Grand Laboratories, Inc. v. Harris, 80-1331

• Decision Date: 25 March 1981
• Docket Number: No. 80-1331,80-1331
• Citation: 644 F.2d 729
• Parties: GRAND LABORATORIES, INC., Appellee, v. Patricia HARRIS, Secretary of Health, Education and Welfare, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 729

644 F.2d 729

GRAND LABORATORIES, INC., Appellee, v. Patricia HARRIS, Secretary of Health, Education and Welfare,

Appellant.

No. 80-1331.

United States Court of Appeals,

Eighth Circuit.

Submitted Jan. 14, 1981.

Decided March 25, 1981.

Sanford M. Litvack, Asst. Atty. Gen., John J. Powers, III, Peter L. De La Cruz, Attys., Dept. of Justice, Washington, D. C., for appellant; John J. Ulrich, Asst. U. S. Atty., Sioux Falls, S. D., of counsel.

Nancy L. Buc, Chief Counsel, Fredrick H. Degnan, Asst. Chief Counsel, for Veterinary Medicine Food and Drug Administration, Rockville, Md.

George T. Qualley, Qualley, Larson & Jones, Sioux Falls, S. D., Philip C. Jones, Harold M. Carter, Alan W. Brick, Qualley, Larson & Jones, Washington, D. C., for appellee.

Before HEANEY, Circuit Judge, GIBSON, Senior Circuit Judge, and ARNOLD, Circuit Judge.

FLOYD R. GIBSON, Senior Circuit Judge.

This case presents the question whether animal biologics constitute drugs within the meaning of the Federal Food, Drug and Cosmetic Act (FDCA), 21 U.S.C. § 321(g)(1) (1976).

I.

In February 1979, two field officers from the Food and Drug Administration (FDA) attempted to inspect the facilities of Grand Laboratories, Inc. (Grand) in Freeman, South Dakota. They were denied entrance. In August 1979, the FDA obtained a warrant from a United States magistrate to inspect Grand's facility. Before the warrant was enforced, Grand brought suit in the United States District Court for the District of South Dakota seeking declaratory and injunctive relief against the FDA on the grounds that the FDA is without jurisdiction to regulate the manufacture and sale of animal biologics. After issuing a temporary restraining order, the District Court held a hearing on whether a preliminary injunction should issue against the FDA. On February 21, 1980, the District Court filed a memorandum opinion and issued a preliminary injunction. Grand Laboratories, Inc. v. Harris, 488 F.Supp. 618 (D.S.D.1980). The Secretary of Health, Education and Welfare filed a timely appeal.

Grand manufactures and distributes animal biologics wholly within the state of South Dakota. Animal biologics are products prepared from animal tissues or fluids or growth of microorganisms, used for the prevention or treatment of disease in animals.

Grand successfully argued in the District Court ¹ that Congress granted sole federal regulatory power over the manufacture and sale of animal biologics to the United States Department of Agriculture (USDA) under the Virus, Serum, Toxin Act of 1913, 21 U.S.C. §§ 151-158 (1976). That act provides in part:

It shall be unlawful for any person, firm, or corporation to prepare, sell, barter, or exchange in any place under the jurisdiction of the United States, or to ship or deliver for shipment from one State or Territory or the District of Columbia, any worthless, contaminated, dangerous, or harmful virus, serum, toxin, or analogous product intended for use in the treatment of domestic animals, and no person, firm, or corporation shall prepare, sell, barter, exchange, or ship as aforesaid any virus, serum, toxin, or analogous product manufactured within the United States and intended for use in the treatment of domestic animals, unless and until the said virus, serum, toxin, or analogous product shall have been prepared, under and in compliance with regulations prescribed by the Secretary of Agriculture, at an establishment holding an unsuspended and unrevoked license issued by the Secretary of Agriculture as hereinafter authorized.

21 U.S.C. § 151.

Under the Virus, Serum, Toxin Act of 1913, the USDA has limited commerce clause jurisdiction. The agency does not have jurisdiction over animal biologics manufactured and distributed wholly within one state, even though a component used in the biologic may have passed through interstate commerce. See Animal Health Institute v. USDA, 487 F.Supp. 376 (D.Colo.1980).

The FDA contended in the District Court that animal biologics were drugs within the meaning of the FDCA. The FDCA defines the term "drug" as follows:

(g)(1) The term "drug" means (A) articles recognized in the official United States Pharmacopoeia, official Homoeopathic Pharmacopoeia of the United States, or official National Formulary, or any supplement to any of them; and (B) articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals; and (C) articles (other than food) intended to affect the structure or any function of the body of man or other animals; and (D) articles intended for use as a component of any article specified in clauses (A), (B), or (C) of this paragraph; but does not include devices or their components, parts, or accessories.

