United States v. Franck's Lab, Inc.

• Decision Date: 12 September 2011
• Docket Number: Case No. 5:10–cv–147–Oc–32TBS.
• Parties: UNITED STATES of America, Plaintiff, v. FRANCK'S LAB, INC., et al., Defendants.
• Court: U.S. District Court — Middle District of Florida

816 F.Supp.2d 1209

UNITED STATES of America, Plaintiff,

v.FRANCK'S LAB, INC., et al., Defendants.

Case No. 5:10–cv–147–Oc–32TBS.

United States District Court, M.D. Florida,Ocala Division.

Sept. 12, 2011.

Recognized as Unconstitutional

21 U.S.C.A. § 353a

John W.M. Claud, Office of Consumer Litigation, Washington, DC, Lacy R. Harwell, Jr., U.S. Attorney's Office, Tampa, FL, for Plaintiff.

Alan R. Dial, Ashley C. Parrish, Jeffrey S. Bucholtz, Mark S. Brown, King & Spalding LLP, Washington, DC, Edward L. Birk, Jeptha Fowlkes Barbour, Marks Gray, PA, Paul E. Bueker, Law Offices of Fred Tromberg, Jacksonville, FL, Michael E. Dean, Dean Law Firm, LLC, Ocala, FL, for Defendants.

ORDER

TIMOTHY J. CORRIGAN, District Judge.

In the seventy-plus years since Congress created the Food and Drug Administration, the FDA has never before sought to enjoin a state-licensed pharmacist from engaging in the traditional practice of bulk compounding of animal drugs. Here, the FDA seeks just such an injunction. This case of first impression implicates matters of statutory construction, federalism, and the proper deference to be afforded to the FDA in interpreting its enabling statute.

I. Facts and Procedural Posture

This statutory injunction proceeding is brought by the United States of America, on behalf of the FDA, against defendants Franck's Lab, Inc. d/b/a Franck's Compounding Lab (“Franck's”) and Paul W. Franck, Franck's owner and CEO. Franck's is a pharmacy located in Ocala, Florida which compounds and distributes a wide variety of drugs for both humans and animals to customers across the United States.

The facts of this case are straightforward and largely undisputed. Mr. Franck, a Florida-licensed pharmacist in good standing since 1981, opened an independent pharmacy practice in Archer, Florida in 1983. Over the next several years, Franck expanded his practice by purchasing or opening additional retail pharmacies, including a location in Ocala in 1985. That same year, Franck began to compound medications at the Ocala location for humans and “non food-producing animals” (such as horses). The Ocala pharmacy was later expanded into two practices which now comprise Franck's: Franck's Lab, which operates as a compounding pharmacy, and Franck's Pharmacy, which is a traditional retail pharmacy. At the time the FDA instituted this action, Franck's employed approximately 65 individuals full-time.

Animal and veterinary drug compounding comprises roughly 40 percent of Franck's Lab's business, while human drug compounding accounts for the remaining 60 percent.¹ Franck's compounds the majority of its animal medications from “bulk” active ingredients,² which it receives from suppliers outside the state of Florida. The company also receives prescription orders from customers outside Florida and ships its compounded products to those out-of-state customers. Franck's holds a valid pharmacy license in each of the 47 states in which it is required to do so, and, nationwide, fills approximately 37,000 animal drug prescriptions per year.

The FDA first inspected Franck's compounding facilities between September 29 and October 4, 2004 and, in January 2005, issued a warning letter expressing concern that Franck's was impermissibly manufacturing drugs. (Doc. 17–1, Declaration of Emma Singleton ³ (“Singleton Dec.”), Ex. E.) Among the FDA's concerns were: (i) Franck's practice of compounding veterinary drugs using bulk active pharmaceutical ingredients; (ii) that a number of those drugs “appear[ed] to be compounded outside the context of a valid veterinarian-client-patient relationship;” and (iii) that Franck's was compounding drugs where an approved drug would adequately treat the animal. ( Id. at 1–2.)

