The United States Court of Appeals for the First Circuit is hearing an appeal by Aetna, Inc. against Pfizer, Inc. and Warner-Lambert Company concerning a summary judgment that favored the defendants. Aetna claims harm from fraudulent marketing of the drug Neurontin for off-label uses, asserting violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) and the Pennsylvania Insurance Fraud Statute (PIFS). A related case, Kaiser Foundation Health Plan, Inc. v. Pfizer, had affirmed a jury verdict against Pfizer for similar claims, which involved evidence of misrepresentation directly to Kaiser. The court determined that Aetna's evidence of causation and damages was sufficient to withstand summary judgment on its RICO claim, thus reversing the dismissal of this claim and vacating the dismissal under PIFS. Aetna's complaint was part of a coordinated action filed in the District of Massachusetts, where the court had previously granted partial summary judgment in favor of Pfizer, dismissing Aetna’s claims while allowing Kaiser’s claims to proceed.
On February 9, 2011, the court ruled in favor of Pfizer against Guardian and Aetna, subsequently denying Aetna's motion to alter the judgment and reconsider the case on April 20, 2011. Aetna filed a notice of appeal on May 19, 2011, challenging both the judgment and the denial of its motion for reconsideration.
The review process for a district court's summary judgment grant is de novo, favoring the non-moving party while disregarding unsupported allegations or speculation. Summary judgment must be reversed if a genuine issue of material fact exists that a reasonable jury could resolve in favor of the nonmovant. Familiarity with background facts regarding Neurontin's development and FDA approval is assumed, as these facts were undisputed.
Aetna's appeal centers on the effectiveness of Neurontin for off-label uses. The district court noted that Aetna provided studies indicating Neurontin was no more effective than a placebo for various off-label conditions, including bipolar disorder, neuropathic pain, nociceptive pain, and migraines, as well as studies on high doses above 1800 mg.
Parke-Davis, a subsidiary of Warner-Lambert, began marketing Neurontin for these off-label uses in late 1995, despite FDA non-approval. Marketing efforts persisted under Pfizer after acquiring Parke-Davis in 2000, involving misleading promotional practices that suppressed negative information and presented half-truths, which Aetna argued were actionable under the RICO statute.
Defendants recognized the influence of third-party payors (TPPs) like Aetna on Neurontin's market demand and reimbursement. Parke-Davis targeted Aetna in its marketing strategy, identifying it as a key managed care plan. Surveys indicated that such plans, including Aetna, were unlikely to impose formulary restrictions on anticonvulsants. A Pfizer marketing plan from 2002 confirmed open access to Aetna’s network for sales representatives and mentioned efforts to enhance reimbursement defenses for managed care plans.
In 2003, as the patent for Neurontin approached expiration, defendants commissioned a market research study to evaluate how Third Party Payers (TPPs), including Aetna, would respond to a new tablet version of the drug aimed at competing with generics. Pfizer produced 'HMO Opportunity Reports' analyzing formulary status, projected sales, potential profits, and market share for various HMOs, noting that 69% of Neurontin revenues in 2001 were from TPPs.
Aetna, a significant TPP covering over 13 million individuals, included Neurontin on its formulary after its FDA approval in 1993 for epilepsy treatment. A formulary development team at Aetna conducted comprehensive clinical reviews to inform the Pharmacy and Therapeutics Committee (P.T. Committee), which meets monthly to determine formulary inclusions and restrictions based on safety, efficacy, cost, and other drugs in the same class. Initially, Aetna did not impose restrictions on the anticonvulsant class, including Neurontin, but later moved Neurontin to 'non-preferred' status in late 2003 and implemented prescription limits in 2004, followed by step edits in 2006.
Michael Brodeur, responsible for formulary development at Aetna, communicated with Pfizer and Warner-Lambert but did not recall specifics regarding Neurontin. Aetna acknowledged that there were no direct misrepresentations from the defendants about Neurontin, yet Brodeur suggested that earlier knowledge of misleading marketing could have prompted Aetna to manage the drug class sooner.
Statistical evidence from experts Dr. Meredith Rosenthal and Dr. Raymond Hartman indicated a significant correlation between Pfizer's marketing of Neurontin for off-label uses and the increase in prescriptions covered by Aetna, with Dr. Rosenthal employing standard econometric methods to quantify this impact.
