City of Chicago v. Purdue Pharma L.P., 2015 U.S. Dist. Lexis 60587 (N.D. Ill. May 8, 2015), deals with an effort by the City of Chicago to recover payments it made to drug companies on opioid prescriptions for City employees (and retirees) covered by HMO, PPO and worker’s compensation plans. Id. at *9-11. Chicago claimed that it should get its money back because the drug companies misrepresented that the opioids were effective for more than short-term treatment of cancer pain. The City lost—at least for the time being.
The City claimed that the drug companies had mounted a coordinated campaign to use key opinion leaders to write, speak and create guidelines on long-term opioid therapy, use professional and patient advocacy groups as marketing tools, develop and support medical journal articles on long-term opioid therapy, misuse CME programs to market such long-term therapy, and more. In this campaign, according to the City, the drug companies overstated the effectiveness of opioids, downplayed the effectiveness of alternatives, and hid or understated risks such as addiction. Id. at *4-9. The City made common law fraud, conspiracy and unjust enrichment claims, and claims under certain Chicago municipal codes that, among other things, incorporated the Illinois Consumer Fraud and Deceptive Businesses Practices Act. E.g., Chicago Municipal Code § 2-25-90. Chicago asked for its money back and, as is often the case, hired private counsel to help them get it. Read here for our take a number of years ago on efforts by municipalities to recover these and other types of costs.
The drug companies moved to dismiss. The good news is that they won. Despite hundreds of paragraphs of allegations, the City did not allege actual facts to support what were essentially fraud claims. The City’s allegations had two glaring omissions. First, there was nothing to indicate that the content of the alleged improper materials or speeches, be they journal articles, guidelines, or CME programs, were controlled by the drug companies. Second, the city alleged no facts to connect the alleged misstatements to Chicago doctors or patients or their decisions to prescribe and use opioids. Here, for instance, is what the court said about the City’s claims under its municipal codes against the Endo Pharmaceuticals defendants:
[T]he City does not explain what editorial control, if any, the Endo entities had over materials they allegedly sponsored or funded. Further, it does not allege that the Endo entities distributed the educational materials or advertisements to Chicago doctors or consumers, that Chicago doctors attended the continuing medical education programs, that Chicago doctors or consumers visited the websites or otherwise indicate when, how, and to whom the alleged misrepresentations were made. Without such allegations, the City has not stated viable §§ 2-25-90 and 4-276-470 claims against the Endo entities.
Id. at *40-41. The court offered the same ruling, time and again, as to all defendants and all claims. The only claim that survived was a portion of a claim against Purdue Pharmaceuticals related to statements made on its own website (that the court presumably believed would likely reach Chicago doctors). This almost complete dismissal is the good news.
The bad news is that, before getting to the dismissals for insufficient factual pleading, the court denied almost every legal argument made by the defendants. The defendants asked the court to choose not to hear the case under the doctrine of primary jurisdiction (admittedly, a weak argument in this context), and the court refused. Id. at *13-14. Two foreign companies sought to be dismissed for lack of personal jurisdiction, but the court dismissed only one, holding that alleged facts as to a fairly ordinary and proper holding company structure were enough to suggest at the pleading stage that the foreign company was the successor-in-interest to its United States subsidiary. Id. at * 21-25. The court rejected legal arguments that prescription drugs like opioids do not fit within the reach of the City’s municipal codes and that the City did not have standing to bring its claims. Id. at * 27-32. And the court rejected the argument that the FDA-approved label, which addresses addiction and abuse, preempted or foreclosed the City’s argument on misrepresentations of those risks. Id. at *32-33.
Ominously, the court gave the City thirty days to come up with allegations that might work. Id. at *54. The City will try. There’s too much money at stake not to. And, while the court dismissed almost all the claims this time, its uniform rejection of all the defendants’ legal arguments (as opposed to pleading-deficiency arguments) makes us wonder what will happen if the City is able to boost its factual allegations even just a little bit. There should be another motion, and probably another opinion, later this year.