Third Circuit gives broad preemptive scope to FDCA

Pennsylvania Employees Benefit Trust Fund v. Zeneca Inc, -- F.3d --, 2007 WL 2376312 (3rd Cir.)

Plaintiffs sued Zeneca for false advertising of the prescription drug Nexium under the Delaware Consumer Fraud Act (DCFA), violations of all 50 states’ consumer protection statutes, and Delaware common-law claims based on unjust enrichment and negligent misrepresentation in Nexium ads. The basic claim is that it was false and misleading to advertise Nexium as an improvement on Prilosec, an earlier drug for treating acid reflux whose patent expired in 2001, which was, not coincidentally, when Zeneca obtained approval for Nexium. A clinical study showed that 40 mg of Nexium worked better than the approved 20 mg dose of Prilosec; the FDA approved both 20 and 40 mg doses of Nexium, and Zeneca promoted Nexium as superior to Prilosec. Plaintiffs alleged, however, that most patients don’t need 40 mg doses, and that Nexium was not superior at 20 mgs.

The first question was whether FDA approval of drug labels and ads brought these claims within the DCFA exemption of “any advertising or merchandising practice” that complies with FTC regulations. The district court ruled that all the ads plaintiffs cited in their complaint were consistent with the FDA-approved label and thus were not actionable. Plaintiffs argued that the exemption only applies to conduct expressly approved by the FTC, and that in any event Zeneca’s ads diverged from the approved label.

The court declined to find that express FTC approval was required, only compliance with FTC rules and regulations. But of what relevance is this FTC exception when the FDA is the relevant agency? The court of appeals ruled that the language of the exception simply could not apply when the FDA, not the FTC, had promulgated the relevant regulations, even though the agencies had worked to make their rules consistent.

The big problem wasn’t state-law statutory exclusions, but federal preemption. To the extent that the ads were consistent with statements used in the FDA-approved label, the FDA has determined that they are not false or misleading. The plaintiffs argued that Zeneca’s ads weren’t consistent with the labeling.

The court of appeals found implied conflict preemption. The question was whether state consumer fraud laws pose an obstacle to the FDA’s regulation of drug ads. By statute, drug ads must include the drug’s name, the ingredient list, and a brief summary of side effects, contraindications, and effectiveness. If an ad complies with this, it’s not subject to the Federal Trade Commission Act’s false advertising provisions. The FDA has promulgaged regulations for drug ads (prohibiting false or misleading claims, requiring a “fair balance” of positive and negative information, and requiring material disclosures), but the agency rarely pre-approves ads; its review is post hoc and voluntary.

The court concluded that the discretion “inherent in the regulations” showed that the FDA “envisioned itself occupying an ongoing and extensive role in the supervision of prescription drug advertising.” And federal regulations, no less than federal laws, can have preemptive effect. Though the plaintiffs here need not show violation of the FDCA to win, allowing their claims to proceed would “unnecessarily frustrate” the FDCA’s purpose and the FDA’s regulations. And the case for preemption was even stronger to the extent the challenged ads relied on the FDA-approved labeling; state consumer fraud laws can’t be used to “question the veracity of statements approved by the FDA.” Because Congress specifically intended that only the FDA should have the power to enforce the FDCA, “[t]he high level of specificity in federal law and regulations with respect to prescription drug advertising is irreconcilable with general state laws that purport to govern all types of advertising” and the claims are preempted.

Comment: this is much broader preemption than courts in Lanham Act cases – even in the Third Circuit – have applied. Pharmacos may applaud this result, but if it is applied consistently to business plaintiffs they will notice some costs as well. The majority, in a footnote, says the cases are different because prior Lanham Act precedent was about over-the-counter drugs, as to which the regulations are different – though it didn’t identify what relevant differences there are – and because the issue in those cases was what constituted falsity. As to that last, yes; but I would expect future Lanham Act cases to raise preemption arguments.

Judge Cowen dissented. The majority, he wrote, sought out conflicts where none clearly exist. Protecting consumers against falsehood, and protecting their health and safety, are matters of traditional state regulation, where there ought to be a presumption against preemption. The majority’s references to the comprehensive scope of federal regulation, he thought, were more relevant to field preemption, which was not argued. He saw no actual conflict in this case.

Specifically, he disagreed with the idea that Congress’s purpose of protecting consumers would be frustrated if these plaintiffs were allowed to challenge the truth of FDA-approved statements. In this case, defendants never contended that the FDA had approved the ads in question, and plaintiffs never challenged the FDA-approved labeling itself. The majority links ads and labeling, and it’s true that an ad consistent with the labeling would present a more difficult preemption question. But the allegations here were that Nexium ads contained a false and misleading comparison. Labeling doesn’t contain superiority claims, and thus the FDA has rendered no opinion on Nexium’s claim of superiority to Prilosec. So there’s no risk that a successful state-law claim would conflict with Nexium’s labeling.

Judge Cowen pointed out that the FDA’s ad regulations supported his interpretation. The FDA regulations say that an ad making a comparative safety or efficacy claim must be backed by “substantial evidence or substantial clinical experience,” which is not the same as requirements for labeling. The link between ads and FDA-approved labels, then, doesn’t require preemption for a state-law cause of action attacking an ad superiority claim.

Further, he pointed out that state-law standards track federal requirements. Parallel requirements alone do not support preemption; state-law damages remedies, for example, provide another reason for defendants to comply with the law. Given that there are limits to FDA oversight of drug ads – both FDA’s inability to require preapproval, and practical limitations – state-law remedies would aid the FDCA’s consumer protection objectives, not frustrate them. Judge Cowen found it difficult to believe that Congress meant to deprive persons injured by false and misleading ads of any remedy, reversing a longstanding history of consumer protection, without saying so explicitly.

In a footnote, Judge Cowen drew attention to plaintiffs’ claims based on false and misleading presentations and detailing to doctors, which he argued deserved separate attention because FDA regulations relating to advertising didn’t cover those kinds of promotional activities. Indeed, the Washington Legal Foundation has aggressively litigated to ensure that the FDA gives very little scrutiny to such activities, and the majority’s preemption analysis is a poor fit for those activities.