Judge Colleen McMahon has dismissed a class action suit against Allergan PLC for alleged securities fraud. The court found that the plaintiffs presented no evidence that Allergan misled the public about the potential link between some of their breast implants, a rare form of cancer, and the eventual recall of said implants from the European market.
Per the order, Allergan is a global pharmaceutical and medical products company that develops, manufactures, and sells over 100 pharmaceutical and medical-aesthetics products. At issue in this case is their production and sale of textured breast implants, which can adhere to tissue better in some patients.
In the mid-2010s, several studies were published that found an association between Allergan’s textured-envelope implants and anaplastic large cell lymphoma, a rare form of non-Hodgkin’s lymphoma. Although these studies were not able to identify the manufacturer of a large section of the implants associated with the cancer in their samples, they did find outsized numbers of cases to be associated with Allergan’s textured implants. Breast implant associated anaplastic large cell-lymphoma (BIA-ALCL) is extremely rare and generally treatable.
However, these studies were not able to calculate the incidence rate of Allergan’s implants compared with other manufacturers. In other words, these studies could not ascertain whether patients were more likely to develop BIA-ALCL from Allergan’s textured implants or from their competitors.
The order details that to sell medical devices in Europe, companies need to obtain a Conformité Européene (CE) mark from a body called the GMED. CE marks are up for renewal every five years. When Allergan’s textured implants were up for renewal in 2019, the GMED, appeared to indicate that the implants’ CE mark would be renewed; however, as the GMED began to look into the link between textured implants an BIA-ALCL, the ASNM seemed reticent to approve the renewal.
On December 14, 2018, the GMED announced that it would not recertify the implants, and four days later, France’s National Agency for the Safety of Medicines and Health Products (ASNM) issued a recall for Allergan’s textured implants. Allergan’s stock price subsequently fell nearly 7%. The following spring, the ASNM decided to recall all heavily textured implants.
Two days after Allergan’s recall, the plaintiffs sued alleging executives at Allergan misled the public about the higher risk for BIA-ALCL in patients who received an Allergan textured implant compared with those of other companies.
The Southern District of New York disagreed. Judge McMahon found that not only were the studies cited by the plaintiffs publicly available, neither they, nor the regulatory bodies commenting on their contents felt there was any link between Allergan, in particular, and BIA-ALCL. As such, not only did Allergan not have a duty to disclose this fact, if they did so they would be lying to the public.
Judge McMahon further found that Allergan’s implants were recalled before those of other manufacturers for the sole reason that they were up for renewal before other implants. Nothing in the ASNM’s statements implied otherwise. Furthermore, the court found Allergan’s statements regarding the safety of said implants to be true, as BIA-ALCL is extremely rare.
Finally, Judge McMahon ruled that the plaintiffs could not prove loss causation, since the implants in question only made up 0.8% of Allergan’s global revenue, and sales specifically in CE mark countries made up only half of that. These fall well below standards set by precedent for how significant an event must be to qualify as loss causation.
The lead plaintiff is represented by Faruqi & Faruqi, LLP, and Allergan by Cleary Gottlieb Steen & Hamilton LLP.
