Nov 17, 2014 Zogenix vs Deval Patrick MA Support to Dismiss

UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

ZOGENIX, INC.,

Plaintiff,

v.

DEVAL PATRICK, in his official capacity as the

GOVERNOR OF MASSACHUSETTS,

CHERYL BARTLETT, RN, in her official capacity

as DEPARTMENT OF PUBLIC HEALTH

COMMISSIONER,

CANDACE LAPIDUS SLOANE, M.D., et al., in

their official capacities as members of the

MASSACHUSETTS BOARD OF

REGISTRATION IN MEDICINE,

KAREN M. RYLE, MS, R.PH, et al., in their

official capacities as members of the


REGISTRATION IN PHARMACY, and

DIPU PATEL-JUNANKAR, PA-C, et al., in their

official capacities as members of the


REGISTRATION OF PHYSICIAN ASSISTANTS,

Defendants.

CIVIL ACTION

No. 1:14-cv-11689-RWZ

REPLY MEMORANDUM IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS

PLAINTIFF’S VERIFIED THIRD AMENDED COMPLAINT

Jo Ann Shotwell Kaplan (BBO #459800)

Eric Gold (BBO #660393)

Anne McLaughlin (BBO #666081)

Julia Kobick (BBO #680194)

Assistant Attorneys General

One Ashburton Place, 20th Floor

Boston, MA 02108

Case 1:14-cv-11689-RWZ Document 84 Filed 11/17/14 of 7

1

Zogenix now concedes that its claims are moot except with respect to the Boards’ final

regulations. See Mem. of Law in Opp. to Defts’ MTD Pltf’s 3rd

Am. Comp. (“Opposition” or

“Opp.”) at 2-3 n. 1. Those regulations do nothing more than impose reasonable restrictions on

medical and pharmacy professionals prescribing or dispensing any “hydrocodone-only extended

release medication that is not in an abuse deterrent form.” 243 CMR 2.07(25); 247 CMR

8.05(3).1 Designed to address the unique public health risks posed by Zohydro and any future

medication meeting this description, the regulations are intended to “help prevent opiate misuse

and overdose.” Mem. in Supp. of Defts’ MTD Pltf’s Ver. 3rd

Am. Compl. (“Mem.”), Exh. A at

3.2 The regulations prevent abuse of Zohydro by requiring prescribers to “follow best practices

in diagnosing and treating patients,” id., and by restricting the pharmacy personnel able to handle

the drug and therefore potentially divert it to improper use. See 247 CMR 8.05(3).

No matter how many times Zogenix repeats its conclusory assertions that the Defendants

are trying to “prevent patients from accessing” Zohydro, “force Zogenix to reformulate” it, or

“creat[e] an effective ban,” Opp. at 1, 3, 8, the assertions are refuted by the plain terms of the

regulations and the public rulemaking record. The regulations are neither intended to, nor could

by their terms, prevent legitimate patient access to Zohydro; and Zogenix was working on an

abuse-deterrent form of Zohydro as early as November 2013, well before Massachusetts officials

took any action at all. See http://goo.gl/CS9qYL. Defendants’ concern is not whether Zogenix

ever markets an abuse-deterrent Zohydro, but rather that the non-abuse-deterrent form not find

its way into the hands of those who would abuse it.3

1 It is beyond reasonable debate that the Boards have not regulated how Zohydro is designed or formulated, but

rather how it is prescribed and dispensed. Zogenix ignores both the nature of the Boards’ regulatory authority and

the plain terms of the regulations in suggesting to the contrary. See Opp. at 22, n. 5. 2 Zogenix continues to obscure the unique dangers of Zohydro, once again discussing potency, when the issue is

dosage, and misreading the Department of Justice Fact Sheet on hydrocodone. See Opp. at 16; TAC, ¶ 62. Zogenix

cites the Fact Sheet for the proposition that hydrocodone “combination products, not single ingredient opioids, are

the most widely abused opioid drugs.” Opp. at 16. What Zogenix fails to note is that, as of the preparation of that

fact sheet, the hydrocodone products on the market were “[a]ll . . . combination products.” See http://goo.gl/J5fCQc.

