Stiefel sued Brookstone, alleging that Brookstone falsely
advertised its acne gel BPO Gel as a generic equivalent to Stiefel’s competing
acne gel Brevoxyl. The court of appeals
affirmed the grant of summary judgment in favor of Brookstone. They’re prescription drugs, but “generally
recognized as safe and effective” (GRAS/E) and BPO Gel didn’t need FDA approval
before calling itself “generic.” Indeed,
there are no paths to approval for such a use, since the FDA doesn’t approve or
accept comparative testing for this category of drugs, and they’re not in the
Orange Book of FDA-approved generics.
Stiefel alleged that BPO Gel was not generic for Brevoxyl,
so that Brookstone falsely advertised it when it (1) submitted “Labeling
Statements” to a pharmaceutical database listing the product name as “Benzoyl
Peroxide 4% Gel” and “Benzoyl Peroxide 8% Gel” instead of “BPO 4% Gel” and “BPO
8% Gel; (2) announced publicly that its BPO Gel was a generic for Brevoxyl; and
(3) said on a Texas Medicaid Form that BPO Gel was graded an “A” in the “Orange
Book.” The district court found that
Stiefel had shown the falsity of (1) and (3), but didn’t show enough material
impact from those to survive summary judgment.
Stiefel argued that the district court erred in failing to
consider misleadingness and looking only for literal falsity, when the evidence
included an expert report offered for the purpose of proving misleadingness.
But Stiefel didn’t clearly identify its theory or tell the district court that
it was relying on the expert report for misleadingness, so the court of appeals
confined its review to literal falsity.
Stiefel didn’t produce enough proof to show literal falsity
on Brookstone’s “generic” statements. It
didn’t establish the meaning of “generic” in the relevant context. Stiefel pointed to the FDA definition of
“generic,” but Brookstone countered that the FDA definition didn’t apply to GRAS/E
drugs not subject to FDA approval. The
court concluded that Stiefel didn’t show that, in this unregulated context,
pharmacists understand the term “generic” to have the same meaning as it does
in the regulated context. Rather, the
evidence reflected uncertainty about the proper meaning of the term. Thus, a
reasonable jury could not decide that Brookstone’s statements were literally
false.
Anyway, even if Stiefel had shown the meaning of “generic,”
it didn’t present bioequivalency tests showing that BPO Gel wasn’t a generic,
even though it argued that bioequivalence testing is the only way to establish
genericity as understood by the FDA.
Rather, Stiefel argued that BPO Gel had never been tested for bioequivalence. (I guess the court isn’t going for the Third
Circuit’s rule that completely unsupported claims are false, eh?)
Finally, Stiefel argued that the district court was wrong in
its assessment of the materiality of the false statements in the Texas Medicaid
form and the labeling statements. Stiefel
argued that it had shown materiality by showing that pharmacies linked BPO Gel
and Brevoxyl, which caused pharmacists to substitute BPO Gel for the more
expensive Brevoxyl. But this showed only
that Brookstone got some of Stiefel’s market share; it didn’t show that the
false statements influenced pharmacists’ purchasing choices, so Stiefel failed
to show materiality.
Comment: Hunh? If
Brookstone concededly used a false name, and that name produced the
linkage—that is, if the database wouldn’t have linked the two products without
the false name equating it to Stiefel’s product, which is how I understand
these databases to work—then how can that not be material, in the ordinary
sense of “causing a different purchase to happen than would have happened if
the defendant hadn’t used a false statement”?
The linkage influenced what products were used to fill
prescriptions.
Yes, once the linkage was
in place, substitution may have been automatic because of policies favoring
generics. But that doesn’t mean that the
falsity wasn’t material. It just means
that in the pharmaceutical market many material decisions get made behind the
scenes. Suppose a fraudster convinces
the purchasing department for Georgetown’s cafeteria that it’s delivering
organic eggs, but they’re actually conventional eggs. Thus, every time a patron orders eggs,
believing them organic, she gets conventional eggs, never aware of the
problem. In that sense, her decision
isn’t influenced, but only in that she doesn’t know that she’s not getting what
she ordered (or, in the case at bar, what her doctor prescribed). I would call that false advertising even
though the impact of the substitution is felt distant from the purchasing agent
who’s been misled. This seems like a
very weird, mechanical reading of “influencing [consumers’] purchasing
choices.”
1 comment:
The case doesn't make any sense at all. It seems pretty clear that, but for the misrepresentation, the defendant's product would not have been substituted for the plaintiff's nearly as frequently.
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