IN RE NEURONTIN MARKETING SALES PRACTICES LITIGATION

moved from the study, the trial results were no longer positive.

Second, Dr. Bird relied on the Gorson DPN study, the results of which he interpreted to be positive based on a secondary outcome. His testimony, however, did not address the assertion made by many of plaintiffs' efficacy experts and by Dr. Dickersin that it is not good science to rely on secondary outcomes in clinical trials when evaluating efficacy.

Third, Dr. Bird relied on the Parsons DPN study, stating that the results of the trial were positive on the primary outcome, and very positive on the other outcomes. However, the primary outcome in the Parsons trial showed a difference of less than one point on an eleven-point Likert pain scale between Neurontin and the placebo. Earlier in his testimony, when discussing the Gorson trial, Dr. Bird stated that "the patient doesn't really care if there's a 1-point change on their Likert scale." (Trial Tr. vol. 18, 28.) In addition, reliance on secondary outcomes is misplaced.

Fourth, Dr. Bird relied on the Rice and Rowbotham studies, which were positive for the use of Neurontin to treat post-herpetic neuralgia. However, plaintiffs do not dispute that Neurontin is effective for the treatment of PHN.

Fifth, Dr. Bird relied on the positive results of the Serpell study, which included patients with a variety of neuropathic pain conditions, but did not acknowledge the fact that the results were positive largely due to the population of PHN patients included in the study. Nonetheless, Dr. Bird dismissed the negative results of the POPP study, which also included participants with a variety of neuropathies, due to the fact that the study involved a "mixed group of patients." (Id. at 38.)

Defendants also presented the testimony of Dr. Gary Brenner. Dr. Brenner is a board certified physician in both anesthesiology and pain medicine who also has a Ph.D. in immunology and neuroscience. He is currently an assistant professor of anesthesia at Harvard Medical School and has an active pain medicine practice at Massachusetts General Hospital. (Trial Tr. vol. 17, 6.) Like Dr. Bird, Dr. Brenner testified credibly that Neurontin is an effective, safe, and well-tolerated treatment for some kinds of neuropathic pain in some patients. (Id. at 13-14, 19-21, 28, 62-63.) Dr. Brenner did not discuss each DBRCT separately, but instead relied on systematic reviews of Neurontin used for the treatment of neuropathic pain. In particular, Dr. Brenner's opinion was based on the 2005 Cochrane Review of Neurontin for neuropathic pain. The Cochrane Review found that "looking at the literature as a whole . . . there is adequate evidence to support that there's efficacy of gabapentin for the treatment of neuropathic pain." (Id. at 34.) However, Dr. Brenner did not address the evidence as presented at trial and by Dr. Perry that the Cochrane Review's neuropathic pain report on Neurontin was deficient because the reviewers did not have access to unpublished trials like Reckless and POPP and because they did not have access to the complete data for published trials like Backonja, Gorson, and Serpell. (See Trial Tr. vol. 6, 147-48.)

After a review of 12 DBRCTs studying the use of Neurontin in the treatment of neuropathic pain, and a careful consideration of the expert testimony, the Court finds that there is no generally accepted scientific evidence that Neurontin is effective in the treatment of neuropathic pain as a broad category or indication. This is a closer call because, unlike migraine and bipolar disorder, there are four DBRCTs that concluded that Neurontin was better than placebo for treating certain narrow indications like postamputation phantom limb pain, neuropathic pain after spinal cord injury, and Complex Regional Pain Syndrome I. (TXs 1546, 1553, 1683, 1727 (Bone, Tai, Levendoglu, and Van de Vusse trials).) In addition, some trials studying the use of Neurontin to treat diabetic peripheral neuropathy found that, using some secondary outcomes (i.e. not outcomes designated as the primary outcome to determine success of the trial before the trial was conducted), Neurontin outperformed placebo. (TXs 1250, 192, 2069 (Backonja, POPP, and Parsons trials).) Pfizer also points out that fifty countries have approved Neurontin for pain (although it is unclear what scientific standard these countries applied).

However, using the generally accepted standard of scientific efficacy followed by the FDA and the scientific community (requiring two DBRCTS that demonstrate efficacy), the Court is persuaded that there is insufficient reliable evidence of the efficacy of Neurontin with respect to the broad indication of neuropathic pain. While Drs. Bird and Perry credibly testified that they have had clinical success with some patients, these anecdotal accounts cannot overcome the lack of DBRCT evidence to support efficacy in the treatment of neuropathic pain as a broad indication. Moreover, even with the narrower indication of DPN, there were serious issues with trial design in all of the trials with positive results. Remember, as well, that the FDA rejected the evidence of efficacy with respect to DPN. While this is a closer call, plaintiffs have proven that Neurontin is not generally effective for neuropathic pain, with the exception of PHN.

3. Migraine

Kaiser claims that Neurontin is ineffective for the preventive treatment of migraine headache. Migraine "is a neurovascular disorder characterized by attacks of headache variable in intensity, frequency and with autonomic and neurological accompanying symptoms." (TX 1478 at 145.) Plaintiffs presented the expert testimony of Dr. Douglas McCrory, a board certified physician in internal medicine who is a tenured faculty member at Duke University Medical Center. Dr. McCrory has an active internal medicine clinic at the Durham V.A. Hospital and spends a significant amount of his time conducting systematic reviews of clinical trial evidence for new drugs. (Trial Tr. vol. 6, 16, 17.) He is currently the lead editor for reviews on headache in the Cochrane Collaboration. (Id. at 18.) Dr. McCrory has also published more than 20 articles regarding migraine headache in medical journals.

Dr. McCrory reviewed the data from all available DBRCTs studying the use of Neurontin for migraine prophylaxis, or migraine prevention. (Trial Tr. vol. 6, 20-21.) After performing a meta-analysis of all published and unpublished trial data, Dr. McCrory concluded that "Neurontin was not an effective drug for migraine prophylaxis." (Id. at 20, 22.)

Defendants rebutted this claim by offering the testimony of Dr. Robert Gibbons, a professor of statistics at the University of Illinois at Chicago, where he is also the Director of the Center for Health Statistics. (Trial Tr. vol. 16, 35.) Dr. Gibbons is one of a handful of statisticians worldwide who has been elected to the Institutes of Medicine of the National Academy of Sciences. (Id. at 37.) Dr. Gibbons also reviewed clinical trial data for the use of Neurontin for migraine prophylaxis, and concluded that the trials show there is a "trend in the direction of increased benefit" for migraine patients using Neurontin. (Trial Tr. vol. 16, 70.) However, when the Court directly asked Dr. Gibbons if Neurontin is "effective or not effective for migraine," he responded that "there's a trend toward effectiveness . . . [but] I can't say statistically that it is [effective]." (Id. at 65.)

Although there may be a trend in the direction of increased benefit, the clinical trials completed to date do not show that Neurontin is effective for migraine prophylaxis under the standard used by the FDA and adopted by this Court for the purposes of this efficacy analysis.

