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Concordia Pharmaceuticals Inc. v. Winder Laboratories, LLC

United States District Court, N.D. Georgia, Gainesville Division

March 15, 2017

CONCORDIA PHARMACEUTICALS INC., S.À.R.L., Plaintiff,
v.
WINDER LABORATORIES, LLC, and STEVEN PRESSMAN, Defendants.

          ORDER

          RICHARD W. STORY UNITED STATES DISTRICT JUDGE

         This case comes before the Court on Defendants Winder Laboratories, LLC and Steven Pressman's Motion to Dismiss [67], Plaintiff's Motion to Submit Supplemental Authority in Support of Its Opposition to Defendants' Motion to Dismiss [72], and Plaintiff's Motion to Submit March 2, 2017 Authority in Support of Its Opposition to Defendants' Motion to Dismiss [76]. After a review of the record, the Court enters the following Order.

         Background [1]

         Plaintiff Concordia Pharmaceuticals Inc., S.À.R.L. is a pharmaceutical company that produces the DONNATAL pharmaceutical products, which are used to treat irritable bowel syndrome and acute enterocolitis. (First Am. Compl., Dkt. [61] ¶10). On December 30, 1980, Plaintiff's predecessor-in-interest, A.H. Robins Company, obtained conditional approval Abbreviated New Drug Applications for both DONNATAL Tablets and DONNATAL Elixer. (Id. ¶15.) This became necessary after Congress amended the Federal Food, Drug, and Cosmetic Act (“FDCA”) in 1962 to require the Food and Drug Administration (“FDA”) to conduct retrospective evaluations of drugs previously approved. (Id. ¶13.) On June 20, 1978, the FDA required any drugs involved in the Drug Efficacy Study Implementation review program, including DONNATAL, to obtain an approved New Drug Application or an approved Abbreviated New Drug Application. (Id. ¶14.) Plaintiff claims that under this process, it is the only company legally permitted to market PBA products. (Id. ¶21.)

         Plaintiff, and its predecessors-in-interest, have consistently used the DONNATAL mark as the brand name for its line of irritable bowel syndrome products since at least April 1, 1936. (Id. ¶23.) The DONNATAL mark was registered by the United States Trademark and Patent Office as U.S. Reg. No. 338, 733 in connection with medicinal preparation used in the treatment of gastro-intestinal disturbances in International Class 5 on September 15, 1936. (Id. ¶29.) This registration is valid and subsisting, and all rights under it were assigned to Plaintiff on or around May 15, 2014. (Id. ¶¶30-31.)

         Defendant Winder Laboratories, LLC is a manufacturer of generic drug products. (Id. ¶33.) Defendant Steven Pressman is the owner of Defendant Winder. (Id. ¶34.) In 2013, Defendants began plans to manufacture a generic version of DONNATAL to be marketed by a third party, Method Pharmaceuticals, LLC (“Method”), under the name Me-PB-Hyos. (Id. ¶37.) After Me-PB-Hyos was listed on several drug databases, Plaintiff sued Method and Defendants in the Western District of Virginia. (Id. ¶38.) Defendants were dismissed from that litigation for lack of jurisdiction on July 1, 2015. (Id. ¶40.) Defendants subsequently took steps to begin production and marketing of a generic version of DONNATAL on their own. (Id. ¶¶42-46.)

