Expert testimony in false advertising cases can rely on studies of other events

Concordia Pharmaceuticals, Inc. v. Method Pharmaceuticals,
LLC, 2016 WL 1464639, No. 3:14CV00016 (W.D. Va. Apr. 13, 2016)
 
Previous
opinion on how announcing a product launch and not following up might be false
advertising discussed here.
  Here,
the court resolves some challenges to the parties’ expert witnesses.  Daubert
requires that expert testimony must be “the product of reliable principles and
methods that are reliably applied to the facts of the case.”  Courts aren’t required to admit opinion
evidence “connected to existing data only by the ipse dixit of the expert,” but
neither must they determine that the testimony is irrefutable.
 
Concordia’s expert Dr. Reisetter, a licensed pharmacist with
a doctorate in pharmacy administration, who also works as a consultant for the
pharmaceutical and medical industries, offered opinions on the market impact
and industry consequences of Method’s submissions to drug databases. Reisetter
had performed extensive research on the effects of database listings on the
perceptions and behavior of pharmacists and doctors. Here, he offered the
opinion that Method’s efforts to list its Me-PB-Hyos products with the
databases “caused the marketplace to believe that there was an actual ‘generic’
or pharmaceutical equivalent for Donnatal appropriate for substitution,” and
that this “set off a series of inevitable downstream events in the marketplace
that adversely affected the number of prescriptions for Donnatal filled and
units sold, despite no such product being available.”
 
Method argued, among other things, that Reisetter improperly relied upon surveys conducted in
other cases (or, apparently, other “research projects”) in forming his
opinions.  While there are valid concerns here—especially for surveys
conducted for other litigation, as opposed to for other research objectives—I
think it’s often a mistake to assume that surveys conducted for a specific
litigation are more reliable than surveys conducted without the specific case
in mind.  Even the techniques we have for
detecting bias are not necessarily very reliable, and if anything, generalized
knowledge about a field might be more useful and predictive. 
 
The court found that exclusion was unwarranted; the issues
could be adequately addressed on cross-examination.  In particular, “[w]hile the court may
ultimately limit the extent to which Dr. Reisetter is permitted to reference
specific responses to survey questions, the court will permit him to offer
opinion testimony based on the results of the prior surveys,” as long as
experts in the field would reasonably rely on these kinds of prior surveys. “The
defendants are also free to point out that Dr. Reisetter ‘s opinions are not
based on quantitative or qualitative research employed to determine actual
market behavior in response to the particular database listings at issue in
this case.” In a footnote, the court said that, because these prior surveys
didn’t “account for the actual allegations in this case,” they wouldn’t support
an implied falsity theory.  It’s this
kind of reasoning that makes me sad—I think appropriately conducted surveys can
tell you how consumers will react to a claim, or a type of claim, even without expensively
testing the exact ad claim at issue in a particular defendant’s advertising.
For example, “Made in USA” is the kind of claim that is likely to work the same
way across products and contexts.  More
generally, elevating surveys over marketing experts creates a false sense of
precision, while raising litigation costs and ignoring on the front end (the
survey requirement for implicit falsity claims) all the weaknesses of surveys
that courts—expensively—deal with on the back end (the particular survey once
conducted, which might well end up being discounted).
 
Method also offered the opinions of Dr. William Fassett, a
licensed pharmacist and a professor emeritus of pharmacotheraphy at Washington
State University with an extensive background. 
In his report, he opined that price increases such as those Concordia
implemented for Donnatal would explain the harm Concordia attributed to
Method’s actions: that the reactions of pharmacists and prescribers to price
increases are generally consistent and that he would expect formularies to
eventually exclude Donnatal, and prescriptions for Donnatal to ultimately
decrease, in response to increased prices. 
As an example, he cited a prescription pain reliever that, like
Donnatal, had no generic equivalent. When the manufacturer increased the price
by over 600%, the results were increased sales dollars, fewer prescriptions and
unit sales, exclusion from formularies, and substitution, “all of which would be
expected with Donnatal.”
 
His opinions were “derived from his decades of experience as
a pharmacist, during which he dispensed Donnatal and its generic competitors;
his extensive experience working with formulary committees; and his specialized
knowledge of how formulary committees make coverage determinations.”  Personal experience is a possible
qualification for an expert as long as he can “explain how [his] experience
leads to the conclusion reached, why [his] experience is a sufficient basis for
the opinion, and how [his] experience is reliably applied to the facts.”
 
The court did exclude a portion of Concordia’s damages
expert’s report dealing with lost profits. Concordia failed to establish that his
lost profit calculations were “the product of reliable principles and methods”
that were “reliably applied” to the particular facts of this case. He failed to
take into account numerous market factors that could have affected Donnatal
sales and prescriptions.  For example,
while he determined that Donnatal prescription volume was “generally unaffected
by price increases,” he limited his analysis to two price increases in 2012, a
time when existing inventories of competing generic products were being
eliminated from the market, and he disregarded another price increase in 2013
that was followed by a reduction in Donnatal prescription volume and unit
sales. This price increase occurred after generics had been removed from the
market, but before Method’s products were listed with the pharmaceutical
databases.  Nor did he consider the
impact of newer drugs available for treating IBS, “which, unlike Donnatal, have
been approved for effectiveness by the FDA.” The expert’s failure to consider
them, or to offer an explanation for his failure, creates “enough of a doubt as
to the overall reliability of [his] opinions as to render them inadmissible.”

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