(i) Trial 879-200

Trial 879-200 was conducted by Parke-Davis during the late 1980s, and was a DBRCT of "gabapentin (900 mg/day) as prophylactic treatment in patients with standard therapy-resistant common migraine." (TX 374 at 2; Trial Tr. vol. 6, 23-24.) The investigators of the 879-200 trial concluded that the trial did not provide data "sufficient to permit conclusions regarding efficacy." (TX 374 at 5.)

Dr. McCrory testified that 879-200 "didn't find that there was a statistical[ly] significant effect of Neurontin compared with placebo." (Trial Tr. vol. 6, 23.)

(ii) Trial 945-217

Trial 945-217 was conducted from 1997 to 1999, and was a "large, well-designed trial comparing Neurontin and placebo" for the treatment of migraine prophylaxis. (TX 397 at 1-2; Trial Tr. vol. 6, 27.) The results of the trial showed no statistically significant difference between Neurontin and placebo. (TX 397 at 5; Trial Tr. vol. 6, 27.)

(iii) Mathew Trial

The Mathew Trial was conducted by the defendants from 1996 to 1998, and had a similar trial design to 945-217. (TX 396 at 1; Trial Tr. vol. 6, 28-29.) The trial results showed no statistically significant difference between Neurontin and placebo "with respect to 4-week migraine headache rates or proportion of patients with reduction of 50% or greater in migraine headache rates." (TX 396 at 5.)

The study was published in the journal Headache in 2001, and claimed that "gabapentin is an effective prophylactic agent for patients with migraine." (TX 612 at 119.) The discrepancy between the research report and the published article is not explicitly mentioned; however, the positive published results are achieved by using a "modified" intent-to-treat population and by focusing on outcomes identified as secondary in the research report and initial protocol. Moreover, the article did not disclose the negative results of trials 879-200 or 945-217.

(iv) Di Trapani Trial

The Di Trapani trial, an Italian study conducted in the late 1990s, was a DBRCT studying the efficacy of Neurontin for migraine prophylaxis. (TX 1478 at 145; Trial Tr. vol. 6, 39; Trial Tr. vol. 16, 67-68.) The results of the trial showed Neurontin "to have an effective therapeutic action in the prophylactic treatment of migraine." (TX 1478 at 145.) This trial was published in the journal Clinica Terapeutica in 2000. (Id.; TX 1401.)

4. Doses Greater than 1800 mg/day

Neurontin was approved by the FDA in 1993 for doses up to 1800 mg/day. (TX 9 at 14-15.) Plaintiffs have proven that Pfizer marketed Neurontin at doses greater than 1800 mg and contend there is no evidence supporting additional efficacy at doses greater than the FDA limit.

The FDA twice rejected defendants' applications to increase the maximum dose for Neurontin. (See TX 91 at 3 (noting that "the evidence from controlled trials fails to provide evidence that higher doses of Neurontin are more effective than those recommended"); TX 190 (rejecting proposed marketing materials regarding high doses because "additional benefits of using doses greater than 1800 mg/day were not demonstrated"); Trial Tr. vol. 2, 37-38, 49, 53 (testimony of Dr. David Kessler).)

In addition, the Reckless trial, a DBRCT discussed previously in the context of neuropathic pain, involved titrations to doses greater than 1800 mg/day without exhibiting increased efficacy. (See, e.g., TX 382 at 12; Trial Tr. vol. 7, 27-28.) Defendants' experts testified that Neurontin offers enhanced benefits at doses above 1800 mg/day, and that the proper dose for individual patients is determined through the process of "titrating to effect." They also contend that the practice of titrating to effect is consistent with the FDA label. (See Trial Tr. vol. 18, 44-45 (Testimony of Dr. Bird); Trial Tr. vol. 17, 47-55 (Testimony of Dr. Brenner).) Dr. Abramson testified that the Reckless trial's fixed-dose, parallel group design is the best research design to measure effects at a given dose. (Trial Tr. vol. 3, 31-32.) While it may well be that titrating to effect is the best way to determine the proper dose for an individual patient, the Court finds the FDA's determination of lack of efficacy at higher doses persuasive.

There is no reliable evidence that Neurontin provides patients with additional benefit when administered in doses greater than the FDA-approved maximum of 1800 mg/day.

III. CONCLUSIONS OF LAW

After the jury verdict, plaintiffs' only remaining claim is brought under California Business and Professional Code § 17200, more commonly known as the California Unfair Competition Law ("UCL"). "A UCL action is equitable in nature; damages cannot be recovered." Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1144, 63 P.3d 937, 943 (2003). Accordingly, UCL claims are decided by the Court rather than a jury.

The UCL defines "unfair competition" to include "any unlawful, unfair, or fraudulent business act or practice." Cal. Bus. Prof. Code § 17200. Its coverage is "sweeping, embracing `anything that can properly be called a business practice and that at the same time is forbidden by law.'" Rubin v. Green, 847 P.2d 1044, 1052, 4 Cal. 4th 1187, 1200 (1993) (quoting Barquis v. Merchants Collection Ass'n, 496 P.2d 817, 830, 7 Cal. 3d 94, 113 (1972)).

Plaintiffs argue that defendants have violated the UCL under each of its three prongs: unlawful, unfair, and fraudulent conduct. Because the Court finds that defendants' conduct violated the "fraudulent" conduct prong of the UCL, it is unnecessary to discuss the "unlawful" and "unfair" prongs.

A. Fraudulent Business Acts or Practices

The Court impaneled an advisory jury to render a verdict on Kaiser's claim that Pfizer's conduct constituted fraudulent business acts or practices under the UCL. On March 25, 2010, the jury returned a verdict for Kaiser on this particular claim, finding that defendants engaged in fraudulent business acts or practices with respect to all off-label indications except nociceptive pain. The jury also found that those fraudulent acts or practices caused Kaiser damages with respect to all off-label indications except nociceptive pain. (See Docket No. 2760.) The Court agrees with the jury's conclusion. See Lucent Techs., Inc. v. Gateway, Inc., 580 F. Supp. 2d 1016, 1061 (S.D. Cal. 2008) (stating that a district court has discretion to impanel an advisory jury, but "the ultimate determination of [the] issues rests with the Court"), rev'd on other grounds, 580 F.3d 1301 (Fed. Cir. 2009).

The California Supreme Court recently stated that "[t]o state a claim under either the [fraud prong of the] UCL or the false advertising law, based on false advertising or promotional practices, it is necessary only to show that members of the public are likely to be deceived." In re Tobacco II Cases ("Tobacco II"), 207 P.3d 20, 29, 46 Cal. 4th 298, 312 (2009). Amendments to the UCL have imposed "an actual reliance requirement on plaintiffs prosecuting a private enforcement action under the UCL's fraud prong." Id. at 39.

Defendants contend that they had no duty to disclose negative information about Neurontin's efficacy. Under California law, nondisclosure or concealment may constitute actionable fraud "when the defendant makes partial representations but also suppresses some material facts." LiMandri v. Jenkins, 60 Cal. Rptr. 2d 539, 543 (Cal. Ct. App. 1997).

