BAPTIST HEALTHCARE SYSTEM, INC. D/b/a BAPTIST HEALTH CORBIN, BAPTIST .
Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 1 of 299 PageID #: 1 UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF KENTUCKY LOUISVILLE DIVISION BAPTIST HEALTHCARE SYSTEM, INC. d/b/a BAPTIST HEALTH CORBIN, BAPTIST HEALTH LA GRANGE, BAPTIST HEALTH LEXINGTON, BAPTIST HEALTH LOUISVILLE, BAPTIST HEALTH PADUCAH, and BAPTIST HEALTH FLOYD; and COMPLAINT 3:18-cv-558-CHB CASE NO. JURY TRIAL DEMANDED BAPTIST HEALTH MADISONVILLE, INC. d/b/a BAPTIST HEALTH MADISONVILLE; and BAPTIST HEALTH RICHMOND, INC. d/b/a BAPTIST HEALTH RICHMOND; and BOWLING GREEN WARREN COUNTY COMMUNITY HOSPITAL CORPORATION d/b/a THE MEDICAL CENTER AT BOWLING GREEN, THE MEDICAL CENTER AT CAVERNA, AND THE MEDICAL CENTER AT SCOTTSVILLE; This Action Relates to: Case No. 1:17-MD-2804 Hon. Dan A. Polster Under: Organized Crime Control Act of 1970, IX, Racketeer Influenced and Corrupt Organizations Act, P.L. No. 91-452, 84 State. 922 (1970), (codified at 18 U.S.C. §§ 1961-1967 (2012) (“RICO”) Breach of Implied Warranty of Fitness for a Particular Purpose, KRS 355.2-315 and Kentucky Consumer Protection Act, KRS 367.170 THE MEDICAL CENTER AT CLINTON COUNTY, INC. d/b/a THE MEDICAL CENTER AT ALBANY Negligence and Negligence Per Se THE MEDICAL CENTER AT FRANKLIN, INC. d/b/a THE MEDICAL CENTER AT FRANKLIN Negligent Marketing Plaintiffs, v. AMERISOURCEBERGEN DRUG CORPORATION; Wanton Negligence Negligent Distribution Nuisance Unjust Enrichment
Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 2 of 299 PageID #: 2 CARDINAL HEALTH, INC.; MCKESSON CORPORATION; 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-MCNEIL-JANSSEN PHARMACEUTICALS, INC. n/k/a JANSSEN PHARMACEUTICALS, INC.; JANSSEN PHARMACEUTICAL INC. n/k/a JANSSEN PHARMACEUTICALS, INC.; NORAMCO, INC.; ENDO HEALTH SOLUTIONS INC.; ENDO PHARMACEUTICALS, INC.; INSYS THERAPEUTICS, INC.; ALLERGAN PLC f/k/a ACTAVIS PLS; WATSON PHARMACEUTICALS, INC. n/k/a ACTAVIS, INC.; WATSON LABORATORIES, INC.; ACTAVIS LLC; ACTAVIS PHARMA, INC. f/k/a WATSON PHARMA, INC.; MALLINCKRODT PLC; MALLINCKRODT LLC; CVS HEALTH CORPORATION; WALGREENS BOOTS ALLIANCE, INC.; WAL-MART, INC.; and MIAMI-LUKEN, INC. Defendants.
Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 3 of 299 PageID #: 3 TABLE OF CONTENTS I. INTRODUCTION . 2 A. The Opioid Crisis . 2 B. Impact of Opioids on Kentucky Hospitals . 13 C. Financial Impact of Defendants’ Activities on Plaintiffs . 19 D. The Roles of Defendants in Causing and Perpetuating the Opioid Crisis . 22 II. JURISDICTION AND VENUE . 25 III. PARTIES . 25 A. PlaintiffS . 25 B. Defendants . 27 1. Marketing Defendants . 27 a. Purdue and Associated Companies . 27 b. Cephalon and Associated Companies . 28 c. Janssen and Associated Companies . 30 d. Endo and Associated Companies . 32 e. Insys Therapeutics, Inc. . 34 f. Mallinckrodt Entities . 34 g. Actavis and Associated Companies . 37 2. Distributor Defendants . 38 a. AmerisourceBergen Drug Corporation . 38 b. Cardinal . 39 c. McKesson Corporation. 39 d. Miami-Luken, Inc. . 41 3. National Retail Pharmacies . 41 a. CVS Health Corporation . 41 b. Walgreens Boots Alliance, Inc. . 41 c. Wal-Mart Inc. . 41 C. Defendants’ Agents . 42 IV. CONTINUING VIOLATIONS . 42 V. FACTUAL BACKGROUND . 42 A. The History of Opioids . 42 B. The Opioid Epidemic . 45 C. Legislative Responses to Opioid Crisis . 48 i
Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 4 of 299 PageID #: 4 D. The Marketing Defendants’ False, Deceptive, and Unfair Marketing of Opioids. 49 E. Each Marketing Defendant Used Multiple Avenues To Disseminate Their False and Deceptive Statements About Opioids. . 51 1. Direct Marketing . 52 a. Falsehood #1: The risk of addiction from chronic opioid therapy is low . 53 i. Purdue’s misrepresentations regarding addiction risk . 54 ii Endo’s misrepresentations regarding addiction risk . 60 ii Janssen’s misrepresentations regarding addiction risk . 61 iv Cephalon’s misrepresentations regarding addiction risk . 62 v. Mallinckrodt’s misrepresentations regarding addiction risk. 63 b. Falsehood #2: To the extent there is a risk of addiction, it can be easily identified and managed . 65 c. Falsehood #3: Signs of addictive behavior are “pseudoaddiction,” requiring more opioids . 67 d. Falsehood #4: Opioid withdrawal can be avoided by tapering . 70 e. Falsehood #5: Opioid doses can be increased without limit or greater risks . 71 f. Falsehood #6: Long-term opioid use improves functioning . 73 g. Falsehood #7: Alternative forms of pain relief pose greater risks than opioids . 79 h. Falsehood #8: OxyContin provides twelve hours of pain relief . 82 i. Falsehood #9: New formulations of certain opioids successfully deter abuse . 87 i. Purdue’s deceptive marketing of reformulated OxyContin and Hysingla ER . 88 ii. Endo’s deceptive marketing of reformulated Opana ER . 91 iii.Other Marketing Defendants’ misrepresentations regarding abuse deterrence . 95 2. The Marketing Defendants Disseminated Their Misleading Messages About Opioids Through Multiple Channels . 97 3. The Marketing Defendants Directed Front Groups To Deceptively Promote Opioid Use . 97 a. American Pain Foundation . 99 b. American Academy of Pain Medicine and the American Pain Society . 102 c. Federation of State Medical Boards . 105 d. The Alliance for Patient Access . 108 ii
Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 5 of 299 PageID #: 5 e. The U.S. Pain Foundation . 112 f. American Geriatrics Society . 113 g. American Chronic Pain Association . 115 4. The Marketing Defendants Paid Key Opinion Leaders To Deceptively Promote Opioid Use. 116 a. Dr. Russell Portenoy. 118 b. Dr. Lynn Webster . 121 c. Dr. Perry Fine . 122 d. Dr. Scott Fishman . 125 5. The Marketing Defendants Also Spread Their Misleading Messages to Reputable Organizations . 127 6. The Marketing Defendants Disseminated Their Misrepresentations Through Continuing Medical Education Programs . 129 7. The Marketing Defendants Used “Branded” Advertising To Promote Their Products to Doctors and Consumers . 132 8. The Marketing Defendants Used “Unbranded” Advertising To Promote Opioid Use for Chronic Pain Without FDA Review . 133 9. The Marketing Defendants Funded, Edited and Distributed Publications That Supported Their Misrepresentations . 134 10. The Marketing Defendants Used “Detailers” To Directly Disseminate Their Misrepresentations to Prescribers. 