Monday, June 12, 2017

"unapproved drug" claims fail post-Pom, but not challenge to "natural" claim

Hi-Tech Pharmaceuticals, Inc. v. Hodges Consulting, Inc., 2016 WL 8856671, No. 16-cv-00906 (N.D. Ga. Dec. 13, 2016)

Hi-Tech and Hodges compete in the dietary supplement market for body builders.  Hi-Tech sued for patent infringement, as well as for false advertising. Hodges allegedly put “designer steroids” in its products; if the allegations were true, then those products likely contained a Schedule III controlled substance.  Hi-Tech further alleged that the relevant product should be considered a “new drug” under the FDCA, not a dietary supplement.

The court found that some of Hi-Tech’s claims were precluded, though not all.  Even after Pom Wonderful, there is preclusion “when a Lanham Act claim would require a court to make determinations about the safety, legality, and classification of new drugs that are more properly within the exclusive purview of the FDA.”  Thus, Hi-Tech’s allegations that Hodges improperly sold a “new drug” and a “prescription drug” without FDA approval.  The FDA must determine this issue in the first instance. 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.”

However, Hi-Tech also alleged that Hodges falsely marketed its products as “natural dietary supplements when, in fact they contain ... Schedule III designer steroids.” Labeling a product a “dietary supplement” or “natural dietary supplement” without providing any warning that it contains a Schedule III substance or designer steroid might constitute false or misleading advertising.  The court pointed out that pro athletes have claimed to have accidentally ingested steroids. This wouldn’t require determining whether the product shold have through the new drug approval process (or some other regulatory process): regardless of whether it was a supplement or a drug, Hodges couldn’t falsely or deceptively market it.

Hi-Tech’s Georgia Uniform Deceptive Trade Practices Act and unfair competition claims survived to the precise extent that its Lanham Act claims did.

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