Lorillard Inc v. United States Food and Drug Administration , 56 F. Supp. 3d 37 ( 2014 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
LORILLARD, INC., et al., )
)
Plaintiffs, )
)
v_ ) Civil Case No. 11-440 (RJL)
)
UNITED STATES FOOD AND DRUG )
ADMINBTRATIGN, er 31., ) F I |_ E D
)
Defendants. ) 1 zmll
Clork, U.S. District & B;ir(\:kr|upt;;l¢
' t‘ to oum a
MEMORANDUM OPINION Courts for the D\s nc
Juiy@, 2014 [## 65, 671
This suit challenges the composition of the Tobacco Products Scientific Advisory
Committee ("TPSAC" or "Committee"), a federal advisory committee established in
2010 by the U.S. Food and Drug Administration ("FDA") to provide advice and
recommendations on scientific issues relating to tobacco products The suit also
challenges the process by which that committee drafted a 2011 report on the use of
menthol in cigarettes ("Menthol Report").l Plaintiffs Lorillard, Inc., Lorillard Tobacco
Company, and R.J. Reynolds Tobacco Company (collectively, "plaintiffs") initiated this
action in February 2011 against the FDA; the U.S. Department of Health and Human
Services ("DHHS"); Kathleen Sebelius, the Secretary of DHHS;Z Margaret Hamburg, the
' The full title of the l\/Ienthol Report is: "I\/Ienthol Cigarettes and the Public Health: Review of
the Scientific Evidence and Recommendations" (July 21 , 201 l). AR 19433-684.
2 On June 9, 2014, Sylvia Burwell succeeded Kathleen Sebelius as the new Secretary of DHHS.
For the purposes of this opinion, however, the Court will refer to Secretary Sebelius as the
Secretary.
Commissioner of Food and Drugs; and Lawrence Deyton, the Director of the FDA’s
Center for Tobacco Products (collectively, "defendants") and filed their third amended
complaint on April 25, 2013, seeking declaratory and injunctive relief.3 Third Amended
Complaint ("3d Am. Compl.") [Dkt. # 63] 1111 1, 4, 7.
Plaintiffs assert five causes of action alleging lack of compliance with ethics laws
and the Federal Advisory Committee Act ("FACA"), 5 U.S.C. app. 2 §§ l-l6, all in
violation of the Administrative Procedure Act ("APA"), 5 U.S.C. § 551 et seq. 3d Am.
Compl. 1111 129-84. With regard to the Committee’s composition, plaintiffs allege that
defendants’ appointment of three voting committee members-Drs. Neal Benowitz, Jack
Henningfield,‘i and Jonathan Samet (together, the "Challenged MemberS"S)-was
"arbitrary, capricious, an abuse of discretion, and otherwise not in compliance with lavv"
under the APA, 5 U.S.C. § 706(2)(A), because these three members had alleged financial
conflicts of interest or the appearance of conflicts of interest, in violation of 18 U.S.C.
§§ 202(a), 208; 21 U.S.C. § 379d-1; and 5 C.F.R. pts. 2635, 2640. 3d Am.Comp1.
1111 129-40 (Counts One and Two). Further, plaintiffs allege that defendants violated the
3 Plaintiffs filed their original Complaint on February 25, 2011 [Dkt. # 1], their First Amended
Complaint on March 21, 2011 [Dkt. # 12], and their Second Amended Complaint on July 5, 201 1
[Dkt. # 33].
4 Drs. Benowitz and Henningfield no longer serve on the TPSAC. See Defs.’ Mot. for Summ. J.
and Mem. of P. & A. in Supp. [Dkt. # 65] at 7 n.3. P1aintiff`s continue to challenge their
appointments, however, because their alleged conflicts of interest affect the Menthol Report. See
Pls.’ Supplemental Mem. in Opp’n to Defs.’ Mots. to Dismiss [Dkt. # 42] at 8 n.l3.
5 Plaintiffs also alleged conflict of interest claims against Drs. Burns and Farone, two non-voting
members of the Constituent Subcommittee, see 3d Am. Compl. 1111 l3l, 133, 137, 139, 147, but
plaintiffs no longer pursue those claims. See Pls.’ Mot. for Summ. J. [Dkt. # 67] and Unredacted
Mem. in Supp. of Pls.’ Mot. for Summ. J. and in Opp’n to Defs.’ Mot. for Summ. J. ("Pls.’ Me1n.
