U.S. v. Colahan
| Decision Date | 05 February 1987 |
| Docket Number | No. 85-3608,85-3608 |
| Citation | 811 F.2d 287 |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. Jerry J. COLAHAN, d/b/a IBA of Ohio; Norman F. Bauer; John D. Burrows; Russell C. Humphrey, Jr.; Simon E. Miller; Iba, Inc.; Daniel Belsito, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Stanley M. Fisher (argued), Irene Keyse-Walker, Lynn Toler, Arter & Hadden, Cleveland, Ohio, for defendants-appellants.
Randolph Baxter, Asst. U.S. Atty., Cleveland, Ohio, Donald Eliot Segal, Food & Drug Admin., Richard Eugene Geyer, Rockville, Md., David P. Grise, U.S. Dept. of Justice, Jacqueline H. Eagle (argued), Washington, D.C., for plaintiff-appellee.
Before JONES and WELLFORD, Circuit Judges, and GILMORE, District Judge. *
The government obtained an injunction which prohibited defendants-appellants from distributing certain animal drugs on the ground that the drugs were misbranded and not being sold in compliance with 21 C.F.R. Sec. 201.105 (1985). We affirm the holding of the district court with respect to the applicability of section 201.105 to the drug sales in controversy.
Defendants-Appellants in this case are distributors of drugs for use by dairy farmers. They had distributed certain drugs to users without a direct order from a veterinarian. FDA regulations require that some drugs must have a veterinarian's order to be dispensed, 21 C.F.R. Sec. 201.105, and the government contends the drugs at issue fall within those regulations. In November 1978, the government filed a complaint in the lower court seeking an injunction under 21 U.S.C. Sec. 331 (1982) against defendant Jerry Colahan and others. The court issued a temporary restraining order, which was soon replaced by a stipulated order that the defendants would not distribute the drugs without a prescription or other order of a veterinarian.
The defendants then instituted a practice, which came to be called the "slip system," whereby purchasers would aver to the defendants that the drugs were being bought on a veterinarian's order. The buyers signed a form that indicated their name, the drug bought (but not quantity) and the date of purchase. The name of the veterinarian and date of the order were not indicated on these forms.
On October 9, 1979, on defendant Colahan's motion, the district court dissolved the stipulated order, ruling that the FDA lacked the authority to promulgate section 201.105. That court subsequently enjoined the government from prosecuting a similar action in Massachusetts against defendant IBA, Inc. The Massachusetts action was then transferred to Ohio and consolidated with the Colahan case.
The government appealed the district court's October 9 order and on December 11, 1980, this court reversed, holding that section 201.105 was not invalid and that it was within the agency authority under the statutory scheme. This court remanded the case and directed that the stipulated order be reinstated. See United States v. Colahan, 635 F.2d 564 (6th Cir.1980), cert. denied, 454 U.S. 831, 102 S.Ct. 127, 70 L.Ed.2d 108 (1981). Upon remand, after further discovery, the parties submitted cross motions for summary judgment, and the district court entered judgment for the government. The district judge issued an order enjoining defendants from distributing the drugs at issue without a direct order from a veterinarian. Thereafter, on defendants' motion and the government's stipulation, the court exempted the drug Nitrofurazone from the order because it was currently available elsewhere without prescription. The court denied defendants' motion to clarify or stay the injunction. Defendants appealed from that injunctive order.
The government charged that 17 drugs sold by defendants were "misbranded." The violation alleged in this case concerns the manner in which the drugs were sold or distributed with the restrictive labeling on the drugs involved.
Section 301 of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. Sec. 331 (1982), prohibits the "introduction into interstate commerce of any ... drug ... that is adulterated or misbranded." 21 U.S.C. Sec. 331(a). A drug is misbranded "[u]nless its labeling bears ... adequate directions for use...." 21 U.S.C. Sec. 352(f). "Adequate directions for use" are defined in the regulations as "directions under which the layman can use a drug safely and for the purpose for which it is intended." 21 C.F.R. Sec. 201.5.
