Commercial Litigation and Arbitration

RICO — Mere Off-Label Promotion of Drug Not Actionable; False Statements in Ads Are

The plaintiffs in In re: Epogen & Aranesp Off-Label Mktg. & Sales Practices Litig., 2008 U.S. Dist. LEXIS 105233 (C.D. Cal. Dec. 17, 2008) alleged that the defendants promoted a drug for off-label use through mail and wire fraud and thus in violation of RICO:

Defendants argue that each of Plaintiffs' causes of action constitutes an impermissible attempt to bring a private cause of action under the Food, Drug, and Cosmetics Act ("FDCA" or "the Act"), 21 U.S.C. § 301 et seq., and its implementing regulations. ***

The FDCA, which grants the FDA authority to oversee the safety of drugs, provides that "all such proceedings for the enforcement, or to restrain violations, of [the FDCA] shall be by and in the name of the United States." 21 U.S.C. § 337(a). "Courts have generally interpreted this provision to mean that no private right of action exists to redress alleged violations of the FDCA." Summit Tech., Inc. v. High-Line Med. Instruments, Co., Inc., 922 F. Supp. 299, 305 (C.D. Cal. 1996).... Instead, "the right to enforce the provisions of the FDCA lies exclusively within the federal government's domain, by way of either the FDA or the Department of Justice." ....

In the present case, the Court finds that Plaintiffs' suit is largely an attempt to bring a private cause of action for violations of the FDCA. ***

Although Plaintiffs have avoided explicit references to "misbranding" in their .... These allegations of off-label promotion are, in essence, misbranding claims that should be reviewed by the FDA. See Healthpoint, Ltd. v. Stratus Pharms., Inc., 273 F. Supp. 2d 769, 786 (W.D. Tex. 2001).

Moreover, although Plaintiffs' RICO claims are purportedly based on predicate acts of mail and wire fraud, the main thrust of their allegations is that Defendants illegally promoted EPO for off-label uses, not that Defendants promoted EPO through false, misleading, or otherwise fraudulent statements. ***

The Complaint does not identify a single statement made by [two defendants] that Plaintiffs claim was false, misleading, or contained a material omission.

Instead, the existence of federal enactments--i.e., the FDCA and accompanying regulations--making off-label promotion illegal is central to many of Plaintiffs' claims that Defendants engaged in wrongful conduct. Allowing Plaintiffs to proceed on a theory that Defendants violated RICO by engaging in off-label promotion, without specific allegations that Defendants made false or misleading statements, would, in effect, permit Plaintiffs to use RICO as a vehicle to enforce the FDCA and the regulations promulgated thereunder. See Mylan Laboratories , Inc. v. Matkari, 7 F.3d 1130, 1139 (4th Cir. 1993); Summit I, 922 F. Supp. at 306. Differently put, (truthful) off-label promotion of a drug does not violate RICO. Rather, it violates the FDCA. But the FDCA provides no private right of action for violations thereof, and what the FDCA does not create directly, RICO cannot create indirectly. See Sandoz Pharms. v. Richardson-Vicks, Inc., 902 F.2d 222, 231 (3d Cir. 1990).

For the foregoing reasons, the Court finds that this lawsuit largely constitutes an attempt to shoehorn allegations that Defendants have engaged in off-label promotion in violation of the FDCA into RICO and state consumer fraud causes of action. However, Plaintiffs may bring a RICO claim that is truly based on allegations of mail or wire fraud (in the form of deceptive advertising). This distinction, although perhaps difficult to grasp, is crucial. To the extent that Plaintiffs allege that Defendants made false statements or deliberately concealed material facts in order to mislead health care professionals and consumers about the safety of EPO, those claims are viable under RICO. See In re Zyprexa Products Liability Litigation, 493 F. Supp. 2d 571, (E.D.N.Y. 2007) (denying summary judgment for manufacturer where plaintiffs alleged that defendant's misrepresentation of drug's safety misled plaintiffs to pay more for the drug than they would have absent defendant's fraud).

The existence of the FDCA does not completely preclude injured parties from asserting claims of fraud or false advertising. Other legislation, state and federal, remains in effect to protect consumers from false and deceptive prescription drug advertising. See, e.g., Mut. Pharm. Co. v. Ivax Pharms., Inc., 459 F. Supp. 2d 925, 934 (C.D. Cal. 2006) (discussing the interplay of the Lanham Act and the FDCA). "The FDCA is not focused on the truth or falsity of advertising claims, but is instead directed to protect the public by ensuring that drugs sold in the marketplace are safe, effective and not misbranded, a task vested in the FDA to implement and enforce." Id. at 933 (internal quotation marks omitted) (citing Sandoz Pharms. v. Richardson-Vicks, Inc., 902 F.2d 222, 230 (3d Cir. 1990)). As the Second Circuit has explained, "[t]he FDA's authority in th[e] field [of advertising] derives from the requirement that no drug may be sold in the United States unless it has FDA approval, and then only within the standards set by the FDA." Sandoz, 902 F.2d at 226. In other words, the main purpose of the advertising restrictions set forth in the FDCA and its accompanying regulations is not to protect consumers from deceptive advertising, but rather to further the FDCA's underlying goal of ensuring the safety of prescription drugs. ***

As discussed above, plaintiffs may not use other federal statutes or state unfair competition laws as a vehicle to bring a private cause of action that is based on violations of the FDCA. *** Nonetheless, some false statements made in connection with prescription drug marketing are actionable under state or federal law, "even if their truth may be generally within the purview of the FDA." Summit Technology, Inc. v. High-Line Med. Instruments, 933 F. Supp. 2d at 918, 935 (C.D. Cal. 1996) ("Summit II"). ***

Accordingly, here, to the extent that Plaintiffs have alleged that Defendants made statements that were fraudulent (i.e., literally false, misleading, or omitted material facts), their claims are actionable. See United States v. Beecroft, 608 F.2d 753, 757 (9th Cir. 1979) (deliberate concealment of material facts constitutes mail fraud). It is of no matter that the deceptive statements may have been made in order to promote off-label uses of EPO. "[T]he simple fact that a matter touches upon an area dealt with by the FDA is not a bar to proceeding with a claim" of fraud under another federal statute, such as RICO. See Mut. Pharm., 459 F. Supp. 2d at 935; see also Summit II, 933 F. Supp. 2d at 935 ("If the allegedly false or misleading nature of a statement can be easily verified, then the fact that the determination of the truth of that statement was made by the FDA is immaterial so long as the party can also show the other requirements for establishing a [false advertising] claim.")

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