Opinion ID: 857137
Heading Depth: 5
Heading Rank: 1

Heading: Admissibility of Rosenthal Testimony

Text: We review a district court's ruling on the admissibility of an expert witness's testimony for abuse of discretion. In re -40- Pharm. Indus. Average Wholesale Price Litig. (AWP), 582 F.3d 156, 198 (1st Cir. 2009). Under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), expert testimony must have a reasoning or methodology that is scientifically valid, id. at 592-93, and that methodology must also have a valid scientific connection to the pertinent inquiry -- that is, a proper fit with the facts of the case, id. at 591-92. Admissibility does not turn on a determination by the trial court of which of several competing scientific theories has the best provenance, nor does it turn on convincing the trial court that the proffered expert is correct. Milward v. Acuity Specialty Prods. Grp., Inc., 639 F.3d 11, 15 (1st Cir. 2011) (quoting Ruiz-Troche v. Pepsi Cola of P.R. Bottling Co., 161 F.3d 77, 85 (1st Cir. 1998)) (internal quotation mark omitted). It is clear that Dr. Rosenthal's evidence met several requirements of Federal Rule of Evidence 702. Dr. Rosenthal is a witness with the requisite knowledge, skill, experience, training, or education, Fed. R. Evid. 702, and her opinion would assist the trier of fact to understand the evidence or to determine a fact in issue, Fed. R. Evid. 702(a). Yet Pfizer argues that Dr. Rosenthal's testimony should have been excluded, attacking both the methodology and the fit of the Rosenthal report. As to the methodology, regression analysis is a well recognized and scientifically valid approach to understanding statistical data, and courts have long permitted parties to use -41- statistical data to establish causal relationships. See, e.g., Wards Cove Packing Co., Inc. v. Atonio, 490 U.S. 642, 657-58 (1989) (holding that under Title VII of the Civil Rights Act of 1964, specific causation is shown and a prima facie case is establish[ed] when plaintiff identifies a specific employment practice linked to a statistical disparity); Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 994 (1988) (opinion of O'Connor, J.) (explaining that, to establish a prima facie case under Title VII, [o]nce the employment practice at issue has been identified, causation must be proved; that is, the plaintiff must offer statistical evidence of a kind and degree sufficient to show that the practice in question has caused the exclusion of applicants for jobs or promotions because of their membership in a protected group); Duren v. Missouri, 439 U.S. 357, 366-67 (1979) (permitting petitioner to establish prima facie violation of fair cross-section requirement of Sixth and Fourteenth Amendments by using statistics and other evidence to show that the underrepresentation of women, generally and on his venire, was due to their systematic exclusion in the jury-selection process); Times-Picayune Pub. Co. v. United States, 345 U.S. 594, 621 (1953) (in antitrust case, looking to economic statistics to determine whether demonstrably deleterious effects on competition may be inferred); In re High Fructose Corn Syrup Antitrust Litig., 295 F.3d 651, 660-61 (7th Cir. 2002) (permitting use of regression analysis to show causation -42- in antitrust case); Conwood Co., L.P. v. U.S. Tobacco Co., 290 F.3d 768, 794 (6th Cir. 2002) (finding regression analysis to be admissible on the issue of causation in antitrust case (emphasis omitted) (quoting Jahn v. Equine Servs., PSC, 233 F.3d 382, 390 (6th Cir. 2000))). Pfizer argues that Dr. Rosenthal's analysis is nonetheless unreliable in this instance because it did not account for other factors that may have led a doctor to prescribe Neurontin for off-label use, particularly because the model did not include a time trend.15 Pfizer also argues that the methodology must be unsound because the data contradict the results of Dr. Rosenthal's regression in three ways: (1) gabapentin prescriptions continued to grow after October 2004, when marketing spending plummeted as Neurontin lost patent protection; (2) the model improperly controlled for a spike in promotional spending in 2003, when Neurontin prescriptions remained relatively flat; and (3) the model attributed 85% of Neurontin prescriptions for nociceptive pain to alleged fraudulent marketing, but the factfinders found that there was no fraudulent marketing for that indication. The district court acted well within its discretion in concluding that Dr. Rosenthal's methods met the scientific validity 15 Dr. Rosenthal described a time trend as a variable that is introduced to capture some conglomeration of variables believed to have a pattern over time . . . . [I]t's a hypothetical based on the idea that there are some things [other than promotional spending] over time that drive sales. -43- standard under Rule 702. So long as an expert's scientific testimony rests upon 'good grounds, based on what is known,' it should be tested by the adversarial process, rather than excluded for fear that jurors will not be able to handle the scientific complexities. Milward, 639 F.3d at 15 (citation omitted) (quoting Daubert, 509 U.S. at 590). Pfizer's own expert witness admitted that peer-reviewed, published studies do not always contain time trends. Moreover, Dr. Rosenthal explained her reason for declining to use a time trend: because the case involved only a single drug (as opposed to other studies involving multiple drugs), the time trend would likely be a confounding variable, because its inclusion would produce results showing that promotional spending had no statistically significant effect on prescriptions -- a conclusion that would not comport with basic economics. Indeed, Pfizer's own documents and testimony show that it expected and believed that off-label marketing of Neurontin would increase off-label prescriptions, and that its marketing had that result. The choice not to use a time trend did not make