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U.S. Department of Health and Human Services

Inspections, Compliance, Enforcement, and Criminal Investigations

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Court Updates and Other Enforcement Activities 2001

Chapter 7

Last Update: August 07, 2003

  

Court Decisions

 

 Buckman Co. v. Plaintiffs’ Legal Committee 531 U.S. 121 S. Ct. 1012, 148 L. Ed. 2d 8544. On February 21, 2001, the United States Supreme Court held that state law fraud-on-the FDA claims conflict with, and are therefore impliedly preempted by, the Federal Food, Drug, and Cosmetic Act. The Solicitor General, in response to an invitation from the Court for the government’s views, had argued in support of implied preemption. The plaintiffs in this case were persons who claimed they suffered injuries when their physicians implanted orthopedic bone screws into the pedicles of their spines. They alleged that the defendant Buckman Company fraudulently obtained marketing clearance from FDA for the pedicle screws pursuant to 21 U.S.C. § 360(k), and sought to hold the defendant liable under state tort law on the grounds that had FDA not been defrauded, the device would not have been cleared for marketing and plaintiffs would not have been injured. The U.S. Court of Appeals for the Third Circuit held that the claims were not preempted.

The U.S. Supreme Court reversed that decision. Writing for the Court, Chief Justice Rehnquist reasoned that the relationship between a federal agency and the entity it regulates is inherently federal because it originates from, is governed by, and terminates according to federal law. Because the defendant's dealings with FDA were prompted by the Medical Device Amendments of 1976 and the very subject matter of defendant's statements were dictated by that statute, no presumption of preemption exists. Rather, the court stated, the conflict arises here because the federal statutory scheme empowers the FDA to punish and deter fraud against the agency, and the agency uses this authority to achieve a delicate balance of statutory objectives that can be skewed by allowing state-law fraud-on-the-FDA claims.

The Court concluded that state-law fraud-on-the-FDA claims inevitably conflict with the FDA's responsibility to police fraud consistency with the agency's judgment and objectives.

Justice Stevens, joined by Justice Thomas, wrote a separate opinion g in the Court's judgment.

 

 Alliance for Bio-Integrity, et al. v. Shalala (No. 98-1300 D.D.C.) On Sept. 29, 2000, U.S. District Judge Colleen Kollar-Kotelly granted the government's motion for summary judgment and dismissed this challenge to FDA's regulatory policies concerning genetically engineered foods. In particular, the plaintiff group (consisting of public interest groups, a religious congregation, and numerous individuals) had made numerous allegations about the legality of the agency's 1992 policy statement, "Foods Derived From New Plant Varieties."

The court agreed with FDA that the policy statement was not a rule requiring notice and comment rulemaking. The court also agreed that the policy statement was not a "major federal action" within the meaning of the National Environmental Policy Act and, therefore, the agency was not required to prepare an environmental assessment or environmental impact statement.

The court deferred to FDA's interpretation of the Federal Food, Drug, and Cosmetic Act (Act) under which genetically engineered foods as a class are presumed to be generally recognized as safe (GRAS) and, therefore, do not require a food additive petition absent specific evidence rebutting that presumption. Likewise, the court deferred to FDA's interpretation that special labeling for genetically engineered foods is not required under section 201(n) of the Act if the sole justification for such a requirement is consumer demand. The court also upheld FDA's conclusion that the process used to develop the food did not warrant special labeling for genetically engineered foods as a class.

Finally, the court rejected plaintiffs' contention that the policy violated their First Amendment rights to free exercise of religion because the policy is neutral and generally applicable. The court further held that the policy does not violate the Religious Freedom Restoration Act in that it does not substantially burden plaintiffs' religion.

