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Midlothian Laboratories, LLC v. PAMLAB, LLC

Citation: 509 F. Supp. 2d 1065Docket: Civil Action No. 2:04cv836-MHT

Court: District Court, M.D. Alabama; August 28, 2007; Federal District Court

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Midlothian Laboratories, L.L.C. filed a lawsuit against Pamlab, L.L.C. and Pan American Laboratories, L.L.C. concerning trademark issues related to a medical food product known as "Foltx." Midlothian, an Alabama company, accuses Pamlab, a Louisiana company and owner of the federal trademark FOLTX (Reg. No. 2,547,853), of false advertising and trademark cancellation under the Lanham Act and unfair competition under Alabama law. The complaint includes multiple counts alleging improper use and false advertising under 15 U.S.C. § 1125(a)(1), inducement to violate the Lanham Act, interference under Alabama common law, and abandonment of the FOLTX mark. Pamlab counterclaimed for false advertising under the same statute. Jurisdiction is established for federal claims under various statutes, and supplemental jurisdiction for state claims. The court is considering motions for summary judgment from both parties. After reviewing the factual record, the court decides to grant summary judgment in favor of Pamlab on Midlothian's claims but denies summary judgment on Pamlab's counterclaim. The summary judgment standard requires showing no genuine issue of material fact exists, placing the initial burden on the moving party to establish grounds for the motion.

The court's function at the summary-judgment stage is to assess whether there is a genuine issue for trial, without weighing evidence or determining truth. Evidence must be viewed favorably for the nonmoving party, drawing all reasonable inferences in their favor. The excerpt outlines the marketing and classification of Foltx as a medical food, containing specific vitamins and marketed for vitamin B12 deficiency management. Unlike drugs, medical foods are not subject to stringent FDA safety requirements or labeling standards. The Orphan Drug Amendments of 1988 provided the first statutory definition of medical food, which must be consumed under physician supervision for specific dietary management of diseases. Despite this, the definition lacks clarity in terms of product types covered. The FDA acknowledged the need for substantiation of claims made by medical foods due to concerns over consumer safety and lack of scientific support. However, proposed regulations to enhance oversight were retracted in 2004 due to resource constraints at the FDA, leaving medical foods with less scrutiny than conventional foods aimed at healthy populations.

Medical foods exist in a regulatory gap, not subjected to standard nutrition labeling or drug testing requirements. In this environment, Pamlab introduced Foltx, while Midlothian launched a competing medical food with the same active ingredients as Foltx in December 2003, marketed as a "generic equivalent." Unlike Pamlab, Midlothian targets drug wholesalers and retailers rather than physicians, enabling pharmacies to substitute their product for Foltx when prescribed. Midlothian's marketing claims about bioequivalence are supported by chemical analyses from its manufacturer, Chemins Company, Inc., although it did not obtain a certificate of analysis for over 14 months after market entry. Some tests indicated that Midlothian's product contained only two active ingredients found in Foltx.

Following the introduction of Midlothian's product and a planned launch by Breckenridge Pharmaceuticals, Pamlab filed a federal patent-infringement suit against both companies, which was dismissed. Both generic products remain available. In June 2004, Pamlab released an improved Foltx formulation with double the vitamin B12 based on studies suggesting benefits for its target population. Concurrently, Red River Pharma, linked to Pamlab's leadership, began marketing itself as the exclusive authorized generic licensee for Foltx, offering Folbalin and Folbalin Plus, which contain the same ingredients as the original and new Foltx, respectively. 

Pamlab discontinued the original Foltx and recalled existing stock, replacing it with the new formulation highlighted by "IMPROVED" and "New Strength" on the label. An action plan was launched to inform pharmacists and physicians about the change, emphasizing safety and efficacy. Notably, all parties acknowledge that the new Foltx has a different composition than both the original Foltx and Midlothian's product.

The parties acknowledge that changes to the Foltx product have made it non-interchangeable with Midlothian's offering at pharmacies. Following the introduction of the new Foltx, Eckerd Drugs stopped purchasing Midlothian's product, while CVS continued for about nine months before also ceasing purchases. Midlothian filed a lawsuit on September 3, 2004, with Pamlab later counterclaiming.

