Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Ill.: Compounding pharmacy unable to shake Lanham Act, unfair practices claims, (Dec 12, 2014)

By Greg Hammond, J.D.

A compounding pharmacy could not evade claims that it made false statements about a competitor to customers in violation of the Lanham Act, as well as the Illinois and Florida unfair trade practices laws. In denying the pharmacy’s motion to dismiss, the federal district court in Chicago determined that the fraud-based allegations were pleaded with requisite specificity, and the plaintiff had standing and stated valid claims under the Illinois Uniform Deceptive Trade Practices ACT (IUDTPA) and Florida Deceptive and Unfair Trade Practices Act (FDUTPA) (Medscript Pharmacy, LLC v. My Script, LLC, December 11, 2014, Gettleman, R.).

Background. Medscript Pharmacy, LLC and My Script, LLC are compounding pharmacies. After non-pharmacy defendants sold their interest in Medscript to another individual, a patient list—containing patients’ protected health information—was given to My Script to market and induce prescribers to fill prescriptions with My Script. My Script allegedly called Medscript’s patients and made two false statements: (1) Medscript was out of business and My Script was taking over its patients and would fill the patients’ prescriptions; and (2) Medscript had changed its name to My Script, and My Script would fill the patients’ prescriptions moving forward. My Script was also accused of falsely advertising itself as a Professional Compounding Centers of America (PCCA) Certified pharmacy, and creating a kickback scheme to reward Florida physicians for referring patients to My Script.

Medscript filed suit, alleging—in part—(1) false advertising, pursuant to the Lanham Act; (2) a violation of the IUDTPA; (3) a violation of the FDUTPA; and (4) common law unfair competition. My Script moved to dismiss the complaint.

Heightened pleading standard. First, the defendants argued that Medscript failed to meet the heightened pleading standards of Federal Rule of Civil Procedure 9(b) when alleging its fraud-based Lanham Act and state unfair trade practices claims. The court disagreed, finding that Medscript alleged its fraud-based claims with sufficient specificity. Specifically, it was determined that Medscript sufficiently alleged the who, what, when, where, and how of its Lanham Act, IUDTPA, and FDUTPA claims, because it alleged: (1) the employees made the statements; (2) what was said; (3) the statements were made to Medscript’s patients and prescribers; (4) they began in January 2014; and (5) the conduct was accomplished through the use of the patient list.

In addition, to the extent Medscript pleaded on information and belief that patients and prescribers were duped into believing that Medscript was now My Script or that patients must now fill their prescriptions through My Script, the court found that Medscript was permitted to do so because it was unable to attain specific information prior to filing the complaint. The motion to dismiss based on the requisite heightened pleading standard was therefore denied.

Lanham Act, IUDTPA claims. In support of their motion to dismiss, the defendants argued that the alleged false statements did not amount to commercial advertising or promotion, because the statements were made through person-to-person communications, and were not made to the general population or a significant portion of the industry. The court, however, determined that it was plausible that Medscript’s patients and prescribers, who My Script contacted, represent a significant portion of the compounding pharmacy industry. Because the complaint therefore minimally stated a claim under the Lanham Act, and the IUDTPA claim is analyzed using the same standards, the motion to dismiss both of these claims was denied.

FDUTPA. My Script also argued that the FDUTPA claim should be dismissed, because Medscript lacks standing as a competitor under the state statute, and Medscript further lacks the requisite nexus to Florida to bring its claim. The court disagreed with both arguments, finding: (1) a 2001 legislative amendment to the FDUTPA allows competitors, such as Medscript, to have standing to bring claims under the statute; and (2) alleged conduct that took place in Florida, as well as Medscript’s alleged injuries in Florida, established a sufficient nexus to the state to bring a claim under the FDUTPA. The motion to dismiss the FDUTPA claim was therefore denied.

Unfair competition. Lastly, My Script alleged that the common law unfair competition claim should be dismissed because it was duplicative of the IUDTPA claim. The court denied the motion to dismiss this claim, finding that it is not duplicative. Rather, the unfair competition claim added allegations that My Script falsely advertised itself as a PCCA certified pharmacy.

The case number is 14 C 0469.

Attorneys: Mark Daniel Roth (Orum & Roth, LLC) for Medscript Pharmacy, LLC. Thadford A. Felton (Greensfelder, Hemker & Gale, PC) for My Script, LLC.

Companies: Medscript Pharmacy, LLC; My Script, LLC

Cases: Advertising StateUnfairTradePractices IllinoisNews