Federal courts have recognized that fraudulent half-truths can form the basis of fraud actions. The First Circuit has said that "the locus classicus of fraud is a seller's affirmative false statement or a half-truth, i.e., a statement that is literally true but is made misleading by a significant omission." Bonilla v. Volvo Car Corp., 150 F.3d 62, 69 (1st Cir. 1998) (citing Emery v. Am. Gen. Fin., Inc., 71 F.3d 1343, 1348 (7th Cir. 1995)); see also United States v. Autuori, 212 F.3d 105, 119 (2d Cir. 2000) ("[A]n omission can violate a fraud statute only in the context of a duty to disclose; but a fiduciary duty is not the sine qua non of fraudulent omissions. . . . A duty to disclose can also arise in a situation where a defendant makes partial or ambiguous statements that require further disclosure in order to avoid being misleading."); United States v. Keplinger, 776 F.2d 678, 697 (7th Cir. 1985) ("[O]missions or concealment of material information can constitute fraud cognizable under the mail fraud statute, without proof of a duty to disclose the information pursuant to a specific statute or regulation."); United States v. Townley, 665 F.2d 579, 585 (5th Cir. 1982) ("[U]nder the mail fraud statute, it is just as unlawful to speak `half-truths' or to omit to state facts necessary to make the statements made, in light of the circumstances under which they were made, not misleading.").

In a related context, the Supreme Court recently held that pharmaceutical manufacturers, who have "superior access to information about their drugs, especially in the postmarketing phase as new risks emerge," are under a special duty to investigate and report adverse effects of their drugs. Wyeth v. Levine, 129 S.ct. 1187, 1202, 1219 (2009) ("After the FDA approves a drug, the manufacturer remains under an obligation to investigate and report any adverse events associated with the drug."); see also 21 C.F.R. § 314.80 (placing responsibility for post-marketing surveillance of drugs on the manufacturer).

In one recent UCL case, the court held:

[A] claim that a business practice is (or was) `fraudulent' under Section 17200 can be based upon representations that deceive because they are untrue as well as representations that may be accurate on some level but nonetheless tend to mislead or deceive. As such a perfectly true statement couched in such a manner that it is likely to mislead or deceive the consumer, such as by failure to disclose other relevant information, is actionable under Section 17200.

Gutierrez v. Wells Fargo Bank, ___ F. Supp. 2d ___, 2010 WL 3155934 at *47 (N.D. Cal. Aug. 10, 2010) (finding that a bank committed fraudulent acts under the UCL through its undisclosed use of a "bookkeeping device" designed to maximize the overdraft fees imposed on customers). Misleading omissions may form the basis of a "fraudulent acts and practices" claim under the UCL.

Here, Pfizer had a duty to disclose scientific data demonstrating the lack of efficacy of Neurontin for off-label uses. This duty arose because Pfizer was marketing the drug for unapproved uses by disclosing positive information about the drug while suppressing negative information in its possession. Indeed, the FDA actually rejected requests for expanded labeling of Neurontin in the area of DPN and at increased doses. Pfizer's failure to disclose lack of efficacy is particularly outrageous in the area of bipolar disorder where there was not a scrap of evidence supporting efficacy and where there were actual negative side effects of depression for certain segments of the population.

With respect to bipolar disorder, neuropathic pain, migraine, and use of Neurontin at doses greater than 1800 mg/day, defendants intentionally suppressed material negative information concerning Neurontin's efficacy, rendering defendants' positive statements about Neurontin's efficacy in treating these conditions misleading, and factually false. This information would likely have been material to any PMG physician in determining how best to prescribe Neurontin for the treatment of

patients. Because it is legal for physicians to prescribe drugs off-label, it is imperative that they have accurate scientific information about the medication in the published medical literature. As Dr. Dickerson said, health care professionals practicing evidence-based medicine must rely on the integrity of the published literature to determine whether a pharmaceutical product is effective. Moreover, this information was material to a TPP or health plan like Kaiser trying to manage its drug formulary.

Accordingly, the intentional material misrepresentations and omissions found by this Court constitute fraudulent business acts or practices under the California Unfair Competition Law because they would likely deceive a reasonable health plan or reasonable physician; and actually did so in the case of Kaiser.

B. Pfizer's Legal Defenses

1. Standing

At the end of trial, defendants claimed for the first time that Kaiser Foundation Hospitals lacked independent standing to sue under the UCL because it did not pay for any Neurontin prescriptions during the relevant time periods. Screaming that it had been sandbagged, plaintiff complains that Kaiser had no prior notice that this would be an issue and thus did not introduce at trial evidence of Kaiser Hospital's standing.

However, defendants do not challenge the standing of Kaiser Foundation Health Plan to sue under the California UCL. Because the health plan has standing to bring this case, the Court need not determine whether Kaiser Hospitals independently has standing. See Liberty Prop. Trust v. Republic Props. Corp., 577 F.3d 335, 339 n. 1 (D.C. Cir. 2009) (in a case involving two affiliated plaintiffs, a limited partnership and a trust, holding that "[b]ecause the limited partnership has standing to maintain the action and a remedial award to the partnership would also make the trust whole, in the limited circumstances of this case we need not determine whether the trust independently has standing. . . . [T]he trust and the limited partnership `both are pieces of a single operating business.'").

Still, I have no evidence that Kaiser Hospitals had any damages apart from the Health Plan. As such, any award of restitution will be to Kaiser Foundation Health Plan.

2. Statute of Limitations

A thornier issue is whether Kaiser's UCL claims are barred by the four year statute of limitations. The complaint in this case was filed on February 1, 2005.

(i) Tolling Under American Pipe

As a threshold matter, plaintiffs argue that the related class action complaint (filed on May 14, 2004) tolled the UCL statute of limitations under American Pipe Construction Co. v. Utah, 414 U.S. 538, 552-53 (1974). Defendants respond that this is a pipe-dream. In its view, because Kaiser filed its own action, it cannot be considered part of the class, andAmerican Pipe does not toll the action. The Court does not need to reach this legal question because the class action complaint did not make claims for relief under the California UCL. (See Third Amended Class Complaint, Docket No. 580.) In fashioning the American Pipe rule, the Supreme Court reasoned that the filing of a class action would protect the policies underlying the statute of limitations by providing defendants with notice of a plaintiff's claim. Id. at 554-55. Because the class complaint did not make claims under the UCL, the defendants were not on notice of Kaiser's UCL claims. Accordingly, American Pipe is inapplicable and the statute of limitations was not tolled under that theory.

(ii) The Discovery Rule

Defendants argue that many of the claims are time-barred because the complaint was filed more than four years after the alleged fraudulent activities took place. Plaintiffs argue that defendants fraudulently concealed the facts underlying Kaiser's claims.

