Author: TSA Press

A health insurer is suing the maker of a drug on the market for more than 60 years in federal court, alleging that it engaged in “one of the most outrageous price-gouging schemes in the history of American medicine.”

In a complaint filed Thursday in the U.S. District Court for the Central District of California, Louisville, Kentucky-based Humana alleged that Staines-upon-Thames, U.K.-based Mallinckrodt engaged in monopoly, bribery, racketeering, fraud and other practices to increase the price of H.P. Acthar Gel (corticotropin) by more than 97,000 percent, from $40 per vial in 2001 to $39,000 by 2018. Were it not for the alleged scheme, Humana said it would have paid a fraction of the $700 million over the course of eight years that it did.

A spokesperson for Mallinckrodt wrote in an email the case should be dismissed, and that the drugmaker would “vigorously” defend itself.

“Mallinckrodt strongly believes that Humana’s complaint is completely without merit, as it is based on misstatements of fact and erroneous applications of the law,” the spokesperson wrote. “Humana’s past and present utilization management policies require that a patient and prescriber provide Humana with adequate clinical rationale and treatment history before Humana makes an informed and discretionary decision to reimburse Acthar.”

A spokesperson for Humana confirmed the filing of the lawsuit, but declined to comment further, citing a company policy of not commenting on pending litigation.

The drug initially won Food and Drug Administration approval in 1952 for a variety of indications – at a time when the agency’s regulations were less strict than today – and currently has approval for infantile spasms, exacerbations of multiple sclerosis and certain other indications.

The trajectory of Acthar’s list price will be familiar to those following drug price increases that have achieved similar infamy in recent years.

In 2001, Aventis – now part of French drugmaker Sanofi – sold rights to the then-moribund Acthar for $100,000 plus royalties to Questcor, which then increased the price to $750, increasing it further in the ensuing years. The price already exceeded $30,000 by the time Mallinckrodt bought Questcor for $5.6 billion in April 2014.

Humana’s complaint alleges that Mallinckrodt engineered the price increases in three ways. First, it acquired rights to a competing Novartis drug not approved in the U.S., Synacthen Depot, and then shelved it without developing it for the U.S. market. Second, it artificially increased demand for the drug by using a charitable foundation for illegal payment of patient copays. And third, it bribed doctors to prescribe Acthar when there were cheaper and more effective treatments available.

A study published last year found that 88 percent of more than 200 physicians who frequently prescribe Acthar had received payments from Mallinckrodt, including 20 percent who received payments of more than $10,000.

Photo: Chris Ryan, Getty Images

Vanquishing an opponent in IP litigation is never easy. Especially when significant legal developments complicate matters for plaintiffs. On the patent side, 2017’s Supreme Court opinion on patent venue in TC Heartland (discussed here, and on these pages too) has definitely complicated matters for patent owners. The formerly liberal venue rules, where a patentee could hale a defendant into every federal court where it could establish jurisdiction, were suddenly no more. Instead, patentees were limited to bringing suit where the defendant was incorporated or wherever it had a regular and established place of business. Big change, if only because win rates in patent cases for patentees have been and remain impacted by where a case is brought.

Before TC Heartland, proving venue was proper was easy in most patent cases. That has changed since that opinion was issued, with venue fights a more common occurrence — especially where the defendant is motivated to avoid facing suit in what it considers an unfavorable jurisdiction. While most plaintiffs have adapted to the new venue requirements by filing where the defendant is incorporated — hello, Delaware — or where it is physically headquartered, there are some plaintiffs that have persisted in pushing the envelope on the question of what a regular and established place of business is in America today. Not such a simple question, with customer behaviors changing rapidly. Just consider the ubiquitous uptake of the mobile phone as more than just a communication device and its impact on ecommerce, for example.

