United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
JORGE L. ALONSO, District Judge.
Plaintiff Par Sterile Products, LLC ("Par") alleges in its complaint that defendant Fresenius Kabi USA, LLC ("Fresenius") has violated Section 43(a) of the Lanham Act, the Illinois Deceptive Trade Practices Act, and the Illinois Consumer Fraud and Deceptive Business Practices Act by falsely advertising and promoting its vasopressin injection product. Fresenius has moved to dismiss Par's complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). For the reasons set forth below, the motion is denied in part and granted in part.
Both plaintiff and defendant manufacture and market pharmaceuticals, including a vasopressin injection product. Par's vasopressin product, Vasostrict, is FDA-approved. Fresenius's Vasopressin Injection product is not.
In its brief, Par helpfully describes the historical and regulatory backdrop for this dispute. Vasopressin is a natural hormone that has been used in medicine for over one hundred years, since before drugs had to be approved by the Food and Drug Administration ("FDA") or, indeed, before the FDA even existed. In 1938, Congress passed the Food, Drug and Cosmetic Act ("FDCA"), which required all "new drugs" to be approved for safety. In 1962 Congress amended the FDCA to require "new drugs" to be approved for effectiveness for a particular use as well. However, grandfather clauses exempted drugs from both requirements if they had been on the market prior to the relevant enactment date and met certain other requirements. ( See Compl. Ex. 3, Food and Drug Admin., Guidance for FDA Staff and Industry: Marketed Unapproved Drugs-Compliance Policy Guide 9-12 (2011).)
The modern prescription drug market is made up of not only FDA-approved drugs but also numerous unapproved drugs. Approved drugs include branded drugs, which have FDA-approved New Drug Applications, and generic versions of branded drugs, which have FDA-approved Abbreviated New Drug Applications. Unapproved drugs include pre-1938 and pre-1962 "grandfathered" drugs and other drugs that are marketed without FDA approval, possibly illegally. (Opp'n to Mot. to Dismiss at 2-3 (citing 21 U.S.C. § 255(b), (j)).) Fresenius does not state whether its product has grandfather status.
In recent years, the FDA has encouraged drug makers to seek FDA approval for their products. In its September 19, 2011 document issued to provide guidance to the drug industry, which Par has attached to its complaint as Exhibit 3, the FDA stated that when a company obtains approval of a product that other companies are marketing without approval, the "FDA is more likely to take enforcement action against remaining unapproved drugs." (Compl. Ex. 3 at 7.) However, the document continued, "we intend to take into account the circumstances once the product is approved in determining how to exercise our enforcement discretion with regard to the unapproved products." ( Id. ) The FDA outlined certain enforcement priorities, with the upshot being, as Par puts it in its brief, "absent overriding safety concerns, the FDA generally does not take enforcement actions to halt the marketing of unapproved drugs." (Opp'n to Mot. to Dismiss at 4-5.)
Par had previously sold Pitressin, an unapproved vasopressin product like Fresenius's Vasopressin Injection, but on September 26, 2012, in accord with the FDA guidance, Par submitted a New Drug Application ("NDA") to the FDA for a vasopressin injection product called Vasostrict. (Compl. ¶ 17.) Par alleges that it went to considerable expense to establish the product's safety to the satisfaction of the FDA ( Id. ¶ 30), and Vasostrict was finally approved by the FDA on April 17, 2014 ( Id. ¶¶ 18, 28). Par filed this suit shortly thereafter.
Par alleges, in short, that Fresenius misrepresents its Vasopressin Injection as safe, effective and FDA-approved, when in fact Par markets the only FDA-approved vasopressin injection product on the market. Fresenius allegedly represents to wholesale generic drug purchasers, distributors, group purchasing organizations, and integrated delivery networks that it is in compliance with all applicable laws, which these purchasers take to mean that the Vasopressin Injection is FDA-approved (Compl. ¶¶ 43-46); represents that its product is "generic" in providing drug and pricing information to drug and pricing databases known as "price lists, " which buyers believe include only FDA-approved drugs ( Id. ¶¶ 47-56); and places its drug on the market with the sort of standard labeling and packaging typical of FDA-approved drugs, as if its Vasopressin Injection is FDA-approved ( Id. ¶¶ 57-65).
Fresenius contends in its motion to dismiss that (1) Par has no standing under the Lanham Act, (2) Par's purported Lanham Act claim is really an impermissible private attempt to enforce the Food, Drug and Cosmetics Act ("FDCA"), and (3) Par's factual allegations are insufficient to state a valid Lanham Act claim.
Section 43(a)(1)(B) of the Lanham Act permits a suit against anyone who "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 state a claim under this section, plaintiffs must allege:
(1) a false statement of fact by the defendant in a commercial advertisement about its own or another's product; (2) the statement actually deceived or has the tendency to deceive a substantial segment of its audience; (3) the deception is material, in that it is likely to influence the purchasing decision; (4) the defendant caused its false statement to enter interstate commerce; and (5) the plaintiff has been or is likely to be injured as a result of the false ...