Lanham Act Decision Suggests That Marketing Pursuant to ANDA Approval Does Not Preclude Liability When FDA Later Reverses Its Decision

March 11, 2014

By JP Ellison

In a recent post we described the Generic Pharmaceutical Association’s amicus brief in the POM case, which urged the Supreme Court to “be cognizant of the differences” among FDA regulated products.  In particular, GPhA urged that ‘[e]ven if petitioner is allowed to proceed with certain aspects of its claim, the Court should make clear that such a decision does not license second-guessing explicit FDA approvals, and in particular, FDA approvals under the agency’s authority to review and approve the licensing, labeling, and marketing of pharmaceuticals.”  That admonition from GPhA was brought to mind by a recent district court ruling regarding Lanham Act claims against a manufacturer of generic buproprion hydrochloride, in a case brought by the brand manufacturer.

The regulatory history of buproprion is described here in detail, but suffice it to say, FDA determined generics to be bioequivalent, and then reversed course a number of years later.

In the Lanham Act case, in an unusually long footnote, the district court ruled that “Plaintiff has alleged numerous instances in which Defendant made literally false statements as to the bioequivalence of [the generic].”

The generic defendant moved to dismiss.  The court characterized the defendant’s argument as follows:

Defendant, in its motion to dismiss, claims that the Food Drug and Cosmetics Act (the “FD&C”) delegates decisions of bioequivalence to the FDA. Defendant argues that Plaintiff is attempting to relitigate the decision of the FDA and/or privately enforce the FD&C, both of which are prohibited. Furthermore, Defendant claims that as the FDA originally designated Budeprion XL as bioequivalent to Wellbutrin XL, the statement cannot be false or misleading as a matter of law and private litigation over that fact is precluded.

After a review of the Lanham Act legal landscape regarding FDA regulated products, the district court sets forth the following analysis:

In the matter sub judice, the Court notes that initially the FDA approved of the ANDA for Budeprion XL and, in doing so, approved of it as bioequivalent to Wellbutrin XL. Compl. ¶¶ 27, 36-39. If Budeprion XL retained that FDA approval then Plaintiff’s claim under the Lanham Act, as it relates to statements alleging bioequivalence, may very well have been preempted under the Lanham Act. See Sandoz, 902 F.2d at 231. The FDA, however, subsequently determined that Budeprion XL was not bioequivalent to Budeprion. Defendant argues that the FDA’s previous decision “does not change history” and that the 2012 decision is “a new decision based on new information.” Def.’s Mem. 22, ECF No. 14, Apr. 3, 2013. Defendant claims that this later decision did “nothing to change the fact that Budeprion was, until that change of position, rated AB and found bioequivalent,” and that the “FDA’s change of position cannot be the basis for retroactive liability”. Def’s Mem 23.

Defendant’s argument misstates Lanham Act liability, Plaintiff’s theory of the case, and the preclusive effect of an FDA decision upon a private Lanham Act action. Lanham Act liability is triggered by literally false statements and does not require intent, knowledge, recklessness, or negligence on the part of the Defendant, thus good faith reliance on the FDA’s previous decision is not dispositive. See, e.g., Novartis Consumer Health, Inc., 290 F.3d at 586; U.S. Healthcare, Inc., 898 F.2d at 922-923. FDA findings have a preclusive effect on Lanham act liability not because “mere compliance with the FDCA or with FDA regulations will always (or will even generally) insulate a defendant from Lanham Act liability,” Pom Wonderful LLC v. Coca-Cola Co., 679 F.3d at 1178, but rather because courts should not second guess the scientific determinations of the FDA as the FDA is better suited and statutorily enabled to make such decisions, Sandoz, 902 F.2d at 231. As the FDA has allegedly found that the two drugs are not bioequivalent, the FDAs scientific findings would not preclude the Court from eventually making a determination that Wellbutrin XL and Budeprion XL were not bioequivalent.

The court goes on to note other bases upon which it concluded that the complaint states a claim, but as to the above, the upshot of the court’s analysis is that even though FDA initially determined that the product was bioequivalent, it reversed course, and therefore, a Lanham Act claim was not barred.  Although the court suggests that this does not constitute second-guessing FDA, it is hard to see how FDA’s decision is not second-guessed if Lanham Act liability can attach during a time when FDA’s bioequivalence decision was in effect.  More generally, the court’s reasoning seems to raise the prospect that a company could be subject to Lanham Act liability for something that the FDA had specifically authorized if the agency later changed its mind.

A denial of a motion to dismiss is not appealable, so this case will likely play out in the district court for the immediate future.  If nothing else, this case reinforces our view that the steady stream of Lanham Act cases involving FDA regulated products will continue.