DePriest v. Astrazeneca
Annotate this Case
Download PDF
Cite as 2009 Ark. 547
SUPREME COURT OF ARKANSAS
No.
08-1257
LOUISE DePRIEST, IVA DUNCAN,
GLADYS EATON, CAROLYN
KNIGHT, GERALDINE HARRIS,
BERNICE MILAM, WANDA
HAMILTON, EDDIE LOU SANDERS,
and LISA SANDERS,
APPELLANTS,
Opinion Delivered November 5, 2009
AN APPEAL FROM THE CIRCUIT
COURT OF SEARCY COUNTY,
ARKANSAS, NO. CV-04-77,
HONORABLE MICHAEL A.
MAGGIO, CIRCUIT JUDGE
VS.
ASTRAZENECA
PHARMACEUTICALS, L.P.;
ASTRAZENECA, PLC; ZENECA, INC.;
and ASTRAZENECA U.S.,
APPELLEES,
AFFIRMED.
ELANA CUNNINGHAM WILLS, Associate Justice
This appeal arises from a lawsuit filed by nine named plaintiffs (hereinafter
“Appellants”) against drug manufacturer AstraZeneca Pharmaceuticals, Inc., alleging that
AstraZeneca fraudulently marketed its drug Nexium. The Searcy County Circuit Court
granted AstraZeneca’s motion to dismiss the Appellants’ complaint on August 7, 2008. We
find no error and affirm.
AstraZeneca’s drug Nexium (esomeprazole) and its predecessor medication, Prilosec
(omeprazole), are both so-called proton pump inhibitors (PPIs) that are used in the treatment
of gastro-esophageal reflux disease (GERD), or heartburn. Prilosec, which had been long
08-1257
Cite as 2009 Ark. 547
advertised as “the Purple Pill,” was AstraZeneca’s most profitable drug by the time its patent
expired in 2001.1 Facing the expiration of that patent, AstraZeneca sought approval from the
Food and Drug Administration (FDA) for a new PPI drug, Nexium. In 2001, the FDA
approved AstraZeneca’s request to market Nexium for three GERD-related conditions: the
healing of erosive esophagitis (“EE,” or damage to the lining of the esophagus), maintenance
of healing esophagitis, and the treatment of symptomatic GERD.
The original plaintiffs—Wanda Hamilton, Eddie Lou Sanders, and Lisa Sanders—filed
their initial complaint against AstraZeneca in Searcy County Circuit Court on November 30,
2004, alleging that AstraZeneca’s actions in marketing Nexium as a superior product to
Prilosec were fraudulent and violated the Arkansas Deceptive Trade Practices Act, Arkansas
Code Annotated section 4-88-107 (Repl. 2001). In addition, Appellants raised claims for
common law fraud, breach of contract, promissory estoppel, unjust enrichment, and
violations of the Arkansas Unfair Practices Act and Arkansas Medicaid Fraud False Claims Act.
In essence, Appellants alleged that AstraZeneca had falsely marketed Nexium as “new”
and “better” than Prilosec, when the two drugs were, in fact, very similar and had similar
therapeutic results. Moreover, Appellants contended that AstraZeneca had positioned Nexium
as a “new” drug in order to cause purchasers to pay a higher price for it than they had been
paying for Prilosec.
1
Prilosec is now sold in both an over-the-counter (OTC) formulation and in its
generic form, omeprazole.
-2-
08-1257
Cite as 2009 Ark. 547
Appellants filed first, second, and third amended complaints on December 2, 2004,
January 14, 2005, and January 20, 2005, adding and dropping various named plaintiffs and
including additional allegations. AstraZeneca removed the action to federal district court on
January 21, 2005, but Appellants moved to remand the action, and the federal district court
granted that motion on September 21, 2005. On October 11, 2005, AstraZeneca then filed
a motion to dismiss the third amended and substituted complaint pursuant to Ark. R. Civ.
P. 12(b)(6), contending that Appellants had failed to state a cause of action. The circuit court
held a hearing on AstraZeneca’s motion to dismiss Appellants’ third amended complaint on
May 15, 2006. Before the court could render a ruling, however, Appellants filed their fourth
amended complaint on May 15, 2006. This complaint added five new plaintiffs.
In a letter opinion dated May 24, 2006, and filed on May 31, 2006, the circuit court
granted AstraZeneca’s motion to dismiss the third amended complaint. The court noted that:
The crux of the plaintiffs’ complaint is not that this new Nexium
product is harmful, ineffective, or of poor quality, but rather that it is
inappropriately marketed as “new,” when in fact there is nothing new
chemically about it and when it was not actually superior to the previous AZ
product.
While the plaintiffs’ entire complaint appears to be well researched, it
is convincing only to the point that a giant corporation has flexible power to
control and enhance its own profits. It offers little or no proof that the
defendants committed an actionable tort against the plaintiffs in Searcy County,
Arkansas, or anywhere. The complaint would perhaps make an excellent
article in a scientific magazine, but it fails as a legal pleading.
-3-
08-1257
Cite as 2009 Ark. 547
Accordingly, citing Ark. R. Civ. P. 12(b)(6), the court found that the complaint “should be
dismissed for failure to meet the prima facie elements of any of the causes of action stated in
the pleadings and for failure to state any claim for relief that could be granted.”