Midlothian’s claims under the Lanham Act focus on preventing deceptive use of marks and unfair competition. The Act, specifically 15 U.S.C. § 1127, was designed to address misleading designations and representations in commerce. Section 43(a) outlines two causes of action: product infringement, which involves claims of trademark or trade-dress infringement, and false advertising, which concerns misleading descriptions in advertising.

Count VI of Midlothian's complaint alleges that Pamlab has abandoned the FOLTX mark due to significant differences between the original and reformulated products, requesting cancellation of the mark's registration under 15 U.S.C. § 1119. A mark is considered abandoned if it has not been used with no intent to resume, or if the owner’s conduct causes the mark to lose its significance. Midlothian does not claim the mark has been discontinued or has become generic but contends that Pamlab's changes have diminished its significance. The court must determine if the increased active ingredient in the new Foltx constitutes a significant enough alteration to warrant further examination of trademark abandonment, noting that past cases of abandonment typically involved substantial product changes.

Pamlab increased the active ingredient in its product without constituting an "extreme discontinuity" in type or quality, as there is no evidence showing that the increased amount creates a transformative change. The two versions of Foltx share identical ingredients, countering Midlothian's claims regarding potential consequences from changes in prescription formulations. Midlothian failed to provide examples of FDA approvals for marketing products with different active ingredient amounts under the same name and acknowledged that the FDCA does not allow for private rights of action. The court found no evidence that the reformulated Foltx is less similar to the original for trademark purposes, resulting in summary judgment for Pamlab on Midlothian's count VI.

Count I of Midlothian's complaint alleged "improper use" of the FOLTX mark under the Lanham Act, although this term does not exist in the statute or case law. Midlothian claimed Pamlab's use of the FOLTX mark for both the original and new product misled pharmacists, violating the Lanham Act's provisions on trademark use and false advertising. The court noted that while a significant change in product quality could render a trademark fraudulent, Midlothian presented no evidence of confusion regarding the origin or approval of the products, both sold by Pamlab. Consequently, Midlothian's arguments were interpreted as allegations of false advertising or trademark abandonment rather than infringement of its own trademark.

The court analyzed whether Pamlab engaged in false advertising by using the FOLTX mark for both original and reformulated products and by instructing pharmacists to fill prescriptions with "NEW STRENGTH FOLTX." To establish a false advertising claim under the Lanham Act, Midlothian must demonstrate that: (1) Pamlab's advertisements were false or misleading, (2) they deceived or had the capacity to deceive consumers, (3) the deception materially affected purchasing decisions, (4) the product impacts interstate commerce, and (5) Midlothian suffered or is likely to suffer injury due to the false advertising.

Midlothian's first argument claims that the original and reformulated FOLTX should not share the same mark, paralleling an earlier claim of mark abandonment under 15 U.S.C. 1119. The court noted that while false advertising could lead to a mark losing significance, a mark may also lose significance through abandonment without false advertising. Since the court found no evidence that Pamlab abandoned the FOLTX mark, its continued use of the mark does not qualify as false advertising, leading to summary judgment in favor of Pamlab regarding this claim.

Regarding Pamlab's letter to pharmacists, Midlothian argued that the instruction to fill prescriptions with the new product was literally false. Pamlab contended that the statement was a suggestion and not subject to literal truth or falsehood. The court concluded that while the statement could raise safety concerns, it does not misrepresent the product's nature or characteristics, and thus, it is not actionable as false advertising under the Lanham Act. The court emphasized that the Act protects against false advertising but does not allow a plaintiff to act on behalf of the public against misleading statements.

