post-POM claim based on false implication of FDA approval survives

Par Sterile Products, LLC v. Fresenius Kabi USA LLC, 2015 WL 1263041, No. 14 C 3349 (N.D. Ill. Mar. 17, 2015)
Par’s vasopressin injection product, Vasostrict, is a FDA-approved pharmaceutical. Fresenius’s vasopressin injection product is not.  Vasopressin is a natural hormone that has been used in medicine for over one hundred years, since before the FDCA’s new drug requirements. The FDA has encouraged drugmakers to seek FDA approval for older drugs. However, according to Par, “absent overriding safety concerns, the FDA generally does not take enforcement actions to halt the marketing of unapproved drugs.”
Par previously sold an unapproved vasopressin product like Fresenius’s product, but it submitted a New Drug Application to the FDA for a vasopressin injection product called Vasostrict. Vasostrict was finally approved by the FDA in April 2014. Par sued shortly thereafter, accusing Fresenius of misrepresenting its product as safe, effective and FDA-approved, when in fact Par markets the only FDA-approved vasopressin injection product on the market. “Fresenius allegedly represents to wholesale generic drug purchasers, distributors, group purchasing organizations, and integrated delivery networks that it is in compliance with all applicable laws, which these purchasers take to mean that the Vasopressin Injection is FDA-approved; represents that its product is ‘generic’ in providing drug and pricing information to drug and pricing databases known as ‘price lists,’ which buyers believe include only FDA-approved drugs; and places its drug on the market with the sort of standard labeling and packaging typical of FDA-approved drugs.”
Fresenius moved to dismiss for lack of standing because Par hadn’t yet begun to sell Vasostrict.  The court found other cases involving plaintiffs who hadn’t begun to sell products distinguishable, because in those cases the alleged harm was remote, speculative and ill-defined. “Unlike the products in the cited cases, Par’s product is already FDA-approved, fully developed and ready for sale.”  Par’s concrete competing product gave it standing and made its allegation of likely sales harm plausible.
Fresenius also moved to dismiss for failure to state a claim, arguing that Par was impermissibly trying to enforce the FDCA.  It cited Mylan Laboratories, Inc. v. Matkari, 7 F.3d 1130 (4th Cir. 1993), to support the argument that the mere implication, rather than an explicit statement, of FDA approval is insufficient to state a Lanham Act claim.  Par responded that Pom Wonderful changed the game.  See also JHP Pharmaceuticals, LLC v. Hospira, Inc., No. CV 1307460, 2014 WL 4988016 (C.D. Cal. Oct. 7, 2014) (Lanham Act claim that the defendant misrepresented that its product was FDA-approved, in part by describing it as “generic,” was not precluded by the FDCA). 
Again, the court agreed with Par: this wasn’t just pure implication, but a particularized claim that its competitor “misrepresents its product as FDA-approved by offering it for sale in certain marketing channels alongside FDA-approved generic drugs.” That was a classic Lanham Act dispute over consumer deception. “As long as there is no allegation that Fresenius must do something that directly conflicts with the FDCA or an FDA regulation, or may not do something that the FDCA or an FDA regulation specifically requires (not merely authorizes), Par’s Lanham Act claim is not precluded by the FDCA.”
Fresenius argued that, under Mylan, mere implication, rather than an explicit statement, of FDA approval was insufficient to state a Lanham Act claim. But Par did more than allege an implication by Fresenius.  Par alleged that “buyers believe all prescribed drugs identified on the Price Lists are … FDA-approved,” and that surveys showed up to 91% of pharmacists were actually confused about whether all drugs that appear on industry price lists are FDA-approved. Lanham Act claims can be based on implicit falsity where consumers are deceived.  Mylan shouldn’t be read to bar all implicit falsity claims involving FDA approval, particularly in light of Pom Wonderful.  (Par contended that Fresenius’s claim that its product was “generic” was literally false, but it wasn’t necessary to determine whether the issue was literal falsity or misleadingness at this stage.)  “[W]hether a product is FDA-approved is a simple, easily verifiable matter, not the sort of complex inquiry that might be beyond the Court’s competence or might require the Court to invade the FDA’s rule-making authority,” and thus there was no need for preclusion.
Mylan stands for the proposition that “the mere act of placing a pharmaceutical product on the market, without more, cannot support a Lanham Act claim.” But Par went further, alleging that, by placing a product on the market in a particular marketing channel—the industry price lists—and by making certain statements such as that its product was “generic,” Fresenius represented that its product was an FDA-approved generic drug and deceived consumers.  Mylan didn’t involve those allegations.
Fresenius also argued that the price lists were controlled by third parties, but its responsibility for the price lists couldn’t be decided on a motion to dismiss. “[L]iability under the Lanham Act has been construed to extend beyond those who actually misrepresent goods or directly place such goods in commerce … to any person who knowingly causes a false representation to be used in connection with goods and services in commerce.” Fresenius could be held liable if Par could prove that “Fresenius knows that buyers believe all prescribed drugs identified on the Price Lists are … FDA approved.”
However, the court did dismiss claims based on Par’s allegation that Fresenius misrepresented in its contracts with purchasers that its product “complies with all relevant state and federal laws, including the FDCA when, in fact, [it does] not.” Misrepresentations made in the course of negotiating or executing an individualized contract with a purchaser weren’t “advertising or promotion.”
Par also alleged that Fresenius misrepresented the safety and effectiveness of its product in labels and package inserts, and that by including unapproved indications and omitting recommendations, Fresenius would lead consumers to believe that Par’s product was less effective than Fresenius’s product.  The court dismissed claims based on these allegations, because Par didn’t plead facts showing that the implied message of greater effectiveness was actually transmitted to consumers, nor did it plead facts showing that Vasostrict was at least as effective as Fresenius’s product.  The dismissal was without prejudice.
Par’s claims based on Fresenius’s touting its product as “safe” and “effective” were also dismissed.  They might well fall within the FDA’s primary jurisdiction or be precluded, but the court didn’t have to decide that because Par didn’t allege facts to show lack of safety or effectiveness.
State law claims rose and fell with the federal claims.  (Where preclusion is the issue, this is not obvious since preemption and preclusion aren’t the same thing, but the parties didn’t dispute it.)
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