The parties are rival manufacturers of tizanidine, a drug for treating spasticity. Plaintiffs Apotex Incorporated and Apotex Corporation (collectively “Apotex”) allege that defendant Acorda Therapeutics, Inc. (“Acorda”) (i) filed a sham citizen petition with the Food and Drug Administration (“FDA”) to hinder approval of Apotex’s competing formulation in violation of Section Two of the Sherman Act, and (ii) violated the Lanham Act’s proscription on false advertising. As relevant here, the competition between the manufacturers focused on the relative efficacy of tablets or capsules in controlling somnolence, one of the side effects of tizanidine.
The United States District Court for the Southern District of New York (Swain, J.) ruled that the simultaneous approval .by the FDA of Apotex’s drug application and its denial of Acorda’s citizen petition (raising concerns about the application) was by itself insufficient to support a Sherman Act claim. After discovery, the district court (Torres, J.) granted summary judgment and dismissed all of Apotex’s false advertising claims on the grounds that (with the exception of one graph) no representation was literally false or likely to mislead consumers; and that, as to that one graph, Apotex failed to show that the false depiction would meaningfully impact consumers’ purchasing decisions.
Apotex appeals both rulings, arguing that precedent from this Court allows its antitrust claim to survive dismissal and that material issues of fact pertinent to Acorda’s representations remain for a jury to decide. We affirm these rulings.
Although precedent supports an inference that a citizen petition is an anticom-petitive weapon if it attacks a rival drug application and is denied the same day that the application is approved, that inference has been undercut by recent FDA
BACKGROUND
Tizanidine tablets are used to treat spas-ticity, a symptom of multiple sclerosis and Parkinson’s disease. One of the tablets’ most common side effects is somnolence: sleepiness or drowsiness. Tizanidine tablets were first marketed in the United States by Elan Pharmaceuticals, Inc. (“Elan”), under the trade name “Zanaflex.” (Elan later sold its rights to Acorda.)
Zanaflex tablets were initially approved for sale by the FDA on November 27, 1996. In October 2001, Elan submitted a New Drug Application (“NDA”) to the FDA seeking approval to market tizani-dine in capsule form. During its review, the FDA concluded that the absorption of the drug was delayed when tizanidine capsules were taken with food (rather than without), and that the delay was associated with a mean 20 percent decrease in Cmax, the peak amount of the drug in a subject’s bloodstream. More importantly, the FDA found that “[w]hen bioequivalence of the capsule relative to the tablet is examined under fed conditions [ie., with food], there is a delay in absorption and the mean Cmax for the capsule is approximately 2/3 of the mean Cmax for the tablet (Figure 1).” Joint Appendix at 2280 (emphasis added). The FDA subsequently approved Elan’s NDA on August 29, 2002.
The significance of this phenomenon, in plain terms, is that the faster the drug is absorbed, the more drowsy the patient may become, whereas the side effect may be reduced if absorption is slowed.
While the NDA was pending, Elan filed a patent application for methods of administering tizanidine capsules to reduce somnolence and Cmax. Less than a month after the FDA approved the NDA, Elan’s patent issued as United States Patent No. 6,455,557 (“the '557 patent”). Elan then received permission to market its newly approved tizanidine capsules under the trade name “Zanaflex Capsules.” In July 2004, Acorda acquired the rights to Zana-flex tablets and Zanaflex Capsules; in April 2005, it launched the sale of Zanaflex Capsules. Apotex had begun selling its generic tizanidine tablet product in 2004, and was one of about ten companies to do so. At the time Acorda began selling Za-naflex Capsules, Apotex’s tizanidine tablet product had a five percent market share.
Zanaflex Capsules on the open market carried an FDA label pertaining both to the Capsules and the tablets. The preamble to this label invites doctors to distinguish between tablets and Capsules, and between the drug when taken with food and without:
PHARMACOKINETIC DIFFERENCES BETWEEN ZANAFLEX capsules™ and zanaflex® TABLETS: ZANAFLEX CAPSULES™ ARE NOT BIOEQUIVALENT TO ZANAFLEX® TABLETS IN THE FED STATE. THE PRESCRIBER SHOULD BE THOROUGHLY FAMILIAR WITH THE COMPLEX EFFECTS OF FOOD ON TIZANIDINE PHARMACOKINETICS (see PHAR-MACOKINETICS and DOSAGE AND ADMINISTRATION).