Pamlab's recall of the original Foltx product raises questions about potential misleading implications regarding the new Foltx, especially since it is the only version available to pharmacists. Pamlab's instruction to fill prescriptions with new Foltx undermines Midlothian's false advertising claims, leading to a recommendation for summary judgment in favor of Pamlab on count I of Midlothian's complaint. In count II, Midlothian asserts that two statements by Pamlab constitute false advertising under 15 U.S.C. § 1125(a)(1)(B): one, that pharmacists violate the law by dispensing Midlothian's product in response to prescriptions for new Foltx, and two, that new Foltx is safer and more effective than the original. Midlothian's argument is contingent upon the court finding substantial differences between the two Foltx versions. However, the distinction between the products does not inherently support claims of false advertising. 

Midlothian failed to provide evidence that Pamlab claimed pharmacists would legally breach obligations by dispensing Midlothian's product, leading to summary judgment in favor of Pamlab on this allegation. Regarding the claim that Pamlab advertised new Foltx as safer and more efficacious, the court noted that it need not determine the truth of these claims, as Midlothian could not demonstrate that such statements materially influenced purchasing decisions. The court emphasized that since new Foltx is the sole product on the market and Midlothian's product is not a competitor, consumers cannot base their purchasing choices on Pamlab's safety and efficacy claims, regardless of their validity. Consequently, the court will grant summary judgment on count II of Midlothian's complaint.

Midlothian's product relies on pharmacists substituting it for Foltx, but it acknowledges that its product is no longer substitutable for the updated Foltx. As a result, the decision by drug wholesalers and pharmacy chains to stop purchasing Midlothian's product is independent of Pamlab's advertising, regardless of its accuracy. Consequently, summary judgment should be granted in favor of Pamlab on Midlothian's second count.

Regarding the third count, which claims Pamlab induced pharmacists to violate the Lanham Act, the absence of evidence for primary violations negates any secondary violations. Even if Midlothian's primary claims were valid, the act of pharmacists filling prescriptions for new Foltx does not constitute advertising for Pamlab's product and cannot support a false advertising claim under the Lanham Act. Thus, summary judgment should be granted in favor of Pamlab on this count as well.

In the fourth count concerning Alabama state law, Midlothian's claim of unfair competition does not align with Alabama law, but it could potentially be framed under interference with business relations. However, Midlothian fails to specify actions that would support this claim, and its assertion of "intentionally false advertising" does not hold, as Pamlab's replacement of Foltx does not constitute false advertising. Any damages claimed by Midlothian stem from this replacement, not from Pamlab's advertising. Therefore, Pamlab's statements do not causally relate to the damages, and summary judgment should also be granted in favor of Pamlab on this count.

Lastly, Pamlab's counterclaim under the Lanham Act alleges that Midlothian's use of the terms "bioequivalent" and "generic equivalent" constitutes false advertising.

Pamlab asserts that the terms "generic equivalent" and "bioequivalent" have defined meanings under the Federal Food, Drug, and Cosmetic Act (FDCA) and industry standards, which require testing to substantiate such claims. Pamlab contends that Midlothian did not perform necessary tests prior to marketing its product, rendering its claims of equivalence to Foltx misleading or literally false, potentially leading pharmacists to violate state prescription laws. In response, Midlothian seeks summary judgment, arguing that Pamlab lacks evidence of industry expectations for testing beyond what Midlothian conducted and claims that the FDCA preempts Pamlab's assertions regarding testing and FDA ratings required for drugs.

The regulatory framework for drug marketing, while not directly applicable to the medical foods at issue, informs the discussion on required substantiation for generic substitutions. The FDA and FTC jointly regulate drug marketing, requiring FDA approval for new drugs and allowing similar drugs to be marketed through abbreviated new drug applications, which necessitate therapeutic equivalence and bioequivalence. A drug is pharmaceutically equivalent if it contains the same active ingredients and dosage, and bioequivalent if absorption rates are similar. The FDA's Orange Book lists approved drugs and therapeutic equivalences; some states mandate that generics appear in this book for substitution.

Both Foltx and Midlothian’s product are classified as medical foods, exempt from FDA drug testing requirements, and neither is listed in the Orange Book. Additionally, while the Lanham Act and FDA regulations may overlap, courts recognize that the FDA primarily addresses drug safety and efficacy, while the Lanham Act focuses on the truthfulness of advertising claims.

