The Verdict: Kaiser v. Pfizer, Inc. - a Racketeer Influenced and Corrupt Organzation?

A few weeks ago I attended my first Town Meeting - in Friendship, Maine.  Rather than the contemplative Quaker Meeting atmosphere the Town's name suggests, it had the tension of the Obama Health Care Summit, as neighbors raised their hands to vote Yea or Nay on on whether to give the Harbor Master a raise.


Juries are like that.  After face to face deliberation, under oath, verdicts are announced in open court, with boxes checked, and figures written by hand (not by mouse-clicks), over the foreman's signature, with each juror standing to affirm Yes, this is my verdict.


In this case on March 25 it was a $47 million verdict in favor of Kaiser Foundation - one of the nation's premier health care delivery organizations - and against the  Pfizer, Inc., which calls itself "the world's largest research-based pharmaceutical company".   The drug company is, the jury declared, a corrupt organization.  Under RICO the verdict is subject to trebling. That is the judgment of the community.  That is what we mean when we say, like Justice Scalia, that the jury is the "spinal column" of democracy.  [Neder v. United States, 527 U.S. 1, 30 (1999)]  Read the full verdict HERE



Off-Label, Ineffective
According to plaintiffs co-counsel Lieff Cabraser:

At the trial, Kaiser Foundation Health Plan Inc. and Kaiser Foundation Hospitals (collectively Kaiser) presented evidence that Pfizer knowingly marketed Neurontin for unapproved uses without proof that it was effective. Kaiser said it was misled into believing migraines and bipolar disorder were among the conditions that could be treated effectively with Neurontin, which was approved by the FDA to treat epilepsy.

Kaiser filed suit  under RICO (the Racketeer Influenced and Corrupt Organization Act), according to a report in From the Jury:
"A Boston federal jury ordered Pfizer to pay Kaiser Foundation $47 million for false marketing of its drug neurontin.  Under RICO the verdict is trebled to $142 million.
Kaiser sued Pfizer in the District of Massachusetts, where the Neurontin multidistrict ligation is centralized, alleging that off-label marketing of Neurontin caused it to pay for a drug that was not approved for or effective in treating certain conditions.
Plaintiff experts included former Food and Drug Administration Commissioner David Kessler and David Franklin. Franklin was a former physician liaison for Warner-Lambert, the original Neurontin manufacturer, who filed a False Claims Act case against the company, resulting in a 2004 guilty plea and a $430 million settlement that, in turn, sparked the MDL litigation."

The trial began Feb. 22, and the jury began deliberating March 24. Judge Patti B. Saris presided.
In Re: Neurontin Marketing, Sales Practices, and Products Liability Litigation, MDL Docket No. 1629, No. 04-10981; Guardian Life Insurance Company of America v. Pfizer, Inc., et al., Aetna, Inc., v. Pfizer, Inc., No. 04-10739, D. Mass.

DOJ's RICO Win Against Tobacco

The Justice Department has won a big victory in the U.S. Court of Appeals for the D. C. Circuit. In U.S.A. v. Philip Morris et al. the court opinion upheld the 1,742 page opinion by District Judge Gladys Kessler finding the defendant tobacco companies liable under the federal Racketeer Influenced and Corrupt Organizations Act. (RICO) Some modifications were made regarding remedies.

The manufacturers and the Tobacco Council appealed from a judgment that they are "liable for conducting the affairs of their joint enterprise through a pattern of mail and wire fraud in a scheme to deceive American consumers." As Judge Jed Rakoff once remarked of Federal prosecutors mail fraud is "our Stradivarius". It was played well here but one would pick up a 1,742 page set of findings of fact about as slowly as one would a Stradivarius.

Fortunately there is an alternative. The findings have been extracted and aesthe他ically presented by Mike Freiberg, et al. It is a product of William Mitchell Law School's Tobacco Control Legal Consortium: The Verdict Is In: Findings from United States v. Philip Morris, The Hazards of Smoking (2006). It is available here from SSRN.

The headline is the conclusion:

4034. The foregoing Findings of Fact demonstrate that, over the course of approximately fifty years, different Defendants, at different times, took the following actions in order to maintain their public positions on smoking and disease-related issues, nicotine addiction, nicotine manipulation, and low tar cigarettes, in order to protect themselves from smoking and health related claims in litigation, and in order to avoid regulation which they viewed as harmful: they suppressed, concealed, and terminated scientific research; they destroyed documents including scientific reports and studies; and they repeatedly and intentionally improperly asserted the attorney-client and work product privileges over many thousands of documents (not just pages) to thwart disclosure to plaintiffs in smoking and health related litigation and to federal regulatory agencies, and to shield those documents from the harsh light of day.

Of particular note is that although the Justice Department attorneys attacked the role of tobacco defense attorneys (Shook Hardy, et al. prominent among them) (see decade-old reports here and here) the lawyers and law firms were not made defendants. Nor were ethics complaints ever filed against them. Statute of limitations presumably bar action at this point, leaving the story to historians' inquiry.

The decision upholding the findings should provide support for HR 1256 - a bill to bring tobacco marketing within the jurisdiction of the FDA, a Clinton Administration regulatory effort derailed by the Supreme Court in FDA v. Brown & Williamson (2000).