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From Health Law Daily, May 11, 2015

Chicago’s blow at opioid marketing withers in the wind

By Bryant Storm, J.D.

A district court dismissed the majority of claims brought by the city of Chicago against opioid manufacturers for alleged misrepresentations made by the manufacturers in the course of their opioid drug promotion. The court allowed substantive claims against one manufacturer to proceed but dismissed several other claims because the city failed to identify that specific manufacturer representations regarding the efficacy and safety of opioids were actually editorially directed by the manufacturers or made to Chicago physicians or consumers (City of Chicago v. Purdue Pharma L.P., May 8, 2015, Alonso, J.).

Manufacturers. The city’s lawsuit challenged the marketing practices of Purdue Pharma L.P., Purdue Pharma Inc., The Purdue Frederick Company, Inc. (collectively Purdue), Teva Pharmaceutical Industries, Ltd., Teva Pharmaceuticals USA, Inc., Cephalon, Inc. (collectively Teva), Johnson & Johnson, Janssen Pharmaceuticals, Inc., Ortho-McNeil-Janssen Pharmaceuticals, Inc. now known as Janssen Pharmaceuticals, Inc., Janssen Pharmaceutica, Inc. now known as Janssen Pharmaceuticals, Inc. (collectively Janssen), Endo Health Solutions, Inc. Endo Pharmaceuticals, Inc. (collectively Endo), Actavis plc, Actavis Inc., Watson Laboratories, Inc., Actavis LLC, and Actavis Pharma, Inc. (collectively Actavis). All of the entities manufacture, promote, and sell, within Chicago, opioids including drugs like OxyContin®, Dilaudid®, Duragesic®, Nucynta®, Opana®, and Kadian®.

Drug promotion. Under 21 U.S.C. § 321, the FDA generally requires drug manufacturers to obtain approval for drug labeling and promotional materials. However the FDA does not review promotional materials that “do not identify any particular drug by name.” Chicago challenged the alleged fact that particular opioid drug manufacturers created and directed groups to promote the treatment of chronic pain with opioids. Manufacturers like Janssen and Teva allegedly contracted with third parties to publish “neutral” materials supporting the use of opioids. Additionally, in return for a pro-opioid message, the manufacturers allegedly rewarded physicians designated as key opinion leaders with “money, prestige, recognition, research funding, and publishing opportunities.” The manufacturers also allegedly worked to discredit information that was not favorable to the continued use of opioids. Targeted marketing materials also were alleged to have incorrectly stated opioid efficacy and misrepresented the risks associated with opioids.

Chicago plans. The city of Chicago provides prescription drug coverage for employees and retirees through a preferred provider organization (PPO) and a health maintenance organization (HMO). The Chicago plans generally do not cover prescriptions that are not medically necessary or not approved by the FDA for a particular use. Chicago also covers necessary prescription costs under its worker’s compensation program. The city sued the drug manufacturers on the grounds that the companies’ fraudulent marketing of opioids caused the city to pay for medically unnecessary prescriptions and off-label or unapproved uses of opioids.

Jurisdiction. The manufacturers moved to dismiss the lawsuit on the grounds that the FDA was best positioned to decide whether the opioids were approved for a particular use. The court disagreed and held that the case didn’t seek a determination of whether the opioids were lawfully prescribed but instead whether the opioid marketing was truthful. Additionally, although Actavis and Teva asserted that the court lacked jurisdiction over them because their business entities lacked specific contacts with Illinois, the court held that the manufacturers’ targeted marketing and sales within Chicago were sufficient to establish contacts within Illinois for jurisdictional purposes.

Fraud allegations. The opioid manufacturers also moved to dismiss the case on the grounds that Chicago failed to sufficiently state its fraud claims. Although the manufactures asserted that under Chicago municipal fraud laws, the unbranded marketing could not constitute misrepresentations for a specific product, the court held that the manufacturers’ various advertisements were “indirect attempts” to persuade the prescription and purchase of opioid drugs. The court also rejected an argument that the consumer fraud laws did not cover opioids because they were not expressly named in the statute as a consumer commodity. The court held that the list was intended to be more inclusive of all products “consumed and replaced by consumers on a regular basis.” Thus the court held that the city’s allegations could represent the basis for a successful fraud claim.

