July in D.C. is hot and sticky. When scorching day follows scorching day, area residents look forward to evening thunderstorms, not just to water otherwise thirsty lawns and gardens but to cool things down. Lightning can be frightening—that the words almost rhyme is no accident—but it seems to always accompany our rain during the swampiest part of our summers.

The decision in Sidney Hillman Health Ctr. v. Abbott Labs., No. 13 C 5865, 2016 U.S. Dist. LEXIS 84662 (N.D. Ill. June 29, 2016), is not as dramatic as a flash of lightning or as stirring as a thunderclap. To us, though, it provides some welcome relief and suggests that a larger storm is coming for cases like this. (Like awkward cocktail party banter, we will keep our discussion of weather brief.) Hillman is one of many third payor cases based on alleged off-label promotion of a prescription drug. It is of the variant where benefit plans principally used RICO as the vehicle to try to get damages for past payments for members’ prescriptions for unapproved indications. We sometimes lump such cases together with those using the False Claims Act or various state fraud statutes to try to recover for amounts paid as a result of allegedly improper marketing, often with large fines or a damages multiplier in the mix. Sometimes these cases are class actions on behalf of lots of payors around the country. Sometimes they are pursued by governmental entities, which occasionally outsource the work to contingency fee lawyers. In their various forms, these TPP cases have caught our attention. We have been particular perturbed by some courts’ blithe acceptance of collective proof of causation in these cases, the point of which is to lump together as many purported actionable claims or implicated payments as possible without having to generate proof as to why each prescription was written or paid. We have also questioned whether statutes like RICO (enacted to combat organized crime) or the False Claims Act (enacted to combat war profiteering) are being stretched beyond their legitimate bounds to accommodate these cases, simply because the defendants are unpopular or the coffers of the governmental or benefit plan plaintiffs need an infusion of cash.

Many of these cases have also been predicated on the idea that promotion of off-label use is inherently wrong. Over the last year or so, largely because of Amarin, the underpinnings of that idea have been eroding fast. The First Amendment’s prohibition on laws “abridging the freedom of speech” applies to commercial speech, including commercial speech by and on behalf of drug companies about uses of their products that are off-label. If truthful statements about unapproved uses of the drug—like those that accurately represent the information on risks and benefits and make clear what the label says—are protected, then civil liability should not be based on them. That would go for cases under the FCA, RICO, or various state laws—with the Fourteenth Amendment making the First Amendment applicable to states. To our eyes, some of the notorious cases imposing massive liability for alleged off-label promotion of prescription drugs seem to have relied in large part on vilifying truthful off-label promotion. (Keep in mind that even pre-Amarin FDA regs allowed drug companies to provide information about off-label uses under certain circumstances without it being considered “promotion.”) So, a First Amendment storm is brewing for these cases, both in terms of the precedential value of decisions in cases that did not differentiate between truthful and false statements about off-label uses and the viability of complaints drafted with the expectation that no such differentiation would be necessary.

This brings us back to Hillman, which had an interesting litigation history of its own. It followed FCA and related actions based on alleged off-label promotion by the manufacturer of a prescription seizure and migraine medication. A large settlement of civil and criminal claims, with attendant press coverage, followed. The Hillman plaintiffs filed a putative class action over a year later, alleging overpayments for off-label prescriptions between 1998 and 2012. The trial court dismissed on statute of limitations and the Seventh Circuit reversed. The plaintiffs amended and the defendants moved to dismiss. Along the way, there have been a number of product liability claims with the same drug, complete with off-label promotion allegations and preemption of some warnings claims. (As an aside, it would be interesting if some of the alleged misrepresentations about safety in the Hillman complaint were about the same issues about which it would have been impossible for the defendants to warn. There is no preemption for RICO claims, because preemption only applies to state law, but it should be hard to misrepresent a drug’s safety by accurately repeating the contents of a label that could not have been changed as to a particular risk.)

With this background, Hillman alleged that defendant actively promoted the drug to be prescribed by physicians for several uses beyond its three approved indications. It is not clear when the defendant was supposed to have launched its various alleged schemes, but the drug had been on the market for 15 years before the alleged damages started. The alleged schemes were complicated, involving medical education programs, direct sales representative promotion to physicians, kickbacks to physicians, development of practice guidelines, and publications in medical journals. 2016 U.S. Dist. LEXIS 84662, **5-8. The suggestion that the marketing involved some misrepresentations was that there was “no reliable evidence of [the drug’s] safety or efficacy for the treatment of these off-label conditions and, in some cases, having evidence that it was actually ineffective or unsafe for those conditions,” referring to studies failing to show efficacy for one potential indication. Id. at **8-9. Starting around 2002, some portion of the prescriptions filled for the drug were allegedly written for various off-label uses. Id. at **9-10. There was no allegation as to any communications were made to the plaintiffs or even what portion of their payments for the drug were for off-label uses.

The Supreme Court has interpreted RICO’s causation requirement that injuries arise “by reason of” violations as an inquiry of “whether the alleged violations led directly to the plaintiff’s injuries.” Id. at *13 (quoting Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 461 (2006)). One might think that the Hillman allegations, like those in many of these cases, specify indirect causation at best, so the inquiry should be simple. However, the cases on such causation allegations are split and the Supreme Court has declined to resolve the split. Id. at **14-16 & n.5. Plaintiffs argued that the court should follow the reasoning of the First Circuit in In re Neurontin Mktg. & Sales Practs. Litig., 712 F.3d 51, 58 (1st Cir. 2013) (our #1 worst case of that year), which finds sufficient causation without direct representations to the fund as long as it would be foreseeable that some funds would pay for off-label scrips written as a result of off-label promotion. The Supreme Court cases, however, rejected a foreseeability test in requiring a direct relationship. Id. at **17-18.

A direct relationship would require that “the drug manufacturer directly made misrepresentations to the TPP because otherwise intervening factors—such as a physician’s independent medical judgment or a patient’s decisionmaking—interrupts the chain of causation.” Id. at *19. Plaintiffs did not alleged any “direct misrepresentations to them so as to cause them to place [the drug] on their formularies or pay for [the drug] when prescribed.” Id. at 20. They only made allegations about representations concerning the drug’s “safety and efficacy for off-label uses to doctors, patients and caregivers.” To proceed under these allegations “would require individualized inquiries into the prescribing physician’s and individual patients’ decisionmaking processes, creating difficulties in assessing damaged that the directness requirement was intended to prevent.” Id. at *23. This meant the motion to dismiss was granted, although the dismissal was without prejudice—only the second strike, we guess.

We wonder how direct causation would work in a prescription drug TPP case where truthful statements about off-label use are not actionable. For there to be any payment for a prescription, there would need to be (1) a prescription written by a physician (2) that is filled by the patient, and (3) a claim for that prescription that is paid by the TPP. Just inducing the TPP to put a drug on its formulary to for an unapproved use would not cause any payment. We expect that any TPP, with access to drug labels and medical literature and presumably with a protocol in place on how to set its formulary, could not be confused by any representation about whether a particular use was approved. We also expect that claims about safety or efficacy would need to be backed up by data, probably published data. Sure, it would be easy to make up allegations—plaintiffs almost never suffer consequences from having no basis for what they allege in a complaint—that there were direct misrepresentations and they fooled the TPP into paying claims for off-label prescriptions. The same way TPP plaintiffs can claim that thousands of doctors were induced to write off-label prescriptions without ever having information on why a single prescription was written. Proving such allegations, though, is quite different than what plaintiffs had to prove when they could rely on truthful off-label promotion as a predicate act for RICO.