 

 In the Matter of Hoechst Marion Roussel, Inc., Carderm Capital L.P., and Andrx Corporation (FTC Docket No. 9293) On October 2, 2000, Federal Trade Commission Administrative Law Judge D. Michael Chappell granted FDA's Motions to Quash Subpoenas Served on it by Andrx Corporation and Aventis Pharmaceuticals, Inc (formerly Hoechst Marion Roussel, Inc.). The ALJ granted FDA's motions based on agency regulations at 21 CFR Part 20 which bar FDA from producing documents in response to a subpoena, and provide that document production will be handled pursuant to the agency's Freedom of Information Act regulations. The ALJ held that, although federal courts have declined to follow FDA regulations governing document disclosure on the grounds that the Federal Rules of Civil Procedure trumped FDA regulations, there was no basis for the ALJ to conclude that FTC Rules of Practice override FDA regulations. Accordingly, the ALJ allowed FDA to treat the companies' subpoenas as FOIA requests.

 

 Brubaker Amusement Co. v. United States (Fed. Cl.) On January 12, 2001, Judge Weinstein of the Court of Federal Claims issued a decision granting the government's motion to dismiss the FDA count in one of the five lead vending machine cases. More than 500 vending machine owners and operators have filed claims in that court seeking compensation for alleged "taking" of their cigarette vending machine businesses caused by FDA's tobacco regulations and SAMHSA's block grant program. The judges of that court have decided that five judges should each hear one case to serve as lead cases. On August 3, 2000, the government moved to dismiss the FDA count in the five lead cases.

Judge Weinstein is the second of the five judges to rule on the government's motion to dismiss and her decision was based on the same ground as the first. Judge Weinstein found that a compensable taking arises only if the government action in question is authorized by Congress. The Supreme Court held in FDA v. Brown & Williamson, 120 S. Ct. 1291 (2000), that FDA's tobacco rulemaking was not authorized by Congress.

Therefore, plaintiff failed to state a claim. The court did not reach the government's other grounds for dismissal.

 

 Western States Medical Center Pharmacy, et al. v. Shalala (9th Cir.) Affirmed by Thompson v. Western States Medical Center Pharmacy, et al., 152 L. Ed. 2d 563, 122 S. Ct. 1497 (2002) On February 6, 2001, the United States Court of Appeals for the Ninth Circuit affirmed in part and reversed in part a decision of the U.S. District Court for the District of Nevada involving a challenge to the constitutionality of two speech-related restrictions in section 503A of the Act (21 U.S.C. § 353a). Section 503A, which was enacted in November 1997, as part of FDAMA, exempts compounded drugs from the Act's new drug approval, adequate directions for use, and good manufacturing practice requirements if specified conditions are met. The provisions at issue provide that in order to qualify for the exemption, the compounded drug may not be based on a solicited prescription, section 503A(a), and the pharmacy, pharmacist, or physician may not advertise or promote the compounding of a particular drug, class of drug, or drug type, section 503A(c).

The enforcement of these two conditions has been enjoined since December 18, 1998, although the rest of section 503A remained in effect. The appellate court agreed that the section 503A's restrictions on commercial speech violate the First Amendment. The appellate court, however, concluded that the speech restrictions in section 503A(a) and section 503A(c) may not be severed from the rest of the provisions in section 503A, and held that section 503A is invalid in its entirety.

The court evaluated the restrictions under the test for the constitutionality of commercial speech restrictions set forth by the Supreme Court in Central Hudson. Although the appellate court agreed that the government has substantial interests in protecting the public's health and in preserving the integrity of the drug approval process, it concluded that the government failed to meet its burden of showing that the restrictions will advance these interests to a material degree. The court stated that government did not sufficiently demonstrate that the restrictions will reduce the type of consumption of compounded drugs that the government argued is harmful. The court further stated that the existence of numerous exceptions in section 503A demonstrate that the speech restrictions do not directly advance the government's interest in maintaining the integrity of the drug approval process.

The court further concluded that the restrictions are more extensive that necessary to achieve the government's interests because alternatives exist to the speech restrictions, such as disclaimers or requiring full-scale FDA review of compounded drugs. The restrictions, therefore, violate the First Amendment.

