The Second Circuit last week prescribed death for a class action alleging that Eli Lilly and Company fooled doctors into treating patients with Lily's anti-schizophrenia drug Zyprexa.
The plaintiffs — unions and others that pay all or part of patients' pharmaceutical bills — alleged that Lilly violated the Racketeer-Influenced and Corrupt Organizations Act by hiding and misrepresenting Zyprexa's side effects, which included greater risk of hyperglycemia and even diabetes. The district court certified a nation-wide class of third-party payors (TPPs). Lilly got permission to appeal under Rule 23(f).
The Second Circuit panel held that the TPPs couldn't show that Lilly caused damage to all or almost all class members. Their Honors noted that, since Bridge v. Phoenix Bond & Indem. Co., 128 S. Ct. 2131 (2008) (post here), RICO plaintiffs needn't show that they relied on a fraudulent statement or omission but most often did need to prove that somebody relied on it. The TPPs' theory failed the test for class treatment, the panel ruled, because they couldn't use class-wide evidence to establish that the prescribing doctors and other intermediaries (including the TPPs themselves) relied on Lilly's misleading marketing of Zyprexa. Their reasons may vary, the court reasoned. UFCS Local 1776 v. Eli Lilly and Co., No. 09-0222-cv (2d Cir. Sept. 10, 2010).