Teamsters Local 237 Welfare Fund v. AstraZeneca Pharmaceuticals LP
136 A.3d 688
| Del. | 2016Background
- Third-party payor health insurers (TPPs) sued AstraZeneca claiming Nexium was falsely marketed as superior to cheaper generic Prilosec, causing TPPs to overpay for prescriptions.
- Case was filed in Delaware Superior Court in 2004, stayed during parallel federal litigation, and reactivated in 2014 after federal proceedings concluded.
- Superior Court conducted a choice-of-law analysis, concluded New York law applied, and dismissed the TPPs’ second amended complaint with prejudice for failure to plead causation; TPPs appealed.
- Central allegations: AstraZeneca launched Nexium to blunt Prilosec generic competition and promoted Nexium as superior; TPPs allege this marketing inflated their drug costs.
- Key undisputed factual point: although TPPs alleged Nexium was fraudulently marketed, they continued to list and reimburse Nexium prescriptions for years after filing suit.
- Delaware Supreme Court affirmed dismissal, holding that under either New York or Delaware consumer fraud statutes the TPPs could not recover because their injury was self-inflicted by continuing coverage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law — which state consumer-fraud law governs | Delaware has a closer connection to the claims; Delaware law should apply | New York law applies (Superior Court found New York law controlled) | Court did not decide definitively; outcome would be same under either law, so affirmed without resolving choice-of-law error |
| Causation / standing to recover under state consumer-fraud statutes | TPPs were directly injured because AstraZeneca’s false advertising inflated Nexium’s price and forced TPPs to pay more | TPPs were not injured "by reason of" the advertising: they were not exposed or causation was broken by intervening actors (physicians, PBMs); and TPPs’ continued coverage after learning of alleged fraud shows self-inflicted injury | Held for AstraZeneca: both Delaware and New York law require the plaintiff be a victim / injured by the deceptive act; TPPs continued to cover and reimburse Nexium despite alleging fraud, so they cannot recover as a matter of law; dismissal with prejudice affirmed |
Key Cases Cited
- Stutman v. Chemical Bank, 731 N.E.2d 608 (N.Y. 2000) (sets out elements of a GBL § 349 consumer-fraud claim: consumer-oriented, materially misleading, and injury caused by the deception)
- Pa. Employer Benefit Trust Fund v. Zeneca, 710 F. Supp. 2d 458 (D. Del. 2010) (district court choice-of-law and causation analysis in similar pharmaceutical consumer-fraud litigation)
- In re Avandia Marketing, Sales Practices & Product Liability Litig., 804 F.3d 633 (3d Cir. 2015) (discusses viability of market-theory causation and factual issues at pleading stage)
- UFCW Local 1776 v. Eli Lilly & Co., 620 F.3d 121 (2d Cir. 2010) (analyzes attenuated causation chain from manufacturer misrepresentations to TPP economic injury)
- In re Warfarin Sodium Antitrust Litig., 391 F.3d 516 (3d Cir. 2004) (TPPs suffered direct economic harm when they overpaid due to misrepresentations; background on TPP doctrines)
- Desiano v. Warner-Lambert Co., 326 F.3d 339 (2d Cir. 2003) (hypothetical recognizing insurer damage theory from drug mislabeling claims)
- Prohias v. Pfizer, Inc., 485 F. Supp. 2d 1329 (S.D.N.Y. 2007) (plaintiffs who continued to purchase/use product despite knowledge of alleged misrepresentations lacked cognizable injury under consumer-fraud laws)
- Heindel v. Pfizer, Inc., 381 F. Supp. 2d 364 (D.N.J. 2004) (no ascertainable loss where plaintiffs continued product use while alleging failure to disclose risks)
- Stephenson v. Capano Dev., 462 A.2d 1069 (Del. 1983) (interpreting Delaware Consumer Fraud Act and noting differences from common-law fraud)
- Basic Inc. v. Levinson, 485 U.S. 224 (U.S. 1988) (fraud-on-the-market theory context — discussed to distinguish securities-market principles from prescription-drug market)