False-advertising claims regarding product equivalency can be valid if they can be assessed by standards not exclusive to the FDA. Such claims cannot rely on matters solely within the FDA's jurisdiction. A federal court cannot preemptively decide how the FDA will enforce its regulations. For instance, alleging that a non-FDA-approved product implies FDA approval constitutes false advertising under the Lanham Act, as this would infringe on the FDA's regulatory authority. Conversely, explicitly advertising a product as FDA-approved when it is not can be proven literally false and actionable. Claims regarding bioequivalence can also be actionable under the Lanham Act if they can be shown to be false. In a relevant case, Solvay, the court allowed a false-advertising claim to proceed, as the plaintiff argued that the defendant's drug was inaccurately marketed as a generic equivalent. The key distinction was that the plaintiff did not assert that the advertising implied FDA approval. In the current case, Pamlab denies any implication of FDA approval in Midlothian's advertisements while claiming the product is not listed as therapeutically equivalent in the Orange Book. However, this assertion is irrelevant since the products are not under FDA drug approval processes, and the absence of Midlothian's product from the Orange Book does not substantiate a false-equivalency claim under the Lanham Act, as such a claim is preempted by the FDA's authority.

Pamlab contends that Midlothian's claims of generic equivalence, lacking therapeutic equivalence testing, are misleading and literally false, leading pharmacists to incorrectly believe that Midlothian's product is therapeutically equivalent to Foltx. Pamlab questions whether therapeutic equivalence, as defined by the FDCA, is the appropriate standard for assessing legitimate generic substitutions of medical food products, a point Midlothian disputes. Pamlab can use FDA regulations defining bioequivalence, pharmaceutical equivalence, and therapeutic equivalence to establish a standard for judging the truthfulness of Midlothian's advertisements. Pamlab's assertion that Midlothian's bioequivalence claim constitutes false advertising is not preempted by the FDA, as it can be proven literally false. Furthermore, Pamlab's claim regarding the falsehood of Midlothian's generic equivalence assertion is also not preempted, provided it is supported by evidence that pharmacists interpret "generic equivalence" to imply therapeutic equivalence, rather than relying solely on FDA regulations.

To succeed in its false advertising counterclaim, Pamlab must demonstrate the five Hickson factors: 1) the statement was false or misleading; 2) it had the capacity to deceive consumers; 3) the deception materially affected purchasing decisions; 4) the misrepresented product affects interstate commerce; and 5) Pamlab has been or is likely to be injured by the false advertising. The fourth factor is not disputed. If a statement is deemed literally false, no evidence of consumer deception is required. Pamlab does not differentiate between "bioequivalence" and "generic equivalence," asserting both are misleading, while Midlothian argues they are synonymous and require the same substantiation level. Pamlab maintains that bioequivalence does not suffice to establish generic equivalence for medical foods, and claims Midlothian lacks evidence to support either assertion. The court will evaluate each statement individually, starting with bioequivalence, which both parties agree means that two products have similar absorption rates and extents in the body. Pamlab asserts that Midlothian's bioequivalence claim is literally false.

Pamlab asserts the literal falsity of Midlothian's bioequivalence statement by making an establishment claim, which requires demonstrating that the tests cited in the advertisement do not support the claims made. To succeed in such a claim, it is sufficient to show that the tests failed to establish the advertised proposition. Midlothian's advertisement does not reference any tests or studies, which means Pamlab must prove the falsity of the favorable assertion without the benefit of an established test validation. In previous cases, courts have recognized that both express and implied claims of test validation can constitute establishment claims. The term "bioequivalence" is acknowledged to have a specific meaning that requires substantiation through testing. If testing does not support the claim of bioequivalence, the statement is deemed false. Pamlab has provided evidence that Midlothian's tests did not establish bioequivalence, creating a triable issue of fact. Pamlab contends that Midlothian has not conformed to FDA regulations regarding bioequivalence, but Midlothian argues that Pamlab must prove the applicability of these regulations to the medical foods in question, as doing otherwise would encroach on the FDA's exclusive jurisdiction.