Appellants filed a motion for reconsideration on May 31, 2006, contending that the
circuit court had not yet considered their fourth amended complaint. In addition, Appellants
filed a motion asking the trial judge to recuse on June 6, 2006, suggesting that the court’s
language in the letter opinion “reflect[ed] the appearance of having a mind-set that cannot
be reconciled with the proposition that the trial judge is committed to hear and decide all
issues that are relevant, weighing the issues, and arriving at a judicious result.” Appellants
would also file a second motion to recuse on June 16, 2006, which the court also denied.
On June 7, 2006, Appellants filed their 290-page fifth amended complaint.
AstraZeneca again moved to dismiss the complaint pursuant to Ark. R. Civ. P. 12(b)(6). In
addition, AstraZeneca argued that Appellants’ claims were preempted by federal law. After
an October 31, 2006 hearing on the motion to dismiss, the circuit court issued a letter
opinion stating that it would grant AstraZeneca’s motion to dismiss.
The court’s letter opinion was formalized in an order entered on August 7, 2008. The
court found that Appellants’ claim for violation of the Arkansas Deceptive Trade Practices Act
was barred by that statute’s “safe harbor” provision, Ark. Code Ann. § 4-88-101 (Repl.
2001). The court further found that Appellants’ price-fixing claims and claims under the
Arkansas Unfair Practices Act and the Arkansas Medicare Fraud False Claims Act failed
-4-
08-1257
Cite as 2009 Ark. 547
because those statutes do not afford a private right of action. In addition, the court rejected
Appellants’ claims for common law fraud, breach of contract, promissory estoppel, and unjust
enrichment. Finally, the court found, as independent grounds for dismissal, that all of
Appellants’ claims were preempted by federal law and that Appellants had failed to plead the
required elements of their claims, “including that AstraZeneca’s alleged misconduct caused
them to purchase Nexium and that they were injured as a result.”2 Appellants filed a timely
notice of appeal on August 26, 2008.
We review a trial court’s decision on a Rule 12(b)(6) motion to dismiss by treating the
facts alleged in the complaint as true and by viewing them in the light most favorable to the
plaintiff. Sluder v. Steak & Ale of Little Rock, Inc., 361 Ark. 267, 206 S.W.3d 213 (2005);
Branscumb v. Freeman, 360 Ark. 171, 187 S.W.3d 846 (2004).3 In viewing the facts in the
light most favorable to the plaintiff, the facts should be liberally construed in plaintiff’s favor.
2
The court’s ruling also disposed of all other outstanding motions, granting
AstraZeneca’s motion to strike Appellants’ fourth amended complaint, denying as moot
AstraZeneca’s motion to strike the fifth amended complaint, denying as moot Appellants’
motion to proceed as a class action, and denying Appellants’ motions for the court to
recuse.
3
We note that AstraZeneca attached a copy of the Nexium labeling as an exhibit
to its motion to dismiss. Ordinarily, this would have converted this 12(b)(6) motion into a
motion for summary judgment. See, e.g., Nielsen v. Berger-Nielsen, 347 Ark. 996, 69
S.W.3d 414 (2002) (a motion to dismiss is converted to a motion for summary judgment
when matters outside of the pleadings are presented to and not excluded by the court).
The original complaint, however, incorporated essentially the same information and
language as was found on the label in AstraZeneca’s exhibit. Therefore, we conclude that
this appeal is properly treated as an appeal from an order of dismissal under Rule 12(b)(6).
-5-
08-1257
Cite as 2009 Ark. 547
Sluder, supra. Our rules require fact pleading, however, and a complaint must state facts, not
mere conclusions, in order to entitle the pleader to relief. Ark. R. Civ. P. 8(a)(1); Faulkner
v. Ark. Children’s Hosp., 347 Ark. 941, 69 S.W.3d 393 (2002).
Because our standard of review requires us to examine the facts that were alleged in
the complaint, we set out the pertinent allegations here. At the heart of Appellants’ complaint
was their contention that AstraZeneca, when faced with the patent expiration on their
“blockbuster” drug Prilosec, set out to replace Prilosec with Nexium. Appellants alleged that
AstraZeneca’s strategy was to aggressively market Nexium as a new and improved medication
for heartburn that was more effective than Prilosec, despite studies and medical reviews that
showed the two drugs offered similar benefits. Advertising associated with the launch of
Nexium touted the new drug as “more powerful” than Prilosec and declared that it was
“clinically proven to heal more reflux esophagitis patients in a shorter period of time
compared to [Prilosec].”
AstraZeneca initially offered Nexium at a lower price than Prilosec and offered large
quantities of free samples to physicians. In addition, as part of the marketing campaign,
AstraZeneca conducted direct-to-consumer advertising that offered a seven-day free trial of
Nexium with a prescription from a physician. Sales of Nexium quickly eclipsed sales of
Prilosec, and AstraZeneca raised the prices of Nexium. By the time Appellants filed their
complaint, one Nexium pill cost an average of $4.46, while the over-the-counter version of
Prilosec sold for $0.59 per pill.
