This article discusses whether New York municipalities can bring claims against the manufacturers and distributors of opioids to recover money spent on health care and related costs. Part I provides relevant factual background. Part II provides a brief overview of the proposed claims that the municipalities could assert.<\/a>[1]<\/strong><\/a>\u00a0Part III provides examples of similar cases that have reached favorable outcomes.<\/p>\n During the 1990s, manufacturers had the ability to produce large quantities of opioids cheaply, but the market was small and focused on treating cancer patients. To expand the market to cover non-malignant diseases, like back pain and arthritis, manufacturers developed a plan to persuade patients to request, doctors to write, and health care payors, like the municipalities, to purchase more opioid prescriptions. With the help of consultants, manufacturers created the perception of a scientific exchange in medical literature by commissioning studies concluding that long-term use of opioids for chronic pain is appropriate. Because the FDA generally does not review materials that promote the use of a type of drug, but do not identify any particular drug by name, to avoid regulatory scrutiny, manufacturers created a network of front groups to encourage the treatment of chronic pain using the opioid class of drugs.<\/p>\n For example, manufacturers promoted a small circle of doctors\u2014referred to as key opinion leaders (KOLs)\u2014as experts on opioid use. The KOLs wrote books and scientific articles and gave speeches and continuing medical education programs to support the long-term use of opioids. They also served on committees that developed treatment guidelines encouraging the use of opioids for chronic pain and on the boards of pro-opioid advocacy groups and societies. In return for supporting manufacturers\u2019 pro-opioid message, the KOLs received recognition, research funding, and publishing opportunities, which, in turn, increased their profile and allowed them to exert even more influence in the medical community.<\/p>\n In addition, manufacturers marketed opioids to specific patient populations and to prescribers through one-on-one visits with doctors and group events with featured speakers. The manufacturers\u2019 marketing materials were full of egregious misrepresentations and omissions. For example, they (1) incorrectly stated that opioids improve function, (2) concealed the link between long-term opioid use and addiction, (3) falsely stated that the risk of addiction can be managed, (4) deceptively described the signs of addiction as \u201cpseudo-addiction,\u201d (5) falsely stated that withdrawal from opioids is easily managed, (6) misrepresented the dangers from higher doses of opioids, and (7) falsely understated the adverse effects of opioids.<\/p>\n Notably, the manufacturers did not act alone. Distributors also share some of the blame. Under both federal and state law, distributors have a duty to report suspicious orders of opioids. But they have shirked their duty despite overwhelming evidence that opioids were being misused. Several distributors have already admitted wrongdoing and paid substantial penalties.<\/p>\n As a result of opioid manufacturers\u2019 fraudulent marketing and the distributors turning a blind eye, the municipalities, which provide medical coverage to their employees, were forced to pay for prescriptions that never should have been written in the first place. The municipalities also incurred secondary costs related to addiction (e.g., drug rehabilitation services and increased law enforcement). This lawsuit will seek to recover these expenses.<\/p>\n There are several causes of action that the municipalities could bring to attempt to recover their damages resulting from the opioid epidemic.<\/p>\n First<\/em>, the municipalities could bring negligent marketing claims against the manufacturers based on their misleading promotional activities. In his comprehensive article on the role of litigation in fighting the opioid epidemic, Prof. Richard C. Ausness opined that negligent marketing is one of the \u201cmost promising liability theories.\u201d \u201cThe Role of Litigation in the Fight Against Prescription Drug Abuse,\u201d 116 W. Va. L. Rev. 1117, 1148 (2014). \u201cThe doctrine of negligent marketing rests on the notion that product sellers should not pursue marketing strategies that increase the risk that their products will be purchased by persons who are likely to injure themselves or to injure others.\u201d Id. at 1127. \u201cNegligent marketing claims can be based on product design, advertising or promotional activities[.]