The law is unsettled in California as to whether the discovery rule applies to the statute of limitations for UCL claims.Grisham v. Philip Morris U.S.A., Inc., 151 P.3d 1151, 1157 n. 7, 40 Cal. 4th 623, 634 n. 7 (2007) ("We assume for purposes of this discussion that the delayed discovery rule applies to unfair competition claims. We note that this point is currently not settled under California law, and we do not address it.") (citations omitted). Generally, UCL claims "are subject to a four-year statute of limitations which [begins] to run on the date the cause of action accrued, not on the date of discovery."Karl Storz Endoscopy-America, Inc. v. Surgical Tech., Inc., 285 F.3d 848, 857 (9th Cir. 2002). However, in circumstances where fraud is alleged, California courts apply the "discovery" rule to UCL cases. In Broberg v. Guardian Life Ins. Co., 90 Cal. Rptr. 3d 225, 231 (Cal. Ct. App. 2009), for example, the court held:

At least in the context of unfair competition claims based on the defendant's allegedly deceptive marketing materials and sales practices, which is simply a different legal theory for challenging fraudulent conduct and where the harm from the unfair conduct will not reasonably be discovered until a future date, we believe the better view is that the time to file a section 17200 cause of action starts to run only when a reasonable person would have discovered the factual basis for a claim.

Id. at 231 (citing April Enters., Inc. v. KKTV, 195 Cal. Rptr. 421, 434 (Cal. Ct. App. 1983) ("[The] nature of the right sued on, not the form of the action . . . determines the applicability of the statute of limitations.")).

In addition, California courts have applied the doctrine of fraudulent concealment in cases brought under the UCL. See, e.g., Snapp Assocs. Ins. Servs., Inc. v. Malcolm Bruce Burlingame Robertson, 117 Cal. Rptr. 2d 331, 334-35 (Cal. Ct. App. 2002) (discussing the fraudulent concealment doctrine in a UCL case and stating that the doctrine "applies to any type of case") (citations omitted). California case law describes this doctrine:

The doctrine of fraudulent concealment, which is judicially created, limits the typical statute of limitations. `The defendant's fraud in concealing a cause of action against him tolls the applicable statute of limitations.' In articulating the doctrine, the courts have had as their purpose to disarm a defendant who, by his own deception, has caused a claim to become stale and a plaintiff dilatory. . . . It was early extended to be available `in all cases.'

Regents of Univ. of Cal. v. Superior Court, 976 P.2d 808, 822-23, 20 Cal. 4th 509, 533 (1999) (internal citations omitted).

The fraudulent concealment doctrine "does not come into play, whatever the lengths to which a defendant has gone to conceal the wrongs, if a plaintiff is on notice of a potential claim."Rita M. v. Roman Catholic Archbishop, 232 Cal. Rptr. 685, 690 (Cal. Ct. App. 1986). "A plaintiff is under a duty to reasonably investigate, and a suspicion of wrongdoing, coupled with a knowledge of the harm and its cause, commences the limitations period." Snapp Assocs., 117 Cal. Rptr. 2d at 335 (citing Jolly v. Eli Lilly Co., 751 P.2d 923, 928, 44 Cal. 3d 1103, 1112 (1988)).

For bipolar disorder, plaintiffs have proven that defendants fraudulently concealed the facts underlying plaintiffs' UCL claims. In 1999, Kaiser's DIS prepared a monograph on the use of Neurontin for the treatment of bipolar disorder. In making its recommendation to expand Neurontin's formulary status to permit prescription by psychiatrists, DIS relied on a personal communication from a Pfizer employee who did not disclose the negative Pande trial. (TX 301.) In August of 2000, defendants responded to an inquiry from Kaiser with a letter that "concluded that gabapentin appears to be effective in the milder segment of the bipolar universe" and that the "low side effect profile associated with gabapentin gives it a favorable risk to benefit ratio." (TX 309.) This letter did not disclose the negative results of the Pande, Frye, or Guille trials on bipolar, all of which were available to defendants prior to 2000. (Id.) In addition, Pfizer suppressed these negative results in the medical literature. These actions amount to fraudulent concealment that prevented Kaiser from learning about the existence of negative data from clinical trials with respect to Neurontin's use for the treatment of bipolar disorder, all the while reinforcing the claim that Neurontin was a safe and effective treatment for mood disorders.

For neuropathic pain, defendants suppressed negative evidence about the use of Neurontin to treat neuropathic pain and sponsored publication of positive evidence in scientific journals. In 1998, Parke-Davis sponsored an "abstract" in the journal Neurology, spinning the Gorson trial as positive when the author's own manuscript interpreted the trial results as negative. (TX 1271 ("Gapapentin may be effective in the treatment of painful diabetic neuropathy.").) In November 1997, defendants sponsored the publication of a supplement in Internal Medicine that claimed Neurontin was effective in treating neuropathic pain, while suppressing the negative Gorson trial results. (TX 40.) In 1998, defendants sponsored a supplement to the Cleveland Clinic Journal of Medicine that also touted Neurontin as a treatment for neuropathic pain while suppressing the negative Gorson results. (TX 110.) Beginning in 1999, the defendants actively prevented Dr. Reckless from presenting or publishing the negative results of his neuropathic pain trial. (TX 183 at 1; see also TXs 185, 136, 109.) In 2000, defendants sponsored a supplement to Neurology Reviews that suppressed the negative Gorson and Reckless trials. (TX 82.)

In connection with plaintiffs' development of a 1999 drug monograph, DIS contacted the defendants to request all available information about the use of Neurontin to treat neuropathic pain. (Trial Tr. vol. 9, 76-81.) In these communications, defendants did not disclose the complete story about the potential unblinding of the Backonja trial or provide the full research report of the Gorson trial. (Trial Tr. vol. 9, 76-80; Trial Tr. vol. 10, 84-85; Trial Tr. vol. 12, 102-06.) Finally, defendants also fraudulently concealed facts concerning efficacy through communications that were part of DIS's Inquiry Service. (See TXs 296, 309.) For example, in August 2000, DIS contacted Pfizer to inquire about dosing of Neurontin. Pfizer did not indicate that the Reckless trial had not shown increased efficacy at doses greater than the 1800 mg/day limit imposed by the FDA, but instead advised DIS that tolerability had been shown up to 3600 mg/day. (TX 296.) Dr. Joel Hyatt, a PMG physician who is a co-chair of the DUAT initiative, explained that had he known in 2003 the full extent of the evidence, he would not have written that Neurontin is effective for certain forms of neuropathic pain, and instead "would have made a statement that gabapentin, Neurontin, is not effective in neuropathic pain, period." (Trial Tr. vol. 8, 107-08.)

For migraine, defendants fraudulently concealed the facts underlying plaintiffs' UCL claim by suppressing the negative results of the Mathew study and subsequently publishing the study with positive results in Headache in 2001. They also sent a letter in 2000 to a PMG physician that claimed Neurontin was effective for the treatment of migraine headaches, but that did not disclose the negative results of trials 879-200, 945-217 or the Mathew study. (TX 432.) These actions prevented plaintiffs from learning the truth about Neurontin's efficacy for the migraine prophylaxis and the truth about defendants' fraud.

