Court finds veracity of study claiming effectiveness of Prevagen is an issue for trial

A single study of effectiveness is not sufficient evidence to preclude claims that a product does not produce the results claimed in marketing and on the label.

A magistrate judge found that a study purporting to show the effectiveness of a dietary supplement intended to boost memory may be relevant to a manufacturer’s defense that the product’s marketing is false or misleading, but it does not automatically preclude such claims. The judge noted that the study was extrinsic evidence and its reliability was not an issue to be taken up in a motion to dismiss and recommended that the district court deny the motions (Engerat v. Quincy Bioscience, LLC, October 8, 2019, Hightower, S.).

Product claims. Quincy Bioscience, LLC (Quincy) manufactures, markets, sells and distributes Prevagen, which is a dietary supplement made with the protein apoequorin. Prevagen advertising and labeling claim that the product supports a “sharper mind,” “clearer thinking,” and “healthy brain function” and will “improve memory within 90 days.” Three consumers brought a class action lawsuit against Quincy alleging claims under the Texas Deceptive Trade Practices Act, breach of express and implied warranties, and a violation of the Magnuson-Moss Warranty Act. The consumers allege that the advertisements regarding Prevagen were false and misleading and designed to dupe customers into purchasing a product that has no effect on the brain.

Apoequorin. According to the complaint, Prevagen’s only active ingredient, apoequorin, is a protein that when digested is broken down into amino acid constituent parts. As a result, Prevagen never reaches the bloodstream as apoequorin and the broken down amino acids are no different than any other protein such as those found in a regular diet, which do not improve memory or brain function. Further, if Prevagen did somehow enter the bloodstream as apoequorin, it cannot pass through the blood-brain barrier and therefore can have no effect on brain function. The consumers contend that there has never been an independent, randomized, controlled clinical trial subject to a peer review process that supports the products claims and that there is no scientific basis for the representations made about the product.

Extrinsic evidence. Quincy claims that a clinical drug trial was done on Prevagen that is made available on the product’s website, and on which the advertising claims are based. Based on this study, Quincy argued that all of the claims asserted should fail because the study demonstrates that the marketing statements were truthful and fully substantiated. The judge held that in a motion to dismiss, it can only look to the facts set forth in the complaint, the documents attached to the complaint, and matters of which judicial notice may be taken. Here, the consumers may have mentioned the study in their original complaint, however they never mentioned it in or attached it to their First Amended Complaint which supersedes the original complaint.

Additionally, the public records that a court generally may take judicial notice of, include things like government-provided records. A commercial website may be available to the public, but it is not a public record. Finally, the reliability of the study is a disputed issue of fact in the case and therefore, not appropriate for determination in a motion to dismiss. Therefore, the judge found that the study was extrinsic evidence that could not be considered and the argument that the claims should be dismissed based on the study were meritless.

Failure to plead. Quincy made the alternative argument that an element of each of the claims requires the consumers to show that the product did not comply with a promise made in the marketing or labeling or that the marketing or labeling were false or misleading. Quincy argued that the consumers failed to plead these claims because they could not show that the labels were false or misleading or the product didn’t live up to the claims made on the label, in light of the study. The judge noted again that it could not rely on extrinsic evidence when considering a motion to dismiss and the reliability of the study is a fact issue inappropriate at this stage. It therefore held that the motions to dismiss based on this theory should be denied.

Reconsideration of Honey Bunches of Oats false advertising claims denied

A court found that consumers failed to show why a reasonable consumer would believe Honey Bunches of Oats was sweetened primarily by honey.

In a memorandum opinion and order, a court denied consumers’ motion for reconsideration of their claims that Post Consumer Brands, LLC used deceptive packaging and advertising that led consumers to believe that Honey Bunches of Oats was sweetened primarily by honey. The court found that emphasizing the imagery of bees and honey on a product that contained honey and tasted like honey, was not deceptive (Lima v. Post Consumer Brands, LLC, October 2, 2019, Burroughs, A.).

Labeling. Two consumers purchased Honey Bunches of Oats with Almonds under the belief that the cereal was sweetened exclusively or primarily with honey. The consumers relied on television commercials and the product branding and packaging that emphasized the presence of honey. The consumers claimed that the packaging and marketing led them to expect that honey was a prominent ingredient. The consumers did not look at the ingredient list, which disclosed that honey is the cereal’s fifth most prominent sweetener. The consumers filed a putative class action against Post, alleging that the advertising and packaging of Honey Bunches of Oats was deceptive. Post filed a motion to dismiss and the court granted the motion (see Health Law Daily, Aug. 16, 2019). The consumers then filed a motion for reconsideration.

Consumer protection claims. The consumers argued that whether Post’s packaging was ambiguous was a determination of law that should not have been made at the motion to dismiss stage. They further argued that the issue of whether the consumers were reasonable to think that honey was the predominant sweetener should have been left to the jury. The court noted that it did not consider the factual matter of whether the consumers were misled by the packaging, but instead considered whether the allegations made it plausible that on a full factual record, a factfinder could reasonably regard the label as having the capacity to mislead.

