In re Valsartan, Losartan, & Irbesartan Prods. Liab. Litig.

IN RE VALSARTAN, LOSARTAN, AND IRBESARTAN PRODUCTS LIABILITY LITIGATION

This Document Relates to All Actions

MDL No. 2875 (RBK/JS)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY CAMDEN VICINAGE

January 12, 2021

MTD OPINION 2

KUGLER, United States District Judge:

Before this Court are Defendants' Motions to Dismiss (Doc. No. 520, 522, 523) the three Master Complaints filed in this Multi-District Litigation ["MDL"] which involves the sale of a generic blood pressure medication that was found to be contaminated with probable human carcinogens. Because the MTDs seek dismissal of several claims for each set of plaintiffs, the Court is issuing a series of opinions to resolve the motions. Each opinion will be numbered with this opinion being the second in the series. This OPINION 2 resolves Defendants' arguments relating to Article III standing. An ORDER 2 of this date accompanies this OPINION 2.

1.0 BACKGROUND AND FACTS¹

Hundreds of millions of Americans suffer from high blood pressure. Two common medications used to treat this condition are Diovan and Diovan HCT and Exforge and Exforge HCT. This case involves their generic counterparts, Valsartan and its combination therapy with hydrochlorothiazide and Amlodipine-valsartan and its combination therapy with hydrochlorothiazide (collectively the valsartan-containing drugs or "VCDs"). While generic drugs are supposed to be bioequivalent to their brand-name counterparts, at some point these VCDs were found to be contaminated with probable human carcinogens known as N-nitrosodimethylamine ("NDMA") and N-nitrosodiethylamine ("NDEA"). This led to a recall of the VCDs in July of 2018. The current lawsuits stem from the Defendants' manufacturing, promotion, and sale of the VCDs and their subsequent recall. Plaintiffs, consumers and Third-Party Payors who purchased or made reimbursements for Defendants' contaminated VCDs, brought an economic damage and a medical monitoring class action against Defendants. They also brought a personal injury action against Defendants. The Defendants are entities with various and sometimesoverlapping roles within the supply chain. They include the manufacturers ("Manufacturer Defendants") of the drug (both the manufacturers of the active pharmaceutical ingredient and the manufacturers that make the finished drug product), the wholesalers ("Wholesaler Defendants") who obtain the finished drug product and resell it to retailers, and consumer-level distributors ("Pharmacy Defendants").

In the wake of the success of the blood pressure medications DIOVAN and EXFORGE, many generic drug manufacturers sought to capitalize on this success by introducing their own generic versions of the Valsartan drug. (Doc. No. 398, Am. ELMC at ¶¶ 217-20). Many of these generic drug manufacturers, like Teva Pharmaceuticals, contracted with other companies to manufacture the active pharmaceutical ingredient ("API"). (Id. at ¶¶ 54, 67, 185). Others manufactured the API themselves because they had vertically integrated supply chains. (Id. at ¶¶ 48-72). The events underlying this lawsuit occurred at the foreign manufacturing facilities of the API manufacturers.

Defendants ZHP, Aurobindo, Mylan, and Hetero had manufacturing facilities in India or China where the active pharmaceutical ingredient for the VCDs were produced. (Id. at ¶¶ 235, 252, 267, 298). Their manufacturing practices and processes resulted in numerous deviations from and violations of the "current Good Manufacturing Practices"—minimum standards established by the FDA that set forth the requirements for the methods, facilities, and controls used in manufacturing, processing, and packing of a drug. (Id. at ¶ 233-311). For instance, after the FDA inspected ZHP's Chuannan facility in July of 2018, it issued a warning letter to ZHP for significant deviations from the cGMPs. (Id. at ¶ 244). Specifically, the FDA explained:

ZHP failed to evaluate the potential effect that changes in the manufacturing process may have on the quality of [its] API. More specifically, ZHP approved a [V]alsartan API process change . . . that included the use of the solvent. [ZHP's] intention was to improve the manufacturing process, increase product yield, and lower production costs. However, [ZHP] failed to adequately assess the potential formation of mutagenic impurities [,such as NDMA,] when [it] implemented the new process. Specifically, [it] did not consider the potential for mutagenic or other toxic impurities to form from [redacted] degradants, including the primary [redacted] degradant, [redacted].

(Id. at ¶ 246). The FDA's inspections of the other Defendants' facilities revealed similar, substantial deviations from the cGMP. (Id. at ¶ 233-311).

The introduction of a solvent into the manufacturing process of the VCDs and the manufacturing Defendants' deviations from the cGMPs created and allowed the presence of two probable human carcinogens—n-nitrosodimethylamine ("NDMA") and n-nitrosodiethylamine ("NDEA")—to remain undetected in the VCDs. (Id. at ¶¶ 335-53). Around the time that the manufacturers introduced the solvent into their manufacturing process, an FDA inspector found that ZHA "routinely disregarded sampling anomalies suggestive of impurities." (Id. at ¶ 340, 349).

