GlaxoSmithKline has defeated claims by the ACCC that revised packaging for its now-discontinued pain killer Osteo Gel misled consumers. The drug maker will face penalties for earlier violations it admitted to, but the court hinted the damages will be nowhere near the $6 million competitor Reckitt Benckiser faced in a similar case.
The regulator accused GSK and Novartis of making false and misleading claims in marketing Osteo Gel and EmulGel, saying they were promoted as two separate treatments, for osteoarthritis and soft tissue sports injuries, respectively, despite being chemically identical. Both firms have admitted to contravening the Australian Consumer Law with regard to packaging and website information used prior to March 2017. GSK took Osteo Gel 1% off the shelves in May 2018.
In a decision published Friday, Justice Robert Bromwich said that after “anxious and prolonged consideration” he had concluded the ACCC had not made out its case that GSK’s revised packaging for Osteo Gel violated the ACL. “Perhaps by a whisker”, GSK had convinced the judge that the addition of the words “same effective formula as Voltaren Emulgel” — coupled with a new, easier-to-use cap and different dosage information — went far enough to dispel any misperception that Osteo Gel was specifically formulated to treat or was more effective at treating osteoarthritis.
“There is no doubt that the additional words and where they were placed have, only just, saved GSK from that finding of further contraventions. It would not have taken a lot more evidence – or put another way, for much less additional information on the packaging – for the result to have been different,” Justice Bromwich said.
“Little lasting comfort is to be obtained from this decision. It undoubtedly would have been better for GSK not to have danced so close to the edge,” the judge said.
The consumer regulator argued the changes to the packaging had to be viewed in light of the earlier misleading representations, which the companies admitted to following the Full Court’s decision upholding a $6 million penalty against Reckitt Benckiser for misleading consumers into believing its different Nurofen products were formulated to treat specific types of pain.
The ACCC argued the revised packaging amounted to a “disclaimer” that did not go far enough to correct the earlier misrepresentations. But Justice Bromwich said the packaging was “sufficiently changed” and that this was not a disclaimer case.
A “difficult balance”
In his ruling, Justice Bromwich pointed to the benefits to consumers of differential marketing — an older consumer with osteoarthritis is not compelled by the consumer laws to be presented with “a shopping list of conditions” in order to find out if a product would suit their needs, the judge said. Differential marketing is not barred by the consumer laws, provided consumers are not misled into believing another product with the same ingredients is not sufficient to treat their ailments, Justice Bromwich clarified.
The judge agreed with GSK that its Osteo Gel packaging amounted to differential marketing that was not misleading or deceptive, but admitted this was a “difficult balance” to achieve.
“A difficult balance may need to be struck between marketing to the effect that a product is,
correctly, suitable for use in treating a specific condition, which is not of itself proscribed, and giving the misleading impression that a product has been specifically formulated for such a condition, which is proscribed if that is not true.”
The ACCC had argued the differential packaging, including the easier-to-open cap, contributed to the misleading and deceptive illusion that Osteo Gel was specifically formulated to treat osteoarthritis.
Not another Nurofen
The companies will be on the hook for damages for the admitted contraventions with respect to the earlier packaging, Justice Bromwich found, but indicated the penalties would be nowhere near the $6 million imposed in the Nurofen case.
Justice Bromwich countered parallels the ACCC sought to make to the Nurofen case.
“To be clear, the Nurofen case did not involve any genuine attempt at differential marketing, as opposed to flagrant deception. This case, even for the admitted contraventions, is in a different category,” Justice Bromwich said.
The prior packaging was not “overwhelmingly misleading”, as the ACCC had contended, and the conduct was not as “extreme” as in the Nurofen case.
“At trial, the original packaging would have been found to be misleading, but not in the most egregious category. Some ordinary consumers, perhaps many, would have been misled, but others would not,” the judge said.
The violations the companies had admitted to had been made by implication, and not by express false statement, as Reckitt had done with the Nurofen products, the judge said.
GSK and Novartis had argued the earlier contraventions only amounted to violations of section 18 of the ACL, which does not carry a penalty.
The ACCC said the court’s finding that the companies should face penalties served as a warning.
“This case serves as a warning to all businesses that misleading consumers into thinking that products are specifically formulated to treat or target certain conditions when this is not the case can lead to serious consequences,” ACCC Commissioner Sarah Court said.
“Novartis and GSK’s conduct continued after the ACCC’s successful action against the makers of Nurofen for similar conduct involving its pain relief products. In this case both gels are identical and are equally effective in treating osteoarthritis symptoms and a range of other pain conditions.”
In an earlier press release, the ACCC incorrectly stated the Federal Court had found GSK and Novartis breached the ACL.
The ACCC is represented by Kate Morgan and Jeremy Clarke, instructed by solicitors with Webb Henderson. GSK and Novartis are represented Richard Cobden and Hamish Bevan, instructed by solicitors with Bird & Bird.