A federal judge ruled that Amgen Inc. cannot force me to answer questions related to a 2007 story that sparked a class action suit by investors and triggered a change in FDA regulations of erythropoiesis-stimulating agents.
Judge Amit Mehta, of the U.S. District Court for the District of Columbia, quashed a subpoena filed by Amgen that sought information related to my reporting of a story about a critically important clinical trial showing that patients who received Aranesp did worse than patients who did not.
The ruling, dated Aug. 21, is posted here.
Since I am a participant in these events, I have to call this story an editorial, which is just as well, because the rubric allows me to get a few things off my chest:
• As a member of the press and as a naturalized American, I consider it a privilege to defend our First Amendment rights against attacks from one of the world’s largest biotechnology companies.
• Though much of discussion is about securities fraud, the real issue is harm done to patients, and Amgen’s decision not to release information from a negative clinical trial. I am told that by reporting this story and directly triggering FDA action, I may have saved some lives. Reporters don’t get to do this often. Stories like this one explain why we have the First Amendment.
Let’s roll back the clock to the beginning:
On Feb. 16, 2007, I reported that Amgen failed to disclose the results of a study called DAHANCA 10 (insert link), which tested Aranesp in head and neck cancer patients in Denmark. The study was stopped, because patients who received Aranesp did worse than patients who didn’t.
After my story was published, Amgen’s stock crashed, precipitating a shareholders lawsuit. Sequelae included a congressional investigation, a hearing of the House Committee on Energy & Commerce, an investigation by the Securities and Exchange Commission, a Supreme Court ruling, and—most importantly—a decision by FDA to limit the use of red cell growth factors to treat chemotherapy-induced anemia. Books have been written about this controversy, including one with my name on the cover.
Defending the lawsuit filed by shareholders, Amgen lawyers formulated a novel argument. Wall Street analysts learned about the Danish study before my story was published, they contend.
While the plaintiffs argue that my story constituted a “corrective disclosure” of information to the market, Amgen lawyers say that my story was irrelevant. They argue that I had to have made the disclosures to Wall Street sources as I was trying to figure out the significance of the DAHANCA finding. In its filings, the company postulates that the key players learned about study from me, as I was doing my reporting.
Or at least this was Amgen’s stated rationale for wanting to depose me.
Fortunately, this is America. When litigants in civil cases seek to depose reporters, they have to (1) show that the information they seek goes to the heart of the matter in the lawsuit, and (2) demonstrate that they had made a diligent effort to obtain information from alternative sources.
Compelling a reporter to testify should be a rare exception rather than the rule, Judge Mehta wrote in his excellent opinion. Amgen had failed to interview either the physicians who are cited as having been informed about the DAHANCA 10 results or to establish what Wall Street analysts may have known before the story was published.
“Amgen has failed to demonstrate the requisite diligence in seeking evidence from alternative sources. Amgen argues that it cannot reasonably be expected to depose a large quantity of ‘securities analysts covering the biotechnology sector’ in the hope of finding the two with whom Goldberg spoke. Unfortunately for Amgen, that is precisely what the law in this circuit requires.
“Here, Amgen knows of 25 or 26 analysts who followed the company at the time the DAHANCA 10 study was conducted. Deposing, at most, only three of them to discover which of them might have spoken to Goldberg and thus learned about the study before the Article’s publication, is not enough. Deposing a large number of analysts in the hope of finding the two that spoke to Goldberg might indeed be akin to looking for a needle in a haystack, as Amgen contends. But the law requires Amgen to have conducted a thorough search of the hay before deposing Goldberg, which it failed to do.”
Mehta also notes the company’s failure to depose doctors who knew about the study.
One of them was Michael Henke, a German radiation therapist, who is quoted in my story stating that he found the Danish results on the Internet. Henke was one of the first clinical researchers to suggest that these agents were harming head and neck cancer patients (The Cancer Letter, Oct. 24, 2003).
The second is Charles Bennett, an oncologist and a drug safety expert, whom I quoted stating that he heard about the results from a European colleague. Bennett would later publish a landmark study in JAMA (The Cancer Letter, June 1, 2007, Feb. 29, 2008), in which he points to harm from agents that include Aranesp.
“If confirming Dr. Bennett’s pre-Article knowledge of the study is as critical as Amgen claims, it would have been a simple matter to serve him with a subpoena for testimony,” Mehta wrote. “Instead, Amgen only served him with a document subpoena, which of course could not provide Amgen with the admissible testimonial evidence it seeks.
“Amgen also did not seek evidence from Dr. Henke. Admittedly, the burden with regard to Dr. Henke is far greater. As Dr. Henke is a resident of Germany, Amgen would have been required to proceed under The Hague Convention to secure evidence from him.