Joint Appendix at 643. The Pharmacoki-netics section of the label, under the subheading “Pharmacokinetic differences between Zanaflex Capsules™ and Zanaflex® Tablets,” advises (consistent with the FDA review of the Zanaflex Capsules NDA)
The label contains a graph that figures in a number of the false advertising claims. Referred to as “Figure 1,” the graph is titled “Mean Tizanidine Concentration vs. Time Profiles for Zanaflex Tablets and Capsules (2x4 mg) Under Fasted and Fed Conditions.” It displays the mean plasma tizanidine concentration at various hours from dosing. The peak for the curve representing tizanidine capsules (taken with food) is lower, and occurs later than the peak for the curve charting concentration over time for tizanidine tablets (taken with food).
The label then explains, in the Dosage and Administration section, that pharma-cokinetic differences between the fed and fasted state may affect the frequency and onset of certain adverse events. (The text is in the margin.
In 2007, Apotex filed an Abbreviated New Drug Application (“ANDA”) — a filing that seeks generic drug approval for an existing licensed medication or approved drug — in order to sell generic tizanidine capsules which would provide competition to Acorda’s Zanaflex Capsules. In the ANDA, Apotex certified that it was not encroaching on any validly claimed intellectual property rights because the '557 patent was invalid. In predictable response, Acorda filed a patent-infringement suit in 2007. After a seven-day bench trial, the United States District Court for the District of New Jersey (Brown, /.) ruled in September 2011 that the '557 patent was invalid. See Acorda Therapeutics Inc. v. Apotex Inc., No. 07-4937 (GEB-MCA),
Soon after that ruling, Acorda filed a citizen petition with the FDA raising problems with Apotex’s ANDA. The citizen petition is a means afforded by the FDA for raising concerns about products the FDA reviews; any individual may file such a petition concerning scientific or legal issues before or while the product is on the market. See 21 C.F.R. § 10.30. Conceptually, citizen petitions provide an avenue for public input into the drug approval process; but the process has been abused by pharmaceutical companies that file merit-less petitions intended to delay approvals sought by their competitors and inhibit competition. Acorda’s citizen petition objected to (1) Apotex’s statement that its product was bioequivalent to Reference Listed Drugs (RLDs) in the fed state; and (2) allegedly misleading or untrue state
The FDA denied Aeorda’s citizen petition on February 3, 2012. That same day, the FDA approved Apotex’s ANDA. The Sherman Act claim relies principally on the FDA’s simultaneous dispositions.
With the green light from the FDA, Apotex launched its product. Acorda countered with its own authorized generic version of Zanaflex Capsules. Apotex contends that in the course of Acorda’s marketing: (1) its representatives misrepresented to doctors that Zanaflex Capsules reduced Cmax — in comparison with the tablets — and then improperly used reduction in Cmax as a proxy for a corresponding decrease in somnolence; and (2) Acorda distributed written promotional materials to the same effect. In total, Acorda’s advertising efforts contributed to sales of more than $240 million attributable to its version of Zanaflex Capsules.
Apotex commenced this lawsuit in December 2011, amending its complaint in February 2012 to include the FDA’s denial of Acorda’s citizen petition. Acorda countered with a motion to dismiss, which the district court (Swain, J.) granted with respect to the Sherman Act claim and denied with respect to the Lanham Act claims. The district court observed that Apotex’s Sherman Act claim relied purely on temporal proximity — the denial of Acorda’s citizen petition on the same day the Apotex ANDA was approved — and concluded that was insufficient to state a claim in view of recent legislation making the requirements for delaying an ANDA application more stringent: “Congresses] explicit directive that ANDA processing should not ordinarily be delayed by a citizen petition, coupled with its narrowing for the grounds for any such delay and the statutory notice requirement, strongly undermines any inference that mere simultaneity of ANDA and citizen petition decisions is indicative of the delay of one by reason of pendency of the other.” Apotex Inc. et al., v. Acorda Therapeutics, Inc., No. 1:11-cv-8803 (S.D.N.Y. Feb. 7, 2013), Doc. 45 at 7 (Swain, J.) (‘Apotex I”). Apotex moved for leave to amend, but the motion was denied in the interest of judicial economy.
