In November 2017, a biopharmaceutical company urged a federal appeals court to reverse a district court ruling involving competitors in the sports supplement industry. The "primary jurisdiction" ruling formed the basis for the dismissal of a lawsuit filed by one sports supplement marketer against a rival supplement business.
GTx Inc. didn’t comment on the merits of a lawsuit involving the purported sale of ostarine in supplements. Instead, the Memphis, Tennessee-based company agreed with the plaintiff, Nutrition Distribution LLC, that its complaint was improperly dismissed based on the legal doctrine known as primary jurisdiction.
Under the doctrine, courts sometimes refrain from ruling on claims until an administrative agency like FDA first decides an issue within its expertise.
It’s unusual for a pharmaceutical firm to formally meddle in private litigation between two marketers of supplements; but, GTx has invested in the development of a SARM (selective androgen receptor modulator) at the heart of the lawsuit: enobosarm, also known as ostarine or MK-2866. GTx is developing ostarine to treat breast cancer, Duchenne muscular dystrophy (DMD) and stress urinary incontinence.
Ostarine has been the subject of FDA warning letters to marketers of dietary supplements, including a party in the case before the U.S. Court of Appeals for the Ninth Circuit: IronMag Labs LLC. In a complaint, Nutrition Distribution, also known as Athletic Xtreme, accused IronMag Labs, its CEO Robert DiMaggio and IronMag Research of violating the Lanham Act, a federal statute governing unfair competition, and California law through false and misleading statements about products (OSTA RX and Super DMZ 4.0) containing ostarine.
In 2016, U.S. District Court Judge Manuel L. Real held FDA hadn’t made a final determination whether ostarine was a new drug under the Federal Food, Drug & Cosmetic Act (FDCA).
“Without a final determination or any clear statement by the FDA on this issue, the court or a jury, would have to apply the FDCA definitions to the substances at issue to determine whether OSTA RX and Super DMZ 4.0 are or contain a new or prescription drug that may not be sold or included in a dietary supplement,” the judge wrote in his order, granting defendants’ motion to dismiss Nutrition Distribution’s lawsuit. “Such an expedition requires expertise and uniformity in administration, not practicable through the courts.”
Arguments on Appeal
Nutrition Distribution argued a district court could decide its claims of false and misleading advertising against IronMag Labs without FDA’s expertise.
“Contrary to the district court’s determination, this case does not require the FDA’s technical or policy expertise, and does not present an ‘issue of first impression’ or ‘complicated issue’ that Congress has specifically committed to the FDA,” Nutrition Distribution asserted in a 31-page brief filed with the Ninth Circuit by its outside counsel, Robert Tauler, of the law firm Tauler Smith LLP. “Rather, plaintiff’s claims solely concern defendants’ false and misleading statements about their products.”
Nutrition Distribution said it could show “defendants’ advertisements have misled, confused or deceived consumers through … expert testimony and consumer market data.”
In its brief and at oral arguments, Nutrition Distribution highlighted the importance of private lawsuits brought under the Lanham Act.
In POM Wonderful LLC v. Coca Cola Co., the U.S. Supreme Court recognized “the Lanham Act and the FDCA complement each other in regulating misleading labels as each has its own scope and purpose,” Lisa Zepeda, an attorney with Tauler Smith, advised a panel of judges on the Ninth Circuit during oral arguments in December.
IronMag Labs maintained the Supreme Court case concerned a legal issue distinct from primary jurisdiction: whether the FDCA barred Lanham Act lawsuits like the one brought by POM Wonderful against Coca Cola.
Michael Adams, an attorney representing IronMag Labs, also observed in a brief that the case related to a determination by a district court that “POM could never state a Lanham Act claim because of federal preclusion.
“With primary jurisdiction, in contrast, the plaintiff is not barred from alleging a claim in the future following the agency’s final determination,” added Adams, a partner with the law firm Rutan & Tucker LLP.
Nutrition Distribution’s appeal also involved the sufficiency of a claim brought in a first amended complaint under the Racketeer Influenced and Corrupt Organizations Act (RICO).