& Opp’n") [Dkt. # 69] at 3 n.3.
APA by appointing a committee lacking "fair[] balance[] in terms of the points of view
rcpresented" and exhibiting "special interest" influence, in violation of FACA, 5 U.S,C.
app. 2 §§ 5(b)(2)-(3), (c). 3d Am. Compl. 1111 141-49 (Count Three).
Next, with regard to the TPSAC’s deliberative process, plaintiffs allege that:
members of the Committee held a private meeting on March 17, 2011, in violation of
FACA, because the meeting was not open to the public and timely notice of the meeting
was not previously published, 3d Am. Compl. 1111 150-57 (Count Four); and defendants, in
violation of FACA, failed to disclose various documents that were created by the TPSAC
and its subcommittee and related to the Menthol Report. 3d Am. Compl. 1111 158-84
(Count Five). As a remedy for these alleged violations of` ethics laws and FACA under
the APA, plaintiffs seek, inter ali`a, an order enjoining the FDA to reconstitute the
TPSAC’s membership so that it complies with applicable ethics laws and FACA, and an
injunction barring defendants from using the allegedly "tainted" Menthol Report. 3d Am.
Compl. at 84-91; see also Pls.’ Unredacted Reply Mem. ("Pls.’ Reply") [Dkt. # 77] at 23-
24.
Before the Court are the parties’ cross-motions for summary judgment.G Upon
consideration of the pleadings, relevant law, and entire record therein, the Court
concludes, first, that the FDA erred in determining that the three Challenged Meinbers of
the TPSAC did not have financial and appearance conflicts of interest, and second, that
6 See Defs.’ Mot. for Summ. J. and Mem. of P. & A. in Supp. ("Defs.’ Mem.") [Dkt. # 65]; Pls.’
Mot. for Summ. J. [Dkt. # 67] and Unredacted Mem. in Supp. of Pls.’ Mot. for Summ. J. and in
Opp’n to Defs.’ Mot. for Summ. J. ("Pls.’ Mem. & Opp’n") [Dkt. # 69]; see also Defs.’ Mem. in
Opp’n to Pls.’ Mot. for Summ. .l. and in Reply to Pls.’ Opp’n (“Defs.’ Opp’n & Reply") [Dkt. #
72]; Pls.’ Unredacted Reply Mem. ("Pls.’ Reply") [Dkt. # 77].
therefore the FDA’s appointment of those members was arbitrary and capricious, in
violation of the APA, and fatally tainted the composition of the TPSAC and its work
product, including the Menthol Report. Accordingly, plaintiffs’ motion is GRANTED, in
part, on Counts 0ne and Two, and defendants’ motion is DENIED.7
BACKGROUND
I. Legal Backgr0und
a. The Tobacco Control Act and the TPSAC’s Role
Until recently, the FDA lacked authority to regulate tobacco products. See FDA v.
Brown & Wil/iamson Tobacco Corp., 529 U.S. 120 (2000) (holding that FDA lacked
authority under the Federal Food, Drug, and Cosmetic Act ("FDCA") to regulate tobacco
products as customarily marketed). ln 2009, however, Congress passed the Family
7 Because l find that the three Challenged Members’ financial and appearance conflicts of
interest, alone, are sufficient to taint the composition of the 'I`PSAC, 1 need not reach the
somewhat thornier "fair balance" and "special interest" claims under FACA (Count Three).
Compare Pub. Ci`tizen v. Nat ’l Aa'visory Comm. on Microbiological Criteriafor Foods, 886 F.2d
419, 426-31 (D.C. Cir. 1989) (Silberman, J., concurring in the judgment) (finding FACA claim
non-justiciable under the APA because FACA’S statutory language~"fairly balanced in terms of
the points of view represented and the functions to be performed," 5 U.S.C. app. 2 § 5(b)(2), and
"inappropriately influenced . . . by any special interest," z`d. § 5(b)(3)~provided no "meaningful
standard against which to judge the agency’s exercise of discretion," Heckler v. Chaney, 470
U.S. 821, 830 (1985)), with id. at 420-26 (Friedman, J., concurring in thejudgment) (finding
FACA claim justiciable but concluding that how to achieve "fair balance" lies within discretion
of official who appoints advisory committee, and finding no abuse of discretion in case at bar),
and i'd. at 431-38 (Edwards, J., concurring in part and dissenting in part) (finding FACA claim
justiciable and that plaintiffs had made out their claim of a FACA violation in their complaint,
and recommending remand for review on the merits). Further, because 1 find that the
appointment of the three Challenged Members tainted the composition of the TPSAC from the
outset and requires remand to the agency, 1 also find it unnecessary to reach plaintiffs’ additional
claims regarding the process by which the TPSAC operated (Counts Four and Five), which
followed later in time. See Sz‘ale o/Nebraska Dep ’t of Healrh & Human Servs. v. Dep ’t of
Heallh & Hurncm Servs., 435 F.3d 326, 331 (D.C. Cir. 2006) (lf the Court "deterrnines that [the]
agency made an error of law, the court’s inquiry is at an end: the case must be remanded to the
agency for further action consistent with the corrected legal standards." (citation omitted)).
