UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

Nancy Gerdts, individually and for minor A.G., Cindy Slavens individually and for minor J.S., for themselves and all similarly situated,

Paul R. Dahlberg, Anthony J. Nemo, and Andrew L. Davick, Meshbesher & Spence, Ltd. for and on behalf of Plaintiffs.

James D. Miller, King & Spaulding LLP, and Scott A. Smith, Amanda M. Cialkowski and Tracy J. Van Steenburgh, Halleland Lewis Nilan & Johnson, P.A. for and on behalf of Defendants.

This action involves the prescription drug paroxetine, sold under the trade name Paxil® (“Paxil”), and marketed by SmithKline Beecham Corporation d/b/a GlaxoSmithKline (“GSK”). Plaintiffs, residents of Minnesota and Ohio, seek to represent a class of persons who purchased Paxil after November 19, 1998, for the treatment of depression in patients under the age of 18 years. Complaint ¶ 1. The basis of Plaintiffs’ claims are that GSK misrepresented information concerning the safety and efficacy of Paxil for treating pediatric depression. Id. ¶ 2. Specifically, Plaintiffs allege that GSK has “allowed positive information about pediatric use of paroxetine to be disclosed publically, but ha[s] withheld and concealed negative information concerning the safety and effectiveness of the drug as a treatment for pediatric depression.” Id.

Currently before the Court is GSK’s motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Standard

For the purposes of GSK’s motion to dismiss, the Court takes all facts alleged in Plaintiffs’ Complaint as true. Westcott v. Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990). Further, the Court must construe the allegations in the Complaint and reasonable inferences arising from the Complaint favorably to Plaintiffs. Morton

v. Becker, 793 F.2d 185, 187 (8th Cir. 1986). A motion to dismiss will be granted only if "it appears beyond doubt that the Plaintiff can prove no set of facts which would entitle him to relief." Id.; see Conley v. Gibson, 355 U.S. 41, 45-46 (1957). The Court applies those standards in the following discussion. Factual Background

Paxil has been approved by the Food and Drug Administration (“FDA”) for treatment of depression in adults, but it has not been approved by the FDA for treatment of depression in patients under the age of 18. Id. ¶ 29. Physicians may nonetheless prescribe Paxil to pediatric patients when, in the physician’s professional judgment, it is an appropriate treatment. Id. ¶ 30. This is referred to as an “off-label” use.

Plaintiffs allege that GSK conducted three multi-center, placebo-controlled, double-blind clinical studies to assess the safety and efficacy of Paxil in treating children and adolescents diagnosed with major depressive disorder (“MDD”). These studies are referred to as Studies 329, 377 and 701. Id. ¶ 35. Final clinical reports for Studies 329 and 377 were received by GSK in November 1998 and for Study 701 in July 2001. Id. ¶ 36. Studies 377 and 701 allegedly failed to show that Paxil was more effective than a placebo, or that there was any efficacy for treating children with MDD. Id. ¶ 39. Study 329 presented a mixed picture of efficacy with respect to treating pediatric depression. Id. ¶ 40.

Plaintiffs allege that GSK limited physician access to only the most favorable aspects of the data from the studies referred to above. Id. ¶ 45. To that end, GSK allegedly sought publication of Study 329, but not the results of Studies 377 and

701. Id. ¶ 46. In an internal memo, GSK recognized that the studies did not “demonstrate a statistically significant difference from placebo on the primary efficacy measures” and “failed to demonstrate any separation of Paxil from a placebo.” Id. ¶ 47. This same document provided that GSK’s target was “to effectively manage the dissemination of this data in order to minimize any potential negative commercial impact.” Id. ¶ 48. This memo further provided that data from Studies 329 and 377 would not be submitted to regulators, since these studies did not support a label change concerning pediatric use. Id. ¶ 50. Positive data from Study 329 was presented in abstract form in November 1998 and an article describing and analyzing the results was published in a professional journal. Id. ¶ 53. Studies 377 and 701 were not published, however. Id. ¶ 54.

In 2002, GSK submitted to the FDA the results of the studies in order to obtain “Pediatric Exclusivity.”¹ Id. ¶ 59. Upon review of this submission, the FDA concluded that the studies did not provide evidence that Paxil is effective for the treatment of adolescent MDD, and that Study 329 should be considered a failed trial as it did not show “superiority over placebo by a statistically significant margin.” Id. ¶ 60. GSK was nonetheless granted the Pediatric Exclusivity in June 2002. Id. ¶ 62. Plaintiffs allege that during this exclusivity period, GSK made hundreds of millions of dollars through the sales of Paxil for pediatric use. Id. ¶

66.

