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Gustavsen v. Alcon Laboratories, Inc.

United States Court of Appeals, First Circuit

August 27, 2018

ROBERT GUSTAVSEN; JOSEPH CUGINI; DEMETRA COHEN; JACKIE CORBIN; LEE WILBURN; MARY LAW; CECILIA BRATHWAITE, Plaintiffs, Appellants,
v.
ALCON LABORATORIES, INC.; ALCON RESEARCH, LTD.; FALCON PHARMACEUTICALS, LTD.; SANDOZ, INC.; ALLERGAN, INC.; ALLERGAN USA, INC.; ALLERGAN SALES, LLC; PFIZER, INC.; VALEANT PHARMACEUTICALS INTERNATIONAL, INC.; BAUSCH AND LOMB, INC.; ATON PHARMA, INC.; MERCK & CO., INC.; MERCK, SHARP & DOHME (I.A.) CORP.; PRASCO, LLC; AKORN, INC., Defendants, Appellees.

          APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Mark L. Wolf, Senior U.S. District Judge]

          Leah M. Nicholls, with whom Public Justice, P.C., Richard S. Cornfeld, Law Office of Richard S. Cornfeld, John C. Simon, Kevin M. Carnie, Jr., The Simon Law Firm, P.C., Kenneth J. DeMoura, DeMoura Smith LLP, Emily Lisa Perini, Perini-Hegarty & Associates, P.C., and Brian Wolfman were on brief, for appellants.

          Gregory E. Ostfeld, with whom David G. Thomas, Michael Pastore, Christiana Jacxsens, Greenberg Taurig, LLP, Peter Simshauser, Skadden, Arps, Slate, Meagher & Flom LLP, Robyn E. Bladow, Austin Norris, Kirkland & Ellis LLP, Joseph P. Crimmins, Posternak Blankstein & Lund LLP, John M. Kilroy, Jr., J. Santon Hill, Polsinelli PC, W. Scott O'Connell, Nixon Peadoby LLP, James P. Muehlberger, Lori A. McGroder, Shook, Hardy & Bacon LLP, Stephen G. Strauss, Bryan Cave LLP, David J. Volkin, Law Offices of David J. Volkin, David B. Chaffin, and White and Williams LLP were on brief, for appellees.

          Jeffrey S. Bucholz, Paul Alessio Mezzina, King & Spalding LLP, Peter Tolsdorf, and Manufacturers' Center for Legal Action, on brief for American Tort Reform Association, The Chamber of Commerce of the United States of America, The National Association of Manufacturers, and Pharmaceutical Research & Manufacturers of America, amici curiae.

          David R. Geiger, Kristyn M. DeFillip, and Foley Hoag LLP, on brief for Product Liability Advisory Council, Inc., amicus curiae.

          Before Thompson, Kayatta, and Barron, Circuit Judges.

          KAYATTA, CIRCUIT JUDGE.

         Our disposition of the merits of this appeal turns on a single question: Can manufacturers of prescription eye drops change the medication's bottle so as to alter the amount of medication dispensed into the eye without first getting the FDA's approval? Finding that federal law requires prior approval for such a change, we hold that state law claims challenging the manufacturers' refusal to make this change are preempted. Our reasoning follows.

         I.

         Because this appeal comes to us following the district court's grant of a motion to dismiss, we draw the facts from the operative complaint. SEC v. Tambone, 597 F.3d 436, 438 (1st Cir. 2010) (en banc).

         Defendants in this case are companies engaged in the manufacturing, marketing, and distribution of both brand name and generic prescription eye drops. These drops treat a multitude of ailments, including glaucoma, allergies, infections, inflammation, and pre- and post-operative conditions. The eye drop solutions are sold in plastic bottles shaped at one end to form a plastic dispenser. To use the eye solution, consumers must squeeze or tap the bottle, emitting a drop of solution directly into the eye. Consumers cannot dispense less than one drop at a time. And the dimensions of the bottle's dispenser, rather than any factor under human control, determine the size of each drop. Specifically, the complaint explains, the volume of the drop dispensed varies based on the "inner diameter or hole and the outer diameter of the tip" of the dispenser. The bottles do not disclose the size of the eye drops, nor do they reveal an estimate of the number of drops or doses contained in each bottle.

