A federal court in Los Angeles, California dismissed claims that a subsidiary of PepsiCo. violated a variety of California laws and the federal Magnuson-Moss Warranty Act (“MMWA”) by misrepresenting its no-calorie, vitamin enhanced, flavored water drinks. Hairston v. South Beach Beverage Co., Inc., No. 12-civ-1429-JFW (C.D. Cal. May 18, 2012).

The plaintiff made three specific allegations about Lifewater:

1. He alleged that the labels on SoBe 0 Calorie Lifewater beverages were deceptive because they declared the products to be “all natural” when, in fact, their ingredients are “synthetic or created via chemical processing.”
2. He contended that the use of names such as “MacIntosh Apple Cherry,” “Strawberry Kiwi Lemonade,” and “Black Cherry Dragonfruit” to describe the products’ flavors was potentially misleading because Lifewater does not contain actual fruit or fruit juice.
3. He alleged that the use of common vitamin names such as B12 was misleading because the vitamins added to Lifewater are synthetic or created through chemical processing.

The court determined that federal Food, Drug, and Cosmetic Act, together with implementing regulations promulgated by the Food and Drug Administration, preempted the plaintiff’s claims regarding the defendants’ use of names of fruits to describe the flavors of Lifewater, as well as his claims regarding the use of common vitamin names. With regard to the plaintiff’s claims regarding use on the product label of the term “all natural,” the court observed that “Lifewater does not use the ‘all natural’ language in a vacuum, and, thus, it will be impossible for plaintiff to allege how the ‘all natural’ language is deceptive without relying on the preempted statements regarding fruit names and vitamins.” Moreover, the court concluded that “no reasonable consumer would read the ‘all natural’ language as modifying the ‘with vitamins’ language and believe that the added vitamins are supposed to be ‘all natural vitamins.’” Lastly, the court pointed out that the MMWA does not apply “to any written warranty the making or content of which is otherwise governed by federal law” (quoting 15 U.S.C. § 2311 (d)), and held that, in any event, the Lifewater label did not meet applicable definitions of a written warranty under the MMWA.

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On May 30, 2012, the U.S. Food & Drug Administration (“FDA”) denied a petition filed by the Corn Refiners Association to authorize the use of “corn sugar” as an alternate common or usual name for high fructose corn syrup (“HFCS”). See Response to Petition from Corn Refiners Association to Authorize “Corn Sugar” as an Alternate Common or Usual Name for High Fructose Corn Syrup. Among other things, the Association contended that many consumers are confused by the name “high fructose corn syrup,” and incorrectly believe that HFCS is significantly higher in calories, fructose, and sweetness than sugar. In denying the petition, the FDA explained that its “regulatory approach for the nomenclature of sugar and syrups is that sugar is a solid, dried, and crystallized food; whereas syrup is an aqueous solution or liquid food.” The FDA reasoned that,

[T]he use of the term “corn sugar” for HFCS would suggest that HFCS is a solid, dried, and crystallized sweetener obtained from corn. Instead, HFCS is an aqueous solution sweetener derived from corn after enzymatic hydrolysis of cornstarch, followed by enzymatic conversion of glucose (dextrose) to fructose. Thus, the use of the term “sugar” to describe HFCS, a product that is a syrup, would not accurately identify or describe the basic nature of the food or its characterizing properties. As such, using the term “sugar” would not be consistent with the general principles governing common or usual names under 21 CFR 102.5.

The FDA also denied a request by the Association to amend both the standard of identity for dextrose monohydrate (21 CFR 168.111) to eliminate “corn sugar” as an alternative name, and the GRAS affirmation regulation for corn sugar (21 CFR 184.1857) to replace the term “corn sugar” with “dextrose.”

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In a notice published yesterday in the Federal Register, the Secretary of the U.S. Department of Health and Human Services delegated to the Food and Drug Administration authority “[t]o determine that any clinical trial information was not submitted as required under 42 U.S.C. 282(j) or was submitted but is false or misleading in any particular and to notify the responsible party and give such party an opportunity to remedy non-compliance by submitting required revised clinical trial information not later than 30 days after such notification.” FR Doc. 2012-2359. Context for this decision is provided at FDA Given New Authority to Oversee Clinical Trials Data Reporting, Regulatory Focus (Sept. 25, 2012).

