United States District Court, W.D. Virginia, Charlottesville Division
Glen E. Conrad Chief United States District Judge
fourth day of a bifurcated trial, a jury returned a verdict
in favor of the plaintiff, Concordia Pharmaceuticals, Inc.
("Concordia"), on its claim that the defendants,
Method Pharmaceuticals, LLC ("Defendant Method")
and Matthew Scott Tucker ("Defendant Tucker, and
collectively, "Method"), engaged in false
advertising in violation of the Lanham Act, 15 U.S.C. §
1125(a)(1)(B). In the subsequent damages phase of trial, the
jury found that Concordia was entitled to $733, 200.00 in
actual or compensatory damages. However, the jury also found
that Method's false advertising was not willful.
Concordia subsequently filed a motion for judgment as a
matter of law or a new trial on the issue of willfulness, a
motion for enhanced damages and prejudgment interest, and a
motion for attorneys' fees and litigation costs. This
memorandum opinion sets forth the court's rulings on
of 2014, Concordia acquired the Donnatal® line of
products ("Donnatal") from PBM Pharmaceuticals,
Inc. ("PBM"). Donnatal is a line of combination
phenobarbital and belladonna alkaloid ("PBA")
products that is used as adjunctive therapy in the treatment
of irritable bowel syndrome and acute enterocolitis. Donnatal
is available by prescription in the form of a tablet and an
was first introduced in the 1930s, before drug manufacturers
were required to prove that drugs were both safe and
effective in order to obtain approval by the Food and Drug
Administration ("FDA"). Although Donnatal products
have been approved for safety, the FDA has yet to determine
many years, Donnatal faced competition from generic PBA
products that were pharmaceutically equivalent to Donnatal.
In 2011, manufacturers of the generic versions began to take
their products off the market. Once the inventories of
previously manufactured generic products were eliminated,
Donnatal was the only line of PBA products available for
Method is a wholesale drug distribution company based in
Arlington, Texas. The company was founded by Defendant Tucker
in 2012 and he is the sole owner. During the time period at
issue, Christopher Boone served as the company's vice
president of operations.
sells approximately thirty pharmaceutical products that are
manufactured for the company by contract manufacturing
organizations. Rather than employing a sales force, Method
utilizes pharmaceutical databases to promote its products.
Method's admitted business strategy is to ensure that its
products are "linked" to existing drugs in the
databases, which are used by members of the pharmaceutical
industry to determine whether generic substitutes are
available for brand name products. See Tr. of Trial
Testimony of Matthew Scott Tucker ("Tucker Tr.") at
5, Docket No. 229 ("[M]y business model is to sell any
product that we have. Link[ing] would be the way we do
2013, Method began making plans to market a new product that
would be pharmaceutically equivalent to Donnatal. The new
product was eventually named Me-PB-Hyos. Method contacted
Winder Laboratories, LLC ("Winder") and expressed
an interest in having Winder manufacture the new product. In
December of 2013, Method issued a purchase order for initial
stability testing. However, Winder never performed the
stability testing necessary to develop Me-PB-Hyos, and no
finished product was manufactured by Winder or any other
in March of 2014, Method moved forward with its plans to
market Me-PB-Hyos as a generic alternative to Donnatal.
Method used the product labels and package inserts for
Donnatal tablets and elixir to create labels and inserts for
Me-PB-Hyos tablets and elixir. Method then proceeded to list
the nonexistent Me-PB-Hyos products with two of the major
pharmaceutical databases, Medi-Span and First Databank.
March 31, 2014, Method submitted the Me-PB-Hyos product
labels, along with new product submission forms, to
Medi-Span. As part of its efforts to have Me-PB-Hyos linked
to Donnatal in the Medi-Span database, Method listed
Donnatal's National Drug Code ("NDC") as the
Reference NDC. See Tr. of Trial Testimony of Christopher
Boone ("Boone Tr.") at 27, Docket No. 228
(acknowledging that Method identified Donnatal as the
reference drug for Me-PB-Hyos for the purpose of having
Me-PB-Hyos listed as its "generic equivalent");
see also Tr. of Trial - Day Three ("Day Three
Tr.") at 74, Docket No. 263 (confirming that Method
suggested that Me-PB-Hyos should be linked to Donnatal).
