Payne & Fears LLP Obtains Significant Win on Behalf of Compounding Pharmacy Client Against Pharmaceutical Giant Allergan
On May 16, 2019, a federal jury handed down a huge win for a compounding pharmacy, Imprimis Pharmaceuticals, Inc., in its defense of efforts by pharmaceutical giant Allergan USA, Inc. to put it out of business.
On September 7, 2017, Allergan sued Imprimis, a San Diego company operating compounding pharmacies that sell unique, compounded drugs in all 50 states. Allergan alleged that Imprimis had violated the Lanham Act and other laws by making false statements in its product advertisements. Allergan sought more than $7,000,000.00 in direct damages and additional millions of disgorged Imprimis profits.
A federal jury in the Central District of California returned a verdict in Imprimis’ favor, awarding Allergan only $48,500.00 on its damages claim and none of Imprimis’ profits. This is a noteworthy win for Imprimis and the doctors relying on its drugs, and will have major implications throughout the pharmaceutical industry.
Imprimis is a pharmaceutical company dedicated to delivering high-quality and innovative medicines to physicians and patients at affordable prices. It is pioneering a new commercial pathway in the pharmaceutical industry, using compounding pharmacies for the formulation and distribution of high quality, proprietary, and affordable compounded formulations—formulations that are supported by the clinical experience of physicians and their patients.
Allergan’s trial strategy was novel. The Food and Drug Administration (“FDA”) recognizes that compounded drugs “can serve an important medical need for certain patients.” FDA regulates compounding pharmacies under the Federal Food, Drug, and Cosmetic Act (“FDCA”). The FDCA does not provide a private right of action. Allergan employed its Lanham Act false advertising claim in an attempt to essentially create a private cause of action to enforce the FDCA.
Allergan’s theory—one of great interest throughout the pharmaceutical industry—tests the extent to which a pharmaceutical giant can stifle competition from an upstart compounding pharmacy. Allergan sought multiple millions of dollars in damages, a number that would have potentially meant that Imprimis could no longer sell its low-cost, specialized drugs to the doctors and patients who depend on them. In a huge victory for Imprimis (and the doctors who use compounded drugs in their practices and compounding pharmacies in general), the federal jury rebuffed Allergan’s theory only awarding it $48,500.00 in damages and none of Imprimis’ profits.
Imprimis’ founder and CEO, Mark Baum, had this to say about the verdict: “This was a tremendous victory for ophthalmologists, optometrists and patients. Allergan’s relentless aggression in this case, besides wasting many millions of its shareholders’ dollars in lawyer’s fees, had two unintended consequences: (1) it helped further clarify the legal path for our business, and (2) it caused thousands of new ophthalmologist and optometrist customers to learn about and ultimately become ImprimisRx customers. That said, it was a brutal fight – a true David versus Goliath story. Our team didn’t back down though; we faced the Allergan Goliath – and ultimately – a jury stated very clearly that Allergan would not get away with bullying a competitor and that Americans should have access to the affordable medicines ImprimisRx is dedicated to producing.”
The Imprimis trial team consisted of Keith J. Wesley of Browne George Ross LLP and Daniel L. Rasmussen of Payne & Fears LLP, with substantial contribution from David A. Grant of Payne & Fears and Carl A. Roth and David D. Kim of Browne George Ross. According to both trial counsel, Mr. Grant’s assistance before and during the trial was “invaluable.” Mr. Rasmussen described this verdict as: “A substantial win for a great company, great doctors, and the compounding pharmaceutical industry in general.”
The case is Allergan USA, Inc. v. Imprimis Pharmaceuticals, Inc., case number 8:17-cv-01551, in the U.S. District Court for the Central District of California, before the Honorable David Carter.