Locke Lord QuickStudy: Expanding Litigation Against Prescription Distribution Channel Constituents In Wake of Opioid Epidemic

Locke Lord LLP
September 26, 2017
In the battle against prescription opioid (e.g., oxycodone and hydrocodone) addiction waged by law enforcement agencies, healthcare providers, and politicians on both sides of the aisle, there has been a swell of civil litigation targeting various constituents of the opioid distribution channel. Specifically, counties from those States most deeply impacted by the nation’s growing opioid epidemic have initiated litigation against brand and generic prescription opioid manufacturers, as well as the country’s largest pharmaceutical distributors under a variety of legal theories – some new, and some not so new. Most recently, some counties have begun suing large retail pharmacy chains. With the threat of growing pools of potential plaintiffs and defendants, the question arises: To what extent and under what legal theories will potential plaintiffs target other opioid distribution participants?
While there may be few things that Democrats and Republicans presently agree on, one is the need to combat opioid abuse and to ferret out its illicit causes. Recently, Senator Claire McCaskill, D-MO announced that she has been leading an investigation into prescription opioid manufacturers, focusing on manufacturers’ improper marketing efforts to increase prescription opioid utilization. From the other side of the political spectrum, Attorney General Jeff Sessions recently announced that the U.S. Department of Justice is assigning 12 assistant U.S. attorneys to spend three years focusing exclusively on investigating and prosecuting healthcare fraud related to prescription opioids.

Concurrently, on the civil litigation front, a multitude of counties from several states – e.g., Alabama, Illinois, Kentucky, New Mexico, Ohio, and West Virginia – have filed various civil lawsuits in state and federal courts accusing prescription opioid manufacturers of engaging in unlawful marketing practices with respect to these medications. These allegations largely mirror those previously asserted against drug manufacturers for years in False Claims Act litigation, including: (i) delivering false or misleading information regarding opioid addiction and adverse events and side effects; (ii) suppressing unfavorable clinical studies and unduly influencing others; (iii) developing biased treatment guidelines that favor and “promote” the liberal use of prescription opioids; and (iv) employing key opinion leaders, speakers bureaus, and CMEs to unlawfully promote prescription opioids for non-FDA approved uses.

Counties also have targeted major pharmaceutical distributors. These claims are premised on distributors owing a duty under various state and federal laws, as well as States’ common law sounding in negligence and nuisance, to monitor, detect, investigate, refuse, and report “suspicious” orders of prescription opioids originating from pharmacies. These complaints allege that the foreseeable harm from the breach of these common law and statutorily prescribed duties is the unlawful diversion of prescription opioids for unnecessary and/or nonmedical purposes. Plaintiffs allege that this unlawful diversion of millions of prescription of opioids is a direct and proximate cause of prescription opioid abuse and addiction.

Based on the theories of liability and causation already being advanced, one can anticipate plaintiffs setting their sights on retail pharmacies, group purchasing organizations (GPOs), and pharmacy benefits managers (PBMs). Indeed, in a select number of cases, plaintiffs have named Kroger pharmacy entities as defendants and have sought to paint them as “wholesale distributors” for purposes of imposing the aforementioned duties of care, which Kroger allegedly breached by failing to properly monitor and control the distribution of prescription opioids. Likewise, the universe of potential plaintiffs may similarly expand to include government payors (e.g., Medicaid and Medicare). Most recently, State attorneys general have publicly turned their attention to health insurance companies, urging insurers to take further action to control the “unnecessary overprescription” of prescription opioids or face threatened legal action. 

In the face of this growing threat of litigation that implicates nearly all tiers of prescription opioid distribution channels, retail and specialty pharmacies, GPOs, PBMs, and private insurers (among others) should consider: (i) designing, implementing, and adhering to appropriate order fulfillment monitoring protocols and programs where otherwise applicable; (ii) evaluating any in-place contracts with payors to ensure that appropriate steps are being taken to avoid breaching such contractually imposed duties; (iii) scrutinizing and abiding by any applicable licensing requirements or regulations; and (iv) continuing to monitor cases predicated on statutory and common law negligence theories and developing and adjusting business practices that meet those duties as articulated by the courts.

Taking such preventative steps may help thwart plaintiffs’ growing efforts to identify legal duties (whether in contract, statute, or common law negligence) on which to base their claims, and then engineer a breach of such duties based on would-be defendants’ inaction or seeming lack of attention.

For more information on the matters discussed in this Locke Lord QuickStudy, please contact the author.