In other words, there was at the time no ability to compare Zohydro, with its far greater dose of hydrocodone, to the

hydrocodone-combination products. The relevance of the Fact Sheet is its confirmation that hydrocodone products

(of which Zohydro is now one) are the most abused opioid drugs. 3 The mere fact, if true, that Zohydro prescription volume continues to be low in Massachusetts, see Opp. at 1, does

not mean that the regulations are responsible. New Hampshire has no comparable regulations, and yet physicians


http://goo.gl/CS9qYL

http://goo.gl/J5fCQc

2

Preemption. There is no such thing as a “preempted purpose,” and Zogenix cites no legal

support for such a preemption theory. Opp. at 3, 10. Nor does an alleged “improper purpose” for

a state law, or a complaint that the law “singles out” a party for regulation, have anything to do

with preemption doctrine. What matters instead, as Zogenix elsewhere acknowledges, see Opp.

at 4, is “what the state law in fact does,” Wos v. E.M.A. ex rel. Johnson, 133 S. Ct. 1391, 1398

(2013), and, given what it does, whether it stands as an obstacle to Congressional objectives.

This Court has already decided, and correctly so, that the BORIM and BOROPA

regulations (revised to eliminate the former “other treatments have failed” requirement) are not

preempted. See Mem. Dec. Vacating PI at 5-6 (“[T]here is no conflict between state and federal

law, and thus, no preemption.”). Zogenix completely ignores this ruling in its Opposition. It

instead quotes selectively from the transcript of the June 10 preliminary injunction hearing in a

futile effort to resurrect a preemption claim as to those regulations that is clearly barred by the

doctrines of waiver and judicial estoppel.4 But even if Zogenix were not foreclosed from now

there have said that they will not prescribe Zohydro. See http://goo.gl/suZ2Fx. And, despite Zogenix’s stated

concerns about Zohydro’s limited period of exclusivity, Zogenix admits that it has effectively stopped marketing the

drug in Massachusetts, see Hawley Aff., Doc. # 64-1, ¶ 6, even though nothing in the regulations prevents the

company from doing so. If Zohydro sales remain low despite Defendants’ revision of their regulations, at Zogenix’s

behest, to eliminate the “other treatments have failed” requirement and the restriction on pharmacy interns handling

Zohydro, it is now clear that those provisions of the former emergency regulations had nothing to do with the low

volume of Zohydro prescriptions in the state, just as Defendants suggested at the time. In any event, Zogenix has

been hugely successful in this litigation, defeating a conditional ban of Zohydro and securing what it repeatedly

characterized as by far the most important revision it needed to the regulations (elimination of the “other treatments

have failed” provision), together with half of what it sought regarding the pharmacy handling restrictions. If

Zogenix nonetheless remains disappointed by Massachusetts sales, the fault lies elsewhere than in the regulations. 4 Zogenix first quotes its counsel as having stated “We would note that it seems unfair to us to single out Zohydro

Extended-Release from all of the other opioid medications that have contributed to what the Governor says was a

public health crisis before Zogenix got into prescribing [sic] Zohydro in Massachusetts.” June 10 Tr. at 11:8-12;

Opp. at 9. What Zogenix fails to quote are the immediately preceding lines from the transcript, in which Zogenix’s

counsel explained that this point went to its class-of-one equal protection argument, not its preemption argument:

“We do not, your Honor. Although we would note – and this is part of our equal protection argument. We would

note that it seems unfair to us to single out Zohydro….” June 10 Tr. at 11:6-9. The omission is highly significant, as

is Zogenix’s omission of lines from the transcript immediately succeeding the lines contained in the indented quote

on page 9 of its Opposition. What followed was the following colloquy: “THE COURT: Now, assume for the

moment that the [BORIM] regulations include the letter of medical necessity without any reference to failed

treatments. Would there be a problem? MR. HOLLMAN: If the medical necessity is only the same as the

approved indication, which is to show that other – which is to state that other medications are inadequate, that would

be supported by the clinical testing that was performed, supported by the approval that the FDA gave, and it would

be consistent with the FDA’s approval. So, no, under those circumstances, no objection. That’s not what we have.