Smoking Prevention and Tobacco Control Act ("TCA" or "Act"), Pub. L. No. 11 1-3 l,
123 Stat. 1776 (2009), which authorized the FDA “to regulate tobacco products under the
[FDCA] . . . by recognizing it as the primary Federal regulatory authority with respect to
the manufacture, marketing, and distribution of tobacco products." Id. § 3(1) (Purpose).
1n part of that Act, Congress established the TPSAC, a twelve-member advisory
committee, to "provide advice, information, and recommendations to the Secretary [of
DHHS]" relating to the regulation of tobacco. 21 U.S.C. § 387q(c).8
The TCA authorizes the Secretary of DHHS to refer certain matters to the TPSAC.
For instance, the FDA "may refer a proposed regulation for the establishment,
amendment, or revocation of a tobacco product standard to the [TPSAC] for a report and
recommendation with respect to any matter involved in the proposed regulation which
requires the exercise of scientific judgment." 21 U.S.C. § 387g(d)(5)(A). Or the agency
may refer an application to produce and distribute a "new tobacco product" to the
Committee for a report and recommendation. 21 U.S.C. § 387j(b)(2).
But the TCA also affirmatively requires the Secretary to refer certain matters to
the TPSAC. As relevant here, Congress chose to set two specific priorities for the
Committee to address upon its formation, mandating, first, that "[i]mmediately upon the
establishment of the [TPSAC] . . . the Secretary shall refer to the Committee for report
8 Specifically, the TCA specifies that TPSAC "shall provide advice, inforrnation, and
recommendations to the Secretary-- (1) as provided in this subchapter; (2) on the effects of the
alteration of the nicotine yields from tobacco products; (3) on whether there is a threshold level
below which nicotine yields do not produce dependence on the tobacco product involved; and (4)
on its review ofother safety, dependence, or health issues relating to tobacco products as
requested by the Secretary." 21 U.S.C. § 387q(c).
and recommendation . . . the issue of the impact of the use of menthol in cigarettes on the
public health, including such use among children, African-Americans, Hispanics, and
other racial and ethnic minorities." 21 U.S.C. § 387g(e)(1). Second, Congress also
directed that "[t]he Secretary shall refer to the [TPSAC] for report and recommendation .
. . the issue of the nature and impact ofthe use of dissolvable tobacco products
[("DTPS")] on the public health, including such use among children." 21 U.S.C. §
387g(f)(1). The 'l`CA further required that the TPSAC submit its report on menthol
within one year of its establishment and its report on DTPS within two years thereof. 21
U.S.C. §§ 387g(e)(2), (f)(2). 1n providing such advice, the TPSAC is obligated to
address the considerations the Secretary evaluates when issuing tobacco product
standards, 21 U.S.C. §§ 387g(e)(1), (f)(l) (referring back to subsection (a)(3)(B)(i)), but
the Act does riot require the Secretary to defer to TPSAC’s advice or recommendations,
21 U.S.C. §§ 387g(e)(3), (f)(3).
b. Laws Governing the TPSAC’s Composition
Advisory committees that advise executive branch officials and agencies, such as
the TPSAC, are governed by FACA, 5 U.S.C. app. 2 §§ 1-16. See Final Rule, Advisory
Committee; Tobacco Products Scientific Advisory Committee; Establishment, 74 Fed.
