As I've noted before, when a medicine is withdrawn from the market, the people who allegedly were physically injured by it are hardly the only litigants trying to put their hands in the defendant's "deep" pockets. Often, the people who took the medicine and suffered no physical harm sue for so-called "diminished value" of the medicine they took. And increasingly states are getting into the game, claiming that they would not have paid for the medicine through their Medicaid programs if they had only known what they know now.
Yesterday the MDL judge presiding over the Vioxx litigation issued his findings of fact and conclusions of law in a bench trial of the State of Louisiana's claims. The court's opinion is a strong reminder that although a state can make all sorts of claims about what it would have done, it must actually prove loss causation to prevail on its claims. Where the state cannot establish that it would have acted differently if it had different knowledge, then its claims must fail for lack of causation.
In State of Louisiana v. Merck & Co., Case No. 05-3700, Slip op. (E.D. La. June 29, 2010), Louisiana had sued on a variety of theories seeking to recover the money it spent reimbursing for Medicaid prescriptions for Vioxx -- the COX-2 pain medicine that Merck had withdrawn from the market amid allegations that it caused cardiovascular problems. The district court had granted summary judgment on the state's claims for unjust enrichment and violations of the Louisiana Unfair Trade Practices Act and the New Jersey Consumer Fraud Act. The only claim left was Louisiana's claim for redhibition.
Redhibition requires that: (1) the product was worthless or would not have been bought had plaintiff known of the alleged defect, (2) that the plaintiff did not know of the alleged defect, which existed at the time of purchase, and (3) the defendant was given the opportunity to repair. In a 40-page opinion, the district court reviewed the testimony and evidence and concluded that the state could not prove causation. Specifically, the state "did not establish at trial that: had it known the different facts about Vioxx, (a) the State could have established an exclusive formulary; (b) and the State would have established such a formulary and excluded Vioxx from it." Slip. op. at 38.
The court conducted an extensive analysis of the state's Medicaid program and observed that the state had no ability to make independent decisions about various medicines that were federally approved for much of the time-period covered in the Complaint. Moreover, once it started to act on the issue, the legislature's conduct established that it would not have adopted a formulary that would have allowed it to exclude Vioxx from payment.
The opinion also contains an extensive discussion of the scientific developments in the field of Cox-2 inhibitors, the development of the labeling, and a description of how the company that advised the state on its formulary made its decisions -- including that it did not rely on marketing materials, internal pharmaceutical company e-mails, or pharmaceutical companies' formulary dossiers to make decisions about what medicines to cover.
The decision in this case serves as a strong reminder that even states must not be excused from actually proving the basic elements of their claims, including causation.