It has been just about two years since the Central District of California dismissed the claims in Nexus Pharmaceuticals, Inc. v. Central Admixture Pharmacy Services, Inc. as impermissible attempts to privately enforce the FDCA and therefore impliedly preempted. We blogged about that decision back then. At that time, we noted that while the case arose in the context of a business dispute, the preemption principles it enforced are equally applicable to product liability and other tort claims (including unfair competition claims) that are brought against our clients. For that reason, we promised to keep bringing these types of decisions to our readers’ attention. Much to our delight, we now have a federal appellate decision upholding the dismissal.
The drug at issue, ephedrine sulfate, is administered to surgical patients if their blood pressure drops too low. The drug is typically sold at a concentration that needs to be diluted before it can be administered to patients. Plaintiff developed a ready-to-use version which has been FDA-approved. Nexus Pharmaceuticals, Inc. v. Central Admixture Pharmacy Services, Inc., — F.4th –, 2022 WL 4175106, *1 (9th Cir. Sept. 13, 2022). Defendant, a network of compounding pharmacies, sells ephedrine sulfate in ready-to-use syringes. As a compounder, defendant does not need to seek FDA-approval for its product. But drug compounders are still subject to other FDA requirements, particularly large-scale compounders. Large-scale compounders have to register with the FDA, provide yearly reporting, and are subject to inspection. Id. at *2. The concern is making sure compounders do not become generic drug manufacturers by “wholesale copying” FDA-approved drugs without any of the safeguards that govern generic drug manufacturing. Therefore, compounders are exempt from needing FDA-approval for their drugs unless the compounded drugs are “essentially a copy of one or more approved drugs.” Id.
Plaintiff’s theory of the case is that the laws of California, Florida, Connecticut, Pennsylvania, and Arizona prohibit the sale of drugs not approved by the FDA. And, defendant’s product is neither FDA-approved nor subject to the exception to the FDA-approval requirement because it is essentially a copy of plaintiff’s drug. Therefore, defendant is in violation of those states’ laws and plaintiff is entitled to economic damages. Id. at *3. However, the FDA itself has not found defendant violated the FDCA. So, asking a court to find a violation is a form of prohibited private FDCA enforcement. In other words, if the FDA has not concluded that the defendant’s drugs were “essentially a copy,” plaintiff cannot ask a court to do so.
This was the Ninth Circuit’s first time to interpret this provision of the FDCA—whether a compounded drug is a “essentially a copy” of an FDA-approved drug. So, its analysis is like a walk down implied preemption memory lane. While the first stop is Medtronic v. Lohr, the court lingered there only a moment finding Buckman to be the more analogous way point. The fraud claims in Buckman existed “solely by virtue of the FDCA” rather than sounding in “traditional state tort law.” Id. at *4. Like the claims in the current case which seek to hold defendant liable for violating a state law that itself relies on the federal statute, not traditional state tort law. Id. The court completed the medical device leg of the journey with Riegel, which because it is based on express preemption was also not analogous to the current case. What the court did find important about Lohr, Buckman, and Reigel to the question at hand was that the claims that were not preempted, “were made by patients injured by defective medical devices, who pleaded traditional common law tort claims.” Not present in this case. Moving farther along to prescription drug preemption cases, the court started with Wyeth v. Levine. Again finding it distinguishable because it was based on traditional state tort law whereas “a necessary element of [plaintiff’s] claim is the alleged violation of the FDCA. Id. at *6. The court’s next stop was at one of its own cases which is quite on point. In Photomedex v. Irwin, a medical device manufacturer sued a competitor alleging certain statements in its marketing materials violated the FDCA. Plaintiff manufacturer argued that the prohibition on private enforcement of the FDCA did not apply because it was suing under the Lanham Act and state unfair competition laws. Relying on that decision here, the court said:
to the extent the claim was based on a arguably false assertion of FDA approval, it “would require litigation of the alleged underlying FDCA violation in a circumstance where the FDA has not itself concluded that there was a violation,” so the action was barred by the FDCA’s prohibition of private enforcement. That claim could only be permissibly made by the government. . . Like PhotoMedex, Nexus’s claims would require litigation of whether Central Admixture’s compounded drugs are “essentially a copy” of Emerphed where the FDA has not itself so concluded.
Id. (quoting 601 F.3d 919 (9th Cir. 2022).
Sticking with Ninth Circuit cases, the preemption path takes a bit of a sharp turn to arrive at Stengel which the court distinguished as involving a traditional state tort law duty and as not addressing the ban on private enforcement of the FDCA. With Stengel put to the side, Ninth Circuit law is pretty clear:
to permit [plaintiff] “to proceed with a claim that Defendants violated this law when the FDA did not so determine would, in effect, permit [plaintiff] to assume enforcement power which the statute does not allow and require the finder of fact to make a decision that the FDA itself did not make.” Proceedings to enforce or restrain violations of the FDCA, including the compounding statute, must be by and in the name of the United States, not a private party. Nexus’s claim is such a proceeding, so it is barred by the exclusive enforcement statute.
Id. at *7.
Finally, the Ninth Circuit took this opportunity to state that Allergan v. Athena, 783 F.3d 1350 (Fed. Cir. 2013) was wrongly decided. In that case, the manufacturer of an FDA-approved product sued the manufacturer of a non-FDA-approved product for violation of California’s unfair competition law. The Federal Circuit reasoned that because California’s law “merely incorporated FDCA requirements,” the laws were not in conflict and therefore, the claims were not impliedly preempted. However, the Federal Circuit did not address the prohibition on private enforcement. Had it done so, Photomedex, would have required a different result because a claim for economic harm by reason of an alleged FDCA violation is not a traditional common-law tort that may have an avenue to escape preemption. Id. at *7-8. On the issue of being “essentially a copy,” the FDA has issued a guidance and has indicated it plans to issue clarifying regulations. These are not agency decisions, but they show the FDA is grappling with the issue. And the important question of whether defendant’s drug is “essentially a copy” of plaintiff’s drug, is a question that must be left to the FDA’s discretion to decide how and when to enforce the statute.