Antitrust Law Daily Wrap Up, ADVERTISING—2d Cir.: Drug ads align with FDA-approved labels, don’t violate Lanham Act, (May 16, 2016)

By Jody Coultas, J.D.

A district court did not err in finding that Apotex, Inc. failed to state Sherman Act and Lanham Act claims against Acorda Therapeutics, Inc. for filing a sham citizen petition with the U.S. Food and Drug Administration (FDA) and misrepresenting its pharmaceutical products, according to the U.S. Court of Appeals in New York. The court noted that a pharmaceutical company’s advertisements cannot form the basis for Lanham Act false advertising claims to the extent they were in line with an FDA-approved label (Apotex Inc. v. Acorda Therapeutics, Inc., May 16, 2016, per curiam).

The parties manufacture tizanidine, a drug for treating a symptom of multiple sclerosis and Parkinson’s disease. Acorda’s Zanaflex Capsules carried an FDA label pertaining both to the capsules and tablets.

Apotex alleged that Acorda filed a sham citizen petition with the FDA to hinder approval of Apotex’s competing formulation in violation of Section Two of the Sherman Act, and violated the Lanham Act’s prohibition on false advertising. Acorda’s citizen petition objected to (1) Apotex’s statement that its product was bioequivalent to certain Reference Listed Drugs (RLDs); and (2) allegedly misleading or untrue statements in the proposed label for the Apotex Abbreviated New Drug Application (ANDA). The FDA denied Acorda’s citizen petition and, that same day, approved Apotex’s ANDA for generic tizanidine capsules.

The District Court for the Southern District of New York ruled that the simultaneous approval by the FDA of Apotex’s drug application and its denial of Acorda’s citizen petition was insufficient to support a Sherman Act claim. The court also dismissed all of Apotex’s false advertising claims on the grounds that Acorda’s representation was not literally false or likely to mislead consumers. Apotex appealed.

Sherman Act claim. The district court’s decision dismissing Apotex’s antitrust claim was affirmed by the court. Apotex argued that the possibility that Acorda’s FDA petition was a sham was reinforced by the fact that the FDA approved the generic drug on the same day that it rejected the petition. However, the court found that the FDA’s Guidance for Industry undermines the inference that when a citizen petition is denied simultaneously with the grant of an ANDA petition, the citizen petition was a sham and an anticompetitive weapon. The Guidance favors contemporaneous adjudications to safeguard the procedural rights of ANDA applicants such as Apotex, according to the court. In addition, Apotex failed to present other facts from which it could plausibly be inferred that Acorda’s petition was a sham.

The lower court also did not abuse its discretion in denying Apotex’s request for leave to amend. In particular, Apotex argued that the district court’s denial of leave to amend was based on a misapplication of the rules set forth in the Southern District’s Pilot Project Regarding Case Management Techniques for Complex Civil Cases. However, the district court concluded that the interests of judicial economy warranted denial of Apotex’s motion, not Apotex’s purported noncompliance with the Pilot Rules.

Lanham Act claim. A pharmaceutical company may make advertising statements outside the four corners of an FDA label so long as none of its representations are inconsistent with that label, according to the court. Apotex argued that Acorda’s representations were inconsistent with the FDA-approved label for Zanaflex Capsules.

There was no basis to disturb the grant of summary judgment relating to Acorda’s sales representatives’ statements, according to the court. Apotex challenges statements by Acorda sales representatives that patients taking Zanaflex Capsules with food enjoy dosing flexibility and diminished drowsiness. However, Apotex needed to do more than show that Acorda made representations absent from the FDA label, the court stated. There was no evidence that Acorda’s promotion of dosing flexibility was either literally false or likely to cause consumer confusion.

Although Acorda made statements that were not drawn from the FDA label, the court found that Apotex was unable to present evidence of falsity sufficient to support a Lanham Act claim. There was no evidence of literal falsity because the statements at issue did not convey an unambiguous message. Acorda’s brochure may have implied efficacy in combating drowsiness, but it was not unambiguous. Also, Apotex failed to show extrinsic evidence of consumer confusion with respect to imagery used by Acorda, or that any alleged misrepresentations would dissuade consumers from purchasing Zanaflex Capsules.

The case is No. 14-4353-cv.

Attorneys: Keith D. Parr, Joseph N. Froehlich, Scott B. Feder, Hugh S. Balsam, James T. Peterka, and Andy J. Miller (Locke Lord LLP) for Apotex Incorporated & Apotex Corporation. John W. Nields, Jr., Jason C. Raofield and Colin P. Watson (Covington & Burling LLP) for Acorda Therapeutics, Inc.

Companies: Apotex Incorporation; Apotex Corporation; Acorda Therapeutics, Inc.

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