-6-
08-1257
Cite as 2009 Ark. 547
According to the complaint, the success of Nexium was due to AstraZeneca’s allegedly
“false and misleading” advertising campaign that, as noted above, promoted Nexium as
superior to Prilosec. Appellants contended, however, that clinical trials of Nexium showed
that it was not significantly better than Prilosec. They pointed to statements from an FDA
medical review of Nexium that concluded that there was “no scientific basis for
[AstraZeneca’s] statement that, compared to [Prilosec], [Nexium] offers a faster and improved
resolution of heartburn symptoms and higher rates of healing in the treatment of erosive
esophagitis.”
Appellants alleged that they had been harmed by AstraZeneca’s conduct in various
ways. For example, plaintiff Geraldine Harris alleged that, after seeing advertisements for
Nexium on television, she asked her doctor for a prescription for her heartburn. Harris filled
the prescription, making her insurance company’s co-payment, but it eventually became too
expensive for her to continue to purchase Nexium. Therefore, she switched to Prilosec OTC
and was satisfied with the results of that medication.
Plaintiff Louise DePriest alleged that her doctor suggested that she try Nexium and
told her that it was the best thing available. Based on her doctor’s representations, DePriest
never tried Prilosec OTC. Plaintiff Iva Duncan took Nexium after asking for a prescription
from her doctors based on information she saw in Nexium’s advertising. Plaintiff Gladys
Eaton received two prescriptions for Nexium from her doctors and tried the drug, but found
that it did not do her much good. Therefore, she started buying Prilosec OTC and discovered
-7-
08-1257
Cite as 2009 Ark. 547
that it worked better than Nexium. Eaton compared the package inserts for Nexium and
Prilosec and determined that there were essentially the same thing, and because Prilosec
worked better for her, she continued to use it instead of Nexium.
Plaintiff Bernice Milam asked her doctor for a prescription for Nexium after seeing the
drug’s advertisements. She used Nexium until it became too expensive, and then her doctor
switched her to Prilosec OTC, with which she got better results than she did with Nexium.
Plaintiff Carolyn Knight saw Nexium’s advertising and asked her physician for a prescription.
Her doctor gave her samples of Nexium, telling her that an AstraZeneca sales representative
had told him that Nexium was superior to Prilosec. After getting a prescription for Nexium,
however, Knight discovered that she could not afford it, so she began taking two Prilosec
OTC pills each day instead of one Nexium.
Plaintiffs Wanda Hamilton, Eddie Lou Sanders, and Lisa Sanders alleged that they
suffered from heartburn and had been prescribed Prilosec. They contended that AstraZeneca
both limited quantities of Prilosec after introducing Nexium and delayed the introduction of
the generic version of Prilosec, and so they were unable to purchase Prilosec to treat their
heartburn. They claimed that they believed Nexium’s advertising that it was superior to all
other PPI drugs, so they refrained from purchasing any other drugs to treat their heartburn.
On the basis of the foregoing, Appellants claimed that they had been damaged, both
monetarily and physically, by AstraZeneca’s alleged false and misleading advertising. As noted
above, the circuit court dismissed all of their claims. On appeal, Appellants do not challenge
-8-
08-1257
Cite as 2009 Ark. 547
the court’s dismissal of their claims for breach of contract, price fixing, and violations of the
Arkansas Unfair Practices Act and the Arkansas Medicaid Fraud False Claims Act. These
issues, therefore, are considered abandoned on appeal. See, e.g., Wagner v. Gen. Motors Corp.,
370 Ark. 268, 258 S.W.3d 749 (2007).
In their first point on appeal, Appellants argue their cause of action for violations of
the Arkansas Deceptive Trade Practices Act (ADTPA) was not barred by the statutory “safe
harbor” found in that Act. The ADTPA, Arkansas Code Annotated sections 4-88-101—502
(Repl. 2001), prohibits deceptive and unconscionable trade practices, which include, among
other things, “[k]nowingly making a false representation as to the characteristics, ingredients,
uses, benefits, alterations, source, sponsorship, approval, or certification of goods or services,
or as to whether goods are original or new, or of a particular standard, quality, grade, style,
or model[.]” Ark. Code Ann. § 4-88-107(a)(1) (Repl. 2001).4 The Act does not apply,
however, to
(1) Advertising or practices which are subject to and which comply with
any rule, order, or statute administered by the Federal Trade Commission; [or]
....
(3) Actions or transactions permitted under laws administered by . . . [a]
regulatory body or officer acting under statutory authority of this state or the
United States.
4
The ADTPA provides a private cause of action to “[a]ny person who suffers
actual damage or injury as a result of an offense of violation as defined in this chapter.”
Ark. Code Ann. § 4-88-113(f) (Repl. 2001).
-9-
08-1257
Cite as 2009 Ark. 547
Ark. Code Ann. § 4-88-101(1) & (3) (Repl. 2001). This is the so-called “safe harbor”
provision of the ADTPA.
The trial court noted that federal law specifically permits drug manufacturers to
promote their drugs to consumers and physicians in a manner that is consistent with and
supported by the labeling approved by the Food and Drug Administration. The court thus
found that all of the promotional and advertising activity that the appellants challenged was
supported by Nexium’s FDA-approved labeling and therefore fell with the ADTPA’s safe
harbor.
