pharmaco gets summary judgment against compounder on falsity/unlawfulness

Allergan USA, Inc. v. Imprimis Pharmaceuticals, Inc., 2019
WL 4545960, No. 17-cv-01551-DOC-JDE (C.D. Cal. Mar. 27, 2019)
The parties compete in the market for ophthalmic drugs. Imprimis
sells its ophthalmic drugs pursuant to Sections 503A and 503B of the FDCA
(compounding and outsourcing). None of its ophthalmic drugs are approved
by the FDA. Imprimis has exceeded FDA limits on compounding/outsourcing
in various ways, including by using the unapproved component artesunate to
prepare drugs until it received a letter from FDA and by using bulk drugs that
weren’t on the FDA-issued lists of bulk drugs for 503B.
Imprimis advertised that its pharmacies “only use
FDA-approved ingredients,” and that its Cyclosporine-based formulations are
“made from FDA-approved drug components,” and told a potential customer in
Kansas that “In simpler terms, FDA found our products and services to be safe
and effective.” A video on its Go Dropless website included the statement, “The
patient is protected from infection and inflammation even more effectively than
can be achieved with expensive, inconvenient and irritating topical
medications.” Also, a press release claimed “Imprimis Pharmaceuticals Go
Dropless™ Video Interview Survey Reveals 95% of Leading Cataract Surgeons
Surveyed Would Prefer Dropless Therapy.” Though Imprimis didn’t have the
details of the survey, it “understands” that survey participants were asked
“Would you prefer your patients not to have to take topical eye drops following
an ocular surgery,” rather than identifying a specific formulation such as its
Dropless Therapy injectables. When the survey was conducted, Imprimis “probably
had less than ten customers” for its injectable Dropless formulations, and, of
the 21 surgeons surveyed, only “a handful” had used them. Up to 20 months
later, Imprimis was advertising these “recent” survey results and indicated
that they referred to Imprimis’s product specifically.
Allergan sued for false advertising under the Lanham Act and
violations of the UCL’s unlawful and unfair prongs. A related
case
shows how this is going to go.   Previously, even in the presence of unlawful
statements regarding “FDA approval” that generated Lanham Act liability, the
Court declined to hold the defendants liable under the Sherman Law and UCL “so
long as the compounder complied with FDA’s interim guidance, especially in
light of the agency’s ongoing implementation efforts.” Where it didn’t comply
with the interim guidance, there could also be Sherman Act/UCL liability.  There was noncompliance here—among other
things, Imprimis wasn’t requiring individual prescriptions before compounding
when it should’ve been.
However, Allergan couldn’t get restitution under the UCL
based on disgorgement of Imprimis’s profits. “The profits obtained by Imprimis
come from third parties rather than from Allergan. They were never in
Allergan’s possession.” Only injunctive relief was available for this claim.
Lanham Act claims: Imprimis claimed that its pharmacies
“only use FDA-approved ingredients” and were “made from FDA-approved drug
components.” That was literally false because FDA does not approve individual
“ingredients” or “components” of drugs. “In simpler terms, FDA found our
products and services to be safe and effective” was also literally false
because Imprimis “does not subject its drugs to the FDA approval process that
would support such a finding.”  Likewise,
Imprimis’s claim that it “Meets requirements under Section 503B of the FD&C
Act” was literally false based on the findings above.
Superiority claims: The survey/surgeon preference claim was
a “tests prove” claim that could be falsified by showing that “such tests ‘are
not sufficiently reliable to permit one to conclude with reasonable certainty
that they established’ the claim made.” Even without expert testimony, the
court found literal falsity.  “No
reasonable jury could determine the survey was sufficiently reliable to
conclude with reasonable certainty that 95% of cataract surgeons surveyed
prefer Dropless Therapy.” The survey didn’t even ask about Imprimis’s specific
product. So too with the video claiming “the patient is protected from
infection and inflammation even more effectively than can be achieved with
expensive, inconvenient, and irritating topical medications.”  This wasn’t “merely a professional opinion; it
is a promotional statement published by the company, and Dr. Lewis appears to
have been a consultant paid by Imprimis to speak with ophthalmologists and
investors.” Imprimis’s witnesses knew of no basis for the video’s claim.
Literal falsity created a rebuttable presumption of actual,
material deception. “Regardless, the uncontroverted facts also establish that
the statements were material. Some of the false commercial promotions were even
made in direct follow-up to consumer questions about quality and FDA
compliance.”
Whether there was harm to Allergan, and the extent of that
harm, was for the jury.

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