Rhone-Poulenc Rorer v. Marion Merrell Dow ( 1996 )

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No. 95-3743
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Rhone-Poulenc Rorer *
Pharmaceuticals, Inc., *
*
Plaintiff - Appellant, *
* Appeal from the United States
v. * District Court for the
* Western District of Missouri.
Marion Merrell Dow, Inc., *
*
Defendant - Appellee. *
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Submitted: April 10, 1996
Filed: August 22, 1996
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Before MAGILL, Circuit Judge, HENLEY, Senior Circuit Judge, and LOKEN,
Circuit Judge.
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LOKEN, Circuit Judge.
This appeal challenges the district court's1 disposition of false
advertising claims by competing manufacturers of diltiazem, a "miracle
drug" for the treatment of hypertension and angina. The governing law is
the false advertising cause of action provided in § 43 of the Lanham Act,
15 U.S.C. § 1125(a)(1)(B). The court found both parties guilty of false
advertising. It awarded no damages to plaintiff Rhone-Poulenc Rorer
Pharmaceuticals ("RPR") and ordered RPR to undertake corrective advertising
to counter the effects of its Lanham Act violation. RPR appeals those
rulings. We vacate as not sufficiently specific that portion of the decree
requiring RPR to advise the marketplace of "the food effect" associated
with its product. We otherwise affirm.
1
The HONORABLE DEAN WHIPPLE, United States District Judge for
the Western District of Missouri.
I. Background.
Defendant Marion Merrell Dow ("MMD") introduced the first diltiazem
drug, Cardizem, in 1982. The FDA approved Cardizem for the treatment of
angina; it was also widely prescribed to treat hypertension. In 1989, MMD
introduced a sustained release Cardizem product that is taken twice per
day. MMD then developed Cardizem CD, a sustained release drug that is
taken only once per day. The FDA approved Cardizem CD for hypertension and
for angina.
Diltiazem was a pioneer new drug, which means that the Cardizem
products enjoyed a ten-year period of market exclusivity under the Hatch-
Waxman amendments to the Food, Drug, and Cosmetics Act. See 21 U.S.C.
§ 355(j)(4)(D); Abbott Labs. v. Young, 920 F.2d 984 (D.C. Cir. 1990), cert.
denied, 502 U.S. 819 (1991). Cardizem products were immensely successful,
generating sales of $1.1 billion in 1992 alone. By the early 1990's,
competing drug manufacturers were anxious to penetrate the diltiazem market
with less costly alternatives.
RPR launched its diltiazem drug in June 1992. RPR's Dilacor XR, a
once-per-day sustained release tablet, initially received FDA new drug
approval for the treatment of hypertension but not angina. FDA approval
as a new drug, which is more rigorous than approval as a generic
substitute, allowed Dilacor XR to compete with Cardizem CD during the
latter's period of market exclusivity. FDA classified Dilacor XR as a
"BC" drug -- one that is not necessarily "bioequivalent"2 -- rather than
a bioequivalent "AB" drug.
2
FDA will classify drugs as "bioequivalent" when their rate
and extent of absorption by the body make them interchangeable.
Drugs are bioequivalent when they have "the same strength and
similar bioavailability in the same dosage form." Bioavailability
is "the degree to which a drug or other substance becomes available
to the target tissue after administration." Dorland's Illustrated
Medical Dictionary 206 (27th ed. 1988).
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Pharmacists may freely substitute among AB drugs, but only a prescribing
physician may substitute one BC drug for another.
Given this FDA classification, to significantly penetrate the
diltiazem market RPR had to persuade physicians to prescribe its low-cost
product, Dilacor XR, as a substitute for Cardizem CD. MMD of course wanted
to persuade the same audience that this is an inappropriate substitution.
With this issue as the battleground, the two companies launched advertising
campaigns for the allegiance of doctors, pharmacists, and hospitals.
Because these are sophisticated consumers, the battle was waged with
technical advertisements in professional journals and with marketing
presentations by each company's sales representatives. RPR sought to
convince prescribing physicians that Dilacor XR is the "same as, only
cheaper" than Cardizem CD. MMD's message was, in essence, "not same as,"
and maybe not cheaper.
The nature of the competing false advertising claims can be briefly
summarized. MMD's defensive advertising began with literature telling its
sales representatives that Dilacor XR might be only seventy-five percent
as bioavailable as Cardizem CD. After agreeing to discontinue that
unsubstantiated claim, MMD's next wave of promotional materials advised
sales representatives, doctors, and pharmacists that studies showed Dilacor
XR only fifty percent as bioavailable as Cardizem CD. In its third wave
of advertising, MMD released a four-page brochure in April 1993 reporting
the results of a comparative study conducted by an outside laboratory, the
"6730 Study." The results, as reported by MMD: "Dilacor XR delivers 81%
of a 180-mg dose relative to Cardizem CD" and "74% of a 540-mg dose." RPR
sued, contending that these false comparative bioavailability claims
violate the Lanham Act.
