By David Yucht, J.D.
Negligence and consumer fraud claims brought by the State of Delaware against manufacturers and distributors of opioid medications survived a motion to dismiss. Other claims against the manufacturers and distributors were dismissed as were claims filed against pharmacies.
The State of Delaware established a prima facie case for negligence and consumer fraud against manufacturers and distributors of opioid medications, according to a state superior court judge in Delaware. Consequently. the court denied a motion to dismiss negligence and consumer fraud as they pertained to the manufacturers and distributors. However, the State did not demonstrate a prima facie case against pharmacies involved in opioid sales, nor did it sufficiently plead claims for nuisance, conspiracy or unjust enrichment, all of which were dismissed (State of Delaware ex rel. Jennings v. Purdue Pharma L.P., February 4, 2019, Johnston, M.).
Opioid suit. The State of Delaware brought a civil action seeking damages, disgorgement, restitution and penalties against manufacturers and distributors of opioid medication as well as pharmacies that fill prescriptions for these medications. The State claimed that the manufacturers breached their duty to disclose accurately the risk of addiction associated with these medications even though they were aware of this risk. Rather, they misrepresented this risk in their advertising campaigns. The State asserted that the distributors breached their duty to actively prevent opioid diversion and the pharmacies breached their duty to prevent opioid diversion and report suspicious orders. The State sued based on the theories of negligence, consumer fraud, civil conspiracy, nuisance and unjust enrichment. The manufacturers, distributors and pharmacies filed a motion to dismiss.
Manufacturers. The court found that the State sufficiently pleaded its negligence and consumer fraud action as to the manufacturers. The State argued that the manufacturers’ duty is set forth in a Delaware statute that prohibits the manufacturing of misbranded drugs. The state accused the manufacturers of misstating facts and failing to accurately disclose the risk of addiction. Among other things, manufacturers’ representatives were allegedly trained to advise physicians that the risk of addiction was one percent of the population who used the drugs long term, whereas the Centers for Disease Control and Prevention placed the rate at twenty-six percent. Also, physicians were advised, without scientific evidence, that many individuals who showed signs of addiction were actually "pseudo-addicted" and required more medication. The court found that the state met its notice-pleading requirement by putting the manufacturers on notice of its claims of misrepresentation by understating risks and labelling inconsistent with FDA approvals. However, the State’s other claims, including conspiracy, unjust enrichment and nuisance were not sufficiently plead to withstand the dismissal motions.
Distributors. The court also determined that the State’s claims against the distributors for negligence were sufficient. The State argued that the distributors had common law, statutory and regulatory duties to act reasonably as distributors of opioids to prevent diversion for illicit purposes. Delaware’s narcotics statute mandates that distributors ensure a safe system for distribution to prevent diversion. The distributors were trained by the DEA to identify issues relating to diversion and minimize risks. Despite knowing the risks involved and having the knowledge to minimize these risks, the distributors had allegedly failed to act appropriately and, consequently, had been fined on numerous occasions by government agencies. The court was not swayed by the distributors’ argument that their duty only applied to their pharmacy customers. Moreover, the court could not determine, prior to discovery, whether distributors were protected from liability due to compliance with government regulations. The State set forth a case for reasonable foreseeability and proximate cause. Similar to the claims against the manufacturers, the State’s other claims, including conspiracy, unjust enrichment and nuisance were not sufficiently pleaded to withstand the dismissal motions filed by the distributors.
Pharmacies. The court determined that the State failed to make out a case against the pharmacies. The State argued that pharmacies breached their duty to prevent diversion by failing to address certain "red flags" when filling prescriptions. It asserted that at the pharmacy level, diversion occurred whenever a pharmacist filled a prescription despite having reason to believe it was not for a legitimate purpose and that "on information and belief" the pharmacies regularly filled opioid prescriptions that would have been suspicious to a reasonably prudent pharmacist. The court found regarding the negligence claims, that because pharmacy negligence was considered "medical" negligence, the State was required to submit an Affidavit of Merit signed by a medical expert, which it failed to do. Accordingly, the negligence claim was dismissed with out prejudice. The court found that the remaining allegations against the pharmacies were entirely speculative. Additionally, the suit, to the extent it involved a duty to prevent diversion, was preempted by comprehensive state and federal regulations.
The case is C.A. No. N18C-01-223 MMJ CCLD.
Attorneys: Michelle Whalen, Delaware Department of Justice, for State of Delaware. Brian D. Tome (Reilly, McDevitt & Henrich, PC) and Mark S. Cheffo (Dechert LLP) for Purdue Pharma LP and The Purdue Frederick Co. Michael P. Kelly (McCarter & English, LLP) and John A. Freedman (Arnold & Porter Kay Scholer LLP) for Endo Pharmaceuticals, Inc. and Endo Health Solutions, Inc.
Companies: State of Delaware; Purdue Pharma LP; The Purdue Frederick Co.; Endo Pharmaceuticals, Inc.; Endo Health Solutions, Inc.
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