The Year That Was: 2016 Sonia M. Valdes, Esq. Vice President, Medmarc Kara Trouslot Stubbs, Esq. Partner, Baker Sterchi Cowden & Rice, LLC
Agenda Drug and Device Pricing Off-Label Communication/Free Speech Issues State Actions vs. Drug and Device Manufacturers/Distributors 2016 Verdicts and Settlements FDA Activity What’s on the Horizon? Q & A 1
Drug and Device Pricing Cases Turing Pharmaceuticals- Daraprim Mylan Pharmaceuticals- EpiPen Rodelis Pharma – Cycloserine Valeant – Isuprel and Notropress (two heart drugs) Hepatitis C Generic Drugs 2
Why are drug costs so high in the US? Other countries often restrict patients’ access to superior, but more expensive drugs to keep prices down. Analysis in these countries is whether the product justifies the cost differential. In the US, all a patient needs is a prescription from a physician, and Medicare or a health plan will pay for it. FDA approval period is much, much longer than in Europe. Longer exclusivity period for patents keeps generics out of the market place. 3
Do we really want the government involved in drug/device pricing? Government imposed controls do not work: Price controls Negotiated Medicare drug prices Value-based pricing Capping out-of-pocket costs of certain drugs Scrap patent monopolies and drug exclusivity Will lead to shortages and curtailed production 4
Defending the Company Rigorous and detailed accounting of: Costs of clinical trials Costs of premarket approval or approval process Costs of Regulatory Compliance such as AE reporting to the FDA Costs of any corrective action Costs of sale of product at reduced prices Investments in additional research to update the product by making it safer (warnings, delivery methods, etc.) Investments in the community 5
Off-Label Marketing/Commercial Free Speech Tension between FDA and the First Amendment FDA’s historical position: Off-label promotion by a manufacturer is unlawful even if statements are truthful and non-misleading. Case law challenging FDA’s position – Caronia and Amarin FDA’s March 2016settlement with Amarin What does the landscape look like today? 6
Off-Label Marketing/Commercial Free Speech Amarin Stipulation and Order of Settlement (March 2016) – Erosion of FDA regulation of off-label promotion. Amarin may engage in “truthful and non-misleading speech” promoting off-label use of Vascepa and under Caronia , such speech may not form the basis or a prosecution for misbranding. FDA agrees to be bound by Court’s conclusion that the statements and disclosures Amarin proposes to make to physicians are truthful and non-misleading. Amarin bears the responsibility of assuring that its communications remain truthful and non-misleading. FDA agreed to provide Amarin with an optional preclearance provision through 2020 for new off-label claims. Both sides agreed to a dispute resolution provision intended to avoid future litigation. 7
Off-Label Marketing/Commercial Free Speech What does the landscape look like today? No protection for statements that are either untruthful or misleading. It may be easy to determine if a claim is untruthful, but it can be much more difficult to know if a claim is misleading or not. A manufacturer that leaves its sales force at liberty to converse unscripted with doctors about off-label use of an approved drug, risks a misbranding action, if false or misleading. Medicine and science is ever-evolving. A statement that is truthful and non-misleading today, may not be tomorrow. The speech at issue in Amarin was directed to healthcare providers, which limits applicability to direct-to-consumer advertising. Key rulings are limited to Second Circuit. 8
Off-Label Marketing/Commercial Free Speech LATEST AND GREATEST: Nov. 9 and 10, 2016 - FDA conducted a public meeting on “Manufacturer Communications Regarding Unapproved Uses of Approved or Cleared Medical Products.” Written comments will be accepted by FDA until 1/9/17. 9
State Action Genesis – Medicaid reimbursement by the tobacco industry. Birth of “regulation by litigation.” Advances policy preferences against gun manufacturers, lead paint manufacturers, alleged contributors to global warming, gasoline refiners and not surprisingly, pharmaceutical and medical device manufacturers. How it works. Confidential contingency fee arrangements between public officials and private firms that are politically connected. 10
