By Donielle Tigay Stutland, J.D.
Health benefit plans get another chance to pursue state consumer protection law and RICO claims that GSK falsely marketed Avandia and concealed data with respect to its potential cardiovascular risks and side effects.
The Third Circuit reversed GlaxoSmithKline LLC’s (GSK) summary judgment win in connection with litigation over the marketing of Avandia, a prescription drug for type-2 diabetes. Avandia was touted as offering cardiovascular benefits, but was later found to increase risks of heart attacks. Two employee benefit plans (the Plans) that covered the drug brought suit against GSK alleging false marketing and concealing data relating to the drug, which was a violation of federal racketeering laws, as well as state consumer protection laws. The Plans’ contend that they would never have added Avandia to their formularies had GSK disclosed the cardiovascular risks associated with the drug. Reversing a lower court decision that granted GSK summary judgment because the state law claims were preempted by the Food, Drug & Cosmetic Act (FDC Act), the appellate court held that the Plans’ state law consumer protection claims were not preempted by the FDC Act. Additionally, the case was remanded because the Plans should have been given the opportunity to seek discovery relating to the RICO claims before the granting of summary judgment (In re Avandia Marketing, Sales and Products Liability Litigation, December 17, 2019, Restrepo, L.).
Factual background. The plaintiffs are two health benefit plans which brought suit against GSK, the maker of the drug Avandia, a prescription medication used to treat diabetes. Avandia was approved in 1999 for the treatment of type-2 diabetes. GSK also marketed Avandia as being able to control a patient’s blood sugar levels and reducing cardiovascular risk. As such, despite a much higher price tag that similar drugs, many plans chose to add Avandia to their formularies as a covered drug. The decision notes that, "health benefit plans covered a large portion of the expenses related to patients’ prescriptions for Avandia, resulting in approximately $2.2 billion in U.S. sales in 2006 alone."
In 2006, concerns arose that Avandia may in fact increase heart problems. In 2007, the FDA asked GSK to add a black-box warning to Avandia’s label regarding the increased cardiac risks. In 2011, the FDA also gave direction to Avandia about revising its labeling for Avandia. However, in 2013, however, the FDA reevaluated a key clinical trial and concluded that the evidence did not support a finding of increased risk of heart attacks.
Procedural background. The district court granted summary judgment in favor of GSK in 2017. It held that (1) the Plans’ state-law consumer-protection claims were preempted by the FDC Act; (2) the Plans had failed to identify a sufficient "enterprise" for purposes of RICO; and (3) the Plans’ arguments related to GSK’s alleged attempts to market Avandia as providing cardiovascular "benefits" were "belated."
Decision. Looking at the recent Supreme Court case Merck Sharp & Dohme Corp. v. Albrecht, which was decided in 2019, after key earlier decisions in the case, the appellate court concluded that the Plan’s state law consumer protection claims are not pre-empted by the FDCA. Prior to that, the Supreme Court had held in Wyeth, "the FDCA does not preempt state-law consumer-protection claims regarding the labeling of a drug ‘absent clear evidence that the FDA would not have approved a change to [the drug]’s label.’" Merck clarified things further by offering the following two-prong test to "show that federal law prohibited a drug manufacturer from adding a warning that would satisfy state law": (1) "it fully informed the FDA of the justifications for the warning required by state law" and (2) "the FDA, in turn, informed the drug manufacturer that the FDA would not approve changing the drug’s label to include that warning." The appellate court also noted that GSK’s own evidence shows that it could have added a warning to Avandia’s label regarding the drug’s cardiovascular health risks in 2005 but never made a formal application to make a label change. The appellate court found that GSK did not satisfy either prong of the Merck test.
Additionally, the appellate court found that the district court erred in granting summary judgment to GSK regarding the RICO claims without giving the Plans the opportunity for discovery on these claims. The appellate court called the failure of the district court to consider the Plans’ Rule 56(d) declaration regarding the lack of discovery on this issue an abuse of discretion, "especially as the District Court granted summary judgment on the grounds that the Plans could not prove the existence of an ‘enterprise.’"
The appellate court also noted that on remand, the district court must consider the Plans’ arguments that GSK actively marketed Avandia as providing cardiovascular benefits.
The case is No. 18-1010.
Attorneys: Hannah W. Brennan (Hagens Berman Sobol Shapiro LLP) and James R. Dugan, II (The Dugan Law Firm, LLC) for United Food and Commercial Workers Local 1776 and Participating Employers Health and Welfare Fund and JB Hunt Transport Services Inc. Hedya Aryani (Pepper Hamilton LLP) and Jay P. Lefkowitz (Kirkland & Ellis LLP) for GlaxoSmithKline LLC.
Companies: United Food and Commercial Workers Local 1776 and Participating Employers Health and Welfare Fund; JB Hunt Transport Services Inc.; GlaxoSmithKline LLC
MainStory: TopStory Advertising RICO StateUnfairTradePractices DelawareNews NewJerseyNews PennsylvaniaNews
Interested in submitting an article?
Submit your information to us today!Learn More
Antitrust Law Daily: Breaking legal news at your fingertips
Sign up today for your free trial to this daily reporting service created by attorneys, for attorneys. Stay up to date on antitrust legal matters with same-day coverage of breaking news, court decisions, legislation, and regulatory activity with easy access through email or mobile app.