trial court erred by presuming materiality of black box warning; $834 million penalty vacated

State ex rel. Shikada v. Bristol-Myers Squibb Co., 2023 WL
2519857, SCAP-21-0000363, — P.3d —- (Hawai’i Mar. 15, 2023)

The state sued two pharmaceutical companies for violating Hawai‘i’s
Unfair or Deceptive Acts or Practices law (UDAP) by misleading the public about
the safety and efficacy of their antiplatelet drug, Plavix. What makes someone
a Plavix poor responder is complicated, and knowledge has evolved over time. The
state alleged that Plavix was less effective in patients who had certain
liver-enzyme mutations, and that defendants knew this fact years before 2009,
when the FDA updated Plavix’s label with information about the issue. The state
argued that their failure to update warnings plus intentionally suppressing
information about/research into the issue violated the law.

The trial court found for the state:  defendants misled Hawai‘i consumers by failing
to warn them that Plavix was less effective for poor responders. This omission
injured consumers by “denying them the drug’s full promised antiplatelet
effect, hindering their ability to give informed consent, and preventing them
from taking an alternative drug or undergoing genetic testing to determine
whether they were poor responders.”

The court imposed an $834 million penalty, which the Supreme
Court vacated on materiality grounds: the trial court improperly granted
partial summary judgment on whether the label mattered to consumers. A new
trial is required for UDAP deception, but not for whether the acts were unfair.
Nor did preemption, safe harbor, or statute of limitations arguments protect

The trial court agreed that the information contained in
Plavix’s federally mandated black box warning was material as a matter of law.
In the alternative, as the finder of fact at a bench trial, the court found the
defendant companies’ evidence on immateriality “weak and unpersuasive.”

Thus, at trial, defendants weren’t allowed to present
evidence showing that Hawai‘i doctors and patients hadn’t changed how they
prescribed or consumed Plavix after information about the poor responder issue
was added in 2010 to the black box warning.

Key issues: (1) Did the defendants mislead anyone by
omitting the poor responder information from the Plavix label between 1998 and
May 2009, or were they doing “the best they could with incomplete and
conflicting scientific information about the causes of variability of response
to Plavix”? [For affirmative misrepresentations this wouldn’t matter, but for
omissions state of mind does matter.] (2) Did defendants suppress research into
variability of response for financial reasons? (3) Did omission of the poor responder
information from Plavix’s label hurt Hawai‘i consumers, including by hindering
their ability to give informed consent?

The court reviewed the evidence as it developed over the
years, both before and after FDA approval. In 2009, a BMS employee wrote:

[I]t looks like we are into
stalling some more. I have to tell you that I have had in depth 1:1’s with
about 6 senior [key opinion leaders] since I have been at [the American College
of Cardiology] and the mood is very negative towards us ([Experts] are all
saying that they have been telling us this for years and we chose to ignore
them and bury our head in the sand and so they feel no sympathy toward our
current situation!)

In 2010, the FDA decided to put information about diminished
effectiveness for poor responders, associated with a particular genetic
variant, in a black box warning, including language stating that poor
metabolizers taking Plavix are more likely to have adverse cardiac events on
the drug than non-poor responders. Research and debate continued about the
causes of poor response. In 2016, the FDA removed the statement about worse
clinical outcomes from the boxed warning and just warned about “diminished
antiplatelet effect.”

As to suppressing research, the state submitted internal
documents that suggested that defendants were worried about studying
variability of response given that it could lead to “restrictive positioning”
of drugs, which posed “[p]otential threats for future sales.” Another
researcher wrote that “[t]he problem is that, given the variability of the
test, we always run the risk to show a difference in a pharmacology study …
and then we really are in trouble.” Another scientist: “In my opinion,
[Sanofi]’s/our reluctance to go down the path toward documentation of clopidogrel
resistance is understandable, but it will catch up with us and perhaps be an
unpleasant and costly surprise when others document it without asking our
permission to do so.” The BMS Vice President for the “Sanofi Alliance” at the
time wrote: “Sanofi remains adverse [sic] to doing any further work on either
aspirin or clopidogrel resistance because of the potential negative marketing
implications.” Etc.

On consumer harm, the supreme court reviewed the evidence
about whether the relevant genotype was linked to adverse clinical outcomes
(unclear; it wasn’t actively harming them, but the state’s witnesses testified
that it was essentially a placebo for nonresponders, which defendants disputed)
and whether non-white (particularly Asian) patients on Plavix are more likely
to receive little or no benefit from the drug.

The trial court found deception by omission, focusing on
what defendants knew when Plavix launched, as well as suppression/avoidance of
clarifying research. And it found consumer harm, relying on the label’s

Safe harbor: UDAP’s “safe harbor” exempts “[c]onduct in
compliance with the orders or rules of, or a statute administered by, a
federal, state, or local governmental agency.” But the FDA “did not issue the
companies a special dispensation absolving them of any state-law duties they
may have (above and beyond their obligations under federal law) to update the
Plavix label as the relevant science evolves. The FDA’s approval of Plavix’s
label does not confer the agency’s imprimatur on the companies’ decision not to
add information about variability of response to its warnings before 2009.”  Moreover, there was no safe harbor for
suppressing research or failing to disclose the results of a meta-analysis to
the public.

