ENHANCE RICO Class Action Gathers Steam. . . .

Schering's lawyers (at Dechert LLP) had earlier filed motions to dismiss the portions of the Vytorin/Zetia Marketing, Sales Practices and Products Liability Litigation, formally captured under Polk v. Schering-Plough, et al. (Case No. 08-285), by suggesting that, among other matters, the FDA's jurisdiction forecloses RICO actions -- that only the FDA may bring such claims. Poppy-cock. So now, with much precedent in tow, the plaintiffs' lawyers have formally pled so. Let's read along, shall we?

. . . .[Schering-Plough's] argument about the FDA’s primacy in regulation of drug advertising (Br. at 23-26) rests entirely on their baseless assertion that the Complaint merely disguises violations of the Food Drug & Cosmetic Act of 1938, 52 Stat. 1040, 1042, 21 U.S.C. § 301 et seq. (“FDCA”), as civil RICO claims. Not only are Defendants wrong, but no court has ever invoked FDA “primacy” as a basis to dismiss a RICO claim based on predicate acts of mail and wire fraud involving suppression of material information and misrepresentations.

Here, the Complaint describes a scheme to suppress information, including the ENHANCE study results, bearing on the purported efficacy of Vytorin and Zetia. It does not allege FDCA violations as predicate acts or claims addressing the FDA’s regulation of prescription drugs. Rather, the RICO claim involves predicate acts of mail and wire fraud in furtherance of Defendants’ scheme to suppress material information. Defendants do not challenge the sufficiency of the pleading of those predicate acts. At this stage, those allegations must be accepted as true. . . .

Defendants ignore the numerous precedents upholding RICO claims alleging that pharmaceutical companies engaged in a pattern of racketeering activity involving fraudulent marketing of drugs through acts of mail and wire fraud. For example, in In re Synthroid Mktg. Litig., 188 F.R.D. 287, 289-90 (N.D. Ill. 1999), and 188 F.R.D. 295, 299-300 (N.D. Ill. 1999), the court certified a RICO class action where consumers alleged that they had paid increased prices for Synthroid because defendants, through predicate acts of mail and wire fraud, had suppressed a relevant medical study and falsely represented that other drugs were not Synthroid’s bioequivalent. Similarly, in In re Zyprexa Prods. Liab. Litig., 493 F. Supp. 2d 571, 574 (E.D.N.Y. 2007), the court upheld RICO claims alleging that defendants had misrepresented the safety and efficacy of the anti-psychotic drug Zyprexa via mail and wire fraud. And in In re Lupron Mktg. & Sales Practices Litig., 295 F. Supp. 2d 148, 167-68 & n.18 (D. Mass. 2003), the court held that the defendants’ fraudulent promotion of the cancer drug at issue was actionable under the mail and wire fraud statutes. . . .

The cases that Defendants cite (Br. at 24-25) do not suggest that Congress intended to preclude RICO claims alleging predicate acts of mail and wire fraud as a means to suppress information or convey false messages about prescription drugs. The alleged predicate acts in those cases were direct violations of the FDCA or other statutes vesting regulatory authority in a federal agency.

The Third Circuit has recognized that concealment of material facts by means of the mails or wires constitutes mail and wire fraud. United States v. Olatunji, 872 F.2d 1161, 1167 (3d Cir. 1989); accord United States v. Bryant, 556 F. Supp. 2d 378, 431 (D.N.J. 2008). That the FDCA creates no private right of action (Br. at 24) is irrelevant. Defendants cite no case in which similar allegations have been dismissed because of the FDCA. . . .

RICO, by its very design, reaches many of the same areas as do other statutes. Indeed, overlap is inherent in its scheme. See 18 U.S.C. § 1961; cf. Grove Fresh Distrib., Inc. v. Flavor Fresh Foods, Inc., 720 F. Supp. 714, 715-16 (N.D. Ill. 1989) (Lanham Act claim not an attempt to circumvent FDCA, where both FDCA and Lanham Act prohibited alleged misconduct).

Even assuming arguendo that there were an irreconcilable conflict between the FDCA and RICO, that would not suggest a repeal by implication because it is the more recent statute that normally controls. See Watt v. Alaska, 451 U.S. 259, 266 (1981). RICO was adopted more than thirty-two years after the FDCA. . . .

And so it would seem that the RICO counts in this putative class action complaint will move forward, inexorably toward a trial on the merits.

And that, coupled to the whiff of evidence that, while at the helm over at Pharmacia, about eight years ago, a prior Hassan- and Cox-led allegedly fraudulent truncated publication, and misleading partial disclosure of the Celebrex CLASS study results caused a securities fraud -- it will all begin to look very much like RICO repeated "pattern" activity -- trebling the potential damages, and very-likely ending two careers. We'll see.