G&W Laboratories, Inc. v. Laser Pharmaceuticals, LLC,
No. 17-cv-3974-BRM-DEA, 2018 WL 3031943 (D.N.J. Jun. 19, 2018)
G&W sells Anucort, a prescription drug for use in
treatment of hemorrhoids. G&W alleged that its formulation delivers 25 mg
of the active ingredient “in a reasonable amount of time.” Anucort isn’t FDA
approved, and G&W has been “actively working” with the FDA to obtain an
approved New Drug Application (NDA) for Anucort. G&W submitted an
Investigational New Drug (IND) application, spending “millions of dollars
conducting clinical studies of the safety and efficacy of Anucort for treating
symptomatic internal hemorrhoids.” Despite its lack of approval, Anucort has
been on the market for about thirty years, because the FDA has exercised
enforcement discretion as to it. Anucort
is allegedly a leading prescription product for the treatment of hemorrhoids,
selling one million units a year.
Laser sells Hemmorex as a competing product, but G&W
alleged that “[l]aboratory testing shows that Hemmorex releases less than
20%—that is, less than 5 mg—of the 25 mg labeled amount of hydrocortisone
acetate active ingredient into a two-hour period.” Laser markets Hemmorex to
generic buyers at drug wholesalers and retailers as an “equivalent to and
substitute for Anucort.” Laser also tells databases that Hemmorex is equivalent
to Anucort and requests that the databases link Hemmorex to Anucort,
communicating to subscribers that the products are equivalent and may be
substituted for each other. G&W alleged that many wholesalers, retailers,
and pharmaceutical chains purchase, stock, and dispense only one brand of
hydrocortisone acetate 25 mg suppository, basing their purchasing decisions on
price as between linked products; thus, G&W alleged that it lost sales to
Laser.
Because G&W’s dissolution testing determined that Hemmorex
doesn’t release its labeled active ingredient to the patient in the same amount
of time, G&W argued that Hemmorex isn’t equivalent to or substitutable for
Anucort. Laser also advertised “that the FDA allows Hemmorex to be marketed and
sold as a ‘DESI drug’ – that is, a drug covered by an ongoing Drug Efficacy
Study Implementation (‘DESI’) program.” G&W alleged that this was false.
Laser also claimed that it has submitted a Pre-IND application to the FDA for
Hemmorex, and that it is the only manufacturer of a 25 mg hydrocortisone acetate
suppository to have done so. G&W alleged that Laser hadn’t “participated in
a Pre-IND meeting with the FDA, nor has it submitted an IND application to the
FDA for Hemmorex, nor has it done any predicate clinical toxicology or animal
testing.” G&W is also currently working with the FDA to obtain NDA approval
and submitted an IND application, making Laser’s statement false.
G&W also alleged that InvaDerm, which manufactured
Hemmorex for Laser, knew about the falsity and continued to supply the product.
The court said some things about primary jurisdiction, which
is essentially a discretionary doctrine that pauses a case for regulatory
action, but really treated this as a preclusion case. We know that the FDCA and Lanham Act can both
apply to drugs. But “where a claim
requires interpretation of a matter that is exclusively within the jurisdiction
and expertise of the FDA and FDCA, plaintiffs cannot use the Lanham Act as a
run around to private enforcement.”
Laser argued that Anucort was unapproved, and thus couldn’t
be a reference drug against which Hemmorex could be compared; thus no
equivalency claim could be falsified.
Moreover, “the variety of very specific data-driven and
medical-scientific determinations attendant to demonstrating ‘equivalence’”
counseled in favor of letting the FDA act.
But the court agreed with G&W. The issue was whether advertising Hemmorex
as “equivalent to or substitutable” for Anucort when the drugs allegedly didn’t
contain the same active ingredients was false or misleading. G&W “is not
relying on either explicit or implicit FDA enforcement or terms that only the
FDA can define.”
However, G&W couldn’t argue that the label, stating that
Hemmorex contains 25 mg of hydrocortisone acetate, was literally false because
Hemmorex released less than 20% of its active ingredient in two hours, whereas
Anucort releases 90% in the same time period. Whether this was false or misleading was
better left to the FDA; there was no standard for how much of a suppository’s
active ingredient had to be released. By
contrast, had G&W alleged that Hemmorex didn’t produce or contain 25 mg of
hydrocortisone acetate at all, that would be actionable, “assuming science
could determine such an answer.”
Similarly, whether Hemmorex is a DESI drug was a question
for the FDA, since answering it would require the court to determine whether
Hemmorex is similar to a drug listed in a drug efficacy notice without
permitting the FDA to do so first. The FDA leaves it to a manufacturer, in the
first instance, to determine whether it is DESI approved as being “similar” to
a product that was specifically reviewed. Under federal regulations, a
determination as to whether a drug is identical, related, or similar can be
made by “an individual who is knowledgeable about drugs and their indications
for use,” but “[w]here the relationships are more subtle and not readily
recognized, the purchasing agent may request an opinion by writing to the
[FDCA].”
The court then turned to Laser’s alleged statements that it
has submitted a Pre-IND application to the FDA for Hemmorex, and that it is the
only manufacturer of 25 mg hydrocortisone acetate suppositories to have done
so. Laser, ridiculously in my opinion,
argued that this couldn’t be material because INDs are confidential and so no
reasonable purchaser would rely on a statement that an IND application had been
submitted. Among other things, why did
Laser (allegedly) say this, if not to win consumers? Also, people rely on credence claims all the
time, and it should not be rule that consumers have to expect drug companies to
outright lie to them.
Nonetheless, the court found that G&W sufficiently pled
falsity on the “only” part of the statement, but not for the “Laser submitted a
pre-IND application” part, because those allegations were conclusory. G&W
failed to plead why it believed Laser “has not participated in a Pre-IND
meeting with the FDA, nor has it submitted an IND application, nor has it done
any predicate clinical toxicology or animal testing,” especially given that IND
applications are confidential.
The court also rejected Laser’s unclean hands defense
predicated on the argument that Anucort was currently unapproved, and shouldn’t
be able to challenge the market presence of a competing unapproved drug product.
“The unclean hands doctrine should not bar Lanham Act claims when the doctrine
is premised on allegations of non-compliance with the FDCA because such a use
of the doctrine would essentially permit a private enforcement action—a power
reserved for the FDA.” Whether Anucort was on the market illegally was a matter
for the FDA, and anyway Laser failed to allege or demonstrate how it was
injured “as a result of [G&W’s] misconduct.”
The actual manufacturer, InvaDerm, argued that there was no
basis for aiding and abetting liability under the Lanham Act, and the court
agreed, but contributory infringement [for which read false advertising] was an
available theory and was sufficiently pled.
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