Pharm.Checker.com v. Nat'l Ass'n of Bds. of Pharm.

• Decision Date: 20 September 2022
• Docket Number: 19-CV-7577 (KMK)
• Parties: PHARMACYCHECKER. COM, Plaintiff, v. NATIONAL ASSOCIATION OF BOARDS OF PHARMACY, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

PHARMACYCHECKER. COM, Plaintiff,
v.
NATIONAL ASSOCIATION OF BOARDS OF PHARMACY, et al., Defendants.

No. 19-CV-7577 (KMK)

United States District Court, S.D. New York

September 20, 2022

Aaron Gott, Esq. Bona Law PC Minneapolis, MN Counsel for Plaintiff/Counter-Defendant

James F. Lerner, Esq. Bona Law PC New York, NY Counsel for Plaintiff/Counter-Defendant

Erik T. Koons, Esq. Jana I. Seidl, Esq. Timothy P. Singer, Esq. Baker Botts LLP Washington, DC

Counsel for Defendant/Counter-Plaintiff National Association of Boards of Pharmacy

OPINION & ORDER

KENNETH M. KARAS, UNITED STATES DISTRICT JUDGE:

PharmacyChecker.com (“PCC”) brings this Action against the National Association of Boards of Pharmacy (“NABP”), Alliance for Safe Online Pharmacies (“ASOP”), Center for Safe Internet Pharmacies Ltd. (“CSIP”), and Partnership for Safe Medicines (“PSM”; collectively, “Defendants”) alleging that Defendants unlawfully conspired to restrain trade in violation of § 1 of the Sherman Act, 15 U.S.C. § 1, and that NABP falsely advertised or promoted in

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violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125. (See generally Am. Compl. (Dkt. No. 82).)^[1] NABP brings counterclaims against PCC for violations of § 43(a) of the Lanham Act; §§ 349 and 350 of the New York General Business Law (“GBL”), N.Y. G.B.L. §§ 349, 350; and the D.C. Consumer Protection Procedures Act (“CPPA”), D.C. CODE § 28-3904. (See generally NABP's Answer & Counterclaims (Dkt. No. 148).)^[2] Before the Court is PCC's Motion To Dismiss NABP's Counterclaims pursuant to Federal Rule of Civil Procedure 12(b)(6) (the “Motion”). (See Not. of Mot. (Dkt. No. 190).) For the following reasons, PCC's Motion is granted.

I. Background

A. Factual Background

The following facts are drawn from the Counterclaims and are assumed to be true for the purposes of resolving the instant Motion. See Div. 1181 Amalgamated Transit Union-N.Y. Emps. Pension Fund v. N.Y.C. Dep't of Educ., 9 F.4th 91, 94 (2d Cir. 2021) (per curiam).

1. Background to the Parties

NABP is a § 501(c)(3) non-profit organization organized under the corporate laws of Kentucky and with its principal place of business in Illinois. (See Counterclaims ¶¶ 14, 21.) NABP was founded in 1904 to support and work with state and jurisdictional boards of pharmacy to protect the public health; its membership consists of all 50 state boards of pharmacy in addition to the boards of pharmacy in the District of Columbia, Guam, Puerto Rico, the U.S.

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Virgin Islands, the Bahamas, and all 10 Canadian provinces. (See id. ¶¶ 21, 22.) NABP alleges that it “combines diverse skills and backgrounds, which helps NABP create innovative programs that meet the public health protection needs of today-with an eye on the future.” (Id. ¶ 24.)

PCC is a limited liability company organized under the laws of New York and with its principal place of business in New York. (See id. ¶ 15.) PCC operates a website that is purportedly designed to allow U.S. consumers to search for and purchase drugs from PCC's “accredited” foreign pharmacies, which PCC claims are more affordable than drugs purchased from U.S. pharmacies. (See id. ¶¶ 48-60.) However, NABP alleges that in reality, “PCC is engaged in the business of misleading consumers about the safety, legality, and pricing of unlawfully imported drugs from foreign ‘pharmacy' affiliates that are subject to PCC's ‘verification program'” and that “PCC directly and indirectly profits from misleading consumers and facilitating consumer purchases of these drugs from PCC's affiliate suppliers.” (Id. ¶ 1.)

Broadly, NABP alleges that PCC has “engaged in two simultaneous but intertwined campaigns to mislead consumers.” (Id. ¶ 19.) “First, PCC has based its entire business model on affirmatively misleading consumers about the safety and legality of imported drugs sold through its website and their equivalence to [U.S. Food and Drug Administration (‘FDA')]-approved drugs, as well as the legality, regulatory rigor, and origin of drugs sold through its website.” (Id.) “Second, PCC has gone out of its way to directly attack and sully NABP's reputation because NABP's mission (in part) to encourage consumers to buy safe, legal pharmaceuticals is antagonistic to PCC's business model of profiteering off of encouraging, empowering, and facilitating the unlawful purchase of foreign drugs for personal use.” (Id.)

