Justia U.S. 1st Circuit Court of Appeals Opinion SummariesArticles Posted in Drugs & Biotech
Karth v. Keryx Biopharmaceuticals, Inc.
The First Circuit affirmed the judgment of the district court in favor of Defendants, denying Plaintiff's motion for class certification, and denying Plaintiff's motion to file a third amended complaint, holding that Defendant sufficiently warned investors about the vulnerability of its manufacturing infrastructure so that Plaintiff knew of the investment risks when he purchased his shares.Plaintiff was an investor who lost money when he bought stock in Keryx Biopharmaceuticals, Inc. and watched the value plummet soon after that purchase. Plaintiff sued Keryx and its executives, alleging that Keryx's inadequate disclosures about its manufacturing defects amounted to securities fraud. The district court allowed Defendants' motion for judgment on the pleadings. The First Circuit affirmed, holding that Plaintiff failed to state a claim under section 10(b) of the Securities Exchange Act. View "Karth v. Keryx Biopharmaceuticals, Inc." on Justia Law
Carrozza v. CVS Pharmacy, Inc.
The First Circuit affirmed the judgment of the district court granting summary judgment in favor of CVS Pharmacy, Inc. and dismissing this complaint involving a pharmacist's dispensation of a prescription that triggered the pharmacy's internal warning system, holding that the district court did not err.Plaintiff brought this action alleging that he sustained permanent ocular damages as a result of a medication dispensed by CVS. Plaintiff brought a claim for negligence, a claim under Mass. Gen. Laws ch. 93A, and a claim for product liability. The district court granted summary judgment for CVS. The First Circuit affirmed, holding that Plaintiff did not provide any adequate basis for reversing the district court's decisions. View "Carrozza v. CVS Pharmacy, Inc." on Justia Law
Securities & Exchange Commission v. Johnston
The First Circuit affirmed the district court's denial of Defendant's motion for judgment as a matter of law and for a new trial in this civil enforcement action brought by the Securities and Exchange Commission, holding that the evidence was sufficient to support the verdict.At issue was whether Defendant, the CFO of AVEO Pharmaceuticals, knowingly misled investors by the manner in which he responded to investor inquiries about the substance of AVEO's discussions with the Food and Drug Administration (FDA) about the results of AVEO's clinical trial for tivozanib, a kidney cancer drug candidate. A jury found against Defendant. On appeal, Defendant argued (1) he was entitled to judgment as a matter of law because he had no duty to disclose the substance of the FDA discussions and because the evidence of scienter was insufficient, and (2) he was entitled to a new trial because the district court improperly instructed the jury. The Supreme Judicial Court affirmed, holding (1) the evidence of fraud and scienter was sufficient to support the verdict; and (2) the challenged instructions were not given in error. View "Securities & Exchange Commission v. Johnston" on Justia Law
United States v. Clough
The First Circuit affirmed Defendant's conviction of violating federal laws by conspiring to receive, and of receiving, kickbacks from the pharmaceutical company Insys in exchange for prescribing its synthetic opioid, Subsys, holding that there was no merit to Defendant's arguments on appeal.Specifically, the First Circuit held (1) the government introduced sufficient evidence to prove that Defendant participated in a conspiracy to receive kickbacks or to prove that he accepted those kickbacks in exchange for prescribing Subsys; (2) Defendant's conduct fell outside the Anti-Kickback Statute's safe harbor provision; and (3) the district court did not err in failing to instruct the jury about that same safe harbor provision. View "United States v. Clough" on Justia Law
Akebia Therapeutics, Inc. v. Azar
The First Circuit affirmed the judgment of the district court denying Akebia Pharmaceuticals, Inc.'s motion for a preliminary injunction, holding that the district court did not err or abuse its discretion in denying a preliminary injunction in this case.Akebia sued the Administrator of the Centers for Medicare & Medicaid Services (CMS), the Secretary of the Department of Health and Human Services, and other related defendants asserting that CMS acted arbitrarily, capriciously, and contrary to law regarding the reimbursement protocol for Auryxia, a drug owned by Akebia, when prescribed for treatment of iron deficiency anemia in patients with chronic kidney disease. Akebia moved for a preliminary injunction seeking to pause the coverage determination until CMS's interpretation could be entirely litigated. The district court denied the motion. The First Circuit affirmed, holding that the district court did not err in holding that Akebia failed to carry its burden of showing that it was likely to succeed on the merits of its claims. View "Akebia Therapeutics, Inc. v. Azar" on Justia Law
United States v. Chin
The First Circuit affirmed both of Defendant's federal racketeering-related convictions but vacated and remanded the prison sentence, forfeiture order, and restitution order, holding that the district court erred in several respects.Defendant was convicted of racketeering, racketeering conspiracy, federal mail fraud, and violating the Federal Food, Drug and Cosmetic Act (FDCA), 21 U.S.C. 331(a), 333(a). The district court sentenced Defendant to ninety-six months' imprisonment, issued a forfeiture order in the amount of $175,000, and ordered restitution. On appeal, Defendant challenged his convictions for racketeering and racketeering conspiracy and his sentence. The First Circuit remanded the case, holding (1) the convictions were supported by sufficient evidence; (2) the district court erred in its reasoning declining to apply certain enhancements; (3) neither of the two reasons the district court gave for limiting the forfeiture order was sustainable; and (4) the district court too narrowly construed who counts as a "victim" under the Mandatory Victims Restitution Act. View "United States v. Chin" on Justia Law
In re HIPAA Subpoena
The First Circuit affirmed the district court's judgment reversing the magistrate's order that had quashed an administrative subpoena duces tecum as to the recordings of certain telephone conversations, holding that the magistrate judge clearly erred in finding that Appellants met their burden of proving that an employer's interception of the telephone calls was intentional.When investigating whether Patient Services, inc. (PSI) had engaged in an illegal kickback scheme, the Government issued an administrative subpoena duces tecum to PSI for all recorded conversations of PSI officers and employees. This appeal concerned conversations that were recorded on the extension of Karen Middlebrooks. Middlebrooks's telephone conversations were recorded while she was working in PSI's call center on the second floor where calls were regularly recorded. At issue was whether PSI intentionally continued recording Middebrooks's calls after her transfer to the third floor, where calls were not regularly recorded, in violation of Title III of the Omnibus Crime Control and Safe Streets Act. The magistrate judge ruled that the recordings violated Title III. The district court reversed. The First Circuit affirmed, holding that the magistrate judge clearly erred in finding that Appellants met their burden of proving that PSI's interception of calls from Middlebrooks's extension after her move to the third floor was intentional. View "In re HIPAA Subpoena" on Justia Law
In re Ocular Therapeutix Inc.
