In re AVANDIA MARKETING, SALES PRACTICES AND PRODUCTS LIABILITY LITIGATION, AVANDIA MDL Nos. 1871, 2007-MD-1871 THIS DOCUMENT RELATES TO Allied Services Division Welfare Fund
GSK UFCW Local 1776 and Participating Employers Health and Welfare Fund
GSK United Benefit Fund
MEMORANDUM OPINION AND ORDER
CYNTHIA M. RUFE, J.
Plaintiffs bring these actions against Defendant GlaxoSmithKline LLC (“GSK”) alleging RICO violations, violations of state consumer protection laws, and unjust enrichment in GSK’s marketing and sales of Avandia. These actions have been filed in the Avandia Marketing, Sales Practices and Products Liability MDL. GSK has moved to dismiss the complaints for failure to state a claim. As similar factual and legal claims are raised in the three complaints, GSK has filed a single motion to dismiss the claims raised in the three cases. The Court, therefore, addresses the adequacy of the pleadings in each of the three complaints herein.
I. FACTUAL ACKGROUND
GSK, either directly or through related companies, produces, markets and distributes oral medications to treat Type II diabetes mellitus. These medications are sold under the brand names Avandia, Avandamet and Avandaryl (collectively “Avandia”). Plaintiffs are employee welfare benefit plans and employee benefit plans as defined by the Employee Retirement Income Security Act (“ERISA”). Plaintiffs provide medical coverage, including prescription drug coverage, to their members and their members’ dependents and, along with other similarly-situated third-party payors (“TPPs”), have paid for Avandia since the Food and Drug Administration (“FDA”) approved it for sale in the United States on May 25, 1999.
The FDA approves drugs for sale when the manufacturer can establish, through well-designed, placebo-controlled clinical trials, that a drug is safe to use and effective (compared to a placebo) as a treatment for all conditions listed or suggested on the drug’s proposed label. The FDA also can direct additional research or conduct limited independent research on drug quality, safety, and effectiveness. Once the FDA approves a drug, its manufacturer or distributor can market the drug to doctors, pharmacy benefit managers, health insurance companies and plans, and state and federal agencies, but the information provided cannot be false or misleading.
TPPs generally have Pharmacy Benefit Managers (“PBMs”) prepare a formulary, a list of drugs which are approved for coverage when prescribed to the TPP’s beneficiaries. In preparing the formulary, the PBM examines research regarding a drug’s safety and efficacy, and also assesses cost-effectiveness, for the TPP. If one drug has some advantage over other competing drugs, that drug can be given a priority status on the formulary, which means that a patient will pay a lower co-payment when his or her doctor prescribes that drug. Because PBMs rely on existing research on safety and efficacy, when a company acts, as Plaintiffs allege GSK did, to conceal material information about a drug’s safety, the PBM will not have the information it needs to make an informed decision. Here, the TPPs opted to include Avandia on their formularies, sometimes at a higher preference level than competing drugs, and covered Avandia prescriptions at the favorable, formulary rate.
GSK marketed and promoted Avandia as a safe and effective treatment for Type II diabetes that would control blood sugar levels in individuals better than other established medications and thus would lower a user’s cardiovascular risk and improve overall health. Cardiovascular disease is the leading cause of death for individuals with Type II diabetes (more than 65% of diabetics will die of heart attack or stroke), so reduction of cardiovascular risk is a primary goal of any diabetes treatment.
Among other marketing tactics, many of which were directed at physicians or PBMs for TPPs, Plaintiffs allege that GSK employed “ghostwriters” to lend the appearance of independence and objectivity to scientific papers actually authored by GSK, focused on short-term studies so that significant side effects were unlikely to be revealed, and pressured a scientist into retracting statements recommending that clinical trials should be conducted to test the hypothesis that Avandia use was associated with increased heart attacks and heart-related diseases. Plaintiffs also allege that GSK knowingly made false statements to consumers, TPPs, doctors, and pharmacies, and concealed negative information regarding Avandia’s cardiovascular risks.
TPPs and PBMs relied, in part, on GSK’s representations about the safety and efficacy of Avandia, including promises of better cardiovascular outcomes compared with other diabetes drugs, when deciding whether and how to include Avandia on their formularies. Plaintiffs further allege that GSK knew or should have known that its misrepresentations would harm TPPs, as the TPPs paid a significant premium for a drug which they later learned was associated with serious health risks.
Since at least 1999, GSK has been aware of, and the FDA has been monitoring, clinical trials and reports of heart-related adverse events associated with Avandia use. Early on, Plaintiffs allege, it was clear that certain adverse events, such as fluid retention, edema, and congestive heart failure, were associated with Avandia use. In 2001, the FDA asked GSK to add a warning to the prescription label, cautioning doctors that use of Avandia could cause fluid retention. The FDA also issued a warning letter to GSK, instructing the company to stop denying or downplaying the risk of heart attacks and heart diseases in its marketing. In April 2006, the FDA required GSK to add a warning based upon data suggesting a potential increased incidence of heart attack and heart-related chest pain in some patients taking Avandia.
On May 21, 2007, Steven E. Nissen, M.D. and Kathy Wolski, M.P.H. published a paper in The New England Journal of Medicine documenting their meta-analysis of 42 clinical trials and other relevant published and unpublished studies of Avandia, all of which were trials or studies looking at the long-term effects of Avandia use (more than 24 weeks). The Nissen study reported that, although Avandia does lower blood sugar levels, Avandia is also associated with a statistically significant increase in the risk of myocardial infarction (specifically, a 43% increased risk) and a borderline-significant increase in the risk of death from heart-related diseases compared to competing diabetes medications. Other studies reached similar conclusions. Scientists have suggested possible mechanisms or contributing factors for this increased cardiac risk, noting in particular the elevated LDL cholesterol levels and apoB protein levels found in Avandia users, compared with those taking placebos.