After the case was reassigned to Judge Torres, Acorda successfully moved for summary judgment on the Lanham Act claims. Judge Torres began the analysis with the principle that: “[i]n the context of pharmaceutical drugs, courts have generally rejected Lanham Act claims based on advertisements that merely repeat labeling information that has been approved by the FDA.” Apotex Inc. v. Acorda Therapeutics, Inc., No. 11-cv-8803(AT),
Apotex appeals both decisions.
DISCUSSION
Apotex’s Sherman Act claim was dispatched at the motion-to-dismiss stage,
Summary judgment “is appropriate when, having resolved all ambiguities and permissible factual inferences in favor of the party against whom summary judgment is sought, there are no genuine issues of material fact in dispute and the movant is entitled to judgment as a matter of law.” Baez v. JetBlue Airways Corp.,
I
The claim that Acorda’s filing of a sham citizen petition constitutes illegal monopolization arises under Section Two of the Sherman Act, which imposes liability on: “[e]very person who shall monopolize, or attempt to monopolize ... any part of the trade or commerce among the several [s]tates.... ” 15 U.S.C. § 2. A complaint alleging that a competitor filed a sham citizen petition with the FDA states a claim under that section. See In re DDAVP Direct Purchaser Antitrust Litig.,
As relevant here, the factual basis for the claim in DDAVP was “that the sham petition caused a delay in generic competition, a possibility reinforced by the fact that the FDA approved the generic drug on the same day that it rejected the petition.”
However, the FDA issued a new Guidance for Industry (“Guidance”) explaining how the FDA determines if a petition implicates an issue of public health, and how the FDA’s decision-making process is affected by the simultaneous pendency of an ANDA application and a
The Guidance explains: “If a petition requests that the Agency take an action related to a specific aspect of a pending application, we will consider the review status of the affected application(s) in determining whether it would be appropriate for the Agency to respond to the request to take the action requested in the petition within the 180-day timeframe.” Joint Appendix at 530 (emphasis added). Such consideration is necessary because of the differing procedural rights of an ANDA applicant and the writer of a citizen petition. “[T]he Agency must give the [ANDA] applicant notice of an opportunity for a hearing on whether the application is approvable, with a specific timeframe and process should the applicant request such a hearing.” Id. at 531. FDA decisions adjudicating citizen petitions, on the other hand, “are subject to immediate review by the courts. They therefore carry with them none of the procedural rights for the affected applicants that attach to a decision to deny approval of an application.” Id. To bring these procedural arrangements into sync, the FDA states that it is preferable not to issue a decision on a citizen petition until it issues a decision on the corresponding ANDA application. See id. (“If we were to respond substantively to a petitioner’s request regarding the ap-provability of ... the application as a whole, such [a] response could interfere with the statutory and regulatory scheme governing the review of applications and related procedural rights of applicants.”).
Although it remains conceivable, notwithstanding the Guidance, that a citizen petition might cause anticompetitive delay, the Guidance tends to undermine the inference (drawn in DDAVP and advocated now by Apotex) that when a citizen petition is denied simultaneously with the grant of an ANDA petition, the citizen petition was a sham and an anticompetitive weapon. The Guidance favors contemporaneous adjudications to safeguard the procedural rights of ANDA applicants such as Apotex.
The FDA letter rejecting Acorda’s citizen petition reinforces this conclusion.