The FDA is vested with the authority to approve labeling for any new drug. See 21
U.S.C. § 355(d). As part of the application process for new-drug approval, the applicant must
submit such things as full reports of investigations showing whether the drug is safe and
effective; a statement of the composition of the drug; and a description of the methods used
in the manufacture, processing, and packaging of the drug. See 21 U.S.C. § 355(b)(1). In
addition, the FDA regulates prescription-drug advertising. See 21 U.S.C. § 352(n). Any
advertisement for a prescription drug must “present a true statement of information in brief
summary relating to side effects, contraindications, . . and effectiveness.” 21 C.F.R. §
202.1(e)(1). In a notice from the FDA regarding a public meeting on professional product
labeling, the FDA noted the following:
The major purpose of prescription drug product labeling is to help
ensure that prescribing health care professionals have the information necessary
to prescribe products in a safe and effective manner. When the agency
determines that a sponsor has provided the requisite scientific data to allow
-10-
08-1257
Cite as 2009 Ark. 547
marketing of a product in the United States, the approved labeling
communicates the conclusions of FDA review of the data in the product’s new
drug application (NDA). Because the NDA review process provides access to
the raw data from clinical trials, the product labeling may provide the only
comprehensive, independently reviewed source of medical/scientific
information about newly approved products and new indications for older
products.
The approved labeling also serves as the basis for product promotion.
FDA regulations specify that all advertising claims made about a product be
consistent with its approved labeling (21 CFR 202.1(e)(4)). The approved
labeling serves as the basis for fulfilling the requirement of the Federal Food,
Drug, and Cosmetic Act (the act) that prescription drug advertising include
information in brief summary relating to side effects, contraindications, and
effectiveness.” (section 502(n) of the act (21 U.S.C. 352(n)).
Professional Product Labeling; Public Meeting, 60 Fed. Reg. 52196 (Oct. 5, 1995).
In this case, the FDA-approved labeling for Nexium, a copy of which was
incorporated into the complaint, presents the analysis of clinical studies conducted to
determine the efficacy of the drug in healing erosive esophagitis. Those clinical studies
evaluated the healing rates of Nexium 40mg, Nexium 20mg, and Prilosec 20mg (which was
the approved dose of omeprazole for that indication5) in patients with endoscopically
diagnosed erosive esophagitis in four multicenter, double-blind, randomized studies. The
healing rates of Nexium 40mg, as compared to Prilosec 20mg, showed that, for one group
of patients at week four of the study, 75.9% of the Nexium 40mg patients experienced
5
The FDA had previously found that omeprazole 40mg was not superior to the
20mg dose for healing erosive esophagitis, and therefore the higher dosage was not
approved for that indication.
-11-
08-1257
Cite as 2009 Ark. 547
healing of their symptoms, while 64.7% of the Prilosec 20mg patients experienced healing.6
At week eight, the percentages of patients in that particular group with healing were 94.1%
for Nexium 40mg and 86.9% for Prilosec 20mg.
The same studies of patients with erosive esophagitis examined the percent of patients
who experienced sustained heartburn resolution and the time it took for them to obtain
sustained heartburn resolution. Those studies showed that Nexium 40mg provided statistically
significant increases in patients with sustained resolution of their heartburn symptoms (64.8%
for Nexium 40mg compared to 56.5% for Prilosec 20mg at day fourteen of the study, and
74.2% for Nexium 40mg compared to 66.6% for Prilosec 20mg at day twenty-eight). In
addition, the studies also demonstrated that patients taking Nexium 40mg experienced faster
symptom resolution; the “range of median days to the start of sustained resolution (defined
as 7 consecutive days with no heartburn) was 5 days for Nexium 40mg, 7-8 days for Nexium
20mg, and 7-9 days form omeprazole 20mg.” On the basis of these studies, the FDA
approved Nexium at both 20mg and 40mg doses for the healing of erosive esophagitis.7
6
Appellants complain that some of the studies included in the labeling showed
there to be no statistical significance between the healing rates of Nexium and Prilosec.
However, the FDA approval process declares that the Secretary may determine, “based on
relevant science, that data from one adequate and well-controlled clinical investigation and
confirmatory evidence (obtained prior to or after such investigation) are sufficient to
establish effectiveness.” 21 U.S.C. § 355(d) (emphasis added).
7
As noted above, Prilosec 20mg—but not Prilosec 40mg—had been approved for
healing erosive esophagitis.
-12-
08-1257
Cite as 2009 Ark. 547
After obtaining approval of its label for Nexium, AstraZeneca introduced an
advertising campaign that included phrases such as “the proof is in the healing rates,” called
Nexium “the powerful new PPI,” and invited patients to “Relieve the Heartburn. Heal the
damage. It’s possible with Nexium.” These are among the assertions that Appellants claim
constitute “false” and “misleading” advertising.
As noted above, the circuit court found that Appellants’ ADTPA cause of action was
barred by the Act’s “safe harbor” provision, Ark. Code Ann. § 4-88-101(1) & (3). That
subsection provides that the ADTPA does not apply to advertising that is subject to and
complies with any rule, order, or statute administered by the Federal Trade Commission, nor
does it apply to actions permitted under laws administered by a regulatory body acting under
the statutory authority of the United States. The court found that “federal law specifically
permits [drug] manufacturers to promote their drugs to consumers and physicians and to do
so in a manner supported by the ‘labeling’ approved by the [FDA].” Here, the circuit court
determined that the activity fell within the safe harbor provision of the ADTPA because the
challenged promotional and advertising activity was supported by Nexium’s FDA-approved
labeling.
