Pharmaceutical Fraud: Let Go of Civil Rico, and Revive Section Five of the FTC Act

Abstract

A circuit split exists regarding pharmaceutical fraud and whether or not consumers and third-party-payors can successfully prove proximate cause under civil RICO. The plaintiffs in these cases allege that they would not have paid for a drug had the manufacturer disclosed a known safety risk. Conversely, the defendants allege that the chain of causation is broken through a doctor’s prescription of the drug, thereby making the manufacturer not proximately liable for the subsequent purchase. The courts are split—some agreeing with the plaintiffs, and some with the defendants. However, this Comment will explore an alternative route, which is to allow plaintiffs a private right of action under Section 5 of the Federal Trade Commission Act in order to pursue a pharmaceutical fraud cause of action against a manufacturer. This would alleviate the proximate cause burden that plaintiffs face under civil RICO, and provide a solution for the courts. This Comment proceeds in six parts. Part I provides background information in regards to the statute RICO, and how it morphed into a civil use known as the civil RICO statute. Part II addresses the current circuit split surrounding civil RICO and its proximate cause element within pharmaceutical fraud cases. Part III discusses the Federal Trade Commission and how the FTC operates under the FTC Act, and more specifically, what Section 5 of the Act offers consumers. Part IV compares civil RICO to Section 5 of the FTC Act with an in depth analysis of each. It also dives into FTC data to suggest that not only does the FTC need help in pursuing actions, such as pharmaceutical fraud under the FTC Act, but also consumers. Both struggles would be alleviated through a consumer private right of action under Section 5. Accordingly, Part V suggests a solution to the circuit split issue, which is to offer consumers a private right of action under Section 5 of the FTC Act in order to pursue pharmaceutical fraud, instead of utilizing civil RICO and its difficult proximate cause element. Part V also addresses a counterargument to the idea of a private right of action under Section 5 of the FTC Act, which is to utilize state consumer protection laws instead. Part VI concludes.