Lies, Damned Lies, and Drug Advertising: Judge Turns Blind Eye to AZ's "Deceptive" Purple Pill Ads

Last Updated May 11, 2010 1:26 PM EDT

AstraZeneca (AZN) has again prevailed in a lawsuit that claimed the company deceptively marketed the heartburn drug Nexium as superior to Prilosec when in reality they're basically the same thing. The ruling illustrates how difficult it is for consumers and healthcare coverage providers to get redress in the courts if they find out belatedly that they've been hoodwinked. AZ also prevailed in an earlier case on substantially the same set of issues.

The newest ruling -- from a Delaware federal court -- suggests that drug companies can tell as many lies as they like as long as consumers and insurers don't expressly rely on those ads when taking the medicine.

The history here is that 99 percent of people in the pharmaceutical business agree that Nexium and Prilosec are all-but identical products. (AZ begs to differ, naturally.) Chemically, Nexium is Prilosec except without one of Prilosec's less-active mirror image isomers. The drugs work in identical ways. (The ruling even has a useful footnote describing how similar the two drugs are on page 6).

AZ spent millions of dollars touting the launch of Nexium ("the Purple Pill") after Prilosec went generic in 2001. The FDA approved Nexium after AZ published a study which showed that it offered a statistically significant improvement over Prilosec. Many healthcare providers then added Nexium to the list of the treatments they would cover.

As the years went by, the industry slowly began to believe that Nexium wasn't an advanced version of Prilosec, but a trick that allowed AZ to gain a new patent on an old drug. Thomas Scully, the administrator of the federal Centers for Medicare and Medicaid Services, famously gave a speech in which he said:

You should be embarrassed if you prescribe Nexium because it increases costs with no medical benefits... The fact is Nexium is Prilosec. It is the same drug. It is a mirror compound.
But even if AZ's Nexium ads were all a bunch of lies, patients and insurers can't get their money back, judge Eduardo Robreno ruled. As virtually all consumers get their meds only after a doctor writes a prescription, and reimbursers rely on the prescription in handing over the drug, neither party is "relying" on the advertising -- no matter how deceptive it might be. (To make matters worse, the plaintiffs forgot to expressly state that they paid for the drugs because of the advertising, the ruling says.)

The lesson for healthcare benefit managers here is that you should probably send notarized letters to drug companies that say, "Hey, we saw your ads on TV and on that basis are covering your drugs!" That seems to be the only way to preserve your rights against misleading claims.

The judge offered one small glimmer of hope for consumers and insurers: He invited the plaintiffs to refile their case, and his ruling reads like an instruction sheet on how to word the new complaint.