Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Ill.: Drug manufacturer may be liable for alleged FDA-approval claims, (Mar 18, 2015)

By Jody Coultas, J.D.

Par Sterile Products was able to state Lanham Act and Illinois consumer protection law claims against competitor Fresenius Kabi USA, LLC for allegedly misrepresenting its product as FDA-approved, the federal district court in Chicago has held (Par Sterile Products v. Fresenius Kabi USA, LLC, March 17, 2015, Alonso, J.).

Both parties manufacture and market pharmaceuticals, including a vasopressin injection product. Vasopressin is a natural hormone used in medicine since before drugs had to be approved by the Food and Drug Administration (FDA). Par’s vasopressin product, Vasostrict, is FDA-approved. Fresenius’s Vasopressin Injection1 product is not. Par alleged that Fresenius misrepresented its Vasopressin Injection as safe, effective, and FDA-approved.

Standing. Fresenius argued that Par lacked standing to bring a Lanham Act claim because it had yet to sell Vasostrict. However, Par’s product was already FDA-approved, fully developed, and ready for sale. Allegations that sales of Vasostrict were likely to suffer due to misrepresentations made by Fresenius in advertising or promoting its Vasopressin Injection were sufficient to satisfy the Lanham Act’s standing requirement, according to the court.

FDCA preclusion. Par’s Lanham Act claims were not barred by the Food, Drug, and Cosmetic Act (FDCA), according to the court. Fresenius alleged that Par’s Lanham Act claim was actually an attempt to enforce the FDCA, which has no private right of action. However, the FDCA does not preclude Lanham Act claims pertaining to drugs because the two statutes serve distinct, complementary purposes. Par’s Lanham Act claim was based on Fresenius misrepresenting its product as FDA-approved by offering it for sale in certain marketing channels alongside FDA-approved generic drugs. Whether this actually violated the Lanham Act was a question for a jury, but the claim was not precluded by the FDCA.

Fresenius cited cases holding that the mere implication that the Vasopressin Injection had FDA approval was insufficient to state a Lanham Act claim. However, Par did more than allege that Fresenius had merely implied that Vasopressin was FDA-approved. Par alleged that, by placing a product on the market in a particular marketing channel—namely, the industry price lists—and by making certain representations about its products such as that the product is “generic,” Fresenius represented that its product was an FDA-approved generic drug, deceiving consumers, as demonstrated by a consumer survey. The allegations distinguished this case from those cited by Fresenius, according to the court.

Contract compliance. Par’s claims that Fresenius made false statements in its contracts or contract negotiations were dismissed by the court. Fresenius argued that Par’s Lanham Act claims based on representations made by Fresenius to purchasers in the context of negotiating or executing a transaction should be dismissed because the statements were not “advertising” or “promotion” as required by the Act. The allegedly false representations in Fresenius’s contracts were more like a “person-to-person pitch,” which is not “advertising.”

Misleading labeling, packaging. Par was unable to show that the implied message that Vasostrict was less effective than Fresenius’s Vasopressin Injection was actually transmitted to consumers, according to the court. There was no evidence on which the court might base a finding that Vasostrict was not less effective than Vasopressin. Therefore, the claim was dismissed.

Safety, effectiveness claims. Par’s complaint did not contain sufficient factual matter for the court to reasonably infer that Fresenius’s Vasopressin Injection was not safe or effective.

State law claims. Par’s state law claims survived to the extent they were based on the surviving Lanham Act claims, according to the court.

The case is No. 14 C 3349.

Attorneys: Amanda S. Williamson (K&L Gates LLP) for Par Sterile Products, LLC. Alexander Kaplan (Proskauer Rose LLP) for Fresenius Kabi USA, LLC.

Companies: Par Sterile Products; Fresenius Kabi USA, LLC

Cases: Advertising IllinoisNews