GlaxoSmithKline Consumer Healthcare, L.P. v. Merix Pharmaceutical Corp., 2006 WL 1792856 (3rd Cir.) Glaxo makes Abreva, an OTC pharmaceutical approved by the FDA for shortening the healing time of cold sores. Merix makes Releev, a cold sore product, and sells it for roughly the same price. It’s a combination of a common topical antiseptic and the herb Echinacea, for which Merix has two patents. Drug stores often stock Releev and Abreva together, and they are the only two cold sore products selling in their price range. Releev generates annual revenues of several million dollars. Glaxo sued for false advertising under the Lanham Act (and
Before suing, Glaxo complained to the FDA, which issued Merix a warning letter. Glaxo also brought a challenge before the National Advertising Division, which ruled in Glaxo’s favor on all its claims. When Merix appealed, Glaxo abandoned NAD and sued.
The allegedly false advertising included: Releev has been "clinically proven" (a) to be a "1 Day Cold Sore Treatment" and (b) to "prevent outbreaks"; Releev is endorsed by the
The district court concluded that both sets of claims were false. The only claim Releev can truthfully make is symptom relief. The new claims still implied a cure by characterizing Releev as a “1 Day … Treatment” and showing before and after photos, not to mention by establishing continuity with the old packaging and suggesting that the old claims were therefore still valid. (Though the court doesn’t specify, I think this is falsity by necessary implication: If it weren’t implying a cure, it couldn’t promise time-limitation of treatment of the symptoms of pain and tingling caused by cold sores. Given that cheaper immediate topical anaesthetics are on the market, it's also ridiculous to interpret the claim as "use this product today and your cold sores will stop hurting tomorrow.")
The district court identified the “prevents outbreaks” language as a false establishment claim, because the words were in close proximity to the words “clinically proven,” but there was no clinical evidence to support it. Advertisers have to be very careful about separating clinically proven claims from nonproven claims; courts often proceed as the district court did, treating the claim as explicitly made rather than requiring evidence that consumers would understand “clinically proven” to encompass all nearby claims. And, as it turned out, “clinically proven” was false for even the direct claim of one-day treatment. Merix’s clinical trials were tiny and unreliable.
Releev’s package also included claims that “Dr. Ken Thompson at the Clinical Microbiology Laboratory at The University of Chicago” had tested Releev and found it effective. Thompson had conducted in vitro tests and found Releev effective against certain herpes strains, but in vitro testing isn’t reliable evidence of in vivo effect. Moreover, Thompson hadn’t consented to be named, and the court found that using his name so prominently to support Releev’s claims constituted false endorsement. (I’m a little leery of the way this holding was worded: If the tests were reliable evidence of efficacy, surely Merix could have truthfully reported their results without liability. Otherwise makers of generic drugs wouldn’t be able to make claims based on studies sponsored by the original maker. Since the studies were not reliable evidence that Releev worked, however, making claims about them was misleading, and the misleadingness was increased by Thompson’s credentials.)
Releev also prominently touted the fact that it was registered, regulated or approved by the FDA as a cold sore drug. There was conflicting testimony about whether Releev’s active ingredient was covered by an FDA OTC Monograph for treatment of cold sores. The court assumed that Releev was covered, but found these claims, too, misleading, since the monograph only covered symptom relief, not Releev’s treatment claims. Releev also wasn’t registered with the FDA, and its claim to be registered violated FDA’s own rules. (The court didn't mention preemption.)
Separately, the district court found that the use of the brand name “Vira Medx” “conveys to consumers, falsely, that RELEEV is a medication that has been proven to cure cold sores by killing viruses.” Merix proposed to change the brand name to VIMDX.
Merix made a whole lot of other false and misleading claims, which I won’t detail, only to say that they were specific, extravagant, and totally unsubstantiated. The district court thus applied the Third Circuit rule that totally unsubstantiated claims are false, without the need for further evidentiary submission by the plaintiff.
Recalling that this ad strategy bought Merix millions of dollars of revenue even when there was a competitor confirmed by the FDA to work, that consumers were in no position to evaluate the competing claims, and that self-regulation was a failure, I’d like to suggest that this is a case where the Lanham Act served a valuable social function.
Related to a recent post on this blog: the district court had reasoned that Glaxo was suffering irreparable harm not just from sales diversion, but from the likelihood that, “when customers found that Releev did not live up to its promises, its failures might also tar the reputation and goodwill of Abreva, which is the only other cold sore product in the same price range.” The court of appeals, implying possible discomfort with this theory, found that the sales diversion evidence alone was enough to support irreparable harm and get a preliminary injunction.
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