Glaxo Draws Support in Petition for Cert

GlaxoSmithKline LLC of London has filed a petition for cert with the Supreme Court over an attempt by the state of Louisiana to sue the drugmaker separately over allegations the company thwarted the availability of generic versions of a sinus medication. At stake is the question of whether the Eleventh Amendment allows states to work a legal end-around of the outcome of class actions in federal courts, even when the state in question benefited by the class action.

The State of Louisiana had declined to opt out of a federal class action against Glaxo, which revolved around the issue of the company’s alleged interference with the FDA’s efforts to approve a generic version of Flonase. In 2013, the company arrived at a settlement with private and indirect purchasers in the amount of $150 million, but Louisiana’s attorney general filed a suit over the matter the following year.

The State of Louisiana had received a notice of the outcome in 2013 as stipulated by the Class Action Fairness Act (CAFA), but did not receive the notice of settlement approved by the U.S. District Court for the Eastern District of Pennsylvania. In its decision on the matter, the District had purportedly enjoined all states, including Louisiana, from taking further action on the matter, but the Louisiana attorney general successfully argued that the Eleventh Amendment does not allow states to be bound to a class action. The case then moved from the district court to the U.S. Court of Appeals for the Third Circuit, which arrived at essentially the same determination. In its Dec. 22, 2017, decision, the three-judge panel at the Third Circuit said the state did not waive its sovereign immunity merely by its receipt of the CAFA notice.

This isn’t the first time Glaxo Louisiana have tangled. The two settled for $45 million in 2013 over allegations the company had illicitly marketed and/or promoted several drugs for a number of indications, including Avandia and Wellbutrin. This settlement was a separate conclusion to the cases filed jointly by a number of other states, and followed a $3 billion settlement with the federal government the previous year, in part for promotion of off-label use.

Glaxo petitioned the Supreme Court for cert after the Third Circuit declined to grant an en banc hearing, stating in the July 6 petition that states have not enjoyed sovereign immunity “when they are aligned as plaintiffs.” The company stated also that the outcome flies against the 1985 Supreme Court decision in Phillips Petroleum Co. v. Shutts, which provided for the legal use of opt-out class actions. Glaxo said the opt-out class action would be rendered “categorically unconstitutional” by the Third Circuit’s decision.

As it turns out, Glaxo has company in making those arguments. The Washington Legal Foundation has filed an amicus brief, and said in an accompanying statement that Louisiana’s lawsuit was a copycat lawsuit, adding that the Eleventh Amendment applies only to lawsuits filed against a state rather than in response to a lawsuit filed by the state. The Pharmaceutical Research and Manufacturers of America also weighed in, stating that Louisiana “did not somehow become a defendant at any point,” and that a constitutionally sufficient notice of class action eliminates any form of immunity from a plaintiff-side position. The association further stated that absent any textual or historical indications to the contrary, “there is simply no warrant for this Court or the Third Circuit to simply make such rules up.”

Technical assistance or radical overhaul?

Despite its hiatus from the headlines, the question of FDA regulation of lab-developed tests never quite went away, and is now topical again thanks to a technical assistance document recently published by the agency. The proposal has its critics, but Congress might soon act on the question if some stakeholders have their say.

The Aug. 8 technical assistance refers to the notion of a pre-certification program akin to the digital health pre-cert program, but FDA commissioner Scott Gottlieb had already said the pre-cert concept could be applied to LDTs, so such a provision hardly comes across as any surprise. There is a provision in the FDA approach, however, for the use of for-cause inspections when adulteration or misbranding is suspected, and ultimately this document may prove significant if the Diagnostic Accuracy and Innovation Act of 2017 gathers sufficient momentum to reach the House floor in the remaining weeks of 2018.

Among the supporters of the FDA framework is the diagnostic arm of the Advanced Medical Technology Association, which said in an Aug. 8 statement that the FDA document “is an important and necessary next step” in providing a statutory framework for LDT regulation. Perhaps less expected is the support of the American Clinical Lab Association, which had previously expressed skepticism regarding FDA regulation of LDTs.

Not everyone is so optimistic, however. An entry at the FDA Law Blog by Hyman, Phelps and McNamara points out that the FDA document would jettison the existing lexicon for premarket review of LDTs, to be replaced by “a whole new vocabulary.” Jeffrey Gibbs of Hyman Phelps said the novel regulatory mechanism of a test group is not functionally similar to that of the predicate device of 510(k) lore. Gibbs said the document would also seem to offer outside parties the opportunity to challenge the approval obtained by a test maker, an outcome he said the FDA “would not want.”