Similarly, with respect to Acorda’s labeling argument, the FDA “disagreefd]” with Acorda that the Cmax of Apotex’s product in the fed state was increased compared to the RLDs. Id. at 420. Apotex elides the distinction between arguments that fail to move the FDA and arguments that are false and objectively baseless. As the Supreme Court has cautioned, courts need to “ ‘resist the understandable temptation to engage in post hoc reasoning by concluding’ that an ultimately unsuccessful ‘action must have been unreasonable or without foundation.’ ” Real Estate Inv’rs,
Apotex relies on In re Suboxone Antitrust Litig.,
In the alternative, Apotex argues that the district court’s denial of leave to amend the antitrust claim was based on a misapplication of the rules set forth in the Southern District’s Pilot Project Regarding Case Management Techniques for Complex Civil Cases (“Pilot Rules”). However, the district court denied the motion to amend in the interests of judicial economy, not because of Apotex’s noncompliance with the Pilot Rules. Apotex sought to amend in order to cite the FDA’s fourth annual report to Congress, issued in December 2012, detailing the ineffectiveness of the FDAAA. The district court found that this report was available to Apotex before its decision issued dismissing Apotex’s claims in February 2013, that Acorda expressly relied on the FDAAA in its initial motion to dismiss Apotex’s Sherman Act claim, and that Apotex brought the FDA annual report to the district court’s attention only after Acorda’s motion to dismiss was adjudicated. Because Apotex delayed seeking leave to include the FDA’s fourth annual report until March 2013, and because the general findings of the report were largely immaterial to Apotex’s specific claim, the district court concluded that the interests of judicial economy warranted denial of Apotex’s motion. We have consistently afforded district courts latitude to deny leave to amend on this basis. See Ruffolo v. Oppenheimer & Co.,
In sum, Apotex has not stated a claim under Section Two of the Sherman Act, and the district court did not abuse its discretion in denying Apotex leave to amend. The district court’s decision dismissing Apotex’s antitrust claim is affirmed.
II
The Lanham Act’s prohibition on false advertising states:
Any person who, on or in connection with any goods or services ... uses in commerce ... any ... false or misleading description of fact, or false or misleading representation of fact, which ... in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is likely to be damaged by such act.
First (and obviously), a plaintiff bringing a false advertising claim must show falsity. There are two ways to do that. First, a “plaintiff can demonstrate that the challenged advertisement is literally false, i.e., false on its face.” Time Warner Cable, Inc. v. DIRECTV, Inc.,
“Alternatively, a plaintiff can show that the advertisement, while not literally false, is nevertheless likely to mislead or confuse consumers.” Time Warner,
Falsity alone does not make a false advertising claim viable; “[u]nder either theory, the plaintiff must also demonstrate that the false or misleading representation involved an inherent or material quality of the product.” Id. n. 3. Such a “requirement is essentially one of materiality, a term explicitly used in other circuits.” S.C. Johnson & Son, Inc. v. Clorox Co.,
Such a rule reflects proper “deference to the expertise” of the FDA as the regulatory agency responsible for issuing the label by respecting the exhaustive process preceding the issuance of a; label. Am. Home Prods. Corp. v. Johnson & Johnson,
We “have been careful not to permit overextension of the Lanham Act to intrude on First Amendment values.” Groden v. Random House, Inc.,
Apotex, however, goes further and contends that Acorda’s advertisements exceeded the boundaries imposed by the FDA label. Each of Apotex’s specific Lan-ham Act challenges is now considered.
1. Statements by Acorda’s Sales Representatives
Apotex challenges statements, attributable to Acorda sales representatives, that patients taking Zanaflex Capsules with food enjoy the benefits of reduced Cmax, including dosing flexibility and diminished somnolence. Representative samples of these sales pitches include the following:
Upon learning of the ability to decrease somnolence ... by using Zanaflex Capsules, the doctors agreed to give it a try.
Joint Appendix at 3072;
I explained to [the doctor] that the [C]apsule[ ] [is] really unique in that it counteracts a lot of the drowsiness when you dose it with food. He said he would give that a try and see how well it works for his patients.
Joint Appendix at 3093.
When Acorda learned that its representatives may have made unauthorized promotional claims for Zanaflex Capsules, Acorda’s head of sales sent a memorandum to the sales team explicitly forbidding promotions that Zanaflex Capsules had fewer side effects and less sedation than the tablets.
