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).

Battle Won – War in Jeopardy?

In litigation, facts matter and the facts in Allergan et al v Athena, favored Allergan. The impact of the December 30, 2013 ruling by the Federal Circuit Court may go beyond the facts of this case to bolster tort claims against manufacturers under the emerging doctrine of "parallel claims." Allergan may find an odd bedfellow in Plaintiffs' lawyers, whom it may be helping unwittingly and in unintended ways to undercut the defense of federal preemption and reliance on the doctrine of primary jurisdiction.

Allergan's claims involved California's Unfair Competition Law (UCL), California Business and Professions Code § 17200 et seq. Allergan was marketing a Food and Drug Administration (FDA) approved drug and, under the Food Drug and Cosmetic Act (the FDCA), Allergan was permitted to make treatment and mitigation claims concerning how the drug affects the structure and function of the body. Athena, on the other hand, was marketing a cosmetic and could only make claims to support the structure and function. Both products were similarly formulated and contained a prostaglandin derivative for the treatment of a condition that affects eyelash growth. At issue was whether Athena's claims concerning its RevitaLash product rendered it not a cosmetic but an unapproved new drug. The issue was not that the product was unsafe or not efficacious. Allergan claimed that Athena's marketing increased its market share to the financial detriment of Allergan.

On December 30, 2013 the Court of Appeals for the Federal Circuit issued an opinion in Allergan et al v Athena affirming the District Court's grant of summary judgment finding that Athena violated California's UCL by "marketing, distributing and selling, without regulatory approval, products that qualify as drugs." The Federal Circuit found jurisdiction over the California case concluding that "'patent law is a necessary element of one of the well-pleaded claims' in the complaint" even though the patent claims in the underlying case had been dismissed.

As is true in many states, California's Health Code (the California FDCA) mirrors and incorporates various provisions of the federal FDCA. While it is well recognized that the FDCA does not allow a private right of action for violations (21 U.S.C. § 337(a)), the Federal Circuit reasoned its way around the notion of federal primacy and preemption concluding that references in the complaint to the FDCA were merely "referential." There is no express preemption for cosmetics or drugs under the FDCA, as there is for medical devices, and the issue before the Court was whether the claims were impliedly preempted. Athena argued Buckman preemption; that Allergan's claims exist because of the FDCA and required deference to a determination by the FDA concerning whether Athena marketed a drug or a cosmetic.

Allergan argued that its state law claims merely "parallel" federal law and rely on a violation of the California FDCA.

Athena further argued that Allergan's claim interferes with the FDA's discretionary authority over whether to regulate a product, such as the cosmetic at issue in this case, in interstate commerce as a drug. Athena also argued, under the doctrine of primary jurisdiction, that the district court abused its discretion by declining to stay this case pending the FDA's determination of whether the cosmetic products at issue were improperly marketed, unapproved new drugs. Under the doctrine of primary jurisdiction, the FDA, and not the court, should decide, in the first instance, an issue concerning whether certain conduct is a violation of the FDCA.

Relying on Wyeth v. Levine, 555 U.S. 555 (2009), Allergan argued that there is no implied preemption where simultaneous compliance with state and federal law is possible, and the state law is not an obstacle to the realization of federal goals. According to Allergan, the California FDCA's requirements parallel the FDCA's requirements making compliance with both regimes possible. In essence, Allergan argued that if California state law mirrors the FDCA, there is a private right to sue, provided the claim does not necessitate action by the FDA.

The Federal Circuit agreed with Allergan that the FDCA does not impliedly preempt California UCL claims where the claims rely on the California FDCA and not the federal FDCA. Citing well recognized precedent in the area of preemption, the Court observed:

[T]he purpose of Congress is the ultimate touchstone in every pre-emption case. In all pre-emption cases, and particularly in those in which Congress has legislated in a field which the States have traditionally occupied, we start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.'" Citing Medtronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996)).

Citing the Supreme Court in Buckman v. Plaintiffs' Legal Committee, 531 U.S. 341 (2001), the Federal Circuit acknowledged "the historic primacy of state regulation of matters of health and safety," Id. at 348, finding the "fact that the California Health Code parallels certain FDCA provisions does not mean that it does not implicate an historic state power that may be vindicated under state law tort principles."

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 Buckman 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 "warrant a presumption against finding federal pre-emption of a state law cause of action." Buckman 531 U.S. at 347, 352..

The Alchemy of a Parallel Claim

The definition of a "drug" under the California FDCA mirrors that of the FDCA and 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 will determine 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 alchemy at play in the Federal Circuit's analysis is that the FDA regulation on "intended use" does not have a "parallel" under state law but is borrowed by the Federal Circuit Court to create the glue that holds together the Court's reasoning to allow Allergan's claims to proceed. In Allergan, the FDA made no determination concerning whether Athena intended to market a cosmetic or a new drug and the Federal Circuit Court stood in the shoes of the FDA to apply 28 CFR 201.128 and determine Athena's intended use to permit a private litigant to pursue its claims.

Allergan and Off-Label Use – Why this Case Matters?

Allergan supports a private litigant bringing an action alleging that a manufacturer's conduct constitutes an intended new use rendering a product an unapproved new drug under state law. While Allergan concerned a cosmetic, what is at issue is a new drug claim, and new drug claims apply to foods, supplements, drugs and cosmetics. By definition, there is no "adequate warning" that can accompany an unapproved new drug and a finding that a new drug is marketed without FDA approval may pave the way for a tort claim and render a claim per se negligence.

According to recent medical survey data for prescription drugs, more than 100 million prescriptions are written each year with no medical or scientific support. That is to say, tens of millions of consumers ingest unapproved "new drugs." The FDCA does not define the term "off-label" because the term refers to the manner in which a product is used in the practice of medicine. The phrase "off-label promotion" when applied to a manufacturer means the manufacturer promoted an unapproved new drug. Thus, where a tort plaintiff claims a manufacturer is marketing "off-label", the claim is that the manufacturer is marketing an unapproved new drug and Allergan supports the contention that a plaintiff bringing such a claim is not preempted by federal law.

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

To find that Athena demonstrated an objective "intent" to market an unapproved 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."

According to the Federal Circuit, "Athena's argument that it markets only cosmetic benefits fails. We need not decide whether the products at issue could also be cosmetics—it is sufficient to resolve this case that there is no dispute that Athena objectively intends that the products at issue be used as drugs."

The Mission Impossible Disclaimer:

While the FDA may, under some circumstances, allow a disclaimer to counter a current claim or may 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 requiring a disclaimer. 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:

The three Supreme Court cases that form the foundation for federal preemption under the FDCA (Lohr 518 U.S.470 (1996), Buckman 531 U.S. 341 (2001) and Reigel 552 U.AS. 312 (2008)) also gave birth to the cacophonous maelstrom of circuit court opinions that threaten to redefine and up-end medical products liability in the 21st Century (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).

"Parallel" state law claims for violating the federal FDCA are a wild-west for medical product manufacturers and the risk of litigation, particularly as it relates to the issue is aided by the Federal Circuit Court's ruling.

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

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 separate concurring opinion purporting to clarify the murky waters, the Court stated: In this case, 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 expressing the views of the FDA on the issue of parallel claims. The government has yet to file a brief and it remains unclear what position the government will take. 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 case to proceed. While manufacturers of FDA regulated products have enjoyed a decade where the pendulum swung generally in their favor on the issue of federal preemption and the primacy of jurisdiction of the FDA, the political climate and emerging new approaches by the Courts, aided by the new world of the internet and social media, threaten to reopen the courthouse doors.

Originally published in The Spotlight, Spring 2014.

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