Reg. 43,042, 43,042 (Aug. 26, 2009) (acknowledging TPSAC is "governed by . . . the
Federal Advisory Committee Act, which sets forth standards for the formation and use of
advisory committees"). Congress passed FACA in 1972 "to ensure that new advisory
committees be established only when essential and that their number be minimized; that
they be terminated when they have outlived their usefulness; that their creation,
operation, and duration be subject to uniform standards and procedures; that Congress
and the public remain apprised of their existence, activities, and cost; and that their work
be exclusively advisory in nature." Public Citizen v. Dep ’t of Justz`ce, 491 U.S. 440, 446
(1989) (citing 5 U.S.C. app. 2 § 2(b)). While Congress recognized that advisory
committees "are frequently a useful and beneficial means of furnishing expert advice,
ideas, and diverse opinions to the F ederal Govemmcnt," 5 U.S.C. app. 2 § 2(a),
"Congress also feared the proliferation of costly committees, which were often dominated
by representatives of industry and other special interests seeking to advance their own
agendas," Currzmock v. Gore, 180 F.3d 282, 284 (D.C. Cir. 1999). Accordingly,
"FACA’S principal purpose was to enhance the public accountability of advisory
committees established by the Executive Branch and to reduce wasteful expenditures on
them." Public Citizeri, 491 U.S. at 459.
To achieve these purposes, FACA mandates, among other things, restrictions on
the membership of advisory committees. As relevant here, FACA requires that any
subsequent legislation establishing (or authorizing the establishment of) an advisory
committee "shall . . . require the membership of the advisory committee to be fairly
balanced in terms of the points of view represented and the functions to be performed by
the advisory committee." 5 U.S.C. app. 2 § 5(b)(2). And any such legislation "shall"
also "contain appropriate provisions to assure that the advice and recommendations of the
advisory committee will not be inappropriately influenced by the appointing authority or
by any special interest, but will instead be the result of the advisory committee’s
independent judgment." 5 U.S.C. app. 2 § 5(b)(3).9
The TCA is an example of such subsequent legislation establishing an advisory
committee. That Act sets forth specific criteria for appointing the twelve members of the
TPSAC, including the expertise required:
The Secretary shall appoint as members of the Tobacco Products Scientific
Advisory Committee individuals who are technically qualified by training
and experience in medicine, medical ethics, science, or technology
involving the manufacture, evaluation, or use of tobacco products, who are
of appropriately diversified professional backgrounds. The committee shall
be composed of--
(i) 7 individuals who are physicians, dentists, seientists, or health care
professionals practicing in the area of oncology, pulmonology, cardiology,
toxicology, pharmacology, addiction, or any other relevant specialty;
(ii) 1 individual who is an officer or employee of a State or local
government or of the Federal Government;
(iii) 1 individual as a representative of the general public;
(iv) 1 individual as a representative of the interests of the tobacco
manufacturing industry;
(v) 1 individual as a representative of the interests of the small business
tobacco manufacturing industry, which position may be filled on a rotating,
sequential basis by representatives of different small business tobacco
manufacturers based on areas of expertise relevant to the topics being
considered by the Advisory Committee; and
(vi) 1 individual as a representative of the interests of the tobacco growers.
21 U.S.C. § 387q(b)(1)(A). Further, the TCA provides that the nine members described
in clauses (i)-(iii) will serve as voting members of the TPSAC, whereas the three tobacco
9 Further, "[t]o the extent they are applicable, the guidelines set out in subsetion (b) of this
section shall be followed by the President, agency heads, or other Federal officials in creating an
advisory committee." 5 U.S.C. app. 2 § 5(e).
industry representative members described in clauses (iv)-(vi) may not vote and "shall
serve as consultants" to the voting members. 21 U.S.C. § 387q(b)(l)(B).
Notably, the provision barring tobacco industry representative members from
voting is not the only way in which the TCA addresses FACA’S requirement that
advisory committee legislation must "contain appropriate provisions to assure that the
advice and recommendations of the advisory committee will not be inappropriately
influenced . . . by any special interest, but will instead be the result of the advisory
committee’s independent judgment." 5 U.S.C. app. 2 § 5(b)(3). The Act also includes a
specific "conflicts of interest" provision governing the membership of the TPSAC:
No members of the committee, other than [the three tobacco industry
representatives] shall, during the member’s tenure on the committee or for
the 18-month period prior to becoming such a member, receive any salary,
grants, or other payments or support from any business that manufactures,
distributes, markets, or sells cigarettes or other tobacco products.
