Solvay Pharmaceuticals v. Global Pharmaceuticals

• Citation: 298 F.Supp.2d 880
• Decision Date: 09 January 2004
• Docket Number: No. Civ. 03-2854DWFSRN.,Civ. 03-2854DWFSRN.
• Parties: SOLVAY PHARMACEUTICALS, INC., Plaintiff, v. GLOBAL PHARMACEUTICALS and Impax Laboratories, Inc., Defendants.
• Court: U.S. District Court — District of Minnesota

298 F.Supp.2d 880

SOLVAY PHARMACEUTICALS, INC., Plaintiff, v. GLOBAL PHARMACEUTICALS and Impax Laboratories, Inc., Defendants.

No. Civ. 03-2854DWFSRN.

United States District Court, D. Minnesota.

January 9, 2004.

John B. Gordon, and Peter J. Goss, Faegre & Benson, Minneapolis, MN; Saul H. Perloff, C. David Kinder, Pamela St. John, Fred I. Williams, and Joseph Sorkin, Akin Gump Strauss Hauer & Feld, San Antonio, TX, for Plaintiff.

Kevin M. Magnuson, and Jay W. Schlosser, Briggs & Morgan, Minneapolis, MN; Rebecca Goldsmith, Peter Curtin, and Julie A. Petruzzelli, Venable Baetjer Howard & Civiletti, LLP, Washington, DC, for Defendants.

MEMORANDUM OPINION AND ORDER

FRANK, District Judge.

Introduction

The above-entitled matter came on for hearing before the undersigned United States District Judge on November 7, 2003, pursuant to Defendants' Motion to Dismiss. For the following reasons, Defendants' Motion is granted in part and denied in part.

Background

Plaintiff Solvay Pharmaceuticals, Inc., is a Georgia corporation with its principal place of business in Marietta, Georgia. Solvay also has a manufacturing and packaging facility in Baudette, Minnesota. Relevant to this lawsuit, Solvay develops, manufactures, and markets its Creon line of prescription microencapsulated pancreatic enzyme supplements. Creon is used to treat cystic fibrosis patients who suffer from pancreatic exocrine insufficiency, a disorder that keeps their bodies from producing the proper enzymes to digest food. Solvay's line of Creon products include Creon 5, Creon 10, and Creon 20, based upon how many units of the lipase enzyme each product contains. (See Complaint at ¶ 19.)

Defendant Impax Laboratories, Inc., is a Delaware corporation with its principal place of business in Haywood, California. Defendant Global Pharmaceuticals is the generics marketing division of Impax. According to Solvay's Complaint, Defendants manufacture, distribute, and market a pancreatic enzyme supplement under the trade name Lipram.

Solvay contends that Defendants have falsely promoted Lipram as a substitute for Creon to wholesalers, chains, distributors, mail order houses, independent pharmacies, and managed health care organizations. (See Complaint at ¶¶ 6-9.) Solvay asserts that Defendants' "knock-offs" of Solvay's Creon line include Lipram "CN 10" and "CN 20." (See id. at 25.) Solvay further alleges that Defendants are marketing their Lipram products either expressly or by implication as "generic" versions of Creon, even though Lipram is not, in fact, equivalent to Creon. (See id. at 24.)

Solvay's Complaint provides an undisputed account of the different means by which states regulate the substitution of prescription drugs by pharmacists. According to Solvay, the majority of states prohibit drug substitution of a generic for a brand name drug unless the substitute is therapeutically equivalent to the brand (i.e., the drug is identical in active ingredients, strength, and dosage form and the drug has the same rate and extent of absorption) or the drug appears in the FDA's Orange Book, a list of brand-name drugs listed along with their FDA-determined therapeutic equivalents. In fewer than ten states, a generic need only be pharmaceutically equivalent (i.e., the drug has identical active ingredients, strength, and dosage form) in order to be substituted. (See Complaint at ¶¶ 31-33.)

Neither Lipram or Creon currently appear in the Orange Book. (Id. at ¶ 36, n. 5.) Solvay contends that Defendants have not studied whether Lipram is a therapeutic equivalent of Creon. (Id. at 37.) In addition, Solvay asserts that Lipram is not pharmaceutically equivalent to Creon. (Id. at 38.) Despite this alleged lack of equivalence, Solvay contends that "in a variety of promotional materials Global has stated or implied that Lipram is `generic,' `comparable,' and an `alternative' to Creon." (Id. at 28.) Solvay asserts that "Defendants' marketing tactics mislead their audience into believing that Lipram is a generic equivalent to, and substitutable for, Creon." (Id.) Solvay argues that Defendants' allegedly misleading marketing efforts have damaged Creon's sales and reputation. (See Complaint at 39.)

