Wednesday, October 06, 2021

false advertising claim fails, in part because of stringent antitrust rules

In re EpiPen (Epinephrine Injection, USP) Marketing, Sales Practices & Antitrust Litig., MDL No. 2785, No. 17-md-2785-DDC-TJJ (D. Kan. Dec. 17, 2020)

A lot of stuff here; I will ignore the non-false advertising related aspects of this mostly antitrust case. The court says the usual not-good things about false advertising’s relationship to antitrust, unfortunately: Deceptive speech usually doesn’t violate antitrust laws. In several circuits, there’s a presumption of a de minimis effect on competition that can be rebutted by showing six things that aren’t particularly connected to whether the speech harmed competition: showing that the disparagement was: (1) clearly false, (2) clearly material, (3) clearly likely to induce reasonable reliance, (4) made to buyers without knowledge of the subject matter, (5) continued for prolonged periods, and (6) not readily susceptible to neutralization or other offset by rivals. As Mike Carrier and I have explained, this test was just made up without reference to the purposes either of false advertising law or the effects of false advertising on competition, but here we are.

Plaintiff Sanofi failed to show a triable issue of fact on (1), (5), and (6). As for falsity, Mylan funded and presented a study purporting to show “Failure to Demonstrate Bioequivalence of Epinephrine Delivery Based on Partial Area Under the Curve.” While the FDA concluded that the epinephrine in Sanofi’s Auvi-Q “demonstrated bioequivalence” with the epinephrine in EpiPen, this study wasn’t false because all it said was this study found failure to show bioequivalent delivery. Likewise, statements about why payors didn’t include Sanofi’s product in their formularies weren’t clearly false despite Sanofi’s argument that they misleadingly implied that there were safety concerns.

There wasn’t enough evidence about duration on (5), and on (6), Sanofi was a big pharmaceutical company that could have fought back in the market with its teams of sales reps. Representing the disconnection from reality in this test, the court noted that the final factor doesn’t require the plaintiff to have succeeded in neutralizing the falsity—mitigating its damages—it instead has to show that there was nothing it could have done.

Mylan’s Lanham Act claim against Sanofi: Mylan argued that Sanofi falsely claimed that its Auvi-Q was the “new EpiPen” or the “talking EpiPen,” and that Auvi-Q was preferred by physicians and patients over EpiPen. Sanofi argued that none of its advertisements or promotional materials made any of these assertions. But Mylan relied on Sanofi’s internal documents reporting Sanofi market research, which were admissible as business records and party admissions. Still, the court doubted that they established that Sanofi actually made the allegedly false/misleading statements. Nothing in the summary judgment record suggested that Sanofi distributed those materials to consumers, so they might not be enough to be commercial advertising or promotion. But more fundamentally, the research materials didn’t seem to reflect “statements that Sanofi’s sales representatives actually made to physicians.” Instead, they recorded “what physicians reported they recalled about their interactions with sales representatives.” [They should therefore show whether doctors took away misleading implications, but I understand caution about this because consumers take away all sorts of messages for all sorts of reasons.]

Mylan argued that statements that Auvi-Q was the “new EpiPen” or a “talking EpiPen” were literally false because they communicated that Auvi-Q was a new model of the EpiPen. The court found that these statements were not unambiguous. The evidence was that some people recalled messaging that Auvi-Q was a “new EpiPen,” or “was going to be like the new EpiPen,” and two recalled a pharmaceutical sales representative telling them that “Auvi-Q was the new up-and-coming EpiPen.” But, the summary judgment record also undisputedly showed that “EpiPen” was used to describe the entire category of devices, like “ ‘Kleenex’ for tissues or ‘Band-Aid’ for bandages.” Thus, these were ambiguous statements.

Doctor/patient preference claims: A statement that patients preferred Auvi-Q was supported by Sanofi’s preference study which found that patients preferred Auvi-Q’s size, shape, and method of instruction.  Although the FDA told Sanofi that it couldn’t use this study to make comparison claims that Auvi-Q was easier to use and easier to carry because patients weren’t actually administrating the EAI devices in the study, the record didn’t suggest that Sanofi made those claims; instead the record just showed messaging about a patient “preference” and generalized messaging about Auvi-Q being easy to carry, easy to use, and easy to follow its instructions. The latter were also nonactionable opinion.

Last, Mylan argued that Sanofi made false statements by necessary implication when it advertised Auvi-Q as the “first and only” EAI device with a “[r]etractable needle mechanism designed to help prevent accidental needle sticks,” implying falsely that EpiPen doesn’t have needlestick protection even though EpiPen has a needle cover that extends over the needle after the EpiPen is administered. But that’s not the necessary implication of the true claim about Sanofi’s retractable needle. Sanofi also stated—truthfully—that patients [often] don’t carry their devices, which Mylan argued falsely implied that patients would be more likely to carry Auvi-Q when juxtaposed with a claim that Auvi-Q is easy to carry. But Mylan didn’t prove that Sanofi juxtaposed the statements in this way.

With no extrinsic survey evidence of consumer confusion, the claims failed. (Two purported instances weren’t enough to show that “a statistically significant part of the commercial audience” was actually confused or deceived.) Nor was Mylan entitled to a presumption of consumer confusion from intentional deception. The record showed that Sanofi did review advertising and training and warned sales reps about what claims they could and couldn’t make; it barred them from creating their own promotional materials or altering Sanofi’s promotional materials in any way. Relatedly, Mylan didn’t show that the allegedly false statements were made in “commercial advertising or promotion,” given the lack of evidence of widespread dissemination. Even Sanofi’s internal documents didn’t “quantify the prevalence of the challenged statements among the customer base.” And while “28% of 364 physicians surveyed recalled that Sanofi [sales representatives had] said ‘Auvi-Q preferred over EpiPen in comparative survey,’ ” many versions of that are true and Mylan didn’t show how many of them received false or misleading comparative claims.

Plus, Mylan didn’t show that it suffered harm from the allegedly misleading claims that could be distinguished from the harm caused by fair competition. Though injury can be presumed from false comparative claims, the record showed only two instances where a Sanofi rep compared the parties’ products by name. Without explicit comparison, “a presumption of injury is inappropriate because each competitor’s injury may be only a small fraction of the defendant’s sales, profits, or advertising expenses.”

This all also got rid of the New Jersey unfair competition claim.

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