         Plaintiffs complain that defendants deliberately designed their dispensers to emit unnecessarily large drops, on the order of 24 to 52 microliters. This ploy, plaintiffs say, forces patients to waste medication, to their detriment and to defendants' gain. Plaintiffs marshal a body of scientific literature to support their argument. The scientific consensus, they say, is that the optimal size of drops rests between 5 and 15 microliters. The reason is a matter of human anatomy. The fornix, which is the area between the eye and the lower eyelid, is only capable of absorbing a small portion of the unnecessarily large drops dispensed by defendants' bottles.

         All manufacturers of prescription eye drops, plaintiffs say, engage in this practice; there is no prescription eye solution on the market that dispenses drops that are not substantially larger than 15 microliters. Plaintiffs do not allege, however, that this industry standard is the result of conspiracy, or that defendants otherwise acted in concert. Rather, they allege that defendants "separately engaged in" the challenged conduct. And that conduct, plaintiffs allege, harms patients in two ways.

         First, it costs patients money. If the bottles dispensed smaller drops, then each bottle would deliver more doses, and patients would be able to purchase fewer bottles over any set amount of time. By comparing the number of bottles a patient would use if the bottles dispensed 15 microliter doses against the number of bottles each patient is now required to purchase, plaintiffs calculate that a patient, on a yearly basis, could save upwards of $500, depending on the brand and type of solution used.

         These calculations naturally rely on an assumption that a manufacturer would not substantially increase the price of a bottle that dispensed smaller drops. Support for this assumption in the complaint comes in two forms. Plaintiffs point out that defendants currently price the various sized bottles proportionate to their volume. A bottle twice the size costs approximately twice as much. The inference they would have us draw is that, if only the drop size were to change but the volume of solution in the bottle were to stay consistent, the price of the bottle would stay constant too. Plaintiffs also point to various statements in academic studies that draw a connection between the drop size and cost to plaintiffs. For example, in a study published by Allergen (one of the defendants here), the authors say that "a smaller drop size would mean that more doses could be dispensed from each bottle of medication, providing cost savings to patients and managed care providers." They also allege that, following a study by scientists employed by Alcon (another defendant here) that concluded that 16 microliter drops were as effective as 30 microliter drops, Alcon's top marketing executive said that Alcon would not make the change to its bottles because "patients would use the bottles longer and Alcon would therefore sell less product and make less money."

         The second alleged impact on patients is physical. Excess eye drops that stream down the cheek can cause allergies and pigmentation. The excess drops that enter the bloodstream do so without first going through metabolic inactivation in the liver. And without the liver's processes, say plaintiffs, the eye solution can lead to decreased cardiovascular response to exercise, lowered blood pressure, and emotional and psychiatric side effects. Although plaintiffs allege an increased risk of these consequences, they do not allege that any named plaintiff did, in fact, experience any such side effect.

         Armed with these grievances, the named plaintiffs filed suit in federal court on their own behalf and on behalf of a putative class of prescription eye solution purchasers. The named plaintiffs are residents of either Massachusetts or New York who purchased eye solution from at least one of the defendant manufacturers during the four years preceding the filing of their lawsuit. They allege two categories of violations.

         First, they allege that defendants' practice is "unfair" under Massachusetts state law and the laws of twenty-five other states and the District of Columbia, all of which adopt the meaning of "unfair" as applied in section 5 of the Federal Trade Commission Act. 15 U.S.C. § 45(a)(1). Plaintiffs do not allege that defendants' actions are deceptive.

         Second, under the laws of New York and sixteen other states, plaintiffs allege claims for unjust enrichment and for "money had and received." The basis for these latter two causes of action is plaintiffs' contention that defendants received excess profits from their actions to which they are not entitled.

         All defendants moved to dismiss. They asserted first that the court lacked subject-matter jurisdiction because plaintiffs had failed to satisfy the "injury in fact" requirement of Article III standing. Second, defendants argued that plaintiffs' claims were preempted by Food and Drug Administration regulations. Specifically, they contended that changing the dispensers to reduce the size of the eye drops -- the change plaintiffs claim state law mandates -- requires pre-approval from the FDA, thus implicating the ...


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