Reversing the district court, the appellate court held that the speech restrictions in sections 503A(a) and (c) cannot be severed from the rest of section 503A because the evidence in the legislative record interpreting the final legislation demonstrates that Congress meant to exempt compounding from the Act's requirements only in return for a prohibition on the promotion of specific compounded drugs. Accordingly, the court held that section 503A is invalid in its entirety.

 

 United States v. All Articles of Drug . . . Labeled As Containing L-Tyrosine, (D. Minn.). On February 16, 2001, the United States District Court for the District of Minnesota denied the Claimant's (Creative Labs, Inc.) motion to permit it to bring seized articles into compliance prior to condemnation. The products at issue include approximately $4 million worth of sun tan products seized by FDA. The claimant sought pre-condemnation release of articles, which were alleged to be new drugs, for reconditioning. The court held that based on the plain language of the statute and the relevant case law, that 21 U.S.C. § 334(d) did not authorize release of the products prior to a judicial determination of their legal status.

 

 In the Matter of Natural Organics, Inc., et al. (Federal Trade Commission, Docket No. 9394). On March 26, 2001, Chief Administrative Law Judge Timony issued an order granting FDA's motion to quash a subpoena for documents and testimony served on a CDER employee who had been asked by FTC to testify as a fact witness in an FTC proceeding, to explain FDA's role in the regulation of Deaner Tablets. The documents requested by Natural Organics included the DESI and NDA files for Deaner Tablets.

CDER agreed to the deposition of the employee and to the production of the DESI file, but resisted producing the NDA file on the grounds that it was overly burdensome and irrelevant to the employee's testimony. Judge Timony granted the motion "[b]ecause the employee is intended to testify on a narrowly limited topic and because the FDA has already produced documents relevant to that topic."

 

 Riceland Foods, Inc., v. Kentucky-Tennessee Clay Co. (E.D. Ark.) On February 23, 2001, District Court Judge George Howard, Jr., denied Kentucky-Tennessee Clay Company's (K-T Clay) motion to compel deposition testimony of current FDA employees in this litigation between two private parties involving chickens, dioxin, and ball clay used in the manufacture of animal feed.

FDA opposed K-T Clay's motion, arguing that its decision to deny K-T Clay's request for testimony of FDA employees was not arbitrary and capricious. After issuance of its subpoenas, K-T Clay had made a formal request for testimony of current FDA employees pursuant to 21 C.F.R. § 20.1, the regulation governing procedures for testimony requests. FDA argued that, in reviewing K-T Clay's request, FDA had considered whether authorizing the testimony would be in the public interest and promote the objectives of the agency and the Federal Food, Drug, and Cosmetic Act.

Finding that the factors would not be met by authorizing the employees to testify and that the information sought by K-T Clay could be obtained from public records, FDA denied K-T Clay's request. The court stated that the relevant factors in 21 C.F.R. § 20.1 were "thoroughly considered" by FDA and found that the agency's decision to deny its employees authorization to testify was not arbitrary and capricious.

Although K-T Clay also issued subpoenas seeking testimony of former FDA employees, the court did not explicitly address those subpoenas. If K-T Clay wishes to pursue those subpoenas, it would need to return to the court with another motion to depose the former FDA employees.

 

 St. Louis University v. United States (4th Cir.) On March 1, 2001, the Court of Appeals for the Fourth Circuit reversed a district court judge's grant of summary judgment for the government in this Federal Tort Claims Act case by St. Louis University (SLU) for monetary contribution and remanded the case for further consideration.

On January 29, 1997, District Judge J. Frederick Motz granted the government’s motion for partial summary judgment on collateral estoppel grounds in SLU's action for contribution. SLU brought this action after a state jury awarded $16 million to a child who had become paralyzed shortly after receiving oral polio vaccine but almost immediately after receiving treatment at a hospital for a bacterial infection. The federal court ruled that SLU was estopped by the St. Louis case from denying that: (1) SLU's conduct in treating the child’s bacterial infection fell below the prescribed standard of care and constituted negligence; (2) but for SLU's treatment of the bacterial infection, the child’s immune system would not have been suppressed; (3) but for the suppression of the child’s immune system by SLU's negligence, the live polio virus would not have been able to replicate fast enough to result in poliomyelitis; and (4) but for SLU's negligence, the child would not be paralyzed. As a result of these rulings the court granted the government’s motion for summary judgment, concluding that SLU failed to present any evidence tending to show that any fault on the part of the government caused the injury to the child.