Two recent district court decisions are illustrative of the types of venue questions that district courts are grappling with post-TC Heartland. Both cases involve huge technology companies seeking to avoid litigating in unfavorable districts. In one, Google tried to avoid the clutches of the Eastern District of Texas with a motion under 12(b)(3) seeking dismissal of the complaint for improper venue. In the other, Amazon tried a motion to transfer based on improper venue; it sought to remove a case from the plaintiff’s home forum in upstate New York all the way to Amazon’s Seattle home base. While both Google and Amazon were unsuccessful, their attempts to challenge venue confirm the continued importance of this threshold question to modern-day litigation, while illustrating the challenges faced by today’s tech giants in trying to limit their patent litigation venue exposure to a few select districts.

In some ways, the Google case (Super Interconnect Technologies LLC v. Google LLC, case no. 2:18-cv-00463, E.D. Tex.) is a replay of earlier Google venue battles. At the core of the issue was whether the physical presence of Google “Global Cache” servers — which are provided by Google to ISPs in the EDTX’s environs — constitute a regular and established place of business under patent venue law. Despite losing on the issue in a previous case, Google re-urged the question before the same district court judge that had found against them earlier. Perhaps unsurprisingly, the judge once again found that the physical presence of the Google servers, coupled with the fact that they generate revenue for Google (like a 21st-century digital goods vending machine, I guess), meet the physical place of business requirement. Perhaps anticipating some pushback, the district court also limited its decision on whether a server can be a place of business to the facts of the case before it. That said, however, it remains clear that the EDTX is a court where an expansive definition of what constitutes proper venue still holds sway.

From servers in the Google case, we now turn to lockers and grocery stores in the Amazon dispute. In deciding whether or not Amazon had an established place of business in upstate New York, the court in Rensselaer Polytechnic Institute and CF Dynamic Advances LLC, v. Amazon.com, Inc., (case no. 1:18-cv-00549 N.D. NY) considered the full scope of Amazon’s links to that forum. First, the Court noted that Amazon owns Whole Foods and that there was a Whole Foods in Albany that advertised other Amazon services. Next, the Court found that Amazon had announced plans to set up a distribution center in the district, while already maintaining an Amazon Locker program in the Whole Foods and two gas stations in the area. Importantly, those lockers were branded with Amazon logos, were listed on Amazon’s website, and Amazon negotiated specific terms for hosting the lockers with the gas stations. The point of the lockers, of course, is to provide Amazon customers with a convenient location to pick up their purchases. Taking into account all of Amazon’s “touches” with the forum, venue was proper. But the court found that only the lockers were valid bases for imputing venue to Amazon, unlike the Whole Foods store or the prospective distribution center. Even though the lockers were not staffed by Amazon personnel, but rather serviced by Amazon agents on an ongoing basis, the fact that these were clearly physical locations that Amazon had set up to conduct business was enough to carry the day for the plaintiff on venue.

Ultimately, these decisions suggest that venue issues will continue as a source of conflict in patent cases. While the question of whether Amazon lockers or Google servers may not be relevant to other companies, each company should consider whether or not they are exposed to venue because of physical business locations they are maintaining. We know for sure that patent Caesers will do their best to choose the battlefield they find most favorable. Defendants hoping to make battle in a more favorable location are best advised to know where they are most vulnerable in advance of conflict. No sense in making things easier for the conqueror.

Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.

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Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.

Tale as old as time,
Trump just doesn’t see.
Capricious is a flaw,
Cannot change the law,
Arbitrarily.

Yesterday, the Trump administration announced it was gutting the Endangered Species Act. Why? The Department of the Interior says that changing the way the ESA is enforced will increase transparency and efficiency while still protecting wildlife. If you believe that, I have a oil rig in Manhattan I’d like to sell you. The real reason for the proposed changes is to make it easier for businesses and ranchers to trample wildlife on their way to greater profits. You can tell who this is intended to benefit by just looking at the validators who support this proposed change to the regulation:

A series of statements in support of the changes, published by the Interior Department, included comments from five Republican U.S. senators and six members of Congress, the National Association of Home Builders, the Public Lands Council, the National Cattlemen’s Beef Association and other organizations.