THE COURT: Well, I understand that. I’m just trying to understand where the line might be. MR. HOLLMAN:

That’s the line, your Honor . . . . [T]hat’s the line of demarcation here, your Honor.” June 10 Tr. at 14:16 – 15:12.


http://goo.gl/suZ2Fx

3

asserting a preemption claim vis-à-vis the BORIM and BOROPA regulations, the Court has

already determined that the claim does not lie as to those regulations.5

Zogenix claims that the BORIP regulation preventing certified pharmacy technicians

from handling Zohydro effectively bans Zohydro in the Commonwealth. The suggestion defies

common sense. The provision does not regulate prescribers at all; and it leaves pharmacists and

pharmacy interns able to dispense the drug when presented with prescriptions. Zogenix still does

not assert (nor could it plausibly) that a single patient has been unable to fill a Zohydro

prescription in the Commonwealth because of this regulation. Without that allegation there

cannot be a determination that this restriction results in an effective ban on Zohydro or otherwise

stands as an obstacle to the drug’s availability.

Contrary to Zogenix’s claims, see Opp. at 7, Defendants have not argued that it is

irrelevant whether pharmacies are dispensing Zohydro. Defendants argue instead that it is

irrelevant whether pharmacies will stock Zohydro, provided they will order and dispense it upon

presentation of a valid prescription. It is Zogenix that confuses the analysis by discussing the

legally irrelevant question whether pharmacies will keep the drug in stock pending presentation

of prescriptions.6

Equal Protection. As expected, Zogenix still cites no case applying the class-of-one

equal protection theory to anyone other than a party actually subject to the challenged state law.

There being no such case, Zogenix argues instead that it is subject to the Boards’ regulations.

However, unless a state law imposes obligations or liabilities, or confers privileges, upon a party,

that party is not subject to the law. See Mem. at 6. And Zogenix is simply wrong that the

Boards’ regulations impose liabilities on it. There may be an economic impact on Zogenix, if the

5 Zogenix mischaracterizes Defendants’ arguments of waiver, law-of-the-case, and judicial estoppel when it treats

those arguments as having applied to the BORIP provision preventing certified pharmacy technicians from handling

Zohydro. See Opp. at 5. Defendants expressly indicated that this was the sole provision of the final regulations still

open to preemption challenge given those doctrines and the Court’s prior rulings. See Mem. at 23. 6 Defendants have argued legal irrelevance; they have not attempted to exceed the bounds of a motion to dismiss and

make a factual argument about whether pharmacies are in fact choosing not to stock Zohydro. See Opp. at 7-8, incl.

n.2. And neither the Court nor Defendants are obliged to ignore for purposes of this legal argument the

commonsense distinction between stocking and dispensing drugs.


4

regulations serve their purpose of preventing diversion and abuse of Zohydro. But the

regulations impose duties (and hence potential liability for breach of those duties) only upon

prescribers and pharmacies, not drug manufacturers. As a result, Zogenix has no answer to this

threshold requirement of a class-of-one equal protection claim and, as the Court has already

recognized, the claim is “misplaced.” July 8 Dec. at 4-5 n.3.

Zogenix also wrongly faults this Court for applying Engquist v. Or. Dep’t of Agric., 553

U.S. 591, 603 (2008), outside the public-employment context. While Engquist’s holding is

obviously specific to that context, numerous circuit court decisions, previously cited, have

applied its rationale outside that context. See Mem. at 7-8 incl. n. 9. And Defendants never

suggested that an agency is exempt from class-of-one scrutiny whenever it exercises any degree

of discretion. See Opp. at 10-12. But here Zogenix is unable to identify, as it must, any state

“legislative or regulatory classification[ ]” preceding the challenged regulations that created “a

clear standard against which departures, even for a single plaintiff, could be readily assessed”

and thereby constrained the Boards’ exercise of discretion. 553 U.S. at 602. Zogenix points

only to an absence of prior state regulation. Opp. at 13. Like the public employer in Engquist,

therefore, the Boards exercised broad discretionary authority based on individualized facts in

choosing to regulate hydrocodone-only, extended-release opioids not in an abuse-deterrent form,

as opposed to some larger category of opioids.7

7 Zogenix also misunderstands the significance of the emergency context in which the Boards were operating. The

point is not that the Boards lacked time to take deliberate action; their regulatory process was extensive and highly

deliberate, as required by law. The point is instead that public-health emergencies inherently involve novel

circumstances such that there is no prior baseline standard to apply. Moreover, Zogenix still does not clarify what

class it supposedly belongs to, variously describing the purported class as “other similarly-situated opioid products”

(without further definition), “all opioids,” or “all extended-release/long-acting opioid products.” Opp. at 14-15. And

Zogenix has no answer to the fact that it has itself made allegations clearly distinguishing Zohydro, the only

hydrocodone-only, extended-release, non-abuse-deterrent opioid currently on the market, from all other opioid

drugs, however classified. Case law clearly supports dismissal of a class-of-one claim where plaintiff’s own

allegations reflect such distinctions. See Mem. at 9. Finally, Zogenix misstates the law of this circuit regarding the

need to allege facts demonstrating malice, or “personal hostility.” Tapalian v. Tusino, 377 F.3d 1, 6 (1st Cir. 2004).