Throughout this period, RPR's advertising urged doctors and
pharmacists to switch their patients from Cardizem products to the low-cost
Dilacor XR. In its counterclaims, MMD attacked this
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advertising as falsely telling medical professionals that Dilacor XR is
freely substitutable for Cardizem products when in fact Dilacor XR is not
FDA-approved for angina,3 physicians should monitor patients who switch
from Cardizem CD because Dilacor XR does not have "similar
bioavailability," and the two drugs are absorbed differently when taken
with a meal (the "food effect").
After a bench trial, the district court found that MMD's early
literature claiming that Dilacor XR has only seventy-five percent or fifty
percent bioavailability violated the Lanham Act. It enjoined MMD from
making those claims. However, it found that MMD's advertising based upon
the 6730 Study was not false, and it declined to award RPR money damages
because RPR failed to prove damage resulting from MMD's earlier false
advertising.
Turning to MMD's counterclaims, the district court found that RPR's
advertising "contain[ed] a hidden message encouraging indiscriminate
substitution" that is false in two respects -- Dilacor XR is not approved
for treatment of angina, and Dilacor XR has a "food effect" that creates
a risk of injury if physicians do not monitor patients who are switched to
Dilacor XR. Based upon these violations, the court enjoined RPR to "take
necessary steps" to advise sales representatives, physicians, pharmacists,
and patients (1) of "the food effect associated with Dilacor XR," (2) that
physicians should "carefully monitor and titrate" (adjust the dosages) when
they switch patients from Cardizem CD to Dilacor XR, and (3) that "Dilacor
XR is not approved to treat angina."
Following the district court's September 1994 decision, RPR filed a
motion to correct the judgment, which the court denied. MMD moved to
enforce the court's order, and the court granted that motion without
further explanation of what compliance is required.
3
Doctors may prescribe an FDA-approved drug for non-approved
uses, but the manufacturer may not promote non-approved uses.
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RPR appeals. It argues that MMD was guilty of false advertising based on
the 6730 Study, that the district court erred in denying RPR money damages,
and that the court erred in ordering RPR to conduct corrective advertising
disclosing that Dilacor XR is not approved to treat angina and has a "food
effect."
II. MMD's Advertising.
MMD advertised Dilacor XR's lower bioavailability in order to
persuade medical professionals that Dilacor XR is not a comparable
substitute and to undercut Dilacor XR's price advantage. The trial
evidence showed that MMD's first claim of seventy-five percent
bioavailability was false because it had no substantiation. The second
claim of fifty percent bioavailability was false because it was based upon
an obvious misinterpretation of data from prior studies. But MMD's third
claim of 74% to 81% bioavailability was based upon the specially
commissioned 6730 Study. The bona fides of that Study became a principal
subject of the trial.
The Lanham Act prohibits "commercial advertising or promotion [that]
misrepresents the nature, characteristics, qualities, or geographic origin
of [the advertiser's] or another person's goods, services, or commercial
activities." 15 U.S.C. § 1125(a)(1)(B). False advertising decisions in
other circuits have consistently distinguished between two types of
comparative advertising claims: "my product is better than yours," versus
"tests prove that my product is better than yours." To successfully
challenge the first type of claim, a Lanham Act plaintiff must prove that
defendant's claim of superiority is false. But to successfully challenge
the second type of claim, where defendant has hyped the claim of
superiority by attributing it to the results of scientific testing,
plaintiff must prove only "that the tests [relied upon] were not
sufficiently reliable to permit one to conclude with reasonable certainty
that they established the proposition for which they were cited." Castrol,
Inc. v. Quaker State Corp., 977 F.2d 57, 62-63
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(2d Cir. 1992), quoting Procter & Gamble Co. v Chesebrough-Pond's, Inc.,
747 F.2d 114, 119 (2d Cir. 1984). Accord BASF Corp. v. Old World Trading
Co., 41 F.3d 1081, 1089-91 (7th Cir. 1994); Mylan Labs., Inc. v. Matkari,
7 F.3d 1130, 1138 (4th Cir. 1993), cert. denied, 114 S. Ct. 1307 (1994);
McNeil-P.C.C., Inc. v. Bristol-Myers Squibb Co., 938 F.2d 1544, 1549 (2d
Cir. 1991). The district court applied this standard for "tests prove"
claims to MMD's advertising based upon the 6730 Study. Neither party
challenges the standard, and we agree it is a correct application of Lanham
Act § 43.