2016 State Actions Filed Opioids: Illinois AG sues Insys Therapy for deceptive marketing of spray version of Fentanyl. NY AG sues Endo Pharmaceuticals for false advertising. Alleges company distorted addictive nature of the Opana ER. NY, PA and 33 other states have filed anti-trust complaint against Invidor alleging it was trying to keep out generic version of its opiate addiction treatment drug. Other Drugs and Medical Devices New Mexico AG goes after Bristol Myers for false advertising of Plavix. Alleges unsafe and ineffective for certain people. 11
2016 State Actions, cont. CA and WA State AGs sue J&J for false advertising and deceptive marketing of its surgical mesh products for women. Allege failure to warn of severe potential complications. Drug Pricing MD AG sues J&J for antitrust violations alleging the Company negotiated an agreement with Costco to increase the price of its lens products. Mass AG files an action against Gilead arising out of price increases on two Hep C drugs, Sovaldi and Harvoni. City of Providence, RI proceeds against Allergan, Mylan and others over generic drug prices. UK fined Pfizer ₤84.2 ($106M) for escalating the price of an Epilepsy drug. Notable settlements Novartis will pay $35M settlement to dismiss of -label allegations arising from its Elidel product 12
State Actions: Kitchen Sink Approach AG Allegations: False advertising Off-label promotion Inadequate warnings or instructions in labeling or promotional materials (second guessing the FDA) Inadequate AE reporting Withholding data from the FDA Unfair competition – attempting to control availability of generics Unfair pricing 13
State Actions: Defending these cases Challenge the appointment of private counsel Improper designation – denial of due process Separation of powers State statutory grounds First Amendment right to free speech Preemption Limits to AG injunctive power Regulatory Activity Exception 14
2016 Verdicts In re: DePuy Orthopaedics, Inc., Pinnacle Hip Implant Product Liability Litigation, USDC for the N.D. Texas $1.04 BILLION VERDICT (12/1/16) Third bellwether trial - 6 CA plaintiffs $4 -6M per plaintiff for compensatory damages $504M punitive damages against J&J and DePuy (each) $502 MILLION VERDICT (3/17/16) Second bellwether trial – 5 TX plaintiffs $140M in compensatory damages divided between 5 plaintiffs $360M in punitive damages; reduced to $10M per TX caps DEFENSE VERDICT IN FIRST BELLWETHER (2014) 8000 cases remain in the MDL 15
2016 Verdicts, cont. Talcum Powder Verdicts Plaintiffs allege link between talcum powder and ovarian cancer Three trials in Circuit Court for City of St. Louis (MO) Fox v. J&J: $72M verdict (2/2016) - SD plaintiff Ristesund v. J&J: $55M verdict (5/2016) – AL plaintiff Giannecchini v. J&J : $70M verdict (8/2016) – CA plaintiff J&J appealing verdicts 2500 claims pending, majority in the City of St. Louis 16
2016 Verdicts, cont. City of St. Louis Circuit Court – Litigation Tourism Permissive joinder statute and venue statute permit massive joinders of plaintiffs in product liability complaints who have nothing in common except that they are suing over injuries (not the same) allegedly caused by the same product. Talcum powder, pelvic mesh, hernia mesh, IVC filters, etc. Low bar for admission of expert testimony/junk science NJ state court judge granted summary judgment in two talc cases finding plaintiffs’ experts (same ones who testified in MO cases), had gaps in their “made-for-litigation” scientific methods and failed to explain how talcum powder specifically causes ovarian cancer. Misleading advertising about product in advance of trial 17
2016 Verdicts, cont. Risperdal, Mass Tort Program, Philadelphia Court of Common Pleas Allegation: Risperdal, an anti-psychotic medication, causes gynecomastia in adolescent boys 5 Trials: 1 st trial – Defense Verdict 2 nd – 4 th trials – Verdicts totaling $4.75M for plaintiffs 5 th trial - $70M Verdict (7/1/16) – compensatory damages ONLY 6 th trial - Case settled running up to trial, amount undisclosed (11/2/16) 2000 cases remain J&J/Janssen Pharmaceuticals are not looking to globally resolve the litigation 18
2016 Verdicts, cont. Carlino v. Ethicon, Inc., Philadelphia Court of Common Pleas – 2/16 Pelvic mesh case – transvaginal tape product $13.5M Verdict $10M in punitive damages Followed $12.5M Prolift verdict in Dec. 2015 ($7M punis) Plaintiff did not have extraordinary injuries or numerous surgeries afterwards. “Trial in a box” 19
2016 Verdicts, cont. Sherrer v. Boston Scientific Corporation and C.R. Bard, Inc. , Circuit Court of Jackson County, Missouri (Kansas City) Alleged BSC’s Solyx pelvic mesh and Bard’s Align pelvic mesh products were defectively designed and contained inadequate warnings. First trial involving two manufacturers Plaintiff sought $28M, punitive damages DEFENSE VERDICT 20
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