Pharmaceutical Phonies: The Entanglement of Fraud, Third-Party Payors, and Proximate Cause in Civil RICO Cases

This Case Note analyzes the Ninth Circuit’s approach to the issue of whether patients and doctors destroy proximate cause in cases where third-party payors (“TPPs”) sue drug companies for fraudulently misrepresenting the health risks associated with their products. In the 2019 case Painters & Allied Trades District Council 82 Health Care Fund v. Takeda Pharmaceuticals Co., the Ninth Circuit held that TPPs suing to recover damages from a pharmaceutical company for the fraudulent omission of a drug’s health risks could satisfy the proximate cause requirement for a civil cause of action under § 1964(c) of the Racketeer Influenced and Corrupt Organizations Act (“RICO”). The Ninth Circuit’s decision is satisfactory in that it faithfully (1) observes the Supreme Court’s direct relation test and (2) follows precedent establishing that a plaintiff satisfies the proximate cause requirement when their alleged injury is a foreseeable and natural consequence of the defendant’s fraud. As a matter of public policy, this holding is positive because it hamstrings pharmaceutical companies’ ability to escape liability by hiding behind patients, doctors, and other actors inhabiting the chain of causation. Additionally, the Ninth Circuit’s holding is positive in that it adheres to Supreme Court precedent and helps deter future injurious conduct. In support of these assertions, this Case Note begins by examining the factual background and procedural posture of Painters. The Note continues by analyzing the majority’s opinion with respect to related case law and closes by suggesting ways to address some of the potential problems that could stem from the Ninth Circuit’s decision.

A Game Theoretic Analysis of Competition Between Vaccine and Drug Companies during Disease Contraction and Recovery

Background Infectious diseases such as COVID-19 and HIV/AIDS are behaviorally challenging for persons, vaccine and drug companies, and donors. Methods In 3 linked games in which a disease may or may not be contracted, [Formula: see text] persons choose risky or safe behavior (game 1). Two vaccine companies (game 2) and 2 drug companies (game 3) choose whether to develop vaccines and drugs. Each person chooses whether to buy 1 vaccine (if no disease contraction) or 1 drug (if disease contraction). A donor subsidizes vaccine and drug developments and purchases. Nature probabilistically chooses disease contraction, recovery versus death with and without each drug, and whether vaccines and drugs are developed successfully. COVID-19 data are used for parameter estimation. Results Each person chooses risky behavior if its utility outweighs safe behavior, accounting for nature’s probability of disease contraction which depends on how many are vaccinated. Each person buys a vaccine or drug if the companies produce them and if their utilities (accounting for side effects and virus mutation) outweigh the costs, which may be subsidized by a sponsor. Discussion Drug purchases depend on nature’s recovery probability exceeding the probability in the absence of a drug. Each company develops and produces a vaccine or drug if nature’s probability of successful development is high, if sufficiently many persons buy the vaccine or drug at a sales price that sufficiently exceeds the production price, and if the donor sponsors. Conclusion Accounting for all players’ interlinked decisions allowing 14 outcomes, which is challenging without a game theoretic analysis, the donor maximizes all persons’ expected utilities at the societal level to adjust how persons’ purchases and the companies’ development and production are subsidized. Highlights A game theoretic approach can help explain the production decisions of vaccine and drug companies, and the decisions of persons and a donor, impacted by Nature. In 3 linked games, N persons choose risky behavior if its utility outweighs safe behavior. Vaccine and drug companies develop vaccines and drugs sponsored by a donor if profitable, allowing 14 outcomes.

Putting Theory into Practice at BridgeBio

Many drug companies spring from scientific discoveries made in a laboratory. BridgeBio Pharma, though, owes its genesis to the musings of a financial theorist.

Brand drug companies impeding generic drug company access to product samples: Estimated prevalence and impact on drug costs

Some brand drug companies have stymied attempts by generic drug companies to obtain samples of brand drugs needed to develop and gain regulatory approval for their generic products. This conduct, which has been reported in both the US and Canada, raises drug costs to drug plans and other payors and can lessen competition. The literature to date contains little empirical evidence on the prevalence of this conduct, the attendant effects on generic drug market launches and costs incurred by drug payors. This paper addresses these questions for Canada, using data on the drug development projects undertaken by the members of the Canadian Generic Pharmaceutical Association over the period 2015–2019. I found that about 16% of generic drug development projects were delayed due to originator firm efforts to impede access to samples of their drugs. The median generic drug launch delay (among affected drugs) attributable to the challenged conduct was 6 months. The additional costs to drug payors from the resulting delays in generic drug launches over the analysis period was in the order of $284 million, or $57 million annually. This study did not explore the additional generic drug development costs attributable to the challenged conduct.

