Ark. Supreme Court rejects Nexium false advertising claim

DePriest v. AstraZeneca Pharmaceuticals, L.P., --- S.W.3d ----, 2009 Ark. 547, 2009 WL 3681868 (Ark.)

Plaintiffs sued AstraZeneca for false advertising of Nexium. Prilosec, Nexium’s predecessor, aka “The Purple Pill,” was AZ’s most profitable drug when its patent expired in 2001. In 2001, the FDA approved AZ’s request to market Nexium to treat conditions relating to gastro-esophageal reflux disease (GERD), aka heartburn. Plaintiffs alleged that AZ falsely marketed Nexium as “new” and “better” than Prilosec, when in fact they were very similar and produced similar therapeutic results. They alleged violations of the Arkansas Deceptive Trade Practices Act (ADTPA), along with common law fraud, breach of contract, promissory estoppel, unjust enrichment, and other state statutory violations.

The trial court dismissed for failure to state a claim. After appeal, the state supreme court affirmed.

The allegations: despite studies that showed similar benefits, Nexium ads touted it as “more powerful” than Prilosec, “clinically proven to heal more reflux esophagitis patients in a shorter period of time compared to [Prilosec].” But an FDA review concluded there was “no scientific basis for [AstraZeneca’s] statement that, compared to [Prilosec], [Nexium] offers a faster and improved resolution of heartburn symptoms and higher rates of healing in the treatment of erosive esophagitis.” Still, AZ advertised using claims such as “the proof is in the healing rates,” called Nexium “the powerful new PPI,” and invited patients to "Relieve the Heartburn. Heal the damage. It's possible with Nexium.”

AZ initially offered Nexium at a lower price than Prilosec and offered huge quantities of free samples to physicians, as well as a free-seven day trial for consumers with a prescription. Nexium’s sales shot past Prilosec’s, and AZ raised its price. At the time the complaint was filed, one pill of Nexium cost $4.46, while Prilosec OTC sold for $0.59.

Plaintiffs alleged various harms. For example, one alleged that, after seeing Nexium ads on TV, she asked her doctor for a prescription, which she received, but it eventually became too expensive. She shifted to Prilosec OTC and was satisfied. Others took Prilosec based on doctor suggestions or after seeing Prilosec ads; others alleged that AZ limited quantities of Prilosec after introducing Nexium and delayed introduction of the generic version so that they were unable to buy Prilosec; they believed Nexium’s superiority claims in its ads and didn’t buy other drugs to treat their heartburn.

The ADTPA bars knowingly false representations about goods or services. It has a safe harbor for any ads subject to and compliant with any rule, order, or statute administered by the FTC or transactions permitted under laws administered by a regulatory body acting under federal statutory authority. The trial court reasoned that federal law specifically permits drug manufacturers to promote their drugs in a manner consistent with and supported by the FDA-approved labeling, so all the challenged ads fell within the safe harbor. Here, the FDA-approved labeling includes results from clinical studies showing that Nexium 40mg did better than Prilosec 20mg—94.1% of patients showed healing at 8 weeks for Nexium 40mg versus 86.9% for Prilosec 20mg, and so on. (And yes, 20mg versus 40mg appears to be doing a lot of the work here, but the FDA hadn’t approved Prilosec 40mg for various indications, whereas it did so approve Nexium 40mg.)

Plaintiffs argued that the ads went beyond the FDA-approved labeling and thus beyond the safe harbor. The court disagreed. “[T]he FDA-approved labeling did, in fact, indicate that the approved dose of [Nexium] was superior to the approved dose of Prilosec at healing erosive esophagitis.” If the labeling supports the statements in ads, those statements aren’t actionable under the ADTPA. Though there was that pesky FDA medical review mentioned above, a medical review doesn’t reflect the conclusions of the FDA; the labeling controls.

The common-law fraud, promissory estoppel, and unjust enrichment claims failed as well. Fraud couldn’t be shown because AZ’s ads, being in accordance with their labeling, were not false or misleading as a matter of law. Likewise, the unjust enrichment claim was premised on the idea that customers bought Nexium because of misrepresentations, so AZ’s conduct couldn’t be unjust. And promissory estoppel failed for failure to allege the existence of an enforceable promise or reliance—“more powerful” etc. didn’t suffice because an ad isn’t a quasi-contractual promise, as required for the tort.