In 2007, many third-party payors and employee welfare benefit plans (“Plaintiffs”) filed lawsuits against GlaxoSmithKline LLC (“GSK”) alleging violations of RICO and various state consumer protection laws in connection with the marketing of the diabetes drug, Avandia. These actions combined into the Avandia Marketing, Sales Practices and Products Liability Multi-District Litigation (“Avandia MDL”). The Avandia MDL is premised on the theory that, from 1999 to 2007, GSK engaged in deceptive marketing practices to convince the healthcare marketplace that Avandia was capable of both controlling blood sugar levels and reducing cardiovascular risk better than other medications. After the FDA approved Avandia for sale in 1999, several studies evaluated the drugs cardiovascular outcomes and found that Avandia did not lower cardiovascular risks more than its competitors but increased cardiovascular risk. The findings of the early studies resulted in a boxed warning label. However, later studies discredited the supposed increased cardiovascular risk, and the FDA removed the warning label. Having already instituted such claims before the latter studies, Plaintiffs changed their initial theory of liability from the concealment of the drugs increased cardiovascular risk, to improper marketing of the drug as having better cardiovascular outcomes when compared to cheaper alternatives.
In re Avandia Marketing, Sales Practices & Products Liability Litigation, 2024 WL 4582876, at *3 (E.D. Pa. Oct. 25, 2024), the most recent decision in the Avandia MDL, the Eastern District Court of Pennsylvania applied the newly amended Rule 702 during a Daubert hearing on GSK’s motion to exclude Plaintiffs’ economic loss experts, Meredith Rosenthal, Ph.D., and Thomas McGuire, Ph.D. With the 2023 amendments, Rule 702 now reads as follows:
A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if the proponent demonstrates to the court that it is more likely than not that:
(a) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data. (c) the testimony is the product of reliable principles and methods; and (d) the expert’s opinion reflects a reliable application of the principles and methods to the facts of the case.
With respect to Dr. Rosenthal, Plaintiffs sought to offer her as an economic expert on pharmaceutical demand and the effect of Avandia promotions on sales. Dr. Rosenthal opinion that a sizable portion of Avandia sales were caused by GSK’s fraudulent promotion was based on a regression model. Dr. Rosenthal designed the regression model to determine whether and to what extent there was a causal relationship between GSK’s marketing of Avandia and the sales of the drug. As part of her analysis, Dr. Rosenthal calculated two depreciation rates which GSK argued were result-oriented, in that these rates departed from both the literature and prior methodologies she had employed in other cases. In support of their position, GSK’s expert conducted a falsification analysis:
As an illustration, [defendant’s] responsive expert . . . conducted a falsification analysis wherein he replaced the input variable in Dr. Rosenthal’s model with datasets having no connection to Avandia and bearing no resemblance to Avandia promotional expenditures − specifically, monthly beef production, Colorado River flows, U.S. carbon emissions, and Hershey’s expenditures. In each case, [the defense expert] employed Dr. Rosenthal’s methodology (including her use of two depreciation rates) and found a positive and statistically significant relationship with Avandia sales.
Id. at *8. In short, under Dr. Rosenthal’s regression model, it did not matter what inputs were used, the outcome would always produce a statistically significant relationship with Avandia sales because she had simply selected a rate that would identify a close relationship between GSK’s marketing and Avandia sales regardless of whether those rates made any sense as a matter of logic. Accordingly, the Avandia Court granted GSK’s motion to exclude her opinions under Rule 702 finding that Dr. Rosenthal’s methodology is result-oriented, unsupported by the literature, and unreliable.
As for Dr. McGuire, he opined that damages could be calculated on a class-wide basis and presented two alternative damages scenarios. For the first scenario, he offered two calculation methods, the first of which relied directly and entirely on the opinion of Dr. Rosenthal and as such, to the extent Dr. McGuire’s opinions relied upon Dr. Rosenthal’s calculations, the Avandia Court excluded them. The second scenario was based on the unsupportable assumption that absent GSK’s alleged fraudulent promotion, sales of Avandia would have been zero for the relevant time period, and thus, Dr. McGuire’s opinions as to the damages based on scenario two were also excluded. The Avandia Court otherwise permitted Dr. McGuire to provide limited testimony and opinion regarding his second method for scenario one, referred to as the “Step-Down Adjustment.”
While the Avandia Court eventually reached the correct result, it did not properly apply the newly amended Rule 702. The 2023 amendment to Rule 702 clarifies that when it comes to the admissibility of expert testimony, it is the proponent who has the burden to establish admissibility of the expert by a preponderance of the evidence standard and that the expert’s opinion must reflect a reliable application of the principles and methods to the facts of the case. The advisory committee adopted these amendments to correct prior misapplication of Rule 702 by the trial courts, who previously cited a “liberal standard of admissibility,” and wrongly presumed that questions about the sufficiency of the expert’s basis or methodology went to the weight of the evidence, not its admissibility. Indeed, the Avandia Court incorrectly cited a pro-admissibility standard when it stated:
As a general rule, the factual basis of an expert opinion goes to the credibility of the testimony, not the admissibility, and it is up to the opposing party to examine the factual basis for the opinion in cross-examination. Exclusion is required only where the expert’s opinion is so fundamentally unsupported that it can offer no assistance to the jury.
Id. at *6 (internal citations omitted). Accordingly, Rule 702 amendments seek to reprise the trial court’s role as the gatekeeper of expert testimony and move away from the general notion that such issues were more appropriately addressed on cross-examination. However, at this time it is too early to know the impact that the new Rule 702 will have on the federal courts, practitioners’ approach to Daubert challenges, and the use of experts at trial.
The In re Avandia Marketing, Sales Practices & Products Liability Litigation opinion can be found here.
For additional questions, please contact Kylie A. Griffith, Esq. and/or Conrad James Benedetto, Esq.
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