Dr. Rosenthal's methodology unreliable. Pfizer's objections regarding data that allegedly contradict the reliability of the model also do not show that the district court abused its discretion. These objections presented a question for the jury. The post-October 2004 increase in gabapentin prescriptions does not render the regression analysis -44- inadmissible. Indeed, the increase can be explained by the fact that gabapentin became a generic drug at that time, and the generic's lower price would be expected to increase gabapentin sales even though marketing efforts for Neurontin had ceased. This change in circumstances does not negate the causal relationship between marketing and prescriptions that the model revealed for the pre-October 2004 period. There was also nothing methodologically suspect about Dr. Rosenthal's controlling for a spike in promotional spending in 2003, because that spike was likely the result of strategic interaction between the marketing efforts for Neurontin and for Pfizer's launch of a new anti-epileptic drug, Lyrica. As Dr. Rosenthal explained, this was the most plausible reason why promotional spending for Neurontin would increase even as it neared the end of its patent life. Finally, Pfizer's argument about the 85% figure for nociceptive pain misunderstands the structure of the model. In conducting her analysis, Dr. Rosenthal assumed -- at the plaintiffs' direction -- that all off-label marketing was fraudulent,16 then analyzed the relationship between marketing and prescriptions. Such an approach to proving injury from an underlying assumption of unlawful behavior (to be proven to the fact-finder) is well accepted in the antitrust context from which 16 Her analysis excluded the marketing for on-label uses. -45- RICO has drawn many of its causation principles. See, e.g., Associated Gen. Contractors, 459 U.S. at 528, 535-46 (noting that appellate court had properly assumed that defendant's alleged conduct might violate the antitrust laws, id. at 528, then going on to separately evaluate whether plaintiff had sufficiently alleged antitrust injury). Ultimately, Pfizer's attacks on Dr. Rosenthal's methodology were all grist for the trier of fact; they warranted test[ing] by the adversarial process, rather than exclu[sion]. Milward, 639 F.3d at 15. As to the fit between Dr. Rosenthal's model and the facts at issue in the case, Pfizer objects that: (1) Dr. Rosenthal did not analyze the effect of the distorted studies or educational events on prescriptions, but rather the effect of promotional spending on prescriptions; (2) she did not analyze the effect of formulary expansion on the number of prescriptions written; (3) the analysis used national drug utilization data, as opposed to drug utilization data of Kaiser; (4) the analysis assumes all off-label marketing expenditures for Neurontin were for fraudulent marketing; and (5) the diagnostic codes used to determine what condition the drug was prescribed for indicate a patient's primary condition, so Neurontin could have been prescribed for an on-label use, but appear to be off-label. The basic thrust of Pfizer's argument is that Dr. Rosenthal's analysis does not provide insight into the -46- quantity of prescriptions written as a result of Pfizer's alleged fraudulent marketing. None of these arguments demonstrate that the district court abused its discretion under the fit criterion in admitting Dr. Rosenthal's testimony. The use of promotional spending as a variable was a reasonable fit to represent Pfizer's fraud because Pfizer targeted its promotional activities toward PMG physicians and toward Kaiser itself, and the money it spent on promotion helped to implement its fraudulent publication strategy. See Kaiser Findings, 2011 WL 3852254, at -28. The analysis did not require Kaiser to quantify the publication strategy as distinct from other promotional activities in order to effectively model the causal relationship. In fact, if publications and CME events did exert an effect independent of detailing (for instance, an effect on decisions about the formulary), the model would have underestimated the impact of the fraud. Next, the use of national drug data was reasonable, and the district court did not abuse its discretion in so holding. See id. at . Dr. Rosenthal used data that was prepared by independent consulting companies, and this type of data is used by Pfizer itself in its own strategic planning and marketing efforts. Kaiser did not independently keep track of the usage for which each prescription was written, so Dr. Rosenthal used what she considered the best alternative, derived from national databases that the -47- district court described as the gold standard. Id. Pfizer does not challenge the district court's determination that it was reasonable to assume that Kaiser's patient population and physician distribution are similar to the national mix. See id. The district court also permissibly found a fit in Dr. Rosenthal's use of the databases' diagnostic codes (particularly with respect to bipolar disorder) to determine the percentage of prescriptions written for each indication. Indeed, Pfizer's own estimate was that bipolar disorder accounted for 14.7 percent of Neurontin prescriptions, which is quite close to Dr. Rosenthal's estimate of 16 percent. See id. at  n.20. Finally, that Dr. Rosenthal's report assumed all of Pfizer's off-label marketing was fraudulent marketing is not a basis to find that the district court erred in admitting the report. Pfizer is incorrect that this assumption means that Dr. Rosenthal was assum[ing] the very conclusion she was attempting to prove. Dr. Rosenthal's analysis sought to determine whether Pfizer's marketing had a causal effect on prescribing behaviors, not whether the marketing was in fact fraudulent. Pfizer's objection does not go to the question of whether Dr. Rosenthal's regression had a close enough fit to satisfy Daubert; rather, it is a question of damages. -48-