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From Health Law Daily, February 3, 2016

‘Wonder drug’ fraud claims left too much to the imagination

By Bryant Storm, J.D.

A district court dismissed a consumer class action lawsuit which alleged that the manufacturers and distributors of the pharmaceutical product Anatabloc® misrepresented the medicinal benefits of the product. The consumers alleged that the product was misrepresented as a “wonder drug” capable of providing “anti-inflammatory support” and other medical benefits, despite the fact that the manufacturers and distributors knew that was not the case. The court held that the claims were inadequately plead because the consumers failed to demonstrate both reliance on specific statements and that those statements were false (Baldwin v. Star Scientific, Inc., February 2, 2016, Pallmeyer, R.).

Miracle supplement. Star Scientific, Inc. launched Anatabloc as a “miracle supplement” in 2011. Anatabloc contains vitamins A and D3 and anatabine, an alkaloid found in the tobacco plant. The label of Anatabloc indicates that the product provides “anti-inflammatory support.” Star Scientific used print and television ads to convey the anti-inflammatory benefits of the drug. After seeing multiple advertisements and representations of the drug’s alleged benefits, two consumers, one from Illinois and one from Missouri, began using the drug, which they purchased at a GNC Holdings, Inc. store and through an online subscription on Rock Creek Pharmaceuticals, Inc. website. After noticing that Anatabloc was not providing the promised relief, both consumers stopped taking the drug. The consumers filed lawsuits under Illinois and Missouri law on behalf of other consumers who took Anatabloc, alleging that the companies misrepresented the therapeutic effects of the product in a manner that was fraudulent.

FDA. On December 13, 2013, the FDA notified Star Scientific that the therapeutic claims on Star Scientific’s website established that Anatabloc was a drug, and, therefore, required FDA approval before it could be marketed. Star Scientific and Rock Creek responded by filing a New Dietary Ingredient Notification (NDIN), in the hopes of having the product designated as a dietary supplement, rather than a drug. When the FDA declined to give Anatabloc such a designation, Star Scientific and Rock Creek permanently suspended sales of Anatabloc on September 12, 2014. Subsequently, a governor and his wife were found guilty for accepting bribes to endorse the product and Star Scientific settled two lawsuits with shareholders over the incident pertaining to violations of securities laws and breaches of fiduciary duties.

Fraud. Star Scientific, Rock Creek, and GNC asserted that the consumers’ complaint did not adequately plead fraud under the state consumer fraud statutes. The court explained that although the consumers challenged the validity of the product claims regarding a variety of other therapeutic benefits, because the consumers did not allege reliance on claims with regard to any other particular representations, only the anti-inflammatory claims were relevant to the analysis. The court found the allegations inadequate because they did not identify specific fraudulent misrepresentations in the form of specific statements, commercials, or other advertisements. Additionally, the court reasoned that the consumers failed to properly plead that the product “did not work” as advertised. Without specific allegations as to how the product failed to perform, the court held that it could not draw a reasonable inference as to whether Star Scientific and Rock Creek knew that Anatabloc could not provide the desired anti-inflammatory support.

Science. Although the consumers pointed to evidence that certain scientific representations in support of the product were false, the court found no evidence that the consumers relied on those representations. Additionally, the court held that to make a plausible allegation of the falsity of those statements, the consumers needed to have shown scientific studies or other evidence showing that Anatabloc was ineffective at treating inflammation.

The case is No. 14 C 588.

Attorneys: Elizabeth A. Fegan (Hagens Berman Sobol Shapiro LLP) for Howard T. Baldwin and Jerry Van Norman. Paul J. Walsen (K&L Gates LLP) for Star Scientific Inc., Rock Creek Pharmaceuticals, Inc. and GNC Holdings, Inc. Kenn Brotman (Kelley Drye & Warren LLP) for RCP Development, Inc.

Companies: Star Scientific Inc.; Rock Creek Pharmaceuticals, Inc.; GNC Holdings, Inc.; RCP Development, Inc.

MainStory: TopStory CaseDecisions FDCActNews AdvertisingNews SupplementNews DrugBiologicNews FraudNews LabelingNews MisbrandingNews SafetyNews IllinoisNews

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