136 11. The Marketing Defendants Used Speakers’ Bureaus and Programs To Spread Their Deceptive Messages. . 140 12. The Marketing Defendants Targeted Vulnerable Populations. 140 13. Insys Employed Fraudulent, Illegal, and Misleading Marketing Schemes To Promote Subsys . 141 F. The Marketing Defendants’ Scheme Succeeded, Creating a Public Health Epidemic . 146 1. The Marketing Defendants Dramatically Expanded Opioid Prescribing and Use. 146 2. The Marketing Defendants’ Deception in Expanding Their Market Created and Fueled The Opioid Epidemic. . 149 G. The Marketing Defendants’ Marketing Scheme Misrepresented the Risks and Benefits of Opioids . 150 1. The Marketing Defendants Embarked Upon A Campaign of False, Deceptive, and Unfair Assurances Grossly Understating and Misstating the Dangerous Addiction Risks of the Opioid Drugs. . 150 iii
Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 6 of 299 PageID #: 6 2. The Marketing Defendants Targeted Susceptible Prescribers and Vulnerable Patient Populations . 151 H. The Marketing Defendants Made Materially Deceptive Statements and Concealed Material Facts . 153 1. Purdue . 153 2. Endo . 157 3. Janssen . 159 4. Cephalon . 160 5. Actavis . 161 I. Marketing Defendants’ Prior Bad Acts. 162 J. The Distributor Defendants’ Unlawful Distribution of Opioids . 163 K. Defendants Throughout the Supply Chain Deliberately Disregarded Their Duties To Maintain Effective Controls and To Identify, Report, and Take Steps To Halt Suspicious Orders . 164 1. All Defendants Have a Duty To Guard Against, and Report, Unlawful Diversion and To Report and Prevent Suspicious Orders . 165 a. Pain Care Forum . 175 b. Healthcare Distribution Alliance . 176 2. Defendants Were Aware of and Have Acknowledged Their Obligations To Prevent Diversion and To Report and Take Steps To Halt Suspicious Orders . 182 3. Defendants Kept Careful Track of Prescribing Data and Knew About Suspicious Orders and Prescribers . 183 4. Defendants Failed To Report Suspicious Orders or Otherwise Act To Prevent Diversion. 189 5. Defendants Delayed a Response to the Opioid Crisis by Pretending To Cooperate with Law Enforcement . 193 6. The Distributor Defendants Breached Their Duties . 197 a. McKesson . 200 b. Cardinal . 202 c. AmerisourceBergen . 205 7. The Distributor Defendants Have Sought To Avoid and Have Misrepresented Their Compliance with Their Legal Duties. 205 L. The National Retail Pharmacies Were on Notice of and Contributed to Illegal Diversion of Prescription Opioids . 212 1. The National Retail Pharmacies Have a Duty To Prevent Diversion . 213 iv
Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 7 of 299 PageID #: 7 2. Multiple Enforcement Actions Against the National Retail Pharmacies Confirms Their Compliance Failures. 217 a. CVS . 217 b. Walgreens . 220 M. The Marketing Defendants’ Unlawful Failure To Prevent Diversion and Monitor, Report, and Prevent Suspicious Orders . 223 1. Defendants’ Unlawful Conduct and Breaches of Legal Duties Caused the Harm Alleged Herein and Substantial Damages. 228 N. Conspiracy Allegations . 230 1. The Defendants Conspired To Engage in the Wrongful Conduct Complained of Herein and Intended To Benefit Both Independently and Jointly From Their Conspiracy . 230 a. Conspiracy Among Marketing Defendants . 230 b. Conspiracy Among All Defendants . 233 2. Statutes of Limitations Are Tolled and Defendants Are Estopped From Asserting Statutes of Limitations as Defenses . 235 a. Continuing Conduct . 235 b. Equitable Estoppel and Fraudulent Concealment . 236 3. Facts Pertaining to Punitive Damages . 238 a. The Marketing Defendants Persisted in Their Fraudulent Scheme Despite Repeated Admonitions, Warnings, and Even Prosecutions . 239 i. FDA Warnings to Janssen Failed To Deter Janssen’s Misleading Promotion of Duragesic . 239 ii. Governmental Action, Including Large Monetary Fines, Failed To Stop Cephalon From Falsely Marketing Actiq for Off-Label Uses . 240 iii.FDA Warnings Did Not Prevent Cephalon From Continuing False and Off-Label Marketing of Fentora. 241 iv. A Guilty Plea and a Large Fine Did Not Deter Purdue From Continuing Its Fraudulent Marketing of OxyContin . 242 v. Repeated Admonishments and Fines Did Not Stop Defendants From Ignoring Their Obligations To Control the Supply Chain and Prevent Diversion . 243 O. Facts Pertaining To Claims Under Racketeer-Influenced and Corrupt Organizations (“Rico”) Act. 249 1. The False Narrative Enterprise . 249 a. The Common Purpose and Scheme of the False Narrative Enterprise . 249 b. The Conduct of the False Narrative Enterprise Violated Civil RICO . 253 v
Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 8 of 299 PageID #: 8 c. The False Narrative Enterprise Defendants Controlled and Paid Front Groups and KOLs To Promote and Maximize Opioid Use . 257 d. Pattern of Racketeering Activity . 258 2. The Opioid Supply Chain Participants . 261 VI. CLAIMS AND PRAYER FOR RELIEF . 270 First Claim for Relief . 270 Second Claim for Relief. 274 Third Claim for Relief . 275 Fourth Claim for Relief . 275 Fifth Claim for Relief. 278 Sixth Claim for Relief . 279 Seventh Claim for Relief . 280 Eighth Claim for Relief . 283 Ninth Claim for Relief . 285 Tenth Claim for Relief . 286 Eleventh Claim for Relief . 289 Prayer for Relief . 290 VII. JURY DEMAND . 290 vi
Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 9 of 299 PageID #: 9 The decade of the 1990s was the era of the blockbuster drug, the billion-dollar pill, and a pharmaceutical sales force arms race was part of the excess of the time . . . A pharmaceutical Wild West emerged. Salespeople stampeded into offices. They made claims that helped sell the drugs to besieged doctors. Those claims also led years later to blockbuster lawsuits and criminal cases against their companies.1 COMPLAINT Come now the Plaintiffs, Baptist Healthcare System, Inc. d/b/a Baptist Health Corbin, Baptist Health La Grange, Baptist Health Lexington, Baptist Health Louisville, Baptist Health Paducah, and Baptist Health Floyd; Baptist Health Madisonville, Inc. d/b/a Baptist Health Madisonville; Baptist Health Richmond, Inc. d/b/a Baptist Health Richmond; Bowling Green Warren County Community Hospital Corporation d/b/a The Medical Center at Bowling Green; The Medical Center at Clinton County, Inc. d/b/a The Medical Center at Albany; and The Medical Center at Franklin, Inc. d/b/a The Medical Center at Franklin, by counsel, and for their claims against the Defendants, AmerisourceBergen Drug Corporation; Cardinal Health, Inc.; McKesson Corporation; 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 Pharmaceutica, Inc.; Ortho-McNeil-Janssen Pharmaceuticals, Inc. n/k/a Janssen Pharmaceuticals, Inc.; Janssen Pharmaceutical Inc. n/k/a Janssen Pharmaceuticals, Inc.; Noramco, Inc.; Endo Health Solutions Inc.; Endo Pharmaceuticals, Inc.; Insys Therapeutics, Inc.; Allergan plc f/k/a Actavis PLS; Watson Pharmaceuticals, Inc. n/k/a Actavis, Inc.; Watson Laboratories, Inc.; Actavis LLC; Actavis Pharma, Inc. f/k/a Watson Pharma, Inc.; Mallinckrodt Plc; Mallinckrodt LLC.; CVS Health Corp.; Walgreens Boots Alliance, Inc.; Wal-Mart, Inc.; and Miami-Luken, Inc. (collectively Sam Quinones, Dreamland: The True Tale of America’s Opiate Epidemic at 133 (Bloomsbury Press 2015) (hereinafter referred to as “Dreamland”). 1 1
Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 10 of 299 PageID #: 10 “Defendants”), under the Organized Crime Control Act of 1970, IX, Racketeer Influenced and Corrupt Organizations Act, P.L. No. 91-452, 84 Stat. 922 (1970), (codified at 18 U.S.C. §§ 1961-1967 (2012) (“RICO”); Controlled Substances Act of 1970, 84 Stat. 1236, 1242 (codified at 29 U.S.C. § 801, et seq.) (2012); Breach of Implied Warranty of Fitness for a Particular Purpose, KRS 355.2-315; Kentucky Consumer Protection Act, KRS 367.170; Negligence; Wanton Negligence; Negligence Per Se; Negligent Marketing; Negligent Distribution; Nuisance; and Unjust Enrichment, state as follows. I. INTRODUCTION A. THE OPIOID CRISIS 1. Hospitals in Kentucky and elsewhere encounter patients with opioid-related conditions daily. On one end, hospitals must deal with patients who have serious medical conditions that require extra care and expense because the patient is opioid addicted, and on the other, hospitals must utilize their resources to handle the “pill seekers.” Take for example this situation: Two very pregnant women present themselves