Appeals court upholds Pfizer award to Kaiser health plan

A federal appeals court in Boston has upheld a lower court ruling requiring Pfizer to pay Kaiser Foundation Health Plan $142 million for alleged fraudulent marketing of the epilepsy drug Neurontin, and also let related lawsuits filed by Aetna and a self-funded employer go forward.

A jury ruled against Pfizer in 2010, after Kaiser Foundation Health Plan sought damages suffered from covered Neurontin prescriptions for conditions it did not successfully treat, including migraines, headaches and bipolar disorder.

Kaiser argued the off-label coverage was influenced by fraudulent marketing by Pfizer, which took control of Neurontin with the 2000 acquisition of Warner-Lambert and four years later paid $430 million over civil and criminal allegations of illegal marketing of the drug for non-approved conditions.

Neurontin was first developed by Warner-Lambert subsidiary Parke-Davis in the 1980s and was approved by the Food and Drug Administration in 1994. The jury in the Kaiser trial and the district court that denied Pfizer a new trial found that Parke-Davis, Warner-Lambert and Pfizer had "engaged in the fraudulent marketing of Neurontin" for treating bipolar disorder, neuropathic pain and migraines starting in the late 1990s, with direct marketing and promotion of off-label effectiveness in medical journals.

The marketing extended to doctors and payers, with Parke-Davis's marketing team listing Kaiser as second on its list of "Top 10 HMOs Targeted for Neurontin," according to court documents.

In rejecting Pfizer's appeal and upholding the award, the U.S. Court of Appeals for the First Circuit in Boston wrote that "Kaiser has met both the direct relationship and functional tests" for establishing causation. The "harm to Kaiser plainly was foreseeable," the appeals court wrote. "We reject Pfizer's core defense that there are too many steps in the causal chain between its misrepresentations and Kaiser's alleged injury."

Pfizer, the country's largest drug maker, "fraudulently marketed to physicians with the intent that those physicians would write prescriptions paid for by Kaiser...inducing a huge increase in Neurontin prescriptions for off-label uses," the court wrote.

In separate but related opinions, the appeals court allowed a lawsuit filed by Aetna and a class action filed by the Alabama-based Harden Manufacturing Corp., a self-insured employer, to proceed, after both were rejected by a lower court.

Aetna's lawsuit made allegations similar to Kaiser's, but the district court had distinguished the two on the basis that "Kaiser had much stronger evidence of misrepresentations made directly to Kaiser and reliance by Kaiser on those misrepresentations in its formulary decisions," the appeals court wrote.