United States: Allergan v Athena: Medical Products Liability And Parallel Claims

Allergan v Athena: Medical Products Liability and Parallel Claims

There is something inherently troubling when a prescription drug manufacturer argues in favor of parallel claims under state law, but that is what happened in Allergan et al. v Athena, No. 2013-1286, 2013 U.S. App. LEXIS 25746 (Fed. Cir. Dec. 30, 2013) (here).

On December 30, 2013, the Court of Appeals for the Federal Circuit issued an opinion in Allergan affirming the California District Court's grant of summary judgment, finding that Athena violated California's Unfair Competition Law (UCL) by "marketing, distributing and selling, without regulatory approval, products that qualify as drugs."

California's Health Code (the California FDCA) mirrors and incorporates various provisions of the federal Food Drug and Cosmetic Act (FDCA). Relying on Wyeth v. Levine, 555 U.S. 555 (2009), Allergan argued that the claims were not preempted where simultaneous compliance with state and federal law is possible, and where the state law is not an obstacle to the realization of federal goals. The Federal Circuit ruled that the FDCA does not impliedly preempt California UCL claims where the claims rely on the California FDCA and not the federal FDCA. However, when a manufacturer's claims render a product a new drug, FDA approval is required to market the product using those claims. According to the Federal Circuit, "[w]e do not find a clear purpose by Congress to preempt the state law claim at issue." The Court distinguished the Supreme Court opinion in Buckman v Plaintiffs' Legal Committee, 531 U.S. 341 (2001) finding that unlike state laws directed at health and safety, fraud on the FDA claims exist "solely by virtue of the FDCA disclosure requirements" and warranting finding federal pre-emption of a state law cause of action." Id at 347, 352.

The Parallel Claim

The definition of a "drug" under the California FDCA mirrors that of the FDCA, i.e. whether a substance is a drug is determined by the manufacturer's "intended use." "Intended use," however, is a term defined under the FDA regulations, not California state law. Under the federal regulations, the FDA determines a manufacturer's intended use of its product "by such persons' expressions or may be shown by the circumstances surrounding the distribution of the article, including labeling claims, advertising matter, or oral or written statements by such persons or their representatives." 28 CFR 201.128. A product is an unapproved new drug if the FDA determines that the manufacturer intended the product to be used for a purpose that constitutes a "drug" under the FDCA. The FDA regulation on "intended use" does not have a "parallel" under California state law, but the FDA regulation was borrowed and applied by the Federal Circuit Court to hold together the Court's reasoning to allow Allergan's claims to proceed. In Allergan, the FDA never determined that Athena intended to market a cosmetic or a new drug and, thus, the Federal Circuit Court stood in the shoes of the FDA to apply 28 CFR 201.128 and determine Athena intended its cosmetic to be used as a drug.

What Facts Did the Court Rely on to Establish Objective Intent to Market a New Drug?

The Federal Circuit found:

Athena's website collectively refers to the ... "line-up of products," and describes formulation changes as "improve[ments]" to the intended use of "one or more of our products."

Athena's marketing of the products at issue consistently discusses physical changes to eyelashes.

[T]he company's website contained a message from the founder referring to his wife's "fragile, sparse and thin" eyelashes, and his development of a formula to achieve "the look of renewed health, strength and beauty."

An advertisement about the most recent formulation states that the product is "both dermatologist and ophthalmologist reviewed," and describes "improved appearance" of eyelashes in the context of a "clinical study."

Athena's training of resellers similarly references eye-lash structure...achieving "fuller and thicker" eyelashes... a "maintenance program" to retain "the desired length" after "achiev[ing] longer, fuller-looking eyelashes" "eyelashes will grow naturally or with RevitaLash".... .

One reseller's marketing materials displayed a before-and-after photograph of eyelashes and promoted "dramatically thicker, longer, and lusher lashes."

The Disclaimer: While the FDA may, under some circumstances, allow a disclaimer to counter a current claim or require a retraction of a claim to be disseminated for a prior claim, the FDA had not taken such action concerning Athena's marketing of its product. Instead of FDA taking action, the Federal Circuit stood in FDA's shoes and suggested a disclaimer was required to render a prior claim not a current intent to improperly market. The Federal Circuit reasoned that a claim that had been made in the past attached to the product and constituted current claim because it was never disclaimed. In this regard, the Court concluded:

There is no dispute that Athena made drug-related claims about an early formulation—and it never expressly disavowed such claims as it reformulated its products.
[W]e disagree with Athena that the only relevant evidence is labeling and marketing, or that the only relevant formulation is the most recent one.

The "Odd" Circuits (5th 7th and 9th) and the Doctrine of Parallel Claims:

A trilogy of Supreme Court cases form the foundation for federal preemption under the FDCA (See Lohr 518 U.S.470 (1996), Buckman 531 U.S. 341 (2001) and Reigel 552 U.AS. 312 (2008)) and gave birth to a trilogy of Circuit Court opinions that threaten to up-end medical products liability (see Hughes v Boston Scientific, 631 F3d 762 (5th Cir. 2011), Bausch v Stryker Corp., 630 F2d 546 (7th Cir. 2010) and Stengel v Medtronic, Inc., 704 F.3d 1224 (9th Cir. en banc 2013).

With the increase in cases applying parallel claim reasoning and the Supreme Court poised to address this issue, the pendulum is poised to change direction as Courts find creative ways to permit litigation to proceed where Congress or the FDA have refused or neglected to provide a private remedy. Moreover, recently the government has been a willing proponent of private litigant lawsuits claiming violations of the federal FDCA (see POM v Coca Cola). The FDA itself has even sought to aide private tort litigants to create a right to pursue private litigation for labeling claims where the Supreme Court found claims preempted (see here).

Next Up, Stengel v. Medtronic

In Stengel v Medtronic, the Ninth Circuit reinstated plaintiffs' purported Arizona state-law failure-to-warn claims stating that the "[Medical Device] Amendments do not preempt a state-law claim for violating a state-law duty that parallels a federal-law duty under the Amendments." In a concurring opinion purporting to clarify the murky waters, the Ninth Circuit stated:

Medtronic's failure to report was more than a mere misrepresentation to the FDA because it simultaneously misled the device's current and potential users, to whom Medtronic owed an independent duty under state law. There is no question that state law has an important and legitimate role to play in regulating the adequacy of post-sale warnings for products already on the market.

Stengel is currently before the Supreme Court (here). The government was invited to file a brief, but has yet to do so. While it remains unclear what position the government will take, but the government likely will not stray far from the position it took in POM v. Coca Cola, supra. It is also unclear whether the Supreme Court will grant the writ of certiorari or, if it does, how it will rule. What is clear is that if the Court denies the petition, the medical products liability pendulum may have gained momentum in its turn towards allowing cases to proceed.

Manufacturers of FDA regulated products have enjoyed a decade of favorable rulings on the issue of federal preemption and the primacy of jurisdiction of the FDA, but the political climate and emerging new approaches by the Courts threaten to reshape the litigation landscape.

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