Preclusion lives even after Pom Wonderful

JHP Pharmaceuticals, LLC v. Hospira, Inc., 2014 WL 4988016, No. CV 13–07460 (C.D. Cal. Oct. 7, 2014)

Pom Wonderful had a lot of broad language in it, and there is a pattern in which lower courts interpret Supreme Court Lanham Act opinions to mandate a course correction, whether in the direction of expanding or constraining liability.  Those of us who follow these things were deeply interested in how expansively they’d read Pom Wonderful.  Here, the court largely adheres to the pre-Pom precedent; while some claims related to marketing of FDA-unapproved drugs survive, many don’t.

Plaintiff (aka Par) sued defendants for false advertising (state and federal; the parties agreed that both claims should be analyzed similarly even though the preemption/preclusion issue differs). Par makes injectable epinephrine sold as ADRENALIN.  (That’s a brand name?  This might be the old “aspirin” situation, a trademark to druggists but not to consumers.)  Defendants make other injectable epinephrine products.

In 2012, Par received FDA approval for its 1 mL version of Adrenalin.  Defendants sell non-FDA-approved injectable epinephrine products.  Par alleged that they represented to consumers, either expressly or by implication, that their products were FDA-approved, and misleadingly advertised them as “safe” or “effective.” Also, Par alleged that defendants advertised products that are illegal to sell while maintaining that they were law-abiding, misleading wholesalers and the public about the legality of their products.  Finally, Par alleged that defendants omitted injection location and adverse reaction information Par’s product had to carry as part of its FDA-approved labeling, misleading the public into thinking Par’s product is more dangerous than the generics because it has more restrictions.

One defendant, American Regent, argued that Par failed to exhaust its administrative remedies by submitting a citizen petition to the FDA.  But Par wasn’t arguing that the FDA had done anything wrong or failed to act where it was required to do so; exhaustion was irrelevant.

How about preclusion?  The Lanham Act and the FDCA are “two discrete statutory schemes that can regulate the advertising, marketing, and labeling of food and drugs.” Neither precludes the application of the other, and the Lanham Act brings the market expertise of competitors to bear on advertising, serving a different function.  However, Pom Wonderful did say that “Unlike other types of labels regulated by the FDA, such as drug labels, it would appear the FDA does not preapprove food and beverage labels under its regulations and instead relies on enforcement actions, warning letters, and other measures” (emphasis added). Thus, the Court suggested that it might find preclusion where a Lanham Act claim turns on the content of a drug label, especially if it were preapproved by the FDA.  Also, a Lanham Act claim might be barred where “the agency enacted a regulation deliberately allowing manufacturers to choose between different options,” or where the plaintiff’s theory of liability otherwise conflicted with an “affirmative policy judgment” by the FDA.

Pre-Pom cases like PhotoMedex, Inc. v. Irwin, 601 F.3d 919 (9th Cir. 2010), might have limited precedential value, but even they recognized that claims weren’t barred if the law didn’t require the FDA’s expertise or rulemaking authority to interpret.  PhotoMedex said that if it was clear that FDA approval was required and that no such approval had been granted, a competitor could recover for misrepresentations of approval.  So, taking these decisions together, Lanham Act claims are not generally precluded by the FDCA, but some claims may require the FDA’s expertise to resolve.

The court then rejected defendants’ argument that Pom didn’t reach drug advertising.  Though the Court made frequent mention of “food and drink,” “the arguments, logic, and holding of POM Wonderful are couched in much broader language and strongly suggest a more wide-ranging application.”  The Court’s argument about competitors’ expertise, for example, wasn’t peculiar to food and beverages.  Nor was its failure to find any preclusive language in the FDCA.  “The logical building blocks of the Court’s specific holding with regard to food and beverage labeling would seem to be equally applicable to food and beverage advertising, drug marketing, medical device labeling, cosmetics branding, or any other kind of marking or representation which would fall under both the Lanham Act and the FDCA, unless preclusion is required for some specific reason.”  (In a footnote, the court noted that specific reasons would involve affirmative FDA action such as preapproving labeling or explicitly allowing manufacturers a menu of lawful choices.)  Thus, after Pom, the general presumption is that “Lanham Act claims with regard to FDCA-regulated products are permissible and, indeed, desirable.”

Given that presumption, Par’s claims mostly survived.  Par’s fundamental argument was that FDA approval was a government imprimatur of quality, safety, and desirability.  Though not all drugs must be approved, consumers take approval to mean assurance that a drug has been properly tested and meets minimum quality standards.  Given the expense of FDA approval, a company that invests in such approval can be put at a competitive disadvantage if others can misrepresent their status.

The alleged misrepresentations came in several ways: First, Par alleged that Hospira advertised its drug as a New Drug Application (NDA) product without FDA approval.  Second, Par alleged that Hospira (maybe others) advertised that Adrenalin was the “brand name equivalent” of its own product, and that it is a “generic” version of Par’s product.  Third, more generally Par alleged that defendants encouraged purchasers to think of their products as “comparable to or interchangeable with” Par’s product. Finally, Par alleged that defendants advertised using certain industry lists, and that consumers expect the products on such lists to be “branded drugs or generic products,” even though defendants’ products weren’t “generics” as defined by the FDA.