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On November 21, 2012, the U.S. Federal Trade Commission filed in the U.S. District Court for the Eastern District of Pennsylvania an amicus brief contending that minor, non-therapeutic changes to branded pharmaceutical products may violate U.S. antitrust law if the changes harm generic competition. Amicus Brief, Mylan Pharmaceuticals, Inc. v. Warner Chilcott Public Limited Co., No. 12-3824 (E.D. Pa.).

The FTC states in its brief that name brand pharmaceutical companies may attempt to block generic competition and preserve their monopolies by making modest reformulations of patented drugs that offer little or no therapeutic advantages. For example, before its original drug patent expires, a brand drug company may withdraw its original product from the market, inducing consumers to switch to the reformulated brand drug. This practice, known as “product switching” or “product hopping,” can freeze out generic competitors and enable the brand company to maintain a monopoly.  The FTC explains that,

Once the original version of the brand product is less available or more expensive, physicians will stop writing prescriptions for it. Because the prescription must contain, among other things, the same dosage and form as the generic for a pharmacist to substitute it for the brand, a product-switch will effectively eliminate substitution at the pharmacy counter and thus meaningful generic competition.

In addition, “If the brand manufacturer reformulates its product before a generic receives FDA approval, the generic’s only practical option is to go back to the drawing board and reformulate its own product to be bioequivalent to the brand reformulation and thus substitutable at the pharmacy. ”

According to the FTC, the success of “product-switching” “does not depend on whether consumers prefer the reformulated version of the product over the original, or whether the reformulated version provides any medical benefit.” The exclusion of competition under these circumstances, the FTC says, can violate antitrust law. The Commission cited for this proposition United States v. Microsoft, 253 F. 3d 34 (D.C. Cir. 2001), where the court expressly held that a monopolist’s product change can violate the antitrust laws when the change is made for anticompetitive purposes and with anticompetitive effect.

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On February 11, 2013, by a vote of 99 in favor and 1 against, the Montana House of Representatives passed a bill that would allow law enforcement officers in the state to issue permits authorizing the salvaging for human consumption of wild animals accidentally killed by motor vehicles. Montana HB 247. In tongue-in-cheek remarks before the chamber, Representative Steve Lavin introduced the measure as “the first true cleanup bill of this session,” and noted that the proposed law is “affectionately known as the ‘Roadkill Bill.’”

HB 247 provides in part that, “A peace officer may issue permits to applicants for the purpose of salvaging antelope, deer, elk, or moose that have been accidentally killed as a result of a vehicle collision.” As explained by Representative Lavin (who also serves as a state highway trooper), many large game animals are struck by automobiles each year. It has been a practice of many food banks that serve the poor to collect freshly killed animals, clean and dress them, and serve them as food for needy families. Technically, this practice is prohibited by Montana law. HB 247 would legalize such salvage.

The only vote against the bill came from Bozeman Representative JP Pomnichowski, who cited public health reasons for her opposition.

With the House’s approval of HB 247, the bill moves to the state Senate.

An ABC News story on the Montana bill points out that Georgia, Colorado, Illinois, and Indiana already have similar legislation in effect. Montana Bill Would Legalize Roadkill Dining, ABC News (Feb. 21, 2013).

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In American Meat Institute, Inc. v. United States Department of Agriculture, No. 13-5281 (D.C. Cir. Mar. 28, 2014), the U.S. Court of Appeals for the District of Columbia Circuit rejected industry challenges to a U.S. Department of Agriculture rule that in most cases requires retailers of “muscle cuts” of meat (meat that is not ground) to list the countries of origin and production steps—born, raised or slaughtered—that occurred in each country. The rule also discontinued a prior USDA practice that permitted the use of identical labels on commingled cuts from animals of different origins that were processed on the same day.