“But unfortunately for Amgen, there is no foreign evidence exception to the exhaustion requirement. Litigation in this case commenced at least two years ago and, in that time, Amgen has not made any effort to secure admissible evidence from Dr. Henke. Nor has it shown that obtaining evidence from Dr. Henke would be particularly burdensome or difficult to obtain under an international convention. A journalist’s privilege should be overridden only as ‘a last resort.’ In the case of both Dr. Henke and Dr. Bennett, Amgen has failed to pursue evidence about their knowledge of the DAHANCA 10 study from the doctors themselves.”
The company also neglected to depose the head of the DAHANCA group, Jens Overgaard, the DAHANCA 10 PI, the judge noted.
“Notably, Amgen has not sought discovery from the one person that might have information about how widespread knowledge was about the DAHANCA 10 study before the Article’s publication—the study’s principal investigator, Jens Overgaard. According to Amgen, it has concluded that Overgaard would have little to offer other than that the DAHANCA 10 study was posted on a website. If Amgen has concluded that Overgaard would have little to offer to show the market’s knowledge of the study, it is hard to believe that Goldberg would be able to offer any more.
“Amgen has not shown how it expects to obtain critical evidence by asking Goldberg the open-ended question whether he spoke to anyone else who knew about the study before the Article’s publication,” Mehta wrote.
Anyone who read my 2007 story carefully would have been able to see that, even if compelled, even if water-boarded, there would be no way I would be able to do anything but express surprise at Amgen’s theory that I had in effect disclosed to Wall Street that DAHANCA 10 came up negative.
I said in an affidavit that I spoke with two “Wall Street sources” whom I didn’t name in the story—one whom I will never identify (as per agreement, not because of this person’s prominence), and another, whose name I simply forgot. (Case No. 1:15-00825, Doc. 1-1, Exhibit A to Declaration of Paul Goldberg.)
I didn’t need many sources. In an analogous hypothetical situation where a group of 25 people is basking in sunshine, you don’t need to talk to all of them to ascertain that it’s not raining.
What does Amgen actually want from me?
I am not prone to paranoid fantasies, and neither are my lawyers, who so ably represented me in this matter.
Steven Lieberman, The Cancer Letter’s lead attorney who argued the case before Judge Mehta, said Amgen’s actions have the smell of revenge.
“This is the case of a company with unlimited resources choosing to flout the legal system to punish the publication that outed them,” said Lieberman, an attorney with Rothwell, Figg, Ernst & Manbeck.“This ruling sends a message to corporations: no matter how rich and powerful you are, you can’t flout the Constitution.
“Judge Mehta’s excellent opinion explained that companies in litigation cannot simply use journalists as a regular part of the discovery process. They may do so only when they have undertaken the extensive alternative steps that the constitution requires of them.”
Gregg Leslie, legal defense director of the Reporters Committee for Freedom of the Press, also praised the opinion: “This is a great decision, because we constantly see big corporations try to sweep up all information from reporters when they’re engaged in litigation, as if journalists are just another research resource for them. Journalists need to function independently to keep good information and analysis flowing to the public, and this decision helps with that.
“It is particularly important to get a decision like this in a case involving a specialist publication that often doesn’t have the resources of a big media company, but which is doing intensive research and reporting that must be protected,” Leslie said to The Cancer Letter.
Companies that face class action suits from shareholders try to make litigation as expensive as possible for their adversaries. This is because attorneys for the plaintiffs get paid only if they win, and there is always a chance that they would be unable to continue to invest in litigation.
In this case, which could be worth billions, Amgen dragged the plaintiffs all the way to the Supreme Court. The company challenged the certification of class, a crucial step in a class action suit, by a lower court.
Amgen argued that plaintiffs should have been required to prove materiality of Amgen’s alleged misrepresentations and omissions before class certification in order to satisfy the requirement that “questions of law or fact common to class members predominate over any questions affecting only individual members.”
An appellate court upheld the lower court’s certification of a class action, and Amgen pressed on. Finally, on Feb. 27, 2013, the Supreme Court upheld the lower and appeals court rulings, finding Amgen’s arguments “unpersuasive.”
An excerpt from the Supreme Court decision follows:
“While Connecticut Retirement [the plaintiff in the case against Amgen] certainly must prove materiality to prevail on the merits, we hold that such proof is not a prerequisite to class certification. [Federal Rule of Civil Procedure] 23(b)(3) requires a showing that questions common to the class predominate, not that those questions will be answered, on the merits, in favor of the class.