Midlothian's parent company CEO testified that in vivo testing was not deemed necessary for their product. Pamlab did not address regulatory exemptions for many drugs from the bioequivalence testing that it claims is required for Midlothian’s product. Without adequate evidence from Pamlab to establish the testing standards for assessing advertising claims of bioequivalence, Midlothian would be entitled to summary judgment. Midlothian argues that pharmacists assume bioequivalence based on pharmaceutical equivalence. The company provided evidence that its product underwent chemical analyses confirming the presence of active ingredients, which it believes establishes pharmaceutical equivalence to Foltx. However, there were tests showing that Midlothian’s product contained only two of the three active ingredients found in Foltx, indicating it may not have been pharmaceutically equivalent at some point.

Pamlab's evidence of literal falsity in Midlothian's bioequivalence claims negates the necessity for proving actual consumer deception, but materiality must still be established. Materiality is linked to the misrepresentation of a product's inherent qualities, and in this case, bioequivalence is essential for consumer (physicians and pharmacists) decisions regarding prescriptions. Therefore, the misrepresentation is material. Additionally, assessing injury from false advertising can be complex due to the influence of market dynamics and other factors affecting sales that are not directly related to the alleged wrongful conduct.

Declining prices and increased competition can lead to sales drops that are not necessarily linked to violations of the Lanham Act. In the case of Nikkal Industries, lost sales of ice cream makers weren't solely attributable to the plaintiff's advertising amidst a competitive market. Similarly, in Schiller, Schmidt, Inc., a plaintiff attempted to link all lost sales to trade secret misappropriation, despite personnel changes and a strong competitor entering the market being contributing factors. Midlothian argues that Pamlab cannot prove that its product's marketing caused lost profits, asserting that other generic distributors would have captured those sales regardless. However, this interpretation overlooks the evidence and the burden of proof at this stage. Pamlab presented expert reports indicating the specific percentages of sales directly tied to prescriptions for its product, distinct from those filled for others. Since Foltx was uniquely marketed to prescribing physicians, this direct substitution allowed for a clearer assessment of damages. Although Pamlab's report does not consider the possibility that other competitors might have gained those sales, this only highlights a factual dispute about the extent of damages rather than negating the existence of injury. Midlothian's president acknowledged that its product sales resulted in Pamlab's losses, even if he contends those losses would have occurred regardless. Consequently, Pamlab has demonstrated actual injury and is not required to prove that other generic products would not have taken Midlothian's sales if it had not entered the market. Midlothian's argument essentially proposes that a valid false advertising claim cannot exist in a multi-competitor market without disproving the presumption that other competitors would have taken profits in the defendant's absence.

The court denies summary judgment regarding Midlothian's claims of bioequivalence and generic equivalence. Evidence indicates that Midlothian's product was marketed as a substitute for Foltx, negatively impacting Pamlab's sales. Pamlab has presented sufficient facts to create a genuine issue for trial concerning damages, as required by Fed. R. Civ. P. 56(e). Pamlab contends that Midlothian's claims of generic equivalence constitute false advertising, asserting that such claims necessitate proof of both pharmaceutical and bioequivalence, akin to standards for drugs listed in the Orange Book. The Third Circuit's precedent emphasizes that consumer expectations regarding advertising claims must be substantiated, necessitating consumer surveys or similar evidence.

Pamlab submitted a survey showing pharmacists do not differentiate between Foltx as a prescription dietary food product and prescription drugs. However, the survey fails to address pharmacists' perceptions specifically regarding the equivalence of medical foods versus prescription products. Pamlab’s expert acknowledged a lack of studies on this distinction, yet concluded that Midlothian's product requires FDA rating for therapeutic equivalence. The court notes that Midlothian's products are not mandated to undergo FDA testing, and claims for FDA approval are preempted by the FDCA.

