MEMORANDUM OPINION AND ORDER
Pending before the Court is Defendants' motion (ECF No. 50) to dismiss Plaintiffs' Second Amended Complaint ("SAC"). The parties presented oral argument regarding the motion to dismiss on January 16, 2013, in Huntington. For the reasons stated below, the Court GRANTS the motion to dismiss (ECF No. 50). Also pending before the Court is Plaintiffs' motion for leave to file a supplemental memorandum (ECF No. 70). For reasons appearing to the Court, the Court GRANTS this motion (ECF No. 70).*fn1
The drug at the center of this litigation-Plavix (clopidogrel bisulfate)-is a prescription anticoagulant, or blood thinner. The Food & Drug Administration ("FDA") initially approved Plavix for use in patients who experienced a recent heart attack, stroke, or peripheral arterial disease ("PAD"), and later additionally approved its use in patients suffering from acute coronary syndrome ("ACS"). Mem. in Supp. of Defs.' Mot. to Dismiss SAC, at 3-4, ECF No. 51. Bristol Myers Squibb manufactured Plavix, and together with Sanofi engaged in massive marketing of the drug. Plavix has generated massive revenues, with allegedly over $42 billion in sales worldwide, and is one of the world's top-selling drugs. SAC ¶ 3, ECF No. 48.
The Employer Teamsters-Local Nos. 175/505 Health and Welfare Trust Fund and International Brotherhood of Teamsters Voluntary Employee Benefits Trust ("Plaintiffs") commenced this action against Defendants Bristol Myers Squibb Company ("BMS"), SanofiAventis U.S., L.L.C., and Sanofi-Aventis U.S., Inc.*fn2 on February 27, 2012. Compl., ECF No. 1. The Complaint alleged that Defendants engaged in misleading and false marketing of Plavix, resulting in Defendants' unjust enrichment.
Plaintiffs properly filed their First Amended Complaint ("FAC") on April 6, 2012, adding a claim for breach of implied warranty of merchantability in addition to unjust enrichment. ECF No. 13. Defendants moved for dismissal of the FAC, and that motion became ripe for disposition on July 9, 2012. The Court scheduled oral argument concerning the motion to dismiss for October 12, 2012, but then canceled oral argument because Plaintiffs indicated that they wanted to amend their pleadings.
Plaintiffs timely moved on October 18, 2012, for leave to file a second amended complaint due to recent legal developments, namely, a recently unsealed complaint filed in the Southern District of Illinois. See U.S. v. Bristol Myers Squibb, No. 11-cv-246-DRH-SCW (S.D. Ill.). The Court granted such leave, and Plaintiffs filed the SAC on October 24, 2012. ECF No. 48. As with the FAC, the SAC alleges unjust enrichment and breach of implied warranty of merchantability. The SAC differs from the FAC in many regards, however, such as: the attachment of multiple exhibits, whereas the FAC had none; the inclusion of more substantive details; reference to the recently unsealed complaint; and a re-wording of the breach of implied warranty claim.
Plaintiffs allege that Defendants misrepresented Plavix as being more effective than aspirin for certain indicated usages, namely treating patients who recently experienced myocardial infarction ("MI") or stroke. Specifically, Plaintiffs claim that Defendants mischaracterized scientific studies as supporting these efficacy claims, when in fact such studies do not actually show Plavix's superiority. Plaintiffs allege that the marketing campaign surrounding Plavix influenced doctors' decisions in prescribing the drug. While each Plavix pill costs approximately $4.00, an equivalent dose of aspirin costs approximately $0.04. Given this price difference and Plavix's lack of superiority over aspirin, Plaintiffs-as third party payors ("TPPs")-allege that they suffered damages by reimbursing Plavix prescriptions on behalf of their insureds. Plaintiffs allege that the monetary benefit retained by Defendants constitutes unjust enrichment. Plaintiffs further claim that Defendants have breached the implied warranty of merchantability. Specifically, Plaintiffs allege that "Plavix was not fit for its ordinary and intended pharmacological purpose of being a superior alternative to aspirin for certain indicated usages" and that "Defendants therefore breached the warranty implied by law that Plavix was fit for the ordinary purposes for which it was to be used." SAC ¶¶ 58-59.
Defendants have moved for dismissal of the SAC. ECF Nos. 50, 51. They argue that there are significant independent intervening events between the Plavix marketing and the prescription reimbursements, and that proximate causation is therefore lacking. Additionally, Defendants argue that Plaintiffs have not suffered any economic injury from paying for Plavix prescriptions because premiums cover the Plavix reimbursement costs, and insurance funds take into account the risk of wrongful prescriptions when setting premiums. Lastly, Defendants argue that Plaintiffs' claims sound in fraud and must therefore meet the pleading standard of Federal Rule of Civil Procedure 9(b), which such claims fail to do.
Defendants' motion to dismiss the SAC became ripe for disposition on December 3, 2012.*fn3 The parties presented oral argument on January 16, 2013, in Huntington. Therefore, the Court is ready to resolve this motion to dismiss.