Right. If anybody cares about transparency and efficiency in protecting wildlife, it’s the National Association of Home Builders and the National Cattleman’s Beef Association. Sure.

Also yesterday, Massachusetts Attorney General Maura Healey and California Attorney General Xavier Becerra promised to sue the administration to stop these changes. From The Enterprise:

“By gutting key components of the Endangered Species Act, one of our country’s most successful environmental laws, the Trump administration is putting our most imperiled species and our vibrant local tourism and recreation industries at risk,” Healey said in a statement. “We will be taking the administration to court to defend federal law and protect our rare animals, plants, and the environment.”

Healey and California Attorney General Xavier Becerra said the new rules would allow federal agencies to ignore “serious threats to endangered animals and plants,” limit the circumstances when a species can be listed as threatened, and eliminate a requirement that agencies consider a species’ ability to recover before removing it from the endangered or threatened list.

Healey’s office said she believes the rules “would pave the way for approval of oil and gas and other development projects despite any species impacts.” U.S. Sen. Ed Markey took a similar stance, saying the changes came “at the behest of the oil, gas, and mining industries” and “will put countless species in the crosshairs of extinction.”

And so we play our game: the Trump administration wants to change the law based on a pretextual reason that nobody should actually believe. The states want to block the administration and will likely argue that their rule change is arbitrary and capricious. Progressive courts will recognize the bad faith and bad intentions of the Trump administration and try to block him from implementing wanton destruction of vulnerable species based on the say so of some dude who thinks methane-induced climate change is a socialist, vegan “hoax.” Republican courts will rule that the president can do whatever he wants because the last remaining habitats for the Ahch-To Porg should not stand in the way of voracious capitalism.

In a 5-4 decision, Chief Justice John Roberts will rule that not only is the Trump administration allowed to put Don Jr. in charge of “administering” the the Endangered Species Act, it will also rule that Massachusetts has no standing to sue unless lobsters are threatened, and overrule Mass v. EPA which is the thing even slightly standing in the way of fossil fuel proponents who want to ruin the climate.

Everything is terrible and will get worse.

AG Maura Healey plans to sue feds to protect wildlife [The Enterprise]

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Elie Mystal is the Executive Editor of Above the Law and a contributor at The Nation. He can be reached @ElieNYC on Twitter, or at elie@abovethelaw.com. He will resist.

He was terrified what would happen if anybody knew he was sick or struggling in any way. If you show vulnerability it’s the kiss of death. You’ll be overlooked for projects or promotions. If people have any doubt that you would perform at the highest level you won’t be trusted.

— Marny Turvill, wife of Ian Turvill, who worked as chief marketing officer at Chicago-based Freeborn & Peters before he died by suicide in 2017, commenting on her late husband’s reluctance to let anyone at the firm know that he was suffering. Professional staff members at Biglaw firms are also under a lot of stress and pressure to perform their jobs well, but it seems as though all of the recent attention that’s been paid to mental health in the legal profession is being afforded only to associates and partners.

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Staci Zaretsky is a senior editor at Above the Law, where she’s worked since 2011. She’d love to hear from you, so please feel free to email her with any tips, questions, comments, or critiques. You can follow her on Twitter or connect with her on LinkedIn.

We’re not big on research but it has to be some kind of record to be under federal indictment for insider trading less than 15 months after graduating from college.

So, congrats to BIll Tsai on making history!

According to his LinkedIn page, young Mr. Tsai got his BS at Stern last May, and a gig at RBC Capital Markets a month later.  

