Non-binding Guidance | Talkin’ Trade: Trends in False Advertising and Related Competitor Disputes Involving FDA-Regulated Products

On this special collaborative episode of Ropes & Gray's Non-binding Guidance and Talkin’ Trade podcast series, life sciences regulatory and compliance partner Josh Oyster is joined by intellectual property litigation partner Matt Rizzolo to discuss the complex world of false advertising and unfair competition disputes involving drugs, medical devices, and other FDA-regulated products. Together, they explore recent developments in Lanham Act competitor lawsuits, ITC investigations, and the shifting regulatory landscape. Discover the nuances of private litigation, the powerful remedies available through Section 337 investigations, and the potential impact of recent changes at FDA.

Transcript:

At a glance: Click the links below to advance directly to the corresponding sections of the transcript:

• [0:00] Introduction
• [1:00] Trends in Claims and Cases
• [15:20] Impact of FDA Changes
• [17:15] Conclusion

[0:00] Introduction

Josh Oyster: Hi, I’m Josh Oyster, a partner in the life sciences regulatory and compliance practice group at Ropes & Gray based in Washington, D.C.

Matt Rizzolo: And I’m Matt Rizzolo, a partner in our IP litigation practice group, also based in D.C. and co-host of Ropes & Gray’s Talkin’ Trade podcast.

Josh Oyster: We’ve got a special episode for you today because it’s actually a collaboration of both our Non-binding Guidance and Talkin’ Trade podcast series. Non-binding Guidance is a podcast series focused on current trends in FDA regulatory law as well as other important developments affecting the life sciences industry.

Matt Rizzolo: And Talkin’ Trade explores the ins and outs of Section 337 investigations at the U.S. International Trade Commission (“ITC”). On today’s podcast, we’ll discuss false advertising disputes involving medical products companies and other FDA-regulated products, focusing on recent developments in Lanham Act competitor lawsuits, ITC investigations, and the potential impact of the shifting regulatory and government enforcement landscape.

[1:00] Trends in Claims and Cases

Josh Oyster: What do we mean by false advertising and competitor disputes? Well, there are two common scenarios we run into with our life sciences clients:

• In the first scenario, our client is upset that a competitor is not complying with the FDA requirements of one form or another. Typically, the competitor is engaged in what our client perceives as false or misleading advertising or otherwise misleading positioning of their product in the marketplace. And this is causing significant harm to our client. When it seems like FDA is not taking steps to stop the competitor’s misconduct, our clients want to know what they can do to take matters into their own hands to protect their interests.
• The other scenario is really the reverse of the first. Our client may come to us after they’ve received a cease-and-desist letter or some other nasty correspondence from a competitor, alleging that our client has engaged in false advertising or some misconduct that violates FDA requirements. And our client wants to understand what can happen if the competitor escalates the issue and how our client can best respond and defend themselves.
• Private litigation—typically a lawsuit under the federal Lanham Act or state unfair competition laws—can often arise from these scenarios. But these scenarios can also lead to investigations by the ITC.

Before we go too far down the road, Matt, can you provide a very quick refresher on the Lanham Act, as well as how Section 337 investigations at the ITC can be relevant here?

Matt Rizzolo: Sure. Section 43(a) of the Lanham Act allows competitors to sue in federal court for false or misleading statements in commercial advertising and promotion. The ITC, which is not a court, is an independent quasi-judicial federal agency based in D.C. that’s responsible for, among other things, enforcing Section 337 of the Tariff Act. Although most of these Section 337 investigations traditionally focus on patent issues and some involve trademark-related allegations, we’ve seen a growing number of ITC complaints in recent years alleging false advertising or other claims that do not involve statutory IP. When companies allege false advertising related to drugs or medical devices, they need to navigate around potential arguments that their cases are precluded by the Food, Drug, and Cosmetic Act (“FDCA”) or fall under the FDA’s so-called primary jurisdiction. Since the FDCA does not authorize private enforcement of FDA requirements, companies can’t directly allege violations of the FDCA or its regulations in Lanham Act lawsuits in district court or in complaints to the ITC.

Josh Oyster: In the last few years, the most significant private legal actions that we’ve seen involving FDA-regulated products have focused on GLP-1 drugs for the treatment of obesity and diabetes, particularly compounded GLP-1 drugs. These cases have gotten significant media attention and have been closely watched by the industry. Manufacturers of FDA-approved GLP-1 drugs have sued compounders and related entities for false advertising, trademark infringement, unfair competition under state laws, and sometimes patent infringement. A number of these cases have resulted in settlements. Many are still ongoing and being litigated. It’s hard to draw any broad conclusions from the cases that have been litigated because the outcomes tend to be very fact specific and depend on the specific conduct of a defendant in terms of the specific statements that they’re making in advertising, on their websites, in the marketplace, etc.