\u201d Id. While the municipalities would have colorable claims that the opioid manufacturers \u201cengaged in each of these forms of negligent marketing,\u201d id., the argument for negligent promotion is particularly strong. As provided above, the manufacturers used a variety of illicit marketing techniques to promote opioids for long-term pain management in the treatment of non-life-threatening diseases.<\/p>\n Second<\/em>, using the Controlled Substances Act (which has onerous reporting requirements for distributors) to establish the appropriate standard of care, the municipalities could bring straight negligence claims against the distributors for failing to report the suspicious orders of opioids they were delivering.<\/p>\n Third<\/em>, opioid manufacturer\u2019s misleading marketing tactics also \u201cfit the description of intentional or fraudulent misrepresentation.\u201d Id. at 1128. \u201cThe elements of a fraud cause of action consist of a misrepresentation or a material omission of fact which was false and known to be false by the defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury.\u201d\u00a0Pasternack v. Lab. Corp. of Am. Holdings<\/em>, 27 N.Y.3d 817, 827 (N.Y. 2016) (quotation marks and text alterations omitted). According to Professor Ausness, \u201c[t]he statements and assurances made by [manufacturers] \u2026 arguably satisfy the first [two] elements.\u201d 116 W. Va. L. Rev. at 1129. \u201cWhether a plaintiff could prove the [justifiable reliance] element would depend upon how familiar the target physician was with opioids in general and [the specific drug] in particular.\u201d Id. Despite these uncertainties, a common-law fraud claim is advantageous because the prospect of being liable for punitive damages puts extra financial pressure on defendants.<\/p>\n Fourth<\/em>, the municipalities have conferred a benefit on the manufacturers by purchasing opioids based on their misrepresentations. Under these facts, the municipalities may have a plausible claim for unjust enrichment because it would be inequitable for the manufacturers to retain this benefit. See, e.g.,\u00a0Georgia Malone & Co. v. Ralph Rieder<\/em>, 86 A.D.3d 406, 411(1st Dep\u2019t 2011), aff\u2019d sub nom.\u00a0Georgia Malone & Co. v. Rieder<\/em>, 19 N.Y.3d 511 (N.Y. 2012) (\u201cIt is well established that to successfully plead unjust enrichment a plaintiff must show that (1) the other party was enriched, (2) at that party\u2019s expense, and (3) that it is against equity and good conscience to permit the other party to retain what is sought to be recovered.\u201d) (quotation marks and text alterations omitted).<\/p>\n Fifth<\/em>, the municipalities could bring claims under NYGBL \u00a7\u00a7349 and 350. \u201cNYGBL\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a7349\u00a0prohibits \u2018deceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state.\u2019\u201d\u00a0New World Sols. v. NameMedia<\/em>, 150 F. Supp. 3d 287, 329 (S.D.N.Y. 2015) (quoting NYGBL \u00a7349). \u201cNYGBL \u00a7350\u00a0prohibits \u2018false advertising in the conduct of any business, trade or commerce or in the furnishing of any service in this state.\u2019\u201d Id. at 329 (quoting NYGBL \u00a7350). \u201c\u2018The standard for recovery under\u00a0General Business Law \u00a7350, while specific to false advertising, is otherwise identical to\u00a0section 349.\u2019\u201d Id. at 330 (quoting\u00a0Goshen v Mut. Life Ins. Co. of N.Y.<\/em>, 98 N.Y.2d 314, 1195 n.1 (N.Y. 2002)). \u201c\u2018Neither\u00a0section\u00a0349 nor 350<\/p>\n require[s] proof of\u00a0reliance, \u2026 nor proof that defendants intended to mislead consumers.\u2019\u201d\u00a0Id. at 330 (quoting\u00a0In re Scotts EZ Seed Litig.<\/em>, 304 F.R.D. 397, 409 (S.D.N.Y. 2015)). A court could find that the manufacturers and distributors engaged in deceptive acts and false advertising regarding the addictive nature of opioids, which resulted in damages to the municipalities through their funding of ineffective, unnecessary, and harmful prescriptions.<\/p>\n Finally<\/em>, Professor Ausness also believes that public nuisance is one \u201cof the most promising liability theories.\u201d 116 W. Va. L. Rev. at 1148. Under New York law, \u201c[a] public nuisance exists for conduct that amounts to a substantial interference with the exercise of a common right of the public, thereby offending public morals, interfering with the use by the public of a public place or endangering or injuring the property, health, safety or comfort of a considerable number of persons.\u201d\u00a0532 Madison Ave. Gourmet Foods v. Finlandia Ctr.