Dr. Rosenthal's analysis of promotional spending revealed that defendants' marketing practices led to 43 million off-label prescriptions of Neurontin from 1995 to 2004, with Aetna covering many of these prescriptions. The analysis indicated that off-label marketing was responsible for a significant percentage of prescriptions from various specialists: 99.4% for bipolar disorder by psychiatrists, 27.9% for migraines by neurologists, 70.0% for neuropathic pain, 84.7% for nociceptive pain, and 37.5% for doses over 1800 mg.
In ruling on defendants' summary judgment motion, the district court found that Aetna provided evidence of actionable "half truths" under the RICO statute and that plaintiffs demonstrated harm from paying for ineffective off-label prescriptions. However, the court noted a lack of direct evidence that Aetna or Guardian relied on these misrepresentations, as their case relied on the individualized proof of prescribing physicians' reliance on defendants’ statements. The aggregate evidence presented was deemed legally insufficient to separate damages due to defendants' misrepresentations from those caused by other factors. Consequently, the court granted summary judgment for the defendants regarding Guardian and Aetna's claims.
Aetna contends on appeal that the lower court wrongly dismissed its aggregate evidence of causation and damages under RICO and did not adequately address its PIFS claim. Defendants argue that Aetna's evidence was properly rejected and lacked sufficient proof of proximate causation or injury. Aetna also claimed that Brodeur's testimony about Pfizer's suppression of negative information influenced its formulary decisions regarding Neurontin.
Aetna's evidence of but-for causation was deemed sufficient to survive summary judgment, negating the need to assess Brodeur's testimony. The central question of but-for causation was whether, without Pfizer's fraudulent actions, Aetna would have paid for fewer off-label Neurontin prescriptions. Previous rulings acknowledged the validity of using aggregate evidence for causation in RICO claims related to fraudulent marketing. Aetna's evidence included statistical data and circumstantial indicators, such as a rise in off-label prescriptions following Pfizer's marketing efforts aimed at increasing sales. The absence of individual doctor testimony did not undermine Aetna's argument; it was determined that a jury should evaluate the collective and circumstantial evidence of causation. Aetna was not required to pinpoint which doctors' prescriptions were influenced by Pfizer's alleged fraud, as establishing the extent of damages would occur in a later phase of the case with a more lenient burden of proof.
Pfizer's claim that aggregate proof of reliance was impermissible because it attempted to apply the 'fraud on the market' doctrine was rejected, as this doctrine is not applicable to RICO claims. Regarding proximate causation, Aetna was found to have provided sufficient evidence to withstand summary judgment, with the court clarifying that direct reliance on misrepresentations is not necessary to prove proximate cause in RICO cases. Aetna's evidence demonstrated a link between Pfizer's marketing tactics and the payments made for off-label prescriptions, establishing that Aetna could be viewed as a primary victim of Pfizer's fraudulent scheme. The details indicated that TPPs, which include Aetna, were targeted by Pfizer for both on-label and off-label sales of Neurontin, further reinforcing the causal connection.
Defendants actively monitored and targeted Aetna for sales of Neurontin, seeking information on Aetna's formulary management and payment practices in comparison to generic gabapentin. Pfizer created a specific marketing plan for Aetna, leading to potential conclusions by a jury that Aetna was a victim of the defendants' fraudulent scheme, resulting in economic injury that was foreseeable. This injury remained valid even if misrepresentations were made to physicians rather than directly to Aetna.
The court found that Aetna adequately demonstrated proximate causation, supported by expert reports that could help quantify damages, and that Aetna, as the directly injured party, was appropriately positioned to act as a private attorney general. The argument that decisions made by numerous physicians diluted this causal link was rejected; the fraudulent marketing aimed to induce doctors to prescribe Neurontin to Aetna's members, which was a foreseeable outcome.
Regarding the RICO claim, defendants contended that Aetna had to prove Neurontin's ineffectiveness for all off-label uses to establish economic injury, arguing Aetna failed to do so. However, Aetna presented evidence from clinical trials showing Neurontin was no more effective than a placebo for these uses, allowing a jury to reasonably conclude its ineffectiveness.
The district court had previously denied Aetna's PIFS claim without discussion, but in light of the RICO claim ruling, this decision was vacated for further consideration upon remand. Defendants' assertion that Aetna needed to prove no member benefited from the drug was deemed incorrect, as the placebo effect could lead to reported improvements regardless of scientific efficacy. The district court's judgment was reversed concerning Aetna's RICO claim and vacated regarding the PIFS claim, with further proceedings ordered.