According to a 2007 Senate Report, GSK received a leaked draft of the Nissen study before it was published,  the results of which were shared with at least 40 GSK executives, including the CEO, the head of research, and the Vice President of Corporate Media Relations. Immediately after the Nissen study was published, GSK responded with a marketing campaign to increase consumer confidence in Avandia, including the publishing of full-page advertisements in more than a dozen United States newspapers on June 5, 2007, as well as the release of promotional materials directed at physician prescribers. The campaign focused on certain key messages. Despite acknowledging, in internal documents, that the results of the Nissen study were similar to the results of GSK’s own findings, GSK publically challenged the methodology of and the conclusions reached by the Nissen study. GSK pointed to the company’s own RECORD study,  characterizing it as having employed a “scientifically rigorous way to examine the safety and benefits” of Avandia and as being reassuring with regard to heart-related risks. However, GSK knew that the RECORD study’s results were completely compatible with the Nissen study’s findings, that the RECORD study did not take into account mitigating factors such as the use of cholesterol-lowering medications with Avandia, and that the study was not designed with sufficient power to answer questions regarding cardiovascular risks. In short, all three complaints allege that through its public statements and marketing efforts, GSK engaged in deceptive behavior with regard to the safety of Avandia, even after the Nissen study was published, and it took steps to avoid detection of their deceptive behavior.
On May 23, 2007, the FDA recommended that GSK add a “black box” warning to its product label to more prominently address the risk of congestive heart failure (not heart attack— which was the risk at issue in the Nissen study) associated with the use of Avandia. In June 2007, the United States House of Representatives held a hearing to examine how the FDA had assessed the safety of Avandia. In response, two FDA advisory panels met to evaluate Avandia in July 2007. In November 2007, the FDA required GSK to add a black box warning regarding the possible increased risk of heart attacks and other ischemic events.
The complaint in Civil Action No. 10-5419 alleges that in the fall of 2007, the United States Department of Veteran’s Affairs, followed by PBMs Prime Therapeutics and HealthTrans, and health insurers such as Kaiser Permanente and government providers, dropped Avandia from their formularies.
In February 2010, senior members of the United States Senate published a Senate Report that summarized a Senate investigation and concluded that GSK was aware of the possibility that Avandia use was correlated with increased cardiac risks years before the risks became publicly known, and had failed to timely notify the FDA and the public of the risk despite an arguable duty to do so. That report also noted that in order to contradict the findings of Dr. Nissen’s study, GSK executives had engaged in certain practices designed to minimize or misrepresent findings that Avandia use was associated with greater cardiovascular risk. For example, GSK issued assurances that RECORD study’s results contradicted the Nissen study, although GSK knew the RECORD study was not designed to answer questions about cardiovascular safety, and intimidated certain independent researchers in an attempt to prevent them from voicing concerns about Avandia’s risks.
In July 2010, an FDA advisory panel met to review scientific data on Avandia. Of the thirty-three panel members, eighteen felt there were significant safety concerns, twelve recommended that it be taken off the market, ten recommended that the black box warning should be enhanced and additional restrictions on use should be implemented, and seven members voted for enhanced warnings without restriction on prescriptions. Only three members voted for Avandia to continue to be sold with the existing warnings, and one member abstained. Around that time, the FDA placed on hold an ongoing study comparing Avandia and a competing drug, Actos (the TIDE study). Ultimately, in September 2010, the FDA announced significant restrictions on access to Avandia, allowing its continued use by patients already taking the drug only after their doctors reviewed with them statements describing the cardiovascular risks associated with Avandia,  and limiting new prescriptions to patients whose blood sugar was inadequately controlled with other medications and who decided, in consultation with their physician, not to take Actos. Around the same time, the European Medicines Agency suspended marketing authorization for Avandia in Europe, and advised physicians to transition patients to other treatment options.
Since its introduction in 1999, more than one million individuals in the United States have used Avandia on a regular basis. A monthly supply sold for between $90 and $220, with the TPPs typically paying between $135 and $140 per month per prescription, and patient co-pays covering the balance. In contrast, the typical cost for metformin, another medication used to treat Type II diabetes, was $45-55 for a monthly supply, with TPPs typically paying $40-50 per month per prescription. Although Plaintiffs also propose Actos as a safer alternative to Avandia, the complaints do not indicate the amount the TPPs typically pay for Actos prescriptions.
Plaintiffs seek to litigate their claims as class actions, filing on behalf of themselves and other health insurance companies, TPPs, health maintenance organizations (HMOs), health and welfare benefit plans, and other health benefit providers which paid for Avandia after May 25, 1999. Plaintiffs assert violations of RICO,  based on acts of mail fraud, wire fraud, tampering with witnesses, and use of interstate facilities to conduct unlawful activity. Plaintiffs also assert that GSK violated the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL),  and other state consumer protection and unfair and deceptive practices laws.Finally, Plaintiffs assert claims for unjust enrichment. They seek both monetary damages and equitable relief.
II. Standard of Review
Pursuant to Federal Rule of Civil Procedure 12(b)(6), dismissal of a complaint for failure to state a claim upon which relief can be granted is appropriate where a plaintiff’s “plain statement” lacks enough substance to show that he is entitled to relief. In determining whether a motion to dismiss should be granted, the court must consider only those facts alleged in the complaint, accepting the allegations as true and drawing all logical inferences in favor of the non-moving party. Courts are not, however, bound to accept as true legal conclusions couched as factual allegations. Something more than a mere possibility of a claim must be alleged; rather plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.”The complaint must set forth “direct or inferential allegations respecting all the material elements necessary to sustain recovery under some viable legal theory.” ...