Based upon these allegations, Solvay asserts the following causes of action against Defendants: (1) false advertising in violation of section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); (2) unfair competition in violation of section 43(a) of the Lanham Act; (3) violation of the Minnesota Unfair Trade Practices Act, Minn.Stat. § 325D.13; (4) violation of the Minnesota Uniform Deceptive Trade Practices Act, Minn.Stat. § 325D.44; (5) violation of the Minnesota False Advertising Act, Minn.Stat. § 325F.67; (6) violation of the Minnesota Consumer Fraud Act, Minn.Stat. § 325F.69; and (7) a request for declaratory judgment pursuant to 28 U.S.C. §§ 2201 and 2202. Solvay has filed a nearly identical complaint in the United States District Court, District of Minnesota, against another drug company. See Solvay Pharmaceuticals, Inc. v. Ethex Corp., et al., (Civ. No. 03-2836 (JRT/FLN)) (D. Minn., filed Apr. 10, 2003).

Defendants have brought this motion to dismiss on all counts. First, Defendants assert that Counts I-VII fail because Solvay has attempted to use the Lanham Act and other state laws as a vehicle to assert violations of the Food, Drug and Cosmetic Act ("FDCA"), under which no such private causes of action exist. Alternatively, Defendants assert that Counts I-VI of the Complaint fail for a lack of specificity; Count VI fails because the Consumer Fraud Act does not protect entities who are not "consumers" under Minnesota law; and Count VII fails because it does not address conduct that can be remedied by Defendants.

1. Standard of Review

In deciding a motion to dismiss, the Court must assume all facts in the Complaint to be true and construe all reasonable inferences from those facts in the light most favorable to the complainant. Morton v. Becker, 793 F.2d 185, 187 (8^th Cir.1986). The Court grants a motion to dismiss only if it is clear beyond any doubt that no relief could be granted under any set of facts consistent with the allegations in the Complaint. Id. The Court may grant a motion to dismiss on the basis of a dispositive issue of law. Neitzke v. Williams, 490 U.S. 319, 326, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989). The Court need not resolve all questions of law in a manner which favors the complainant; rather, the Court may dismiss a claim founded upon a legal theory which is "close but ultimately unavailing." Id. at 327, 109 S.Ct. 1827.

2. Preemption

Defendants assert that Solvay's claims fail because they attempt to redress violations of the FDCA, claims which are within the exclusive jurisdiction of the FDA. Solvay, on the other hand, asserts that claims for falsely stating or implying that a drug is generic, equivalent, or substitutable are actionable under the Lanham Act and Minnesota law, even if in part regulated by the FDA.

In its Complaint, Solvay asserts that Defendants have not tested Lipram to determine if Lipram was bioequivalent or otherwise therapeutically equivalent to Creon. (Complaint at ¶ 27.) In fact, Solvay contends that Lipram is neither bioequivalent nor therapeutically equivalent to Creon. (See id.) However, despite this alleged lack of testing, Solvay asserts that Defendants have explicitly or implicitly marketed Lipram as a "generic," "comparable," "alternative," or "equivalent" to Creon. (See id. at ¶¶ 28, 48.) Solvay alleges that "Defendants' marketing tactics mislead their audience into believing that Lipram is a generic equivalent to, and substitutable for, Creon." (Id.) It is in reference to these assertions of false and misleading advertising that Solvay has brought its claims for relief under the Lanham Act and Minnesota state law.

The Lanham Act provides a private remedy to a plaintiff who can prove that it has been harmed by "commercial advertising or promotion" that "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). Minnesota law similarly prohibits false and misleading statements related to the sale of merchandise. See Minn.Stat. §§ 325F.69, subd. 1; 325D.01-.16, 325D.43-.48, 325F.67. The FDCA, on the other hand, "`is not focused on the truth or falsity of advertising claims' but on protecting the public interest in safety and efficacy" of food, drugs, and cosmetics and does not allow for private rights of action. See Mylan Laboratories, Inc. v. Matkari, 7 F.3d 1130, 1139 (4th Cir.1993) (citing Sandoz Pharmaceuticals Corp. v. Richardson-Vicks, Inc., 902 F.2d 222, 230 (3rd Cir.1990); see also 21 U.S.C. § 337 ("all proceedings for the enforcement of or to restrain violations of [the FDCA] shall be by and in the name of the United States.").

The Eighth Circuit has not decided the issue of whether claims for false and misleading advertising under the Lanham Act and state law are preempted by the FDCA.¹ However, the parties primarily rely upon two cases in support of their opposing positions.

First, in support of its preemption argument, Defendants cite Ethex Corp. v. First Horizon Pharm. Corp., 228 F.Supp.2d 1048 (E.D.Mo.2002). Ethex involved a dispute over the allegedly false advertising and marketing of prenatal vitamins. First Horizon brought a counterclaim under the Lanham Act and various Missouri state laws alleging that Ethex had illegally attempted to have its products listed as generic versions of First Horizon's drugs in pharmacist databases. Id. at 1051. Similar to the facts in this case, neither of the parties' prenatal vitamins were subject to FDA approval. Id. at 1052. First Horizon's arguments in the counterclaim focused on the fact that Ethex's use of the word "generic" in its marketing implied FDA-defined concepts, and therefore the claims were preempted by the FDCA. Id. at 1055. The...