Plaintiffs further allege that GSK affirmatively misrepresented Paxil’s efficacy in pediatric patients in a cover memo given to its sales representatives. Id.

¹A drug manufacturer may obtain an additional six months of patent exclusivity by conducting a study on safety and efficacy for pediatric use, and submitting it to the FDA.

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¶ 68. GSK also issued Medical Information Letters “which materially omitted the negative information known to GSK concerning the safety and efficacy of paroxetine for treating MDD in children and adolescents.” Id. ¶ 70.

After submitting the final clinical reports for Studies 329, 377 and 701 to the FDA, Plaintiffs allege that GSK admitted to the European Agency of the Evaluation of Medicinal Products that the studies failed to show efficacy of Paxil with regard to pediatric patients. Id. ¶ 73. In June 2003, the Medicines and Healthcare products Regulatory Agency (“MHRA”) in the United Kingdom “stated its analyses of GSK’s studies suggested the risk of self harm and potential suicidal behavior of youngsters with MDD was between 1.5 and 3.2 times greater for the paroxetine group than for the placebo group.” Id. ¶ 74. The MHRA advised that pediatric status be added as a contraindication on the Paxil label. Id.

In response to the MHRA warning, GSK allegedly admitted to physicians in the United Kingdom “clinical trials in children and adolescents under 18 years of age failed to demonstrate efficacy in Major Depressive Disorder, and that there was a doubling of the rate of adverse events in the paroxetine group compared with placebo, . . . “ Id. ¶ 75.

In July 2003, following discussions with Health Canada, GSK issued a letter to Canadian physicians that provided “until further information is available Paxil [] should not be used in children and adolescents under 18 years of age.” Id. ¶ 77.

The letter further stated that “[i]n pediatric patients with Major Depressive Disorder (MDD), Paxil is contraindicated, due to additional evidence of lack of efficacy.” Id. ¶ 78

Despite the MHRA’s warning, the letter to physicians in the UK and Canada, as well as the labeling changes there, GSK allegedly did not disclose this information in the U.S. and “continued to misrepresent and foster a false impression in the United States about the efficacy of Paxil in treating pediatric depression in an ongoing effort to remain in the pediatric market.” Id. ¶ 80.

Plaintiffs further allege that GSK actively promoted the use of Paxil for the treatment of pediatric depression in a television ad, and through the official Paxil website. Id. ¶ 89.

Finally, in May 2004, in response to an FDA Public Health Advisory, GSK issued a “Dear Healthcare Professional” letter which provided: “These products [Paxil and Paxil CR] are not approved for use in the pediatric population and clinical trials for PAXIL failed to demonstrate efficacy in pediatric depression.” Id. ¶ 92. Plaintiffs allege that this admission was based “on the very studies that were available to and within GSK control since 1998"; Studies 329, 377 and 701. Id.

There are three named class representatives in the Amended Complaint. Each of the named class representatives allege that one of their children was prescribed and ingested Paxil for the treatment of depressive symptoms when such children were under the age of 18. Id. ¶¶ 4-6. It is Plaintiffs’ position that GSK misrepresented to physicians and consumers the safety and efficacy of Paxil in treating pediatric depression. Based on such misrepresentations, the Plaintiffs did not receive full value for the direct or indirect purchase of Paxil for the treatment of pediatric depression; incurred personal debt and/or out-of-pocket expenditures to purchase Paxil; and passed up other treatment options. Id. ¶ 102.

Plaintiffs assert the following causes of action: fraud; misrepresentation, breach of express warranties; breach of implied warranties; and refund/restitution. The remedies sought are a refund and reimbursement of all monies expended for the purchase of Paxil and disgorgement of all profits acquired through the sale of Paxil for the treatment of pediatric depression, prejudgment and post judgment interest, attorney’s fees, expenses and costs and any further relief the Court may deem appropriate. Id. Prayer for Relief. Motion to Dismiss

1. Damages Allegations

GSK first argues that dismissal of the Amended Complaint is appropriate as Plaintiffs have failed to allege that they or their children suffered an injury as a result of taking Paxil or that Paxil was not effective for the treatment of their depressive symptoms. Without alleging either injury or lack of effectiveness, Plaintiffs have not properly asserted claims for fraud, misrepresentation or breach of warranty. Plaintiffs respond that this action involves economic transaction claims. They assert that Paxil was not effective for the treatment of pediatric depression, and therefore all class members that purchased Paxil for the treatment of pediatric depression were injured at the time of purchase.

