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From Health Law Daily, April 4, 2013

Kaiser’s $140 million award upheld in Neurontin case; trial judge asked to revisit class-certification of insurers

By Harold M. Bishop, JD

The U.S. Court of Appeals for the First Circuit has affirmed a $142.1 million dollar verdict for Kaiser Foundation Health Plan, Inc. and related Kaiser hospitals and health insurance plans (Kaiser) in their action against Pfizer, Inc. (Pfizer) and Warner-Lambert Company (Warner-Lambert), a subdivision of Pfizer, for their fraudulent off-label marketing of Neurontin (In re: Neurontin Marketing and Sales Practices Litigation, April 3, 2013, Lynch, S). The First Circuit, with retired Associate Justice of the Supreme Court, David H. Souter, sitting by designation, also found that certain third-party payers (TPPs) presented sufficient evidence to show that Pfizer’s fraudulent off-label marketing of Neurontin caused them injury. As a result, the case was sent back to the U.S. District Court for the District of Massachusetts (Boston) to consider the racketeering claims of these TPPs and for the court to revisit whether or not these cases should be given class action status.

The verdict. The $47.4 million jury verdict, tripled by the district court judge to $142.1 million under provisions of the racketeering statutes, was awarded to compensate Kaiser, a non-profit health care provider and one of the largest health maintenance organizations in the nation, for injuries suffered when it paid for four categories of off-label Neurontin prescriptions (generic gabapentin) which had been induced by a fraudulent marketing scheme by Pfizer, the manufacturer of Neurontin. The jury verdict and imposition of treble damages followed the settlement of a criminal case brought by the United States government against Warner-Lambert, in which Warner-Lambert agreed to pay a criminal fine of $240 million for its off-labeling marketing of Neurontin and Pfizer agreed to an additional $190 million in civil fines.

FDA-approved use. Parke-Davis, an operating division of Warner-Lambert, originally developed Neurontin during the 1980s and early 1990s as an anti-epileptic drug. On December 30, 1993, the FDA approved Neurontin as an adjunctive therapy in the treatment of partial seizures in adults with epilepsy, setting the maximum dose at 1800 milligrams per day (mg/day). Over time, the FDA found that certain patients taking Neurontin experienced depressive side effects. As a result, and the agency issued a warning to physicians in January 2008 to "be aware of the possibility of the emergence or worsening of depression, suicidality, or any unusual changes in behavior" resulting from the use of anti-epileptic drugs, including Neurontin. In December 2008, the FDA required manufacturers to include warnings of suicidal thought and ideas on the labeling of epileptic seizure drugs. In 1996, Parke-Davis applied to the FDA for approval of Neurontin as a monotherapy for the treatment of seizures, and sought an increase in Neurontin's effective dose range and maximum recommended dose. While the FDA rejected this application, in 2002 the FDA did approve Neurontin for the treatment of post-herpetic neuralgia (PHN), a type of neuropathic pain associated with shingles.

Marketing of Neurontin. In 1994, Parke-Davis had estimated that Neurontin would generate $500 million in profits over the duration of its patent. In order to increase Neurontin’s earnings, in 1995 Parke-Davis began to develop strategies to market Neurontin for off-label conditions (i.e., conditions not included on the official FDA-approved label). While Parke-Davis was implementing these strategies, Pfizer acquired Warner-Lambert in 2000, and with it, Parke-Davis. In the year 2003, Neurontin sales exceeded $2 billion. It is estimated that only 10 percent of Neurontin prescriptions in 2003 were for FDA-approved uses of epilepsy or post-herpetic neuralgia. More than one third was attributed to the off-label uses of neuropathic pain, migraine or headache, or bipolar disorder.

Jury and court findings. Both the jury and district court found that Parke-Davis, Warner-Lambert, and Pfizer engaged in the fraudulent marketing of Neurontin for the treatment of bipolar disorder, neuropathic pain, for the treatment of migraines, and for doses greater than 1800 mg/day. The fraudulent marketing included, but was not limited to, three strategies: (1) direct marketing to doctors, which misrepresented Neurontin's effectiveness for off-label indications; (2) sponsoring misleading informational supplements and continuing medical education programs; and (3) suppressing negative information about Neurontin while publishing articles in medical journals that reported positive information about Neurontin's off-label effectiveness. The defendants' fraudulent marketing campaign also targeted third-party payers (TPPs), including Kaiser. As to TPPs, additional mechanisms were used to influence both formulary decisions and prescribing decisions.

Summary of underlying court action. On February 1, 2005, Kaiser, Aetna, Inc. (Aetna), and The Guardian Life Insurance Company of America (Guardian) filed a coordinated complaint in the U.S. District Court of Massachusetts against Pfizer and Warner-Lambert, asserting injury from the fraudulent marketing of Neurontin for off-label uses.

On May 14, 2004, in a related case, Harden Manufacturing Corporation (Harden) filed a class action against Pfizer and Parke-Davis on behalf of a purported class consisting of “all entities throughout the United States and its territories who, for purposes other than resale, purchased, reimbursed and/or paid for Neurontin for indications not approved by the FDA during the period from January 1, 1994 through the present.”

Both the class action complaint and the coordinated complaint were part of a larger multidistrict litigation concerning the marketing of Neurontin, consolidated in the District Court of Massachusetts.

Ultimately Kaiser prevailed at the district court level, but Aetna and Guardian's claims were dismissed on summary judgment, with Aetna's dismissal the subject of a separate appeal. The district court also granted summary judgment against all of the Harden purported class plaintiffs except two.

The case numbers are 11-1904 and 11-2096.

Attorneys: Scott Kelly Attaway (Kellogg Huber Hansen Todd Evans & Figel PLLC) for Kaiser Foundation Health Plan, Inc., Kaiser Foundation Hospitals, Kaiser Foundation Health Plan of Colorado, Kaiser Foundation Health Plan of Georgia, Inc., Kaiser Foundation Health Plan of the Mid-Atlantic States, Inc., Kaiser Foundation Health Plan of Northwest, and Kaiser Foundation Plan of Ohio. Katherine Anne Armstrong (Skadden Arps Slate Meagher & Flom LLP) for Pfizer, Inc. and Warner-Lambert Company LLC.

Companies: Kaiser Foundation Health Plan, Inc.; Kaiser Foundation Hospitals, Kaiser Foundation Health Plan of Colorado; Kaiser Foundation Health Plan of Georgia, Inc.; Kaiser Foundation Health Plan of the Mid-Atlantic States, Inc.; Kaiser Foundation Health Plan of Northwest; Kaiser Foundation Plan of Ohio; Pfizer, Inc.; Warner-Lambert Company LLC

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