2. PCC's Alleged Campaign to Mislead Consumers

As to PCC's “campaign” to mislead consumers, NABP alleges that through its website, PCC has made a series of misstatements that fall into one of five categories:

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First, NABP alleges that PCC has made “statements that mislead consumers about the legality [of] personal importation and the relationship between foreign pharmaceuticals and FDA-approved pharmaceuticals.” (Id. ¶¶ 62-80 (capitalization omitted).) NABP identifies multiple instances in which PCC has claimed that while the FDA has not legalized personal importation of foreign drugs, no consumer has ever been prosecuted for personal importation, which NABP alleges encourages consumers to “break the law by purchasing foreign pharmaceuticals via PCC's website and the links PCC provides to its affiliate[] foreign drug suppliers.” (Id. ¶ 68; see also id. ¶¶ 66-77.) NABP also alleges that PCC “misleadingly equates foreign drugs and FDA-approved drugs” by obfuscating the fact that “[e]ven a brand-name drug sold under the same name in multiple jurisdictions may differ,” including because “the drugs may use different inactive ingredients, different release mechanisms, or be manufactured in different facilities.” (Id. ¶¶ 65, 77; see also id. ¶¶ 79-80.)

Second, NABP alleges that PCC “hides that the ‘pharmacy' websites it links to are not pharmacies at all.” (Id. ¶¶ 81-86 (capitalization omitted).) NABP identifies multiple instances in which PCC has repeatedly used words and phrases like “pharmacy,” “accredited pharmacy,” and “reputable online pharmacy websites,” when in reality each of the “pharmacies” listed on PCC's website and “verified” by PCC is a “pharmacy intermediary” that merely dispenses prescriptions from unidentified, third-party pharmacies. (See id.)

Third, NABP alleges that PCC has made “statements that mislead consumers on price.” (Id. ¶¶ 87-108 (capitalization omitted).) Specifically, NABP alleges that despite promising consumers that it is helping consumers find the lowest price for their prescription drugs, PCC actually steers consumers away from cheaper, generic drugs dispensed by U.S. pharmacies and toward more expensive and illegal foreign drug importation. (See id.)

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Fourth, NABP alleges that PCC has made “statements that mislead consumers about the origin of the drugs they are buying.” (Id. ¶¶ 109-14 (capitalization omitted).) Specifically, NABP alleges that many of the “pharmacies” listed on PCC's website and “verified” or “accredited” by PCC use a misleading name or logo to deceive consumers into believing that the “pharmacy” is Canadian or Canada-based, when in reality, the “pharmacy” dispenses drugs from a number of other countries, such as India, Mauritius, and Turkey. (Id.)

Fifth and finally, NABP alleges that PCC has made “statements that mislead consumers about the safety and trustworthiness of PCC's accredited pharmacies.” (Id. ¶¶ 115-83.) NABP alleges that PCC both affirmatively represents that all of the “pharmacies” listed on PCC's website are “safe, trustworthy, and operating in compliance with Canadian or other regulatory requirements,” when this is often not the case, and endorses similar misrepresentations made by these “pharmacies” themselves via PCC's accreditation process in which PCC guarantees that the marketing claims made by these “pharmacies” are “truthful and not misleading.” (Id. ¶ 115.) NABP specifically identifies two PCC-affiliated “pharmacies”-PriceProPharmacy.com and Canadian Prescription Drugstore-which, among other things, represent themselves as Canadabased pharmacies when in reality, they are pharmacy intermediaries that dispense drugs from suppliers located in countries around the world that are not required to comply with Canadian regulatory standards. (See id. ¶¶ 132-83.)

3. PCC's Alleged Campaign to Harm NABP

As to PCC's “campaign” to harm NABP, NABP alleges that “PCC has, through its PharmacyChecker.com and blog sites, maliciously and specifically attacked NABP” in an effort to “falsely undermine NABP's reputation” via claims such as that “NABP bears responsibility for the opioid crisis or that NABP is responsible for pharmacy errors.” (Id. ¶ 189.) NABP

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alleges that PCC has used such “false claims to drive consumers away from safe domestic pharmacies and towards riskier foreign pharmacies that PCC ‘verifies.'” (Id. ¶ 190.)

On June 4, 2020, PCC published a blog post entitled “NABP and Opioid Death in the U.S.” in which it claimed that “in its quest to ‘educate' the public about the dangers of internet pharmacies and personal medicine imports, the [NABP] appears to have ignored the greatest pharmacy-related public health travesty happening right under its nose”: the opioid epidemic. (See Decl. of Erik Koons in Opp'n to Mot. (“Koons Decl.”) (Dkt. No. 202) Ex. A.)^[3] The author of the blog post (identified as the President of PCC) goes on to write:

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I was wondering whether the NABP might pipe up about this. Afterall, it is the U.S. boards of pharmacy that are most responsible for regulating retail pharmacy sales. Isn't the NABP's main focus supposed to be public health as affected by retail pharmacy sales here in the United States? Instead, last week the NABP turned its attention to the dangers of internet pharmacies and rogue activity surrounding Covid-19. That's a noble topic, but it's also useful to deflect from breaking news about Big Pharmacy drug dealing! . . . Will the NABP speak up about how its accredited pharmacies, the drug companies that sponsor its

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