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In re Rezulin Products Liability Litigation

November 26, 2007

IN RE: REZULIN PRODUCTS LIABILITY LITIGATION


The opinion of the court was delivered by: Lewis A. Kaplan, District Judge.

MASTER FILE

(MDL No. 1348)

This Document Relates to: 05 Civ. 8397

MEMORANDUM OPINION

This action was brought by Charles A. Foti, Jr., in his official capacity as the Attorney General of the State of Louisiana and as parens patriae on behalf of Louisiana and its citizens, the State of Louisiana, and the Louisiana Department of Health and Hospitals ("LDHH"). The matter is before the Court on the motion of defendants Warner-Lambert Company LLC and Pfizer Inc. for summary judgment dismissing the complaint.

Facts

Plaintiff here seeks to recover amounts paid to fill Rezulin prescriptions for Louisiana Medicaid recipients and to treat their illnesses allegedly caused by Rezulin. Their claims are premised on their allegations that Louisiana would not have paid for Rezulin prescriptions filled by Medicaid recipients had it known information that allegedly was withheld or misrepresented by Warner-Lambert and that Louisiana Medicaid recipients would not have used the drug had the State not paid for it. The facts pertinent to this motion, however, are undisputed.*fn1 As they all relate to the legal framework of the Medicaid program, they are discussed below.

Discussion

The Merits

Louisiana's Legal Obligation to Pay for Rezulin Federal statutory provisions regulating Medicaid govern what can be included in or excluded from State Medicaid formularies. They also mandate the medications for which Louisiana is required to pay and the exclusive circumstances under which it could refuse such payment. Under those provisions and Louisiana statutes enacted to implement them, the State of Louisiana was required to pay to fill Rezulin prescriptions for Louisiana Medicaid recipients.

Medicaid is a federal program established in 1965 as part of the Social Security Act to provide medical assistance, including the cost of prescription drugs, to low-income individuals and their families by authorizing federal grants to States to accomplish that purpose.*fn2 To participate in the Medicaid program and receive federal funding, States must comply with a comprehensive federal statutory and regulatory scheme.*fn3

Under 42 C.F.R. § 431.10(b), States must provide the federal government with a detailed plan of operation that, among other things, specifies "a single State agency established or designated to administer or supervise the administration of the [Medicaid] plan." Louisiana has designated LDHH to administer the Medicaid program in Louisiana.

The LDHH was created in 1988 to "be responsible for the development and providing of health and medical services for the prevention of disease for the citizens of Louisiana" and to provide "health and medical services for the uninsured and medically indigent citizens of Louisiana."*fn4 In Louisiana, the LDHH is the sole agency designated to administer the Medicaid program. The program is directed by the Secretary of the LDHH.*fn5

The Social Security Act has a detailed statutory and regulatory framework that sets forth specific requirements for Medicaid programs, such as that administered by the LDHH, which received federal funding. Under federal law, a "covered outpatient drug" is one "which may be dispensed only upon prescription" and "which is approved for safety and effectiveness as a prescription drug" under the Federal Food, Drug and Cosmetic Act the "FDCA").*fn6 At all times, while it was marketed, Rezulin was a prescription drug that was approved ...


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