On appeal, Appellants rely heavily on an unpublished district court case from
California’s Los Angeles County Superior Court, Ledwick v. AstraZeneca Pharm. LP, Case No.
BC 324 518. In that case, the plaintiffs alleged that AstraZeneca deceptively marketed
Nexium in violation of California’s Business & Professions Code sections 17200, that state’s
-13-
08-1257
Cite as 2009 Ark. 547
Unfair Competition Law. The California trial court denied AstraZeneca’s motion for
demurrer on the basis of preemption, concluding as follows:
Assuming drug labeling or the FDA’s authority to prescribe it qualify as federal
law for purposes of preemption analysis, defendants [AstraZeneca] do not
explain, and the court cannot fathom, how Nexium’s labeling affirmatively
supports defendants’ claim that Nexium is superior to Prilosec. The court is
unaware of any allegation that Nexium’s labeling even mentions Prilosec,
much less demonstrates Nexium’s superiority to it. Additionally, the court is
unaware of any allegation that the promotional statements at issue were derived
by defendants from Nexium labeling. Rather, it appears the challenged
statements arose after Nexium was approved and do little, if anything, to
reference the labeling. Even if the advertising were somehow derived from the
labeling it would be nonsensical to hold all advertising valid or immunized
simply because it does not “conflict” with the labeling. If all advertising were
permissible simply because it does not conflict with the label, a manufacturer
could say virtually anything, so long as he avoid the label’s limited purlieu. (A
claim that snake oil cures dandruff does not conflict with the label identifying
the oil as coming from a snake.)
Ledwick, Case No. BC 324 518, at *10. The Ledwick court also rejected AstraZeneca’s “safe
harbor” argument for the same reason. Id. at *12-13. Appellants ask this court to adopt the
reasoning of the California court and conclude that their ADTPA action was not barred by
the Act’s safe harbor provision.
We decline to do so. This unpublished trial court order is of absolutely no precedential
value for this court. In addition, as AstraZeneca points out, California’s Unfair Competition
Law does not itself contain a statutory safe harbor provision. See, e.g., Yabsley v. Cingular
Wireless, LLC., 176 Cal. App. 4th 1156, 98 Cal. Rptr. 3d 657 (2009) (“Although section
17200 broadly prescribes ‘any unlawful, unfair or fraudulent business act or practice,’ it does
not apply when specific legislation provides a ‘safe harbor’ for the conduct at issue”) (emphasis
-14-
08-1257
Cite as 2009 Ark. 547
added) (citing Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal.4th 163, 83 Cal.
Rptr. 2d 548, 973 P.2d 527 (1999)).8 Arkansas’s ADTPA, by contrast, contains a safe harbor
provision that specifically exempts conduct that is permitted under laws administered by a
federal agency. See Ark. Code Ann. § 4-88-101(3).
Appellants next contend that AstraZeneca claimed, through direct-to-consumer
marketing, that Nexium is superior to Prilosec, even though “there is no proof that Nexium
is more effective or superior than Prilosec or other PPIs at equivalent standard doses.”
However, the FDA-approved labeling did, in fact, indicate that the approved dose of Nexium
was superior to the approved dose of Prilosec at healing erosive esophagitis. Therefore,
because the advertising complied with the product’s labeling and “present[ed] a true statement
of information in brief summary relating to . . . effectiveness,” 21 C.F.R. § 202.1(e)(1), the
challenged conduct is advertising that is “permitted under laws administered by . . . [a]
8
The statutory “safe harbor” in Yabsley was found in a portion of the California
Code of Regulations pertaining to the collection of gross receipts taxes, not in the
California Unfair Competition Law under which the plaintiff filed his suit.
-15-
08-1257
Cite as 2009 Ark. 547
regulatory body . . . of . . . the United States”—in this case, the FDA.9 Ark. Code Ann. §
4-88-101(3).
The information included in the labeling of a new drug reflects a determination by the
FDA that the information is not “false or misleading.” See 21 C.F.R. § 314.125(b)(6) (stating
the FDA must deny a new drug application if it determines that “[t]he proposed labeling is
false or misleading in any particular.”). By approving information to be included in the drug
labeling, the FDA has determined that the information complies with its rules and regulations.
Therefore, if the FDA labeling supports the statements made in advertising for an FDAapproved drug, the statements are not actionable under the ADTPA.
Here, as discussed above, the advertising for Nexium is supported by the FDAapproved labeling. For example, one advertisement declared, “Relieve the heartburn. Heal
the damage.” As discussed above, Nexium was demonstrated to have greater healing rates
9
The Federal Trade Commission and the FDA originally shared jurisdiction over
regulation of drug marketing. See Pub. L. No. 87-781 (1962). Congress gave the agencies
concurrent jurisdiction with respect to regulating prescription drug advertising until the
FDA promoted regulations on the subject, and in 1971, the agencies agreed that the FDA
had “primary responsibility with respect to the regulation of the truth or falsity of
prescription drug advertising.” 36 Fed. Reg. 18,539 (Sept. 16, 1971). That statement did
not preclude FTC regulation of prescription drug advertising, but instead acknowledged
that the FDA would take the lead in regulating such activities. The FDA subsequently
promulgated its own regulations for prescription drug advertising. See 21 U.S.C. 352; 21
C.F.R. 202.1. FDA’s promulgation of these regulations effectively eliminated the FTC’s
authority in this area. See Penn. Employees Benefit Trust Fund v. Zeneca, Inc., 499 F.3d 239
(3rd Cir. 2007) (vacated by Penn. Employees Benefit Trust Fund v. Zeneca, Inc., ___ U.S.
