trial court erred by presuming materiality of black box warning; $834 million penalty vacated

State ex rel. Shikada v. Bristol-Myers Squibb Co., 2023 WL 2519857, SCAP-21-0000363, --- P.3d ---- (Hawai’i Mar. 15, 2023)

The state sued two pharmaceutical companies for violating Hawai‘i’s Unfair or Deceptive Acts or Practices law (UDAP) by misleading the public about the safety and efficacy of their antiplatelet drug, Plavix. What makes someone a Plavix poor responder is complicated, and knowledge has evolved over time. The state alleged that Plavix was less effective in patients who had certain liver-enzyme mutations, and that defendants knew this fact years before 2009, when the FDA updated Plavix’s label with information about the issue. The state argued that their failure to update warnings plus intentionally suppressing information about/research into the issue violated the law.

The trial court found for the state:  defendants misled Hawai‘i consumers by failing to warn them that Plavix was less effective for poor responders. This omission injured consumers by “denying them the drug’s full promised antiplatelet effect, hindering their ability to give informed consent, and preventing them from taking an alternative drug or undergoing genetic testing to determine whether they were poor responders.”

The court imposed an $834 million penalty, which the Supreme Court vacated on materiality grounds: the trial court improperly granted partial summary judgment on whether the label mattered to consumers. A new trial is required for UDAP deception, but not for whether the acts were unfair. Nor did preemption, safe harbor, or statute of limitations arguments protect defendants.

The trial court agreed that the information contained in Plavix’s federally mandated black box warning was material as a matter of law. In the alternative, as the finder of fact at a bench trial, the court found the defendant companies’ evidence on immateriality “weak and unpersuasive.”

Thus, at trial, defendants weren’t allowed to present evidence showing that Hawai‘i doctors and patients hadn’t changed how they prescribed or consumed Plavix after information about the poor responder issue was added in 2010 to the black box warning.

Key issues: (1) Did the defendants mislead anyone by omitting the poor responder information from the Plavix label between 1998 and May 2009, or were they doing “the best they could with incomplete and conflicting scientific information about the causes of variability of response to Plavix”? [For affirmative misrepresentations this wouldn’t matter, but for omissions state of mind does matter.] (2) Did defendants suppress research into variability of response for financial reasons? (3) Did omission of the poor responder information from Plavix’s label hurt Hawai‘i consumers, including by hindering their ability to give informed consent?

The court reviewed the evidence as it developed over the years, both before and after FDA approval. In 2009, a BMS employee wrote:

[I]t looks like we are into stalling some more. I have to tell you that I have had in depth 1:1’s with about 6 senior [key opinion leaders] since I have been at [the American College of Cardiology] and the mood is very negative towards us ([Experts] are all saying that they have been telling us this for years and we chose to ignore them and bury our head in the sand and so they feel no sympathy toward our current situation!)

In 2010, the FDA decided to put information about diminished effectiveness for poor responders, associated with a particular genetic variant, in a black box warning, including language stating that poor metabolizers taking Plavix are more likely to have adverse cardiac events on the drug than non-poor responders. Research and debate continued about the causes of poor response. In 2016, the FDA removed the statement about worse clinical outcomes from the boxed warning and just warned about “diminished antiplatelet effect.”

As to suppressing research, the state submitted internal documents that suggested that defendants were worried about studying variability of response given that it could lead to “restrictive positioning” of drugs, which posed “[p]otential threats for future sales.” Another researcher wrote that “[t]he problem is that, given the variability of the test, we always run the risk to show a difference in a pharmacology study ... and then we really are in trouble.” Another scientist: “In my opinion, [Sanofi]’s/our reluctance to go down the path toward documentation of clopidogrel resistance is understandable, but it will catch up with us and perhaps be an unpleasant and costly surprise when others document it without asking our permission to do so.” The BMS Vice President for the “Sanofi Alliance” at the time wrote: “Sanofi remains adverse [sic] to doing any further work on either aspirin or clopidogrel resistance because of the potential negative marketing implications.” Etc.

On consumer harm, the supreme court reviewed the evidence about whether the relevant genotype was linked to adverse clinical outcomes (unclear; it wasn’t actively harming them, but the state’s witnesses testified that it was essentially a placebo for nonresponders, which defendants disputed) and whether non-white (particularly Asian) patients on Plavix are more likely to receive little or no benefit from the drug.

The trial court found deception by omission, focusing on what defendants knew when Plavix launched, as well as suppression/avoidance of clarifying research. And it found consumer harm, relying on the label’s materiality.