In Briehl v. GMC, 172 F.3d 623, 627 (8^th Cir. 1999), the Eighth Circuit recognized that in product liability cases, “[c]ourts have been particularly vigilant in requiring allegations of injury or damages. . .” (listing cases). “It is well established that purchasers of an allegedly defective product have no legally recognizable claim where the alleged defect has not manifested itself in the product they own.” Id. at 628 (citing Weaver v. Chrysler Corp., 172 F.R.D. 96, 99

(S.D.N.Y. 1997)). See also, Rivera v. Wyeth-Ayerst Laboratories, 283 F.3d 315 (5^th Cir. 2002)(buyer of prescription drug, seeking economic damages based on fact that some users suffered liver damage, lacked standing due to her lack of injury).

In Williams v. The Purdue Pharma Co., 297 F.Supp.2d 171 (D.D.C. 2003), plaintiffs brought an action on their own behalf and on behalf of others similarly situated to recover injunctive relief, refunds and damages for defendants’ allegedly deceptive, misleading and fraudulent advertising and over-promotion of OxyContin. Id. 172. The advertising was allegedly false and misleading in two respects: that OxyContin would provide pain relief for twelve hours; and that OxyContin posed little risk of addiction. Id. The named plaintiffs, however, did not allege that OxyContin did not provide them 12 hour pain relief, or that they became addicted. Id.

In response to the defendants’ motion to dismiss, the court found that absent an allegation that the product failed to perform as advertised, “a plaintiff has received the benefit of his bargain and has no basis to recover purchase costs.” Id. at 176 (citation omitted). The court further held that as the named plaintiffs did not allege that they were injured by defendants’ alleged deceptive conduct, they did not have standing with respect to the asserted claims. Id. at 177 (“Standing requires ‘individualized proof’ of both the fact and the extent of the injury.”).

In this case, Plaintiffs have asserted claims of fraud, misrepresentation, breach of warranties and refund/restitution. An essential element to all of these claims is that Paxil was not effective for the treatment of pediatric depression, and Plaintiffs have appropriately included these allegations in the Complaint. For example, in paragraphs 90 through 94, Plaintiffs describe the data they allege indicate Paxil was not effective for adolescent depression. See eg. ¶ 91 (study published in The Lancet concluded paroxetine did not improve depressive symptoms for adolescents and that “little evidence remained for efficacy”); ¶ 92 (GSK admitted in May 2004 letter that clinical trials failed to demonstrate efficacy in pediatric depression)’ ¶ 94 (paroxetine failed to demonstrate efficacy in pediatric depression.) Further, in paragraph 113 it is alleged that “Paxil failed to show efficacy for treatment of adolescent depression . . . “. And in paragraph 118, Plaintiffs allege “Paxil was not of merchantable quality or safe or fit for its intended use, because the drug was not effective for the treatment of pediatric depression . . .” Accordingly, the Court finds that Plaintiffs have sufficiently alleged injury to withstand Defendant’s motion to dismiss.

2. Learned Intermediary Doctrine

GSK next argues that both Minnesota and Ohio have adopted the learned intermediary doctrine. This doctrine recognizes that a pharmaceutical manufacturer has a duty to warn only physicians of the risks involved with a pharmaceutical drug, and that the physician is in the best position to assess those risks as to a particular patient. Ehlis v. Shire Richwood, Inc., 367 F.3d 1013, 1016 (8^th Cir. 2004). “Thus, a warning to the [physician] is deemed a warning to the patient; the manufacturer need not communicate directly with all ultimate users of prescription drugs.” Id. (quoting Kirsch v. Picker Int’l, Inc., 753 F.2d 670, 671 (8^th Cir. 1985). Under this doctrine, courts have found that a manufacturer’s failure to provide a physician with an adequate warning is not the proximate cause of a patient’s injury when the physician had independent knowledge of the pharmaceutical’s risks. Id.

In this case, however, there is no suggestion or allegation that physicians had independent knowledge of Paxil’s lack of efficacy for the treatment of pediatric depression. Rather, Plaintiffs allege that GSK’s failure to disclose the results of clinical studies resulted in the fact that physicians would have no basis for independent knowledge. Thus, for purposes of addressing GSK’s motion to dismiss, Plaintiffs have sufficiently plead that physicians did not have independent knowledge of Paxil’s lack of efficacy for pediatric depression.