On July 13, 2018, FDA announced the voluntary recalls of the VCDs manufactured by Defendants and others due to the presence of NDMA and NDEA. (Id. at ¶ 355). Two weeks later, the FDA announced expanded recalls of additional VCDs manufactured by Defendants and non-parties and repackaged by third parties. (Id. at ¶ 356). In a press release issued that same day, the FDA explained the reason for its concern regarding the presence of NDMA found in VCDs:

NDMA has been found to increase the occurrence of cancer in animal studies . . . Consuming up to 96 nanograms NDMA/day is considered reasonably safe for human ingestion . . . The amounts of NDMA found in the recalled batches of valsartan exceeded these acceptable levels.

(Id. at ¶ 321). Subsequently, the FDA announced numerous additional recalls of VCDs, and other similar products manufactured, distributed, or sold by Defendants as well as non-parties (Id. at ¶ 358).

After the recall of ZHP's VCDs, FDA testing revealed the valsartan API manufactured by ZHP contained levels of NDMA of between 15,180 and 16,300 ng, which was in excess of the FDA's interim limits of 96 ng/day or 0.3 ppm. Id. at ¶250.. Similarly, FDA testing showed the valsartan API manufactured by ZHP for Torrent Pharmaceuticals contained levels of NDEA of up to 1,310 ng in excess of the FDA's interim limits of 26.5 ng/day or 0.083 ppm. Id. at ¶251. The FDA's testing of the other Defendants VCDs revealed similar findings of NDMA and NDEA well in excess of the limits. Id. at ¶ 266, 297, 311.

Lawsuits quickly followed these voluntary recalls. Consumers and third-party payors filed a class action alleging economic losses. (Doc. No. 1). Consumers also filed a medical monitoring class action alleging "cellular damage, genetic harm, and/or an increased risk of developing cancer" as a result of exposure to the probable human carcinogens in the VCDs. ECF Doc. 123. Lastly, personal injury claims were filed on behalf of consumers who allegedly developed cancer as a result of taking the contaminated VCDs. (Doc. No. 122). These actions were centralized by the United States Judicial Panel on Multi-District Litigation and transferred to this Court for pretrial purposes only. ECF Doc. 1.

Three Master Complaints were filed with this Court. ECF Doc. 122 ¶ 4-5; ECF Doc. 123 at 1 n.1; ECF Doc. 398 at ¶ 1 n.1 Only the first two are relevant here.

1.1 Economic Loss Master Complaint

The Economic Loss Master Complaint ("ELMC") alleges economic damages based on Defendants sale of VCDs that were "of a lesser quality and were adulterated and/or misbranded (and thereby rendered worthless) through contamination with" probable human carcinogens. ECF Doc. 398 ¶ 4. The ELMC asserts eighteen claims on behalf of classes of consumers and third-party payors in order to recoup the amounts they paid for Defendants' allegedly worthless VCDs. In the EMLC, the consumer class plaintiffs are represented by twenty-four named Plaintiffs from the following states: (1) New York; (2) New Mexico; (3) North Carolina; (4) South Carolina; (5) New Jersey; (6) Texas; (7) Indiana; (8) Pennsylvania; (9) California; (10) Ohio; (11) Massachusetts; (12) Mississippi; (13) Florida; (14) Virginia; (15) Louisiana; (16) Kansas; (17) Georgia; and (18) Connecticut. ECF Doc. 398, Am. ELMC ¶¶ 11-34. The named Plaintiffs allege they purchased one or more of Defendants' VCDs, that Defendants expressly and impliedly warranted their VCDs were the same as the registered listed drug, had they known the product was not the same as the brand-name drug, they would not have paid for it, and had Defendants' deception about the product's impurities been made known earlier, they would not have paid for it. (Id.). The named Plaintiffs alleged they purchased the VCDS from the following: (1) ZHP; (2) Aurobindo; (3) Solco; (4) Mylan; (5) Teva; (6) Camber; (7) Torrent; and (8) Hetero. Ibid. The Third-Party Payor Plaintiffs are represented by Plaintiff MSP Recovery Claims, Series LLC ("MSPRC") as they have assigned their recovery rights to assert claims to MSPRC. Id. ¶36. MSRPC's assignors paid $79 million on behalf of their enrollees and it is believed some of those payments include payments for Defendants VCDs. Id. ¶3).

Because Defendants VCDs were supposed to be the generics of Diovan^® and of the valsartan in Exforge^®, they had to demonstrate the medication was the same as the brand name versions in the following ways: (1) the active ingredient in the generic medication is the same as the brand name medication; (2) the generic medication is manufactured under the same strict standards as the brand name medication is; (3) the generic medication has the same strength as the brand name medication; (4) the inactive ingredients...