Midlothian claims evidence of pharmaceutical equivalence, allowing for presumed bioequivalence, but there is conflicting evidence regarding the actual equivalence of its product to Foltx. Consequently, summary judgment is denied on Pamlab's false advertising claims related to both bioequivalence and generic equivalence. The court orders that Pamlab's counterclaim proceed to trial and enters judgment in favor of Pamlab on Midlothian's federal and state law claims. An appropriate order will be issued.

The court grants summary judgment in favor of defendants Pamlab, L.L.C. and Pan American Laboratories, L.L.C. on counts I, II, III, IV, and VI of plaintiff Midlothian Laboratories, L.L.C.'s complaint, while denying Midlothian's motion for summary judgment on count I. Judgment is entered against Midlothian for the aforementioned counts. Additionally, Midlothian's motion for summary judgment on the defendants' counterclaim is also denied, and that counterclaim will proceed to trial. Count V, which alleges a violation of the Florida Deceptive and Unfair Trade Practices Act, will be addressed separately by the court. The excerpt references various exhibits and declarations related to the motions, including testimony and documentation that support the court's decisions. The FDA's enforcement jurisdiction over medical foods is noted, along with the implications for false or misleading labeling.

Liability arises under 15 U.S.C. § 1125(a) for acts that likely cause confusion or deception regarding a person's affiliation with another or the origin of their goods and services, allowing anyone who believes they may be harmed to file a civil action. Under 15 U.S.C. § 1119, courts can address issues related to registered trademarks, including the authority to cancel or restore registrations. Additionally, 15 U.S.C. § 1064(3) allows individuals to petition for the cancellation of abandoned marks if they believe they will be harmed by such registrations.

In this case, the court determined there is no triable issue of fact regarding the abandonment of the FOLTX mark under the Lanham Act, clarifying it does not overstep the FDA's jurisdiction to address misbranding under the FDCA. Midlothian has the option to petition the FDA regarding alleged labeling violations. Evidence presented did not support claims that a 2 mg Vitamin B12 formulation would pose unique risks compared to a 1 mg formulation, as Vitamin B12 is considered safe at these doses.

Midlothian's motion for summary judgment treats both alleged behaviors in count I as false advertising, asserting that Pamlab's marketing of a 2 mg Vitamin B12 product under a mark associated with a 1 mg product constitutes deceptive trade practices under the Lanham Act. The court concurs that these behaviors warrant analysis as false advertising. Testimonies from Midlothian's Vice President of Sales and President indicated that, despite some consumer confusion regarding product sourcing, customers still associate the FOLTX brand with Pamlab.

Insurance providers ceased coverage for Foltx, stating it was no longer available in a generic form, which was confirmed as accurate for the new strength of Foltx. Midlothian's president indicated that Pamlab had not sent any notifications to pharmacists warning against dispensing a generic version of the original Foltx, and there was no evidence presented to the court suggesting such a warning was made for the new Foltx. In Alabama, state law permits pharmacists to substitute a less expensive, therapeutically equivalent drug, even if it is not listed in the Orange Book, provided a licensed practitioner authorizes this substitution. 

The court observed that an advertisement for Folbalin, an alternative to Foltx produced by Red River (which shares leadership with Pamlab), claimed Red River was the "sole authorized generic licensee" for Foltx but noted that Folbalin had not been tested for therapeutic equivalence by the FDA. Therefore, it could not be classified as a generic of Foltx. The advertisement suggested that therapeutic equivalence is necessary for a product to be considered a generic, while simultaneously failing to clarify how Red River's product could be seen as generic to Foltx without such testing. This situation implied that Red River was leveraging regulatory loopholes associated with medical foods to market its product while attempting to restrict competitors by emphasizing the need for therapeutic equivalence.

Pamlab distanced itself from claims regarding the validity of Midlothian's advertisements but also acknowledged testing claims in other parts of its response. The significance of bioequivalence, which is foundational to the concept of therapeutic equivalence, was highlighted as essential for public trust in generic medications.