___, 129 S. Ct. 1578 (2009), cert. granted, judgment vacated, and remanded to Third
Circuit “for reconsideration in light of Wyeth v. Levine, 555 U.S. ___, 129 S. Ct. 1187
(2009).”).
-16-
08-1257
Cite as 2009 Ark. 547
than Prilosec in patients with erosive esophagitis. Another print advertisement stated that
Nexium was “clinically proven to heal more reflux esophagitis patients in a shorter period of
time compared to omeprazole.” Again, the drug’s labeling indicated that this claim was true
and thus permitted AstraZeneca to make this statement.10 Therefore, the circuit court
correctly concluded that the challenged conduct fell within the ADTPA’s statutory safe
harbor. See, e.g., Bober v. Glaxo Wellcome PLC, 246 F.3d 934, 941 (7th Cir. 2001) (where
statements concerning Zantac 75 and Zantac 150 did not falsely claim that one could not be
substituted for another and comported with the FDA-approved label, the Illinois Consumer
Fraud Act would not impose higher disclosure requirements than those that are sufficient to
satisfy federal regulations; therefore, if drug manufacturer was doing something specifically
authorized by federal law, safe harbor provision of Illinois CFA would protect it from liability,
and plaintiffs failed to state a cause of action (emphasis in original)); Prohias v. Pfizer, Inc., 490
F. Supp. 2d 1228 (S.D. Fla. 2007) (where FDA-approved label for Lipitor supported the
claim that the drug reduced the risk of heart attacks in some patients, advertisements making
that claim fell within the safe harbor provisions of both Florida and Massachusetts consumer
10
When pressed at oral argument to list other specific examples of allegedly false or
misleading claims, Appellants’ counsel was only able to cite “numerous advertisements that
[were] referenced in the complaint.” Counsel did point to an alleged “switch letter” sent
out by Wal-Mart’s pharmacy that encouraged pharmacy patients to switch to Nexium;
however, the complaint did not allege that any of the named plaintiffs had ever seen a
copy of this letter. Therefore, this letter could not have constituted a false or misleading
statement made to the plaintiffs and thus does not state facts sufficient to support
Appellants cause of action.
-17-
08-1257
Cite as 2009 Ark. 547
fraud acts, and plaintiffs’ complaint was therefore dismissed); Cytyc Corp. v. Neuromedical
Systems, Inc., 12 F. Supp. 2d 296, 301 (S.D.N.Y. 1998) (where defendant’s statements
concerning “ThinPrep” cervical cell screening system that plaintiff claimed were false were
actually consistent with the substantive claims approved by the FDA on ThinPrep’s label, such
statements failed to state a claim under New York’s General Business Law §§ 349–350);
Prohias v. AstraZeneca Pharm., LP., 958 So.2d 1054, 1056 (Fl. Dist. Ct. App. 2007) (allegedly
false advertising of Nexium by AstraZeneca “falls within the safe harbor of the Florida
Deceptive and Unfair Trade Practices Act . . . because the promotional and advertising
activity attacked in the complaint is supported by the FDA-approved labeling for Nexium and
thus is ‘specifically permitted’ by federal law”; therefore, the plaintiffs’ complaint failed to
plead a valid claim under the Florida DUTPA).11
11
Appellants raise one final argument in which they claim that AstraZeneca’s
actions were fraudulent because it was aware of an FDA medical review that indicated that
Nexium was not superior to Prilosec for treating heartburn. However, as AstraZeneca
points out, the statements in a medical review do not reflect the conclusions of the FDA:
A statement or advice given by an FDA employee orally, or given in writing
but not under this section of § 10.90, is an informal communication that
represents the best judgment of that employee at that time but does not
constitute an advisory opinion, does not necessarily represent the formal
position of FDA, and does not bind or otherwise obligate or commit the
agency to the views expressed.
21 C.F.R. § 10.85(k).
-18-
08-1257
Cite as 2009 Ark. 547
Accordingly, we conclude that AstraZeneca’s advertisements constituted actions
permitted under laws administered by the FDA, and therefore, the ADTPA, by its own terms,
does not apply to the challenged conduct. See § 4-88-101(a)(3). Because we conclude that
the advertisements fall within the ADTPA’s safe harbor provision, we decline to address
Appellants’ claim that the trial court erred in concluding that they failed to plead the required
elements of their ADTPA claim.
We next turn to Appellants’ claims of common-law fraud, promissory estoppel, and
unjust enrichment. The circuit court found that Appellants’ common-law fraud claim failed
because “[a]dvertising statements supported by the FDA-approved labeling cannot be deemed
false or misleading as a matter of law, and Plaintiffs have failed to identify any actionable
promotion. Plaintiffs have also failed to plead sufficiently the required elements of reliance,
causation, and injury.” On appeal, Appellants dispute this conclusion, contending that their
complaint stated a cause of action for common law fraud against AstraZeneca for its practices
in the prices and mass marketing of Nexium.