RPR concedes that the 6730 Study results support the claims MMD made
in its advertising brochure. Thus, the issue before us is whether that
advertising was false because the 6730 Study is not a sufficiently reliable
basis for comparing the bioavailability of Dilacor XR and Cardizem CD. At
trial, RPR presented expert testimony that the 6730 Study was flawed in
design and execution, plus evidence that two RPR studies, the "113 Study"
and the "115 Study," did not have these flaws and refuted the
bioavailability conclusions of the 6730 Study. MMD countered with expert
testimony supporting the 6730 Study's methodology and attacking the RPR
studies. After weighing this conflicting evidence, the district court
concluded that the 6730 Study is a valid study "conducted by standards
accepted within the scientific community and consistent with FDA
principles."
On appeal, RPR concedes that the district court was free to reject
RPR's evidence attacking the 6730 Study's methodology. But RPR argues that
the results of its two studies refuted the 6730 Study, thereby proving that
MMD's study did not scientifically establish the inferior bioavailability
of Dilacor XR. However, RPR's studies were not that conclusive. The
single-dose 113 Study was more limited in scope and did not necessarily
refute MMD's claims. The 115 Study was not available when MMD began
advertising the results of the 6730 Study, was criticized extensively by
MMD's
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experts, and also showed a reduced bioavailability for Dilacor XR, albeit
not as great as the difference found by the 6730 Study.
After carefully reviewing this evidence, we conclude the district
court's finding that MMD did not falsely advertise the 6730 Study must be
upheld. We do not have a "definite and firm conviction that a mistake has
been made," the clear error standard in Anderson v. Bessemer City, 470 U.S.
564, 573 (1985). We note that Lanham Act liability for "tests prove"
advertising requires proof that the tests are not "sufficiently reliable"
to support the advertised conclusion with "reasonable certainty." To
ensure vigorous competition and to protect legitimate commercial speech,
courts applying this standard should give advertisers a fair amount of
leeway, at least in the absence of a clear intent to deceive or substantial
consumer confusion.
RPR also argues that it was entitled to money damages for MMD's
earlier false advertising. The Lanham Act provides that a successful
plaintiff "shall be entitled" to recover "any damages sustained." 15
U.S.C. § 1117(a). Plaintiff must prove both actual damages and a causal
link between defendant's violation and those damages. See ALPO Petfoods,
Inc. v. Ralston Purina Co., 913 F.2d 958, 968-69 (D.C. Cir. 1990).
"[P]laintiff may not recover if he fails to prove that the defendant's
actions caused the claimed harm." Harper House, Inc., v. Thomas Nelson,
Inc., 889 F.2d 197, 209 (9th Cir. 1989), quoting Otis Clapp & Sons, Inc.
v. Filmore Vitamin Co., 754 F.2d 738, 745 (7th Cir. 1985).
In this case, RPR did not attempt to prove that it incurred increased
costs in countering MMD's false advertisements, one well-established method
of proving Lanham Act damages. See ALPO, 913 F.2d at 969. Rather, RPR
attempted to prove that MMD's false advertising resulted in $40 to $56
million of lost Dilacor XR sales. However, the district court found that
Dilacor XR sales "exceeded [RPR's] initial predictions" and that "Dilacor
XR is as
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well-positioned as should be reasonably expected at this stage in its
product history with or without [MMD's] anti-Dilacor campaigns." These
findings are not clearly erroneous and are directly responsive to RPR's
damage theory. Thus, the district court did not abuse its remedial
discretion in declining to award RPR damages. See Abbott Labs. v. Mead
Johnson & Co., 971 F.2d 6, 16-19 (7th Cir. 1992) (standard of review).
Likewise, because MMD discontinued its earlier false advertising and did
not violate the Lanham Act in advertising the 6730 Study results, the court
did not abuse its discretion in declining to order MMD to conduct
corrective advertising.
III. RPR's Advertising.
The district court found that RPR's advertisements conveyed a false
hidden message encouraging indiscriminate substitution of Dilacor XR for
Cardizem CD. It ordered RPR to engage in corrective advertising regarding
the fact that Dilacor XR is not FDA-approved to treat angina, the need to
monitor and titrate patients who switch from Cardizem CD to Dilacor XR, and
Dilacor XR's food effect. RPR concedes that its advertisements encouraged
physicians to consider the two drugs freely substitutable, and it does not
appeal the order that it must effectively disclose the need to monitor and
titrate patients who switch drugs. But RPR does contend that the district
court erred in ordering corrective advertising disclosing that Dilacor XR
is not approved to treat angina and has a "food effect."
A. Regarding the limited FDA approval issue, RPR notes that it has
truthfully advertised Dilacor XR as approved for the treatment of
hypertension. The district court erred, RPR argues, because a Lanham Act
plaintiff alleging that advertising is false because it conveys a false
implicit message must prove actual consumer confusion, and MMD presented
no such proof. See Johnson & Johnson * Merck Consumer Pharm. Co. v.
