Class certification was denied — again — in litigation brought by plaintiffs who allege a drug maker misstated the likelihood of withdrawal symptoms in use of a prescription medication. See Saavedra v. Eli Lilly & Co., No. 12-09366 (C.D. Calif., 7/21/15).
Plaintiffs originally moved to certify four classes under the state consumer fraud acts of Missouri, New York, Massachusetts and California. The court rejected those proposed classes, noting plaintiffs’ “unusual” theory of injury and damages. Plaintiffs did not allege they suffered the alleged withdrawal effects, or that they were injured by being overcharged. They asserted instead that they were harmed because they received a product that had less value than the class expected it to have. They got a product with less utility, defined as the benefit consumers believe they will get by using the product. This flawed model looked only to the demand side of the market because it focused on a refund tied to consumers out of pocket costs; yet, the prescription drug market is quintessentially inefficient and the relationship between price and value is “severed.” In turn, causation and injury could not be shown on a class-wide basis, and common issues did not predominate.
Plaintiffs tried again, with a proposal to certify New York and Massachusetts classes. This effort, too, raised serious issue of predominance. Plaintiffs claimed to seek only the minimum statutory damages provided under the laws of the two states, Thus, they sought to avoid the problems of their original damages model. But plaintiffs still had to show that each class member was injured as a result of defendant’s alleged misleading act — that the act caused the loss. Plaintiffs could only show that harm by alleging the acts caused them to pay the wrong price, too much, a price premium, for the drug; this is either a variant on the rejected fraud-on-the-market theory or a theory that calls for a subjective individual inquiry into what each class member got and paid for. Because the prescription drug market is not efficient (for example, it is complicated by the role of insurance and co-payments), plaintiffs cannot rely on price to show injury in this way. Pricing affected different class members to varying degrees because of different health insurance and the different terms of benefits that can accompany it. Even if, under the new theory, plaintiffs did not need to quantify the subjective injury each felt to quantify damages, that didn’t change the fact that plaintiffs would need to show that same thing to establish causation and fact of injury. This could not be done on a class-wide basis.
Here, the class period spanned a decade and included class members who paid different prices for the drug and had different insurance. Different class members would have been affected to different degrees. And use of a defendant’s internal marketing or pricing documents wouldn’t bridge the gap: the suggestion that a lower level of withdrawal symptoms might lead some consumers to pay more for a drug does not prove that a premium was actually charged, that the price charged was in excess of the drug’s true value, or that prices negotiated with third-party payers were directly and fully passed on to the class.
So, again, the attempted showing of predominance failed.