April 4 (Bloomberg) -- Pfizer Inc. may have to face lawsuits by insurers alleging the company improperly marketed the epilepsy drug Neurontin after an appeals court found the cases were improperly denied class-action status.
The U.S. Court of Appeals in Boston yesterday found a lower-court judge erred in refusing to allow so-called “third-party payers,” such as health insurers and union funds, to combine their Neurontin racketeering claims. The appeals court also upheld a $142.1 million damage award to Kaiser Foundation Health Plan Inc. over Pfizer’s Neurontin marketing.
“We reject the argument” that Kaiser’s lawyers didn’t produce sufficient evidence to uphold the jury verdict, the court said in a 64-page ruling.
The decision allows hundreds of U.S. health plans to revive potential class-action racketeering claims that the world’s largest drugmaker engaged in illegal off-label marketing of Neurontin for bipolar disorders, said Carl Tobias, who teaches product-liability law at the University of Richmond in Virginia. “They are telling the judge to take another look at the class-certification issue,” Tobias said.
Pfizer officials said they are considering appealing the today’s rulings in the Neurontin cases.
“Pfizer continues to believe there was no basis in fact or law” for the Kaiser verdict, Chris Loder, a spokesman for the New York-based company, said in an e-mailed statement. The drugmaker also contends the trial judge correctly ruled the insurers shouldn’t be able to proceed as a class with their claims.
Pfizer and its Warner-Lambert unit are accused in the insurers’ lawsuits of promoting the drug for uses that weren’t approved by the U.S. Food and Drug Administration to boost profit. The insurers contend they were duped into covering Neurontin prescriptions for unapproved ailments, such as bipolar disorder.
Pfizer’s Warner-Lambert subsidiary pleaded guilty in 2004 to criminal charges filed by the U.S. Justice Department and paid $430 million to resolve allegations over the company’s Neurontin marketing. Pfizer acquired Warner-Lambert for $120 billion in 2000.
Neurontin’s sales rose from 15 percent off-label in 1994 to 94 percent in 2002, the government said in court filings. The drug’s sales hit $2.3 billion in 2002.
The insurers sought to combine claims that Pfizer engaged in racketeering through its Neurontin marketing. U.S. District Judge Patti Saris denied that request, ruling the plans couldn’t show Pfizer’s actions caused their damages and therefore weren’t entitled to have a class-action case certified, according to court filings.
The appeals court panel, which included retired Supreme Court Judge David Souter, concluded the plans presented sufficient evidence to show Pfizer’s illegal Neurontin marketing caused the insurers’ damages. The panel sent the case back to Saris to revive the racketeering claims and to reexamine whether the cases should be certified as a class action.
“We express no view as to whether the plaintiffs can, on remand, meet the requirements” for having their cases combined, the court said.
In the Kaiser case, a federal court jury in Boston concluded in 2010 Pfizer violated federal racketeering laws through its Neurontin marketing and it awarded $47.4 million in damages.
Saris later tripled the award under a provision of the racketeering statutes. The claims were brought by the Kaiser Foundation plan and Kaiser Foundation Hospitals. Both are units of Oakland, California-based insurer Kaiser Permanente.
The cases are In RE Neurontin Marketing and Sales Practices Litigation, 11-1806, 11-1904 and 11-2096, United States Court of Appeals for the First Circuit (Boston).
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