The Fourth Circuit held that the district court's collateral estoppel ruling was incorrect under Missouri law, because the United States was not a party to the St. Louis action and the issue of liability as between SLU and the United States was not litigated in that case. Accordingly, the Court of Appeals held that there was not a full and fair litigation of the questions central to SLU's contribution claim, including whether the government's negligence was a concurring cause of the child's injuries and the extent to which the government should be held responsible for the $16 million verdict. Because the district court limited SLU during discovery to causation theories consistent with its incorrect collateral estoppel ruling, and the district court premised its order granting summary judgment on SLU's failure to present evidence of causation consistent with its collateral estoppel ruling, the Fourth Circuit held that the court erred in granting summary judgment to the government. The Fourth Circuit remanded the case to the district court for further proceedings. One judge dissented from the Court's opinion, concluding that SLU failed to present sufficient evidence of causation. Pharmanex v. Shalala (D. Utah) On March 30, 2001, the United States District Court for the Administrative Decision, and granted FDA's motion to Affirm Administrative Decision, in the Cholestin matter.   This matter involves a purported dietary supplement product that containsserum cholesterol levels.  Last fall, the Tenth Circuit Court of Appeals had ruled in favor of FDA on legal issues, but remanded the matter back to the district court for resolution of certain factual issues.

In the latest ruling, the district court has affirmed the factual bases supporting FDA's Administrative Decision that Pharmanex, in marketing Cholestin, wass marketing lovastatin, an article approved as a new dru that was not before such approval, marketed as a food or dietary supplement.  This means that , under DSHEA, red yeast rice containing lovastatin is regulated as a drug and not a dietary supplement.

 

 Paul Mason v. Donna Shalala (9th Circuit) On March 22, 2001, the United States Court of Appeals for the Ninth Circuit affirmed the district court's order granting summary judgment in favor of the government with respect to plaintiff's claim challenging FDA's interpretation of its food labeling regulations and dismissing plaintiff's remaining claims against FDA. On May 11, 1999, the U.S. District Court granted FDA's motion to dismiss, or in the alternative, for summary judgment, with respect to all of plaintiff’s claims for relief. Plaintiff, a manufacturer of bottled water, charged that FDA failed to regulate his competitor’s bottled water, which was allegedly adulterated under the FDC Act, because magnesium had been removed from the water by purification methods. Plaintiff charged that the sale of such water harmed his business and the health of consumers and that FDA’s nutrient content claim regulation defining the "reference amount customarily consumed" for water as 8 ounces was unreasonable.

The District Court dismissed plaintiff’s requests for relief that were based on the alleged failure of FDA to prevent magnesium deficiencies in bottled water. The Court found that these requests would require the Court to review FDA’s decisions not to take enforcement action with respect to magnesium in bottled water and that such decisions are within the discretion of the agency and, thus, unreviewable. The Court also awarded summary judgment to FDA on plaintiff’s remaining claim that was based on the alleged unreasonableness of the agency’s nutrient content claim regulations. The Court held that FDA acted reasonably in defining the "reference amount customarily consumed" per eating occasion as 8 ounces of water. The Ninth Circuit found that FDA reasonably interpreted the "reference amount customarily consumed" to mean the amount "consumed per eating occasion" and that FDA's decisions not to take enforcement action are not subject to judicial review.

