FDA jurisdiction and dismissal without prejudice

Schering-Plough Healthcare Products, Inc. v. Schwarz Pharma, Inc., 2009 WL 151573 (E.D. Wis.)

Schering-Plough sought an amendment to an earlier judgment in this false advertising case concerning statements about defendants’ Polyethylene Glycol 3350 Powder for Oral Solution laxatives. The court initially dismissed the Lanham Act claim with prejudice and the state-law claims without prejudice, and here it amended the judgment to turn it into a dismissal without prejudice.

Basically, defendants marketed their product as “prescription only,” while Schering-Plough had the exclusive right to market the same drug over the counter. Schering-Plough thus alleged that it was false to label the drug as “prescription only.” Defendants argued that the “prescription only” label was required by the FDA, which had approved their ANDAs based on the initial NDA, which was for a prescription-only drug.

Schering-Plough argued that, because the court had determined that the Lanham Act claim was unripe, Schering-Plough argued that the appropriate resolution was a dismissal without prejudice. If and when the FDA determines that defendants’ drugs are misbranded, Schering-Plough could refile. The defendants responded that the court already decided the claim on the merits: the FDA approved and required the label, precluding a private cause of action.

The court clarified that its dismissal was not merit-based, but dependent on the FDA’s inaction. Once the FDA takes an official position on proper labeling, the court can defer to that. If the FDCA wholly precluded a private cause of action, then an FDA ruling would be irrelevant. Defendants argued that, even if the FDA does act, Schering-Plough will still have no claim: either the drugs will have to be pulled from the market as misbranded but there will be no retroactive claim for false advertising, or the label is ok and there’s no false advertising claim. The court held that it need not determine the merits of Schering-Plough’s claim (here, retroactivity of any FDA determination) to decide that the dismissal should be without prejudice.