Unapproved malaria drugs can be hazardous to your business

Mutual Pharmaceutical Company v. Ivax Pharmaceuticals, -- F. Supp. 2d --, 2006 WL 3026246 (C.D. Cal.)

Mutual makes, among other things, quinine sulfate for treating malaria. Quinine’s been around long enough that it predates the FDA safety/approval regime. In 1998, however, FDA halted all OTC sales of quinine sulfate, requiring a prescription for it, because of evidence of injury and even death from use. Quinine sulfate has a very narrow range between therapeutic levels and toxic levels, so the FDA considers a doctor’s supervision key to its safe dosage and use.

After 1998, the market for quinine sulfate was filled by drug makers selling unapproved prescription quinine sulfate. Mutual submitted a new drug application for treating symptoms of imported drug-resistant, uncomplicated malaria by quinine sulfate, and received approval and orphan drug designation, which allows it exclusive marketing rights for the approved indication. It markets its drug under the name Qualaquin.

Defendants continue to market unapproved quinine sulfate of varying dosages to the public for treating both complicated and uncomplicated malaria. Mutual contends that they’ve represented that their products are safe, effective and FDA-approved for treatment and prevention of malaria, all of which is false. Defendants’ labels allegedly list information that omits warnings the FDA requires on Qualaquin and recommend incorrect and potentially dangerous dosages. Third-party internet retailers such as buygenericdrugs.com make representations that all the products sold on the site are FDA-approved, then sell defendants’ quinine sulfate.

In addition, Mutual challenges defendants’ placement of their drug on “privately integrated drug dispensing databases and pricing systems (‘clinical/price lists’)” that “‘represent a major drug-marketing communications-channel to pharmacists and chain store buyers.’” Defendants have other marketing channels which Mutual doesn’t attack.

As the result of Mutual’s complaints, the FDA is considering, but hasn’t decided on, an enforcement action against defendants.

The obvious question is whether Mutual can use the Lanham Act in this instance, when the FDA has authority in the area and there’s no private cause of action under the FDCA. The court used the standard resolution: a Lanham Act claim that would require interpreting the statute or FDA regulations is out, but a claim whose truth or falsity can be adjudicated without doing so – even when that requires reference to specific FDA determinations – is acceptable. (The court referred to the latter as a claim whose false or misleading nature can be “easily verified,” and suggested that the FDA’s determination of truth or falsity would be determinative in a Lanham Act case; both of those seem somewhat shaky, but okay.) Despite the seeming ease of resolution, the case ends up edging closer than ever to the question of which rule applies when the plaintiff has a consumer survey indicating that consumers think something about FDA rules.

First, the court addressed the labeling claim, which encompassed omission of FDA-required warnings, bad dosages, bad instructions for what types of malaria are covered, all on a label printed with the same format and “look and feel” as the label of an FDA-approved drug. The FDA required Mutual to put a huge warning on its label about one potential side effect, which can lead to arrhythmia, a heart attack, or sudden cardiac death. Defendants’ label mentions only “anginal symptoms” as a possible adverse reaction. Mutual submitted a survey in which 11% of pharmacists did not believe, and 20% did not know, that the quinine sulfate they dispensed using the clinical/price lists had that potential life-threatening side effect.

The court rejected Mutual’s FDA preemption argument. In the special circumstances here of a grandfathered drug, the argument was that the FDA has already determined what must be included on the label for quinine sulfate specifically, and defendants’ labels don’t conform. This didn’t require the court to interpret any FDA regulations. (I’m a little dubious about this. If the formulations aren’t exactly the same – even if the delivery form is different, as with tablets versus gelcaps – my understanding was that the FDA might require a slightly different label. The problem I’m having here is that defendants’ drugs are neither me-too drugs (which would merit their own labels) nor generic versions of Mutual’s drug (because the formulations and dosages are different). It is certainly plausible that formulations and dosages wouldn’t affect the relevant parts of the label, but I’d have appreciated more about the special regulatory background here.

Anyway, the court analogized the label to a direct statement that a product was FDA-approved when it wasn’t, a readily verifiable factual matter, and found that Mutual was likely to succeed on its falsity claim.

The price lists claim was more interesting because of the interaction between the FDA and consumer surveys. Mutual’s surveys demonstrated that a drug’s presence on clinical/price list has special meanint to pharmacists and large pharmacy chain stores. One survey – done before Qualquin was even available – revealed that 91% of the pharmacists surveyed believed that all of the drugs contained on the clinical/price lists were FDA-approved, including 89% who believed that the quinine sulfate they dispensed using the clinical/price lists was FDA-approved. Another survey showed that 48% of pharmacists who use such private clinical/price lists commonly mistake the fact that a drug appears on the list means the drug was approved for use by the FDA, and that anywhere between 28 to 38% of pharmacists thought that the usage and other labeling information listed in connection with the drug on the private clinical/price list description is complete.

Moreover, a similar survey of 11 chain pharmacy stores found that ten either frequently or always refer to clinical/price lists when dispensing or ordering prescription drugs, and that nearly half thought that "all of the prescription drugs listed" on the clinical/price lists "were FDA approved."

Thus, the survey evidence showed that the marketing channel deceived the relevant consumers into thinking the defendants’ drugs were FDA-approved. Defendants called this a clever evasion of the general rule that false implications (as opposed to explicit representations) of FDA approval aren’t actionable. It is an evasion, in the sense that this is the first case of which I’m aware in which the plaintiff used consumer survey evidence to prove that consumers interpret silence as FDA approval where drugs are concerned. In previous cases, plaintiffs just tried to use logic to show that the omission was false. But if consumers really are being fooled, the policy objectives behind the Lanham Act counsel in favor of liability, and it’s not clear what FDCA policy goals are being served by allowing such deception. Presumably it’s always possible to disclose affirmatively a lack of FDA approval, so that a lawful but unapproved drug could still be marketed even if governed by Lanham Act requirements.

The court ruled that it wasn’t just marketing an unapproved drug that led to the falsity here, but the particular form that the marketing has taken, which carries implicit false representations of FDA approval. Of course, the blank spot here – that I strongly suspect could be filled by a survey – is whether all marketing channels for prescription drugs in the US carry implicit false representations of FDA approval. If that were true, then past cases holding that merely marketing an unapproved drug is not itself a false implicit representation of FDA approval would either have to be distinguished as not having involved consumer perception evidence (my preferred result) or applied to bar claims even when there was evidence of actual deception. Mutual’s litigation strategy here, however, allowed it to avoid facing those precedents head-on by characterizing the price lists as a unique and specialized marketing channel.

The court also found that defendants could be held liable, under standard contributory liability principles, for the false statements of third-party internet retailers if it knew or reasonably should have known about the false claims and continued to supply the product. At this stage, however, Mutual lacked proof that defendants knew their products were being falsely advertised.

Mutual’s labeling claim also faltered at the irreparable harm stage – because defendants weren’t engaged in comparative advertising, there was no presumption that Mutual suffered harm from the false advertising, and Mutual hadn’t put in any other evidence of harm. I find this a bit puzzling – if Mutual is the only FDA-approved source of quinine sulfate, it would seem that Mutual is the only competitor who could suffer. In a highly concentrated market, even noncomparative advertising can be the equivalent of comparative advertising. It’s possible, however, that the misleading label information led to the theft of business from non-quinine sulfate malaria treatments, so maybe there needs to be more marketplace information.

Mutual’s consumer survey evidence, in contrast, was enough to show irreparable harm on the price list claim, so the court enjoined defendants’ use of such price lists.