3. Preemption

Finally, GSK argues that Plaintiffs’ allegations that GSK failed to submit relevant data to the FDA “run headlong into FDA’s regulations” and that Plaintiffs are specifically prohibited from enforcing FDA regulations. Thus, the claims are preempted. This argument, however, misconstrues’ Plaintiffs claims.

Plaintiffs’s claims appear to be primarily based on the allegations that GSK withheld information from physicians and the public which demonstrated Paxil’s lack of efficacy in the treatment of pediatric depression, while at the same time actively promoting Paxil for this off-label use. While Plaintiffs do allege that GSK failed to submit the relevant clinical studies to the FDA, such fact, if true, is not determinative of whether it was wrongful to keep such information from physicians and the public under the state law claims asserted.

The two cases upon which GSK mainly relies for its preemption argument, Buckman Company v. Plaintiffs’ Legal Committee, 531 U.S. 1012 (2001) and Flynn v. American Home Products Corp., 627 N.W.2d 342 (Minn. Ct. App. 2001) are distinguishable from this case. In Buckman, the plaintiffs asserted that defendants, a consulting company that assisted the manufacturer of bone screws through the regulatory process, had made false representations to the FDA in the course of obtaining approval to market orthopedic screws and sought damages under state tort law. The Supreme Court held that state fraud on the FDA claims are preempted, as such claims would inevitably conflict with the FDA’s responsibility to police fraud, and would cause applicants to fear that their disclosures to the FDA, although deemed appropriate, will later be judged inappropriate by a state court. Id. at 350-351.

In Flynn v. American Home Products Corporation, 627 N.W.2d 342, 349 (Minn. Ct. App. 2001) the plaintiff ingested the diet drug “fen-phen” after it was prescribed to her by her physician. She brought an action against a generic manufacturer of the drug and brand name manufacturer of the drug after plaintiff was diagnosed with aortic insufficiency. Plaintiff claimed that defendants breached their duty to disclose known instances of adverse effects to the FDA, and that as a result, her physician prescribed fen-phen based on misrepresentations as to the risks involved. In response to a motion to dismiss before a Minnesota state district court, the plaintiff characterized her claims as “these Respondents deliberately withheld information they were legally obligated [by the FDA] to disclose [to the FDA] . . . Appellant was injured because these Respondents deliberately violated their legal duties imposed on them as manufacturers of prescription drugs.” Id. at 346.

Clearly, both Buckman and Flynn involved cases in which the claims plead necessarily depended on a violation of a specific federal requirement. By contrast, this case is primarily about misrepresentations made to consumers and to medical professionals, not to the FDA. See, Woods v. Gliatech, Inc., 218 F. Supp.2d 802, 809-810 (W.D.Va. 2002)(distinguished case before it from Buckman because “Woods’ fraud claim is based on material misrepresentations to ‘consumers and users and patients’ and not on misrepresentations to the FDA.”); Globetti v. Sandoz Pharmaceutical Corp., 2001 WL 419160 *1 (N.D. Al. 2001)(even though defendants may have undertaken to misrepresent or conceal information from the FDA, once defendant undertook to misrepresent and conceal those facts to plaintiff, the claim no longer rested on the assertion that the FDA was defrauded, thus Buckman distinguishable).

GSK further argues that federal law imposes severe restrictions, backed by criminal penalties, on the information GSK is permitted to disseminate to physicians about unapproved uses. 21 U.S.C. §§ 360aaa-360aaa-6, 332-334. Plaintiffs claims under state law would conflict with these federal regulations, and would thus be preempted.

This Court rejects this argument as well because Plaintiff’s claims do not conflict with the regulations referred to by GSK. First, the regulations, consistent with Plaintiff’s claims, provide that manufacturers may disseminate information concerning off-label uses, but that such information may not be false or misleading. 21 U.S.C. §360aaa-1(a)(2). Second, nothing in the regulations prohibited the dissemination of the studies at issue here, yet GSK is alleged to have withheld the studies for the purpose of misleading physicians and the public as to the efficacy of Paxil for the treatment of pediatric depression. See, Behrens

v. United Vaccines, Inc., 189 F. Supp.2d 945, 962 (D. Minn. 2002)(claims under the Minnesota Consumer Fraud Act and under common law that promotional representations were false or fraudulent not preempted by federal statute, as such claims were not predicated on a duty imposed by such statute, but by a general obligation not to deceive). This Court thus finds no conflict between Plaintiffs’ claims and applicable federal regulations.

IT IS HEREBY ORDERED THAT Defendant’s Motion to Dismiss [Doc. No. 7] is DENIED. Date: May 4, 2005

s/ Michael J. Davis Michael J. Davis United States District Court