Our rules of civil procedure require that claims of fraud be pled with specificity. Rule
9(b) provides that “[i]n all averments of fraud, . . . the circumstances constituting fraud . . .
shall be stated with particularity.” Ark. R. Civ. P. 9(b). In addition, to state a claim for
fraud, a plaintiff must plead the existence of five elements: (1) a false representation of
material fact; (2) knowledge that the representation is false or that there is insufficient
evidence upon which to make the representation; (3) intent to induce action or inaction in
-19-
08-1257
Cite as 2009 Ark. 547
reliance upon the representation; (4) justifiable reliance upon the representation; and (5)
damage suffered as a result of the reliance. McAdams v. Ellington, 333 Ark. 362, 970 S.W.2d
203 (1998); Scollard v. Scollard, 329 Ark. 83, 947 S.W.2d 345 (1997).
As discussed above, the circuit court correctly found that AstraZeneca’s claims
regarding Nexium were supported by the FDA-approved labeling. Stated another way, we
agree that, because AstraZeneca’s advertisements were in accordance with that labeling, they
were thus not false or misleading as a matter of law. In the absence of the pleading of a false
representation of a material fact, Appellants’ fraud claim fails to state a cause of action.
Similarly, Appellants’ unjust enrichment claim was premised on the notion that
AstraZeneca was unjustly enriched at Appellants’ expense when it received money from
customers
who
purchased
Nexium
based
on
advertisements
that
contained
“misrepresentations” about the efficacy of Nexium. The circuit court found that the
complaint failed to state a claim “for the same reasons underlying dismissal of the ADTPA and
fraud claims. There cannot be any ‘unjust’ enrichment where AstraZeneca’s alleged conduct
falls within what is permitted by federal law and Nexium’s labeling.” We agree.
To find unjust enrichment, a party must have received something of value, to which
he or she is not entitled and which he or she must restore. See El Paso Prod. Co. v. Blanchard,
371 Ark. 634, 269 S.W.3d 362 (2007). One who is free from fault cannot be held to be
unjustly enriched merely because he or she has chosen to exercise a legal or contractual right.
Id. In short, an action based on unjust enrichment is maintainable where a person has received
-20-
08-1257
Cite as 2009 Ark. 547
money or its equivalent under such circumstances that, in equity and good conscience, he or
she ought not to retain. Id. (citing Merch. & Planters Bank & Trust Co. v. Massey, 302 Ark.
421, 790 S.W.2d 889 (1990)).
As discussed above, AstraZeneca’s advertisements that were pled in the complaint were
not misleading and did not contain misrepresentations; the advertisements complied with
federal labeling regulations. Because AstraZeneca’s advertisements were not misleading, and
the company was entitled to set the price for Nexium,12 Appellants have failed to state facts
to allege a cause of action for unjust enrichment, and we affirm the circuit court’s granting
of AstraZeneca’s motion to dismiss on this issue.
Next, The trial court found that Appellants’ claims of promissory estoppel failed
because they did not allege the existence of an enforceable promise or reliance. Appellants
argue on appeal that AstraZeneca “reasonably expected that the promise in their
advertisements that Nexium was ‘more powerful,’ ‘more effective,’ and offered ‘significant
improvements over Prilosec’ would induce reliance and cause patients to request Nexium
from their physicians for heartburn, resulting in a financial detriment to the patient when the
patient purchased the higher priced Nexium and discovered it offered no significant
improvement over Prilosec for the treatment of heartburn.”
12
The original claim that AstraZeneca engaged in price fixing was rejected by the
trial court and is not pursued on appeal.
-21-
08-1257
Cite as 2009 Ark. 547
The black-letter law on promissory estoppel is found in the Restatement (Second) of
Contracts:
A promise which the promisor should reasonably expect to induce
action or forbearance on the part of the promisee or a third person and which
does induce such action or forbearance is binding if injustice can be avoided
only by enforcement of the promise. The remedy granted for breach may be
limited as justice requires.
See K.C. Props. v. Lowell, 373 Ark. 14, 280 S.W.3d 1 (2008); Rigsby v. Rigsby, 356 Ark. 311,
149 S.W.3d 318 (2004).
Appellants’ complaint alleged that AstraZeneca “promised” that Nexium was more
powerful and more effective, that AstraZeneca intended to induce Appellants and their
physicians to rely on those “promises,” and that Appellants relied on that promise to their
financial detriment because Nexium was priced higher than other heartburn treatments.
However, Appellants cite no authority that a product advertisement constitutes a quasicontractual “promise.” Therefore, we affirm the circuit court on this issue as well.13
Finally, Appellants contend that the circuit court should have granted their motions
to recuse. The first of the two motions alleged that the court’s letter opinion of May 24,
2006, gave the “appearance of having a mind-set that cannot be reconciled with the
proposition that the trial judge is committed to hear and decide all issues that are relevant,
13
The circuit court’s order found, as an independent basis to grant dismissal of the
complaint, that Appellants’ causes of action were preempted by federal law. Because we
affirm the lower court’s dismissal of the case on the grounds discussed above, it is
unnecessary for us to reach the preemption issue.
