Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—D.N.J.: Consumers lack standing in 'larger than necessary' eye drops suit, (Mar 25, 2016)

By Greg Hammond, J.D.

Consumers failed for a second time to state claims that various pharmaceutical manufacturers and distributors engaged in unfair and illegal business practices by deliberately designing and manufacturing eye drop bottles to dispense larger than necessary drops. The federal district court in Trenton, New Jersey, concluded that the consumers lacked Article III standing because the amended complaint merely speculates that smaller drop volume would likely produce lower costs (Cottrell v. Alcon Laboratories, Inc., March 24, 2016, Wolfson, F.).

The consumers claimed that the pharmaceutical companies purposefully designed the eye drop bottles to dispense more drops of medication than were necessary, in an effort to compel consumers to pay for “much more medication than the users of those medications needed.” In addition, they claimed that the large tips lead to dispensing excess fluid from the bottle that could not be used, was entirely wasted, provided no pharmaceutical benefit, and was often harmful. The pharmaceutical companies moved to dismiss the various state unfair trade practices claims, which were dismissed once before for lack of standing.

Pricing theory. The court first rejected the consumers’ pricing theory—that if the pharmaceutical companies made the tips of the dispensers smaller, the cost of the medications would decrease, thereby producing a cost savings to consumers. In their amended complaint, the consumers cited various articles and studies expressing authors’ opinions concerning the size of the drop volume. However, reliance on these articles did not cure the speculative nature of the consumers’ pricing theory, the court found, because the authors assumed as true that the eye drops manufacturers would price their medication solely based on the volume of the fluid contained in the bottles. Article III injuries require a firmer foundation, the court stated.

Reimbursement theory. The consumers also reiterated in their amended complaint that they suffered a concrete injury because they did not receive the full use and therapeutic benefit of the medication they purchased as a result of the pharmaceutical companies’ actions and that they were compelled to purchase amounts of medication that were not useful and therefore wasted. They consequently sought reimbursement for the wasted drops.

This reimbursement of costs theory was also unavailing, the court concluded. In particular, the court determined that the consumers’ causes of action sounded in fraud, but the consumers failed to allege that: (1) they were promised a specific number of doses or drops and that they failed to receive those amounts; (2) they were forced to purchase additional prescriptions because the drops were depleted prematurely; (3) the medications failed to perform as intended such that the consumers did not receive the benefit of their bargain; (4) they were induced by any deception on the part of the pharmaceutical companies to purchase the drops; or (5) they would have purchased comparable cheaper products that dispense smaller drops, in lieu of the pharmaceutical company defendants’ drops. Finding that none of the consumers’ allegations demonstrated harm, the court concluded that the consumers failed to sufficiently allege Article III standing.

The case is No. 14-5859 (FLW).

Attorneys: Jeffrey W. Herrmann (Cohn, Lifland, Pearlman, Herrmann & Knopf, LLC) for Leonard Cottrell. Roger B. Kaplan (Greenberg Traurig, LLP) for Alcon Laboratories, Inc.

Companies: Alcon Laboratories, Inc.

Cases: StateUnfairTradePractices NewJerseyNews