The consumers further argued that they should not have had the burden of pleading why they concluded that honey was a sweetener, as opposed to a flavor. The court held that it was permissible for Post to use the images of honey and bees because honey was a characterizing flavor and the cereal included honey as an ingredient. Had the cereal not contained honey, then Post would have been required to include sufficient cautionary language explaining that it was naturally or artificially flavored. Because the cereal did contain honey, the burden shifted to the consumers to plead why the packaging and marketing would lead a consumer to believe that the cereal was not only honey flavored and contained honey, but also that honey was the primary sweetener. The consumers failed to plead why they believed honey was a sweetener and not only a flavor.

Express warranty claims. The consumers argued that the court failed to consider that an express warranty can be created through the packaging’s words and images. The court noted that it was explicit in its analysis of the use of the Honey Bunches of Oats brand name and the imagery on the packaging to determine whether Post made an express warranty. The court held that the consumer failed to demonstrate that the court’s analysis depended on a misinterpretation of law.

Request for leave to replead. The consumers asked the court to give them leave to amend to include a survey the consumers conducted relating to consumer impression of the packaging at issue. The consumer pointed to their opposition to the motion to dismiss, which contained a request that “if the Court believes any aspect of Post’s motion should be granted for a reason that has not previously been subject of amendment, Plaintiffs request leave to amend.” The court cited the circuit court in finding that “a passing request for contingent leave to file an amended complaint, made in opposition to a motion to dismiss, is insufficient, in and of itself, to bring a post-judgement motion for reconsideration within the orbit” of the requirement that courts freely give leave to amend.

FDA moving to expand access to experimental drugs

The FDA is taking steps to expand patients’ access to drugs that have not yet been approved for marketing, encouraging manufacturers to exclude fewer people from clinical trials and to publicize their policies about accessing drugs outside of clinical trials, according to a report from Government Accountability Office (GAO Report, GAO-19-630, September 9, 2019).

Clinical trials

Clinical trials often exclude patients by geography, age, or medical condition, and many stakeholders believe that the eligibility criteria are too narrow and exclude patients who are likely to be treated once a drug is approved, according to the GAO. Two recent laws have encouraged expanded access to pre-approved, or “investigational” drugs, the Federal Right to Try Act of 2018, which allows terminally ill patients and their doctors to request access to drugs without an FDA review process, and the FDA Reauthorization Act of 2017, which required the FDA to discuss and report on clinical trial inclusion and exclusion, and requires the GAO to report FDA’s actions to expand access to investigational drugs.

FDA efforts

The FDA has made efforts to make sure that historically excluded classes of people, like children, pregnant women, or patients with liver disease, can gain access to “investigational” drugs that have not been approved for marketing. The agency has met with stakeholders, reported on its meetings, and issued guidance on cancer drugs and on clinical trials more generally.

FDA issued four new draft guidance documents and one finalized guidance document in March 2019, aimed at expanding eligibility for cancer drug trials. Collectively, the guidance recommends that manufacturers attempt to include certain patient populations that have typically been excluded from participation, including children and adolescents; patients with HIV, hepatitis B or hepatitis C virus; patients with brain cancer; and patients with kidney, heart, or liver diseases. Rather than excluding these patients outright, FDA’s new guidance recommends ways to safely include them in trials, such as allowing testing on HIV-positive patients if they have not had an AIDS-defining infection within the past 12 months.

The FDA has more recently issued draft guidance that goes beyond cancer trials, recommending in June that manufacturers examine whether exclusion criteria are necessary to ensure safety or to achieve the study’s objectives, and avoid any unnecessary restrictions to a study’s population.

Despite the FDA’s efforts, drug manufacturers have not generally moved to expand eligibility for clinical trials. Only two out of ten surveyed by the GAO indicated that they had broadened their clinical trial eligibility criteria or intended to do so, while other drug manufacturers said that they had tried other ways to expand access to trials, such as reimbursing travel and hotel costs, or taking advantage of decentralized trials that took place in retail health clinics and patients’ homes, according to the report.

Beyond clinical trials, patients can also request access to investigative drugs through the FDA’s expanded access program or the federal Right to Try Act, and the FDA is taking steps to raise awareness about those programs. While the FDA has tried to use both programs to increase access to investigative drugs, it can only go so far, since neither program compels drug makers to provide access outside of a clinical trial.

The GAO received mixed feedback on the FDA’s program. Some physician and patient advocacy groups criticized it as too complex and burdensome, while others pointed out that the FDA approves most requests—99 percent in 2017—and that manufacturer’s approval is a bigger factor in preventing patient access.

The FDA has tried to simplify and improve the expanded access process, simplifying forms and enlisting an outside partner to help physicians and patients find drug manufacturers’ expanded access policies, according to the report. The FDA has also started a pilot program to assist oncologists with requests for investigative drugs, and created a streamlined process for institutional review board approval, both of which have been well-received by stakeholders.