While the supplement company pointed to allegations that defendants’ racketeering activities diverted sales to a website selling competing products, Real held Nutrition Distribution failed to sufficiently allege concrete losses. During oral arguments, Zepeda said the company could allege additional facts in support of its RICO claim.
GTx Clinical Trials
GTx weighed in on a distinct issue from the ones briefed by the parties to the litigation: the legal effect of its ongoing clinical drug trials of ostarine.
Subject to certain exceptions under federal law, compounds authorized for investigation as a new drug and the subject of substantial clinical trials made public are prohibited from being used in dietary supplements. GTx reported ostarine meets the criteria above, as confirmed by its ongoing clinical trials referenced in a 2017 FDA warning letter to IronMag Labs.
“Because ostarine is authorized for investigation as a new drug, is the subject of publicly disclosed substantial clinical investigations, and was not previously marketed as a dietary supplement or as a food, ostarine is excluded from the statutory definition of a ‘dietary supplement,’” GTx proclaimed in a brief filed by its outside counsel, Gretchen Hoff Varner, of the law firm Covington & Burling LLP. “Accordingly, the district court’s conclusion that there was a dispute about whether IronMag Labs’ ostarine-containing product was a ‘dietary supplement’ or a ‘drug’ is wholly unfounded.”
In an emailed statement, Henry Doggrell, vice president, chief legal officer and secretary of GTx, reported an increase in the illegal sale of SARMs by supplement companies.
“GTx believes that supplements sold on the internet, particularly SARMs, should have greater regulatory oversight to ensure that consumers know what ingredients they are putting into their bodies, and that only safe products are being sold,” he told INSIDER. “GTx wants product safety above all, and has begun to warn about illegal sale of SARMs.”
IronMag Labs’ Warning Letter
A few days after GTx filed its brief, the Ninth Circuit ordered Nutrition Distribution and IronMag Labs to address the significance of FDA’s warning letter to IronMag Labs.
In response, Nutrition Distribution wrote the “letter simply confirms what is clear from the plain statutory language—the ostarine products are not ‘dietary supplements’ under the FDCA because ostarine has been authorized for investigation as a new drug and is the subject of publicly disclosed clinical investigations.”
Nutrition Distribution reiterated the district court doesn’t need to determine whether the defendants’ sale of ostarine violated the FDCA to rule on its claims. “Regardless, defendants’ statements about their products may still be false and misleading,” the supplement company maintained in its supplemental brief.
According to the lawsuit filed by Nutrition Distribution, IronMag Labs claimed its products provide various benefits, such as increased muscle mass and strength, without any adverse effects. However, Nutrition Distribution alleged ostarine has many published side effects.
In an advisory in October, FDA cautioned SARMs are associated with serious safety concerns, including the potential to increase the risk of heart attack and stroke, and other life-threatening reactions, like liver damage. That same month, FDA issued warning letters to three sports nutrition companies—including IronMag Labs—for distributing products that contain SARMs.
FDA warned IronMag Labs that distribution of its product, Super DMZ 4.0, violated federal law because it contained ostarine. Asked at the time to respond to the letter, DiMaggio said the product was discontinued more than two years ago and replaced with a version that didn’t contain any SARMs.
“IronMag Labs has not used a SARM in any of our products since 2015, and all of our ingredients and compounds currently used comply with all DSHEA [Dietary Supplement Health and Education Act] regulations,” he said in an emailed statement.
IronMag Labs disputed Nutrition Distribution’s argument that FDA’s warning letter demonstrated clear violations of the law.
“In sum, the warning letter is not a final decision of the FDA that IronMag’s discontinued Super DMZ 4.0 product violates the FDCA,” IronMag Labs proclaimed in its supplemental brief. “The warning letter obligates neither IronMag nor the FDA to take any future action. Instead, the warning letter is an intermediary step in the FDA’s review of products that precedes the agency’s final determination.”
The district court judge, IronMag Labs argued, was correct to invoke primary jurisdiction as a basis to dismiss the lawsuit.