Apotex specifically objects to representations that Zanaflex Capsules provide more flexibility than the Capsules’ counterpart — the tablets — a point on which the FDA label is silent. However, statements that Zanaflex Capsules reduce Cmax when taken with food are fully consistent with the FDA label, as the district court correctly found, and Lanham Act liability therefore cannot attach to these statements. See Apotex II,
Apotex next argues that Acorda’s sales representatives used Cmax as a proxy for somnolence and improperly claimed that Zanaflex Capsules reduce it. Critically, Apotex relies on a test-proven superiority argument — that the representations relied on tests or studies allegedly proving the superiority of Zanaflex Capsules. The district court, however, properly rejected liability under the test-proven superiority theory.
The theory comes into play only when the “defendant’s advertisement] explicitly or implicitly represents that tests or studies prove its product superior....” Castrol,
Talked to Dr. Corondan for the first time. I asked him about the most common complaint with Zanaflex tablets and he said the drowsiness and then we went to the graph and I discussed the [Capsules (which is how I love a call to work out).
Joint Appendix at 1520. At no point in this passage is it explicitly stated or implied that Figure 1 necessarily shows that Zanaflex Capsules reduce somnolence; instead, the graph was used as a tool for
2. Acorda’s Promotional Materials
Supplementing representations by Acorda’s sales team were written promotional materials heralding the benefits of Zanaflex Capsules in a manner Apotex believes was false and misleading. Apotex specifically attacks Acorda’s “gatefold brochure,” a piece of advertising that Acorda disseminated in the thousands. The front cover announces: “Flexible Control in a Capsule” directly above two images of the sun and the moon with the words “DAY” and “NIGHT” printed underneath. The bottom of the front cover urges: “For Treatment of Spasticity When Relief is Most Important.” The second page contains Figure 1 juxtaposed with relevant Cmax data, along with additional text at the bottom of the graph. The text reads:
Effects and Adverse Events are Dose Related to Plasma Levels of Tizanidine.
• Significant pharmacokinetic changes including plasma level differences occur when administering Zanaflex Capsules or tablets with food.
• These (pharmacokinetic) differences can result in clinically important differences in effectiveness and adverse events.
Joint Appendix at 3327-28. See Appendix A.
Apotex asserts that the brochure is misleading as a whole because the sun and moon imagery, with the text underneath the graph on page 2 of the brochure, delivers the message that Zanaflex Capsules undoubtedly reduce Cmax and somnolence.
Although Acorda argues that it merely reprinted the graph from the FDA label in its advertisements (including the gatefold brochure) Apotex accuses Acorda of manipulation because the following text is superimposed on the graph: “30% INCREASE FOR TABLETS”; “20% DECREASE FOR CAPSULES.” Joint Appendix at 3258. Apotex argues that the graphic, as a whole, conveys a false message because Figure 1 depicts mean tizani-dine concentration, which is the average drug concentration at different points in time, while the text relates to Cmax data, which is the maximum drug concentration
With the exception of the version of Figure 1 with superimposed text, Apotex fails to create a triable issue of fact as to the falsity of the brochure. Literal falsity cannot be shown because no unambiguous message is conveyed by the remainder of the brochure; Apotex argues that the presence of the sun and the moon implies that the drug is equally effective during the day and at night and thereby implies efficacy in combating somnolence. This conclusion is plausible, but it is not unambiguous, especially because the cover never mentions somnolence. Nor has Apotex shown extrinsic evidence of consumer confusion with respect to the sun-moon imagery. Apotex relies on internal marketing statements from Aeorda focusing on reduced Cmax and somnolence; but Acor-da’s motivations for launching the gatefold brochure do not constitute extrinsic evidence as required.
Apotex contends that the district court erred by examining the brochure in isolation while ignoring the context of Acorda’s launch letters and other documents detailing Acorda’s marketing efforts. True, a “district court evaluating whether an advertisement is literally false ‘must analyze the message conveyed in full context.’ ” Time Warner,
Acorda’s use of the version of Figure 1 with superimposed text, seen on the second page of the gatefold brochure, raises a closer issue.
