Map of United States made up of pills.

The Opioid Multidistrict Litigation, Federal Rule 23, and the Negotiation Class

By Laura Karas

A recent Sixth Circuit decision dashed hopes of a faster resolution to the federal opioid multidistrict litigation (MDL).

The MDL (In re National Prescription Opiate Litigation, Docket No. 1:17-md-02804) consolidated many thousands of suits against opioid makers and distributors.

Thus far, action in the MDL has presaged the enormity of corporate responsibility for the opioid crisis. Roughly one year ago, the first bellwether trial in the MDL, involving two Ohio counties, was averted due to a last-minute settlement by Teva Pharmaceuticals and the “Big Three” drug distributors (AmerisourceBergen, Cardinal Health, and McKesson). A $465 million verdict last year against Johnson & Johnson “abated” one year’s worth of damage to the state of Oklahoma from the opioid crisis, which was held to be a public nuisance under Oklahoma law. And another bellwether trial involving pharmacy chains including Walgreens and CVS is scheduled to take place next year, despite the pharmacy chains’ strong pushback.

As part of the MDL, the U.S. District Court for the Northern District of Ohio had certified a new kind of class, distinct from a litigation or settlement class — a “negotiation class” of cities and counties throughout the United States — under Federal Rule of Civil Procedure 23, the Federal Rule that governs class actions.

But on September 24, a decision by the U.S. Court of Appeals for the Sixth Circuit reversed this decision.

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Violations of federal antifraud provisions alleged against two hepatitis B treatment producers

By Wendy S. Salkin

Two investor class-action suits have been filed within days of one another against two different California-based pharmaceutical companies both of which produce hepatitis B treatments, Dynavax Technologies and Arrowhead Pharmaceuticals. The named plaintiffs in both shareholder class-action suits, David Soontjens and Yaki J. Meller, are represented by counsel at Pomerantz, LLP.[1]

Meller v. Arrowhead Pharmaceuticals, Inc., et al., complaint filed (C. D. Cal. Nov. 15, 2016)

On November 15th, named plaintiff Yaki J. Meller filed a Class Action Complaint in the United States District Court for the Central District of California against Pasadena-based Arrowhead Pharmaceuticals, Inc., its President and CEO (Christopher Anzalone), and its CFO (Kenneth Myszkowski). Arrowhead is a biopharmaceutical company that, according to its website, “develops medicines that treat intractable diseases by silencing the genes that cause them.”

Among its clinical stage drugs are ARC-520 and ARC-521, which “are designed to treat chronic hepatitis B virus infection by reducing the expression and release of new viral particles and key viral proteins with the goal of achieving a functional cure.” ARC-520 is the drug at issue. According to the Complaint, Arrowhead knew but failed to disclose that ARC-520 “could be fatal at its higher doses and that the FDA was unlikely to approve the treatment as a result.”[2] In particular, the Complaint alleges that Arrowhead:

made false and/or misleading statements and/or failed to disclose that: (i) the Company’s ARC-520 was unsafe at certain doses and caused deaths in an ongoing primate toxicology study; and (ii) as a result, Arrowhead’s public statements were materially false and misleading at all relevant times.

According to Meller’s Complaint, in so doing, Arrowhead violated Sections 10(b) (“Position Limits and Position Accountability for Security-Based Swaps and Large Trader Reporting.”) and 20(a) (“Liability to contemporaneous traders for insider trading.”) of the Securities Exchange Act of 1934, “Position Limits and Position Accountability for Security-Based Swaps and Large Trader Reporting” and “Liability to contemporaneous traders for insider trading,” respectively, and Securities and Exchange Commission Rule 10b-5, “Employment of manipulative and deceptive devices.”

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