Lanham Act Claim Should Await FDA Ruling On Proper Labeling
SCHERING-PLOUGH HEALTHCARE PRODUCTS v. SCHWARZ PHARMA (October 29, 2009)
Schering-Plough makes an over-the-counter oral laxative which it sells under the trade name "MiraLAX." Its chemical name is polyethylene glycol 3350. Four other companies sell polyethylene glycol 3350 as a generic, prescription medication. The FDA requires a warning on the over-the-counter version that it should not be used for more than seven days. The FDA also requires that a generic drug be labeled the same as the original drug and be bioequivalent to the original drug. Schering-Plough brought a Lanham Act action against the defendants. It alleges that the defendants' labels stating that the drug is sold by prescription only are false, in violation of the Act. Meanwhile, the FDA is conducting proceedings to determine whether the defendants' products are mislabeled. The district court dismissed Schering-Plough's suit without prejudice, noting that it could be refiled, if appropriate, after the conclusion of the FDA proceedings. Schering-Plough appeals. The defendants cross appeal, seeking a dismissal with prejudice.
In their opinion, Judges Posner, Flaum and Rovner affirmed. The Court first addressed its jurisdiction, given that the suit was dismissed without prejudice below. The Court recognized some decisions in the past that have suggested that a dismissal without prejudice is not appealable unless the plaintiff is unable to bring a later suit. Focusing on the actual holdings in those cases as well as other authority, the Court concluded that a dismissal without prejudice is appealable unless the defect is immediately curable. On the merits, the Court looked to the provisions of the Lanham Act and the Food, Drug, and Cosmetic Act. It noted that the statutes should be read so as not to conflict with each other and to be given as much effect as possible. For example, the FD&C Act should not be read to prohibit a disclaimer that would correct a misinterpretation on which a Lanham Act claim is based. The record in the case did not make it clear, however, what the Lanham Act remedy should be. Schering-Plough was not very helpful in its suggestions. In addition, the Court believed that any change in labeling adopted by the defendants would have to be approved by the FDA. The Court therefore agreed with the district court that the FDA should be allowed to consider the misbranding issue before the Lanham Act suit is allowed to proceed. Although the Court affirmed the lower court's dismissal without prejudice, it also commented briefly on the viability of the Lanham Act claim. It questioned whether Schering-Plough's reliance on the "literal falsity" doctrine was proper in the context of the case.
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Barbara Wahl accumulated a small balance on her credit card. When she stopped using it, the balance was less than $100. Unfortunately, Wahl incurred some huge medical bills and never paid off the credit card. By the time the card issuer turned it over to Midland Credit Management, Inc. (“Midland”) in 2005 for collection, the balance (with interest and late fees) had risen to $1149.09. In February 2005, Midland sent a letter to Wahl and offered to settle for a 25% discount. When Wahl did not accept the offer, Midland sent letters again in April and August. In each of those letters, Midland included an itemization of the amount owed. In each, it referred to the $1149.09 as the “principal balance” and the rest as “accrued interest.” Wahl filed a class action under the Fair Debt Collection Practices Act (“FDCPA”). She alleged that Midland’s inclusion of interest charged by the card issuer before the debt was purchased by Midland as part of the stated “principal balance” was false and a violation of the FDCPA. The district court certified the class and granted summary judgment to Midland. Wahl appeals.