According to the US Attorney for New York’s Southern District, Tsai spent a few days in March and April of this year working on his personal trading account. Specifically, Tsai was allegedly buying call options on the stock of a printing outfit named EFI. Those options had strikes and those kicked in about three days after Tsai stopped buying the options. And the reason that EFI stock had gone up was that it had been acquired by a private equity firm called Siris. Now guess which investment bank worked with Siris on the deal…and guess who the Fed claim they can prove had seen internal RBC documentation on the EFI/Siris deal.

So, what we have here is a 23-year-old being accused of the most old school basic strain of insider trading that we know to exist.

If this is true, we just want to say that we are beaming with pride to see the youth of Wall Street embracing the classics.

And we’d also like to dd that Bill Tsai appears to have been one of the RBC Capital Markets summer associates offered a job at the end of last summer. The fact that he’s now under arrest is enough reason to make us give a polite golf clap to those wily Canadians for handing out fewer offers to the summer kids this year.

Another day, another Biglaw gender discrimination lawsuit. The latest case was filed by a former secretary at Troutman Sanders, Jessica Correa, against the firm and former transactional partner Gerald Francese (Francese is now a partner at Locke Lord).

The complaint describes escalating behavior that Correa says left her feeling “uncomfortable, vulnerable, and sexualized.” Francese allegedly began by using pet names for Correa and ogling her. According to the complaint, the increasingly aggressive inappropriate behavior included trying to kiss Correa, offering to be her “Sugar Daddy,” and inviting her to dinner and vacations. As reported by Big Law Business:

Francese, who had a reputation for being “very generous” with the staff, was soon calling her “cutie” and creating situations where he could stare at her breasts, Correa says. He also commented on and offered to adjust her clothing. Next came dinner invitations, which Francese really envisioned as dates, and physical touching, according to the complaint.

While at dinner one night, Francese mentioned Korean prostitutes and later tried to kiss her, the lawsuit says. He loaned her $2,600 when she had personal issues and then offered to be her “Sugar Daddy.” He ultimately kissed her twice against her will and retaliated when she worked up the courage to complain, Correa says.

Correa says when she complained about Francese’s behavior, he badmouthed her performance to HR, which led to her being “constructively discharged” from the firm.

Troutman Sanders and Francese have not yet commented on the lawsuit.

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Kathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

It’s a good thing lawyers love law school rankings, because there are tons of them. Every year, it seems like there’s a whole new crop of law school rankings to fight about with your friends. Aren’t you getting tired of them? No, of course not. Lawyers love rankings more than they love money (okay, maybe that’s taking it a step too far).

You’ve seen the Princeton Review law school rankings (and like us, you probably wondered why the hell so much emphasis was put on student feedback over actual data). You’ve seen the U.S. News law school rankings (and you watched your deans play the blame game lest they be fired). You’ve seen the ATL law school rankings (and you cheered for realistic, employment-based metrics). You’ve even seen the Cooley law school rankings (and you’re hoping and praying that the school hasn’t gained a sense of shame and will someday put out another edition because it’ll surely be a LOLable work of disingenuous art).

But have you seen a ranking of the best law schools in the world? Here’s your chance.

Before we get to the World Law School Rankings, let’s discuss the methodology used by the Quacquarelli Symonds team at Top Universities (you can explore more in-depth explanations here):

Each of the subject rankings is compiled using four sources. The first two of these are QS’s global surveys of academics and employers, which are used to assess institutions’ international reputation in each subject. The second two indicators assess research impact, based on research citations per paper and h-index in the relevant subject. These are sourced from Elsevier’s Scopus database, the world’s most comprehensive research citations database.

These four components are combined to produce the results for each of the subject rankings, with weightings adapted for each discipline.

We know you want to see if any American law schools cracked the list, so we won’t make you wait anymore. Here they are, the top 10 best law schools in the world:

1. Harvard University
2. University of Oxford
3. University of Cambridge
4. Yale University
5. Stanford University
6. University of Melbourne
7. London School of Economics and Political Science
8. UC Berkeley
9. Columbia University
10. New York University

USA! USA! USA! More than half of the world’s top 10 legal academies are in America! Be sure to grab your ivy and roll around in it, because half of those American law schools are in the Ivy League. Congratulations go out to Harvard for finally coming out on top of both Yale and Stanford in a law school ranking. You already thought you were elite, but now the entire world has to give you a pat on the back.

