(Aaron Couture)

A group of workers’ compensation insurers that alleged Cephalon took advantage of the laws providing for full prescription coverage to those injured on the job had their fraud claims dismissed Monday in federal court in Philadelphia.

U.S. District Judge Mary A. McLaughlin of the Eastern District of Pennsylvania ruled that plaintiffs Travelers Indemnity Co., St. Paul Fire and Marine Insurance Co. and the Standard Fire Insurance Co. showed no causal connection between any alleged off-label marketing by Cephalon and any damages the insurers allegedly faced.

The lawsuit, Travelers Indemnity v. Cephalon, centered on two drugs made to treat “breakthrough” cancer pain, or the pain cancer patients face intermittently on top of being on other opioids to treat chronic pain. The drugs were Actiq and Fentora. The labels on those drugs are very explicit, according to McLaughlin’s opinion, that they should not be used to treat people who are not already on other opioids because they could have serious side effects or cause addiction.

As part of the U.S. Food and Drug Administration’s approval for Actiq, Cephalon was charged with monitoring the prescriptions of the drug and initiating an education campaign if more than 15 percent of the prescriptions were for off-label uses. The Fentora warning label states that the drug should not be prescribed for management of acute or post-operative pain.

The plaintiffs alleged Cephalon, now owned by Teva Pharmaceuticals, “aggressively” promoted the drug to non-cancer doctors for treatment of non-cancer patients, as well as to doctors who treated injured workers.

“The plaintiffs argue that Cephalon targeted these doctors because patients covered by workers’ compensation enjoy full prescription reimbursement, and because state laws limit the ability of workers’ compensation insurers to restrict the drugs they will cover,” McLaughlin said.

The insurers argued they spent $15 million for more than 8,400 Actiq prescriptions between 2004 and 2011 and $4.5 million for Fentora prescriptions between 2006 and the present, McLaughlin said.

McLaughlin said the insurers’ claims fall into two categories—that they did not get what they paid for because their claimants were prescribed drugs that were allegedly unsafe or ineffective, and that they paid for more expensive drugs.

McLaughlin said the insurers didn’t provide any evidence, however, that the drugs were ineffective for their claimants or that they failed to relieve the claimants’ pain. They also didn’t show how the insurers, as third-party payers, faced increased economic harm from the “mere risk” of claimants taking the drug, the judge said.

As to the second claim, McLaughlin said a party isn’t injured simply because it paid for a more expensive drug.

“If this were so, then any successful marketing campaign—no matter how truthful—that induced a consumer to purchase the more expensive of competing products would cause ‘economic injury,’” McLaughlin said.

It isn’t enough to show that a plaintiff was induced to buy more expensive drugs, McLaughlin said, pointing out a plaintiff must also show the drug was prescribed or purchased in reliance on untrue statements or misrepresentations about the drug’s attributes.

McLaughlin pointed to cases involving Avandia and other drugs in which the defendants were alleged to have promoted their drugs as safer and more effective than a cheaper alternative while concealing clinical trial data that showed the drugs were less safe or no more effective. The judge said the insurers suing Cephalon did not show how their medical expenses would have been “drastically reduced” absent Cephalon’s off-label marketing campaign. McLaughlin said they didn’t mention in the complaint any cheaper, alternative drug that doctors could have prescribed.

While McLaughlin found the insurers didn’t plead a cognizable claim that would confer standing, she still addressed their claims for intentional and negligent misrepresentation, violation of consumer protection laws, unjust enrichment and a request that Cephalon inform all doctors to whom it marketed off-label uses of the drugs that the drugs were inappropriate and highly dangerous for non-cancer patients.

McLaughlin, who determined the insurers’ misrepresentation claims should be viewed under the heightened pleading standard for fraud allegations, said the insurers alleged Cephalon’s marketing campaign was intentionally deceptive.

“But allegations that at some point in the last 13 years unidentified members of the defendant’s sales team made unspecified false statements or misrepresentations about Actiq and Fentora to unidentified doctors somewhere in the United States are insufficient” under the pleading standards, McLaughlin said.

As to the consumer protection claims, McLaughlin said the insurers failed to allege in which states claimants had their prescriptions for Actiq and Fentora filled or how the insurers suffered economic injury. Because McLaughlin found the insurers hadn’t pleaded any cognizable injury, she found they hadn’t shown why Cephalon was unjustly enriched.

McLaughlin similarly rejected the request for a mandatory injunction forcing Cephalon to inform doctors of the inappropriateness of prescribing the drugs off-label.

McLaughlin also rejected any claims against Teva.

“The fact that Teva USA and TEVA Ltd. may have profited from sales of Actiq and Fentora is simply insufficient to establish either control of Cephalon’s activities or actual wrongdoing by these corporate entities,” McLaughlin said.

James J. Reardon Jr. and Katherine Ann Scanlon of Reardon Scanlon Vodola Barnes in Connecticut represented the insurers. Cephalon was represented by attorneys in the Philadelphia and Miami offices of Morgan, Lewis & Bockius.

Gina Passarella can be contacted at 215-557-2494 or at gpassarella@alm.com. Follow her on Twitter @GPassarellaTLI.

(Copies of the 41-page opinion in Travelers Indemnity v. Cephalon, PICS No. 14-1106, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information. Account holders can use our online form to order.) •