What is really notable is just the sheer number of lawsuits that have been brought and the real focus it has gotten in the industry. A couple of the recent lawsuits brought by a GLP-1 drug manufacturer even raised a new theory of unfair competition. Specifically, the manufacturer alleges in these new cases that the defendants, which are telehealth companies offering compounded GLP-1 medications, violated California laws regulating the corporate practice of medicine and that these corporate practice of medicine violations in turn constitute acts of unfair competition under California law. It’ll be interesting to watch how those cases unfold and whether we’ll continue to see novel theories of unfair competition under state laws in California and elsewhere.

Matt, in addition to these lawsuits, there’s been at least one action at the ITC involving unapproved GLP-1 drugs, right?

Matt Rizzolo: Yes, that’s right. No allegations there of corporate practice of medicine, but there was a case recently—it was instituted in 2023 and involved allegations of false advertising, false designation of origin, and trademark infringement concentrating products containing an approved GLP-1 drug. The ITC instituted an investigation, went through the proceeding, and the presiding administrative law judge (“ALJ”) made an initial determination that an exclusion order and cease-and-desist order should issue to prevent the illicit import of these products as well as prevent ancillary activities relating to them in the United States. The ALJ, and subsequently, the Commission, found that several entities here were likely deceiving consumers about both the nature of the products at issue—what ingredients they had in them—as well as the source of those products, implying that they were actually coming from the branded drug manufacturer when they were not. The ITC issued exclusion orders as well as cease-and-desist orders to a fairly large number of respondents in that case, giving the manufacturer the relief that it was seeking.

Josh, outside of the GLP-1-related cases, what about other cases involving drug compounders?

Josh Oyster: There was a really interesting case recently involving state law unfair competition claims in April 2025. The Fifth Circuit denied a motion to dismiss by a compounder and allowed a drug manufacturer to proceed with state law-based unfair competition claims that were premised on the compounder’s sales of compounded versions of the manufacturer’s drug without federal FDA approval. The states at issue in these cases each have state laws that—through one phrasing or another—generally require drugs to have federal FDA approval. The Fifth Circuit found that there was no preemption of these state laws, at least at the motion to dismiss stage, because given that procedural posture, the defendant compounder could not establish that they met all of the conditions under the Food, Drug, and Cosmetic Act to be exempt from FDA approval requirements, and therefore, the defendant could not prove that the state laws in these cases would be impermissibly adding to federal requirements.

The upshot of the Fifth Circuit’s decision seems to be that a compounder would never be able to get similar state law-based claims dismissed at the motion to dismiss stage. This outcome appears to conflict with other decisions in similar cases, including a Ninth Circuit case from a few years ago. Now, the defendant in the Fifth Circuit case is not taking this lying down—they’ve petitioned for rehearing en banc before the Fifth Circuit, arguing, among other things, that the Fifth Circuit panel effectively overruled some binding Fifth Circuit precedent from other cases dealing with FDCA preemption in other contexts.

Matt, switching gears a bit, one question that I’ve seen arise from time to time, particularly in these compounding cases, is whether a compounder’s protected from patent infringement claims if they’re compounding drug products that are in shortage and that otherwise comply with FDA requirements. What’s your take on that?

Matt Rizzolo: It’s that it’s an interesting theory, but the short answer is that compliance with FDA requirements or a compounding regulatory regime by itself doesn’t insulate a party from patent litigation or patent infringement claims from a private party, and it’s not a defense to patent infringement. These are totally separate legal regimes: one is regulatory, set up by the government; one is private party—patent infringement is akin to a tort. So, the fact that there may not have been many patent claims brought by manufacturers against compounders in the past may be more because prior disputes with compounders often involve drugs with no patent protection at all. But here, we have the increased popularity of novel GLP-1 drugs—high margins; there’s a lot of money at issue—so this has changed the status quo.

I will say, the government does have some power to immunize private parties from infringement claims, but that is limited to situations where the acts that are being complained of are taken on behalf of the government and with the government’s authorization or consent. Typically, this is in the government contractor context—think missiles, jets, the like. In those situations, the patent owner needs to sue the government in the Court of Federal Claims under 28 U.S.C. Section 1498, and that same statute would provide the private party with a defense were they to be sued in district court. But in the situation that we’re talking about, the compounding that’s being done is not done for the government, and the government hasn’t authorized the private parties to infringe, so 1498 doesn’t apply.

Josh Oyster: Got it. Thanks so much for that helpful clarification. Matt, we’ve talked a lot about some of the cases and some of the theories that arise in litigation and at the ITC. What kinds of damages are we talking about that can be recovered in Lanham Act cases? How much is really at stake?

