Opinion ID: 857137
Heading Depth: 4
Heading Rank: 2

Heading: Regression Analysis Aggregate Evidence

Text: Pfizer relies heavily on its argument that the aggregate statistical evidence presented by Dr. Rosenthal was also insufficient to show causation (or injury) as a matter of law, and was inadmissible as well.
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-
Having found that Dr. Rosenthal's testimony was admissible, we turn to Pfizer's argument that it was insufficient evidence to support the jury's and district court's findings of causation. We reject the argument, while pointing out that her testimony was not the only evidence of but-for causation. Pfizer insists that Dr. Rosenthal's testimony cannot be credited because it does not take into account the patientspecific, idiosyncratic decisions of individual prescribing physicians. Thus, according to Pfizer, the report was legally insufficient proof of causation. Indeed, Pfizer purports to find support for its position in the district court's rulings entering summary judgment against Aetna and Harden. See Neurontin Class SJ, 754 F. Supp. 2d at 310-11; Neurontin Coordinated SJ, 677 F. Supp. 2d at 485, 494-95. A tort plaintiff need not prove a series of negatives; he doesn't have to 'offer evidence which positively exclude[s] every other possible cause of the accident.' BCS Servs., 637 F.3d at 757 (alteration in original) (quoting Carlson v. Chisholm-Moore Hoist Corp., 281 F.2d 766, 770 (2d Cir. 1960) (Friendly, J.)). Once a plaintiff presents evidence that he suffered the sort of injury that would be the expected consequence of the defendant's wrongful conduct, the burden shifts to the defendant to rebut this causal inference. Id. at 758. -49- Pfizer's argument is a repetition of its assertion that there is an intervening cause -- individual physicians' independent medical judgment -- which precludes a finding of causation based on aggregate evidence. But the burden of proving an 'intervening cause' -- something which snaps the 'causal chain' (that is, operates as a 'superseding cause,' wiping out the defendant's liability) that connects the wrongful act to the defendant's injury -- is on the defendant. Id. at 757 (citation omitted). Pfizer did offer the testimony of doctors who said that their decisions to prescribe Neurontin were not influenced by Pfizer's fraudulent marketing, and the jury and district court, within their powers, rejected the argument. Pfizer also argues that its testimony from doctors who stated that they prescribed Neurontin for off-label uses without relying on Pfizer's misrepresentations falsified Kaiser's statistical analysis. Not so. The existence of some doctors who purportedly were not influenced by Pfizer's misinformation would not defeat the inference that this misinformation had a significant influence on prescribing decisions which injured Kaiser. Indeed, Dr. Rosenthal noted the scientific invalidity of looking to physician-by-physician accounts of their prescribing decisions. Weighing the individual testimony presented by Pfizer against the aggregate evidence presented by Kaiser was a task for the jury and district court. -50- Pfizer next argues that the Rosenthal report merely demonstrated correlation and not causation. But if Pfizer's information could not be expected to affect a single doctor's decisionmaking, the company's choice to undertake the marketing campaign would be inexplicable. Cf. id. at 758 (The object of [the defendants'] conspiracies was to obtain liens that would otherwise go to [the plaintiffs and other] bidders -- there could be no other reason for wanting to pack the room in violation of the County's rule. . . . How likely is it that [plaintiffs] lost no bids to bidders who had 13 arms in the room but should have had only three?). More generally, Pfizer argues that Kaiser's use of aggregate evidence is precluded by the decisions of other courts in pharmaceutical marketing RICO fraud cases. Pfizer relies on a series of cases that it argues have rejected evidence like Kaiser's. See, e.g., In re Schering Plough Corp. Intron/Temodar Consumer Class Action, 678 F.3d 235 (3d Cir. 2012); Ironworkers Local Union 68 v. AstraZeneca Pharm., LP, 634 F.3d 1352 (11th Cir. 2011); UFCW Local 1776 v. Eli Lilly & Co., 620 F.3d 121 (2d Cir. 2010); Se. Laborers Health & Welfare Fund v. Bayer Corp., 655 F. Supp. 2d 1270 (S.D. Fla. 2009). But we disagree with Pfizer's characterization of these cases and find them either supportive of our result or inapposite. We see no split in authority. -51- In particular, Pfizer leans heavily on the Second Circuit's decision in UFCW Local 1776 v. Eli Lilly & Co., 620 F.3d 121, which reversed a district court's certification of a class of TPP plaintiffs who claimed that Eli Lilly's fraudulent marketing of Zyprexa caused them to pay an inflated price for that drug and to pay for prescriptions that would not have otherwise been written. Id. at 123, 137. To begin, the district court in Eli Lilly granted class certification on the former (excess pricing) claim, and the Second Circuit reversed on that basis. See id. at 133. By contrast, the claimed injury to Kaiser resembles the latter (excess quantity) theory. The Second Circuit found a lack of but-for causation only on the excess pricing theory, because doctors do not generally consider the price of a drug when they make prescribing decisions. Id. at 133-34. On the other hand, doctors would certainly consider information about the efficacy of a drug when deciding whether to prescribe it for their patients. As to the excess quantity theory, the Second Circuit described the plaintiffs' aggregate evidence of causation as involving only an extrapolation from the fact that the number of off-label prescriptions for Zyprexa fell after Eli Lilly's fraud became known. See id. at 135. This does not come close to resembling Dr. Rosenthal's evidence, which examined contemporaneous data that reflected what was actually happening with regard to spending and prescriptions while Pfizer's fraud was ongoing. -52- Finally, the Second Circuit specifically noted that, while [the excess quantity] theory cannot support class certification, it is not clear that the theory is not viable with respect to individual claims by some TPPs. Id. at 136. Kaiser's case, of course, is just such an individual claim by a TPP. The other cases on which Pfizer relies are distinguishable. The Eleventh Circuit, addressing alleged fraudulent marketing claims involving the drug Seroquel, specifically declined to decide the case on causation grounds. Ironworkers, 634 F.3d at 1359-60. Instead, that court held that the TPP plaintiffs had failed to show economic injury because the prescriptions at issue were merely less cost-effective than the alternatives, rather than being medically unnecessary or inappropriate.17 Ironworkers, 634 F.3d at 1360. Kaiser, in contrast, staked much of its case on proving that Neurontin was ineffective for the promoted off-label uses, and the district court so found. See Kaiser Findings, 2011 WL 3852254, at -45. The Third Circuit addressed the causation question as a matter of Article III standing rather than RICO doctrine. In re Schering Plough, 678 F.3d at 246. It also did not address the use 17 The Eleventh Circuit also decided that the TPPs had assumed the risk of paying for all prescriptions of covered drugs, even those induced by fraud, through the process of setting and collecting premiums. Ironworkers, 634 F.3d at 1364. Without commenting on such a theory, we note that neither party in this litigation has raised it. -53- of aggregate evidence at all, finding merely that the TPP plaintiff in that case had not connected the pharmaceutical company's alleged fraudulent marketing scheme as to two drugs to the TPP's payment for a third drug owned by the same company. Id. at 247-48. The Ninth Circuit, in an unpublished decision, did not mention aggregate evidence. United Food & Commercial Workers Cent. Pa. & Reg'l Health & Welfare Fund v. Amgen, Inc., 400 F. App'x 255, 25758 (9th Cir. 2010).18 Courts' treatment of aggregate evidence is not as Pfizer represents. Earlier we cited to the use of such aggregate evidence to show causation under several causes of action. We see no reason to reach a different conclusion for the specific subset of RICO claims based on fraudulent marketing.