pharmaceutical equivalence isn't therapeutic equivalence/FDA approval

Concordia Pharmaceuticals Inc., S.À.R.L. v. Winder Laboratories, LLC, 2021 WL 3573118, No. 16-cv-00004-RWS (N.D. Ga. Feb. 17, 2021)

Concordia makes DONNATAL, a combination of phenobarbital and belladonna alkaloids (PBA) used to treat irritable bowel syndrome (IBS) and acute enterocolitis. Winder makes generics.

When the FDCA was amended to require proof of efficacy, FDA began an administrative process called the Drug Efficacy Study Implementation (DESI) to retroactively evaluate prescription drugs that were previously only evaluated and approved for safety between 1938 and 1962. Drug manufacturers still need an NDA or ANDA to sell their drugs, but, during the pendency of an open DESI proceeding, the FDA permits the subject product or drug to remain on the market. Drugs that are “identical, related, or similar” to a product that is subject to an ongoing DESI proceeding can also remain on the market during the proceeding. Drugs that contain the same active ingredients are considered identical, related, or similar.

People in the industry use subscription pharmaceutical drug information databases to fulfill prescriptions and determine whether generic substitutes are available for brand named products. “When companies submit drugs to the Drug Databases for listing, FDA regulations require that the drug products’ labels and package inserts list the drug’s active ingredients, strengths, usage, and dosage form.” The databases rely on the information submitted by drug manufacturers to classify drugs based on pharmaceutical equivalence, that is, the same active ingredients, in the same amounts, in the same dosage forms, and the same route of administration. Pharmaceutical equivalents are given the same generic alphanumeric identifier and linked in the databases so that a search for one returns information on both. Pharmaceutical equivalence is not bioequivalence, therapeutic equivalence, FDA approval, or a rating by the FDA. As another case said: “In fact, they explicitly warn that drugs that are listed together as pharmaceutically equivalent may have different efficacies.”

The FDA publishes the “Orange Book,” which lists all approved drugs and their therapeutic equivalence determinations, and which is “the primary mechanism used in the pharmaceutical industry to determine whether drugs are therapeutically equivalent, rather than only pharmaceutically equivalent.” Orange Book therapeutic equivalences are also published in the databases; if the FDA hasn’t evaluated a drug’s therapeutical equivalence, then that drug will not appear in the Orange Book.

State law governs how and when pharmacists and health care professionals can and must make generic substitutions. “Some states, including Georgia, permit substitution based solely on the pharmaceutical equivalence of drug products, while others require that the drugs be therapeutically equivalent before they can be substituted.”

Donnatal dates to the 1930s and has had conditional ANDAs for tablets and elixir since 1980; DESI review remains ongoing. According to their labels and package inserts, Defendants’ B-Donna and Phenohytro products contain the same active ingredients, in the same amounts, and in the same dosage forms, and have the same route of administration, as the DONNATAL products. They are therefore allowed on the market during the DESI review pendency and qualify as pharmaceutically equivalent. But they aren’t listed in the Orange Book as therapeutically equivalent to any other product, and the labels and package inserts state that “[t]his drug has not been found by FDA to be safe and effective, and this labeling has not been approved by FDA.”  They were linked in the databases, but the listings “explicitly indicated that the products were ‘unapproved’ and ‘Not Rated’ as therapeutically equivalent to any other product.” (Nor were they labeled as bioequivalent.)

Around the same time as defendants listed their products, Concordia began a letter writing campaign to the databases, the three largest drug wholesalers and distributors in the United States, and retail pharmacy chains and supermarkets, warning that defendants “were illegally advertising and promoting their drugs as therapeutically or FDA-approved generic equivalents that are substitutable for DONNATAL.” Concordia specifically asserted that: Defendants’ products were “unapproved, “non-substitutable,” “unsafe,” and “present[ ] a high risk for FDA enforcement action, including seizure and recall”; Defendants had “previously tried to launch an unlawful drug product that claimed to be a generic version” of DONNATAL; Defendants’ product listings were “inaccurate”; Defendants’ products were being “illegal[ly] market[ed] and substitut[ed]” for DONNATAL; and Defendants “d[id] not appear to have any basis for claiming that [their] products are equivalent or substitutable for Donnatal.” Concordia suggested that the letter recipients could face civil and criminal liability by continuing to list and distribute the products. This was the basis of the counterclaims.

