no predominance of common issues where many consumers would still have taken the drug at issue

Painters & Allied Trades District Council 82 Health Care Fund v. Takeda Pharm. Co., 2023 WL 4191651, -- F. Supp. 3d --, No. 2:17-cv-07223-JWH-AS (C.D. Cal. May 24, 2023)

I tell my students that probabilistic claims are easier for competitors to bring than directly harmed consumers themselves, because competitors can aggregate harm, whereas if a court thinks that only 45% of consumers were deceived it may well reject a direct consumer protection claim. This case illustrates that principle well, though in a slightly different configuration. Here, a national third-party payer class was certified, but not a California consumer class.

The claims relate to the drug Actos and allege RICO violations and violations of state consumer protection laws because defendants conspired to market Actos fraudulently by concealing the association between its use and its users’ subsequent development of bladder cancer. Defendants allegedly misled the FDA regarding the risk of bladder cancer by generating false studies, manipulating study results, and controlling the messaging about Actos to conceal aspects of the drug’s mechanism that could have raised concerns, and also misled prescribing physicians, consumers, and third-party payors into believing that Actos did not create an increased risk of bladder cancer. A group of patients who developed bladder cancer sued and a jury returned a verdict in favor of bellwether plaintiffs.

Painters alleged that it “reimbursed a significant number of claims at potentially elevated prices for Actos” that would not have been reimbursed “but for the fraud. Emails, testimony, and internal marketing studies suggested that defendants were aware that language linking Actos to bladder cancer would reduce sales of Actos, and sales of Actos indeed began to decline when the FDA announced that it would investigate Actos for bladder cancer risk. Sales dropped even more precipitously after a bladder cancer warning was added to the Actos label. Plaintiffs’ expert found that, had a bladder cancer warning been issued from the beginning, third-party payors would have paid for 56% fewer Actos prescriptions during the class period.

The expert estimated that around 40% of the Actos prescriptions would have still been written (and, thus, would have been reimbursed), even if there was full awareness of the bladder cancer risks, while 56.77% were fraudulently induced. Only third-party payors who paid for at least five Actos prescriptions would be part of the class; the odds were thus that any TPP that paid for at least five Actos prescriptions had, statistically, a 98.5% chance of suffering an injury; that 1.5% chance didn’t defeat predominance. And other data indicated that only about 4% of patients switched from Actos to an equally or more expensive drug, which again wasn’t enough to defeat predominance for the TPPs.

But there was no predominance for the consumer class, because the individual plaintiffs would vary so much in whether they still would have taken the drug if they’d known the true risks. There was “some compelling common evidence of materiality,” such as a “wave” of physician contacts in the wake of the actual risk disclosures, and one defendant’s concession that bladder cancer risks would be a “serious thing” for a healthcare professional.

Nonetheless,

the materiality of that bladder cancer risk to patients’ diabetes prognoses is highly individualized. Moreover, some medicines and treatment regimens would be ineffective; some patients would have no other option other than Actos, notwithstanding the bladder cancer risks. Those determinations necessarily reside with the patients and their physicians. Even Comanor recognized that reality. Therefore, the question of whether Takeda or Lilly’s omissions were material to the choices of any physician-patient tandem is an individualized one.

California’s ordinary presumption of reliance from material deceptiveness was insufficient, because doctors consider so many patient-specific factors in prescribing. Although the bladder cancer risks here were “ones that most reasonable physicians and patients would evaluate before choosing an appropriate healthcare regimen,” materiality exists only where the omission of those risks “would have been important to the decision-making process.” And that was individualized.

The Court is loath to insert itself into the doctor’s office and impose its judgment onto physicians and their patients, blanketly concluding on behalf of all “reasonable persons” that some risks matter (i.e., bladder cancer risk) and that some do not (i.e., untreated or mismanaged diabetes). … And indeed, [plaintiffs’ expert’s] own model suggests that 40% of Actos purchases would have been made even if full information of the risks was known. Forty percent is not a trivial amount ….

This also meant that there were individualized questions of actual injury (for the CLRA claim) that predominated over common issues. The court also thought the damages model wasn’t sufficiently explained, compared to the damages model for the TPPs.