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In re Testosterone Replacement Therapy Products Liability Litigation

United States District Court, N.D. Illinois, Eastern Division

July 26, 2018

ABBVIE INC., et al., Defendants. This document relates to MEDICAL MUTUAL OF OHIO, Plaintiff,



         In this MDL proceeding, thousands of individual plaintiffs have brought personal injury lawsuits against defendants, who are manufacturers, promoters, and sellers of testosterone replacement therapy (TRT) drugs. The individual plaintiffs allege that defendants' TRT drugs caused them to suffer serious cardiovascular and venous thromboembolic injuries.

         Presently before the Court is a different case within the MDL. Plaintiff Medical Mutual of Ohio (MMO), an Ohio mutual insurance company, has sued on behalf of a putative class of third-party payors (TPPs) who allege that they suffered economic injuries when-as a result of defendants' fraudulent marketing schemes-they made reimbursement payments for medically inappropriate TRT prescriptions. The Court previously dismissed some of MMO's claims but allowed others to proceed. See In re Testosterone Replacement Therapy Prods. Liab. Litig., 159 F.Supp.3d 898 (N.D. Ill. 2016) ("MMO I"); In re Testosterone Replacement Therapy Prods. Liab. Litig., Nos. 14 C 1748, 14 C 8857, MDL No. 2545, 2016 WL 4091620 (N.D. Ill. Aug. 2, 2016) ("MMO II"). MMO's surviving claims are made under the federal RICO Act, 18 U.S.C. § 1962(c), against defendants AbbVie, Auxilium, Lilly, and Endo; for conspiracy to violate the Act, 18 U.S.C. § 1962(d), against defendants AbbVie, Auxilium, Lilly, Endo, and Actavis; and against defendants AbbVie, Auxilium, Lilly, and Endo for negligent misrepresentation under Ohio common law.

         MMO has moved to certify a nationwide class of TPPs and an Ohio state subclass of TPPs. In addition, MMO has moved to exclude the expert opinions of Dr. Diane Giaquinta and Dr. Eric Gaier, which defendants rely upon in opposing MMO's motion for class certification. Defendants, for their part, have moved to exclude the opinions of MMO's experts: Dr. Meredith Rosenthal, Mr. Roy Wilkinson, and Dr. Jeffrey Harris.

         The Court grants in part and denies in part defendants' motion to exclude Mr. Wilkinson's opinion; denies MMO's motion to exclude Dr. Giaquinta's opinion; and terminates as moot the motions to exclude the opinions of Dr. Rosenthal, Dr. Harris, and Dr. Gaier. The Court denies MMO's motion for class certification because MMO has not demonstrated that it can adequately represent the class, Fed.R.Civ.P. 23(a)(4), and because it has not met Rule 23(b)(3)'s predominance requirement.

         Legal Standards

         1. Rule 702 and Daubert

         "[W]hen an expert's report or testimony is critical to class certification . . . a district court must conclusively rule on any challenge to the expert's qualifications or submissions prior to ruling on a class certification motion." Am. Honda Motor Co. v. Allen, 600 F.3d 813, 815-16 (7th Cir. 2010).

         Rule 702 and the principles set forth in Daubert govern the admissibility of expert testimony. See Fed.R.Evid. 702; Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993). Together, Rule 702 and Daubert provide that for an expert's testimony to be admissible, (1) he or she must be qualified; (2) the reasoning or methodology underlying the testimony must be reliable; and (3) the testimony must be relevant, meaning that it would "assist the trier of fact to understand the evidence or to determine a fact in issue." Ervin v. Johnson & Johnson, Inc., 492 F.3d 901, 904 (7th Cir. 2007); see also Hartman v. EBSCO Indus., Inc., 758 F.3d 810, 817 (7th Cir. 2014) (expert testimony must "fit the issue to which the expert is testifying [and be] tied to the facts of the case" (internal quotation marks and citation omitted)). Daubert's "gatekeeping" requirement is in place "to make certain that an expert . . . employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field." Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152 (1999). The court's inquiry is "a flexible one," but it should focus on the expert's "principles and methodology, not on the conclusions that they generate." Daubert, 509 U.S. at 594-95; see also C.W. ex rel. Wood v. Textron, Inc., 807 F.3d 827, 834 (7th Cir. 2015) ("[T]he key to the gate is not the ultimate correctness of the expert's conclusions," but rather "the soundness and care with which the expert arrived at her opinion" (internal quotation marks and citations omitted)). Nonetheless, an opinion must be "connected to the existing data" by more than "the ipse dixit of the expert." Gen. Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997). A court may exclude expert testimony if "there is simply too great an analytical gap between the data and the opinion proffered." Id.