21 U.S.C. § 321(g)(1) (1976).

The FDA argued in the District Court that because animal biologics were drugs within the meaning of the FDCA the agency retained jurisdiction over their intrastate manufacture. The FDA conceded that 21 U.S.C. § 392(b) (1976) deprived it of jurisdiction over the interstate manufacture and distribution of animal biologics. ² See post at 7-8. The District Court, however, disagreed with the FDA's premise that animal biologics were drugs within the meaning of the FDCA. The court based this finding on the statutory history of both the FDCA and the Virus, Serum, Toxin Act of 1913:

The FDA has correctly pointed out that great weight should be given to an agency's construction of a statute. The definition of "drug", however, appears to have already been construed as not encompassing animal biologics. As mentioned above, the USDA procured the passage of the VSTA in 1913. At that time the Food and Drug Act of 1906 was administered by the USDA and the definition of "drug" contained in that act was apparently not viewed as encompassing animal biologics. The basic definition of "drug" was not materially changed in the meantime. And the circumstances surrounding the inclusion of the VSTA in section 392(b) indicates that Congress concurred with the USDA interpretation.

Grand Laboratories, Inc., 488 F.Supp. at 622.

On appeal, the FDA contends the District Court erred in finding it to be without jurisdiction over the intrastate manufacture and distribution of animal biologics. We find animal biologics not to be drugs within the meaning of the FDCA and affirm the District Court.

II.

"The starting point in every case involving construction of a statute is the language itself." Teamsters v. Daniel, 439 U.S. 551, 558, 99 S.Ct. 791, 795, 58 L.Ed.2d 808 (1979). In spite of the use of animal biologics at the time of the original enactment of the predecessor to the FDCA, the Pure Food Act of 1906, animal biologics were mentioned in neither the statute nor the legislative history of the FDCA, nor in the Pure Food Act of 1906. Despite this lack of any support, in the form of congressional intent, for the inclusion of animal biologics, the FDA maintains that animal biologics are "articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals," and therefore come within the literal definition of section 321(g)(1)(B) of title 21.

Neither we nor Grand nor the FDA disagree that a literal reading of the above section includes animal biologics. The "essential question for our determination is whether Congress intended the definition of drug (as set forth in the FDCA) to have the broad coverage" that the literal language would allow. United States v. Bacto-Unidisk, 394 U.S. 784, 793, 89 S.Ct. 1410, 1415, 22 L.Ed.2d 726 (1969). Reviewing the legislative history of the FDCA and the Virus, Serum, Toxin Act of 1913 and the lack of prior enforcement activity by the FDA, we find that Congress did not intend to include animal biologics within the meaning of the definition of the term "drug" in the FDCA. In so finding, we recognize the remedial nature of the FDCA and give due deference to the FDA's interpretation of the act. Id., 394 U.S. at 798, 89 S.Ct. at 1418; see Teamsters v. Daniel, 439 U.S. at 566 n.20, 99 S.Ct. at 800; National Nutritional Foods Association v. Mathews, 557 F.2d 325, 336 (2d Cir. 1977).

III.

In reviewing the legislative history of the pertinent acts, we are mindful of the Supreme Court's warning that "(o)nly when a literal construction of a statute yields results so manifestly unreasonable that they could not fairly be attributed to congressional design will an exception to statutory language be judicially implied." United States v. Rutherford, 442 U.S. 544, 555, 99 S.Ct. 2470, 2477, 61 L.Ed.2d 68 (1979). In order to fully understand the complex interplay of the FDCA and the Virus, Serum, Toxin Act of 1913, it is necessary to review congressional action in the human as well as the animal biologics area, in relation to congressional regulation of traditional drugs.

Federal regulation of human biologics began in 1902 when Congress enacted a statute prohibiting the importation or interstate shipment of any virus, serum, toxin, antitoxin, or analogous products unless licensed by the Treasury Department and properly labelled. Act of July 1, 1902, ch. 1378, 32 Stat. 728. Four years later, Congress enacted the Pure Food Act of 1906, ch. 3915, 34 Stat. 768. The act contained a broad definition of the term "drug" which was continued in the FDC Act of 1938. Neither the statutory history of the human biologics act of 1902 nor of the Pure Food Act of 1906 contain any cross-references to each other. The Pure Food Act appears to have been enacted with the intention of being independent of any of the provisions of the human biologics act enacted in 1902.

In 1913, Congress passed the Virus, Serum, Toxin Act of 1913. The FDA admits that the legislative history contains no discussion of the Virus, Serum, Toxin Act's relationship to the Pure Food Act of 1906. In 1938, Congress strengthened the FDA's power to protect the public from dangerous drugs by enacting the FDC Act....