Chain, Chain, Chain—Chain of (Pharma) Fools: Why Third Party Payors Maintain the Proximate Causal Chain Under RICO § 1964(C)

Abstract

On December 3, 2019, the U.S. Court of Appeals for the Ninth Circuit in Painters & Allied Trades District Council 82 Health Care Fund v. Takeda Pharmaceuticals Co. held that Third Party Payors (TPPs) may satisfy proximate causation in civil Racketeer Influenced and Corrupt Organizations Act (RICO) claims against pharmaceutical companies where they claim that, but for the pharmaceutical company’s failure to indicate a drug’s cancer-causing risk, they would not have incurred expenditures for the drug. In doing so, the Ninth Circuit joined the U.S. Courts of Appeals for the First and Third Circuits and split from the U.S. Courts of Appeals for the Second and Seventh Circuits as to whether TPPs are too far removed from pharmaceutical companies’ alleged fraud to satisfy RICO’s proximate cause requirement. This Comment argues that the Ninth Circuit was correct in concluding that TPPs may properly allege proximate cause, as its approach effectively followed Supreme Court precedent. It further argues that, as a matter of policy, proximate cause should not be allowed to shield pharmaceutical companies from the damages they inflict on TPPs and the healthcare system at large through their fraudulent drug promotion schemes.