         2. Class Certification

         "[T]he primary purposes of the class action mechanism" are "judicial economy and efficiency." Andrews v. Chevy Chase Bank, 545 F.3d 570, 577 (7th Cir. 2008). To be certified, a proposed class must satisfy all four requirements of Rule 23(a): "(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class." Fed.R.Civ.P. 23(a); McCaster v. Darden Rests., Inc., 845 F.3d 794, 800 (7th Cir. 2017). In addition, a party seeking class certification must establish that the proposed class satisfies one of the requirements set forth in Rule 23(b). See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 614 (1997); McCaster, 845 F.3d at 800. MMO requests certification of the proposed class under Rule 23(b)(3), which requires that "the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed.R.Civ.P. 23(b)(3); see also McCaster, 845 F.3d at 800.

         The party seeking class certification has the burden of establishing by the preponderance of the evidence that class certification is proper. Priddy v. Health Care Serv. Corp., 870 F.3d 657, 660 (7th Cir. 2017). In assessing whether the movant has met this burden, the district court need not accept the allegations in the complaint as true. See Szabo v. Bridgeport Machs., Inc., 249 F.3d 672, 675 (7th Cir. 2001). The court should instead "make whatever factual and legal inquiries [that] are necessary under Rule 23." Id. at 676.


         The Court takes the following facts from its prior orders on defendants' motions to dismiss, the Third Amended Complaint (TAC), and the parties' class certification briefing, including their expert reports.

         MMO filed this action in November 2014. MMO alleges that the United States Food and Drug Administration (FDA) has approved TRT drugs for the treatment of a relatively rare condition, called "classical hypogonadism," which encompasses conditions that cause insufficient secretion of the testosterone necessary for the body to perform normal functions. MMO contends that although the FDA has not approved TRT drugs for the treatment of conditions other than classical hypogonadism, defendants have marketed the drugs as being safe and effective for the treatment of "off-label" conditions and symptoms, such as erectile dysfunction, diabetes, AIDS, cancer, depression, and obesity. Defendants' off-label marketing scheme allegedly included a "disease awareness" campaign that promoted the existence of a nonexistent disease, called "Andropause" or "Low T," which defendants invented and for which they claimed TRT drugs were a safe and effective treatment.

         MMO asserts that no competent medical evidence demonstrates that TRT drugs are safe or effective for treating "Low T" or other off-label conditions. Rather, MMO contends, medical evidence shows that off-label TRT use is associated with increased incidence of adverse cardiovascular and thromboembolic (blood clotting) events. MMO also alleges that the safety risks TRTs pose are particularly high for aging men, who are most likely to experience symptoms of "Low T" and at whom defendants' marketing scheme was largely aimed. Though increased off-label marketing coincided with an "astronomical spike" in TRT drug prescriptions and sales, those sales have begun to decrease, despite "continued rampant promotion," in response to recent revelations of the drugs' safety risks. TAC ¶¶ 19-21.

         For example, on January 31, 2014, the FDA issued a drug safety communication (DSC) announcing that it was "investigating the risk of stroke, heart attack, and death in men taking FDA-approved testosterone products" as well as the "link between TRT use and cardiovascular adverse events." TAC ¶ 23. On March 3, 2015, the FDA announced that it was "requir[ing] label changes for all prescription testosterone products to reflect the possible increased risk of heart attacks and strokes associated with testosterone use." Id. MMO alleges that defendants were "[u]ndaunted" by these and other warnings and "continue[d] to claim that TRT drugs are safe and effective" for off-label use. Id. MMO also alleges that defendants' own research, even prior to these warnings, put them in a position to be aware of the risks TRT use poses. Nonetheless, defendants continued to target TPPs, physicians, and consumers with fraudulent marketing schemes that affirmatively promoted the drugs' safety and efficacy for off-label use and actively concealed unfavorable evidence.

         1. RICO claims and Ohio negligent misrepresentation claims

         Based on these and other facts, MMO alleges that defendants AbbVie, Auxilium, Lilly, and Endo[1] engaged in marketing schemes by forming four "complementary and mutually reinforcing" fraudulent enterprises: a TPP "formulary access" enterprise, which targeted TPPs directly; "peer selling" and "publication" enterprises, which targeted prescribing physicians; and a "direct-to-consumer" enterprise, which targeted consumers. TAC ¶¶ 225-29. MMO alleges that the planning and coordinating of each fraudulent enterprise "required extensive use of the wires and mails," Id. ¶ 246, and that defendants conducted the affairs of the enterprises through a pattern of racketeering activity in violation of 18 U.S.C. § 1962(c).

