pharmaco gets summary judgment against compounder on falsity/unlawfulness

Allergan USA, Inc. v. Imprimis Pharmaceuticals, Inc., 2019 WL 4545960, No. 17-cv-01551-DOC-JDE (C.D. Cal. Mar. 27, 2019)

The parties compete in the market for ophthalmic drugs. Imprimis sells its ophthalmic drugs pursuant to Sections 503A and 503B of the FDCA (compounding and outsourcing). None of its ophthalmic drugs are approved by the FDA. Imprimis has exceeded FDA limits on compounding/outsourcing in various ways, including by using the unapproved component artesunate to prepare drugs until it received a letter from FDA and by using bulk drugs that weren’t on the FDA-issued lists of bulk drugs for 503B.

Imprimis advertised that its pharmacies “only use FDA-approved ingredients,” and that its Cyclosporine-based formulations are “made from FDA-approved drug components,” and told a potential customer in Kansas that “In simpler terms, FDA found our products and services to be safe and effective.” A video on its Go Dropless website included the statement, “The patient is protected from infection and inflammation even more effectively than can be achieved with expensive, inconvenient and irritating topical medications.” Also, a press release claimed “Imprimis Pharmaceuticals Go Dropless™ Video Interview Survey Reveals 95% of Leading Cataract Surgeons Surveyed Would Prefer Dropless Therapy.” Though Imprimis didn’t have the details of the survey, it “understands” that survey participants were asked “Would you prefer your patients not to have to take topical eye drops following an ocular surgery,” rather than identifying a specific formulation such as its Dropless Therapy injectables. When the survey was conducted, Imprimis “probably had less than ten customers” for its injectable Dropless formulations, and, of the 21 surgeons surveyed, only “a handful” had used them. Up to 20 months later, Imprimis was advertising these “recent” survey results and indicated that they referred to Imprimis’s product specifically.

Allergan sued for false advertising under the Lanham Act and violations of the UCL’s unlawful and unfair prongs. A related case shows how this is going to go.   Previously, even in the presence of unlawful statements regarding “FDA approval” that generated Lanham Act liability, the Court declined to hold the defendants liable under the Sherman Law and UCL “so long as the compounder complied with FDA’s interim guidance, especially in light of the agency’s ongoing implementation efforts.” Where it didn’t comply with the interim guidance, there could also be Sherman Act/UCL liability.  There was noncompliance here—among other things, Imprimis wasn’t requiring individual prescriptions before compounding when it should’ve been.

However, Allergan couldn’t get restitution under the UCL based on disgorgement of Imprimis’s profits. “The profits obtained by Imprimis come from third parties rather than from Allergan. They were never in Allergan’s possession.” Only injunctive relief was available for this claim.

Lanham Act claims: Imprimis claimed that its pharmacies “only use FDA-approved ingredients” and were “made from FDA-approved drug components.” That was literally false because FDA does not approve individual “ingredients” or “components” of drugs. “In simpler terms, FDA found our products and services to be safe and effective” was also literally false because Imprimis “does not subject its drugs to the FDA approval process that would support such a finding.”  Likewise, Imprimis’s claim that it “Meets requirements under Section 503B of the FD&C Act” was literally false based on the findings above.

Superiority claims: The survey/surgeon preference claim was a “tests prove” claim that could be falsified by showing that “such tests ‘are not sufficiently reliable to permit one to conclude with reasonable certainty that they established’ the claim made.” Even without expert testimony, the court found literal falsity.  “No reasonable jury could determine the survey was sufficiently reliable to conclude with reasonable certainty that 95% of cataract surgeons surveyed prefer Dropless Therapy.” The survey didn’t even ask about Imprimis’s specific product. So too with the video claiming “the patient is protected from infection and inflammation even more effectively than can be achieved with expensive, inconvenient, and irritating topical medications.”  This wasn’t “merely a professional opinion; it is a promotional statement published by the company, and Dr. Lewis appears to have been a consultant paid by Imprimis to speak with ophthalmologists and investors.” Imprimis’s witnesses knew of no basis for the video’s claim.

Literal falsity created a rebuttable presumption of actual, material deception. “Regardless, the uncontroverted facts also establish that the statements were material. Some of the false commercial promotions were even made in direct follow-up to consumer questions about quality and FDA compliance.”

Whether there was harm to Allergan, and the extent of that harm, was for the jury.