Pamlab, L.L.C. v. Macoven Pharmaceuticals, L.L.C., 2012 WL
2540234 (S.D.N.Y.) (magistrate judge)
Pamlab sued Macoven for patent infringement and false
advertising relating to its medical food product Foltx, which contains 2.5 mg
of folic acid, 2 mg of Vitamin B12, and 25 mg of Vitamin B6, and was designed
to treat elevated levels of homosysteine. Pamlab has authorized Breckenridge to
market Folbic, a generic version of the same product. Macoven marketed a folic acid product labeled
“Folic Acid 2.5 mg Tablets—Prescription Dietary Supplement.” The label states that the product contains
the same active ingredients in the same amounts as Foltx and Folbic, and as a
result pharmacy databases list it as a Foltx/Folbic equivalent. The label also has an expiration date 2 years
after the manufacturing date.
Pamlab argued that the list of active ingredients was
misleading because of a lack of testing prior to release to confirm the actual
ingredients, that the expiration date was false because it wasn’t supported by
adequate stability testing, and that the term “prescription dietary supplement”
is meaningless and therefore deceptive.
Macoven’s product was made by Viva. Viva formulated a pre-manufacture batch,
which tests showed to contain 3.23 mg of folic acid, 2.75 mg of vitamin B12,
and 27.63 mg of vitamin B6 (listed active ingredients were identical to those
in Foltx, whose manufacturing tolerances aren’t discussed in this opinion). Viva
also subjected samples to accelerated stability testing, which uses high
temperature and humidity to cause accelerated degradation. The June 2011 pre-manufacture patch was
tested Oct. 2011 and folic acid measured 3.29 mg, and tested again in Feb.
2012, after it had been stored at room temperature for 4 months, resulting in B12
at 2.06 mg and B6 at 29.39 mg.
Macoven’s agreement with Viva provided for overages (amount
by which the active ingredients would exceed label claims) so that the product
would have 3.0 mg of folic acid, 2.4 mg of B12, and 33.4347 mg of B6. The batch Viva ultimately made for sale tested
at 3.0 mg of folic acid, 3.0 mg of B12, and 33.0 mg of B6. Viva issued a certificate of analysis
representing that the tablets in that batch contained 3.0 mg of folic acid and
had an expiration date of Sept. 2013, two years later, but didn’t include any
B12 or B6 results. Viva didn’t subject
the commercial batch to accelerated stability testing until Feb. 2012.
The parties disagreed about how pharmacy purchasing agents
decide to stock which products.
Plaintiffs’ expert said that it was industry standard for the purchasing
representative to request and receive the certificate of analysis for a
product, with the expectation that it will support the stated label amounts, as
well as documentation of stability tests supporting any claimed expiration
date. Breckenridge's Executive VP flatly contradicted that and testified that
purchasers neither request nor receive either the certificate of analysis or
stability studies. Rite Aid, a major
chain, stopped buying Folbic and began buying Macoven’s product when it was
identified as a lower-priced equivalent.
Plaintiffs estimated that they stood to lose $6 million if Macoven’s
product remained on the market; their products would generate over $8.6 million
in profits from Feb.-Dec. 2012, when their patent expires, but reducing price
to stave off substitution would result in a 75% decrease in profits.
The court denied the preliminary injunction sought on the
false advertising claims. Marketing the
product without pre-release testing for vitamins B6 and B12 didn’t constitute
false advertising. First, plaintiffs
didn’t show that the Macoven pills had less than the stated amounts of active
ingredient. Second, there was no
necessary implication that an assay had occurred. The label said how much of each active ingredient
was in the product, but didn’t say anything definitive about the basis for
those representations. Such label claims
could as easily be based on the inputs in the manufacturing process as on
post-production testing. This was also
why there was no establishment claim: there was no express or implied reference
to testing. (Contrast the case in which
defendants had no basis whatsoever for the claim that an ingredient was
present: there is, I think, a necessary implication of some basis for a claim about composition, though not necessarily a
post-production basis.) Finally,
plaintiffs failed to show misleadingness: they provided no evidence that
consumers believed that full pre-release testing had been performed. They tried to use the testimony of a few
witnesses with experience in the field, but those witnesses weren’t even in
agreement. If purchasers regularly
review certificates of analysis, they wouldn’t have been deceived. Marketing without a full assay “may well have
been reckless,” but that didn’t mean the claim was literally false.
The expiration date was “in effect a prediction, which implicitly
has some basis in science.” Plaintiffs
argued that this communicated a representation that the expiration date was
supported by stability testing that met industry standards using international
guidelines (which were part of Viva’s quality control procedures). There’s no regulatory requirement that a
dietary supplement label include an expiration date. But if a manufacturer uses one, the FDA says
that it should “be supported by data.” While
the plaintiffs agreed that a three-month accelerated stability test can support
a 2-year expiration date, they argued that the testing Viva performed didn’t
conform to the guidelines. These
guidelines provide that where “significant” change occurs at the accelerated
condition, an expiration date would have to be confirmed by intermediate or
long-term testing, and define significant change as a “5% change in assay from
its initial value.” Viva's tests showed
decreases in the amount of active ingredients in the commercial batch from the
initial assay to the assay after three months under accelerated conditions of
13.88% for folic acid, 13.2% for B12 and 6.79% for B6. (The court found that it was not explicitly
false to have conducted post-release analysis; an expiration date “could also
be based, for example, on experience with similar products and then confirmed
with post-release analysis. An expiration date is therefore not literally false
merely because it was placed on a product without pre-release testing.”)
The court wasn’t persuaded by Viva’s argument. First, the FDA found no consensus in the
dietary supplement industry as to the appropriate protocol and explicitly
“decline[d] to offer guidance on the type of data that are acceptable to
support an expiration date.” Second, the international guidelines at issue
provide recommended practices for drug manufacturers, not for dietary
supplement manufacturers. Third, the plaintiffs' witnesses weren’t familiar
enough with the specific ingredients to be able to opine whether folic acid
etc. degraded at a constant rate or stabilizes after an initial period of
degradation; this made it impossible to figure out whether Viva’s results
showed material degradation. Thus, the
plaintiffs failed to show that the expiration date wasn’t “based on data,” the
only industry standard in the record.
Finally, the plaintiffs didn’t show that Macoven’s use of
the term “prescription dietary supplement” was false because they didn’t
present any evidence on it.
Separately, the court rejected plaintiffs’ argument that
they met the preliminary injunction standard because Macoven couldn’t as a
practical matter satisfy a judgment. A
finding of irreparable injury based on the risk a judgment can’t be satisfied
requires a showing that a defendant is insolvent, is on the verge of
insolvency, or has tried to transfer or conceal assets, and plaintiffs didn’t
show any of that. The court also
considered plaintiffs’ estimate of their damages to be highly speculative, and
in any event actual damages would be less than what they originally calculated
because Macoven didn’t aggressively market its product. And their analysis of Macoven’s financial
strength was also light on data, using information not specific to Macoven
about things like rebates, returns, and profit margins.
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