Unreported / Non-Citable
Background
Eli Lilly sued Empower Clinic Services, which operates as Empower Pharmacy, over Empower’s marketing and sale of compounded tirzepatide products. Lilly develops and sells the FDA-approved tirzepatide medications MOUNJARO and ZEPBOUND, while Empower sells orally dissolving tirzepatide tablets and injections combining tirzepatide with niacinamide.
Lilly alleged that Empower falsely or misleadingly promoted its products as safe, effective, personalized, and compliant with regulatory standards even though they had not undergone clinical trials or received FDA approval. Lilly asserted false advertising under the Lanham Act, Texas common-law claims, and statutory claims under the laws of Alaska, Colorado, Connecticut, Hawaii, North Carolina, South Carolina, Tennessee, and Washington. Empower moved under Rule 12(b)(6) to dismiss all claims.
The Court’s Holding
The court dismissed Lilly’s Lanham Act claim because Lilly did not plausibly allege that Empower’s advertising proximately caused injury to Lilly. Although alleged lost sales and harm to brand reputation fell within the Lanham Act’s zone of interests, Lilly did not plead facts linking Empower’s advertisements to customers switching from Lilly’s products or to actual reputational harm. General allegations that some Empower sales otherwise would have gone to Lilly were insufficient.
The court also dismissed Lilly’s Texas common-law claims for failure to state a claim but rejected Empower’s argument that the remaining state-law claims were federally preempted. It allowed Lilly’s statutory claims under Alaska, Colorado, Connecticut, Hawaii, North Carolina, South Carolina, Tennessee, and Washington law to proceed, concluding that claimed regulatory exemptions generally presented affirmative defenses that Empower had to plead and prove. The court denied Empower’s discovery-stay and protective-order motions as moot.
Key Takeaways
- A Lanham Act plaintiff must plead facts plausibly connecting the challenged advertising to lost sales or reputational injury; conclusory assertions of diverted sales do not establish proximate causation.
- Lilly’s state-law challenges to Empower’s alleged sale and promotion of unapproved tirzepatide products were not federally preempted at the pleading stage.
- State-law exemptions for authorized or regulated compounding did not warrant dismissal where their application depended on whether Empower satisfied the relevant statutory requirements.
Why It Matters
The decision illustrates the demanding causation allegations required when a branded drugmaker uses the Lanham Act to challenge advertising for compounded alternatives. Even direct competitors must identify facts tying particular advertising to diverted customers or concrete reputational harm.
At the same time, dismissal of the federal claim did not end the litigation. Lilly may continue pursuing statutory claims in eight states, while Empower may later attempt to prove that state compounding or regulated-conduct exemptions shield its activities.