Farther down the list, but still within the top 25 law schools in the world, you’ll see Chicago (#11), Georgetown (#17), and UCLA (#23 in the world, yet not in the U.S. News T14). Going deeper into the list, but still within the top 50 law schools in the world, you’ll find Michigan (#27), Penn (#30), Duke (#33), Cornell (#35), and Northwestern (#50). But… where’s UVA? Every other U.S. News T14 school has already been listed.

Alas, it seems that the school was ranked outside of the top 50 law schools in the world. Quacquarelli Symonds didn’t even bother to show UVA’s rank — all we know is that it fell somewhere between 51 and 100. Ouch, how does it feel to have landed in the “rank not published” section of the rankings? Sure, it’s great to be ranked so highly on a world scale, but it must be really disappointing to be the only T14 school left out of the world’s top 50. Better luck next year!

What do you think about these worldly law school rankings? Feel free to congratulate or condemn your alma mater — but be careful, the world is watching.

QS World University Rankings by Subject 2019 – Law [Top Universities]

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Staci Zaretsky is a senior editor at Above the Law, where she’s worked since 2011. She’d love to hear from you, so please feel free to email her with any tips, questions, comments, or critiques. You can follow her on Twitter or connect with her on LinkedIn.

* Data indicate the average attorney salary has doubled over the last 20 years. Adjusted for inflation though that’s about a 25 percent bump. Meanwhile, if law school tuition over that period only increased 25 percent, schools would be $40K cheaper now. [Law.com]

* Predictably, a staffing shortage is being blamed for Epstein’s death so everyone can start the push to hire a ton more guards rather than revisit overcrowding or reforming fundamental incarceration policies. [Huffington Post]

* Trump goes to war with the bald eagle. Finally, his revenge is complete. [NY Daily News]

* California and New York ban discrimination based on hairstyle almost 30 years after the Paulette Caldwell article pointing out exactly how messed up this practice is. [Law360]

* Biglaw shows up in force to help Burford fight back against short seller. [American Lawyer]

* ‘Space Law and Poop’ is coming to a 3L seminar near you. [Live Science]

* Ninth Circuit shuts down another attempt to get college football players a cut of the money they earn. [Courthouse News Service]

Vesta says it saddens her to see husband Teddie sitting in the same place “from morning to night”

Retired couple Teddie and Vesta always imagined they would live out their golden years with dignity.

He is 85, and served one company for 46 years as a cleaner, eventually rising to become a receptionist. Vesta says that increasing inflation has robbed them both of a comfortable retirement.

A year ago Teddie’s monthly pension was worth $80 (£66), it’s now worth $10.

“I am saddened when I see my beloved sitting in that corner from morning to night,” Vesta tells the BBC.

“I would love to give him a banana, an orange or a cool drink. But we can’t afford it. A banana costs $0.40.”

The signs of a failing economy are everywhere. Supermarket trolleys are hardly ever full these days and shoppers linger, contemplating their purchases.

The prices of basics like sugar and cooking oil jumped by 200% in the 12 months to June, according to official statistics. So did the price of healthcare.

Meanwhile the cost of bread has gone up fivefold since April.

As of June 2019, inflation had already hit 98%. In July, the local currency, the Zimbabwe dollar, was reintroduced after a decade of using the US dollar and other international currencies. Annual inflation then soared to 176%.

The local currency’s value has continued to drop but the government has now suspended the publication of inflation statistics, citing the change of currency.

The latest economic crisis comes as Zimbabwe’s President Emmerson Mnangagwa marks his first anniversary as an elected leader.

