Caldwell ex rel. State v. Janssen Pharmaceutica, Inc.

144 So.3d 898

James D. “Buddy” CALDWELL, Attorney General ex rel. State of Louisiana

v.JANSSEN PHARMACEUTICA, INC., et al.

Nos. 2012–C–2447, 2012–C–2466.

Supreme Court of Louisiana.

Jan. 28, 2014.

Rehearing Denied April 25, 2014.

Pascal F. Calogero, Jr., Adams and Reese, LLP, Martin A. Stern, Jeffrey Edward Richardson, Irwin Fritchie Urquhart & Moore, LLC, James Burke Irwin, New Orleans, LA, David O'Quinn, James T. Guglielmo, Opelousas, LA, for Applicant (No. 2012–C–2447).

Louisiana Department of Justice, James D. Caldwell, Attorney General, Lonnie Christopher Styron, Assistant Attorney General, Kenneth Warren DeJean, Lafayette, LA, Morrow, Morrow, Ryan & Bassett, Patrick Craig Morrow, Sr., James P. Ryan, Jeffrey Michael Bassett, Opelousas, LA, Salim–Beasley, LLC, Robert Lyle Salim, Natchitoches, LA, Bailey, Perrin, Bailey, LLP, Michael W. Perrin, Pro Hac Vice, for Respondent (No. 2012–C–2447).

Louisiana Department of Justice, James D. Caldwell, Attorney General, Lonnie Christopher Styron, Assistant Attorney General, Kenneth Warren DeJean, Lafayette, LA, Morrow, Morrow, Ryan & Bassett, Patrick Craig Morrow, Sr., James P. Ryan, Jeffrey Michael Bassett, Opelousas, LA, Salim–Beasley, LLC, Robert Lyle Salim, Natchitoches, LA, Bailey, Perrin, Bailey, LLP, Michael W. Perrin, Pro Hac Vice, for Applicant (No. 2012–C–2466).

Pascal F. Calogero, Jr., Adams and Reese, LLP, Martin A. Stern, Jeffrey Edward Richardson, Irwin Fritchie Urquhart & Moore, LLC, James Burke Irwin, New Orleans, LA, David O'Quinn, James T. Guglielmo, Opelousas, LA, for Respondent (No. 2012–C–2466).

GUIDRY, Justice.

The Attorney General for the State of Louisiana brought an action against the defendant pharmaceutical companies alleging inter alia certain violations of the Louisiana Medical Assistance Programs Integrity Law (“MAPIL”). Following trial in September 2010, the district court entered a judgment upon the jury's verdict in favor of the Attorney General finding the defendants' alleged misconduct in marketing certain drugs had violated provisions of MAPIL as it read in November 2003, and awarding civil penalties of $257,679,500.00, attorney fees of $70,000,000.00, and costs in the amount of $3,000,200.00. The court of appeal affirmed the district court's judgment. We granted the writ applications of both the Attorney General and the defendants to determine the correctness of the lower courts' rulings. For the reasons set forth below, we find the Attorney General failed to establish sufficient facts to prove a cause of action against the defendants under MAPIL because no evidence was presented that any defendant made or attempted to make a fraudulent claim for payment against any Louisiana medical assistance program within the scope of MAPIL. Accordingly, we reverse the district court's judgment in favor of the Attorney General.

FACTS AND PROCEDURAL HISTORY

The Attorney General filed the instant suit in September 2004 against Janssen Pharmaceutica, Inc., and Johnson & Johnson (hereinafter, “defendants”), asserting various legal theories of recovery stemmingfrom the allegedly improper marketing of a particular drug, Risperdal, manufactured by the defendants.¹ By the time of trial, however, the Attorney General had narrowed his cause of action to alleged violations of La.Rev.Stat. 46:438.3, a subsection of MAPIL, which prohibits health care providers and other persons from presenting, or causing to be presented, false or fraudulent claims or misrepresentations seeking payment from Louisiana medical assistance programs.

In its suit, the Attorney General alleged the defendants “knowingly misrepresent[ed]” that Risperdal was “safer and/or more effective” than other antipsychotics. Further, the Attorney General alleged: that the defendants' marketing misrepresentations affected the decisions of prescribing physicians, who relied upon the misleading information disseminated by the defendants; that the defendants knew that many of the prescriptions written for Risperdal would be paid for by Louisiana's Medicaid program; that the State would not have purchased, or reimbursed for, Risperdal had it known of the defendants' misrepresentations; and that the State had suffered actual damages “in excess of one thousand dollars” related to misrepresentations made by the defendants in the marketing of Risperdal.

