Northwest Tissue Center v. Shalala, 93-1078

CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)
Citation1 F.3d 522
Docket NumberNo. 93-1078,93-1078
PartiesNORTHWEST TISSUE CENTER, Department of the Puget Sound Blood Center, a Washington Corporation, and Oregon Tissue Bank, a Department of the Emmanual Hospital and Health Center, a Legacy Health System Affiliate, an Oregon Corporation, Plaintiffs-Appellants, v. Donna E. SHALALA, 1 Secretary of the United States Department of Health and Human Services, and David Kessler, Commissioner of the United States Food and Drug Administration, Defendants-Appellees.
Decision Date24 September 1993

George M. Burditt (argued), Alan I. Becker, Deborah B. Norton, Jamie S. Freveletti, Burditt & Radzius, Chicago, IL, for plaintiffs-appellants.

Thomas P. Walsh, Asst. U.S. Atty., Crim. Div., Chicago, IL, William M. Zoffer (argued), Drake Cutini, Dept. of Justice, Consumer Litigation, Washington, DC, for defendants-appellees.

Before BAUER, Chief Judge, MANION and ROVNER, Circuit Judges.

BAUER, Chief Judge.

In this appeal we revisit the United States Food and Drug Administration's ("FDA") treatment of human heart valve allografts 2 as devices under the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. Secs. 301-394 ("the FDC Act") and its implementing regulations. The district court dismissed the plaintiffs' complaint, ruling that it was mooted by our holding in Alabama Tissue Center v. Sullivan, 975 F.2d 373 (7th Cir.1993). In Alabama Tissue, we dismissed a petition challenging an FDA notice interpreting one of its regulations because the notice was not a "regulation" subject to direct appellate review. Id. at 379. Although two of the plaintiffs' three claims were mooted by that ruling, we believe count three of the plaintiffs' complaint should not have been dismissed, and remand this case to the district court for proceedings consistent with this opinion.

I. Background
A. Statutory Framework

Our review of the plaintiffs' claims requires us to delve into the bowels of the regulatory framework imposed by the FDC Act. The Medical Device Amendments of 1976 classify medical devices 3 into three categories--Class I, II, and III--to reflect the devices' relative safety and effectiveness. 21 U.S.C. Sec. 360c(a). Class I devices are the safest, followed by Class II, and then Class III. See 21 U.S.C. Sec. 360c(a)(1). See also Becton, Dickinson, & Co. v. FDA, 589 F.2d 1175, 1177 (2d Cir.1978) (discussing classification scheme). Examples of Class III devices include pacemakers, artificial heart valves, and other products intended to be implanted in the body or designed to sustain human life. 21 U.S.C. Sec. 360c(c)(2)(C)(i). The Act imposes significant restrictions on the marketing of Class III devices to minimize the risk of harm they pose to consumers. One of these requirements is premarket approval. 21 U.S.C. Sec. 360e. Before a Class III device may be distributed commercially, manufacturers must submit extensive data to the FDA for review. The FDA examines the data and must approve the manufacturer's application before a device can be marketed. Id. Application for premarket approval is an onerous process, see 21 U.S.C. Sec. 360e(c); Congress estimated that manufacturers would need thirty months to complete the process. 21 U.S.C. Sec. 351(f)(2)(B)(i).

To ease the burden of the process and minimize the disruption to the market, Congress requires the Secretary of the FDA to regulate devices that were in commercial distribution in 1976 (when the amendments were adopted) in two steps. The two-step procedure allows these preamendment Class III devices to remain in circulation while the FDA evaluates them. First, the Secretary is required to classify all preamendment devices into one of the three classes outlined in 21 U.S.C. Sec. 360c. The Secretary must publish the proposed classification in the Federal Register. The notice of proposed classification invites comment from interested persons and is intended to put manufacturers on notice to enable them to begin to prepare a premarket approval application for their devices. If the Secretary proposes that a device be classified as Class III, it is referred to a scientific panel for its review and recommendation respecting the appropriate classification of the device. Sec. 360c(c). The panel's recommendation is published in the Federal Register, and interested persons are given the opportunity to comment. Sec. 360c(d). After notice and comment, the Secretary publishes the regulation classifying a device as Class III.