Among other things, the DC Circuit acknowledged that the USDA rule implicated the retailers’ constitutionally protected right to engage in commercial speech. However, the court characterized the U.S. Supreme Court’s decision in Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626, 651 (1985), as holding that “commercial speech warrants protection mainly due to its information-producing function,” and thus “a commercial actor has only a ‘minimal’ First Amendment interest in not providing purely factual information with which the actor does not disagree.” For this reason, the Supreme Court held that mandatory disclosures do not violate an advertiser’s First Amendment rights, “as long as disclosure requirements are reasonably related to the State’s interest in preventing deception of consumers.”

Applying the standard set forth in Zauderer, the DC Circuit found that the federal government had a legitimate interest in imposing the country-of-origin rule, and thus the rule did not infringe the industry’s First Amendment rights. The court reasoned that–

What then are the government interests here? AMI argues that the rule merely satisfies consumers’ curiosity. But we can see non-frivolous values advanced by the information. Obviously it enables a consumer to apply patriotic or protectionist criteria in the choice of meat. And it enables one who believes that United States practices and regulation are better at assuring food safety than those of other countries, or indeed the reverse, to act on that premise…. We cannot declare these goals so trivial or misguided as to fall below the threshold needed to justify the “minimal” intrusion on AMI’s First Amendment interests.

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A U.S. federal jury convicted three former food company executives of several crimes relating to a 2008-09 outbreak of Salmonella infections resulting from the production and distribution of adulterated peanut butter. See Verdict Form, United States of America v. Parnell, No.  1:13-CR-12 (M.D. Ga. Sept. 19, 2014). The jury in Albany, Georgia found Stewart Parnell, one-time owner of the now-defunct Peanut Corporation of America (“PCA”), guilty of 67 criminal counts for offenses including mail and wire fraud, conspiracy, obstruction of justice, and the introduction of adulterated and misbranded food into interstate commerce with fraudulent intent. The jury also convicted Stewart’s brother, Michael Parnell, and Mary Wilkerson, a former quality control manager at one of PCA’s plants, of a smaller number of related crimes.

Although the defendants were not charged with having caused any deaths, hundreds of cases of sickness and nine deaths have been attributed to the Salmonella outbreak. See Unprecedented: Peanut Corp. executive convicted for deadly salmonella outbreak, Q13Fox.com (Sept. 19, 2014). Authorities identified a leaky roof and filthy conditions at a PCA manufacturing facility, as well as the presence of water in what should have been a dry process, as reasons for the contamination of PCA’s products with the deadly bacterium. According to prosecutors, the Parnell brothers employed fake laboratory tests to speed up the shipment of their products and distributed peanut butter and peanut paste despite their knowing that it was tainted with Salmonella.

Stewart Parnell could face more than 30 years in prison for the crimes of which he was convicted.

 

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Louisiana’s Secretary of Health, Dr. Rebekah Gee, is attempting to persuade politicians to

support the use of 28 USC § 1498, a federal statute that allows the federal government intentionally to infringe patents, to arrange for production of Gilead Sciences’s patented hepatitis C drugs. Beth Mole, There’s a federal law to lower drug prices—and Louisiana may just use it, ArsTechnica (May 4, 2017).

The statute provides, in part:

Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture.

In the midst of high hepatitis C infection rates in the US, Gilead’s Sovaldi and Harvoni treatments can cost more than US$1,000 per pill. If the state succeeds in invoking the statute, a US government contractor could manufacture generic versions and be immune from patent infringement liability. Gilead could sue the US government, but could not obtain an injunction and would be entitled only to a “reasonable royalty.”

28 USC § 1498 has been the subject of several recent rulings in which the US Court of Appeals for the Federal Circuit has upheld a broad reading of the protection afforded by the law to government contractors. See, e.g., Astornet Technologies, Inc. v. BAE Systems, Inc., 802 F.3d 1271 (Fed. Cir. 2015);  IRIS Corp. v. Japan Airlines Corp., 769 F.3d 1359 (Fed. Cir. 2014); and Zoltek Corp. v. United States, 672 F.3d 1309 (Fed. Cir. 2012).

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