         In January 2016, Defendants listed B-Donna pharmaceutical products with the FDA and subscription pharmaceutical drug databases, including Medi-Span and First DataBank (collectively “Drug Databases”). (Id. ¶47.) B-Donna was removed from the FDA website but remains listed with the Drug Databases. (Id. ¶53.) In February 2016, Defendants listed the Phenohytro pharmaceutical product with the FDA and Drug Databases. (Id. ¶55.) The Drug Databases are subscription-based and used by health care professionals, insurers, payers, and pharmaceutical manufacturers to determine whether generic substitutes are available for brand named products. (Id. ¶¶62-63.) Pharmaceutical products that are pharmaceutically equivalent, that is, those that contain the same active ingredients, in the same amounts, and in the same dosage forms, are “linked” in the drug Databases. (Id. ¶¶64-65.) The B-Donna and Phenohytro products were submitted with labels and package inserts indicating that they contained the same active ingredients, in the same amounts, and in the same dosage forms as the DONNATAL products. (Id. ¶66.) The products were therefore linked on the Drug Databases. The labels and package inserts also indicated that the B-Donna and Phenohytro products had been reviewed and classified by the FDA. (Id. ¶67.) As a result, the relevant market players believe that Defendants' products are FDA-approved generic equivalents that are substitutable for DONNATAL, the brand name product. (Id. ¶78.)

         On March 24, 2016, Plaintiff filed its First Amended Complaint [61] bringing various claims under the Lanham Act and state law. Defendants filed their Motion to Dismiss [67] on April 22, 2016, claiming that Plaintiff's claims are precluded or preempted by the FDCA or, in the alternative, that Plaintiff has failed to adduce sufficient facts to state a claim. On January 30, 2017, Plaintiff filed its Motion to Submit Supplemental Authority of Its Opposition to Defendants' Motion to Dismiss [72], and on March 6, 2017, Plaintiff filed its Motion to Submit March 2, 2017 Authority in Support of Its Opposition to Defendants' Motion to Dismiss [76]. The Court now considers the parties' arguments.

         Discussion

         I. Legal Standard

         Federal Rule of Civil Procedure 8(a)(2) requires that a pleading contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” While this pleading standard does not require “detailed factual allegations, ” “labels and conclusions” or “a formulaic recitation of the elements of a cause of action will not do.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In order to withstand a motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Id. (quoting Twombly, 550 U.S. at 570). A complaint is plausible on its face when the plaintiff pleads factual content necessary for the court to draw the reasonable inference that the defendant is liable for the conduct alleged. Id.

         At the motion to dismiss stage, “all-well pleaded facts are accepted as true, and the reasonable inferences therefrom are construed in the light most favorable to the plaintiff.” Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1273 n.1 (11th Cir. 1999). However, the same does not apply to legal conclusions set forth in the complaint. Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1260 (11th Cir. 2009) (citing Iqbal, 556 U.S. at 678). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678. Furthermore, the court does not “accept as true a legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at 555. Using the framework articulated above, the Court considers Defendants' Motion to Dismiss Plaintiff's Complaint [3].

         II. Discussion

         Plaintiff brings multiple claims under both federal and state law, all of which Defendants argue should be dismissed with prejudice. As an initial matter, the Court GRANTS Plaintiff's Motion to Submit Supplemental Authority in Support of Its Opposition to Defendants' Motion to Dismiss [72]. However, the Court DENIES Plaintiff's Motion to Submit March 2, 2017 Authority in Support of Its Opposition to Defendants' Motion to Dismiss [76]. In the motion, Plaintiff urges the Court to consider an opinion issued in Concordia Pharmaceuticals, Inc. v. Method Pharmaceuticals, LLC, et al., Case No. 3:14CV00016 (W.D. Va. March 2, 2017). However the Court finds that there are significant differences in the facts of that case and those in the present case. Those differences are sufficient to cause the Court to find the opinion unpersuasive. The Court now addresses each of Plaintiff's claims in turn.

