Monday, April 18, 2016

Expert testimony in false advertising cases can rely on studies of other events

Concordia Pharmaceuticals, Inc. v. Method Pharmaceuticals, LLC, 2016 WL 1464639, No. 3:14CV00016 (W.D. Va. Apr. 13, 2016)
Previous opinion on how announcing a product launch and not following up might be false advertising discussed here.  Here, the court resolves some challenges to the parties’ expert witnesses.  Daubert requires that expert testimony must be “the product of reliable principles and methods that are reliably applied to the facts of the case.”  Courts aren’t required to admit opinion evidence “connected to existing data only by the ipse dixit of the expert,” but neither must they determine that the testimony is irrefutable.
Concordia’s expert Dr. Reisetter, a licensed pharmacist with a doctorate in pharmacy administration, who also works as a consultant for the pharmaceutical and medical industries, offered opinions on the market impact and industry consequences of Method’s submissions to drug databases. Reisetter had performed extensive research on the effects of database listings on the perceptions and behavior of pharmacists and doctors. Here, he offered the opinion that Method’s efforts to list its Me-PB-Hyos products with the databases “caused the marketplace to believe that there was an actual ‘generic’ or pharmaceutical equivalent for Donnatal appropriate for substitution,” and that this “set off a series of inevitable downstream events in the marketplace that adversely affected the number of prescriptions for Donnatal filled and units sold, despite no such product being available.”
Method argued, among other things, that Reisetter improperly relied upon surveys conducted in other cases (or, apparently, other “research projects”) in forming his opinions.  While there are valid concerns here—especially for surveys conducted for other litigation, as opposed to for other research objectives—I think it’s often a mistake to assume that surveys conducted for a specific litigation are more reliable than surveys conducted without the specific case in mind.  Even the techniques we have for detecting bias are not necessarily very reliable, and if anything, generalized knowledge about a field might be more useful and predictive. 
The court found that exclusion was unwarranted; the issues could be adequately addressed on cross-examination.  In particular, “[w]hile the court may ultimately limit the extent to which Dr. Reisetter is permitted to reference specific responses to survey questions, the court will permit him to offer opinion testimony based on the results of the prior surveys,” as long as experts in the field would reasonably rely on these kinds of prior surveys. “The defendants are also free to point out that Dr. Reisetter ‘s opinions are not based on quantitative or qualitative research employed to determine actual market behavior in response to the particular database listings at issue in this case.” In a footnote, the court said that, because these prior surveys didn’t “account for the actual allegations in this case,” they wouldn’t support an implied falsity theory.  It’s this kind of reasoning that makes me sad—I think appropriately conducted surveys can tell you how consumers will react to a claim, or a type of claim, even without expensively testing the exact ad claim at issue in a particular defendant’s advertising. For example, “Made in USA” is the kind of claim that is likely to work the same way across products and contexts.  More generally, elevating surveys over marketing experts creates a false sense of precision, while raising litigation costs and ignoring on the front end (the survey requirement for implicit falsity claims) all the weaknesses of surveys that courts—expensively—deal with on the back end (the particular survey once conducted, which might well end up being discounted).
Method also offered the opinions of Dr. William Fassett, a licensed pharmacist and a professor emeritus of pharmacotheraphy at Washington State University with an extensive background.  In his report, he opined that price increases such as those Concordia implemented for Donnatal would explain the harm Concordia attributed to Method’s actions: that the reactions of pharmacists and prescribers to price increases are generally consistent and that he would expect formularies to eventually exclude Donnatal, and prescriptions for Donnatal to ultimately decrease, in response to increased prices.  As an example, he cited a prescription pain reliever that, like Donnatal, had no generic equivalent. When the manufacturer increased the price by over 600%, the results were increased sales dollars, fewer prescriptions and unit sales, exclusion from formularies, and substitution, “all of which would be expected with Donnatal.”
His opinions were “derived from his decades of experience as a pharmacist, during which he dispensed Donnatal and its generic competitors; his extensive experience working with formulary committees; and his specialized knowledge of how formulary committees make coverage determinations.”  Personal experience is a possible qualification for an expert as long as he can “explain how [his] experience leads to the conclusion reached, why [his] experience is a sufficient basis for the opinion, and how [his] experience is reliably applied to the facts.”
The court did exclude a portion of Concordia’s damages expert’s report dealing with lost profits. Concordia failed to establish that his lost profit calculations were “the product of reliable principles and methods” that were “reliably applied” to the particular facts of this case. He failed to take into account numerous market factors that could have affected Donnatal sales and prescriptions.  For example, while he determined that Donnatal prescription volume was “generally unaffected by price increases,” he limited his analysis to two price increases in 2012, a time when existing inventories of competing generic products were being eliminated from the market, and he disregarded another price increase in 2013 that was followed by a reduction in Donnatal prescription volume and unit sales. This price increase occurred after generics had been removed from the market, but before Method’s products were listed with the pharmaceutical databases.  Nor did he consider the impact of newer drugs available for treating IBS, “which, unlike Donnatal, have been approved for effectiveness by the FDA.” The expert’s failure to consider them, or to offer an explanation for his failure, creates “enough of a doubt as to the overall reliability of [his] opinions as to render them inadmissible.”

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