Tristan Lim * | 24.6 | Comment | Citation: Tristan Lim, Civil RICO Standing for Misleading Pharmaceutical Marketing in Painters Health Care Fund v. Takeda Pharmaceutical Co., 24 U. Pa. J. Const. L. 1401 (2022).

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Article III of the U.S. Constitution requires that judicial power extend

only to “cases” and “controversies”—a requirement commonly understood

as standing to sue.1 Article III’s standing requirement embodies a

constitutional minimum that the plaintiff must have suffered a concrete

injury, fairly traceable to the defendant’s conduct that a court can redress by

a favorable ruling. Congress may even specify what is required of a potential

plaintiff to satisfy Article III standing under a particular statute. Under the

civil provision of the Racketeer Influenced and Corrupt Organization Act

(“RICO”), a potential plaintiff must be injured “in his business or property”

“by reason of” certain predicate acts as defined by the statute. Within the

past two decades, there has been a wave of opioid litigation against major

pharmaceutical corporations.4 A current split among circuit courts of

appeals is whether plaintiffs should be able to sue to recover money they

would not have paid to pharmaceutical corporations but-for certain

misrepresentations.

Pharmaceutical manufacturers spend billions of dollars in marketing and

promoting the effectiveness of their drugs to physicians who then prescribe them to patients. But sometimes the promotions are not entirely truthful.

For example, in 2012, GlaxoSmithKline paid approximately three billion

dollars to resolve an allegation by the U.S. Department of Justice that it failed

to report cardiovascular safety risks from taking its diabetes drug Avandia.

The next year Johnson & Johnson paid more than two billion dollars to settle

an investigation by the Department of Justice into whether the company

inappropriately marketed its antipsychotic drug Risperdal to be safe and

effective for the elderly and children with mental disabilities. But can parties

other than the Department of Justice sue pharmaceutical manufacturers for

those misleading or untruthful statements? In 2019, the Ninth Circuit

confronted this question and answered yes.

In Painters & Allied Trades Dist. Council 82 Health Care Fund v. Takeda

Pharmaceutical Co., the Ninth Circuit allowed health insurance providers to

proceed with their claims against Takeda Pharmaceuticals under the RICO

statute, alleging they would not have paid for Takeda’s drug but-for the

company’s misrepresentations about the drug’s effectiveness. However, the

Ninth Circuit was not the first circuit to allow such a claim. Other circuits,

confronted with the same question and similar plaintiffs, did not allow the

claim to proceed. This Comment will explore the circuit split of whether

misrepresentations about a drug’s safety suffice to grant standing under the

RICO statute. This Comment argues that plaintiffs should have standing to

pursue their claims because their harm was foreseeable and the natural

consequence of misrepresenting a drug’s safety risks.

This Comment proceeds in six parts. Part I discusses the drug approval

process by the Food and Drug Administration (“FDA”), the practice of offlabel

prescribing, and the benefits of seeking FDA approval for a drug. Part

II examines the history of the RICO statute, its text, and how the Supreme

Court has broadly interpreted the statute’s scope. Part III documents the

Supreme Court’s standing analysis for a civil RICO claim and the current

circuit split. Part IV discusses the practice of direct-to-physician marketing

and argues why courts should be willing to find civil RICO standing for

pharmaceutical misrepresentation cases. Part V proposes benefits to public health by allowing these claims to proceed. Part VI briefly concludes about

the implications of the Ninth Circuit’s holding in Painters and the state of the

civil RICO statute moving forward.

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* J.D., 2022, University of Pennsylvania Law School; B.A., 2018, University of California, Irvine.