A Legislative/Legal History of Prescription Drug Advertising and Promotion Regulation

Purpose: The communication by pharmaceutical companies of promotional messages about their products has long been controversial, but deemed to be necessary by the pharmaceutical industry so that health care professionals and in some cases patients/consumers can be made aware of the latest developments through the communication vehicles they are accustomed to seeing – in the case of health care professionals, through medical advertising, direct mail, visits by company representatives, and attendance at medical meetings, and in case of patients, through the news media and television advertising. On the other hand, critics argue that such promotion, which sometimes reduces complex medical issues to advertising slogans, is inappropriate for products intended to treat and cure diseases, and that health care professionals should learn about new products from peer-reviewed medical literature. Consequently, advertising, and promotional programs are heavily regulated by the U.S. Food and Drug Administration (FDA). However, the laws themselves raise constitutional issues of infringement on free speech. Over the past few years, a number of lawsuits have been decided that help clarify the role of the FDA and the extent of its authority in regulating what companies or their employees say about their products. These court decisions are important because they help define how health care professionals and patients/consumers receive medical information. Methods: This overview is intended to identify, in non-technical language, some of the more controversial and challenging issues involved in the FDA’s efforts to regulate marketing communications by drug companies and how the courts view them. Results: The recent lawsuits often involve complex and far-reaching legal issues. But when examined in toto, as this paper does, they have reflected a view by the courts that truthful and non-misleading statements by drug companies about their products can be legally communicated even when the medical information is not formally approved by the FDA and included in the FDA-approved labeling. The lawsuits thus have led to an environment in which the FDA continues to oversee with great fervor the activities of drug companies in communicating medical information but at the same time having some flexibility in keeping health care professionals and patients up to date with th latest information about medical research and new therapeutic products. Conclusion: How pharmaceutical products are marketed has been deemed by the U.S. Congress to be important enough to need to be subject to federal regulation. The issues create a tension between the need for medical information to be accurate and balanced, and the guarantees of free speech. This review provides an important perspective on how this tension is being resolved, even as dramatic advances in both medical products and technology create new challenges.

Ethics of Outsourcing Drug Trials

With rising costs of drug testing and more stringent requirements, Western countries have been increasingly outsourcing their drug trials. While such actions make sense from a cost-benefit point of view, can we conclude the same from a marketing-ethics perspective? Are these lesser-developed countries being held to the same ethical standards and practices as expected in the Western countries? Are the drug companies' actions somehow influencing the research participants' decision to partake in such trials? The author applies the theory of reasoned action and ethical marketing underpinnings to develop relevant propositions. Consequently, drug testing companies, research participants, and marketing agencies can utilize these propositions to investigate whether more rigorous oversight is required to protect research participants.

A hidden web of policy influence: The pharmaceutical industry’s engagement with UK’s All-Party Parliamentary Groups

Our objective was to examine conflicts of interest between the UK’s health-focused All-Party Parliamentary Groups (APPGs) and the pharmaceutical industry between 2012 and 2018. APPGs are informal cross-party groups revolving around a particular topic run by and for Members of the UK’s Houses of Commons and Lords. They facilitate engagement between parliamentarians and external organisations, disseminate knowledge, and generate debate through meetings, publications, and events. We identified APPGs focusing on physical or mental health, wellbeing, health care, or treatment and extracted details of their payments from external donors disclosed on the Register for All-Party Parliamentary Groups. We identified all donors which were pharmaceutical companies and pharmaceutical industry-funded patient organisations. We established that sixteen of 146 (11%) health-related APPGs had conflicts of interest indicated by reporting payments from thirty-five pharmaceutical companies worth £1,211,345.81 (16.6% of the £7,283,414.90 received by all health-related APPGs). Two APPGs (Health and Cancer) received more than half of the total value provided by drug companies. Fifty APPGs also had received payments from patient organisations with conflicts of interest, indicated by reporting 304 payments worth £986,054.94 from 57 (of 84) patient organisations which had received £27,883,556.3 from pharmaceutical companies across the same period. In total, drug companies and drug industry-funded patient organisations provided a combined total of £2,197,400.75 (30.2% of all funding received by health-related APPGs) and 468 (of 1,177–39.7%) payments to 58 (of 146–39.7%) health-related APPGs, with the APPG for Cancer receiving the most funding. In conclusion, we found evidence of conflicts of interests through APPGs receiving substantial income from pharmaceutical companies. Policy influence exerted by the pharmaceutical industry needs to be examined holistically, with an emphasis on relationships between actors potentially playing part in its lobbying campaigns. We also suggest ways of improving transparency of payment reporting by APPGs and pharmaceutical companies.