Mission Pharmacal Co. v. Virtus Pharmaceuticals, LLC, 2014 WL 2119237, No. 5:13–CA–176 (W.D. Tex. Apr. 28, 2014) (magistrate judge, report & recommendation adopted)
This started as a patent infringement suit and added false advertising; the opinion here denies summary judgment to the defendant. Mission sells CitraNatal prescription prenatal supplements covered by a patent, while Virtus sells prenatal supplements under the name Natalvirt that allegedly infringed the patent. The false advertising stemmed from Virtus’s representations that Natalvirt used the same ingredients in the same amounts as the Mission products; contained the same iron blend; and were “generic equivalents to and substitutes for” the Mission products while in fact they weren’t bioequivalent. Mission alleged that Virtus “falsely told national pharmaceutical databases that” the Virtus products “use the ingredient ferrous gluconate and are therefore pharmaceutically equivalent.” Mission further alleged that the Virtus products wouldn’t be generic, equivalent, or substituable for the Mission products “unless they have been demonstrated to deliver their active ingredients to patients at the same rate and in the same amount as” the Mission products. But instead, Virtus used a ferrous gluconate “formulated to delay the absorption of the iron compound” instead of the rapid-release compound found in the Mission products.
Among the forms of relief sought was a notice in any ad or promotion that Virtus wasn’t equivalent to Mission and that the substitution of the products “may violate state law.”
More on the facts: Virtus designed around the Mission patent, which focused on combining slow-release with rapid-release ferrous gluconate. The Virtus products “encapsulate” the ferrous gluconate they contain in “slow dissolving matrix,” and “use[ ] a ferrous gluconate formulated for a delayed release.” The parties disagreed about whether this infringed the patent. Virtus’ argument for noninfringement was basically that the ferrous gluconate in the Virtus products was encapsulated in a slow dissolving matrix and was formulated for delayed release, unlike the Mission products which contained a fast-dissolving ferrous gluconate.
Prescription prenatal vitamins aren’t subject to FDA premarket approval, and therefore aren’t listed in the Orange Book of drugs that can be sold as generic equivalents. The parties disagreed over whether the products were otherwise regulated as drugs or as prescription dietary supplements.
Virtus argued that its labels weren’t literally false, because they accurately listed the ingredients and their amounts; that there was no requirement to label its ferrous gluconate as sustained release; that there was no substantiated pharmaceutical benefit from fast dissolution of ferrous gluconate even if Mission marketed it as such; that the labels didn’t represent that the products were equivalent; that any such representation wouldn’t be false because of the equivalence in active ingredients; and that there was no evidence that speed of dissolution was material or that consumers were deceived.
Mission argued that these prescription prenatal vitamins were subject to FDA drug regulations because they included folic acid and therefore had to meet FDA standards for claiming “equivalence,” which requires both pharmaceutical equivalence and bioequivalence. (This seems to me to be the long way around. Even if they aren’t “drugs,” isn’t it likely that consumers’ ordinary standards for judging what is equivalent are set by reference to the usual standard, which happens to be supplied by the FDA? Consumers really don’t know the drug/supplement distinction.)
Also, Mission wasn’t challenging the labels. It was challenging the marketing and promotion of the products as generics—not to doctors but to wholesale distributors and retail pharmacy chains to promote a pharmacist to fill a prescription written for a Mission product with a Virtus product instead, as a generic equivalent. Virtus often sent its customers a form in which it describes its products as “generic” for Mission’s products. Likewise, it submitted new product information forms to a database of prescription products indicating that its products were “generic” for Mission products. It also used a “chart that lists its product, under a column heading “Virtus Name,” right next to Mission’s product, under a column heading “Brand Name.” Thus, every sale of a Virtus product was substituting for a Mission product.
Virtus responded that “generic” and “brand” had different meanings in a commercial context. It contended that it made clear to customers that its products weren’t Orange Book products but multivitamins. It made other distinctions between supplements and drugs and argued that both parties were producing supplements. As dietary supplements, it argued, the products didn’t need to be bioequivalent to be generic, because there was no proper market definition of “generic” in the supplement context.
A previous case, Healthpoint, Ltd. v. Stratus Pharms., Inc, 273 F. Supp. 2d 769 (W.D. Tex. 2001), held that drug makers using “generic” to describe nonapproved drugs still had to use the FDA’s definition of “generic.” Healthpoint, Ltd. v. Ethex Corp., 273 F. Supp. 2d 817 (W.D. Tex. 2001), likewise concluded that whether one drug was “generic” for another was an issue committed to the FDA. New definitions of terms of art such as bioequivalence would undercut national uniformity and would confuse the public. Thus, the Ethex court enjoined ad language claiming that “neither brand nor generic papain-urea compounds are subject to FDA approval or rating,” because, in the context of other representations, “[t]he over-all effect [was] to create the misleading impression that Accuzyme is the ‘brand’ and Ethezyme is a ‘generic substitute for Accuzyme, when it has not been determined that Ethezyme is a ‘generic’ alternative to Accuzyme.”
The court fond that Virtus had failed to provide “any evidence, argument, or authority demonstrating the products fit any applicable definition of a dietary supplement, or countering Mission’s argument that the inclusion of a prescription-level amount of folic acid renders the products drugs,” or to show that products couldn’t be both dietary supplements and drugs. (I wonder how Pom Wonderful might affect this case. Is whether a product is a “drug” an issue the FDA alone should determine?) Virtus also didn’t provide authority to support any other definition of “generic” as applied to the products at issue. Nor could Virtus dispute literal falsity by arguing about materiality. (The court considered Virtus’ arguments in the patent arm of the case to be inconsistent—if it wasn’t infringing because its iron was slowly dissolving, that seemed like a material fact-based difference relevant to whether it was misleading to claim that its products were “generic” for or “equivalent” to the Mission products.) False or misleading claims of equivalency are actionable under the Lanham Act and common law.
The court determined that Mission had produced evidence “raising a fact issue as to whether the retail pharmacist, filling a prescription for a Mission Product, the ‘brand name product,’ might dispense instead the corresponding Virtus Product, the ‘brand name equivalent,’ under the mistaken assumption the two have been determined to be ‘generic equivalents’ or that otherwise there is factual support for the claim of equivalency.” Whether the products were in fact equivalent was a contested issue of fact.