Actavis and Teva. The city of Chicago alleged that Actavis conducted in-person marketing with Chicago physicians and trained its sales representatives to misrepresent information about its opioid products. The misrepresentations included false statements about the efficacy and risks of opioids. The court held that the claims were insufficient, however, because the manufacturer did not allege the “name of any Chicago doctor or consumer to whom any Actavis entity made an alleged misrepresentation.” According to Chicago, Teva and Cephalon allegedly used speaker programs and a guidebook to falsely advertise the efficacy of opioids. However, the court held that those misrepresentation claims were insufficient because the city failed to explain how the manufacturers exercised editorial control over the programs or publications and did not allege when, how, and to whom the manufacturers misrepresented the materials.

Endo and Janssen. The city made similar claims about Endo’s in-person marketing and website, which allegedly misrepresented the efficacy of opioids. Again, the court rejected those claims because Chicago failed to identify who the materials were delivered to or that they were delivered to Chicago physicians at all. The complaint also alleged that the Janssen entities used speaker programs and personal doctor visits to misrepresent and promote opioids. The city failed again to allege that the manufacture exercised control over the misrepresentations made or that the misrepresentations were actually made to Chicago physicians.

Purdue. The court allowed allegations against Purdue to continue, however, because the city did allege facts that the manufacturer’s speaker programs and website did make misstatements about opioids to Chicago based physicians and consumers. The court held that many of the Purdue allegations were insufficient due to a lack of specific fact pleading. Yet, the allegations of misrepresentations from 2005 onward were permitted to proceed.

Conspiracy. The court dismissed claims that the various manufacturers aided, abetted, and conspired to make misrepresentations together because only the substantive claims against Purdue survived the manufacturers’ motions to dismiss. Due to the fact that the city did not allege that Purdue conspired among its own business entities, the court held that any conspiracy claims were, therefore, necessarily insufficient. The court also rejected the city’s unjust enrichment and subrogation claims because of a failure to sufficiently plead facts demonstrating the city’s right to such a recovery.

The case is No. 14 C 4361.

Attorneys: Anthony Raymond Juzaitis (Cohen Milstein Sellers & Toll PLLC) and Fiona A. Burke, City of Chicago Dept. of Law, for the City of Chicago. Ivana Cingel (O'Melveny & Myers LLP) for Janssen Pharmaceuticals Inc. Joshua M. Davis (Arnold & Porter LLP) for Endo Health Solutions. Patrick Joseph Fitzgerald (Skadden, Arps, Slate, Meagher & Flom LLP) for Purdue Pharma L.P. Tinos Diamantatos (Morgan, Lewis & Bockius LLP) for Cephalon, Inc. Ivana Cingel (O'Melveny & Myers LLP) for Johnson & Johnson. James W. Matthews (K&L Gates LLP) for Actavis PLC.

Companies: Purdue Pharma L.P.; Purdue Pharma Inc.; The Purdue Frederick Company, Inc.; Teva Pharmaceutical Industries, Ltd.; Teva Pharmaceuticals USA, Inc.; Cephalon, Inc.; Johnson & Johnson, Janssen Pharmaceuticals, Inc.; Ortho-McNeil-Janssen Pharmaceuticals, Inc.; Janssen Pharmaceuticals, Inc.; Janssen Pharmaceutica, Inc.; Janssen Pharmaceuticals, Inc.; Endo Health Solutions, Inc.; Endo Pharmaceuticals, Inc.; Actavis plc; Actavis Inc.; Watson Laboratories, Inc.; Actavis LLC; Actavis Pharma, Inc.

MainStory: TopStory AdvertisingNews LabelingNews FraudNews PrescriptionDrugNews DrugBiologicNews FDCActNews SafetyNews IllinoisNews

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