United States v. Sene X Eleemosynary Corp., Inc.

• Decision Date: 29 October 1979
• Docket Number: No. 79-2661-Civ-SMA.,79-2661-Civ-SMA.
• Citation: 479 F. Supp. 970
• Parties: UNITED STATES of America, Plaintiff, v. SENE X ELEEMOSYNARY CORP., INC., a corporation, also doing business as "Club SeneX"; and, Seven Freedom Pharmacy, Inc., a corporation; and Alan M. Kratz, Harry Emerson, and Roger I. Sabastier, Individuals, Respondents.
• Court: U.S. District Court — Southern District of Florida

479 F. Supp. 970

UNITED STATES of America, Plaintiff, v. SENE X ELEEMOSYNARY CORP., INC., a corporation, also doing business as "Club SeneX"; and, Seven Freedom Pharmacy, Inc., a corporation; and Alan M. Kratz, Harry Emerson, and Roger I. Sabastier, Individuals, Respondents.

No. 79-2661-Civ-SMA.

United States District Court, S. D. Florida.

October 17, 1979.

As Amended October 29, 1979.

COPYRIGHT MATERIAL OMITTED

J. V. Eskenazi, U. S. Atty., Kenneth D. Stern, Asst. U. S. Atty., Southern District of Florida, Miami, Fla., Catherine L. Copp, U. S. Food & Drug Administration, Rockville, Md., Anita Johnson, Consumer Affairs Section, Dept. of Justice, Washington, D. C., for plaintiff.

Richard J. Hays, Theodore J. Silver, Miami, Fla., for respondents.

OPINION AND ORDER OF PRELIMINARY INJUNCTION

ARONOVITZ, District Judge.

The following Opinion and Order of Preliminary Injunction constitute findings of fact and conclusions of law for the purposes of Rule 52(a), Federal Rules of Civil Procedure.

FINDINGS OF FACT

Introduction

This is an injunction action brought pursuant to section 302(a) of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 332(a) (the Act), which grants federal district courts jurisdiction to restrain violations of section 301 of the Act, 21 U.S.C. § 331. The corporate defendants are Sene X Eleemosynary Corporation, Inc. (Sene X Corp.), 5400 Northwest 159th Street, Miami, Florida, also doing business as Club SeneX, and Seven Freedom Pharmacy, Inc., 2125 Stirling Road, Fort Lauderdale, Florida, both corporations organized and existing under the laws of the State of Florida. The individual defendants are Alan M. Kratz, President and Executive Director of Sene X Corp., Harry Emerson, Vice President and a director of Sene X Corp., and Roger I. Sabastier, a registered pharmacist and President and a director of Seven Freedom Pharmacy.

On June 19, 1979, the plaintiff filed a Complaint for Injunction, charging that the individual and corporate defendants have violated, and continue to violate, sections 301(a), 301(d), and 301(k) of the Act, 21 U.S.C. §§ 331(a), 331(d), and 331(k), in that their activities involve violations of sections 502(a), 505(a), and 502(f)(1) of the Act, 21 U.S.C. §§ 352(a), 355(a), and 352(f)(1). In essence, the Complaint alleges that the defendants are engaged in an operation to compound, promote, and distribute the product, "GH-3 (Equivalent)", an orally administered solution of buffered procaine hydrochloride 2%, as well as GH-3 Topical Cream Formulation, a skin cream. Inasmuch as plaintiff's prayer for relief seeks to enjoin the compounding, promotion, and distribution of GH-3 (Equivalent) or "any similar article of drug" (Complaint at 9), and inasmuch as the testimony establishes that Club SeneX is engaged in the compounding, promotion, and distribution of GH-3 Scalp Fluid, this opinion and Order encompass the defendants' activities with respect to the oral liquid, the skin cream, the scalp fluid, and any other "similar article" of drug, whether or not previously compounded, promoted, or distributed by the defendants.

Regardless of the specific product, the active ingredient in all three of the defendants' products is procaine hydrochloride. Procaine hydrochloride is familiar to the layperson in its use as a local anesthetic, frequently marketed under the proprietary name, Novocaine.

A hearing was held in three segments on July 27, August 24, and September 8, 1979, at which time the Court heard live testimony and admitted into evidence affidavits and documentary exhibits. The plaintiff called five witnesses, three FDA investigators and two medical experts; the defendants offered the testimony of three witnesses, a practicing physician, an attorney who uses defendants' GH-3 oral liquid, and the defendant, Alan M. Kratz. The defendants also offered the deposition testimony of a practicing pharmacist.

Operation of Club SeneX

The evidence adduced at the hearing demonstrates that the defendants have established and operate Club SeneX, which is based in Miami, Florida, as a means to make their products available throughout the country. The Club is purported to be a non-profit organization, the purpose of which is to disseminate educational information on health and nutrition for the elderly. To obtain any of the defendants' procaine products, an individual must join Club SeneX. In fact, most people join the Club only to obtain the GH-3 products.

