Another American Hustle: Actos Court Allows Expert to Offer “Fraud-on-the-FDA” Opinions

Contributed by Adam Tolin

David Russell’s American Hustle is one of the darlings of Hollywood’s awards season.  After seeing the movie, it appears Mr. Russell is the hustler.  The movie was a total mess.  The scam – the key to the entire plot – was never really explained.  The characters were never developed.  Each one was more of a caricature than the other.  So why the love from Hollywood?   Russell is a master at making a movie seem incredible.  He enlisted an incredible cast (Amy Adams, Bradley Cooper and Jennifer Lawrence, among others).  He dressed them up beautifully; the cast gave great performances, and the production and direction was excellent.  But the movie never came together in any coherent fashion.  Or, maybe it’s me and I should not be giving movie reviews.  But my takeaway from the American Hustle love affair is that you can fool a trained eye if you have the right amount of superficial beauty.

This brings me to last week’s Western District of Louisiana’s decision in In re Actos Products Liab. Litig., 2014 WL 120973 (W.D. La.  Jan. 10, 2014).  In Actos, the plaintiffs alleged Takeda, the manufacturer, failed to warn of the risk of bladder cancer.  The plaintiffs retained Dr. David Kessler, who has become one of the plaintiffs’ bar’s go-to experts.  Dr. Kessler is the David Russell of experts; he’s got all the glitz and glamor.  He was the former head of the FDA.  Defendants moved to preclude Dr. Kessler from offering a host of opinions touching at nearly every aspect of the pharmaceutical industry.

Of particular interest is the decision regarding Dr. Kessler’s opinions that Takeda failed to provide the FDA with certain data.  For example, Dr. Kessler intends to testify that Takeda should have reported its October 2005 “data mining” exercise where they ran a search of the FDA database for all adverse event reports for bladder cancer and allegedly found that bladder cancer was reported significantly more often with pioglitazone than with all other drugs compared.

In other words, plaintiffs plan to use Dr. Kessler to argue Takeda committed “fraud on the FDA.”  But that’s preempted, right?  That’s exactly what Takeda argued.  “For purposes of the present argument, the Defendants do not contest either Dr. Kessler’s analysis or his conclusions; their argument is limited to a legal one. Defendants argued the United States Supreme Court has held that state court ‘fraud-on-the-FDA’ claims conflict with and, therefore, are impliedly pre-empted by, federal law. See Buckman Company v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001).”

In Buckman, of course, the Supreme Court held a claim based on the failure to provide data to the FDA was preempted.  Buckman, 531 U.S. at 348.  The Court stated that “the conflict stems from the fact that the federal statutory scheme amply empowers the FDA to punish and deter fraud against the administration and that this authority is used by the administration to achieve a somewhat delicate balance of statutory objectives. The balance sought by the administration can be skewed by allowing fraud-on-the-FDA claims under state tort law.”  Numerous courts have interpreted Buckman to preempt allegations like those in Actos on similar grounds.  See, e.g., Marsh v. Genentech, Inc., 693 F.3d 546 (6th Cir. 2012) (holding that courts should not determine adequacy of post-marketing disclosures to FDA); In re Medtronic, Inc., Sprint Fidelis Leads Prods. Liab. Litig., 623 F.3d 1200 (8th Cir. 2010) (Buckman preempts allegation that defendant “failed to provide the FDA with sufficient information”).

Unfortunately, the Actos court disagreed.  It probably did not help that the court may have been distracted by Dr. Kessler’s admittedly incredibly impressive resume.  As the court noted numerous times, “Dr. Kessler is not only a physician; he is a lawyer, as well,” and “served as the Commissioner of the United States Food and Drug Administration (“FDA”) from 1990 to 1997.”  Perhaps as a result, the court essentially granted Dr. Kessler carte blanch to offer any opinion he so desires; fraud-on-the-FDA, failure to warn, improper marketing, etc.  Best actor: Dr. Kessler.  Best supporting actor: Dr. Kessler.  Best animated song: Dr. Kessler.

As to the fraud-on-the-FDA opinion, the Court simply accepted the argument that plaintiffs are not literally pursuing a claim that Takeda defrauded the FDA.  “Plaintiffs are not pursuing a state law claim grounded in “fraud-on-the-FDA.”  However, as to the obvious end-run around Buckman, the court mistakenly concluded that because Takeda intended on relying on the FDA “as a shield” (introducing evidence of FDA submissions, approvals, and actions), then Dr. Kessler can opine Takeda should have provided additional information to the FDA.  Of course, that’s a flawed premise that rounds afoul of the purpose of Buckman because the FDA is the agency with the power to determine what information it desires, and empowered to prosecute if a company withholds data it would have wanted.  Takeda should be permitted to argue it complied with FDA’s regulations and the FDA did not require a different warning, without opening the door to plaintiffs arguing that it defrauded the FDA by failing to provide information the FDA never asked for, and typically does not want.  Indeed, the FDA simply is not interested in receiving every last internal company analysis.  As the court acknowledged, it may be that Takeda had no legal obligation to submit the analyses to the FDA.  So then why can Dr. Kessler offer those opinions?  The Court found that “Defendants conflate two separate procedural possibilities and two separate evidentiary inquires. Whether Takeda was or was not required to report the now known information to the FDA is of no real moment to whether an actual causal link existed.”  Huh?  It appears that it is the court that has conflated two separate issues.  It’s one thing to state that certain internal analyses demonstrate medical causation or even that the company should have published certain data to the medical community.  It’s quite another to argue that Takeda should have provided that information to the FDA.  Particularly when the expert offering the opinion is Dr. Kessler, the former head of the FDA.

But according to the court, the “fraud on the FDA”-type opinions are fair game because “as a matter of evidence relevant to prove up Takeda’s conduct and knowledge—perhaps most particularly as to punitive damages, but, also, as to general liability—the information it had available and what use or lack thereof Takeda made of that information, is relevant.”

This is certainly not the first attempt to do an end-run around Buckman preemption.   Hopefully, Dr. Kessler does not contribute to similar hustles in the future.