Robert Mugabe was ousted when his long-time ally-turned-rival swept to power with the military’s help in November 2017. Elections were held on 30 July the following year.

President Mnangagwa has dubbed this era the “second republic” – one based on recovery, entrenching democracy and reversing decades of ruinous policies under his predecessor.

Initially many Zimbabweans believed him.

Zimbabweans were initially hopeful that the ousting of Robert Mugabe would persuade investors to return, bringing much-needed cash injections to local businesses.

But hope has faded and old ghosts have returned.

Fuel is in short supply. The government says it doesn’t have enough foreign currency to buy it. Rolling power blackouts are also back.

Authorities blame ageing power plants, low electricity tariffs as well as the worst drought in 40 years which threatens to shut down the main hydro-electric plant at Kariba.

A constant hum has returned to the city – the sound of generators – as boutiques, restaurants, supermarkets try to stay in business. With a sevenfold increase in fuel costs since January, this too will force prices of goods up and further fuel inflation.

‘No quick fix’

Business representatives say power cuts, sometimes lasting up to 18 hours a day, have cost the country $200m (£165m) in lost revenue.

AFP

Newly appointed Energy Minister Fortune Chasi believes there is no quick fix.

Despite a recent 300% tariff hike, electricity is still heavily subsidised by the state. Zesa, the state power firm, is virtually broke.

“The anger and frustration is understandable and should translate into creating a viable entity,” Mr Chasi tells the BBC.

“Our tariff is still below cost-effectiveness and we have a delicate commodity. That is why I keep saying people should pay their bills: Zesa is owed $1.2bn.

“Everyone from every sector owes money.”

Economists say inflation is likely to continue to surge. Local production remains low, causing an over-reliance on imports and a shortage of foreign currency.

Government spending, meanwhile, remains excessive and investor confidence low.

President Mnangagwa, seen here lighting a torch on independence day, says he wants to deepen democracy in Zimbabwe

The authorities have introduced austerity measures – these lowered subsidies on fuel, power and healthcare and drove up prices for Zimbabweans. President Mnangagwa believes this is essential to boost production.

“It hasn’t been easy. Good ground worth celebrating has been covered with your help,” the president said in a televised address to the nation, marking a year since his election victory.

“A solid foundation has been laid for more and greater gains in the future,” he continued, “and while the beginning may be painful, the middle- to long-run will deliver more jobs, economic stability, growth and development.”

Austerity bites

Critics of President Mnangagwa say he is flying blind, and rashly implementing ill-considered policies without consultation. They believe he is leading Zimbabwe back to 2008.

That was the year Zimbabwe hit the record books. Inflation peaked at 500bn%. Bank notes from that time, including one for 100 trillion, are now collectors’ items.

Economist Godfrey Kanyenze says the country could be on the brink of hyperinflation.

“Hyperinflation is when month-on-month inflation rises above 50%,” he explains. “In June it was at 39%. We are currently 11% short of hyperinflation, so this is chronic high inflation.”

He doesn’t believe Zimbabwe’s government has a workable, long-term plan for recovery.

“Most developed countries undertake social impact analysis. Before you implement a policy, you project its likely social impact, then you prepare for it,” Mr Kanyenze says.

“But there wasn’t that preparation, especially in the area of salaries.”

One new measure however has succeeded in cushioning Zimbabweans against rising costs. Public transport subsidies now mean commuters pay about a quarter of what private sector operators charge for the same journeys.

Mr Mnangagwa’s supporters argue that it was always unrealistic to expect a quick fix to dampen a crisis that has been decades in the making.

There is some light, though. Zimbabwe says it has paid some its debt to South Africa’s state-owned power utility, Eskom, paving the way for some imported power.

Meanwhile the government has warned that the economy will contract this year. This is hardly good news for pensioners like Teddie and Vesta.

They don’t want to hear that before things get better for Zimbabweans, they are likely to get worse.

Post published in: Business