To become a Club member, an individual must complete an application for membership, pay membership dues (of one hundred and thirty dollars for a six-month supply of the liquid or sixty dollars for a six-month supply of the cream or the scalp fluid), and procure a written prescription for the product, be it the liquid, cream, or oil. A membership application is included in the booklet written and distributed by Jerome Godin and Samuel Becker, GH-3 Your Prescription for a Healthier Happier Life. (Plaintiff's Exhibit 502c, hereafter PX 502c) A more recent Godin-Becker booklet, GH-3 Discovery, includes directions on how to join Club SeneX. (PX 508c) The written prescription may be obtained from the individual's personal physician or from a physician to whom the individual is referred by Club SeneX and is to be written according to the sample prescription provided both in Club SeneX literature and in the Godin-Becker booklets. (PX 505a) The application, dues, and written prescription must then be mailed to Club SeneX in Miami, Florida.

These items are received on behalf of Club SeneX by defendant Alan Kratz, who delivers the prescriptions to defendant, Roger Sabastier, at Sabastier's Seven Freedom Pharmacy in Fort Lauderdale, Florida. Mr. Sabastier compounds the GH-3 at his pharmacy, utilizing procaine that has been shipped in interstate commerce from Bofors America, in Edison, New Jersey. Dr. Kratz picks up the compounded drug from Seven Freedom Pharmacy, and, with the assistance of Harry Emerson, packages the product with various items of promotional literature. Packages are then delivered to the Club members, usually by United Parcel Service. Records of shipments of GH-3 by Club SeneX via United Parcel Service (PX 313a, 313b, 409a, 409b, 409c, and 409d) establish that the defendants have shipped, or caused to be shipped, their product, GH-3 (Equivalent), in interstate commerce. In addition, there is circumstantial evidence of interstate shipment in the form of GH-3 prescriptions written by doctors practicing outside the State of Florida. (PX 307, 308, and 410.)

Club Literature

The defendants distribute a variety of literature that represents that GH-3 is effective treatment for a broad range of ailments, especially those that affect the aged. (PX 505a, 505f, 505g, 506c, 506d, 508c; Defendants' Exhibit 5, hereafter DX 5). Some of this literature is distributed concurrently with the product; some is distributed separately. Literature written or distributed by the defendants also represents that GH-3 has been proven to be effective in treating such diseases and conditions. (DX 5)

Literature distributed by Club SeneX in January 1979 specifically states that "The chemical has been found not only to retard the aging process through a complex series of bodily reactions, but also to alleviate everything from hair loss and arthritis to acne and senility." The same literature further states that "there is solid U.S. scientific research evidence that GH-3 is an effective anti-depressant" and that GH-3 "has proven to be an effective bio-nutritional factor that is beneficial in dis-eases sic associated with premature aging." Likewise, GH-3 is represented to "prolong functional life." (PX 505a)

With respect to the specific efficacy of GH-3, Club SeneX literature states that, inter alia, GH-3 is effective in cancer treatment regimens because of its effects on stress. Elsewhere, the literature states that "GH-3, because of its favorable effects on chronic dis-eases sic such as arthritis, diabetes, hypertension and cardio-vascular conditions, may potentiate the effects of medication being used to treat these diseases sic." (PX 505e)

In April 1979, and at times thereafter, Club SeneX distributed an advertisement promoting the sale of the Godin booklet, GH-3 Discovery, representing it to be "factual and up to date." According to that advertisement (PX 506c),

GH-3 has been claimed by hundreds of thousands and their physicians to safely relieve the degenerative diseases of premature aging such as senility, arthritis, rheumatism, poor hearing, muscle fatigue, depression, stress, ulcers, poor circulation, hypertension, heart disease, parkinsonism, bone disease, liver or age spots, impotence, frigidity, varicose veins, graying and balding hair, ugly wrinkling skin.

It has also been reported to be effective against other maladies not specifically associated with aging such as allergies, asthma, insomnia, obesity, multiple sclerosis, cerebral palsy, migraines, skin disease, poor eyesight.

The advertisement further states that:

Controlled clinical and laboratory studies conclusively show rejuvenation on all phases of life on which it has been tested from the most simple one celled animals . . . to . . . the most complex of all . . . MAN.

Over the past twelve months, Club SeneX has modified representations in its promotional literature. However, Defendants' Exhibit 5, established to be the most recent literature distributed by Club SeneX, still promotes GH-3 as an effective anti-aging agent. The current literature continues to state that "GH-3, because of its nutritional effect on chronic dis-eases sic such as arthritis, diabetes, hypertension, and cardiovascular conditions, may potentiate the effects of medication(s) being used to treat these dis-eases sic," that "there is solid U.S. scientific research evidence that GH-3 is an effective anti-depressant," and that "The chemical has been found not only to retard the aging process through a...