         In its motion for class certification, MMO places great emphasis on the "formulary access enterprise." According to MMO, TPPs are the entities "directly reimbursing most, if not all, of the cost of TRT drug prescriptions." TAC ¶ 1077. TPPs, therefore, were the primary and intended victims of defendants' marketing schemes. Id. Typically, if a TPP provides drug benefit coverage for a patient's TRT drug prescription, the TPP will pay approximately 80 to 90 percent of the prescription's cost, and the patient will pay the remainder. Whether a TPP will cover the cost of a particular drug depends on the "formulary status" the TPP has assigned to that drug. MMO explains that "[o]nce a drug is on formulary, payment by TPPs for the drug is largely seamless." Pl.'s Mot. at 3. TPPs can thus use formularies to give patients incentives to make more economical prescription choices.

         To determine the appropriate formulary status for prescription drugs, TPPs typically establish committees of experts, called "pharmacy and therapeutics committees" (P&T committees), to review clinical evidence and evaluate the drug products under consideration for formulary placement. In conducting these reviews, P&T committees sometimes consult "dossiers," which are "summar[ies] of the objective clinical evidence in support of a drug" and are prepared by drug manufacturers. Defs.' Opp., Ex. 44 (Declaration of Dr. Diane Giaquinta (Giaquinta Decl.)) ¶ 99.

         MMO alleges that to ensure favorable formulary status for their respective TRT drugs, defendants formed fraudulent marketing enterprises that engaged TPPs and their P&T committees directly through deliberate misrepresentation of their respective TRT drugs' safety and efficacy, submission of false and misleading materials, and concealment of unfavorable medical evidence. Notably, some TPPs contract all or portions of their pharmacy benefit management responsibilities to entities called "pharmacy benefit managers" (PBMs). Pl.'s Mot., Ex. 2 (Declaration of Roy Wilkinson (Wilkinson Decl.)) ¶¶ 40-43. MMO contends that defendants directly engaged PBMs and their P&T committees just as they did TPPs.

         By MMO's account, defendants "used common means and methods" when they engaged directly with TPPs and/or PBMs to obtain formulary access-meaning they used "standardized marketing" and clinical materials that were rife with misrepresentations regarding safety and efficacy, were "explicitly intended for TPPs," and, for all practical purposes, were scripted. Pl.'s Mot. at 9. For example, MMO points to an AbbVie "'Value Proposition' slide deck for Androgel" that allegedly "sought to create an equivalence between hypogonadism" and "Low T." Id. at 10-11. MMO similarly highlights AbbVie's "Pinnacle" materials, which focused on men's health and, among other things, allegedly overstated the incidence of hypogonadism.

         MMO alleges that "[o]nce [d]efendants obtained formulary access for their products, they initiated a variety of marketing initiatives to increase prescription sales by disseminating information regarding the formulary access of their drugs, typically described as 'pull-through' efforts." Id. at 3. And although "the lynchpin [sic] of [d]efendants' schemes was maintaining and expanding formulary access," MMO urges, defendants used "common messaging to deceive" consumers and physicians as well, thus "engag[ing] in . . . interlocking efforts . . . to maximize" profits. Id. at 13-14.

         MMO's claims against defendants AbbVie, Auxilium, Lilly, and Endo for negligent misrepresentation arise out of many of these same facts.

         2. RICO conspiracy claims

         MMO also alleges that defendants AbbVie, Auxilium, Lilly, Endo, and Actavis[2]violated 18 U.S.C. § 1962(d) by conspiring both with third-parties-namely, the physicians, marketing firms, and other vendors with whom they worked to carry out their respective enterprises-and with each other to violate 18 U.S.C. § 1962(c). MMO's allegations regarding defendants' conspiracies with each other focus primarily on their alleged unbranded direct-to-consumer marketing campaign. According to MMO, defendants believed that by engaging in an unbranded campaign, as opposed to brand-specific campaigns, they could sidestep FDA regulations that prohibit off-label marketing. MMO contends that defendants "knowingly conspired" to exploit this perceived regulatory loophole to create belief in a new "curable disease" (Low T) and to boost TRT drug sales. TAC ¶ 891. By participating in the unbranded campaigns, each defendant "jointly adopted the philosophy of 'making a bigger pie, '" recognizing that increased overall sales of TRT drugs would likely lead to increased sales of their individual drugs. TAC ¶ 1076.