Defendants cited Catheter Connections, Inc. v. Ivera Med. Corp., No. 2:14–CV–70–TC, 2014 WL 3536573 (D. Utah July 17, 2014), for the proposition that such claims are precluded post-Pom, but that case involved re-approval of a new model of an existing medical device, where the manufacturer gets to make the call about the need for new approval in the first instance, and thus the manufacturer there could “plausibly claim that its product was, in fact, approved, at least until the FDA determined otherwise.”  This was very different from the case at bar, where the defendants have never had approval.  No preclusion.

Defendants also argued for the application of the primary jurisdiction doctrine.  Nope. No special expertise was required to determine whether the FDA had granted approval or not; there’s a comprehensive list of approved drugs and defendants didn’t contest that their drugs were unapproved. The same thing was true for “generic.”  The FDA will only declare a drug “generic” if it goes through an approval process; it also maintains a list of approved generics. “If all that Par alleges is that Defendants are advertising their products as approved generics when they are not in fact approved, the Court need not refer the question to the FDA’s expertise to make factual determinations.”

But did Par state a claim?  It didn’t allege specific affirmative representations of FDA approval.  Defendants argued that under Mylan Labs., Inc. v. Matkari, 7 F.3d 1130 (4th Cir. 1993), there’s no cause of action for implying FDA approval by putting a product on the market.  For Hospira, Par did allege a specific representation of having “an NDA product.” That could easily be construed as a representation of FDA approval, “who should not bear the burden of uncovering information that contradicts the impression given by misleading advertising” (citing Williams v. Gerber Products Co., 552 F.3d 934 (9th Cir. 2008)).

It wasn’t clear whether the other two defendants said similar stuff.  “Mylan, though not binding on this Court, makes a compelling point: merely putting the product on the market is probably not a representation that the product is FDA-approved.”  (Why not?  There has to be a policy argument behind it: Congress deliberately allowed non-approved products to remain on the market.  Thus, even if consumers are confused by the fact that the product is on the market, other considerations require us to allow it.  However, we could require prominent disclosure of the non-approved status without conflicting with the congressional grandfathering decision.)

Par’s complaint was somewhere between “they put it on the market” and “they said it was FDA-approved.”  Par argued that defendants did more than put their products on the market; they also put their products on industry “Price Lists,” and Par alleged that “buyers believe that all prescribed drugs identified on the Price Lists are ... FDA-approved.” Further, it alleged that by listing their drugs as “generics,” they implied that their products are “equivalents” of Par’s FDA-approved product, misleading consumers.

Par’s problem was that misleadingness carries a high evidentiary bar: the plaintiff must show that the ads actually conveyed the implied message and deceived a significant portion of recipients.  Par did allege actual confusion about what buyers believe.  At the motion to dismiss stage, allegations sufficed without evidence of the alleged consumer beliefs.

Par also alleged misleading representations of safety and effectiveness, which might well fall within the FDA’s primary jurisdiction.  But that didn’t matter because Par failed to allege facts showing that the products were unsafe or ineffective.  Those claims were dismissed.

False representations of compliance with all applicable laws, including the FDCA: at least with respect to two defendants, the complaint alleged sufficient overt statements, such as Hospira’s alleged claim on its website that it complied with “applicable laws and other requirements.” But unlike a mere determination of FDA non-approval, the allegation that the drugs were being sold unlawfully would require a more “complex” finding from the FDA.  What was needed was a “clear and absolute rule making it patently unlawful to market any drug without going through the FDA approval process.”  Though the statute apparently provided such a clear rule for new drugs, many older drugs, even when updated, were exempt from this rule.  “The determination of whether a drug is ‘new,’ and whether it can be lawfully marketed under the FDCA, involves complex issues of history, public safety, and administrative priorities that Congress has delegated exclusively to the FDA.”  While an allegation of illegality under the FDCA could under some circumstances form the basis of a successful Lanham Act claim, for example if there were a clear statement from the FDA that defendants were selling their products illegally or otherwise breaking the law, the court wouldn’t proceed here withough a clear statement by the FDA.  Whether the drugs here were “new” was an issue within the FDA’s primary jurisdiction and required the FDA’s expertise.

Misleading labeling from omitting the warnings required for Par’s product: This was allegedly misleading implication, and Par had to plead “at least some facts tending to show that the alleged implied message is actually transmitted to the consumer.” The pleadings were thin; the message conveyed by lack of labeling was “at least ambiguous: a savvy consumer of pharmaceuticals, used to many pages of dire warnings, might well be put on guard by the lack of similar warnings on the Defendants’ products.”  Plus, Pom singled out drug labeling as an area where the FDA takes a particularly active role, and claims might be precluded.  Par argued that the defendants’ products were unapproved and thus effectively unregulated by the FDA; the court wasn’t unsympathetic to this argument, since there was no pre-approval of the label here.

But the court didn’t need to resolve the question, because the court could not determine that Par’s Adrenalin was not less safe than defendants’ products, as required for the implied message to be false. Par didn’t allege any facts about comparative safety, and if it had done so “the safety determination would almost certainly require the scientific expertise of the FDA, and so would likely fall within the agency’s primary jurisdiction.” Claims dismissed.