Lauris v. Novartis AG

          FINDINGS AND RECOMMENDATIONS RECOMMENDING DENYING DEFENDANTS' MOTION TO DISMISS (ECF No. 33-35, 44, 45) OBJECTIONS DUE WITHIN FOURTEEN DAYS

         On June 20, 2016, Defendant Novartis Pharmaceuticals Corporation (“NPC”) filed a motion to dismiss which was referred to the undersigned for issuance of findings and recommendations pursuant to 28 U.S.C. § 636(b)(1)(B) and Local Rule 302. (ECF Nos. 33, 38.)

         Oral argument on the motion to dismiss was conducted on July 20, 2016. Richard Elias and Tamara Spicer appeared for Plaintiffs, Julie Park appeared telephonically for Defendant Novartis AG, and Robert Johnston and Kelly Matayoshi appeared for Defendant Novartis Pharmaceuticals Corp. For the reasons set forth below, the Court recommends that Defendants' motion to dismiss be denied.

         I.

         BACKGROUND

         On March 22, 2016, Plaintiff Kristi Lauris filed this action on behalf of herself and as guardian ad litem for minor Plaintiffs L.L. and Taylor Lauris against Defendants Novartis AG and Novartis Pharmaceuticals Corporation. (ECF No. 1.) After Defendant Novartis Pharmaceutical Corporation filed a motion to dismiss, Plaintiffs filed a first amended complaint on June 3, 2016. (ECF No. 18-20, 28.)

         On June 20, 2016, Defendant Novartis Pharmaceuticals Corporation filed a motion to dismiss.^[1] (ECF No. 33-35.) On June 22, 2016, District Judge Lawrence J. O'Neill referred the motion to the undersigned for issuance of findings and recommendations. (ECF No. 38.) On July 5, 2016, Defendant Norvartis AG filed a notice of joinder in the motion to dismiss. (ECF No. 42.) Plaintiff filed an opposition on July 7, 2016. (ECF No. 44.) Defendants filed a reply on July 13, 2016. (ECF No. 45.)

         II.

         LEGAL STANDARD FOR MOTION TO DISMISS

         Under Federal Rule of Civil Procedure 12(b)(6), a party may file a motion to dismiss on the grounds that a complaint “fail[s] to state a claim upon which relief can be granted.” A motion under Rule 12(b)(6) tests the legal sufficiency of a claim. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). In deciding a motion to dismiss, the court is to accept as true “all material allegations of the complaint, . . . as well as all reasonable inferences to be drawn from them.” Navarro, 250 F.3d at 732. “[T]o be entitled to the presumption of truth, allegations in a complaint . . . may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). While detailed factual allegations are not required, the factual allegations of the complaint must plausibly suggest an entitlement to relief. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Starr, 652 F.3d at 1216.

         Dismissal of the complaint is appropriate where the complaint fails to state a claim supportable by a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988). Where it is apparent on the face of the complaint that the limitations period has run, defendants may raise a statute of limitations defense in a motion to dismiss. Jablon v. Dean Witter & Co., 614 F.2d 677, 682 (9th Cir. 1980); Von Saher v. Norton Simon Museum of Art at Pasadena, 592 F.3d 954, 969 (9th Cir. 2010).

         III.

         ALLEGATIONS IN FIRST AMENDED COMPLAINT

         Defendants manufactured Tasigna which is a prescription medication for the treatment of chronic myeloid leukemia (“CML”). (First Am. Compl. ¶ 12, ECF No. 28.) CML is a cancer that starts in the blood forming stem cells of the bone marrow. (Id.) Tasigna is a tyrosine-kinase inhibitor that blocks chemical enzymes in the cancer cells called tyrosine kinases inhibiting their growth and division. (Id.) Defendants developed Tasigna to replace Gleevec, a drug for which Defendants' patent expired on July 4, 2015. (Id. at ¶¶ 13-15.) Defendants developed an aggressive advertising campaign to convince physicians to prescribe, and patients to take, Tasigna rather than Gleevec. (Id. at 15.) As early as 2010, Defendants strategy was to have Tasigna take over Gleevec's business as the patent expiration date approached. (Id.)

         Plaintiffs contend that Defendants promoted the efficacy of Tasigna while failing to disclose any safety information, misrepresented that Tasigna was approved as a first-line therapy for CML when it had only been approved as a second-line therapy, and described Tasigna as the “next generation” treatment for CML which misleadingly suggested that it was superior to other similar drugs when this had not been demonstrated by substantial evidence or clinical experience. (Id. at ¶ 16.) On July 29, 2010, the FDA issued a cease and desist letter to Novartis finding that Defendants had misbranded Tasigna in violation of FDA regulations and demanding that Defendants immediately cease its misleading and illegal advertising. (Id.) Plaintiff also alleges that Defendants paid illegal kickbacks, disguised as rebates and discount payments to specialty pharmacies in exchange for recommendations that patients take Tasigna and hid reports of adverse reactions in clinical studies of patients taking Tasigna. (Id. at ¶¶ 17, 18.)

         Plaintiffs allege that Tasigna causes several dangerous adverse conditions, as relevant here, several forms of severe, accelerated, and irreversible atherosclerosis-related conditions.^[2] (Id at ¶ 19.) These conditions include peripheral arterial occlusive disease, coronary atherosclerosis, and cerebral atherosclerosis which are life threatening and can lead to amputations, heart attacks, strokes, and death. (Id.) Defendants have been aware of the risk of these atherosclerosis-related conditions since at least 2011 from multiple medical studies and reports linking Tasigna to the conditions, the higher rate of severe atherosclerosis-related conditions occurring among patients in a randomized clinical trial, and information gathered from a safety database reporting hundreds of incidents after taking Tasigna. (Id at ¶ 20.)

         A Canadian health agency investigated the risks of Tasigna; and in April 2013, Defendants issued an advisory to Canadian health care professionals and the Canadian public of the risks of atherosclerosis associated with taking Tasigna. (Id at ¶ 21.) Around this same time, Defendants updated the document used by Canadian health care professionals when prescribing medication to warn of the risks of atherosclerosis. (Id at ¶ 22.) Although Defendants provided warnings to physicians and patients in Canada, Defendants did not warn physicians and patients ...