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Sidney Hillman Health Center of Rochester v. Abbott Laboratories, Inc.

United States Court of Appeals, Seventh Circuit

April 13, 2015

SIDNEY HILLMAN HEALTH CENTER OF ROCHESTER, et al., Plaintiffs-Appellants,
v.
ABBOTT LABORATORIES, INC., and ABBVIE, INC., Defendants-Appellees

Argued: February 20, 2015.

Page 923

Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:13-cv-05865 -- Sara L. Ellis, Judge.

For Sidney Hillman Health Center of Rochester, Teamsters Health Services And Insurance Plan Local 404, United Food And Commercial Workers Unions And Employers Midwest Health Benefits Fund (14-2282, 14-2909), Plaintiffs - Appellants: Adam J. Levitt, Attorney, COR LD NTC Retained, Chicago, IL; James J. Sabella, Attorney, COR LD NTC Retained, New York, NY.

For Abbott Laboratories, Incorporated, Abbvie, Incorporated (14-2282, 14-2909), Defendants - Appellees: William F. Cavanaugh Jr., Attorney, COR LD NTC Retained, New York, NY.

Before RIPPLE, KANNE, and TINDER, Circuit Judges.

OPINION

Page 924

Tinder, Circuit Judge.

Appellants are a group of multi-employer benefit funds challenging the dismissal of their putative class action alleging that Abbott Laboratories, Inc., and its subdivision AbbVie, Inc. (collectively, " Abbott" ), violated the Racketeer Influenced and Corrupt Organizations Act (" RICO" ) through efforts to promote the anticonvulsant medication Depakote for ineffective and unsafe uses. The district court dismissed the case with prejudice as barred by the statute of limitations, concluding that a reasonable benefit fund would have discovered its injuries in 1998, when the funds first reimbursed the cost of an " off-label" prescription for Depakote. We reverse.

I. BACKGROUND

According to the allegations in the complaint, which we accept as true for purposes of this appeal, see Fox v. Am. Alt. Ins. Corp., 757 F.3d 680, 681 (7th Cir. 2014), Abbott engaged in a scheme from 1998 to 2012 to illegally market Depakote for applications that had not been approved by the Food and Drug Administration (" FDA" ). Unapproved applications are known as " off-label" uses. See United States v. King-Vassel, 728 F.3d 707, 709 (7th Cir. 2013). Physicians may, and often do, prescribe drugs for off-label uses, id., but pharmaceutical companies are generally prohibited from marketing drugs for those same applications, see, e.g., United States ex rel. Wilson v. Bristol-Myers Squibb, Inc., 750 F.3d 111, 113 (1st Cir. 2014); Wash. Legal Found. v. Henney, 202 F.3d 331, 332-33, 340 U.S.App.D.C. 108 (D.C. Cir. 2010). The funds allege that Abbott, in promoting Depakote, not only misrepresented its safety and efficacy for off-label uses but also paid kickbacks to physicians, and established

Page 925

and funded intermediary entities like the Council for Excellence in Neuroscience Education, to promote the drug for off-label uses. Abbott then took steps to conceal its role in these activities. These efforts dramatically increased Depakote sales, which reached a high of $1.5 billion by 2007.

The funds were not the first to bring Abbott's marketing scheme to light. Four qui tam actions were filed against Abbott between October 2007 and January 2010, alleging that its off-label marketing of Depakote violated the False Claims Act and caused excessive charges to government benefit programs. These actions were unsealed in February 2011, when the federal government and multiple state governments intervened. Meanwhile, in November 2009, Abbott disclosed in a public filing with the Securities and Exchange Commission (" SEC" ) that the Department of Justice (" DOJ" ) was investigating its marketing of Depakote. In May 2012, Abbott pleaded guilty to illegally promoting Depakote from 2001 through 2006 for uses that had ...


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