Matt Rizzolo: They can be really large. The Lanham Act authorizes the award of the defendant’s profits, plaintiff’s compensatory damages as well as costs incurred by the plaintiff. Most false advertising cases do settle early, but those that proceed beyond the preliminary relief stage can result in multi-million-dollar verdicts, getting into the tens or hundreds of millions of dollars in some cases. There was a recent Lanham Act case involving two oncology testing companies where a jury awarded over $292 million to one company because of false advertising by the other (and this included $75 million in compensatory damages, over $175 million in punitive damages, and a $42 million disgorgement of the defendant’s profits). Now, this award is being appealed, so it could be reduced on appeal, but it nevertheless illustrates the high dollar amounts that can be at stake in Lanham Act cases.

Josh Oyster: What about Section 337 investigations? What remedies can the ITC impose there, particularly for our audience, who may be less familiar with your usual Talkin’ Trade discussions?

Matt Rizzolo: The ITC, unlike district courts or state courts, cannot award damages, so the primary focus of ITC litigation is on prospective relief—it’s similar to an injunction. These exclusion orders, which is the default remedy from the ITC, they are injunction-like orders that are issued by the ITC, but unlike injunctions, which need to be self-policed by the party who obtains the injunction, exclusion orders are enforced automatically by U.S. Customs and Border Protection. If you obtain an exclusion order, the government will enforce it for you and stop the products that are at issue in the case at the border—it’s a very, very powerful remedy. And those exclusion orders can be limited in nature to the party that was at issue in the case, or in some instances, they can be general exclusion orders, where any party who is importing goods in a similar manner as the named party can be prohibited from importing them into the United States. So, in that GLP-1 investigation that we discussed earlier, the ITC issued a general exclusion order barring the import of tirzepatide-containing products that infringed the complainant’s trademark, and there was a limited exclusion order against some companies that prohibited them from importing falsely advertised products. In that case, the ITC said that anyone bringing in a product that infringes this trademark is automatically barred. They didn’t need to have actually been named as a party in that investigation. So, very, very powerful—it can provide a company with powerful leverage in a one-to-one business dispute, but also, it’s a useful tool to go after many different importers in one fell swoop.

As with claims in federal court, not all ITC proceedings end in the complainant’s favor. I’ve talked on Talkin’ Trade before about the Amarin v. ITC case from a few years back, where the Federal Circuit upheld the ITC’s decision that the Lanham Act-based allegations were precluded by the Food, Drug, and Cosmetic Act—they fell within the FDA’s primary jurisdiction there, and the ITC did not institute an investigation. There’s also some investigations that do get instituted but, on the merits, end up being closed after the ITC finds no violation. So, while the ITC is a promising avenue for a lot of complainants, it’s by no means a complete fail-safe.

[15:20] Impact of FDA Changes

Since President Trump took office in January, HHS has begun to reorganize and reduce its workforce and budget. Josh, I’m curious—this is obviously a bit of a different topic, but before we close here—what impact do you think these developments can have on FDA oversight and enforcement of manufacturers’ promotional activities? I’m interested in how this might affect companies’ incentives to pursue self-help avenues via Lanham Act or ITC complaints or otherwise.

Josh Oyster: Yes, it’s a really interesting topic and a really interesting issue to be considering. Now, we don’t have time for a full discussion of how this may affect FDA priorities related to manufacturer advertising and promotion, but the reductions in force that have occurred and the loss of experienced FDA leaders—especially within the FDA’s Office of Prescription Drug Promotion, where many staff have been laid off and the director has resigned—likely means fewer people and resources dedicated to overseeing and enforcing compliance in this area, at least in the near term. It’s not clear whether this will actually result in fewer enforcement actions but stands to reason it’s unlikely we’re going to see more enforcement in this area by the FDA when they have fewer resources and staff under the new administration. That means that life sciences companies may find it even harder to get the FDA to act against competitors they believe are engaging in wrongdoing, which makes self-help remedies—lawsuits based on false advertising and unfair competition, and Section 337 investigations at the ITC—all the more attractive. And I think we’re likely to see more and more of this in the coming years.

Matt Rizzolo: That makes a lot of sense.

[17:15] Conclusion

Josh Oyster: Well, thanks, Matt. I want to thank all of our listeners for tuning in. Please don’t hesitate to reach out to either one of us if you have any feedback or questions about today’s episode or topics like the Lanham Act or ITC investigations. You can find our contact information and more information about our practices on ropesgray.com. You can listen to Non-binding Guidance, Talkin’ Trade, and other RopesTalk podcasts through our ropesgray.com website, or you can subscribe wherever you listen to podcasts. Thanks again for tuning in.