In the case of In Re: Avandia Marketing, Sales Practices & Product Liability Litigation, the Third Circuit Court of Appeals recently allowed a racketeering class action against GlaxoSmithKline, LLC (GSK) over allegations of deceptive marketing concerning the diabetes drug Avandia. The class action was brought by union health and welfare funds arguing that they overpaid for the drug because of deceptive marketing by GSK. Plaintiffs argued that GSK concealed and misrepresented cardiovascular risks with Avandia, which led third-party payors to cover the drug at favorable rates when in reality it should have been worth far less and prescribed far less.
The Third Circuit found that the Plaintiffs had standing at the motion to dismiss stage under the Racketeer Influenced and Corrupt Organizations Act (RICO) because they had advanced a plausible economic injury and demonstrated that GSK’s alleged fraudulent conduct directly caused that injury. The Court stated that “Plaintiffs have plausibly alleged the elements of RICO standing, and GSK has not offered a valid justification for limiting the claims at this stage of the litigation.”
The Third Circuit further noted, “The conduct that allegedly caused plaintiffs’ injuries is the same conduct forming the basis of the RICO scheme alleged in the complaint – the misrepresentation of the heart-related risks of taking Avandia that caused [third party payors] and [pharmacy benefit managers] to place Avandia in the formulary.” If you need more information on this case, contact Leslie Pescia, a lawyer in our firm’s Consumer Fraud and Commercial Litigation Section, at 800-898-2034 or by email at Leslie.Pescia@beasleyallen.com
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