• Figure 1 shows the average concentration for a group of subjects over time after the drug is administered (i.e., the mean drug concentration); while
• Cmax is the maximum concentration of the drug that is reached in a subject, which varies from subject to subject and is not correlated with the time elapsed from administration of the drug.
Since Cmax values are not time-dependent, and Figure 1 displays mean drug concentration over time, Figure 1 cannot display mean Cmax values. We therefore agree with the district court that “a reasonable juror could determine that the juxtaposition of this text and image communicates a literally false message.” Apotex II,
Applying the materiality standard, the district court concluded that, at most, Acorda “overstated the increase in mean tizanidine plasma concentration” but that this evidence ultimately ‘'does not reveal anything about the impact on consumers’ purchasing decisions.” Apotex II,
The remainder • of Apotex’s attacks on Acorda’s promotional materials suffer from a common flaw: although Acorda unquestionably made statements that were not drawn from the FDA label, the thrust of Chesebrough is that this fact is insufficient to show falsity. A pharmaceutical company is entitled to make advertising statements outside the four corners of an FDA label so long as none of its representations is inconsistent with it.
In sum, the district court correctly granted summary judgment on all of Apo-tex’s false advertising claims.
CONCLUSION
For the foregoing reasons, we AFFIRM the judgment of the district court.
Notes
. "These pharmacokinetic differences may result in clinically significant differences when [1] switching administration of the tablet between the fed or fasted state, [2] switching administration of the capsule between the fed or fasted state, [and] [3] switching between the tablet and capsule in the fed state.... These changes may result in increased adverse events or delayed/more rapid onset of activity, depending upon the nature of the switch. For this reason, the prescriber should be thoroughly familiar with the changes in kinetics associated with these different conditions....” Joint Appendix at 646.
. The FDA’s Medical Review of the Zanaflex Capsules NDA observed: “The most problematic potential situation is that of patients switching from the capsule formulation to the tablet formulation in the fed state, where there is a risk of more severe side effects with excessive hypertension and somnolence.” Id. at 2102 (emphasis omitted).
. The document can be accessed at the following website: Food and Drug Administration, Citizen Petitions and Petitions for Stay of Action Subject to Section 505(q) of the Federal Food, Drug, and Cosmetic Act-Guidance for Industry (June 8, 2011), http://www. regulations.gov/# IdocumentDetail; D=FDA-2009-D-0008-0011.
. While DDAVP was pending on appeal, Congress promulgated the Food and Drug Administration Amendments Act 0‘FDAAA”), which provides in part that consideration of a citizen petition shall not delay FDA approval of an ANDA unless a “delay is necessary to protect the public health.” 21 U.S.C. § 355(q)(l)(A)(ii). If the FDA determines that delay is necessary, it must give notice to the applicant "not later than 30 days after making such [a] determination” along with a brief summary of the "specific substantive issues raised in the petition which form the basis of the determination.” Id. § (B). However, it is not evident that the FDAAA has curbed all abuses of the citizen petition process. See Michael Carrier & Daryl Wander, Citizen Petitions: An Empirical Study, 34 Cardozo L. Rev. 249, 283 (2012) ("[W]hat is clear is that the
. Apotex's assertions that Acorda falsely mis-characterized trial testimony and misrepresented Apotex’s bioequivalence studies are legal contentions, not factual allegations, and therefore need not be credited. See Bell Atl. Corp. v. Twombly,
. We may consider this document because the pleading " ‘relies heavily upon its terms and effect,’ which renders the document ‘integral’ to the complaint.” Chambers v. Time Warner, Inc.,
. Apotex’s reliance on Tyco Healthcare Grp. LP v. Mut. Pharm. Co.,
. See also Grubbs v. Sheakley Grp., Inc.,
. See Mylan Pharms.,
. Lanham Act liability might arise if an advertisement uses information contained in an FDA-approved label that does not correspond substantially to the label, or otherwise renders the advertisement literally or implicitly false.