         3. Formulary status of TRT drugs at MMO

         During the class period, MMO contracted with a PBM (Medco, and later Express Scripts (ESI)) to manage its formularies. John Shoemaker, MMO's corporate designee, testified during his deposition that MMO adopted its PBMs' formulary choices "as-is" for much of the class period. Defs.' Opp., Ex. 7 at 109:17-110:19, 125:5-126:12. MMO, however, retained control of other "utilization management" tools to contain drug costs. Giaquinta Decl. at A-9; Defs.' Opp., Ex. 21 (Deposition of Dr. Kathryn Canaday, MMO's Vice President of Pharmacy (Canaday Dep.)) at 30:4-31:13. One such tool is "prior authorization," which requires "prescribers to receive pre-approval for prescribing certain drugs." Giaquinta Decl. ¶ 29, A-7. If a drug is subject to a prior authorization requirement, it will not qualify for coverage by a TPP until the pre-approval is in place. Id. at A-7.

         In August 2008, MMO's PQM committee, which is similar in concept to a P&T committee, tentatively decided to impose a prior authorization requirement for "oral, topical, and injectable androgens," or testosterone agents. Giaquinta Decl. ¶ 177. The committee had been concerned about androgen use for "enhancement of athletic performance or bodybuilding" and wanted to cover androgens only for FDA-approved "conditions associated with deficiency or absence of testosterone, such as primary and secondary hypogonadism and delayed puberty." Id. ¶ 176. In September 2008, the committee decided to exempt topical and transdermal TRTs-the type of TRT drugs at issue in this litigation-from the prior authorization requirement. Id. ¶ 178. The committee reasoned that "injectable testosterone was the most abused form" and that "topical/transdermal forms of TRT 'have rebates.'" Id. (citation omitted).

         In December 2008, a PQM committee member received an e-mail discussing this prior authorization requirement. The e-mail contained an attachment that discussed (1) increasing prescriptions for TRTs in older men "for the treatment of 'andropause'" and 2) a clinical trial whose results showed "no benefit" from TRT use in men over 60 years of age "with serum testosterone levels on the lower end of normal." Id. ¶ 179 (citation omitted). MMO, however, did not modify its prior authorization requirement at that time. Nor did MMO do so in February 2014, when Dr. Canaday and her colleagues discussed the "irony" of having just "recommended," in close proximity to the FDA's January 2014 DSC, two TRT drugs "for a step therapy program"-meaning that patients wanting to use TRTs had to choose those two drugs before others in order to qualify for reimbursement. Defs.' Opp., Ex. 35; Giaquinta Decl. ¶ 55. It was not until July 2016 that MMO's PQM committee voted to expand the existing prior authorization requirement to include topical and transdermal TRTs. And then, due to an administrative oversight, MMO did not actually implement the prior authorization requirement until late 2017. Notably, when asked during her deposition how MMO discovered that the prior authorization had not been implemented as planned in July 2016, Dr. Canaday testified that MMO "learned through [this] lawsuit." Canaday Dep. at 354:18-355:6.[3] Anecdotal evidence indicates that in contrast to MMO, several TPPs and PBMs implemented prior authorization requirements on some or all topical and transdermal TRTs during some or all of the class period, dating as far back as 2001.

         4. Expert opinions

         The following opinions from Dr. Rosenthal, Mr. Wilkinson, and Dr. Giaquinta are critical to the Court's class certification decision. Opinions from Dr. Gaier and Dr. Harris, by contrast, are immaterial, so the Court does not address them.

         a. Plaintiff's expert Dr. Rosenthal

         Dr. Rosenthal is a professor of health economics and policy at the Harvard T.H. Chan School of Public Health. She earned a Ph.D. in health policy on an economics track in 1998. MMO offers Dr. Rosenthal's opinion as a "common basis to establish" that defendants' alleged fraud caused the putative class members' injuries, and to establish damages. Pl.'s Mot. at 32. Dr. Rosenthal uses standard regression models to "estimate[] effects of promotion on [TRT] prescribing levels, controlling for other determinants of prescriptions for TRT drugs." Pl.'s Mot., Ex. 1 (Declaration of Dr. Meredith Rosenthal (Rosenthal Decl.)) ¶¶ 76, 78. Dr. Rosenthal regresses data regarding "total prescriptions of each drug . . . on a set of explanatory variables" that, like prescription levels, "vary over time." Rosenthal Decl. ¶ 77. "The key explanatory variables" in Dr. Rosenthal's models "are the levels of Defendants' spending on promotion of TRT drugs to physicians and consumers." Id. ¶ 78 (emphasis added).

