FDA letters not official FDA action for Lanham Act purposes

Schering-Plough Healthcare Products, Inc. v. Schwarz Pharma, Inc., 2008 WL 582738 (E.D. Wis.)

Schering-Plough alleged that its competitor Schwarz made false and misleading statements about its Polyethylene Glycol 3350 Powder for Oral Solution laxative drugs. 3350 was a prescription-only drug from 1999 to late 2006, at which time the FDA approved it for OTC sale, with three-year exclusivity for Schering-Plough. In early 2007, Schering-Plough began marketing 3350 in a product called Mira LAX. 3350 is the only active ingredient in Mira LAX and in Schwarz’s competing product.

The defendants sought and received FDA approval to market generic equivalent Polyethylene Glycol 3350, using the Accelerated New Drug Approval (ANDA) process to piggyback on Schering-Plough’s approval. But because of the OTC exclusivity, the approvals only cover prescription uses. Defendants sold their 3350 products as “Rx only” and “prescription only” laxatives. Schering-Plough alleged false advertising, because 3350 is available without a prescription—albeit only from Schering-Plough. Defendants responded that, because their ANDAs were based on Schering-Plough’s original NDA, which was for 3350 as a prescription-only drug, their labels are required to indicate that their products are available only by prescription.

Schering-Plough argued literal falsity: 3350 is not prescription only. However, in the context of the full bottle label, targeted at pharmacists and buyers with significant pharmaceutical experience, a reasonable factfinder could conclude that “prescription only” refers to defendants’ products, not all products with the same active ingredient. Thus, the court denied Schering-Plough’s motion for partial summary judgment on literal falsity.

The next question was whether resolving Schering-Plough’s claims would require the court to interpret the FDCA before the FDA could do so. Under the FDCA, an ANDA must include a showing that “the labeling proposed for the [generic] drug is the same as the labeling approved for the listed drug.” 21 U.S.C. § 355 (j)(2)(A)(v). Moreover, any approved prescription drug “shall be deemed to be misbranded if at any time prior to dispensing the label of the drug fails to bear, at a minimum, the symbol ‘Rx only.’” 21 U.S.C. § 353(b)(4)(A). Logically, and despite the potential misleadingness in this particular situation based on the relatively unusual transition to OTC availability, defendants’ products must bear a “prescription only” label.

You can see where this is going: there is no way to rule for Schering-Plough without interfering with the FDA’s ability to interpret and enforce the FDCA. But there’s a reason Schering-Plough sued: it has the FDA on its side!

In April 2007, the Director of the Office of Generic Drugs in the FDA’s Center for Drug Evaluation and Research, sent letters to the defendants stating that their products were “misbranded and may not be legally marketed.” Defendant Schwarz responded by replying that it disagreed with the Director’s position. Nonetheless, it would withdraw its 3350 product from the market if the FDA allowed it to sell off its existing inventory for the next six months. The FDA responded by rejecting Schwarz’s substantive arguments, but stating that it would exercise its enforcement discretion as Schwarz requested.

Schering-Plough argued that the FDA had already determined that the defendants’ labels violate the FDCA, and thus no judicial interpretation of that law is required. The FDA has already taken the position that defendants violated the provision of the Act that states “a drug to which [prescription requirements do not apply] shall be deemed to be misbranded if at any time prior to dispensing the label of the drug bears the [Rx only] symbol....” 21 U.S.C. § 353(b)(4)(B) .

The court, however, disagreed that an FDA letter was an official FDA determination. In Mylan Laboratories, Inc. v. Thompson, 389 F.3d 1272 (D.C. Cir. 2004), in which the court of appeals deferred to an agency letter to a private party. That letter, however, was different in that it had an immediate legal consequence, prevending Mylan from marketing its drug. The letters here didn’t revoke any approvals “or otherwise purport to mandate any immediate legal consequences.” Nor did they refer to withdrawal of approval for one of the reasons specified in the statute.

Thus, though “in the opinions of the FDA officials who wrote the letters, the defendants’ products are misbranded …. the FDA has not yet taken any official position concerning the labeling of the defendants’ products to which the court can defer.” By statute, the FDA must follow a specific procedure to withdraw approval for a drug based on misbranding, including offering notice and a hearing. The FDA letters here didn’t do that. Judicial action here would interfere with the FDA’s exclusive authority over interpreting the FDCA.