For high doses, defendants fraudulently concealed the underlying facts from plaintiffs through similar methods: i.e. suppression of negative studies, fraudulent publications, and direct communications with Kaiser that contained fraudulent information. In particular, Kaiser presented several DIS Inquiry Service documents showing that, in 2000, Parke-Davis represented to Kaiser that high doses of Neurontin were more effective than low doses. (See TXs 294, 296, 309.) In one communication, Parke-Davis stated that 3600 mg/day is the maximum dose, but states that some non-Parke-Davis studies have seen doses up to 6000 mg/day. (TX 294.) It did not disclose that the results of the Reckless study, for example, showed no additional efficacy at higher doses.

Defendants claim that Kaiser was put on notice by an article titled "Warner-Lambert Neurontin Promotions Under Investigation by U.S. Attorney" in a publication called The Pink Sheet that was published on April 3, 2000. (TX 506 ("Investigation could help define limits of government authority to regulate off-label promoting.").) Although Dr. Millares, the chair of Kaiser's DIS, testified that she reads The Pink Sheet, she did not recall reading this particular article. (Trial Tr. vol. 10, 54-55.) While this article may have suggested to Kaiser that defendants were violating FDA rules about off-label promotion, there is nothing in the article that supports an inference that Neurontin might not be effective for certain off-label indications for which it was widely used. (See TX 506.)

In addition, defendants argue that the unsealing of theFranklin case in 2000 should have put defendants on notice of their potential injuries and claims. See United States ex rel. Franklin v. Parke-Davis, No. 96-cv-11651. The unsealing of a case in Massachusetts, unaccompanied by extensive press coverage, cannot be viewed as sufficient notice, particularly to a California corporation.

Plaintiffs argue that their claims accrued in 2002 after defendants' fraud became nationally publicized. In 2002, plaintiffs were put on notice when press reports surfaced about Dr. David Franklin's whistleblower suit and the potentially fraudulent claims of efficacy made by the defendants. (See TX 319 (Kaiser "Rx Update" referencingWall Street Journal and New York Times articles published in 2002 that discussed off-label marketing of Neurontin to physicians); Trial Tr. vol. 5, 115 (testimony of Dr. Ambrose Carrejo) (stating that in 2002 "the whole story is starting to unfold").) See also United States ex rel. Franklin v. Parke-Davis, 210 F.R.D. 257 (D. Mass. 2002) (modifying protective order governing pretrial discovery after newspapers and television networks sought to intervene in the case). After 2002, Kaiser investigated its potential injuries and engaged in serious efforts to curb inappropriate prescribing of Neurontin through its DRUG and DUAT campaigns. Kaiser's claims are not barred by the UCL's statute of limitations.

3. Prescriptions Written Outside California

Defendants argue that Kaiser cannot recover under the UCL for Neurontin prescriptions written outside California. This contention raises choice-of-law issues, and both parties agree that Massachusetts choice-of-law rules should apply to the Court's analysis because the suit was filed in Massachusetts.

Massachusetts applies a "functional approach" to choice-of-law questions, which is "explicitly guided by the Restatement (Second) of Conflict of Laws (1971)." Levin v. Dalva Bros., Inc., 459 F.3d 68, 74 (1st Cir. 2006). "Section 148 of the Restatement spells out the choice of law analysis for misrepresentation claims, indicating that the law of the state where the representations were made, received, and relied upon should govern unless another state has a closer connection to the parties or the occurrence." First Marblehead Corp. v. House, 473 F.3d 1, 9 (1st Cir. 2006); see also Restatement (Second) of Conflict of Laws § 148(1) (1971). Thus, under the choice of law rules in Massachusetts for fraud and misrepresentation, the law of the state in which a plaintiff took action in reliance on a defendant's representations applies. Bushkin Assocs., Inc. v. Raytheon Co., 393 Mass. 622, 632, 473 N.E.2d 662 (1985); see also First Marblehead Corp., 473 F.3d at 9.

Plaintiffs argue that these Massachusetts choice of law rules require the application of California law to all of their claims because Kaiser's Drug Information Service (DIS) is located in California and DIS was the entity that primarily gathered information on Neurontin and corresponded with Pfizer about Neurontin.

Pfizer disagrees, arguing that California law should only apply to Kaiser's claims concerning prescriptions written in California. California law does have a "presumption against the extraterritorial application of its statutes," Meridian Project Sys., Inc. v. Hardin Constr. Co., 404 F. Supp. 2d 1214, 1225 (E.D. Cal. 2005) (citing Diamond Multimedia Sys., Inc. v. Superior Court, 968 P.2d 539, 554, 19 Cal. 4th 1036, 1060 n. 20 (1999)), and courts have held that the UCL does not apply to conduct occurring outside California. See id. (dismissing UCL claims of Canadian firm against California competitor because it involved a plaintiff that was a Canadian corporation, the plaintiff's injuries occurred in Canada, and the only specific misconduct identified in the complaint occurred in Illinois); Van Slyke v. Capital One Bank, No. C 07-00671, 2007 WL 3343943, at *14 (N.D. Cal. Nov. 7, 2007) ("California courts have been highly critical of attempts to apply the [UCL] outside California borders for transactions that do not affect California residents and did not take place within the state.")

California courts have permitted the certification of nationwide class actions under the UCL where some, or most, class members were non-California residents. See Wershba v. Apple Computer, Inc., 110 Cal Rptr. 2d 145, 159-60 (Cal. Ct. App. 2001); Wash. Mut. Bank v. Superior Court, 15 P.3d 1071, 1080, 24 Cal. 4th 906, 919-20 (2001). Accordingly, there is no bar against the application of the California UCL to prescriptions of Neurontin filled outside California, so long as Kaiser shows that it relied, in California, on misrepresentations made by defendants.

The Kaiser Foundation Health Plan maintains its headquarters in California and Kaiser Foundation Hospitals is a not-for-profit California corporation. The majority of Kaiser's members and the bulk of Kaiser's operations, including the Drug Information Services, are located in California. (Trial Tr. vol. 5, 82-83, 92-93; Trial Tr. vol. 9, 43; Trial Tr. vol. 10, 92-93.) DIS surveys the best available evidence on a drug and often, as it did for Neurontin, contacts the drug manufacturer to learn more about the drug. (Trial Tr. vol. 9, 46, 89-97; Trial Tr. vol. 10, 80-81; TXs 461, 461-A at 22, 296, 309 at 2-4, 294, 292.) DIS then creates drug monographs summarizing its findings and regional P T Committees rely heavily on these monographs. (Trial Tr. vol. 9, 43-46; Trial Tr. vol. 12, 94.) The monographs are shared with all Kaiser regions during monthly teleconferences with formulary personnel and at interregional P T Committee meetings. (Trial Tr. vol. 5, 110; Trial Tr. vol. 9, 43-46 (describing the interregional formulary subcommittee at which all monographs are shared and evidence is discussed).) Kaiser employees testified that, given this cross-pollination and information-sharing, the formularies across Kaiser regions are very similar, and certain formularies, like Kaiser's Medicare formulary, are identical across all regions. (Trial Tr. vol. 5, 112-13.) "[A]ll of the P T committees across Kaiser Permanente rely on the same evidence, rely on the [DIS] review of that evidence, rely on the same literature, and they make decisions on the products." (Trial Tr. vol. 10, 93.) This was specifically true concerning Neurontin, which was on-formulary across all Kaiser regions. (Trial Tr. vol. 5, 109-13; Trial Tr. vol. 10, 93; Trial Tr. vol. 12, 95; TX 840.)

