Drug Manufacturer’s Claim of False Advertising by Competitor is “Unripe” for Decision
On October 29, 2009, the 7th Circuit issued its decision in Schering-Plough Healthcare Products Inc. v. Schwartz Pharma, Inc. (Docket Nos. 09-1438, 09-1462, 09-1601), holding that a drug manufacturer “jumped the gun” by filing its false advertising claim against the manufacturers of the generic version of the drug before the FDA determined whether the generic version of the drug was misbranded. As described in more detail below, the Schering ruling leaves the door open for the claim to be renewed following the decision in the FDA proceeding.
Background of Schering
In 1999, Schering-Plough Healthcare Products, Inc. (“Schering”) received the exclusive right to manufacture MiraLAX, an oral laxative containing Polyethylene Glycol 3350. Four drug manufacturers were subsequently approved by the FDA to sell a generic version of the drug, also by prescription. As required by the Food, Drug, and Cosmetic Act, the generic versions were labeled with “Rx only” or prescription only.
In 2006, however, Schering received the exclusive right to market Polyethylene Glycol 3350 as an over the counter medication as long as it added a warning to use the drug for no longer than seven days. When the other four drug manufacturers continued to sell their generic versions by prescription and bearing the “Rx only” labeling, Schering sued the four manufacturers for false advertising under the Lanham Act.
As this lawsuit is pending, the FDA is conducting its own proceeding to determine whether the prescription generic versions are misbranded given the availability of an over the counter version. The District Court dismissed Schering’s claim without prejudice suggesting that the claim could be refilled pending the outcome of the FDA proceeding.
The Schering Decision
Schering asserts that any trier of fact could only conclude that the terms “Rx only” and “a prescription only laxative,” which appear on the defendants’ labels, are “literally false” and therefore violate the Lanham Act. However, the Seventh Circuit disagreed with this contention. While the FDA seeks to protect the consumer and the Lanham Act is intended to protect competitors from false advertising or labeling, the court held that the FDA should be given the opportunity to opine on the proper labeling since it has more experience with consumers’ understanding of drug labels than the courts do. Therefore, the Seventh Circuit affirmed the District Court’s decision that Schering “jumped the gun” by bring its claim against defendants before the FDA addressed the issue.
Proceedings After Schering
The Seventh Circuit stated that the findings by the FDA in the misbranding proceeding may “cast the issue of consumer confusion in a different light.” In its proceeding, the FDA will determine whether there is a “meaningful difference” between the over the counter drug by Schering and the generic prescription versions or whether they are essentially “the same” drug. If the FDA determines that they are “the same” drug, then the prescription generic versions can no longer be sold. If it is decided that there is a “meaningful difference” between the drugs, then the FDA may or may not decide that the labeling of the prescription generic version must be changed. Following the outcome of the FDA proceeding, Schering can decide whether it is necessary to renew their false advertising claim.
This alert was written by Donna Fernandez.