Schering Corporation v. Pfizer Inc.

189 F.3d 218 (2nd Cir. 1999)

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Nature of the Case

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Facts

P produces Claritin, a prescription antihistamine. Claritin causes no more sedation than placebos in clinical tests. This feature has been important to Claritin's market success. UCB developed a competing second-generation prescription antihistamine called 'Zyrtec.' UCB licensed D to co-promote the product. D was required to perform several controlled clinical tests on Zyrtec before the drug could be registered for domestic use. The tests revealed that Zyrtec causes approximately twice as much sedation as a placebo. The FDA required D to caution both physicians and consumers, through proper labeling and warning instructions, that Zyrtec has these sedating qualities. The FDA also warned D that it would be misleading to advertise Zyrtec by focusing on the rate at which customers discontinued using the drug because of somnolence (i.e., 1%) rather than the drug's somnolence level itself. (i.e., 11-14%). D employed a team of approximately 1200 sales representatives to visit physicians across the nation and emphasize the product's qualities in one-on-one informational meetings called 'detailings.' D representatives were to promote Zyrtec, persuade doctors to prescribe it more often, and respond to any questions or concerns that doctors might have about the drug. No records were kept of these meetings. P believed that D was flat-out lying to the doctors. P hired IMS America, a commercial vendor of market surveys, to conduct a survey of physicians to determine whether any such misrepresentations were being made. P filed suit against D for violating Section 43(a)(2) of the Lanham Act, 15 U.S.C. § 1125(a)(2) (1994), by false advertising. This dispute ended in a settlement agreement. Believing in trust but verify P hired DTW to perform another survey of physicians concerning statements being made in the detailings. This survey polled 78 physicians who had been detailed between March 30 and June 5, 1998, and who were allegedly representative of a panel of over 6000 physicians nationwide who prescribe high volumes of antihistamines. The survey results suggested that approximately 30% of the Zyrtec agents were representing that the drug was either low sedating or nonsedating. P commissioned a second survey from DTW and asked more specifically: 'What did the representative say about the product and sedation?' Approximately half of the physicians polled reported a representative describing Zyrtec as low sedating or nonsedating. P complaint do D. P continued to monitor D's compliance by commissioning another survey, this time from the firm Clarke, Matire, and Bartolomeo (CMB). This survey polled 200 physicians, who were selected randomly from those who prescribe antihistamines in above-minimal quantities nationwide. The survey indicated that 47% of D representatives were calling the product either low sedating or nonsedating. P sought a preliminary injunction against ongoing and pervasive breaches of the Settlement Agreement and Section 43(a)(2) of the Lanham Act. D had commissioned Market Measures Inc. (MMI) to perform a 'FasTape Survey,' a common type of market survey that probes the main messages conveyed in an advertising campaign, 'to understand the key messages and competitive claims concerning the sedation side effect pertaining to Zyrtec.' This survey involved a random sample of 74 physicians, who were allegedly representative of a panel of over 20,000 doctors prescribing antihistamines nationwide. The FasTape Survey stated that 'D representatives appear to be focusing almost equally on the drug's indications . . . and efficacy, followed by its low/no sedation.' Lakshmi Gengler, a market research executive at D indicated that 'physicians report one-third of Zyrtec sales representatives mentioning low/non sedation with respect to Zyrtec's side effect profile and mechanism of action.' Zyrtec representatives were suggesting at a rate of approximately 21% in June of 1998 and 15% in July of 1998 that Zyrtec was nonsedating. P was unable to obtain the entire survey, P commissioned its own Scott-Levin [Survey, which polled approximately 150 physicians per month from March through August of 1998. The survey results suggested that on average, approximately 16% of the Zyrtec agents were communicating a message that Zyrtec was nonsedating. P sought to introduce five surveys: the two DTW surveys, the CMB Survey, the FasTape Survey, and the Scott-Levin Survey. P also sought to introduce Pfizer's internal analysis of the FasTape Survey. P called to the stand Dr. Bartolomeo, an executive at CMB, who testified that it is 'very rare' for so many surveys of these kinds to have such consistent results. D responded with a motion arguing that all of this evidence contained hearsay and was thus inadmissible under Rule 802. The district court agreed and issued a written opinion refusing to admit P's surveys for any purpose. P appealed.