statements about market conditions aren't about "nature, characteristics, or qualities" under 43(b)

Nexus Pharmaceuticals, LLC v. Long Grove Pharmaceuticals, LLC, 2025 WL 81877, No. 24-10444-MJJ (D. Mass. Jan. 13, 2025)

Nexus sued its competitor Long Grove under the Lanham Act, alleging that Long Grove made false statements about a shortage of fluorescein, a drug, which allegedly diverted consumers from buying Nexus’s fluorescein product and preventing Nexus from converting customers. In a rare interpretation of the “nature, characteristics, or qualities” language of §43(a)(1)(B), the court found that “market conditions” were not encompassed in that language, and thus Nexus failed to state a claim.

The FDA sometimes exercises “regulatory flexibility and discretion” to “help[ ] to alleviate a drug shortage and to ensure access to treatment options for patients in critical need.” Manufacturers authorized to sell an unapproved drug in shortage may normally continue doing so for a grace period after the shortage ends.

Fluorescein is a drug product used as part of a diagnostic angiography or angioscopy of the retina and iris vasculature, which enables X-ray-like images of veins. In early 2023, due to the previous manufacturer’s bankruptcy, the nationwide supply of fluorescein sodium injection became low. Long Grove bought the NDA and the remaining inventory from bankruptcy. Given the shortage, the FDA exercised its enforcement discretion to permit Long Grove to sell the old stock, and also required Long Grove to disseminate a “Dear Healthcare Professional” Letter, which the FDA also posted on its website, about the situation.

Later in 2023, Nexus received FDA approval for a generic version, and the FDA declared the shortage resolved.  Nonetheless, Long Grove continued to distribute and advertise its product with statements that a fluorescein shortage existed, despite Nexus’s protests.

The court declined to reach Long Grove’s FDCA preemption argument, because the challenged statement didn’t relate to either party’s product. Nexus didn’t like Long Grove discounting the price of its old product given its shorter expiration date, but Nexus didn’t allege that Long Grove made a false or misleading statement about the actual age of the fluorescein drug or the quality of the fluorescein drug itself. Statements about shortages relate to “supply and demand phenomena,” and “market conditions surrounding fluorescein that led FDA to exercise its enforcement discretion” rather than “any inherent quality or characteristic of either party’s fluorescein drug product.” Indeed, “[e]ven if Long Grove had stated … that fluorescein was ‘only available at Long Grove’ or ‘exclusively available at Long Grove,’ those more direct statements would still be insufficient because they do not relate to the inherent quality or characteristic of the product, as opposed to the market conditions (i.e., the existence or non-existence) of the product.’” [I’m not sure I’d go that far!] The court analogized to other cases holding that statements relating to a “marketing method” are unrelated to actual qualities or characteristics of products, e.g., “exclusive T.V. offer” made “for the first time on T.V.,” false use of the ® symbol, and false claims of legal entitlement to market a product.