In addition, Pfizer's marketing teams specifically targeted Kaiser in an effort to increase off-label Neurontin prescriptions. As Dr. Millares, the manager of Kaiser's DIS, explained:

[PMG physicians] depended on, you know, we're an evidence-based organization . . . and they depended upon the literature, what was out in the literature, they depended upon [DIS], and we depended upon the evidence, and so we came to wrong conclusions, and then they depended on the P T committee and they depended on what we said and we depended on the literature, and so we've had . . . these lies basically that have permeated all this information, and now our physicians are convinced that [Neurontin] . . . has evidence to support it.

(Trial Tr. vol. 10, 94-95.) In other words, DIS relied on Pfizer's misrepresentations in California, and then disseminated the mis-information to the various P T Committees.

Based on this evidence admitted at trial, the Court finds that Pfizer's misrepresentations about Neurontin's use for off-label conditions were made, received and relied on primarily in California. More than 75% of Kaiser's members are located in California. Therefore, most of the Kaiser members who were prescribed Neurontin filled their prescriptions in California. Second, the Kaiser P T Committees outside California relied on drug monographs prepared by the California DIS in making formulary decisions about Neurontin. Accordingly, there was sufficient reliance on misrepresentations in California such that Massachusetts choice of law rules require a finding that the California UCL apply to all Neurontin prescriptions paid for by Kaiser.

4. Causation

California law describes the causation requirements under the UCL by stating that "[t]he court may make such orders or judgments . . . as may be necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition." Cal. Bus. Prof. Code § 17203.

The most difficult issue in this case involves causation. The Court has written extensively on the issue of causation requirements for a RICO claim. See In re Neurontin Mktg. Sales Practices Litig., 677 F. Supp. 2d 479, 493-96 (D. Mass. 2010). Defendants argue that the First Circuit's recent opinion in Rule v. Fort Dodge Animal Health, Inc., 607 F.3d 250 (1st Cir. 2010), precludes any finding of causation in this case. In Rule, plaintiffs in a proposed class action sought to recover for an undisclosed safety risk associated with a veterinary medicine. The plaintiff acknowledged that the drug was effective, i.e. that it prevented heartworms in dogs, but argued that she should recover under the Massachusetts consumer protection statute due to undisclosed safety risks. The court held that where a product had been consumed and provided the intended benefit, the plaintiff could not demonstrate a concrete injury. Id. at 253-54. The court also noted that "it was clear at the time of Rule's law suit that she neither now could show nor could suffer in the future any adverse economic impact." Id. at 253. The First Circuit's decision in Rule does not defeat the plaintiffs' claims here. The Court has found that plaintiffs proved Neurontin was totally ineffective in treating certain off-label conditions, and that plaintiffs relied on defendants' misrepresentations — in choosing to reduce restrictions on Neurontin prescribing in Kaiser's drug formulary and drafting drug monographs. Accordingly, the Neurontin purchased by Kaiser did not, in fact, provide its intended benefit. Moreover, even where the drug may have had effectiveness in some patients (for example, in some pain indications), Kaiser demonstrated that it suffered a significant adverse economic impact because it could have paid for less expensive alternatives.

In Kaiser's case, there are three layers of causation that must be addressed. First, the Court must determine what misrepresentations and omissions Kaiser and DIS relied on and whether that reliance caused Kaiser to suffer injury. Second, I must determine whether or not PMG physicians would have nonetheless prescribed Neurontin to their patients if DIS had not published monographs recommending Neurontin or if the P T Committees had added guidelines or restrictions to Neurontin's formulary status. Finally, the Court must also deal with how to quantify the number of prescriptions caused by fraudulent marketing. I deal with each thorny question in turn.

(i) Reliance by DIS and P T Committees

Recent amendments to the UCL have imposed "an actual reliance requirement on plaintiffs prosecuting a private enforcement action under the UCL's fraud prong." In re Tobacco II Cases, 207 P.3d 20, 39, 46 Cal. 4th 298, 326 (2009). The California Supreme Court has provided a useful explanation of this reliance requirement:

This conclusion [that a showing of reliance is required], however, is the beginning, not the end, of the analysis of what a plaintiff must plead and prove under the fraud prong of the UCL. Reliance is an essential element of fraud. Reliance is proved by showing that the defendant's misrepresentation or nondisclosure was an immediate cause of the plaintiff's injury-producing conduct. A plaintiff may establish that the defendant's misrepresentation is an immediate cause of the plaintiff's conduct by showing that in its absence the plaintiff in all reasonable probability would not have engaged in the injury-producing conduct.

While a plaintiff must show that the misrepresentation was an immediate cause of the injury-producing conduct, the plaintiff need not demonstrate it was the only cause. It is not necessary that the plaintiff's reliance upon the truth of the fraudulent misrepresentation be the sole or even the predominant or decisive factor influencing his conduct. It is enough that the representation has played a substantial part, and so had been a substantial factor, in influencing his decision. Moreover, a presumption, or at least an inference, of reliance arises wherever there is a showing that a misrepresentation was material. A misrepresentation is judged to be material if a reasonable man would attach importance to its existence or nonexistence in determining his choice of action in the transaction in question, and as such materiality is generally a question of fact unless the fact misrepresented is so obviously unimportant that the jury could not reasonably find that a reasonable man would have been influenced by it.

Nor does a plaintiff need to demonstrate individualized reliance on specific misrepresentations to satisfy the reliance requirement. . . .

[W]hile a plaintiff must allege that the defendant's misrepresentations were an immediate cause of the injury-causing conduct, the plaintiff is not required to allege that those misrepresentations were the sole or even the decisive cause of the injury-producing conduct. Furthermore, where, as here, a plaintiff alleges exposure to a long-term advertising campaign, the plaintiff is not required to plead with an unrealistic degree of specificity that the plaintiff relied on particular advertisements or statements. Finally, an allegation of reliance is not defeated merely because there was alternative information available to the consumer-plaintiff, even regarding an issue as prominent as whether cigarette smoking causes cancer. Accordingly, we conclude that a plaintiff must plead and prove actual reliance to satisfy the standing requirement of section 17204 but, consistent with the principles set forth above, is not required to necessarily plead and prove individualized reliance on specific misrepresentations or false statements where, as here, those misrepresentations and false statements were part of an extensive and long-term advertising campaign.

Id. at 39-41 (citations and internal quotations omitted). See also McAdams v. Monier, Inc., 182 Cal. App. 4th 174, 105 Cal. Rptr. 704 (Feb. 24, 2010) (noting that there is a "less stringent" standard for plaintiffs not bringing class actions, and that relief "under the UCL is available without individualized proof of deception, reliance and injury") (quotingTobacco II, 207 P.3d at 35).

