Court ruling could shield drugmakers from some RICO suits

An appeals court ruling could prevent drug and medical device companies from being sued under the Racketeer Influenced and Corrupt Organizations Act in certain cases. The U.S. Court of Appeals for the Seventh Circuit in Chicago ruled that cases filed under RICO must be dismissed if the plaintiff lacks a direct relationship with the defendant and therefore cannot demonstrate that injuries were directly caused by the defendant’s action.

The ruling addressed Sidney Hillman Health Center of Rochester v. Abbott Laboratories, in which three health insurers filed suit alleging the pharma improperly promoted off-label uses for seizure drug Depakote divalproex, prompting doctors to write additional prescriptions for the drug. The insurers claimed these prescriptions led to increased reimbursement costs. After the U.S. District Court for the Northern District of Illinois dismissed the case, plaintiffs filed an appeal asking the appellate court to review racketeering claims. ...