In this complaint alleging that Defendants intentionally or recklessly misled investors about Ocular Therapeutix, Inc.'s manufacturing problems the First Circuit affirmed the judgment of the district court dismissing Plaintiffs' complaint for failure to state a claim, holding that Plaintiffs failed to allege facts giving rise to a strong inference of scienter as required by the Private Securities Litigation Reform Act (PSLRA), 15 U.S.C. 78u-4, 78u-5.In 2015, Ocular submitted a new drug application to the FDA for approval of Dextenza. In 2017, the FDA published its observations of issues at Ocular's manufacturing facility, which resulted in a drop in the company's stock price. Plaintiffs, several shareholders, brought this securities fraud action on behalf of themselves and a putative class of investors alleging violations of section 10(b) of the Securities Exchange Act, 15 U.S.C. 78j(b) and section 20(a) of the Exchange Act, 15 U.S.C. 78t(a). The district court dismissed the complaint pursuant to Fed. R. Civ. P. 9(b) and 12(b)(6), the Exchange Act, and the PSLRA. The district court granted the motion and dismissed the complaint with prejudice. The First Circuit affirmed, holding that Plaintiffs did not allege facts giving rise to a strong inference of scienter as required by the PSLRA. View "In re Ocular Therapeutix Inc." on Justia Law
United States, ex rel. Banigan & Templin v. Pharmerica, Inc.
The First Circuit reversed the judgment of the district court dismissing this qui tam action under the False Claims Act (FCA) against PharMerica, Inc. under the public disclosure bar, holding that relator James Banigan fell within an exception to that bar as an "original source of the information."Banigan and Richard Templin, former employees of the pharmaceutical company Organon, brought this action under the FCA and several of its state law equivalents alleging that PharMerica committed fraud by participating in a Medicaid scheme that rewarded it financially for incentivizing physicians to change patients' antidepressant prescriptions to Organon's medications. The district court dismissed the action under the public disclosure bar, which excludes from the subject matter jurisdiction of federal courts qui tam actions that are based upon the public disclosure of allegations in a civil hearing and other sources. The First Circuit reversed, holding that where the allegations of fraud were based upon Banigan's direct knowledge, Banigan's sources met the statutory requirement of "direct and independent knowledge of the information on which the allegations are based," see 31 U.S.C. 3730(e), to qualify as an original source. View "United States, ex rel. Banigan & Templin v. Pharmerica, Inc." on Justia Law
Painters & Allied Trades District Council 82 Health Care Fund v. Forest Pharmaceuticals, Inc.
In these consolidated appeals arising out of two “off-label” prescription drug marketing cases aggregated for pretrial proceedings in the district court by order of a multidistrict litigation panel, the First Circuit reversed the dismissal of claims brought by two of the four plaintiffs, vacated the denial of Plaintiffs’ motion to compel the production of additional documents, and otherwise affirmed the district court's rulings.In their complaint, Plaintiffs claimed that Defendants, Forest Pharmaceuticals, Inc. and Forest Laboratories, Inc., engaged in an off-label marketing scheme aimed at fraudulently inducing doctors to write pediatric prescriptions of their antidepressant drugs when the FDA had not approved the use of these medications for minors. After discovery, the district court entered summary judgment for Defendant on Plaintiffs’ Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962(c)-(d), claims and dismissed Plaintiffs’ state-based allegations as deriving from their noncognizable RICO claims. The First Circuit (1) reversed the district court’s entry of summary judgment on certain plaintiffs’ RICO and state-law claims and on another plaintiff’s RICO and unjust-enrichment claims on the basis that the evidence was insufficient on these claims; (2) vacated the denial of Plaintiffs’ motion to compel; (3) affirmed the denial of class certification; and (4) otherwise affirmed. View "Painters & Allied Trades District Council 82 Health Care Fund v. Forest Pharmaceuticals, Inc." on Justia Law