for treatment – a healthy one and an opioid-addicted one. Both are admitted. Regardless of whether either patient can pay, they both must be admitted under prevailing federal and state law for medical and possible psychiatric care, even though the hospital knows it may not be compensated in full, or perhaps at all for its medical services. Both women give birth. The opioid-addicted mother has an opioid-addicted child, who enters this world kicking and screaming as he or she goes through the addiction withdrawal process. That baby is taken to a neonatal intensive care unit, often referred to as the “NICU,” with sophisticated medical equipment, supplies and staff specially trained to treat the needs of opioidaddicted babies. The healthy mother’s and her child’s stay in the hospital are completed in two or three days and cost a few thousand dollars, which is likely paid by an insurer. The opioid-addicted 2
Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 11 of 299 PageID #: 11 mother and her addicted baby each require special treatment and attention for opioid withdrawal, which likely is uncompensated or undercompensated even if the mother has insurance. The mother stays as long as is necessary to stabilize her condition, but because of her opioid addiction her new baby may spend months in the hospital receiving around-the-clock care. Ultimately, the hospital has a duty to treat both new mothers and their babies, yet the cost to the hospital for this duty is much greater for the opioid-addicted mother and baby, which results in higher uncompensated costs to that hospital. 2. These two very different encounters play out daily at Plaintiffs’ hospitals. One Kentucky hospital alone, a Plaintiff herein, documented 335 total cases of drug-addicted newborns at seven of its locations between January 2012 and April 2014.2 Throughout Kentucky, in the year 2000, fewer than 30 infants were diagnosed with Neonatal Abstinence Syndrome (NAS) in Kentucky hospitals resulting from the mother’s drug usage. For the year 2013, more than 950 newborns were diagnosed with and treated for NAS in Kentucky hospitals.3 3. Kentucky hospitals, of course, are not unique in dealing with the opioid epidemic. Hospitals across the United States are the front-line treatment for victims of the opioid epidemic. Hospitals – legally and morally – are compelled to treat patients with opioid-related conditions and, as a result, have been directly damaged by the epidemic. In addition to the cost of the opioid drugs themselves, hospitals have and continue to incur millions of dollars in damages for the costs of uncompensated care as a result of the unlawful marketing, distribution and sale of opioids. Boyd, Terry, Addicted Babies Testing the Limits of Louisville’s Neonatology Units, INSIDER LOUISVILLE (July 3, 2014), its/. 2 3 Health Collaborative to Look at Best Practices for Neonatal program.htm. 3 Abstinence Syndrome,
Case 3:18-cv-00558-CRS Document 1 Filed 08/17/18 Page 12 of 299 PageID #: 12 4. The United States is in the midst of an opioid epidemic caused by Defendants’ unlawful marketing, sales, and distribution of prescription opioids that have resulted in addiction, criminal activity, serious health issues, and loss of life. 4 According to the Centers for Disease Control (“CDC”), from 1999 to 2014, the sales of prescription opioids in the U.S. nearly quadrupled, but there was no overall change in the amount of pain that Americans reported.5 5. A particular tragedy of the opioid epidemic is that it has turned law-abiding citizens, who experience routine injuries, into drug addicts and, in some cases, it has ruined their lives. The impact of opioid abuse and dependence on the lives of people from all segments of society is the subject of Beth Macy’s Dopesick, Little, Brown and Company (August 2018). 6. Across the nation, hospitals are struggling from the relentless and crushing financial burdens resulting from the epidemic of opioid addiction and abuse. Every day, more than 115 Americans lose their lives after overdosing on opioids.6 The effects of the opioid epidemic on hospitals may soon become even worse. The coverage
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