Print Edition
September 2010 
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American Courts Dismiss Fraud Class Actions Brought By Third Parties Who Paid For Medicines |
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J. Russell Jackson, March 2010 |
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Page 2 of 2 |
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Second, many defendants have successfully challenged TPPs’ proof of causation. TPPs typically employ experts who use statistical models to estimate either how much the TPP overpaid or how many prescriptions it would not have paid for but for the defendants’ alleged misrepresentations. Pharmaceutical companies have successfully challenged such statistical modelling, noting that the decision to prescribe a medicine off label is a complex one that is influenced by many factors other than what the manufacturer may be saying about its medicine. For example, in In re Neurontin Marketing and Sales Practices Litigation, 2010 WL 53568 (D. Mass. Jan. 8, 2010), the court granted summary judgment against two TPPs that sought to introduce a statistical model to establish damages caused by the alleged misrepresentations. The court observed that “trial courts have almost uniformly held that in a misrepresentation action involving fraudulent marketing of direct claims to doctors, a plaintiff TPP or class must prove through individualised evidence that the misrepresentation caused specific physicians, TPPs, or consumers to rely on the fraud, and cannot rely on aggregate or statistical proof”.
Id. at *9 (collecting cases). The judge noted that despite presiding over Neurontin cases for over a decade, she had never heard evidence of a single doctor who said he had relied on a misrepresentation in prescribing the medicine. Id. at 10; see also Southern Illinois Laborers’ & Employers Health & Welfare Fund v. Pfizer Inc., 2009 WL 3151807 (S.D.N.Y. Sept. 30, 2009) (dismissing TPPs’ RICO claim because there were no allegations that doctors received and actually relied on misrepresentations in prescribing Lipitor).
Even Judge Jack B. Weinstein – a long-serving federal judge who has a reputation for issuing groundbreaking decisions favouring the aggregation of claims – recently issued an opinion in Zyprexa litigation that disallowed statistical modelling. See Hood v. Eli Lilly & Co., 2009 WL 4260857 (E.D.N.Y. Dec. 1, 2009). He explained that appellate courts have insisted on individualised proof of reliance, loss causation, and injury and have rejected statistical modelling. As a result, “this large body of case law constitutes a now widely held view of aggregate litigation, particularly in the products liability or fraud context, that statistical proof is in most instances insufficient to show reliance, loss-causation, or injury on the part of individual class members”. Id. at *36.
To be sure, American plaintiffs’ lawyers will continue to try to turn product liability claims into sprawling consumer fraud class actions, especially in cases involving pharmaceuticals. To date, however, most courts have refused to allow entities that are remote from the underlying transactions to proceed with class actions for speculative financial harm.
J. Russell Jackson is a partner at Skadden, Arps, Slate, Meagher & Flom LLP. He can be contacted on +1 (212) 735 7839 or by email: russell.jackson@skadden.com.
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