Method also provided pricing information for the Me-PB-Hyos
products. The listed prices for the Me-PB-Hyos products were
lower than the listed prices for the Donnatal products.
Although Method knew that the products described in the
Me-PB-Hyos labels and inserts did not exist, and that no
stability testing had been performed to develop the products,
Method indicated that the pricing information was effective
as of April 1, 2014. Based on the information provided by
Method, the Me-PB-Hyos products were listed in the Medi-Span
database and assigned the same Generic Product Identifier
("GPI") as Donnatal.
addition to Medi-Span, Method undertook to have its
Me-PB-Hyos products listed in First Databank's
pharmaceutical database. However, First Databank refused to
list the Me-PB-Hyos products without validation from
DailyMed, a website operated by the National Library of
Medicine. Consequently, Method endeavored to list the
Me-PB-Hyos products with DailyMed. Method sent DailyMed the
product labels for the nonexistent Me-PB-Hyos products.
Despite knowing that the products described in the labels did
not exist, and that no stability testing had been performed
to develop the products, Method indicated that it intended to
start marketing the products on June 1, 2014.
3, 2014, after successfully listing Me-PB-Hyos with DailyMed,
Method resubmitted the Me-PB-Hyos product labels to First
Databank. Method indicated that its planned launch date for
the products was June 1, 2014, a day that had already passed.
At that time, Method knew that no Me-PB-Hyos products were
available to launch the following day, much less two days
earlier. See Boone Tr. at 46-47. Method also knew that the
information that it provided would be relied upon by members
of the pharmaceutical industry. Id. Method's
efforts were once again successful, and the Me-PB-Hyos
products were listed in First Databank's pharmaceutical
database in early June 2014.
point, the Medi-Span listing also showed a marketing start
date of June 1, 2014 for the Me-PB-Hyos products. Method was
aware of this fact, and even reviewed the Medi-Span listing
on June 3, 2014 to confirm that the marketing start date had
been added. See Tucker Tr. at 25-26.
September 15, 2014, after the instant action was filed,
Method contacted Winder via email regarding the Me-PB-Hyos
project. Method indicated that it knew that Winder had not
started anything on the project, and that the company had
decided that it "might be best to bail on [the]
project." PL's Trial Ex. 25. Nonetheless, that same
day, in response to an inquiry from Medi-Span regarding the
status of Me-PB-Hyos, Method advised Medi-Span that
"Me-PB-Hyos is an active product and will be available
to ship by November 15, 2014." Boone Tr. at 40. Method
also confirmed that "[t]he pricing and label... are
current and correct." Id.
Method never launched the Me-PB-Hyos products, and the
products were not manufactured by Winder or any other
company. In mid-October 2014, Medi-Span removed the listings
for the Me-PB-Hyos products. Around the same time, First
Databank moved its listings for the Me-PB-Hyos products from
active listings to archived listings.
the Me-PB-Hyos products were listed with Medi-Span and First
Databank, Donnatal prescriptions and unit sales decreased.
During the course of the litigation, the parties strenuously
disputed whether the listings were the sole cause of the
reduction in prescriptions and unit sales. At trial,
Concordia presented evidence indicating that it experienced
lost sales in excess of $29.4 million dollars after the
Me-PB-Hyos products were listed with the databases. Concordia
maintained that the database listings for the nonexistent
products were solely responsible for the decline in sales.
Method, on the other hand, presented evidence indicating that
a number of other factors contributed to the reduction in
Donnatal unit sales, including significant increases in the
prices of Donnatal products.
also presented evidence regarding the efforts it undertook to
alleviate confusion in the marketplace regarding the
existence and availability of a generic alternative to
Donnatal. For instance, Concordia spent $885, 015.00 on a
coupon buy-down program implemented to combat the negative
effects of the listings for Me-PB-Hyos. The company also