Franck's responded by letter dated January 27, 2005, asserting its intention to be in full compliance with all FDA requirements. ( Id. Ex. F.) However, Franck's also expressed disagreement with the FDA's position that bulk compounding of animal drugs was per se unlawful and noted that “[s]tate law and good compounding practices ... allow bulk compounding as long as there is a valid patient physician (veterinarian) relationship.” ( Id. at 1.) Franck's further argued that, because “the FDA allows compounding by bulk chemicals for human use, ... the same should apply to veterinary compounding.” ( Id.) Despite the disagreement, Franck's pledged: (1) to dispense compounded veterinary drugs only to licensed veterinarians pursuant to a “valid patient-veterinarian relationship”; (2) to compound from bulk only those drugs that were commercially unavailable; and (3) to place warning labels on its products to make clear that its compounds were “not to be used on food producing animals.” ⁴ ( Id. at 1–2.) In closing, Franck's stated:

Again, it is Franck's intention to comply immediately and completely with any and all FDA and other legal requirements, and welcomes [sic] the FDA's involvement in these matters. I have tried to the best of my ability to address each item of concern in your letter. If I have fallen short on anything, if you have additional concerns which were not set forth in your letter, or if you have any other questions or concerns, please contact me immediately and I will see to it that we respond immediately, and to your complete satisfaction.( Id. at 2.) FDA did not respond to Franck's' letter and did not take any further action against the pharmacy at that time.

In April 2009, a veterinarian commissioned Franck's to compound an injectable solution of the prescription drug Biodyl for the Venezuelan national polo team. Due to a mathematical error in the conversion of an ingredient (which went unnoticed by the prescribing veterinarian), the compounded medication was too potent and 21 polo horses died. The incident was thoroughly investigated by the Florida Board of Pharmacy, which imposed fines and reprimanded Franck's for the misfilled prescription.⁵ Despite the reprimand, the Board voted to allow Franck's to continue its pharmacy compounding practice without restriction, and Franck's remains in good standing in Florida. The FDA has acknowledged that it was a mathematical error, as opposed to “faulty bulk drugs,” which caused the death of the polo ponies. (Doc. 47 at 27.)

Though the Florida Board of Pharmacy had investigated and resolved the matter to its satisfaction, the Venezuelan polo pony incident prompted the FDA to reinspect Franck's facilities three times: May 4–20, 2009; June 18–23, 2009; and December 1–4, 2009. Subsequent to the May inspection, the FDA issued Franck's a Form FDA 483 which contained five specific observations, none of which identified bulk compounding of animal drugs as a concern. (Singleton Dec. Ex. B.) ⁶

Franck's responded to the Form 483 by letter dated June 12, 2009. ( Id. Ex. C.) The letter stated that the pharmacy had “carefully considered the [FDA's] observations” and used them “to help further strengthen our operations.” ( Id. at 1.) However, Franck's noted that:

the observations that FDA has outlined involve pharmacy practices that we must strenuously assert are regulated by the Florida Department of Health and Board of Pharmacy. We are concerned that FDA is attempting to assert authority over Franck's Pharmacy that it reserves for drug manufacturers. Put simply, we are a compounding pharmacy that fills prescriptions to meet the needs of individual patients; we are not a drug manufacturer....

The events that are the subject of the FD–483 observations [i.e., the polo pony incident] represent classic, traditional compounding. Franck's was filling a single prescription from a veterinarian specifically and solely for that veterinarian's patients. This was prototypical compounding ....

The Florida Department of Health [conducted] its own inspection and [viewed] the incident as one relating to compounding. Even the FDA investigators orally acknowledged that the activities in question constituted compounding ....

Franck's has been compounding human and veterinary drugs for more than 25 years to meet the special needs of doctors, veterinarians, and patients. We take both our obligations to our patients and our regulatory responsibilities very seriously.

( Id. at 2–4.) Without further response or discussion, FDA initiated this action in April of 2010, seeking to enjoin Franck's practice of distributing animal drugs compounded from bulk substances.⁷

After Franck's moved to dismiss the complaint (Doc. 13), the FDA sought a preliminary injunction (Doc. 16). The Court heard oral argument on August 18, 2010 (Doc. 43), the record of which is incorporated by reference. The Court subsequently denied both motions (Doc. 44) and, at the parties' request, postured the case for resolution via dispositive motions (Doc. 53). The parties then fully developed the record, each submitting declarations and other materials,⁸ as well as a Joint Stipulation of Undisputed Facts (Doc. 55). Thereafter, the parties filed extensive cross-motions for summary judgment and responses thereto (Docs. 54, 56, 59, 60). The Court heard lengthy oral argument on the parties' cross-motions on February 24, 2011 (Doc. 61), the record of which is incorporated by reference.

II. The Record Allows for Disposition on Cross–Motions for Summary Judgment

The FDA acknowledges that this is the first time it has sought to enjoin a state-licensed pharmacist from bulk compounding of animal medications. Further, through its development of the record and posturing of this case, the FDA has made clear that the legal violation it asserts is not contingent on any fact-specific grounds unique to Franck's. Rather, the FDA has taken the bright-line position that any compounding of animal medications from bulk substances violates its enabling statute, the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301, et seq. (“FDCA”), even when conducted by a state-licensed pharmacist for an individual animal patient pursuant to a valid veterinary prescription. Franck's...