Tuesday, July 10, 2012

Drug composition claims and expiration dates not literally false despite limited substantiation

Pamlab, L.L.C. v. Macoven Pharmaceuticals, L.L.C., 2012 WL 2540234 (S.D.N.Y.) (magistrate judge)
Pamlab sued Macoven for patent infringement and false advertising relating to its medical food product Foltx, which contains 2.5 mg of folic acid, 2 mg of Vitamin B12, and 25 mg of Vitamin B6, and was designed to treat elevated levels of homosysteine. Pamlab has authorized Breckenridge to market Folbic, a generic version of the same product.  Macoven marketed a folic acid product labeled “Folic Acid 2.5 mg Tablets—Prescription Dietary Supplement.”  The label states that the product contains the same active ingredients in the same amounts as Foltx and Folbic, and as a result pharmacy databases list it as a Foltx/Folbic equivalent.  The label also has an expiration date 2 years after the manufacturing date.
Pamlab argued that the list of active ingredients was misleading because of a lack of testing prior to release to confirm the actual ingredients, that the expiration date was false because it wasn’t supported by adequate stability testing, and that the term “prescription dietary supplement” is meaningless and therefore deceptive.
Macoven’s product was made by Viva.  Viva formulated a pre-manufacture batch, which tests showed to contain 3.23 mg of folic acid, 2.75 mg of vitamin B12, and 27.63 mg of vitamin B6 (listed active ingredients were identical to those in Foltx, whose manufacturing tolerances aren’t discussed in this opinion). Viva also subjected samples to accelerated stability testing, which uses high temperature and humidity to cause accelerated degradation.  The June 2011 pre-manufacture patch was tested Oct. 2011 and folic acid measured 3.29 mg, and tested again in Feb. 2012, after it had been stored at room temperature for 4 months, resulting in B12 at 2.06 mg and B6 at 29.39 mg.  
Macoven’s agreement with Viva provided for overages (amount by which the active ingredients would exceed label claims) so that the product would have 3.0 mg of folic acid, 2.4 mg of B12, and 33.4347 mg of B6.  The batch Viva ultimately made for sale tested at 3.0 mg of folic acid, 3.0 mg of B12, and 33.0 mg of B6.  Viva issued a certificate of analysis representing that the tablets in that batch contained 3.0 mg of folic acid and had an expiration date of Sept. 2013, two years later, but didn’t include any B12 or B6 results.  Viva didn’t subject the commercial batch to accelerated stability testing until Feb. 2012.
The parties disagreed about how pharmacy purchasing agents decide to stock which products.  Plaintiffs’ expert said that it was industry standard for the purchasing representative to request and receive the certificate of analysis for a product, with the expectation that it will support the stated label amounts, as well as documentation of stability tests supporting any claimed expiration date. Breckenridge's Executive VP flatly contradicted that and testified that purchasers neither request nor receive either the certificate of analysis or stability studies.  Rite Aid, a major chain, stopped buying Folbic and began buying Macoven’s product when it was identified as a lower-priced equivalent.  Plaintiffs estimated that they stood to lose $6 million if Macoven’s product remained on the market; their products would generate over $8.6 million in profits from Feb.-Dec. 2012, when their patent expires, but reducing price to stave off substitution would result in a 75% decrease in profits.
The court denied the preliminary injunction sought on the false advertising claims.  Marketing the product without pre-release testing for vitamins B6 and B12 didn’t constitute false advertising.  First, plaintiffs didn’t show that the Macoven pills had less than the stated amounts of active ingredient.  Second, there was no necessary implication that an assay had occurred.  The label said how much of each active ingredient was in the product, but didn’t say anything definitive about the basis for those representations.  Such label claims could as easily be based on the inputs in the manufacturing process as on post-production testing.  This was also why there was no establishment claim: there was no express or implied reference to testing.  (Contrast the case in which defendants had no basis whatsoever for the claim that an ingredient was present: there is, I think, a necessary implication of some basis for a claim about composition, though not necessarily a post-production basis.)  Finally, plaintiffs failed to show misleadingness: they provided no evidence that consumers believed that full pre-release testing had been performed.  They tried to use the testimony of a few witnesses with experience in the field, but those witnesses weren’t even in agreement.  If purchasers regularly review certificates of analysis, they wouldn’t have been deceived.  Marketing without a full assay “may well have been reckless,” but that didn’t mean the claim was literally false.
The expiration date was “in effect a prediction, which implicitly has some basis in science.”  Plaintiffs argued that this communicated a representation that the expiration date was supported by stability testing that met industry standards using international guidelines (which were part of Viva’s quality control procedures).  There’s no regulatory requirement that a dietary supplement label include an expiration date.  But if a manufacturer uses one, the FDA says that it should “be supported by data.”  While the plaintiffs agreed that a three-month accelerated stability test can support a 2-year expiration date, they argued that the testing Viva performed didn’t conform to the guidelines.  These guidelines provide that where “significant” change occurs at the accelerated condition, an expiration date would have to be confirmed by intermediate or long-term testing, and define significant change as a “5% change in assay from its initial value.”  Viva's tests showed decreases in the amount of active ingredients in the commercial batch from the initial assay to the assay after three months under accelerated conditions of 13.88% for folic acid, 13.2% for B12 and 6.79% for B6.  (The court found that it was not explicitly false to have conducted post-release analysis; an expiration date “could also be based, for example, on experience with similar products and then confirmed with post-release analysis. An expiration date is therefore not literally false merely because it was placed on a product without pre-release testing.”)
The court wasn’t persuaded by Viva’s argument.  First, the FDA found no consensus in the dietary supplement industry as to the appropriate protocol and explicitly “decline[d] to offer guidance on the type of data that are acceptable to support an expiration date.” Second, the international guidelines at issue provide recommended practices for drug manufacturers, not for dietary supplement manufacturers. Third, the plaintiffs' witnesses weren’t familiar enough with the specific ingredients to be able to opine whether folic acid etc. degraded at a constant rate or stabilizes after an initial period of degradation; this made it impossible to figure out whether Viva’s results showed material degradation.  Thus, the plaintiffs failed to show that the expiration date wasn’t “based on data,” the only industry standard in the record.
Finally, the plaintiffs didn’t show that Macoven’s use of the term “prescription dietary supplement” was false because they didn’t present any evidence on it.
Separately, the court rejected plaintiffs’ argument that they met the preliminary injunction standard because Macoven couldn’t as a practical matter satisfy a judgment.  A finding of irreparable injury based on the risk a judgment can’t be satisfied requires a showing that a defendant is insolvent, is on the verge of insolvency, or has tried to transfer or conceal assets, and plaintiffs didn’t show any of that.  The court also considered plaintiffs’ estimate of their damages to be highly speculative, and in any event actual damages would be less than what they originally calculated because Macoven didn’t aggressively market its product.  And their analysis of Macoven’s financial strength was also light on data, using information not specific to Macoven about things like rebates, returns, and profit margins.

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