In the second step of the process, the Secretary promulgates a second regulation to require manufacturers to submit applications for premarket approval. 21 U.S.C. Sec. 360e(b)(1). The Secretary is to publish the proposed regulation in the Federal Register, again with opportunity for comment by interested persons. Id. The proposed regulation must include proposed findings "with respect to the degree of risk of illness or injury designed to be eliminated or reduced by requiring the device to have an approved application for premarket approval and the benefit to the public for the use of the device." 21 U.S.C. Sec. 360e(b)(2)(A). After the final rule requiring submission of premarket approval applications is published, a manufacturer must complete the premarket approval process within ninety days or thirty months from the date the final classification regulation was promulgated, whichever is longer. 21 U.S.C. Secs. 351(f)(2)(B)(i), (ii). A device that does not satisfy these requirements is deemed adulterated and is subject to seizure. The manufacturer is subject to sanction. 21 U.S.C. Sec. 351(f)(1).

The FDA issued a regulation in 1980 classifying replacement heart valves as Class III devices, 21 C.F.R. Sec. 870, 45 Fed.Reg. 7948 (1980). The 1980 regulation identified a replacement heart valve as a

device intended to perform the function of any of the heart's natural valves. This device includes valves constructed of prosthetic materials, biologic valves (e.g. porcine valves), or valves constructed of a combination of prosthetic and biologic materials.

21 C.F.R. Sec. 870.3925. A second regulation promulgated in 1987 subjects replacement heart valves to premarket approval. 21 C.F.R. Sec. 870, 52 Fed.Reg. 18162 (1987). Both regulations were enacted pursuant to the notice and comment provisions of the FDC Act, 21 U.S.C. Sec. 360e, and the Administrative Procedure Act ("APA"), 5 U.S.C. Sec. 553. Things proceeded swimmingly until 1991.

In 1991, the FDA issued a "Notice of applicability of a final rule." ("NAFR") 56 Fed.Reg. 29177 (June 26, 1991). The NAFR informed manufacturers that allografts are subject to the 1980 and 1987 regulations governing replacement heart valves. The NAFR posed difficulties for allograft manufacturers: it announced that to continue distributing allografts, manufacturers were required to have an approved premarket approval application in effect within ninety days, a far cry from the thirty months Congress estimates is required for premarket approval. 4 Allografts had been distributed commercially for years with no indication from the FDA that they were subject to the replacement heart valve regulations. Because they were unprepared for the premarket approval process, manufacturers confronted the substantial likelihood that they would need to pull their products from the market or face sanctions for selling adulterated devices. Indeed, the NAFR threatened as much. 58 Fed.Reg. 29178 (citing 21 U.S.C. Sec. 351(f)(1)(A)). Further, none of the manufacturers participated in the notice and comment proceedings conducted when the replacement heart valve regulations were promulgated in 1980 and 1987.

B. Allograft Litigation History

Six not-for-profit allograft manufacturers petitioned this court for direct appellate review of the FDA's NAFR under 21 U.S.C. Sec. 360(a), (g). That section authorizes review within thirty days of promulgation of final FDA regulations which require premarket approval of medical devices. Alabama Tissue, 975 F.2d at 374. The petitioners also filed suit in district court challenging the FDA's action, seeking injunctive and declaratory relief. 5 In the petition to this court, the manufacturers alleged that the 1991 NAFR was a new "regulation" challengeable under Sec. 360(a)(g) because allografts were not previously subject to the regulations governing other heart replacement valves. Id. at 378-79. This new regulation was promulgated without notice or comment, the manufacturers argued, in violation of the FDC Act and the APA. The FDA countered that the NAFR was not a new regulation, but an interpretation of an existing regulation. For that reason, the agency claimed, this court lacked jurisdiction to review the NAFR. Id. at 376-77.

Because our jurisdiction depended on whether the NAFR was a regulation, 21 U.S.C. Sec. 360(g), the jurisdictional and substantive issues overlapped. Id. at 376. The NAFR itself purported to be an interpretation of the earlier regulations. Id. at 377 ("[T]he summary of the NAFR specifically states 'the FDA is issuing a notice to clarify that replacement heart valve allografts, devices, are subject to a final rule that was issued by FDA on May 13, 1987.' ") (quoting the NAFR). Applying the analysis set forth in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), we concluded that the NAFR was a permissible interpretation of the regulations. For that reason we held that the NAFR was not a regulation, but an interpretive rule. We dismissed the petition for lack of jurisdiction under Sec. 360g. Alabama Tissue, 975 F.2d at 379.

After we dismissed their petition, petitioners pursued their suit in the district court--it had been stayed pending our decision. The government filed a motion to dismiss the petitioners' (now plaintiffs') complaint under Fed.R.Civ.P. 12(b)(6). The complaint charged...

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