In re Actiq Sales & Mktg. Practices Litig.

IN RE ACTIQ SALES AND MARKETING PRACTICES LITIGATION

CIVIL ACTION NO. 07-4492

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

March 23, 2015

MEMORANDUM OPINION

Tucker, C. J.

I. INTRODUCTION

Pennsylvania Turnpike Commission and Indiana Carpenters Welfare Fund (collectively, "Plaintiffs") bring this putative class action suit alleging that off-label prescription payments made by Plaintiffs to Defendant Cephalon, Inc. ("Cephalon") were excessive and constituted unjust enrichment. Plaintiffs are entities, called third party payors ("TPPs"), that are responsible for paying all or part of the costs of prescriptions for their members, employees, plan participants, beneficiaries, or insureds ("beneficiaries"). Cephalon is a Delaware corporation with its principal place of business in Frazer, Pennsylvania that is engaged in the business of manufacturing, selling, and distributing pharmaceutical drugs. Plaintiffs claim that Cephalon engaged in unlawful off-label marketing of Actiq, a drug approved by the U.S. Food and Drug Administration ("FDA") to manage breakthrough cancer pain in patients who are already receiving, and are tolerant to, opioid therapy. Plaintiffs argue that Cephalon's conduct caused Plaintiffs to make excessive off-label prescription payments for Actiq to treat conditions not approved by the FDA and for whom less expensive pain management drugs were appropriateand less dangerous. This Court exercises jurisdiction over this matter pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d), because the amount in controversy exceeds $5,000,000 and at least one Plaintiff resides outside of Pennsylvania.

Presently before the Court is Plaintiffs' Motion for Class Certification. Plaintiffs seek certification of a class action under Fed. R. Civ. P. 23(a) and (b)(3) to recover economic damages for unjust enrichment. Cephalon vigorously opposes certification. Its primary contention is that Plaintiffs' claim is not fit for class treatment under Rule 23 because of the individualized inquiry required to prove the elements of unjust enrichment. Cephalon asserts that no common questions of fact exist, individualized factual issues will predominate, and the action would be unmanageable if certified.

Upon consideration of the parties' submissions, their arguments at a class certification hearing, and for the reasons that follow, the Court DENIES Plaintiffs' motion.

II. THE PROPOSED CLASS

Plaintiffs move for certification of one Nationwide Class defined as follows:

All Third Party Payors ("TPP") in the United States who paid and/or reimbursed, in whole or in part, for the cost of Actiq prescribed for indications other than cancer and for consumption by their members, employees, plan participants, beneficiaries or insureds during the period from January 1, 2002 through December 31, 2006.

(Pls.' Mem. in Supp. of Mot. for Class Cert., 1.) In the first alternative, Plaintiffs move for two multi-state Alternative Classes, defined as follows:

(1) Unjust Enrichment (Restatement) Class: All Third Party Payors ("TPP") in the United States who paid and/or reimbursed, in whole or in part, in Arkansas, Colorado, Connecticut, the District of Columbia, Hawaii, Illinois, Indiana, Iowa, New Hampshire, New York, Oklahoma and West Virginia, for the cost of Actiq prescribed for indications other than cancer and for consumption by their members, employees, plan participants, beneficiaries or insureds during the period from January 1, 2002 through December 31, 2006.

(2) Unjust Enrichment (Appreciation) Class: All Third Party Payors ("TPP") in the United States who paid and/or reimbursed, in whole or in part, in Alaska, California, Florida, Georgia, Kansas, Kentucky, Maine, Maryland, Massachusetts, Missouri, Nevada, New Mexico, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Washington and Wisconsin, for the cost of Actiq prescribed for indications other than cancer and for consumption by their members, employees, plan participants, beneficiaries or insureds during the period from January 1, 2002 through December 31, 2006.

(Id. at 2-3.) In the second alternative, Plaintiffs move for two single-state classes to be certified under the laws of Indiana and Pennsylvania, which is where the Plaintiffs reside. (Id. at 3 n.4.)

"Third Party Payor," as used in the class definition, is defined as "a private or governmental entity that was or is at risk to pay all or part of the cost of Actiq, which was prescribed, provided or administered in the United States for individual members, employees, plan participants, beneficiaries or insureds of the TPP's prescription drug or health coverage." (Id. at 2 n.3.) TPP is not to include: (1) Cephalon, any entity in which Cephalon has a controlling interest, and Cephalon's legal representatives, predecessors, successors, assigns, and employees; (2) the U.S. Government and its agencies and departments, and all other governmental entities that made payments pursuant to any state's Medicaid program; (3) all federal, state, or local governmental entities, except for such governmental agencies or programs that made or incurred any obligations to make a reimbursement for Actiq as part of a health benefit plan for their employees, but only with respect to such payments; (4) the Court and any judge assigned to this case; and (5) class counsel. (Id.)

