Does presence on the market indicate FDA approval?

Mutual Pharmaceutical Company, Inc. v. Watson Pharmaceuticals, Inc., 2010 WL 446132 (D.N.J.)

Earlier litigation between the parties in the C.D. Cal. Watson sells colchicine, a therapeutic compound in use for more than a century to treat, among other things, gout and, more recently, pseudogout and Familial Mediterranean Fever (FMF). Mutual sells a colchicine product, COLCRYS, recently approved by the FDA as an orphan drug with a 7-year exclusivity period for marketing COLCRYS for the treatment of FMF. Mutual alleged that Watson makes an “unapproved prescription drug” containing colchicine as its sole active ingredient, and advertised its product in competition with COLCRYS.

It’s unclear whether defendants’ product requires FDA approval. It’s an old drug and wasn’t required to go through the current review process. Mutual alleged that defendants use several advertising channels, including price lists, wholesaler ordering systems, pharmacy computers, and websites. (I assume this allegation is designed to deal with the earlier court’s skepticism that any of the acts at issue constituted “commercial advertising and promotion.”). Mutual further alleged that defendants supply “misleading, obsolete, and/or incomplete information” about their unapproved colchicine products to those channels. Pharmacists and buyers allegedly believe that all prescribed drugs identified on price lists and wholesaler ordering systems are safe, effective, and FDA-approved, so by listing their products, defendants “knowingly and willfully communicate to relevant consumers that their products are safe, effective and FDA-approved.” (I think this is a fascinating question: It does seem quite likely that the default assumption today is that all drugs are FDA-approved. Consumers just don’t know that much about the various loopholes and grandfather provisions in the law. If we therefore protect consumers’ expectations, advertising law would eliminate the loopholes enacted decades ago to protect drugmakers’ expectations. So which policy should control? See more below!)

Defendants moved to dismiss the common-law unfair competition count because California only recognizes passing off as common-law unfair competition; the court agreed. They also got rid of the “unfair” prong of the allegations under section 17200 of the California Business & Professions Code, which requires an act that would violate antitrust law.

Defendants further moved to dismiss the entirety of the complaint on the grounds that it was within the FDA’s primary jurisdiction. But the complaint was not brought under the FDCA. Rather, it sought redress for implied falsehood under the Lanham Act. Defendants argued that this was an impermissible end run around the regulatory process, trying to create an FDA approval requirement for colchicine where none exists.

This type of argument—that implications about FDA approval/safety arise naturally from a product’s mere presence on what is generally a heavily regulated market—strikes at the heart of distinctions courts have tried to make between enforcing the Lanham Act and enforcing the FDCA in advance of FDA action. Unsurprisingly, the case law says a lot of possibly conflicting things.

Here, the complaint alleged affirmative misrepresentation of FDA approval status, along with false and misleading representations on product inserts and labels. “Whether these statements are false and misleading to relevant consumers is not a matter reserved for the FDA, but a matter that falls within the jurisdiction of this Court.” Though defendants argued that the relief sought would take their product off the market because they’d affect every single marketing channel, the court concluded that the relief sought was narrow: “the cessation of alleged false advertising that implies FDA approval of defendants’ products which are not FDA approved.”

A lot here rests on what is sufficient to “imply” FDA approval. The court held that the complaint sufficiently alleged that the presence of defendants’ product on price lists and at drug wholesalers creates confusion. Moreover, it alleged that “[s]urvey evidence demonstrates the inaccurate perception of relevant consumers that pharmacy computer systems ... perform a gatekeeper function by displaying only those drug products that have been approved by the FDA.” So resolving the complaint wouldn’t depend on any FDA rules or regulations.

But that’s not really the point of the conflict preclusion argument: the point of the argument is that the structure of the FDCA is designed to ensure that colchicine may lawfully be sold without FDA approval, and to the extent that implicit representations occur merely by being on the general price list etc., the courts can’t prohibit that without also taking the products off the market and defying the structure of the FDA. (Explicit misrepresentations of FDA approval are not troublesome in this way.) I think this argument may be correct, but that protecting consumers against deception is also an important policy goal. Here, given that the approved and unapproved products appear to be identical, I would find the FDCA to be a trump, but if there were health or safety issues I’d probably go the other way. It comes down to this: do we think that old drugs really are safe and effective (or at least as safe and effective as the FDA process can guarantee), such that time is a good substitute for FDA approval? And what do we do with the fact that FDA approval isn’t just material to consumers, it’s a background assumption with which they approach any drug on the market?

Regardless: motion to dismiss denied.