“The advertising and sale of products containing SARMs, such as ostarine, is a prime example of a technical, regulatory issue that is squarely within the jurisdiction of the FDA,” the company wrote in its supplement brief. “The warning letter also demonstrates that the FDA is in the process of reviewing products containing ostarine. Where, as here, the agency is in the process of making a determination on a key issue in the litigation, courts find it particularly appropriate to defer to the agency.”
On Dec. 6, in Pasadena, California, a three-judge panel of the Ninth Circuit heard oral arguments in the case. Tauler said he expected the Ninth Circuit to render a decision within the next few months.
Zepeda argued the primary jurisdiction doctrine didn’t apply to the lawsuit filed by Nutrition Distribution.
“The doctrine should only be invoked in a very limited set of circumstances, none of which exist here,” she said at oral arguments. “The issue of whether defendants are falsely advertising products containing ostarine is not an issue of first impression and not a particularly complicated issue that is committed to the FDA.”
Added Nutrition Distribution’s lawyer: “Instead, plaintiff’s claims rest on a determination of whether defendants’ advertisements are likely to deceive a reasonable consumer. This is not an area requiring the FDA’s expertise, as courts are experienced and qualified in determining whether conduct is misleading.”
However, Circuit Judge Consuelo M. Callahan referenced the complaint’s allegations that IronMag’s products are misbranded prescription or new drugs under the FDCA.
“Aren’t these issues within the FDA’s regulatory authority and expertise, and if not, why not?” the judge asked.
Zepeda said the allegations “provide some context here … but the allegations concerning the FDCA are not critical to the claims.” She said Nutrition Distribution has offered to amend the complaint to omit any references to the FDCA, if permitted by the court to do so.
Brian Berggren, an associate with Rutan & Tucker, distinguished the lawsuit against his clients from a typical false advertising case between competitors. During oral arguments, the lawyer described the complaint as one involving violations and determinations under the FDCA concerning “whether ostarine is a new drug, a prescription drug or [has] been misbranded as a dietary supplement.” He argued the district court correctly applied primary jurisdiction.
Callahan asked Berggren about IronMag Labs’ assertion that FDA’s warning letter isn’t significant for the purposes of primary judgment because it doesn’t constitute a final determination by the agency. He responded, the warning letter is advisory and not formal under an FDA manual and case law.
“What that means is, while it may communicate the agency’s position on a matter, it’s … not final; it may change,” Berggren said. “There’s no enforcement action that needs to be taken, and so, as a result of the lack of enforcement action, there’s no legal consequence that flows from the letter. There’s no rights or obligations that have been predetermined.”
He also said certain issues—such as a misclassification of an ingredient and whether something is a new drug—are ones “firmly committed to the FDA.”
Circuit Judge Carlos T. Bea asked Berggren whether FDA would still need to make determinations if Nutrition Distribution was granted permission to amend its complaint and omit its allegations that IronMag Labs’ products are misbranded as dietary supplements, and are prescription or new drugs. Berggren suggested FDA’s expertise would still be required, saying “context in this case is important.” But Bea interjected.
“She’s [Zepeda] removing the context,” the judge said. “She’s saying, ‘We’re … not relying on FDA determinations. We’re relying on other allegations of misleading conduct.’”
Berggren responded that a determination under the FDCA is required for plaintiffs to prove an allegation that, for example, something is effective and safe. Again, Bea seemed unconvinced—the judge suggested an expert could testify on such matters.
The judge also noted the district court could have granted Nutrition Distribution permission to amend its complaint, eliminating portions of the lawsuit related to FDA’s jurisdiction.
Before the hearing was adjourned, Zepeda clarified, in response to questions from the bench, that she was requesting a reversal of the district court’s order of dismissal and permission to amend Nutrition Distribution’s complaint.
But earlier, in response to questioning from Bea, Berggren argued Nutrition Distribution waived certain rights in the case—including the right to amend its complaint.
Editor's note: One day after this story was published, the Ninth Circuit issued a ruling on the "primary jurisdiction" doctrine and sent the case back to the district court.