-22-
08-1257
Cite as 2009 Ark. 547
weighing the issues, and arriving at a judicious result.” The motion pointed to language in
the letter opinion that Appellants apparently found objectionable, such as the court’s
comments that the complaint, while
well researched, . . . is convincing only to the point that a giant corporation has
flexible power to control and enhance its own profits. It offers little or no
proof that the defendants committed an actionable tort . . . . The complaint
would perhaps make an excellent article in a scientific magazine but it fails as
a legal pleading.”
Appellants urged that the court should only have considered whether or not to grant
AstraZeneca’s motion to dismiss, and this kind of language, they contended, gave the
appearance that the court was “not being fair and unbiased.”
A judge has a duty to hear a case unless there is a valid reason to disqualify. Porter v.
Ark. Dept. of Health, 374 Ark. 177, 286 S.W.3d 686 (2008). Moreover, a judge is presumed
to be impartial, and the party seeking recusal must demonstrate bias. Id.; Nash v. Hendricks,
369 Ark. 60, 250 S.W.3d 541 (2007). A judge must refrain from hearing a case in which he
or she might be interested and must avoid all appearances of bias. Dolphin v. Wilson, 328 Ark.
1, 942 S.W.2d 815 (1997); see also Ark. Code of Judicial Conduct Canon 3B(5).14 This court,
however, will not reverse a judgment on the basis of a trial judge’s decision not to disqualify
unless the judge has abused his or her discretion. Porter, supra. In determining whether there
was an abuse of discretion, this court reviews the record to determine if any prejudice or bias
14
As of July 1, 2009, this Canon is now embodied in Canon 2, Rule 2.3(A) of the
Arkansas Code of Judicial Conduct.
-23-
08-1257
Cite as 2009 Ark. 547
was exhibited. Id. The question of bias is generally confined to the conscience of the judge.
Id.
In Porter, supra, this court found no abuse of discretion in the trial court’s denial of a
motion to recuse where the court, at a hearing on a family-in-need-of-services petition,
advised a witness that he had given a “bad answer” when asked why he let his fifteen-year-old
daughter marry a thirty-four year old man. This court noted the trial judge’s comment to the
parties that her statement “in no way addressed the merits” and that “the fact that [the] court
felt that [Porter] made a bad choice is not an indication of the court’s future rulings.” Porter,
374 Ark. at 191, 286 S.W.3d at 697. Thus, we concluded there was no abuse of discretion
in declining to recuse.
Here, although Appellants complain that the court seemed to be “prejudging” the
case, the letter opinion was, in fact, an order granting AstraZeneca’s motion to dismiss the
third amended complaint. It was not “prejudging,” but rather was rendering the judgment.
This court has noted that, unless there is an objective showing of bias, there must be a
communication of bias in order to require recusal for implied bias, and the mere fact that a
judge has ruled against a party is not sufficient to demonstrate bias. See Searcy v. Davenport,
352 Ark. 307, 100 S.W.3d 711 (2003). Here, the court’s comments do not objectively reflect
bias; they objectively reflect the court’s belief that Appellants’ complaint failed to state a cause
of action. Therefore, the trial court did not abuse its discretion in declining to recuse on this
issue.
-24-
08-1257
Cite as 2009 Ark. 547
Appellants’ second motion to recuse stemmed from an alleged ex parte communication
between the court and AstraZeneca’s counsel. In this motion, Appellants complained that
counsel for AstraZeneca had faxed a letter to the trial court, and the court had faxed a letter
back. Thus, Appellants alleged that the court had communicated with the attorneys for
AstraZeneca but did not also communicate with Appellants’ counsel.
The letter faxed from AstraZeneca’s counsel to the court was a note enclosing a copy
of AstraZeneca’s “motion to strike Appellants’ fourth substituted and amended complaint and
response in opposition to Appellants’ motion for reconsideration, amended objection to entry
of final order and request for findings of fact and conclusions of law and a brief in support.”
The letter also asked the court to set a hearing on the motion to strike. The fax sent from the
court to AstraZeneca’s counsel was a copy of AstraZeneca’s cover page sent with the above
letter with a handwritten note that said, “need order to strike 4th amend. complaint.” In
addition, AstraZeneca filed a notice of communication with court, notifying Appellants of
the written communication from the court to AstraZeneca’s counsel.
Appellants’ second motion to recuse alleged that the court’s communication with
AstraZeneca’s counsel “without simultaneously communicating, in whatever form the court
took in that communication, with the attorneys for Appellants, . . . thereby creates the
appearance of impropriety under the circumstances.” They further allege on appeal that the
communications gave the appearance that the judge was not impartial and had prejudged the
Fifth Amended Complaint before he read it.
-25-
08-1257
Cite as 2009 Ark. 547
The fax from the court asking for an order to strike the fourth amended complaint
does not demonstrate that the court had already prejudged the fifth amended complaint.
There is no showing of actual bias, as the court received and considered the fifth amended
complaint and (much later) addressed the merits of it. Appellants’ argument on appeal merely
concludes that the court’s statement evidences bias; however, we conclude that the
communication was merely the court’s ministerial request for a precedent from opposing
counsel. See Searcy v. Davenport, supra (the mere fact that a judge has ruled against a party is
not sufficient to demonstrate bias). The circuit court did not abuse its discretion in declining
to recuse.
Affirmed.
-26-
08-1257
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.