In In re Neurontin Marketing, Sales Practices and Products Liability Litigation, 257 F.R.D. 315 (D. Mass. 2009), plaintiffs sued the manufacturers of an anti-epilepsy drug in various courts alleging that defendants had engaged in a fraudulent campaign to market and sell the drug for “off label” indications for which defendants knew the drug was ineffective. Plaintiffs sought economic damages on theories of common law fraud, unjust enrichment, violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) and violation of the New Jersey Consumer Fraud Act (“NJCFA”). Plaintiffs moved to certify a nationwide class consisting of all consumers and third-party payors (“TPPs”), such as health plans, that paid for a prescription of the drug to treat an off-label indication.
Applying the class certification requirements of Fed. R. Civ. P. 23(a) and 23(b)(3), the court first found that the “questions of law or fact common to the class” criterion required only the existence of a single issue common to all putative class members and is a “low bar.” The court held that plaintiffs satisfied that requirement by proposing separate consumer and TPP sub-classes for each of five identified off-label indications (i.e., for a total of ten sub-classes) and proposing effective dates of the sub-classes to correspond with the dates on which defendants allegedly knew the drug to be ineffective for the relevant off-label indication.
In support of the criterion that the class be “so numerous that joinder of all members is impracticable,” plaintiffs submitted an expert report estimating the number of consumer prescriptions written for each off-label indication for a portion of the time period covered by the proposed consumer sub-classes, all of which were in the millions. The court held based on this report that the proposed consumer sub-classes satisfied the numerosity requirement. The same report also calculated: (1) how large a TPP health plan would need to be to state with 99%, 95%, and 90% certainty that the TPP paid for a prescription of the drug for at least one of its members for each off-label indication; and (2) the number of TPPs that fit that description based on publicly available information about TPPs’ sizes. Although defendants argued that plaintiff’s methodology assumed that the membership of each TPP mirrored the composition of the general population, the court held that the number and geographic diversity of the proposed class of TPPs easily rendered their individual joinder as plaintiffs impracticable and that defendants’ argument related to the typicality and predominance requirements, which the court turned to next.
On the first of those issues, the court held that the consumers and TPPs proposed as sub-class representatives were typical of their respective sub-classes, despite defendants’ argument that some of the consumer sub-class representatives had praised the drug, or never expressed concern about its effectiveness, while they were taking the drug.
Finally, the court noted that the prong of Rule 23(b)(3) requiring that “questions of law or fact common to class members predominate over any questions affecting only individual members” posed the most substantial hurdle to class certification, because both RICO and the NJCFA required that a defendant’s conduct be the proximate cause of a plaintiff’s injury. Although the court had expressed willingness in a 2007 decision in which it denied an earlier motion for class certification to accept a statistical analysis showing that “essentially all” prescriptions of the drug for an off-label indication were a result of defendants’ alleged fraud, the court backtracked from that position, citing a recent New Jersey Supreme Court decision forbidding the use of statistical evidence to establish a presumption of causation under the NJCFA and recent United States Courts of Appeals decisions casting doubt on the use of a “fraud-on-the-market” or similar theory to establish a classwide presumption of causation.
Nonetheless, plaintiffs offered a statistical report as to the proposed consumer sub-classes based on the assumption that physicians prescribed the drug for off-label indications based on four factors: (1) the retail price of the drug; (2) the retail price of the drug’s competitors; (3) the amount spent by defendants to market the drug, especially by sending sales “details” to physicians’ offices; and (4) the amount spent by defendants’ competitors to market their competing drugs. After noting that a recent decision of the United States Court of Appeals for the First Circuit required the trial court to closely scrutinize a novel or complex theory of injury at the class certification stage rather than wait for a Daubert motion and hearing addressing the theory on the merits, the court held that plaintiffs’ statistical analysis was too limited to provide a shortcut to causation and satisfy the predominance requirement as to the proposed consumer sub-classes. In reaching this holding, the court observed that only one of the five physicians who prescribed the drug to the consumer sub-class representatives had been visited by a sales “detail,” and two of the five had explicitly prescribed the drug for some reason other than the drug’s marketing.
With respect to the proposed TPP sub-classes, the court held that causation was properly analyzed not at the level of the prescribing physician but rather at the level of the committee that authored the “formularies,” or pharmaceutical reimbursement schedules, used by the TPP. The court held that the only evidence plaintiffs had provided that defendant’s marketing activities influenced the formulary committees was a blanket assertion that defendant had perpetrated a fraud on the entire pharmaceutical market, an assertion that the court held insufficient to satisfy the predominance requirement as to the TPP sub-classes. Because plaintiffs failed to demonstrate the predominance of common issues over individualized issues of causation as to any of the proposed consumer or TPP subclasses, the court denied plaintiffs’ motion for class certification in its entirety.