Western States Medical Center v. Shalala

Decision Date16 September 1999
Docket NumberNo. CV-S-98-01650(DAE)(RLH).,CV-S-98-01650(DAE)(RLH).
Citation69 F.Supp.2d 1288
PartiesWESTERN STATES MEDICAL CENTER, a Nevada Corporation; Women's International Pharmacy, a Wisconsin corporation; Health Pharmacy, a Wisconsin corporation; Apothecure, a Texas corporation; College Pharmacy, a Colorado corporation; Lakeside Pharmacy, a Tennessee corporation; and Wedgewood Village Pharmacy, a New Jersey corporation, Plaintiffs, v. Donna SHALALA, in her official capacity as Secretary, United States Department of Health and Human Services, and Michael A. Friedman, in his official capacity as Acting Commissioner, United States Food and Drug Administration, Defendants.
CourtU.S. District Court — District of Nevada

Holleb & Coff, Matthew Murer, Howard M. Hoffmann, Michael A. Reiter, Chicago, IL, Lionel, Sawyer & Collins, Samuel S. Lionel, Las Vegas, NV, for plaintiffs.

Kathryn E. Landreth, U.S. Attny, Blaine T. Welsh, Asst U.S. Attny, Las Vegas, NV, Gerald C. Kell, Sen Trial Cnsl, Office of Consumer Litigation, DOJ, Washington, DC, Patricia J. Kaeding, Assoc Chief Cnsl, Food & Drug Admin, Rockville, MD, of counsel, for defendants.

ORDER DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT AND GRANTING PLAINTIFFS' CROSS-MOTION FOR SUMMARY JUDGMENT

DAVID ALAN EZRA, Chief Judge.

The court heard the parties' motions on June 22, 1999. Michael A. Reiter, Esq., and Howard M. Hoffman, Esq., appeared at the hearing on behalf of Plaintiffs; Gerald C. Kell, Esq., Patricia J. Kaeding, Esq., and Blaine T. Welsh, Esq., appeared at the hearing on behalf of Defendants. After reviewing the Motions and the supporting and opposing memoranda, the court DENIES Defendants' Motion for Summary Judgment and GRANTS Plaintiffs' Cross-Motion for Summary Judgment.

I. BACKGROUND

This case involves a First Amendment challenge to Section 503A of the Food and Drug Modernization Act of 1997 (the "Modernization Act"), codified at 21 U.S.C. § 353a ("§ 353a"). The Modernization Act exempts "compounded drugs" from the standard drug approval requirements imposed by the Food and Drug Administration ("FDA"). However, §§ 353a(a) and (c) condition this exemption on drug providers agreeing to not promote or advertise particular compounded drugs. Plaintiffs are licensed pharmacists seeking to enjoin the enforcement of these subsections of § 353a, contending that they violate the First Amendment's guarantee of free speech.1

A. Factual Background

Compounding is the process by which a pharmacist combines, mixes or alters ingredients to create a medication that serves the unique needs of specific patients. Pharmacists may provide compounded drugs to individual patients upon receipt of a valid prescription. Such drugs are produced for a variety of reasons, such as when the patient is allergic to an ingredient in the product or when the product is not available in the proper dosage. It is a process that is taught as part of the standard curriculum at most pharmacy schools, and most states have laws requiring that pharmacists have sufficient education and equipment to provide some compounding services.

Plaintiffs are eight licensed pharmacies located in seven states. In addition to providing traditional pharmaceutical services, they regularly compound drugs in order to meet the specific needs of individual patients. To accomplish this task, Plaintiffs maintain that they have each pursued individual specializations in the compounding of certain drugs. As a result, compounded drugs represent between 60% and 90% of Plaintiffs' total drug orders.

According to Plaintiffs, they have traditionally advertised their compounding services in order to both promote their products and inform physicians and patients of the variety of available compounded drugs. Plaintiffs explain that the compounding process requires them to consult with physicians and patients, and in some cases, make recommendations about the proper combination of drugs. Accordingly, they have prepared written promotional materials that they distribute both by mail and at medical conferences, and they often include studies and other research to inform consumers and physicians of the uses and effectiveness of specific compounded drugs.

B. Statutory History and Framework

The Federal Food, Drug and Cosmetic Act (the "FDC Act"), 21 U.S.C. § 355(a), imposes stringent conditions on the manufacture and distribution of new drugs.2 The FDC Act imposes numerous requirements on the approval of new drugs, and provides that "[n]o person shall introduce or deliver for introduction into interstate commerce any new drug, unless an approval of an application ... is effective with respect to such drug." § 355(a). All new drugs must comply with these requirements unless Congress has provided an explicit exemption.