<\/em>, 96 N.Y.2d 280, 292 (N.Y. 2001). \u201cA public nuisance is a violation against the State and is subject to abatement or prosecution by the proper governmental authority.\u201d Id. The municipalities should have a good argument that the effects of the opioid epidemic\u2014e.g., strain on the health care system and increased criminal activity\u2014constitute a public nuisance.\u00a0\u00a0\u00a0<\/em><\/p>\n Significantly, if the municipalities decide to move forward, they will not be traveling an untrodden path. There have been several previously filed cases asserting similar claims that have reached favorable settlements with opioid manufacturers and distributors:<\/p>\n Case:\u00a0<\/strong>West Virginia v. AmeriSource Bergen, et al.\u00a0<\/em>Disposition:\u00a0<\/strong>In January 2017, AmerisourceBergen and\u00a0Cardinal Health agreed to pay $16 million and $20 million respectively to resolve West Virginia\u2019s negligence claim relating to their distribution of opioids.<\/p>\n Case:\u00a0<\/strong>State of California v. Purdue Pharma LP, et al.<\/em>\u00a0Disposition:\u00a0<\/strong>In May 2017, Teva Pharmaceuticals agreed to pay $1.6 million to resolve Orange and Santa Clara Counties\u2019 claims for violations of California false advertising law, California unfair competition law, and public nuisance.<\/p>\n Case:<\/strong>\u00a0Kentucky v. Purdue Pharma LP et al.<\/em>, and\u00a0Kentucky v. Janssen Pharmaceuticals et al.<\/em>.\u00a0Disposition:\u00a0<\/strong>In December 2015, Purdue Pharma L.P. and Johnson & Johnson agreed to pay $24 million and $15.5 million respectively to resolve Kentucky\u2019s claims for violations of the Kentucky Medicaid Fraud Statute, Kentucky False Advertising Statute, public nuisance, unjust enrichment and restitution, indemnity, negligence, strict liability, and common-law fraud.<\/p>\n Case:\u00a0<\/strong>State of West Virginia ex rel. Darrell V. McGraw, Jr., Attorney General, et al.<\/em>\u00a0v. Purdue Pharma L.P., et al.<\/em>\u00a0Disposition:\u00a0<\/strong>In November 2004, Purdue Pharma L.P. agreed to pay $10 million to resolve claims for negligent marketing and public nuisance brought by West Virginia regulators.<\/p>\n Endnotes:<\/strong><\/p>\n <\/a>[1]<\/strong><\/a>\u00a0Defendants would likely include Purdue Pharma L.P., Purdue Pharma Inc., The Purdue Frederick Company, Inc., Teva Pharmaceutical Industries, Ltd., Teva Pharmaceuticals USA, Inc., Cephalon, Inc., Johnson & Johnson, Janssen Pharmaceuticals, Inc., Ortho\u2013McNeil\u2013Janssen Pharmaceuticals, Inc. (N\/K\/A Janssen Pharmaceuticals, Inc.), Endo Health Solutions, Inc., Endo Pharmaceuticals, Inc., Allergan PLC (F\/K\/A Actavis PLC), Actavis LLC, Actavis Pharma, Inc. (F\/K\/A Watson Pharma, Inc.), McKesson Corp., and Cardinal Health, Inc.<\/p>\n Reprinted with permission from the November 16, 2017 edition of the New York Law Journal\u00a9 2017\u00a0ALM Media Properties, LLC. All rights reserved.<\/em> This article is written by Paul Napoli and Marie Napoli; it was published in the November 16, 2017 issue of The New York Law Journal. This article discusses whether New…<\/p>\n","protected":false},"author":3,"featured_media":7365,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[785],"tags":[860,859],"class_list":["post-7364","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opioid-crisis","tag-paul-napoli","tag-marie-napoli"],"acf":[],"page_builder_type":"gutenberg","gutenberg_data":[],"_links":{"self":[{"href":"https:\/\/napolilaw.lemonadestand.org\/en\/wp-json\/wp\/v2\/posts\/7364","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/napolilaw.lemonadestand.org\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/napolilaw.lemonadestand.org\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/napolilaw.lemonadestand.org\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/napolilaw.lemonadestand.org\/en\/wp-json\/wp\/v2\/comments?post=7364"}],"version-history":[{"count":0,"href":"https:\/\/napolilaw.lemonadestand.org\/en\/wp-json\/wp\/v2\/posts\/7364\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/napolilaw.lemonadestand.org\/en\/wp-json\/wp\/v2\/media\/7365"}],"wp:attachment":[{"href":"https:\/\/napolilaw.lemonadestand.org\/en\/wp-json\/wp\/v2\/media?parent=7364"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/napolilaw.lemonadestand.org\/en\/wp-json\/wp\/v2\/categories?post=7364"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/napolilaw.lemonadestand.org\/en\/wp-json\/wp\/v2\/tags?post=7364"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Background<\/strong><\/h2>\n
Claims<\/strong><\/h2>\n
Previous Successes<\/strong><\/h2>\n
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