Indeed, just this year the First Circuit confirmed that class-of-one claimants “ordinarily must . . . show that the

defendant’s differential treatment of the plaintiff was motivated by bad faith or malicious intent to injure.” Snyder v.

Gaudet, 756 F.3d 30, 34 (1st Cir. 2014) (internal quotation omitted). The earlier decisions cited by Zogenix, see

Opp. at 17 n. 4, are not to the contrary; they instead did not reach the question because the claims failed for other

reasons.


5

Contracts Clause. In an attempt to save its “undeveloped” Contracts Clause argument,

July 8 Dec. at 4-5 n.3, Zogenix continues its pattern of setting up, and then dismissing,

arguments that Defendants never made.8 Defendants have been clear that a claimant’s status as

part of a regulated industry is “especially important” to, not necessarily determinative of, the

question whether any impairment of contract is sufficiently “substantial.” Mem. at 11. Where,

however, Zogenix’s industry is subject to pervasive regulation and it was undeniably foreseeable

that there might be “addition[s] to [that] regulatory regime,” see id. at 11-13, any impairment is

insubstantial. Moreover, Zogenix’s claim of impairment here derives from its facially

inaccurate suggestion that the Boards’ regulations “constructively revoke[ ]” its NDA approval.

Opp. at 18. They, of course, do nothing of the kind. Nor do they impose any liability on

Zogenix, let alone “unexpected liability in potentially disabling amounts.’” Opp. at 18 (quoting

Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 246 (1978)). The Court need not entertain

evidence to reject these plainly insupportable descriptions of the Boards’ regulations. And

Zogenix’s arguments to the contrary notwithstanding, see Opp. at 20, the Court should “properly

defer,” Energy Reserves Group, Inc. v. Kan. Power & Light Co., 459 U.S. 400, 412-13 (1983), to

the Boards’ judgment that their regulations are necessary and reasonable to prevent exacerbation

of a public health crisis.

DEFENDANTS, by their counsel:

_/s/ Jo Ann Shotwell Kaplan, AAG

8 Zogenix’s Commerce Clause claim remains every bit as unpersuasive now as it was in July. See July 8 Dec. at 4-5

n.3. It accordingly warrants only a few brief points. First, Zogenix still can find no burden on interstate commerce,

as opposed to itself, or any way in which this case entails a “lack of national uniformity [that] would impede the

flow of interstate goods.” Opp. at 21 (quoting Exxon Corp. v. Governor of Md., 437 U.S. 117, 128 (1978)). There is

no “national uniformity in how prescription drugs are regulated,” id. at 21-22; to the contrary, there is extensive,

diverse state regulation of prescribing and dispensing practices. See Mem. at 11-13. And Zogenix is not even

subject to the regulations at issue here, so there is no prospect of it being subjected to a patchwork of state

regulations conflicting with those of Massachusetts. Nor is speculation about future, potentially conflicting state

regulations permissible to support a dormant Commerce Clause claim, in any event. See id. at 16. Finally, Zogenix

impermissibly and irrationally speculates that BORIP’s limited restriction on Zohydro handling, affecting only one

category of pharmacy personnel, will somehow prevent national pharmacies from dispensing Zohydro in the future.

Opp. at 21-22. Even if that implausible result were to follow, however, it would burden only Zogenix, not an

interstate market.


Certificate of Service

The undersigned counsel hereby certifies, this 17th day of November 2014, that this

document was filed through the Electronic Case Filing (ECF) system and thus copies will be sent

electronically to the registered participants as identified on the Notice of Electronic Filing

(NEF); paper copies will be sent to any non-registered parties so indicated on the NEF.

/s/ Jo Ann Shotwell Kaplan

Jo Ann Shotwell Kaplan


Nov 17, 2014 Zogenix vs Deval Patrick MA Support to Dismiss

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