Smithkline Beecham Corp., 960 F.2d
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294, 297-98 (2d Cir. 1992). We note that other Second Circuit cases have
said that implicit falsity "should be tested by public reaction," not that
a plaintiff such as MMD must prove confusion by consumer research. Coca-
Cola Co. v. Tropicana Prods., Inc., 690 F.2d 312, 317 (2d Cir. 1982). But
we need not resolve that issue because consumer confusion need not be
proved if advertising is literally false.4
In assessing whether advertising is literally false, "a court must
analyze the message conveyed in full context." Castrol, Inc. v. Pennzoil
Co., 987 F.2d 939, 946 (3d Cir. 1993). Here, the record clearly supports
the district court's finding that RPR's advertisements were literally
false. The court focused on RPR advertisements featuring images such as
two similar gasoline pumps or airline tickets with dramatically different
prices, accompanied by the slogan, "Which one would you choose." The court
found that these ads falsely represented that the two drugs may be
indiscriminately substituted, in effect, a representation that Dilacor XR
"has certain qualities that it in fact does not actually have." Abbot
Labs., 971 F.2d at 14. Because the implicit message was literally false,
the issue became one of remedy -- what corrective advertising would be
appropriate. The district court determined that the false message would
be remedied if RPR adequately explained the differences in the two
products, including the fact that Dilacor XR is not approved to treat
angina. There was no abuse of discretion in adopting that remedy. See
First Bank v. First Bank Sys., Inc., 84 F.3d 1040, 1044 (8th Cir. 1996)
4
Furthermore, MMD presented evidence of consumer confusion.
One physician testified that an RPR representative told him that
RPR's formulation of diltiazem "is the same as Cardizem CD." MMD
produced affidavits from other physicians stating that they had
been told by RPR representatives that the drugs are the same. MMD
also produced RPR physician surveys suggesting that consumers
viewed the two products as interchangeable. Cf. PPX Enters., Inc.
v. Audiofidelity Enters., Inc., 818 F.2d 266, 271 (2d Cir. 1987).
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(standard of review); Pfizer, Inc. v. Miles, Inc., 868 F. Supp. 437, 444
(D.Conn. 1994) (no false advertising when product differences are
explained).
B. Turning to the food effect issue, we agree with RPR that one of
the district court's critical findings is clearly erroneous. The evidence,
particularly RPR's 113 Study, suggests that taking Dilacor XR with food
will increase its overall extent of absorption by about nineteen percent,
whereas taking Cardizem CD with food will decrease its overall extent of
absorption by about thirteen percent. The district court translated that
evidence into the following finding: "within an hour of taking [Dilacor
XR] after eating a high fat meal, a patient will experience a release of
between 19% to 33% of the 24 hour dose." But the evidence addressed the
overall, twenty-four hour extent of absorption, not the amount of product
released during the first hour. Based upon this misinterpretation of the
evidence, the court accused RPR of "callous indifference toward the
individuals ingesting its product" because "[a] patient with a weak heart
who undergoes this quick release of up to 33% of the total daily dosage
within an hour could experience serious health problems."
Although the court's finding of a quick release is not supported by
the record, the evidence does support the general finding of a "food
effect" because the bioavailability of Dilacor XR and Cardizem CD are more
dissimilar if the products are taken during or after a meal. Indeed, FDA
requires that RPR packaging caution consumers that Dilacor XR should be
taken on an empty stomach. The issue then is how the district court's
erroneous finding affects the validity of its order requiring RPR to advise
physicians, pharmacists, and patients of Dilacor XR's food effect.
Rule 65(d) of the Federal Rules of Civil Procedure requires that
"[e]very order granting an injunction . . . shall be specific in terms
[and] shall describe in reasonable detail . . . the act or
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acts sought to be restrained." The Rule "is designed to prevent
uncertainty and confusion on the part of those to whom the injunction is
directed, to avoid the possible founding of contempt citations on an order
that is too vague to be understood, and to ascertain that the appellate
court knows precisely what it is reviewing." Calvin Klein Cosmetics Corp.
v. Parfums de Coeur, Ltd., 824 F.2d 665, 669 (8th Cir. 1987). Particularly
in light of the erroneous finding regarding the nature of Dilacor XR's food
effect, we conclude that this portion of the permanent injunction violates
Rule 65(d) and must therefore be vacated. On remand, MMD may request
additional injunctive relief regarding Dilacor XR's food effect, but it
should advise the district court what specific corrective advertising
disclosures are requested and why such injunctive relief is necessary over
and above the disclosures imposed upon RPR by the FDA.
We vacate one portion of the district court decree: "that Rhone-
Poulenc should take necessary steps to advise sales representatives,
physicians, pharmacists and patients of . . . the food effect associated
with Dilacor XR." In all other respects, the judgment of the district
court is affirmed. RPR's motion to clarify the record on appeal is denied.
A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.
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