Shannon P. Duffy
The Legal Intelligencer
In a big win for drug manufacturers, the 3rd U.S. Circuit Court of Appeals has ruled that federal law bars a suit alleging false-advertising claims under state law because the U.S. Food and Drug Administration has "exclusive authority" to regulate prescription drug advertising.
"To allow generalized state consumer fraud laws to dictate the parameters of false and misleading advertising in the prescription drug context would pose an undue obstacle to both Congress' and the FDA's objectives in protecting the nation's prescription drug users," U.S. Circuit Judge D. Brooks Smith of the Western District of Pennsylvania, wrote in his 51-page opinion in Pennsylvania Employees Benefit Trust Fund, et al. v. Zeneca Inc.
But a dissenting judge complained that such "implied conflict pre-emption" of state law was unwarranted and wrong since the FDA doesn't have the power to require preapproval of pharmaceutical advertisements and lacks the resources to police the ads that run after drugs are approved.
Senior U.S. Circuit Judge Robert E. Cowen said he would have revived the suit because the claims it alleges don't challenge any of the drug maker's claims before the FDA during its labeling process, and therefore posed no conflict with the FDA's mission.
"Given that there are limitations to the FDA's oversight over prescription drug advertisements -- both congressionally imposed limitations, such as the lack of authority to require preapproval, and practical limitations attendant to the sheer volume of drug advertisements in the media, the supplementation of state-law remedies would seem to aid the FDCA's objectives and purposes, not frustrate them," Cowen wrote.
The ruling upholds the dismissal of a proposed class action suit accusing Zeneca of misleading consumers and doctors by advertising the acid reflux drug Nexium as an improvement over Prilosec because it knew that the patent for Prilosec was about to expire and a generic version would soon be hitting the market.
The suit, filed in U.S. District Court in Delaware, alleged claims under the Delaware Consumer Fraud Act as well as the consumer protection statutes of the 50 states for false, misleading and deceptive advertising. It also alleged claims for unjust enrichment and negligent misrepresentation.
Nexium and Prilosec are both proton-pump inhibitors -- drugs that treat gastroesophageal reflux disease, or GERD, and erosive esophagitis, conditions that are commonly known as acid reflux disease and frequent heartburn.
Prilosec was an especially profitable drug for Zeneca, with sales of more than $6 billion in 2000. But the patent for Prilosec was due to expire in 2001, at which point it would be available for sale as the generic drug omeprazole.
In February 2001, Zeneca obtained final approval from the FDA for its labeling on Nexium, the brand name for esomeprazole magnesium.
A clinical study of Nexium compared both 20 mg and 40 mg doses of Nexium with the approved 20 mg dose of Prilosec and showed that 40 mg of Nexium had a statistically significant healing rate over 20 mg of Prilosec.
But the suit alleged that the higher dose of Nexium was not needed for most patients, and that Zeneca's ad campaign was therefore misleading because a fair comparison of 20 mg of Nexium with 20 mg of Prilosec would not have proven Nexium to be superior.
The suit also alleged that Zeneca initially sold Nexium at a price below Prilosec in order to establish brand loyalty, but "then raised the price of Nexium while the price of Prilosec dropped." Nexium now sells for more than $4 per pill versus about 67 cents for Prilosec, the suit alleged.
But U.S. District Judge Sue L. Robinson dismissed the suit, finding that since the Nexium advertisements complied with the FDA-approved labeling, they were not actionable under the state consumer protection laws.
Robinson concluded that the suit was pre-empted because the state law claims conflicted with federal law.
On appeal, plaintiffs lawyers argued that Robinson's application of federal pre-emption was incorrect because there is no irreconcilable conflict between the state consumer fraud laws and the federal Food, Drug and Cosmetic Act. The FDA's approval of Nexium's labeling, they argued, did not extend to an assertion of Nexium's superiority over Prilosec.
Smith disagreed, finding that Robinson's analysis was correct because the FDCA and its implementing regulations include extensive rules governing pharmaceutical advertising. "The degree of discretion inherent in the regulations demonstrates that the FDA envisioned itself occupying an ongoing and extensive role in the supervision of prescription drug advertising,"
Smith wrote in an opinion joined by visiting 6th Circuit Judge Eugene E. Siler. In the claims against Zeneca under state consumer fraud laws, Smith said, the FDCA is not a "critical element" because the plaintiffs wouldn't have to show noncompliance with the FDCA to prevail.
Nonetheless, Smith said, "allowing these claims to proceed would unnecessarily frustrate the FDCA's purpose and FDA regulations, as the extent of agency involvement in regulating prescription drug advertising is extensive and specific."
Implied conflict pre-emption of the state consumer fraud laws was therefore required, Smith said, because both the FDCA and FDA regulations provide specific requirements for prescription drug advertising.
"The high level of specificity in federal law and regulations with respect to prescription drug advertising is irreconcilable with general state laws that purport to govern all types of advertising," Smith wrote.
In dissent, Cowen complained that his colleagues were ignoring the teachings of U.S. Supreme Court decisions that cautioned against "seeking out conflicts between state and federal regulation where none clearly exists."
Cowen said courts must "start with the assumption that the historic police powers of the states were not to be superseded by [a] federal act unless that was the clear and manifest purpose of Congress."
Although the FDA has exclusive power to approve the sale and labeling of drugs, Cowen argued that the agency does not have the exclusive power to regulate drug advertising. "This is not an area of the law inherently requiring national uniformity and ousting all related state law," Cowen wrote.
In the suit against Zeneca, Cowen said, the plaintiffs are complaining that ads for Nexium contained a false and misleading drug comparison -- an issue that was never addressed by the FDA in its approval of Nexium's labeling.
"As a result, there is no risk that a successful state-law claim, alleging that Nexium advertisements contain false and misleading drug comparisons, would conflict with the FDA's approval of the statements in the Nexium labeling," Cowen wrote.
Lead plaintiffs attorney Craig R. Spiegel of Hagens Berman Sobol Shapiro in Seattle could not be reached for comment.
Zeneca was represented in the appeal by Mark E. Haddad of the Los Angeles office of Sidley Austin, along with Jack B. Blumenfeld, Rudolph J. Scaggs Jr. and Lisa K. Whittaker of Morris Nichols Arsht & Tunnell in Wilmington, Del.