedent that '[o]rdinarily the determination of proximate cause . . . is a question of fact that should not be decided by summary judgment.'" ...
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