The statute requiring adequate directions contains a proviso that if such directions are "not necessary for the protection of the public, the Secretary shall promulgate regulations exempting such drug ... from such requirement." 21 U.S.C. Sec. 352(f). Under this authority the Secretary promulgated 21 C.F.R. Sec. 201.105, which applies only to veterinary drugs. This regulation was held valid in the previous appeal. It provides (in part):
A drug intended for veterinary use which, because of toxicity or other potentiality for harmful effect, or the method of its use, is not safe for animal use except under the supervision of a licensed veterinarian, and hence for which "adequate directions for use" cannot be prepared, shall be exempt from [21 U.S.C. 352(f)(1) ] if ...
(1) ... to be sold only to or on the prescription or other order of a licensed veterinarian for use in the course of his professional practice; ...
...
[and]
(1) The statement "Caution: Federal law restricts this drug to use by or on the order of a licensed veterinarian".... 1
Thus, an animal drug that is described in section 201.105, but either is not sold on the "prescription or other order" of a veterinarian or does not bear the cautionary label, is not in compliance with the regulation and, under the statutory scheme outlined above, is "misbranded." All of the drugs involved in this case are sold with the cautionary label set out in subsection (b)(1) above. We must determine whether the drugs in question are governed by section 201.105 and, if so, whether they are sold on the prescription or other order of a veterinarian.
The remaining sixteen drugs covered by the injunction in dispute fall into three categories. Fourteen are termed New Animal Drugs (NADs) and these form the basis of most of the controversy in this case. 2 Two others, Calphosan B-12 injectable and epinephrine, will be discussed separately.
We first decide whether the fourteen New Animal Drugs (NADs) are governed by section 201.105. The government argues that the drugs fall within section 201.105 and that these drugs are required to bear the cautionary label as part of their approval as NADs.
The FDA's interpretation of the misbranding provision of the Food, Drug and Cosmetic Act, 21 U.S.C. Sec. 352, is that failure to distribute the controverted drugs in accordance with approved prescription labeling rendered the drugs misbranded under 21 C.F.R. Sec. 201.105. In our first consideration of the issues raised by Colahan and other animal drug distributors, we concluded that FDA had the authority to exempt certain animal drugs from a misbranding action if certain prerequisites were satisfied. Deferring to agency expertise, the prior panel found "correct" FDA's interpretation that "under the proviso contained in Sec. 352(f), it may require by regulation, as it has, that such drugs [NADs] are exempt and thus approved for distribution only if the requirements of 21 C.F.R. Sec. 201.105 are met since professional direction, in the words of the statute, 'is necessary for the protection of the public health.' " United States v. Colahan, 635 F.2d 564, 567 (6th Cir.1980), cert. denied, 454 U.S. 831, 102 S.Ct. 127, 70 L.Ed.2d 108 (1981) (emphasis in original). FDA now argues that the drugs in controversy were approved for distribution only if distributors sold the drugs in conformity with the labeling, which required the drugs to be dispensed only on order of a licensed veterinarian. Under the FDA's construction of the key statutory and regulatory provisions, the approved labeling, therefore, rendered the drugs subject to 21 C.F.R. Sec. 201.105, and defendants' refusal to comply with its requirements revoked the drugs' exemption and rendered them misbranded.
We should give proper weight to the construction of the statute by FDA, the agency to whose skill and expertise Congress entrusted the statute's administration. Chevron USA, Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984), State of Tennessee v. Herrington, 806 F.2d 642, 653 (6th Cir.1986). When we review an agency's construction and implementation of the statutory scheme that it administers, two questions must be resolved. Initially it is necessary to determine whether Congress specifically resolved the same issue before us. "If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Chevron U.S.A., 467 U.S. at 842-43, 104 S.Ct. at 2781. If Congress failed to address the precise issue in question, the court is not free merely to formulate its construction of the statute. Id. at 843, 104 S.Ct. at 2781. Rather the reviewing court must defer to the agency's construction and implementation of its statutory scheme as long as it represents a reasonable and permissible interpretation. Id.; see also Lyng v. Payne, --- U.S. ----, 106 S.Ct. 2333, 2341-42, 90 L.Ed.2d 921 (1986). Especially when the statute is complex, as is the one in controversy, the Court has admonished reviewing courts not to substitute their judgment for that of the agency. Chemical Manufacturers Association v. Natural Resources Defense Council, Inc., 470 U.S. 116, 125, 105 S.Ct. 1102, 1104, 84 L.Ed.2d 90 (1985); see also Young v. Community Nutrition Institute, --- U.S. ----, 106 S.Ct....
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