“Several entities, including Red Oak Sourcing, a pharmaceutical buying agent that negotiates contracts for the purchase of generic drug products on behalf of Cardinal and CVS, and AmerisourceBergen, subsequently terminated contracts or contractual negotiations with Defendants.” One database contacted the FDA for additional guidance; the FDA responded that, based on its review, the products qualified as “identical, related, or similar” and that  “[t]he final determination regarding the regulatory status, and therefore lawful marketing, of a drug subject to a pending DESI proceeding (including both a drug product that is approved for safety only and has been specifically identified as being subject to that proceeding and products identical, related or similar to that drug product) is reached only when the DESI proceeding has been closed.” Concordia, possibly in a fit of pique, responded to the FDA by stating that it was “now considering launching numerous new unapproved products that [they] believed would qualify for marketing under [the FDA’s] letter.”

Concordia alleged that defendants falsely advertised or promoted their B-Donna and Phenohytro products as “generic” to DONNATAL, thereby misleading wholesalers and the pharmaceutical supply chain to believe that these products were “therapeutically equivalent and/or FDA-approved ‘generic’ products that are A-rated to and/or automatically substitutable for DONNATAL.” This claim was based o: (1) the information that they submitted to the databases on their drug products’ labels and package inserts for inclusion on their product listings; and (2) four email threads that included representatives of defendants. However, the court had previously concluded that the labels/packages were accurate and not false or misleading. They explicitly stated that the their drugs “ha[ve] not been found by [the] FDA to be safe and effective,” and the subsequent product listings on the databases clearly indicated that the drugs were “unapproved” and not therapeutically equivalent to any other drug. Their statements couldn’t reasonably be interpreted to convey FDA approval, therapeutic equivalence, or automatic substitutability.

As to the email threads, the presence of the word “generic” in an email thread didn’t “transform an otherwise innocuous email into false advertising.” In full context (including the parties’ contracts and attachments that disclosed the nature of the products), none of the emails reasonably could be interpreted as false or misleading.

Contributory false advertising:  This required direct false advertising, here either by the databases or pharmacies. Those allegedly advertised and promoted defendants’ products as “FDA-approved ‘generic’ products that are therapeutically equivalent or A-rated to and/or substitutable for DONNATAL.” But the evidence didn’t show any such statements, only that the databases linked the parties’ products. Database linking alone isn’t false or misleading, since it means only pharmaceutical equivalence. Again, the listings for defendants’ products explicitly stated that the drugs are “Not Rated” for therapeutical equivalence and are “unapproved” by the FDA.

Moreover, even if Concordia had sufficiently alleged direct false advertising, it didn’t show that defendants “intended to participate in or actually knew about the false advertising” and “actively and materially furthered the [third party’s] unlawful conduct.” All they did was submit product labels and package inserts with explicit statements that they lacked FDA approval.

This also knocked out state-law deceptive practices claims and tortious interference claims based on the alleged misrepresentations.

Lanham Act counterclaims based on Concordia’s letters: Concordia argued that its letters were written to industry legal departments to protect its legal rights and weren’t commercial speech (or misleading).

Commercial advertising or promotion: “[W]hile it is true that Plaintiffs’ letters do not directly market their own DONNATAL products, it is undeniable that Plaintiffs sent the letters to prevent the recipients from purchasing Defendants’ products, which would therefore influence consumers to buy Plaintiffs’ products instead.” And the letters went broadly to the relevant purchasing public: the databases, the three largest drug wholesalers and distributers in the country, and “countless” retail pharmacy chains and supermarkets. That qualified.

The court declined to grant summary judgment in defendants’ favor on falsity or misleadingness, though a jury could so find. There were genuine disputes of material fact on materiality and losses sustained. While defendants presented testimony from existing and prospective consumers “stating that the allegations in Plaintiffs’ letters were the reason they chose to either move on from contractual relationships with Defendants or terminate discussions regarding prospective relationships,” plaintiffs offered conflicting testimony and evidence. The result was the same for tortious interference and state-law deceptive practices counterclaims.