Pa. High Court: Drug Company Lacks Standing To Challenge State’s Outside Counsel

Pa. High Court: Drug Company Lacks Standing To Challenge State’s Outside Counsel

PHILADELPHIA - (Mealey's) Janssen Pharmaceutica Inc. lacks standing under Pennsylvania law to challenge the hiring of outside counsel to represent the state in a Risperdal off-label marketing lawsuit, the Pennsylvania Supreme Court ruled Aug. 17 (Commonwealth of Pennsylvania, et al. v. Janssen Pharmaceutica, Inc., et al., No. 23 EAP 2009, Pa. Sup., Eastern Dist.).

In 2008, the Pennsylvania Office of General Counsel sued Janssen Pharmaceutica and Janssen LP, divisions of Johnson & Johnson, in the Philadelphia County Common Pleas Court, alleging that the defendants' off-label marketing of its Risperdal atypical antipsychotic cost the state millions of dollars in drug charges to the state's Medicaid and Pharmaceutical Assistance Contract for the Elderly (PACE) program.  The trial court denied Janssen's motion to disqualify the state's outside counsel, Bailey Perrin Bailey of Houston, and the Pennsylvania Supreme Court granted Janssen's motion for extraordinary relief.

The state high court was asked whether Janssen lacks standing under state law to seek disqualification of outside counsel, whether the state Attorneys Act (71 Pennsylvania Statutes  Section 732-101, et seq.) authorizes the Office of General Counsel to enter into a contingency fee agreement, whether the state constitution's separation of powers clause prohibits a contingency fee agreement with outside counsel without authorization by the state General Assembly and whether the due process clauses of the state and federal constitutions prohibit the state from delegating its sovereign powers to private counsel with a direct financial interest in the litigation's outcome.

Chief Justice Ronald D. Castille wrote for the majority that Janssen lacked standing, ending the issue.  "Pursuant to the plain language of Section 103 [of the Attorneys Act], Janssen, as a party to the action other than the Commonwealth party, cannot be heard to challenge Bailey Perrin's authority to represent the Commonwealth party," the majority said.

"Because the statutory language is plain and unambiguous, the alternative construction offered by Janssen must fail," the panel said.  Justices J. Michael Eaken and Debra McCloskey Todd joined in the opinion.

Justices Max Baer and Seamus P. McCaffrey concurred in a separate opinion.  Justice Baer indicated his "hesitancy and discomfort" given that the parties allowed the underlying case to proceed to trial without apprising the Supreme Court, a development he said may have made the appeal moot.

Justice Thomas G. Saylor dissented, saying that he believes Janssen has standing to raise constitutional claims and that the court should have considered Janssen's arguments that its due process rights were violated.

[Editor's Note:  Full coverage will be in the Aug. 19 issue of Mealey's Emerging Drugs & Devices.  In the meantime, the majority, concurring and dissenting opinions are available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844.  Majority opinion is Document #28-100819-029Z.  Concurring opinion is Document #28-100819-030Z.  Dissenting opinion is Document #28-100819-031Z.  For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]

Download the documents now:

Mealeysonline.com - Document #28-100819-029Z

Mealeysonline.com - Document #28-100819-030Z

Mealeysonline.com - Document #28-100819-031Z

For more information, call editor Tom Moylan at 610-205-1120, or e-mail him at tom.moylan@lexisnexis.com.