III. FACTUAL BACKGROUND¹

A. Regulatory Landscape for Prescription Drugs

A pharmaceutical manufacturer may distribute a prescription drug only if the drug has been approved by the Food and Drug Administration ("FDA"), the federal agency that regulates the distribution of drugs in the United States. 21 U.S.C. § 355(a). In order to obtain the FDA's approval, a manufacturer must show that the drug is "safe for use under the conditions prescribed, recommended or suggested" on the drug's label. 21 U.S.C. § 355(d). Pursuant to the Food, Drug, and Cosmetic Act ("FDCA"), the FDA regulates both the advertising and labeling of all prescription drugs. See 21 C.F.R. § 202.1 (advertising); 21 C.F.R. §§ 201.1-201.327 (labeling). Those drugs that are out of compliance with the FDA's requirements are deemed misbranded and may not be distributed through interstate commerce. See 21 U.S.C. § 331. The U.S. government enforces the FDCA and no private cause of action is available. Gile v. Optical Radiation Corp., 22 F.3d 540, 544 (3d Cir. 1994).

For a small class of prescription drugs, the FDA will grant approval under the distribution regulations of 21 C.F.R. § 314.520 ("Subpart H"), which is reserved for drug products that are effective but carry significant safety risks. Such drugs are subject to post-marketing restrictions because the FDA has determined that the drug is safe only if its distribution and use is restricted. Id. § 314.520(a). The drug's manufacturer is to follow a Risk Management Program ("RMP" or"RiskMAP"²), which is designed to ensure safe use of the product. See 21 U.S.C. § 355-1. RiskMAPs may incorporate a range of programs and tools that go beyond cautionary labeling, including registries or educational programs. (Leiderman Decl. ¶ 12.) RiskMAPs, however, are unusual. (Kurowski Decl. Ex. 100, Pyfer Dep. 27:21-28:6, Nov. 4, 2011; see also id. Ex. 101, Brennan Dep. 14:2-14, Nov. 16, 2009.)

B. The FDA Approved Actiq Under Subpart H

Actiq is a drug developed by Anesta Corporation, which merged with Cephalon in 2000. (Kurowski Decl. Ex. 103, DeRogatis Dep. 34:13-18, Sept. 17, 2009; Pyfer Dep. 38:14-39:8.) Cephalon also acquired U.S. marketing rights to Actiq from Abbott Laboratories at that time. (Menkowitz Decl. Ex. 49, Cephalon Form 10-K405, filed Mar. 30, 2001, at 31.) Actiq answered the unmet medical need for "relief of severe cancer pain not adequately controlled by other narcotic therapy." (Leiderman Decl. ¶ 21.) Its active ingredient is fentanyl citrate, a potent opioid painkiller many times stronger than morphine, oxycodone, or codeine. Fentanyl citrate causes respiratory depression, which carries a serious risk of death in vulnerable patients. (Id. ¶¶ 8-9; Kurowski Decl. Ex. 3, Package Insert.) Actiq is packaged as a lozenge, formulated so that patients can quickly absorb a sufficient dose of fentanyl citrate through their gums to ease their pain. (Package Insert.)

In November 1998, the FDA approved Actiq under Subpart H for "the management of breakthrough cancer pain³ ["BTCP"] in patients with malignancies who are already receivingand who are tolerant to opioid therapy for their underlying persistent cancer pain." (Kurowski Decl. Ex. 2, FDA Approval Letter, Nov. 4, 1998, at 1.) The FDA emphasized Actiq's limited approval:

We have concluded that adequate information has now been presented to demonstrate that Actiq is safe and effective, when marketed in accordance with the terms of restricted distribution and use described in the Risk Management Program . . . and as recommended in the attached final labeling. . . . In addition, please note that this product has been approved ONLY for the management of breakthrough cancer pain in patients with malignancies who are already receiving and who are tolerant to opioid therapy for their underlying persistent cancer pain.

(Id. at 1, 5). Under the circumscriptions of Actiq's approved label, off-label⁴ marketing is not permissible since most forms of off-label use were for contraindicated conditions. The label also specified that Actiq must not be used by patients who are not opioid tolerant because it is potentially life threatening.⁵

Section 9.0 of the Actiq RiskMAP, entitled "Intervention," required Cephalon to monitor prescribing patterns and to intervene when off-label usage came to the company's attention. (Kurowski Decl. Ex. 102, 2001 RiskMAP at 27; id. Ex. 4, 1998 RiskMAP at 26.) As to individual prescribers, if Cephalon became aware of a problem of off-label usage, the Actiq RiskMAP required Cephalon to individually notify "all identified prescribers to emphasize...