United States District Court, N.D. Illinois, Eastern Division
IN RE TESTOSTERONE REPLACEMENT THERAPY PRODUCTS LIABILITY LITIGATION
ABBVIE INC., et al., Defendants. This document relates to MEDICAL MUTUAL OF OHIO, Plaintiff,
CASE MANAGEMENT ORDER NO. 130 (MEMORANDUM OPINION AND
ORDER ON MMO'S MOTION FOR CLASS CERTIFICATION, MMO'S
DAUBERT MOTIONS, AND DEFENDANTS' DAUBERT MOTIONS IN MED.
MUTUAL OF OHIO V. ABBVIE INC., NO. 14 C 8857)
MATTHEW F. KENNELLY UNITED STATES DISTRICT JUDGE
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.
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.
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.
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.
702 and Daubert
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).
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
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.
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.
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.
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
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
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.
claims and Ohio negligent misrepresentation claims
on these and other facts, MMO alleges that defendants AbbVie,
Auxilium, Lilly, and Endo 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).
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
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.))
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.
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.
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.
claims against defendants AbbVie, Auxilium, Lilly, and Endo
for negligent misrepresentation arise out of many of these
also alleges that defendants AbbVie, Auxilium, Lilly, Endo,
and Actavisviolated 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
Formulary status of TRT drugs at MMO
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.
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.
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. 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.
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.
Plaintiff's expert Dr. Rosenthal
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
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.
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
Plaintiff's expert Mr. Wilkinson
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
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.
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.