“Because materiality is judged according to an objective standard, the materiality of Amgen’s alleged misrepresentations and omissions is a question common to all members of the class Connecticut Retirement would represent. The alleged misrepresentations and omissions, whether material or immaterial, would be so equally for all investors composing the class. As vital, the plaintiff class’s inability to prove materiality would not result in individual questions predominating. Instead, a failure of proof on the issue of materiality would end the case, given that materiality is an essential element of the class members’ securities-fraud claims. As to materiality, therefore, the class is entirely cohesive: It will prevail or fail in unison. In no event will the individual circumstances of particular class members bear on the inquiry.
“Essentially, Amgen, also the dissenters from today’s decision, would have us put the cart before the horse. To gain certification under Rule 23(b)(3), Amgen and the dissenters urge, Connecticut Retirement must first establish that it will win the fray. But the office of a Rule 23(b)(3) certification ruling is not to adjudicate the case; rather, it is to select the ‘metho[d]’ best suited to adjudication of the controversy ‘fairly and efficiently.’”
Results of Aggressive Promotion
Amgen has faced multiple other legal problems related to promotion of Aranesp.
On Aug. 18, the company paid $71 million to resolve allegations that the biotech company unlawfully promoted biologic medications Aranesp and Enbrel for off-label uses. The Complaint and Consent Judgment filed today alleges that Amgen violated state consumer protection laws by:
(1) Promoting Aranesp for dosing frequencies longer than the FDA approved label without competent and reliable scientific evidence to substantiate the extended dosing frequencies;
(2) Promoting Aranesp for anemia caused by cancer without having FDA approval or competent and reliable scientific evidence to support it;
(3) Promoting Enbrel for mild plaque psoriasis even though Enbrel is only approved by the FDA to treat chronic moderate to severe plaque psoriasis; and
(4) Overstating the length of Enbrel’s efficacy in treating plaque psoriasis. By obtaining a compendium listing (typically, a non-profit reference book listing a drug’s strengths, qualities and ingredients) for Aranesp for anemia of cancer, Amgen unlawfully facilitated health care coverage and reimbursement for the drug.
“Pharmaceutical companies are prohibited from making unapproved and unsubstantiated claims about prescription drugs,” New York State Attorney General Eric Schneiderman said in a statement. “Consumers need to have confidence in the accuracy of claims made by pharmaceutical companies.”
The consent judgment requires Amgen to reform its marketing and promotional practices. Under the terms of the consent judgment, Amgen shall not:
• Make, or cause to be made, any written or oral claim that is false, misleading, or deceptive in promoting Enbrel, Aranesp or any Erythropoietin stimulating agent (“ESA”), a red blood cell stimulant in the same class as Aranesp;
• Represent that Enbrel, Aranesp or any ESA has any sponsorship, approval, characteristics, ingredients, uses, benefits, quantities, or qualities that it does not have;
• Use a compendium listing or publication to promote Enbrel, Aranesp or any ESA for an off-label use to a health care professional;
• Allow Amgen Marketing and Amgen Sales to initiate interactions with a compendium or determine the content of any materials for submissions to a compendium relating to Enbrel, Aranesp or any ESA; and
• Submit a special supplement to a compendium to support an off-label use of Enbrel, Aranesp or any ESA or use a third party to lobby a compendium on Amgen’s behalf without notifying the compendium that it is acting at Amgen’s request.
States participating in the settlement are Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.
In October, 2011, Amgen paid $780 million to settle several criminal and civil investigations that accuse the company of using illegal sales and marketing practices in promoting the red-blood-cell building agents Aranesp and Epogen (The Cancer Letter, Oct. 28, 2011).
Most of the whistleblower lawsuits were sealed, but one lawsuit that was made available was filed by Kassie Westmoreland, a former Amgen sales representative and Aranesp product manager.
That lawsuit was joined by 18 state-level attorneys general. The lawsuit accuses Amgen of placing excessive amounts of Aranesp into containers and, as part of their marketing, told healthcare providers that they could sell the excess medication and profit from the sale. The complaint alleges that Amgen overfilled Aranesp to compete with Procrit, a rival drug. According to court documents, the overfill in Aranesp prescriptions was higher than those of Procrit.
Though Procrit is marketed by Johnson & Johnson, it’s produced in the U.S. by Amgen. The lawsuit was filed in late 2009 (The Cancer Letter, Nov. 6, 2009).
A court document showing an Amgen spreadsheet lays out the financial gains that doctors were encouraged to capitalize on, via the overfilled prescriptions.
Amgen “conspired to encourage medical providers to purchase Aranesp based on representations of the profits that the providers could realize from submission of inflated Aranesp-related claims to Medicare,” and “encouraged medical providers to overstate the amount of Aranesp administered so that the provider could achieve greater amounts of reimbursement form Medicare and/or Medicaid, thereby making Aranesp more attractive than competitive drugs,” the lawsuit stated.