Pfizer engaged in an "extensive and long-term advertising campaign," see id., to promote Neurontin for off-label indications for which the company was aware the drug had not been shown to be effective. Pfizer implemented this campaign through its publications strategies, the sponsorship of CMEs, direct contact by medical liaisons and drug representatives, and direct communication with third party payors like Kaiser.

Kaiser's DIS relied on Pfizer's direct misrepresentations to it, and on the positive information introduced into the published literature by studies funded by the defendants without the benefit of the negative trials sponsored and suppressed by defendant. This reliance was reflected in the drug monographs prepared by DIS, the direct communications between DIS's inquiry service and PMG physicians, and the communications to the P T Committees.

Defendants also argue that Kaiser should not be found to have relied on any misrepresentations because "the evidence shows that the alleged misrepresentations were not a factor in their decision-making" (see Defs.' Proposed Conclusions of Law at 6 (citing Princess Cruise Lines, Ltd. v. Superior Court, 101 Cal. Rptr. 3d 323, 329 (Cal. Ct. App. 2009)) and because they knew "of an alleged falsity." (Id. (citing Laster v. T-Mobile USA, Inc., No. 05-cv-1167, 2009 WL 4842801, at *4 (S.D. Cal. Dec. 14, 2009);Buckland v. Threshold Enters., Ltd., 66 Cal. Rptr. 3d 543, 549-54 (Cal. Ct. App. 2007); Caro v. Procter Gamble Co., 22 Cal. Rptr. 2d 419, 430 (Cal. Ct. App. 1993).) To support their argument, defendants point out that the Backonja study, as published in JAMA, expressly mentioned the potential issue of unblinding, which should have put Kaiser on notice of the potential problems with the study's results. However, when Dr. Backonja alluded to problems with unblinding in the JAMA article, he claimed that proper analysis had been done to verify the reliability of the positive results. (TX 1250 at 1835.) Backonja stated that "inclusion of patients who experienced three central nervous system adverse effects in the original analysis did not account for the overall efficacy seen in the trial." (Id.) As Dr. Jewell testified, when both the sleepy and the dizzy patients who were potentially unblinded were removed from the study, as opposed to only the sleepy patients or only the dizzy patients, the results were no longer positive. Accordingly, at the time it relied on the JAMA article in its 1999 monograph, Kaiser did not and could not have known the entire truth about the Backonja results without access to the study's raw data. Moreover, despite the fact that the Backonja study, as published in JAMA, discussed the potential issue of unblinding, Parke-Davis did not mention this key flaw that could undermine the study's reliability in its public relations campaign that generated more than "85 million impressions." (TX 71 at 4.) The credible evidence is that Kaiser did not understand the true impact of the unblinding as explained by Jewell and did not give full weight to Gorson because it was placed in a letter to the editor as opposed to a peer-reviewed journal. (See, e.g., Trial Tr. vol. 9, 76-79, 86-88 (testimony of Dr. Millares that she did not have the complete data about the Backonja unblinding issue at the time of her recommendation); Trial Tr. vol. 12, 103-04 (testimony of Dr. Daniel explaining how a full understanding of the flaws in Backonja would have changed his opinion about Neurontin's efficacy).)

Pfizer also argues that Kaiser's true motive in its anti-Neurontin campaign was the drug's high cost rather than any lack of efficacy. As evidence, it points out that some regions put gabapentin back on the formulary after it went generic. (TX 810.) As such, it insists that any misrepresentations were not a substantial factor in Kaiser's decision-making. However, the fact that cost was a factor does not undermine the argument that lack of efficacy of a drug is also a substantial factor for consideration in determining which drugs to place on a formulary. If it had known the truth, Kaiser would likely not have removed restrictions on, or sanctioned widespread use of, an extremely expensive drug whose efficacy was not established, or even disproven (i.e., with respect to bipolar disorder).

(ii) Prescribing Behavior of PMG Physicians

The second causation analysis that the Court must perform is to determine whether or not PMG physicians would have nonetheless prescribed Neurontin to their patients if DIS had published monographs based on the true scientific evidence or if the P T Committees had added guidelines or restrictions to Neurontin's formulary status.

No PMG physician testified during the trial that she would not have prescribed Neurontin had she known about defendants' misrepresentations as to efficacy or suppression of negative trials in the literature like Reckless and POPP in the area of neuropathic pain. To the contrary, defendants' presented the testimony of experts with impressive credentials like Dr. Shawn Bird, Dr. Gary Brenner, and Dr. Andrew Slaby who all stated that they had reviewed the data from the negative and positive Neurontin DBRCTs and still believe Neurontin might be an effective drug for certain patients suffering from bipolar disorder and neuropathic pain. Defendants correctly point out that proof of fraud on the market in the aggregate has not been embraced in the case law as a basis for proving causation in individual cases. See generally UFCW Local 1776 v. Eli Lilly Co., ___ F.3d ___, 2010 WL 3516183 (2d Cir. Sept. 10, 2010). (reversing class certification in case alleging that the drug manufacturer had misrepresented the drug's efficacy and side effects and alleging over-pricing.)

The fact that there is a 95% compliance rate among PMG physicians with the Kaiser formulary is proof that PMG physicians would likely have changed their Neurontin prescribing behavior had DIS issued negative monographs and had the P T Committees made different decisions. This is likely true for the Southern California region, where Neurontin was placed on the formulary in 1994 but was restricted to prescribing by neurologists, the physicians who are often responsible for treating patients with epilepsy. The Court is persuaded that, had DIS and the Southern California P T committee been aware of the truth about Neurontin, Kaiser would not have removed prescribing restrictions in 1999. Accordingly, PMG physicians in the Southern California region would more likely than not have reduced their off-label prescribing of Neurontin significantly.

Defendants point out that all other Kaiser regions placed Neurontin on their formularies in 1994 without restriction or guidelines. It is true that, even if Kaiser had known that Neurontin was not effective for the off-label conditions at issue, the seven other regions would not have removed Neurontin from the formulary because it was approved by the FDA for the adjunctive epilepsy treatment and, later, for the treatment of postherpetic neuralgia. Nonetheless, DIS probably would have issued monographs for Neurontin that were materially different and would not have recommended the expanded prescribing of the drug for off-label indications. These monographs would have been shared with all Kaiser regions through the regular interregional P T Committee meetings and the monthly teleconferences with formulary personnel from all regions that were chaired by Dr. Mirta Millares, the chairperson of DIS.