Risperdal was introduced in 1994 as a second-generation or atypical anti-psychotic, and is considered to be highly beneficial in permitting schizophrenia patients consigned to institutional care to return to living more productive lives. The defendants do not dispute that Risperdal, like other atypical antipsychotics, has the potential for serious side effects, but such side effects, including new onset diabetes, are generally fewer and milder, and more treatable, than first generation antipsychotics. In May 2000, the Federal Food and Drug Administration (“FDA”) asked all manufacturers of atypical antipsychotics to conduct a comprehensive data review for a possible association between such drugs and new onset diabetes. The defendants responded in August 2000 with fifteen volumes of data arising out of 66 clinical trials involving more than 11,000 Risperdal patients. The defendants maintained that the clinical trials, supported by epidemiologic review and patient monitoring, showed a low incidence of diabetes and related conditions in patients taking Risperdal. The FDA took no action on the defendants' submission until September 2003, some three years later.

The Attorney General's case begins with the FDA's action in September of 2003, when the FDA notified all manufacturers of atypical antipsychotics, not only the defendants, that new class warnings would be required to be included on the drug labeling to advise health care providers and the public of the increased risk of hyperglycemia and diabetes-related adverse events associated with this class of drugs. The defendants, believing a uniform class warning to be unjustified, thereafter corresponded with the FDA to attempt a negotiation of certain aspects of the warning to be required for Risperdal, succeeding only in part.² The warning ultimately required by the FDA and added to the Risperdal label was as follows:

Hyperglycemia and Diabetes Mellitus

Hyperglycemia, in some cases extreme and associated with ketoacidosis or hyperosmolar coma or death, has been reported in patients treated with atypical antipsychotics including RISPERDAL ®. Assessment of the relationship between atypical antipsychotic use and glucose abnormalities is complicated by the possibility of an increased background risk of diabetes mellitus in patients with schizophrenia and the increasing incidence of diabetes mellitus in the general population. Given these confounders, the relationship between atypical antipsychotic use and hyperglycemia-related adverse events is not completely understood. However, epidemiologic studies suggest an increased risk of treatment emergent hyperglycemia-related adverse events in patients treated with atypical antipsychotics. Precise risk estimates for hyperglycemia-related adverse events in patients treated with atypical antipsychotics are not available.

Patients with an established diagnosis of diabetes mellitus who are started on atypical antipsychotics should be monitored regularly for worsening of glucose control. Patients with risk factors for diabetes mellitus (e.g., obesity, family history of diabetes) who are starting treatment with atypical antipsychotics should undergo fasting blood glucose testing at the beginning of treatment and periodically during treatment. Any patient treated with atypical antipsychotics should be monitored for symptoms of hyperglycemia including polydipsia, polyuria, polyphagia, and weakness. Patients who develop symptoms of hyperglycemia during treatment with atypical antipsychotics should undergo fasting blood glucose testing. In some cases, hyperglycemia has resolved when the atypical antipsychotic was discontinued; however, some patients required continuation of antidiabetic treatment despite discontinuation of the suspect drug.

Additionally, the FDA required all atypical antipsychotic drug manufacturers to send out a letter to all health care providers nationwide (a type of correspondence referred to in the drug manufacturing industry as a “Dear Health Care Provider” letter (hereinafter, “DHCP letter”)) to advise of the label change.

On November 10, 2003, the defendants sent out a DHCP letter stating the FDA had requested all manufacturers of atypical antipsychotics, including Risperdal, to include a class warning label regarding hyperglycemia and diabetes mellitus in their product labeling and to enclose updated prescribing information for Risperdal (generically known as “risperidone”). The November 10, 2003 DHCP letter included the diabetes class warning label within the attached prescribing information,but the letter also included the following additional statements:

Hyperglycemia-related adverse events have infrequently been reported in patients receiving RISPERDAL. Although confirmatory research is still needed, a body of evidence from published peer-reviewed epidemiology research suggests that RISPERDAL is not associated with an increased risk of diabetes when compared to untreated patients or patients treated with conventional antipsychotics. Evidence also suggests that RISPERDAL is associated with a lower risk of diabetes than some other studied atypical antipsychotics. [Footnotes omitted.]

These additional statements arguably constituted off-label statements, and they are the subject of the Attorney General's contention that the defendants engaged in misrepresentation in an attempt to defraud Medicaid by failing to truthfully and fully disclose information required under MAPIL.

On April 19, 2004, after a review of the defendants' November 10, 2003 DHCP letter, the FDA's Division of Drug Marketing, Advertising and Communications (“DDMAC”...