Exeltis USA Inc. v. First Databank, Inc.

Exeltis USA Inc. v. First Databank, Inc.

Opinion

ORDER DENYING MOTION FOR PRELIMINARY INJUNCTION, MOTION TO STRIKE, AND MOTION TO DISMISS

Re: Dkt. Nos. 3, 26

Pending before the Court is Plaintiff Exeltis USA Inc.'s motion for a preliminary injunction, Dkt. No. 3, and Defendant First Databank Inc.'s related motion to strike and motion to dismiss, Dkt. No. 26. For the reasons detailed below, the Court DENIES Plaintiff's motion for a preliminary injunction, DENIES Defendant's motion to strike, and DENIES Defendant's motion to dismiss.

I. BACKGROUND

A. Factual Background¹

At the heart of this case is a regulatory question about the [*2]  prescription status of prenatal vitamins under federal law. Plaintiff manufactures and sells prenatal vitamins. See Dkt. No. 1 ¶¶ 3, 9 ("Compl."). According to Plaintiff, its products, which contain 1 mg of folic acid, are not available without a prescription and are labeled and sold "by prescription only." Id. ¶¶ 3, 40. Defendant publishes a database of information about pharmaceutical products, including Plaintiff's prenatal vitamins. Id. ¶¶ 2, 10. Medicaid and insurance providers ("payors") purchase and use Defendant's database to make reimbursement decisions. Id. ¶¶ 2, 10, 46-47.

Defendant announced in May 2017 that it was revising its coding for dietary supplements and medical foods. See id. ¶ 1; see also Dkt. No. 26-1, Ex. E. Historically, the "class value" field in Defendant's database signified whether manufacturers identified their products as prescription-only. Dkt. No. 26-1, Ex. B at 2368. It used code "F" where "[p]roduct labeling indicates prescription or physician supervision required for use" and code "O" where the "[p]roduct has no labeling indicating dispensing limitations." Id. Then in 2016, following guidance by the Food and Drug Administration ("FDA") that medical foods cannot be [*3]  properly labeled "prescription only," see Dkt. No. 26-1, Ex. A,² Defendant amended the "class value" field to "identif[y] a product's prescription status" under federal law. See Compl. ¶¶ 49-50; Dkt. No. 1-2, Ex. B at 379-80, 2506; Dkt. No. 26-1, Ex. C at 2504. Under this revised field, code "F" signifies "[d]rugs that are prohibited by federal law from being dispensed without a prescription" and code "O" signifies "[p]roducts with no federal legal prescription requirement, including medical foods, dietary supplements, non-prescription medical devices, and over-the-counter drugs." Dkt. No. 1-2, Ex. B at 379-80, 2506; Dkt. No. 26-1, Ex. C at 2504. However, code "F" still explicitly included "prenatal vitamins labeled as prescription." Dkt. No. 26-1, Ex. C at 2504. Now, Defendant intends to remove the reference under "F" to prenatal vitamins and change its coding for all dietary supplements and medical foods — including Plaintiff's prescription prenatal vitamins — to "O." Compl. ¶ 58; see also 26-1, Ex. D at 2529 & Ex. E. Absent Court intervention, these proposed changes are set to go into effect on February 28, 2018. See Dkt. No. 53.

Plaintiff [*4]  contends that Defendant's coding decision, categorizing all prenatal vitamins as "O" instead of "F," is false and misleading. Compl. ¶¶ 59, 79, 88, 99, 107, 115. Relatedly, because this coding is false, Plaintiff contends that Defendant's statements that its database is "robust, reliable, and [offers] effective medication decision support solution[s]" are also false. See Dkt. No. 3 at 18. Plaintiff further urges that Defendant's new coding "will lead to widespread denial of Medicaid and insurance coverage for [prenatal vitamins]." Compl. ¶ 4. Plaintiff states that as a consequence, women will have more limited access to these vitamins, which help prevent serious birth defects such as anencephaly and spina bifida. Id. ¶¶ 5-7, 15-16, 24-25, 67. It may also "destroy" Plaintiff's business model, in which only 6% of its prenatal vitamins are paid for out-of-pocket. Id. ¶¶ 8, 76.

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