In Section I, the Court discusses generally the requirements of Rule 12(b)(6). Next, in Section II, the Court examines whether Plaintiffs plausibly state a claim for relief based on the elements of each claim, apart from any causation requirement; specifically, Section II discusses how Plaintiffs characterize Plavix's ordinary purpose, and Plaintiffs' pleading of unjust enrichment. Lastly, in Section III, the Court analyzes Plaintiffs' pleading of causation.
I.Standard Of Review under Rule 12(b)(6)
In Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), the United States Supreme Court disavowed the "no set of facts" language found in Conley v. Gibson, 355 U.S. 41 (1957), which was long used to evaluate complaints subject to 12(b)(6) motions. 550 U.S. at 563. In its place, courts must now look for "plausibility" in the complaint. This standard requires a plaintiff to set forth the "grounds" for an "entitle[ment] to relief" that is more than mere "labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 555 (internal quotation marks and citations omitted). Accepting the factual allegations in the complaint as true (even when doubtful), the allegations "must be enough to raise a right to relief above the speculative level . . . ." Id. (citations omitted). If the allegations in the complaint, assuming their truth, do "not raise a claim of entitlement to relief, this basic deficiency should . . . be exposed at the point of minimum expenditure of time and money by the parties and the court." Id. at 558 (internal quotation marks and citations omitted).
In Ashcroft v. Iqbal, 556 U.S. 662 (2009), the Supreme Court explained the requirements of Rule 8 and the "plausibility standard" in more detail. In Iqbal, the Supreme Court reiterated that Rule 8 does not demand "detailed factual allegations[.]" 556 U.S. at 678 (internal quotation marks and citations omitted). However, a mere "unadorned, the-defendant-unlawfully-harmed-me accusation" is insufficient. Id. "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Id. (quoting Twombly, 550 U.S. at 570). Facial plausibility exists when a claim contains "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citation omitted). The Supreme Court continued by explaining that, although factual allegations in a complaint must be accepted as true for purposes of a motion to dismiss, this tenet does not apply to legal conclusions. Id. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. (citation omitted). Whether a plausible claim is stated in a complaint requires a court to conduct a context-specific analysis, drawing upon the court's own judicial experience and common sense. Id. at 679. If the court finds from its analysis that "the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not 'show[n]'-'that the pleader is entitled to relief.'" Id. (quoting, in part, Fed. R. Civ. P. 8(a)(2)). The Supreme Court further articulated that "a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Id. This Court will keep the requirements of Rule 12(b)(6) in mind as it examines Plaintiffs' claims.
II.Pleading of Ordinary Purpose and Unjust Enrichment
Plaintiffs allege that Defendants are liable for breach of implied warranty of merchantability and unjust enrichment because Plavix was not as effective as claimed. Specifically, Plaintiffs raise the following allegations:
1. Defendants lied about the safety and efficacy of Plavix . . . . Specifically, Defendants misrepresented the purported health benefits of Plavix by promoting it as a superior drug to aspirin for certain indicated usages for which Plavix is actually no more effective than aspirin, then charging approximately 100 times more for Plavix than aspirin costs.
4. Defendants have achieved these enormous sales by unlawfully misleading physicians, consumers and health insurers regarding the efficacy and safety of Plavix . . . . Defendants promote Plavix as being more effective than aspirin . . . .
5. Defendants' wrongful promotion of Plavix as more effective than aspirin caused Plaintiffs to suffer significant damages. Plavix costs approximately $4.00 per pill, whereas an equivalent dose of aspirin costs approximately $0.04 per pill, despite the fact that Plavix actually is no more effective than aspirin for many of its indicated usages.
15. Defendants implemented a multi-faceted scheme to wrongfully overcharge Plaintiffs by unjustly and deceptively promoting Plavix as superior to aspirin in order to increase Plavix sales.
26. . . . [B]ased on the CAPRIE study,*fn4 it would be incorrect and improper to claim that Plavix is more effective than aspirin at reducing the risk of negative heart health outcomes for patients who had recently suffered an ischemic stroke.
31. . . . Defendants falsely represented that the CAPRIE study concluded that Plavix was more effective than aspirin for . . . these subgroups.
38. . . . Defendants misleadingly characterized the PRoFESS study*fn5 results in communications with physicians to enforce the unsupported notion that Aggrenox was inferior to Plavix .
40. Defendants' purpose of presenting the results of the PRoFESS study in this confusing manner was to increase the Plavix market share in the post-stroke population, despite study results indicating that Plavix simply is not more effective than Aggrenox or aspirin for such patients.
46. Defendants used traditional drug marketing tactics to reach prescribing physicians. Sales representatives targeted and talked to physicians, nurses and other health care providers, including those located in West Virginia, about Plavix. As described above, those communications were deliberately misleading at Defendants' instruction.
50. On information and belief, these marketing efforts, unjustly misleading though they were, were effective and resulted in physicians prescribing Plavix and causing health insurers, including Plaintiffs, to reimburse the cost of their insureds' Plavix prescriptions, even ...