Based upon the fact that Kaiser did engage in the successful DRUG and DUAT campaigns starting in 2002 when it began to learn about Pfizer's fraudulent marketing, the Court finds that it is more likely true than not true that Kaiser would have taken action to reduce inappropriate Neurontin prescribing if it had known the truth earlier by distributing evidence of the suppressed trials (like POPP, Reckless, Pande, and Frye) through its monographs and responses to physician inquiries. The Court is persuaded that PMG physicians would have responded by reducing prescribing of Neurontin to Kaiser members. Even in the area of neuropathic pain, where there is some scientific evidence of

efficacy for certain narrow indications, it is likely that a cheaper alternative like a tri-cyclic antidepressant would have replaced Neurontin. (See, e.g., Trial Tr. vol. 8, 57-58; Trial Tr. vol. 9, 13.) See Desiano v. Warner-Lambert Co., 326 F.3d 339, 349 (2d Cir. 2003) (acknowledging as valid the plaintiff TPPs' argument that the defendant pharmaceutical company's "fraud directly caused economic loss to them as purchasers, since they would not have bought Defendants' product, rather than availablecheaper alternatives, had they not been misled by Defendants' misrepresentations") (emphasis added).

(iii) Quantifying the Fraud

As discussed in the Findings of Fact, the Court accepts Dr. Rosenthal's analysis of the percentage of Neurontin prescriptions caused by defendants' off-label promotion. By indication, those percentages are as follows: (1) bipolar disorder: 99.4%; (2) neuropathic pain: 70%; (3) migraine: 27.9%; (4) doses over 1800 mg/day: 37.5%. (TX 405-K.) These percentages were translated into dollar amounts by plaintiffs' expert, Dr. Hartman, and the Court accepts his calculations as limited by the Court's findings with respect to the time periods during which defendants violated the UCL.

Defendants claim the Second Circuit's decision in Eli Lilly makes it impermissible for the Court to award damages in this case. Eli Lilly found that a proposed class should not have been certified because plaintiffs could not prove their theory of injury using generalized proof. 2010 WL 3516183, at *9-*14. Pfizer's position is that by admitting Dr. Rosenthal's and Dr. Hartman's testimony the Court is permitting plaintiffs to establish their injury through "generalized proof." However, Pfizer is gilding the Lilly. The instant case is not a class action and is therefore distinguishable from Eli Lilly. Moreover, while the testimony of Dr. Rosenthal and Dr. Hartman was allowed in for the purpose of quantifying the defendants' fraud, the Court has found, that plaintiffs established individualized reliance by Kaiser's DIS on Pfizer's misrepresentations, thereby eliminating the concerns expressed by the Second Circuit about the many variables that affect an individual physician's prescriptions. Id. at *10. Indeed, the Second Circuit allowed the so-called "quantity effect theory" to go forward for consideration with respect to individual TPPs.

C. Restitution

The California UCL empowers courts to "restore to any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition." Cal. Bus. Prof. Code § 17203. Under the UCL, Kaiser can recover amounts it paid for Neurontin as a result of defendants' unlawful, unfair, or fraudulent conduct even if Kaiser purchased the drug through a wholesaler or other intermediary rather than directly from the defendants. See Shersher v. Superior Court, 65 Cal. Rptr. 3d 634, 638-41 (Cal. Ct. App. 2007) (citing Hirsch v. Bank of America, 132 Cal. Rptr. 220 (Cal. Ct. App. 2003)). A federal district court has written that "the goal of restitution is to restore the status quo ante as nearly as possible."Tomlinson v. Indymac Bank, F.S.B., 359 F. Supp. 2d 891, 893-94 (N.D. Cal. 2005) (citations omitted).

Under the California UCL, the "court's discretion is very broad" as to the remedy it awards, Cortez v. Purolator Air Filtration Prods. Co., 999 P.2d 706, 717, 23 Cal. 4th 163, 180 (2000), and the standard of proof for a damages determination is "patently less stringent" than the requirements for standing under the UCL. McAdams v. Monier, Inc., 105 Cal. Rptr. 3d 704, 715 (Cal. Ct. App. 2010). However, an award of restitution must not be "arbitrary and capricious," see People v. Fortune, 28 Cal. Rtpr. 3d 872, 874 (Cal. Ct. App. 2005), and there must be some support in the record for a restitution award. See Colgan v. Leatherman Tool Group, Inc., 38 Cal. Rptr. 3d 36, 63 (Cal. App. Ct. 2006).

Because PMG physicians would likely have prescribed alternative medication to their patients had they not prescribed Neurontin, I conclude that the appropriate measure of plaintiffs' damages is the difference between the cost of Neurontin and the cost of the cheaper and more optimal drug that would have been prescribed. I rely on the list of medications that Kaiser considered cheaper and more optimal than Neurontin as the alternative medications that would have been prescribed the Health Plan members but for the defendants' fraud. Defendants argue that efficacy is a patient-specific issue. For example, they point out that while tri-cyclic anti-depressants are generally effective for the treatment of pain, they fail for certain patients and can have unpleasant side effects. (See Trial Tr. vol. 17, 28, 37, 47, 55-57; Trial Tr. vol. 18, 21-22.) They argue that Neurontin will be better tolerated by some patients because it is not metabolized by the liver, is not protein-bound in the blood, and does not interact with other drugs. Even if true, Kaiser has proven that other drugs are equally or more effective and much cheaper, and would likely have been the first line of treatment if the truth about Neurontin's efficacy had been known. Moreover, Neurontin has its own drawbacks; that is, depression with or without suicidal ideation in some patients.

Based on Dr. Hartman's calculations, the Court will award the following restitution to the plaintiffs: (1) bipolar disorder: $18,541,526; (2) neuropathic pain: $41,579,607; (3) migraine: $1,288,141; (4) doses greater than 1800 mg/day: $4,009,145. This totals $65,418,419.

In California, "[e]very person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled to recover interest thereon from that day." Cal. Civil Code § 3287(a). Prejudgment interest, as provided by California law, is a recoverable component of restitution in a UCL action. See Ballard v. Equifax Check Servs., 158 F. Supp. 2d 1163, 1176-77 (E.D. Cal. 2001); Irwin v. Mascott, 112 F. Supp. 2d 937, 956 (N.D. Cal. 2000). On a UCL claim, the applicable rate of interest is 7% per annum. See Cal. Const., Art. XV § 1 ("In the absence of the setting of such rate by the legislature, the rate of interest on any judgment rendered in any court of the state shall be 7 percent per annum."); see also Pro Value Props., Inc. v. Quality Loan Serv. Corp., 88 Cal. Rptr. 3d 381, 384 (Cal. Ct. App. 2009). After adding prejudgment interest to the award at the statutorily determined rate of 7% per annum, the restitution totals are as follows: (1) bipolar disorder — $26,150,953; (2) neuropathic pain — $61,596,338; (3) migraine — $1,949,431; (4) doses greater than 1800 mg/day — $5,589,796. This totals $95,286,518.

III. ORDER

The Court finds the defendants liable under the California Unfair Competition Law for conduct related to the following off-label conditions: (1) bipolar disorder; (2) neuropathic pain; (3) migraine; and (4) doses greater than 1800 mg/day.

The Court orders defendants to pay restitution to the Kaiser Foundation Health Plan in the amount of $95,286,518.

Because this figure reflects the same damage claims encompassed by the jury claim, it will not be added to the jury verdict.