The newer Right to Try Act also received mixed reviews in the GAO’s study, with some physicians and medical ethicists questioning whether the program, which eliminates FDA review, could compromise patient safety without solving the more common obstacle to improving access, which is manufacturers’ cooperation.

Drug manufacturers remain skittish about the FDA’s handling of adverse events that occur under the FDA’s expanded access program, despite recent guidance saying that such events have not prevented FDA from approving any drug. Two out of ten drug manufacturers said that recent the FDA guidance did not quell their concerns, and four in ten said that manufacturers’ concerns about the issue “may never be fully resolved.” FDA officials, for their part, told the GAO that data from the expanded access program has been commonly used to support drug approvals, and only very rarely has led to a clinical hold.

The GAO also tracked drug makers’ efforts to communicate with patients about access to investigative drugs, finding that 23 of 29 manufacturers surveyed communicated their position to potential patients. Nineteen said they would consider requests for investigational drugs outside of clinical trials, while four said they would not consider requests, with two citing safety concerns. Most of the manufacturers willing to accept requests included an estimated time frame for responses, and five mentioned specific drugs for which they would consider requests.

CVS-Aetna merger approved, subject to divestiture of PDP business

The federal district court in the District of Columbia has concluded that the proposed consent judgment allowing the merger of CVS Health Corporation and Aetna, Inc. is in the public interest. The merger may go forward under the condition that CVS divest Aetna’s individual Medicare prescription drug plan (PDP) business to WellCare Health Plans, Inc. The court considered objections to the merger raised by industry, consumers, and states, and concluded that the divestiture will effectively remedy the harm to the PDP market and will not be rendered ineffective due to the proposed judgment’s failure to address effects in markets adjacent to the PDP market (U.S. v. CVS Health Corporation, September 4, 2019, Leon, R.).

In response to the proposed merger between CVS and Aetna, the United States simultaneously filed a complaint and a proposed consent judgment in 2018. Under the terms of the proposed consent judgment, CVS would divest Aetna’s individual Medicare prescription drug plan (PDP) business to WellCare Health Plans, Inc. A number of parties including members of industry, consumer groups, and state regulatory bodies (amici) opposed the proposed consent judgment and filed briefs stating their concerns. As part of its review under the Tunney Act, the court conducted a hearing with witnesses from parties and amici.

The court concluded that the proposed consent judgment is in the public interest, although it did reject the government’s assertion that the court may only consider harms alleged in the complaint. The amici briefs raised three primary objections to the merger. First, that Aetna’s divestiture to WellCare will not effectively remedy the harm to the PDP market, because the divestiture leaves the PDP market overly concentrated and WellCare will not be as strong a competitor in the PDP market as Aetna was. On this point, the court found the evidence from CVS and the Government to be more persuasive. That evidence included testimony that the PDP market is already highly competitive, because plans can be easily compared, and the market is only moderately concentrated. The moderate concentration in the PDP market has neither prevented WellCare from competing in the market, nor prevented price competition from driving premium prices down, in recent years.

Amici also argued that the proposed final judgment’s failure to address effects in markets adjacent to the PDP market will undercut the effectiveness of the divestiture remedy and harm the public. For example, CVS could raise the price of its pharmacy benefit manager (PBM) services when selling the services to health insurance competitors. Such an action could threaten the success of the proposed divestiture remedy because WellCare, which both competes against CVS in the PDP market and contracts with CVS for PBM services, would be vulnerable to such a tactic. But CVS presented more persuasive evidence that substantially undermines this theory. Rival PBMs try to underbid CVS and CVS’s PBM oftentimes competes against its own customers because health insurance companies can move PBM services in house if they consider CVS’s price for contract services too high. That evidence strongly suggests that, if CVS were to raise its PBM prices, customers like WellCare could simply switch to a less expensive PBM or stop contracting for those PBM services altogether.

Finally, amici argued that the proposed final judgment without modification will harm HIV and AIDS patients in need of affordable, quality healthcare. But the court concluded that the record did not establish that the judgment will likely result in CVS gaining the ability to steer patients away from their current healthcare providers (such as the AIDS Healthcare Foundation). The Foundation uses a different PBM and maintains its own pharmacies, therefore it is unlikely that CVS will be likely to steer patients away from the Foundation.

In the Department of Justice press release announcing the settlement, Assistant Attorney General Makan Delrahim of the Antitrust Division expressed pleasure with the decision, noting that the judgment provides a “comprehensive remedy” that “protects seniors and other vulnerable customers of individual PDPs from the anticompetitive effects that would have occurred if CVS and Aetna had merged their individual PDP businesses.”

American Antitrust Institute (AAI) statement. “AAI strongly disagrees with the merits of the court’s opinion,” said AAI President Diana Moss. “On most points, the court simply accepted piecemeal evidence introduced by the DOJ and CVS. The opinion discounts the showing by amici that the remedy will fail to preserve competition in PDP markets and that the merger raises significant vertical concerns ignored by the DOJ in its complaint. The opinion’s statement that ‘[N]otwithstanding CVS’s significant market share, the evidence showed that CVS must compete vigorously to retain its PBM customers’ is divorced from sound economics.”