Safe harbor: UDAP’s “safe harbor” exempts “[c]onduct in compliance with the orders or rules of, or a statute administered by, a federal, state, or local governmental agency.” But the FDA “did not issue the companies a special dispensation absolving them of any state-law duties they may have (above and beyond their obligations under federal law) to update the Plavix label as the relevant science evolves. The FDA’s approval of Plavix’s label does not confer the agency’s imprimatur on the companies’ decision not to add information about variability of response to its warnings before 2009.”  Moreover, there was no safe harbor for suppressing research or failing to disclose the results of a meta-analysis to the public.

Statute of limitations: In Hawai’i, the state is not subject to any limitations periods unless it is “specifically designated in such a statute as subject to the limitation period contained therein.” This one didn’t.

Preemption: There was no preemption because the FDA allows manufacturers to change labels to “add or strengthen a contraindication, warning, precaution, or adverse reaction” or to “add or strengthen an instruction about dosage and administration that is intended to increase the safe use of the drug product,” upon filing a supplemental application with the FDA; a manufacturer need not wait for FDA approval. Preemption only applies when there is “clear evidence that the FDA would not have approved a change to [the brand name drug’s] label” required by state law. Here, by contrast, the FDA eventually put information about the poor responder issue in a black box warning on Plavix’s label.

But the trial court erred on materiality. There were genuine factual disputes, and the trial court shouldn’t have weighed evidence before trial.

Under the UDAP law, a representation or omission is considered material if it “involves information that is important to consumers and, hence, likely to affect their choice of, or conduct regarding, a product.” The test is objective, not subjective.

The State stressed that a black box warning is the most serious warning the FDA can require and presented eight survey findings from the defendant companies’ 40-doctor telephone survey on how the boxed warning impacted the doctors’ prescribing behavior. But the defendants argued that a decade of evidence disproved materiality in this specific case, even though many Hawai’ian patients are of Asian or Pacific Island descent. [This seems affected by path-dependence: if the warning had been added earlier, when doctors were less comfortable/used to the drug, would that still have happened?] The State’s public health journal also recommended that Hawai‘i doctors not change their prescribing practice based on the boxed warning and that genetic testing not be done.

The trial court reasoned that, when information relates to safety and health, there’s a presumption that it’s material. Moreover, “materiality is determined by an objective, patient-oriented test, [so] evidence about the behavior of doctors could never create a genuine issue of material fact.”

This was an overstatement and a misinterpretation. Overcoming the presumption of materiality is “not a high hurdle.” Defendants may always counter the presumption with extrinsic evidence, including “expert testimony, consumer research, and evidence of how the networks and other expert bodies interpreted the advertisements.” Although there’s an intuition that “something the FDA considers very important for consumers to see must be material to those consumers … materiality is about what consumers do, not what the FDA thinks. Even evidence that the defendants themselves considered the information important isn’t dispositive, because the standard is materiality to a reasonable consumer, not the defendants. And “while the prescribing decisions of doctors are not synonymous with consumer behavior, they are certainly not irrelevant to it…. Objectively reasonable patients may rely on their doctors to help them make sense of drug labels.” There was a genuine factual dispute here.

As for the alternative holding, summary judgment evidence was no substitute for trial, including cross-examination.

Thus the deceptive acts liability holding had to be thrown out; the error on materiality also affected the question of whether the omission in question was likely to mislead consumers. Defendants could make their case that Plavix was not, for a large chunk of Hawai‘i’s population, a bad drug.

Unfairness survived. A practice is unfair under the UDAP if it (1) offended public policy, (2) was immoral, unethical, oppressive, or unscrupulous, or (3) substantially injured Hawai‘i consumers.  The materiality ruling affected (3), but (1) and (2) were independently sufficient. Unlike the FTCA, Hawai’i law allows finding a UDAP violation on any of those bases. Rather, “[a] practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three.” This was consistent with interpreting Hawai‘i’s consumer protection law “in a way that maximizes consumer protection.”

Findings about the black box label relied on – and thus were tainted by - the materiality finding. “But the second type of conduct – suppressing research and inquiry into the drug for financial reasons – had no connection to the court’s materiality ruling.” These acts offended public policy given that pharmacos have a common law duty to warn consumers “when the risks of a particular drug become apparent.” The trial court found that the defendantss aimed to avoid their common law duty by: “suppressing research and continuously and repeatedly failing to further investigate the risks of reduced platelet inhibition in poor metabolizers.” And they knew - from the moment Plavix launched - about the diminished effects of Plavix in non-white populations, but didn’t volunteer this information to the FDA and avoided funding studies which could draw more attention to the variability of response. This set back research; “[p]reventing risks from becoming apparent for financial gain offends Hawai‘i public policy,” even if a drug proves to be safe. The same conduct also qualified as “immoral, unethical, oppressive, [or] unscrupulous.”

Nonetheless, the penalty calculation was impaired by the materiality error, so that had to go back too. “That the court landed on a per-prescription penalty reveals how crucial materiality was to the damage calculations.”