Historically, while the FDA has subjected new drugs to its requirements, it has permitted pharmacists to compound drugs without meeting these stringent safety standards. In accordance with this policy, prior to the enactment of the Modernization Act in 1997, the FDA had never exercised its authority to subject compounded drugs to the FDC Act's requirements. However, the FDA had expressed concern over efforts by pharmacists and other drug providers to manufacture drugs under the guise of compounding. In 1992, the FDA issued a Compliance Policy Guide ("CPG") that reflected the FDA's policy regarding efforts to manufacture drugs without obtaining FDA approval. The CPG set forth nine factors the FDA used to determine whether a drug provider's efforts to produce a particular drug justified the FDA's exercise of enforcement action under the FDC Act. These factors included "[s]oliciting business (e.g., promoting, advertising, or using sales persons) to compound specific drug products, product classes, or therapeutic classes of drug products," and "[d]istributing inordinate amounts of compounded products out of state." CPG at 153-54, attached as Exhibit A to Defendants' Motion for Summary Judgment. The CPG explained that such actions were more consistent with manufacturing than compounding, and enforcement of FDA regulations was thus necessary to prevent the "very real potential for causing harm to the public health when drug products are manufactured and distributed in commercial amounts without FDA's approval." CPG at 152.

In 1997, Congress formally recognized this policy by enacting the Modernization Act of 1997. Under the Modernization Act, pharmacists are free to produce compounded drugs without meeting the FDA's restrictive regulations, as long as they satisfy several conditions. First, under subsection (a), the drug product must be compounded "for an identified individual patient based on the unsolicited receipt of a valid prescription order." Subsection (b) imposes numerous standards on the quality of the ingredients of the compounded drug, requiring, inter alia, that the drug product be compounded from a list of approved drug substances that have not been deemed unsafe or inappropriate for compounding. Finally, under subsection (c), a drug may be compounded "only if the pharmacy, licensed pharmacist or licensed physician does not advertise or promote the compounding of any particular drug, class of drug, or type of drug."

On November 19, 1998, Plaintiffs filed their Complaint and Motion for Temporary Restraining Order, seeking injunctive and declaratory relief. They contended that because §§ 353a(a) and (c) allow pharmacists to compound drugs only if they forego the advertising and promotion of their products, these subsections represent an unconstitutional condition in violation of the free speech clause of the First Amendment. On November 20, 1998, Plaintiffs filed a Motion for Temporary Restraining Order and Preliminary Injunction, requesting that the court enjoin the enforcement of the speech-related restrictions in §§ 353a(a) and (c). On December 18, 1998, after an evidentiary hearing held on December 4, 1998, the court granted Plaintiffs' Motion in part and temporarily restrained the Government from enforcing § 353a ("TRO Order"). The parties stipulated to the extension of the TRO Order, pending resolution of the Summary Judgment Motions addressed here.

II. STANDARD OF REVIEW

Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment shall be entered when:

... the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

The moving party has the initial burden of "identifying for the court those portions of the materials on file that it believes demonstrate the absence of any genuine issue of material fact." T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir.1987) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). The movant must be able to show "the absence of a material and triable issue of fact," Richards v. Neilsen Freight Lines, 810 F.2d 898, 902 (9th Cir.1987), although it need not necessarily advance affidavits or similar materials to negate the existence of an issue on which the nonmoving party will bear the burden of proof at trial. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. But cf., id., at 328, 106 S.Ct. 2548 (White, J., concurring).

If the moving party meets its burden, then the opposing party may not defeat a motion for summary judgment in the absence of any significant probative evidence tending to support his legal theory. Commodity Futures Trading Comm'n v. Savage, 611 F.2d 270, 282 (9th Cir.1979). The opposing party cannot stand on his pleadings, nor can he simply assert that he will be able to discredit the movant's evidence at trial. See T.W. Elec., 809 F.2d at 630. Similarly, legal memoranda and oral argument are not evidence and do not create issues of fact capable of defeating an otherwise...

To continue reading

Request your trial
4 cases
  • Medical Center Pharmacy v. Gonzales, MO-04-CV-130.
    • United States
    • U.S. District Court — Western District of Texas
    • 30 Agosto 2006
    ...violated the free speech guarantee provided by the First Amendment to the United States. Constitution. See W. States Med. Ctr. v. Shalala, 69 F.Supp.2d 1288 (D.Nev. 1999). The District Court for the District of Nevada found that the relevant provisions did violate the First Amendment, howev......
  • Minnesota ex rel. Hatch v. Sunbelt Comm. and Market
    • United States
    • U.S. District Court — District of Minnesota
    • 30 Septiembre 2002
    ...be sued. See Destination Ventures, Ltd. v. F.C.C., 844 F.Supp. 632 (D.Or.1994), aff'd, 46 F.3d 54 (9th Cir.1995); W. States Med. Ctr. v. Shalala, 69 F.Supp.2d 1288 (D.Nev.1999) (concerning pre-enforcement challenge to 21 U.S.C. § 353a); see also Thompson v. W. States Med. Ctr., 535 U.S. 357......
  • W. States Medical Center v. Shalala
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • 6 Febrero 2001
    ...court agreed with Plaintiffs and granted their motion for summary judgment in a published opinion. See Western States Medical Ctr. v. Shalala, 69 F. Supp.2d 1288 (D. Nev. 1999). The district court exercised jurisdiction pursuant to 28 U.S.C. 1331 and 1361. We have jurisdiction over this app......
  • Thompson v. Western States Medical Center
    • United States
    • United States Supreme Court
    • 29 Abril 2002
    ...speech under Central Hudson, 447 U. S., at 566, and that their enforcement should therefore be enjoined. Western States Medical Center v. Shalala, 69 F. Supp. 2d 1288 (Nev. 1999). The District Court, however, found those provisions to be severable from the rest of § 127(a) of the FDAMA, 21 ......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT