Travelers Indemnity Co. v. Cephalon, Inc.

32 F. Supp. 3d 538, 2014 WL 3408550, 2014 U.S. Dist. LEXIS 95075
CourtDistrict Court, E.D. Pennsylvania
DecidedJuly 14, 2014
DocketCivil Action No. 12-4191
StatusPublished
Cited by11 cases

This text of 32 F. Supp. 3d 538 (Travelers Indemnity Co. v. Cephalon, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Travelers Indemnity Co. v. Cephalon, Inc., 32 F. Supp. 3d 538, 2014 WL 3408550, 2014 U.S. Dist. LEXIS 95075 (E.D. Pa. 2014).

Opinion

MEMORANDUM.

McLAUGHLIN, District Judge.

This is a fraud and unjust enrichment case brought by The Travelers Indemnity Company, Travelers Casualty & Surety Company, St. Paul Fire & Marine Insurance Company, and the Standard Fire Insurance Company (collectively, the plaintiffs, or “Travelers”) against Cephalon, [541]*541Inc., Teva Pharmaceuticals USA, Inc., and Teva Pharmaceutical Industries, Ltd. The plaintiffs are workers’ compensation insurers who claim that they were injured because they paid for or reimbursed prescriptions for Actiq and Fentora, two pain-management medications owned by the defendants. The plaintiffs allege that these drugs were ineffective, unnecessary, unsafe, or otherwise inappropriate as prescribed, and that the prescriptions were written as a result of Cephalon’s fraudulent marketing of the two drugs for “off-label” uses.

The plaintiffs bring claims against Ce-phalon for intentional misrepresentation (Count 1), negligent misrepresentation (Count 2), and for violations of the unfair trade and consumer protection laws of multiple states (Count 5). Against all three defendants, the plaintiffs bring a claim for unjust enrichment (Count 3), and seek a mandatory injunction compelling the defendants to advise the prescribers to whom they marketed Actiq and Fentora that the use of the drugs for opioid non-tolerant non-cancer patients is inappropriate and highly dangerous (Count 4).1

The defendants now move to dismiss the Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(1), on the grounds that the plaintiffs have failed to plead the injury or causation necessary to establish standing, and pursuant to Federal Rule of Civil Procedure 12(b)(6), for failure to state any of the remaining claims.

Because the Court finds that the plaintiffs have not pleaded any injury sufficient to establish Article III standing, the Court will grant the motion to dismiss under Rule 12(b)(1). In addition, the Court finds that the plaintiffs have not pleaded their claims for fraud or negligent misrepresentation with the particularity required under Federal Rule of Civil Procedure 9(b), or under the lesser standard of Rule 8. The Court also finds that the plaintiffs have not pleaded ascertainable loss or injury necessary to sustain their state consumer protection claims. Finally, the Court 'finds that the plaintiffs have not pleaded circumstances which would justify recovery under an unjust enrichment theory, or pleaded the type of injury required to seek relief in the form of a mandatory injunction. Accordingly, the Court will also dismiss all counts in the Amended Complaint for failure to state a claim under Rule 12(b)(6).

1. Background2

Actiq is a powerful painkiller which was approved by the Food and Drug Administration (“FDA”) in 1998 for managing breakthrough pain in cancer patients who were already receiving and tolerant to other opioid pain therapies.3 The 1998 FDA-approved product label provided, in part:

[542]*542Actiq is indicated only for the management of breakthrough4 cancer pain in patients with malignancies who are already receiving and who are tolerant to opioid therapy for their underlying persistent cancer pain Because life-threatening hypoventilation could occur at any dose in patients not taking chronic opiates, Actiq is contraindicated in the management of acute or postoperative pain. This product must not be used in opioid non-tolerant patients.5 .... Ac-tiq is intended to be used only in the care of cancer patients only by oncologists and pain specialists who are knowledgeable of and skilled in the use of Schedule II opioids to treat cancer.

Compl. ¶ 43 (emphasis in original).

As part of its approval of Actiq in 1998, the FDA implemented a Risk Management Program (“RPM”) which required Cephalon to monitor prescription patterns and report to the appropriate medical professional society any doctors Cephalon identified as having prescribed Actiq inappropriately, if those prescriptions “represent potential off-label usage greater than 15% of total quarterly Actiq prescriptions.” 6 Compl. ¶¶ 49-54. Additionally, if off-label usage continued to exceed fifteen percent, Cephalon would be required to implement an “aggressive education program” notifying and reminding doctors of the drug’s FDA-approved uses and appropriate patient selection. Id.

Fentora poses similar dangers for addiction and fatal overdose, and its FDA-approved label includes a very detailed Black Box Warning cautioning, in part, that deaths have occurred “as a result of improper patient selections (e.g.[,] use in opioid non-tolerant patients) and/or improper dosing,” that Fentora is indicated only for the management of breakthrough pain in opioid-tolerant cancer patients, and that Fentora is “contraindicated in the management of acute or postoperative pain including headache/migraine.” Compl. ¶ 112.

The plaintiffs allege that, despite these dangers and FDA-imposed restrictions, beginning around October 2000 and continuing to the present, Cephalon aggressively marketed, promoted, and sold both Actiq and Fentora to doctors for off-label use. In particular, Cephalon promoted the drugs to doctors treating injured workers whose medical expenses were paid for by the plaintiffs and other third-party payors (“TPPs”) under state workers’ compensation laws. The plaintiffs argue that Cephal-on targeted these doctors because patients covered by workers’ compensation enjoy full prescription reimbursement, and because state laws limit the ability of work[543]*543ers’ compensation insurers to restrict the drugs they will cover. Compl. ¶¶ 74-76.

The plaintiffs allege that Cephalon sought to increase profits by expanding the use of Actiq and Fentora beyond their FDA-approved indications by aggressively promoting the drugs to non-cancer doctors for the treatment, of non-cancer patients. Cephalon’s promotion allegedly included promulgating false or misleading marketing and medical education materials, training its sales representatives to downplay the risks of the drugs for off-label use, providing doctors with free samples of or coupons for the drugs, offering doctors various financial benefits (such as paid speaking engagements) as incentives to prescribe the drugs, and reducing the prices of Actiq and Fentora to compete with generic rapid-onset opioids. The plaintiffs assert that this marketing campaign “goes beyond mere off-label promotion of Actiq [and Fentora] and includes untruthful, factually inaccurate, incomplete and/or otherwise misleading promotion of the drug[s], and the promotion of Actiq [and Fentora] for contraindicated uses.” Compl. ¶ 80.

The plaintiffs allege that between 2004 and 2011, Travelers and its customers paid at least $15 million for more than 8,400 Actiq prescriptions, submitted by more than 500 workers’ compensation claimants, and paid at least $4.5 million for Fentora prescriptions from 2006 to the present. Compl. ¶¶ 97-98, 140.

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Cite This Page — Counsel Stack

Bluebook (online)
32 F. Supp. 3d 538, 2014 WL 3408550, 2014 U.S. Dist. LEXIS 95075, Counsel Stack Legal Research, https://law.counselstack.com/opinion/travelers-indemnity-co-v-cephalon-inc-paed-2014.