 

 John Heeney v. Food and Drug Administration (9th Circuit). (April 12, 2001, Filed) John Heeney, a pro se plaintiff, submitted a FOIA request to FDA seeking the release of a 510(k) application filed by defendant-intervenor Boston Scientific Corporation. Pursuant to Heeney’s FOIA request, the file was released to him with redactions. Heeney filed suit in the Central District of California to obtain the redacted material. The district court held that nearly all of the redacted material constituted trade secret and/or confidential commercial information and thus was exempt from disclosure under FOIA. The redacted material included the name of a catheter withdrawn from the application, design and testing information, materials used in the construction of the catheter, and the name of the company that manufactured Boston Scientific’s catheter. The only information held not to be exempt from disclosure was the dates and lengths of extensions granted to Boston Scientific by FDA and the names of Boston Scientific employees who conducted tests on the catheter.

The Ninth Circuit affirmed the district court's opinion. The Court held that the Vaughn indexes and accompanying affidavits contained reasonably detailed descriptions of the documents at issue and alleged sufficient facts to establish the exemption, and therefore, the district court properly held that the redacted material was exempt from disclosure.

The Court also rejected Heeney's argument that because some of the redacted information may have been released to him pursuant to other FOIA requests he had submitted to FDA, the trade secret exemption had been waived. The Court held that because FDA's previous disclosures involved unrelated files, the information redacted from Boston Scientific's file was properly withheld.

Lastly, the Court rejected Heeney's procedural arguments. The Court held that the district court was not required to conduct an in camera review of the documents or to hear oral testimony in deciding the summary judgment motion and that Heeney had not demonstrated good cause to warrant additional discovery.

 

 Pearson v. Thompson, 141 F. Supp. 2d 105 (D.D.C.) On May 9, 2001, the U.S. District Court for the District of Columbia denied the government's motion for reconsideration of the court's February 2, 2001 decision that granted a preliminary injunction against FDA. In November 2000, the plaintiffs had sued FDA, challenging, on First Amendment grounds, the agency's earlier decision to prohibit plaintiffs' folic acid health claim (".8 mg of folic acid in a dietary supplement is more effective in reducing the risk of neural tube defects than a lower amount in foods in common form"), and requesting a injunction to enjoin FDA from prohibiting the claim. (FDA had determined that the claim was inherently misleading - as opposed to only potentially misleading - and that, therefore, the claim could be prohibited without allowing disclaimers).

On February 2, 2001, the district court granted plaintiffs' request for a preliminary injunction, finding that FDA failed to comply with the constitutional guidelines outlined by the Court of Appeals (Pearson v. Shalala, 164 F.3d. 164 (D.C. Cir. 1999)) when it ruled on FDA's original denial of four health claims, including the folic acid health claim. The court ordered FDA to draft one or more "short, succinct, and accurate" disclaimers from which plaintiffs could choose to accompany their folic acid health claim.

Although FDA complied with that order, it also filed a motion requesting that the court reconsider its decision. In its May 9, 2001, opinion denying reconsideration, the court refused, on procedural grounds, to consider the government's arguments that vitamins and minerals other than folic acid may have been responsible for the protective effect against neural tube defects (NTDs). The court also reiterated its previous statement that "the mere absence of significant affirmative evidence in support of a particular claim . . . does not translate into negative evidence 'against' it." The court concluded by stating that "if a health claim is not inherently misleading, the balance tilts in favor of disclaimers rather than suppression."

The court, however, did clarify that the existence of some credible evidence supporting a claim does not require FDA to permit the claim. The opinion states: "this Court did not hold, or otherwise indicate, that the FDA must approve all health claims supported by some 'credible evidence.'" The court reiterated that the language in the court of appeals decision regarding the circumstances in which FDA may totally ban a health claim continues to apply, but declined to provide further interpretation of the applicable legal standard without the benefit of a concrete factual context.

 

 Pearson v. Thompson (D.D.C.) On June 4, 2001, the U.S. District Court for the District of Columbia entered an order dismissing plaintiffs' complaint. The court entered this order after the parties reached an agreement in which FDA stated its intention to exercise enforcement discretion to permit plaintiffs to label their dietary supplements containing folic acid with the following health claim: ".8 mg of folic acid in a dietary supplement is more effective in reducing the risk of neural tube defects than a lower amount in foods in common form.* *FDA does not endorse this claim. Public health authorities recommend that women consume 0.4 mg folic acid daily from fortified foods or dietary supplements or both to reduce the risk of neural tube defects."