Statute of limitations: In Hawai’i, the state is not subject
to any limitations periods unless it is “specifically designated in such a
statute as subject to the limitation period contained therein.” This one

Preemption: There was no preemption because the FDA allows
manufacturers to change labels to “add or strengthen a contraindication,
warning, precaution, or adverse reaction” or to “add or strengthen an
instruction about dosage and administration that is intended to increase the
safe use of the drug product,” upon filing a supplemental application with the
FDA; a manufacturer need not wait for FDA approval. Preemption only applies
when there is “clear evidence that the FDA would not have approved a change to
[the brand name drug’s] label” required by state law. Here, by contrast, the
FDA eventually put information about the poor responder issue in a black box
warning on Plavix’s label.

But the trial court erred on materiality. There were genuine
factual disputes, and the trial court shouldn’t have weighed evidence before

Under the UDAP law, a representation or omission is
considered material if it “involves information that is important to consumers
and, hence, likely to affect their choice of, or conduct regarding, a product.”
The test is objective, not subjective.

The State stressed that a black box warning is the most
serious warning the FDA can require and presented eight survey findings from
the defendant companies’ 40-doctor telephone survey on how the boxed warning
impacted the doctors’ prescribing behavior. But the defendants argued that a
decade of evidence disproved materiality in this specific case, even though
many Hawai’ian patients are of Asian or Pacific Island descent. [This seems
affected by path-dependence: if the warning had been added earlier, when
doctors were less comfortable/used to the drug, would that still have
happened?] The State’s public health journal also recommended that Hawai‘i
doctors not change their prescribing practice based on the boxed warning and
that genetic testing not be done.

The trial court reasoned that, when information relates to
safety and health, there’s a presumption that it’s material. Moreover, “materiality
is determined by an objective, patient-oriented test, [so] evidence about the
behavior of doctors could never create a genuine issue of material fact.”

This was an overstatement and a misinterpretation.
Overcoming the presumption of materiality is “not a high hurdle.” Defendants
may always counter the presumption with extrinsic evidence, including “expert
testimony, consumer research, and evidence of how the networks and other expert
bodies interpreted the advertisements.” Although there’s an intuition that “something
the FDA considers very important for consumers to see must be material to those
consumers … materiality is about what consumers do, not what the FDA thinks. Even
evidence that the defendants themselves considered the information important
isn’t dispositive, because the standard is materiality to a reasonable
consumer, not the defendants. And “while the prescribing decisions of doctors
are not synonymous with consumer behavior, they are certainly not irrelevant to
it…. Objectively reasonable patients may rely on their doctors to help them
make sense of drug labels.” There was a genuine factual dispute here.

As for the alternative holding, summary judgment evidence
was no substitute for trial, including cross-examination.

Thus the deceptive acts liability holding had to be thrown
out; the error on materiality also affected the question of whether the
omission in question was likely to mislead consumers. Defendants could make
their case that Plavix was not, for a large chunk of Hawai‘i’s population, a bad

Unfairness survived. A practice is unfair under the UDAP if
it (1) offended public policy, (2) was immoral, unethical, oppressive, or
unscrupulous, or (3) substantially injured Hawai‘i consumers.  The materiality ruling affected (3), but (1)
and (2) were independently sufficient. Unlike the FTCA, Hawai’i law allows
finding a UDAP violation on any of those bases. Rather, “[a] practice
may be unfair because of the degree to which it meets one of the criteria or
because to a lesser extent it meets all three.” This was consistent with
interpreting Hawai‘i’s consumer protection law “in a way that maximizes
consumer protection.”

Findings about the black box label relied on – and thus were
tainted by – the materiality finding. “But the second type of conduct –
suppressing research and inquiry into the drug for financial reasons – had no
connection to the court’s materiality ruling.” These acts offended public
policy given that pharmacos have a common law duty to warn consumers “when the
risks of a particular drug become apparent.” The trial court found that the defendantss
aimed to avoid their common law duty by: “suppressing research and continuously
and repeatedly failing to further investigate the risks of reduced platelet
inhibition in poor metabolizers.” And they knew – from the moment Plavix
launched – about the diminished effects of Plavix in non-white populations, but
didn’t volunteer this information to the FDA and avoided funding studies which
could draw more attention to the variability of response. This set back
research; “[p]reventing risks from becoming apparent for financial gain offends
Hawai‘i public policy,” even if a drug proves to be safe. The same conduct also
qualified as “immoral, unethical, oppressive, [or] unscrupulous.”

Nonetheless, the penalty calculation was impaired by the
materiality error, so that had to go back too. “That the court landed on a per-prescription
penalty reveals how crucial materiality was to the damage calculations.”

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