         A. False Advertising in Violation of Lanham Act § 43(a)(1)(B) (Count I)

         “Section 43(a) of the Lanham Act creates a civil remedy for entities injured by their competitor's false or misleading advertising. Phx. of Broward, Inc. v. McDonald's Corp., 441 F.Supp.2d 1241, 1246 (N.D.Ga. 2006) (internal quotations omitted). The statute creates liability for the use in commerce of any “false or misleading description of fact, or false or misleading representation of fact which in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities.” 15 U.S.C. § 1125(a)(1)(B). To succeed on this claim, Plaintiff must show: “(1) [Defendants'] advertisements are false or misleading; (2) the advertisements deceived, or had the capacity to deceive, consumers; (3) the deception had a material effect on purchasing decisions; (4) the misrepresented advertisements affect interstate commerce; and (5) [Plaintiff] has been or is likely to be injured as a result of the false advertising.” Phx. of Broward, Inc., 441 F.Supp.2d at 1246 (citing Johnson & Johnson Vision Care, Inc. v. 1-800 Contacts, Inc., 299 F.3d 1242, 1247 (11th Cir. 2002)).

         Plaintiff alleges multiple false or misleading statements in Defendants' advertising materials. First, Plaintiff alleges that “Defendants made literally false statements on the labels and package inserts for its B-Donna and Phenohytro products, including that those drugs have been reviewed and classified by the FDA, and that Phenohytro has been indicated (without qualification) for certain uses.” (Pl.'s Opp'n to Defs.' Mot. to Dismiss (“Pl.'s Opp'n”), Dkt. [69], at 13.) Defendants argue that a Lanham Act claim here is inappropriate as precluded by the FDCA. The Court agrees.

         The Supreme Court has held that the “Lanham Act and the FDCA complement each other in major respects, for each has its own scope and purpose.” POM Wonderful LLC v. Coca-Cola Co., 134 S.Ct. 2228, 2238 (2014). “Although both statutes touch on food and beverage labeling, the Lanham Act protects commercial interests against unfair competition, while the FDCA protects public health and safety.” Id. The same holds true with drug labeling. Neither the Lanham Act nor the FDCA contain provisions expressly precluding the other from applying where the two overlap. Id. at 2237. Courts are, however, wary of permitting a claim under the Lanham Act where determining falsity of a representation requires interpretation and application of regulatory provisions of the FDCA. Graceway Pharm., LLC v. River's Edge Pharm., LLC, No. 2:08-CV-0067-RWS, 2009 WL 3753586, at *6 (citing Mutual Pharm. Co. v. Ivax Pharm., Inc., 459 F.Supp.2d 925, 934 (C.D. Cal. 2006)). “[O]nce the FDA has taken a position on a particular matter, courts have consistently allowed the Lanham Act claim to proceed even if in determining the falsity of the alleged representation the court must make reference to the FDA action.” Mutual Pharm. Co., 459 F.Supp.2d at 934-35. Regulation by the FDCA alone, however, is not enough to preclude a claim under the Lanham Act. Graceway Pharm., LLC, 2009 WL 3753586, at *6.

         Plaintiff's theory of liability here depends on Defendants' statements, that B-Donna and Phenohytro were reviewed and classified by the FDA and that Phenohytro was indicated for certain uses, being false. Their falsity, in turn, depends on the meaning of the word “drug” in an FDA regulation. Once a “Drug Efficacy Study Implementation notice on a prescription drug” has been published in the Federal Register, the FDA requires “all package labeling . . ., promotional labeling, and advertisements” to include “an appropriate qualification of all claims evaluated as other than ‘effective' by a panel of the National Academy of Sciences-National Research Council, Drug Efficacy Study Group . . . .” 21 C.F.R. § 201.200(c). Plaintiff's drug, DONNATAL, includes such language in its packaging and inserts because of a 1975 Drug Efficacy Study Implementation (“DESI”) notice published by the FDA classifying Barbidonna tablets and elixir as “possibly effective.” 40 Fed. Reg. 52, 644, 52, 646. Plaintiff argues that unlike DONNATAL, neither of Defendants drugs has received the same classification from the FDA. Including the relevant language is therefore false. This argument is predicated on defining the term “drug” in the 1975 DESI to mean “product.” Defendants argue, however, that “drug” is defined by the FDA to mean a specific combination of active ingredients in particular strengths and dosage amounts. Since B-Donna and Phenohytro contain the exact same active ...


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