         Dr. Rosenthal conceded during her deposition that her regression models do not measure promotion to TPPs. See Defs.' Opp., Ex. 1 (Rosenthal Dep.) at 82:14-84:24 (agreeing that "all of the promotional activity that [she] include[s] in [her] regression model consists either of promotion to doctors, including sampling, or promotion to end consumers," and that "none of [it] consists of promotion directly to third-party payors"); id. at 68:21-22 ("I did not attempt to measure direct contact between TPPs and the defendants."). Dr. Rosenthal also conceded during her deposition that her analysis does not measure whether defendants' promotion injured physicians in the form of lost business or revenue, whether it injured TPPs' beneficiaries, or whether TRTs were medically beneficial for TPPs' beneficiaries. Id. at 73:16-74:19; 75:8-21; 275:10-17.

         According to Dr. Rosenthal, her regression models "indicate that in economic terms there is a causal relationship between Defendants' promotion and prescriptions of TRT drugs so that if [MMO's] allegations are proven true, impact on the Class can be inferred." Rosenthal Decl. ¶ 86. She uses the relevant values from the regression models to "simulate what the level of prescribing would have been if Defendants had not engaged in the alleged misrepresentation[s]," id. ¶ 87, and concludes that the "challenged conduct" caused the putative class members to pay for an estimated number of extra prescriptions. Id. ¶ 102. The estimated extra prescriptions translate into an estimated range of monetary damages.

         b. Plaintiff's expert Mr. Wilkinson

         Mr. Wilkinson has twenty-seven years of experience as a "pharmacy benefit consultant" and has expertise in areas including "health care claims analysis" and "administrative services management and contracting." Wilkinson Decl. ¶¶ 1, 6. He earned a Bachelor of Science and is expected to earn a Master's of Health Administration in 2018. Mr. Wilkinson testified during his deposition that he has not served on a P&T committee and does not have the expertise to evaluate drugs' risks and efficacy. Similarly, he testified during his deposition that he does not have the expertise to assess whether clinical studies are reliable, and that he would not know how someone with clinical expertise would interpret clinical information.

         In his report for this case, Mr. Wilkinson provides background information on the managed care industry, including on how TPPs manage drug benefits and make formulary decisions. He opines, for example, that although it is "common" for TPPs and PBMs "to rely upon a variety of sources for the scientific evidence on which they base their decisions," "[m]any of these sources are directly controlled (or heavily influenced) by drug manufacturers." Wilkinson Decl. ¶ 10. He also opines that drug manufacturers, including defendants, use "standard marketing materials"-many of which must be presented "verbatim"-and "various common strategies" to teach "TPPs and/or their contracted PBMs" about their drugs, "influence formulary access," and increase pull-through once their drugs are on formularies. Wilkinson Decl. ¶¶ 11, 12, 85, 187-207. Mr. Wilkinson bases this opinion on MMO-specific documents and contends that defendants' interactions with MMO and/or its PBMs "are the same type of interactions that [defendants] had with other TPPs and/or their contracted PBMs." Id. ¶ 11. Mr. Wilkinson also states that between July 2012 and December 2015, "AbbVie employees made at least 741 calls to TPPs and/or to their contracted PBMs to discuss the AndroGel Value [Proposition] Deck," a promotional tool that MMO contends contained misleading clinical information regarding TRTs. Id. ¶ 118 & Ex. E (listing call notes from AbbVie's "iREP database"). Nonetheless, Mr. Wilkinson agreed during his deposition that he "would need to know the totality of . . . considerations that were in play at a particular time [to] . . . evaluate whether a third-party payor would have changed its treatment of a particular drug in response to a particular piece of information." Defs.' Opp., Ex. 6 (Wilkinson Dep.) at 308:3-11. He also testified that he deems defendants' marketing strategies to be common "regardless of [their] specific content." Id. at 202:17-203:8.

         In addition, Mr. Wilkinson opines that "TPPs and/or their contracted PBMs would generally make strict changes to their formularies to limit a particular therapeutic category of drugs only once they receive notice from the FDA concerning potential safety and efficacy concerns." Wilkinson Decl. ¶ 14. And he states that in his opinion, "TPPs and/or their contracted PBMs would not have been on notice of the serious safety and efficacy issues associated with the TRT Drugs sufficient to implement strict Topical Androgen class-wide pharmacy controls until FDA's Safety Announcement dated January 31, 2014." Id. ¶ 256.

         c. Defendants' ...

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