The parties agreed that the second sentence (i.e., the disclaimer) must be immediately adjacent to and directly beneath the claim with no intervening material that separates the claim from the disclaimer and must be in the same size, typeface, and contrast as the first sentence of the claim.

Plaintiffs had sued FDA in November 2000, challenging, on First Amendment grounds, the agency's earlier decision to prohibit plaintiffs' folic acid health claim, and requesting an injunction to enjoin FDA from prohibiting the claim. The district court granted plaintiffs' request for a preliminary injunction on February 2, 2001, and denied the government's motion for reconsideration on May 9, 2001.

 

 A-1 Amusement Co. et al. v. United States (Fed. Cir.) On June 7, 2001, the United States Court of Appeals for the Federal Circuit dismissed, as untimely, an appeal by 400 plaintiff vending machine owners and operators who were seeking compensation for "takings" of their cigarette vending machine businesses allegedly caused by FDA's tobacco regulations and SAMHSA's block grant program. On October 19, 2000, the Court of Federal Claims dismissed the FDA count and entered judgment against the companies.

Because there was another count (against SAMHSA) pending, the companies did not appeal within 60 days, as required by the court's rules, but rather waited, improperly, for judgement to be entered on the SAMHSA count. The companies have moved for reconsideration. Claims by more than 100 vending machine owners, which were not consolidated with the claims in A-1 Amusement, remain pending, in the Court of Federal Claims and the Federal Circuit.

 

 Campaign for Responsible Transplantation v. United States Food and Drug Administration et al. (D.D.C.). On July 23, 2001, District Court Judge Urbina entered an order denying Plaintiff's motion for a Vaughn index in this case brought under the Freedom of Information Act. The court granted Defendant's cross-motion for a Vaughn index based on a representative sample of the records sought. Plaintiff originally sought all records concerning xenotransplantation clinical trials but has since agreed to limit the scope of the request to records generated by the agency.

On May 29, 2001, Plaintiff filed a motion requesting that the court order the agency to file a comprehensive index of all FDA-generated documents relating to all 35 xenotransplantation IND's; this would have involved the review of approximately 240,000 pages of documents and would have taken the Center for Biologics Evaluation and Research an estimated two years to complete. The agency opposed Plaintiff's motion and filed a cross-motion requesting that the court instead order an index, based on a representative sample of the documents. The index is to be based on the documents relating to one IND of Plaintiff's choosing, and should take CBER an estimated 30 days to complete. The court stated that a comprehensive index "would be unduly burdensome to the agency" and that it would "accord the FDA deference in its description of the documents in each IND as being 'essentially uniform.'"

Thus, the court ordered that Plaintiff, within fourteen days, select one representative IND (with the exception of any IND submitted by defendant-intervenor Novartis) and that the agency, 30 days after the selection of the sample IND, provide Plaintiff with a Vaughn index of FDA-generated documents contained in that IND and FDA-generated documents concerning xenotransplantation clinical trials in general.

 

 Judicial Watch, Inc. v. Food and Drug Administration (RCL) D.D.C.). On July 18, 2001, U.S. District Court Judge Royce C. Lamberth granted Defendant's Motion for a Stay of Proceedings Pending Completion of Search and Production of Documents. The plaintiff, Judicial Watch Inc., requested, pursuant to the Freedom of Information Act (FOIA), certain records pertaining to the drug mifepristone. FDA's motion notified the court that, despite diligent work, the processing of plaintiff's complaint would not be complete until October 15, 2001.

In support of its motion FDA noted, among other things, the large number of documents involved (estimated to be approximately 250,000) and the agency's efforts to reduce its FOIA backlog. The Court's order held that a stay of the proceedings was appropriate until October 15, 2001, and that any dispositive motions shall be filed by November 15, 2001.