Monday, September 21, 2020

FDA preemption/preclusion after Pom Wonderful: still powerful for drugs

Exela Pharma Sciences, LLC v. Sandoz, Inc., 2020 WL 5535026, No. 19-cv-00318-MR (W.D.N.C. Sept. 15, 2020)

Exela sued Sandoz for unfair and deceptive trade practices in violation of North Carolina law; tortious interference with prospective business advantage; and Lanham Act false advertising and unfair competition. It sought a TRO etc. forcing Sandoz to recall its L-Cysteine product.

Exela makes an FDA-approved L-Cysteine injection product, used for high-risk patients, such as preterm or low-weight newborns and patients with severe liver disease, as part of a nutritional supplement regimen (aka “total parenteral nutrition” or TPN). “Aluminum is a known contaminant of TPN solutions, and aluminum toxicity can cause serious health problems including dementia and impaired neurologic development among others. High-risk infants who receive TPN are particularly susceptible to harm from excessive, toxic amounts of aluminum, as they have immature kidneys, which impairs the removal of aluminum from the body.”

Sandoz makes an L-Cysteine product in Canada with a label stating that it contains as much as 5,000 mcg/L of aluminum; it’s not FDA-approved. But starting in 2014, there was an L-Cysteine shortage in the US, so the FDA asked Sandoz to import its product under the FDA’s “shortage program,” without requiring FDA approval. On April 12, 2016, the FDA stated that it would not bring an enforcement action for importing the product for 6 months if Sandoz followed certain conditions, including distributing a “Dear Healthcare Provider” letter alongside its L-Cysteine product that explained the product, the drug shortage, and the lack of other similar FDA-approved products. The letters had to be reviewed by the FDA before distribution.

Sandoz sought several extensions, each of which was granted. The last Dear Healthcare Provider letter was approved on June 21, 2019, instructing Sandoz to ensure that the “previously reviewed Dear Healthcare Provider letter continues to accompany [its] L-Cysteine in distribution.” Every version of the letter stated that “there are currently no FDA-approved L-Cysteine Hydrochloride Injection products in the United States.”

However, Exela developed an L-Cysteine product with low aluminum levels. The FDA wanted no more than 145 mcg/L of aluminum for permanent approval. In April 2019, the FDA approved Exela's NDA. By late May 2019, Exela had manufactured sufficient inventory to meet the entire market demand for L-Cysteine.

Exela made “numerous efforts” to get Sandoz’s product off the market, including repeatedly asking the FDA to act. The FDA declared an end to the shortage in September 2019, and asked Sandoz to stop importing its product; Sandoz complied but continued distributing its existing inventory. Exela’s marketing team “claims to have observed customers buying or committing to buy up to a year’s supply” even after its product received FDA approval. In October 2019, the FDA told Sandoz to stop distribution, which it did. However, even with Exela’s sole-approved-product status, it has less than 20% of the L-Cysteine market while Sandoz “maintain[s] over” 80%.

The FDCA gives the FDA “complete discretion” to “decide how and when [its power] should be exercised.” This can’t be evaded by putting a state law label on what is really a complaint about FDCA violation. [Note that this discussion applies only to drugs/devices; the situation for food/supplements has more leeway for states, consistent with the lesser federal regulation to which they are subject.]  “The test for determining whether a state law claim is impliedly preempted is whether or not the claim would exist in the absence of the FDCA.”

NC unfair/deceptive practices: the allegedly violative action was selling the unapproved product and “stuff[ing]” the distribution channels, including failing to update its 2018 Dear Healthcare Provider letter after the FDA approved the Exela product, failing to warn its customers about its product’s aluminum content, and misusing “its incumbent status in the market and its huge market power and reach to block hospitals and distributors from switching.”

The complaint fundamentally challenged “the FDA’s decision not to bring enforcement proceedings against the Defendant under the FDCA for importing and selling an unapproved and unsafe drug.” That was preempted under conflict preemption, including claims about the safety of Sandoz’s product. Even after Exela received FDA approval, the FDA still had to account for the risk that it might not be able to meet the entire market demand for L-Cysteine, the risk of supply chain issues during the transition, other associated risks, and the parties’ interests (including Sandoz’s interests in selling “inventory it created in response to the FDA’s requests to help with the drug shortage.” Unlike failure-to-warn cases that escape preemption, the only way to comply with state law would have been for Sandoz to leave the market.

Similar analysis applied to the associated claims. The FDA regularly “weans unapproved products off the market once a competing product has been approved.” In fact, it gave Sandoz only six months, not the year it has suggested in the past; and Exela did not even allege that it had sufficient production to satisfy the market for a significant portion of that period.

Failing to update the “Dear Healthcare Provider” letter to disclose the approved Exela product was also ok, even though it said “there are currently no FDA-approved L-Cysteine Injection products in the United States.” The letters were “mandated, overseen, and preapproved by the FDA,” and the last renewal was approved by the FDA after it approved Exela’s product; the 2019 renewal “mandated (under threat of enforcement action)” the use of the previously approved letter. Preemption was appropriate given that, “when a party cannot satisfy its state duties without the Federal Government’s special permission and assistance, which is dependent on the exercise of judgment by a federal agency, that party cannot independently satisfy those state duties for pre-emption purposes.” And state law likewise couldn’t require Sandoz to send other letters “contradicting” the FDA-approved letters.

Failure to warn about aluminum content, even though the aluminum content “far exceed[s]” the standard the FDA required Exela to meet: The FDA didn’t set upper limits on the aluminum content of these products, and the FDA later responded to Exela that Sandoz’s product had aluminum levels that were “well within the standards agreed upon with FDA” and that “[i]t is thus inappropriate to suggest that the Sandoz product is somehow unsafe.” And anyway, “a merchant’s failure to inform its customers as to how its product compares unfavorably to a competitor’s product” isn’t itself deceptive.

Ultimately, Sandoz “imported, marketed, and sold a product that it was permitted by the FDA to import, market, and sell, and in quantities that did not exceed that permission.”

Tortious interference claims fared similarly.

Lanham Act: The false/misleading representations were similar to those discussed above. Unless an omission makes an affirmative statement misleading, the Lanham Act doesn’t require disclosures. Although the Dear Healthcare Provider letters were plausibly “commercial advertising or promotion,” this was still a case where bringing a Lanham Act claim would interfere too much with the FDCA, even after Pom Wonderful, which held out the possibility of precluding a Lanham Act claim if “it turns on the content” of something that has been “previously preapproved by the FDA” or conflicts “with an affirmative policy judgment by the FDA.” Both scenarios applied here.

No comments: