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Natera Countersues CareDx for False Advertising

NEW YORK – Natera on Tuesday filed a countersuit against CareDx, accusing the molecular diagnostics company of false advertising, "tortious interference with Natera's prospective economic advantage," unfair competition, and violations of the Delaware Uniform Deceptive Trade Practices Act.

The two companies have been locked in a court battle since April 2019 when CareDx filed suit against Natera, accusing the company of trying to "mislead" patients and clinicians into thinking that Natera's Prospera kidney transplant test was superior to CareDx's AlloSure organ transplant diagnostics. CareDx made four claims against Natera: false advertising in violation of the Lanham Act, trademark disparagement under the Lanham Act, common law unfair competition, and unfair or deceptive trade practices under Delaware law.

CareDx alleged that Natera's comparisons of its kidney transplant test to AlloSure were based on unscientific and unreliable data.

"Natera has begun a false advertising campaign designed to deceive doctors, healthcare professionals, insurance companies, and patients — as well as investors — into believing that Natera's 'me too' test is superior to AlloSure when that has simply not been shown," CareDx stated in its complaint at the time. "Natera's dissemination of false and misleading claims about AlloSure is an attempt to poison the marketplace and must be stopped."

In May, Natera filed a motion to dismiss the suit, calling the complaint "fatally flawed" and citing a lack of standing on the part of CareDx to bring such an action.

On Dec. 20, 2019, a magistrate judge recommended that Natera's motion to dismiss the counts relating to trademark disparagement and unfair trade practices be granted without prejudice, and that CareDx be given 14 days to refile amended complaints for those claims. However, the magistrate did recommend upholding the false advertising and unfair competition claims, and denying Natera's motions for dismissal of those counts. He found Natera's argument for dismissal unpersuasive, noting that CareDx had established its standing to sue under the Lanham Act and that the company had sufficiently argued several elements of a false advertising claim against Natera.

A judge for the Unites States District Court of Delaware adopted those recommendations and issued an official ruling in January.

Now, Natera is claiming that CareDx has embarked on a "malicious campaign to deceive physicians and healthcare providers by discouraging interest" in the Prospera test, thereby improperly attempting to shield itself from competition, "and putting patients at risk."

CareDx has conducted a campaign of "false and misleading advertising and promotion," and its employees have made "improper" public statements," Natera's brief adds.

Natera noted that it obtained final Medicare coverage for Prospera on Dec. 19, saying that the coverage was awarded "despite CareDx's efforts to interfere in the review process with meritless attempts to undermine the evidence before the Molecular Diagnostic Services (MolDX) Program." During the MolDX review process, Natera said it received 11 positive comments and 3 negative comments. The company alleges that all the negative comments it got are "associated with" CareDx, and were part of the company's efforts to interfere with Prospera's review.

Beyond its alleged attempts to interfere with Natera obtaining Medicare coverage, Natera believes that CareDx has also interfered with its efforts to translate its research into a kidney transplant diagnostic test for patients. "CareDx has falsely and misleadingly represented to healthcare providers and others in the industry that: (a) Natera's clinical data is not accurate — although it is and was independently ranked higher in strength than CareDx’s by MolDX; (b) Natera's assay in no way compares favorably to CareDx's corresponding assay — although it does; (c) Natera's research and the scientists who have carried it out cannot be trusted — although they can be; (d) CareDx’s assay is the 'only' cfDNA kidney transplant diagnostic — though it isn't; and (e) CareDx's assay performs as well as its marketing materials suggest — though it doesn't," Natera's brief states.

Natera further claims that while CareDx has misrepresented the value of Prospera, it has also "misleadingly" represented the performance of AlloSure by "manipulating categories and cutoffs" of data in its brochures to generate numbers that look more favorable.

"Not only that, CareDx's brochure creates the false impression that such reporting of data from disparate cohorts, or the same cohort with two different classification thresholds applied simultaneously, are somehow representative of a physician's likely clinical experience," Natera adds.

These and other statements CareDx has made will be confirmed through discovery, Natera said, adding that they constitute false advertising, have interfered with Natera's business, constitute unfair competition, and violate Delaware's laws on unfair and deceptive trade practices.

The company is asking for a trial by jury, an order preliminarily and permanently enjoining CareDx from disseminating what it calls "false and misleading claims," an order requiring CareDx to take corrective measures to correct these claims among healthcare professionals, a declaration that Natera has not engaged in any false advertising or unfair competition and has not violated any section of the Delaware Uniform Deceptive Trade Practices Act, actual monetary damages such as lost profits and harm to reputation, and CareDx's "ill-gotten and unjustly derived revenues." The company is also asking for punitive and exemplary damages, litigation costs, and attorneys' fees.

CareDx had not responded to a request for comment by the time this article was published.