Bioequivalence refers to a situation where there is no significant difference in the rate and extent of availability of an active ingredient at the site of drug action when pharmaceutical equivalents or alternatives are administered in the same molar dose under comparable conditions in a properly designed study. Intentional differences in the rate of availability, as seen in certain extended-release formulations, do not preclude bioequivalence if the extent of availability remains significantly similar and the rate difference is medically insignificant, well-documented in labeling, and does not hinder effective drug concentrations during chronic use. 

Testimony from Pamlab's CEO indicates that bioequivalence is determined by ensuring that a product's pharmacokinetic profile falls within 85 to 125 percent of the innovator's profile over the same timeframe, typically assessed through in vivo testing, which involves dosing subjects and measuring the active drug levels in their bloodstream. It was noted that no in vivo testing had been conducted on the Midlothian product due to cost considerations. 

21 C.F.R. 320.22 outlines criteria for waiving in vivo bioavailability or bioequivalence evidence. Further deposition by Yeater revealed that while Midlothian's product was believed to be pharmaceutically equivalent to FOLTX due to having the same active ingredients under good manufacturing practices, there was no request for it to be so during its development. Yeater also confirmed the importance of certificates of analysis in communicating test results for the end product, which were not previously sent to Midlothian.

Roger Graben's deposition reveals that he equates the terms "bioequivalent" and "pharmaceutical equivalent" concerning Midlothian's product in relation to Foltx, asserting that marketing claims for both are effectively identical. A product analysis report indicates that Midlothian's product lacked Vitamin B6, an active ingredient in Foltx, and this result has not been disputed by Midlothian. Additionally, Pamlab highlights a significant change in the ratio of active to inactive ingredients in Midlothian's product over time, which, according to Midlothian's expert, suggests a formulation change. However, Pamlab has not demonstrated that this change affects the determination of pharmaceutical equivalence.

Midlothian's president stated that if its generic version of Foltx had not been introduced, Pamlab would have lost comparable sales to other generic competitors. Evidence presented shows that about 80% of prescriptions for Midlothian's product were originally written for Foltx, indicating it is dispensed as a substitute. Midlothian argues that Pamlab bears the burden of proving a negative regarding damages without providing supporting evidence for its claims about other generics capturing its sales. The court emphasizes that it cannot assume the availability of competing generics in all markets where Midlothian's product is sold, particularly at the summary judgment stage, where evidence must favor the non-moving party.

The Orange Book classifies therapeutic-equivalence ratings for pharmaceutically equivalent products, determining their expected clinical effect and safety. Bioequivalent products are presumed therapeutically equivalent, but Foltx is identified as a "medical food." Expert Richard R. Abood's report indicates that products not listed in the Orange Book lack clinical evidence to support claims of therapeutic equivalence. Testimony from Brian C. Reisetter reveals that there is no market study on pharmacists’ evaluation of medical foods, and he notes that the absence of an Orange Book listing suggests Midlothian's product is not therapeutically equivalent to Pamlab's. There is a general confusion among pharmacists and physicians regarding the categorization of the Midlothian product, with a significant percentage unaware it is a nutritional supplement, which is distinct from medical foods under the FDCA. Abood opines that while a medical food may not be classified as a drug under FDCA regulations, it functions as a drug for state substitution laws. Reisetter claims that Midlothian’s advertisements mislead pharmacists into believing the products are therapeutically equivalent and substitutable without consulting physicians. A substantial majority of pharmacists expect generic products to be equivalent in quality and bioequivalence, with over 85% agreeing that substitutions for Foltx should meet FDA equivalence standards.

Reisetter suggests a potential false-advertisement claim regarding Midlothian's failure to disclose its products' lack of FDA approval, indicating that this issue could be distinct from the claims made by Pamlab. The viability of such a claim under the Lanham Act remains unresolved. Midlothian's president equates the terms "generic," "pharmaceutically equivalent," "bioequivalent," and "therapeutically equivalent." However, Midlothian's Vice President of Sales, who previously marketed the product as "bioequivalent," indicates confusion regarding these terms, asserting that "bioequivalency" is not necessary for generic substitution of medical foods and claiming that dietary supplements do not fall under the category of drugs. This inconsistency highlights a lack of clarity in the definitions used by Midlothian regarding their products.