21 U.S.C. § 387q(b)(1)(C).
In addition to this TPSAC-specific conflicts provision, however, general conflict
of interest laws and regulations apply to the voting members of the Committee, who are
considered "special government employees" ("SGE"). See 21 C.F.R. § l4.80(b)(l)(ii)
(voting members of technical advisory committees are "subject to the conflict of interest
laws and regu1ations" as SGEs); 18 U.S.C. § 202(a) (defining SGE); see also AR 32
(TPSAC Charter). Specifically, the voting members must comply with the laws and
regulations prohibiting financial and appearance conflicts of interest set forth in 18
U.S.C. § 208, 21 U.s.c. § 379<1-1(¢), and 5 C.F.R. §§ 2635.401-402, 2635.501-502;
2640.103. Absent certain exceptions, it is unlawful for an SGE to "participate[]
personally and substantially . . . through decision, approval, disapproval,
recommendation, the rendering of advice, investigation, or otherwise," in any "particular
matter" in which he has a "financial interest." 18 U.S.C. § 208(a).l0 Regulations
promulgated by the Office of Government Ethics ("OGE") pursuant to 18 U.S.C. §
208(d)(2) further interpret this general prohibition on financial conflicts of interest. See 5
C.F.R. §§ 2635.401-402, 2640.103. Specifically, 5 C.F.R. § 2635.402 ("Disqualifying
financial interests") provides:
(a) Statutory prohibition. An employee is prohibited by criminal statute, 18
U.S.C. 208(a), from participating personally and substantially in an official
capacity in any particular matter in which, to his knowledge, he or any
person whose interests are imputed to him under this statute has a financial
interest, if the particular matter will have a direct and predictable effect on
that interest.
(b) Definitions. For purposes of this section, the following definitions shall
apply:
(l) Direct and predictable effect.
(i) A particular matter will have a direct effect on a financial
interest if there is a close causal link between any decision or
action to be taken in the matter and any expected effect of the
matter on the financial interest. An effect may be direct even
though it does not occur immediately. A particular matter will
not have a direct effect on a financial interest, however, if the
chain of causation is attenuated or is contingent upon the
occurrence of events that are speculative or that are
independent of, and unrelated to, the matter. A particular
matter that has an effect on a financial interest only as a
consequence of its effects on the general economy does not
have a direct effect within the meaning of this subpart.
(ii) A particular matter will have a predictable effect if there
10 Another statute, 21 U.S.C. § 379d-1(c), provides that members of FDA advisory committees
are subject to parallel prohibitions to those in 18 U.S.C. § 208.
10
is a real, as opposed to a speculative possibility that the
matter will affect the financial interest. lt is not necessary,
however, that the magnitude of the gain or loss be known, and
the dollar amount of the gain or loss is immaterial.
5 C.F.R. § 2635.402(a)-(b); see also 5 C.F.R. § 2640.l03(a) (mirroring language of§
2635.402(a) and stating "[t]he restrictions of 18 U.S.C. 208 are described more l`ully in 5
CFR 2635.401 and 2635.402").
Finally, in addition to explicating financial conflicts of interest, the OGE
regulations also address "appearance" conflicts of interest. See 5 C.F.R. § 2635.501-502.
An appearance conflict exists "[w]here an employee knows that a particular matter
involving specific parties is likely to have a direct and predictable effect on the financial
interest of a member of his household . . . and where the employee determines that the
circumstances would cause a reasonable person with knowledge of the relevant facts to
question his impartiality in the matter." 5 C.F.R. 2635.502(a).l'
II. Factual Background
a. Selecting and Screening the TPSAC Members
The FDA issued the Charter for the TPSAC on August 7, 2009, see AR 30-33, and
then began seeking nominations for voting and non-voting members by publishing
notices in the Federal Register. See 74 Fed. Reg. 43,147 (Aug. 26, 2009) (voting); 74
n Despite § 2653.502(a)’s reference to "financial interest," a financial conflict is not necessary
for an appearance conflict to exist because § 2653.502(a)(2) covers "circumstances other than
those specifically described in the section." Further, although the plain language of §
2653.502(a) indicates that the recusal analysis should be initiated by an employee, agencies are
in fact obligated to address such conflicts. See Memorandum to Designated Agency Ethics
Officials regarding Guidance on Waivers Under 18 U.S.C. § 208(b), Authorizations Under 5
C.F.R. § 2653.502(d), and Waivers of Requirements Under Agency Supplemental Regulations,
OGE, Lega1Advisory DO-10-005, at 4 n.4 (Apr. 22, 2010); Pls.’ Mem. & Opp’n at 61 n.60.
11
Fed. Reg. 43,140 (Aug. 26, 2009) (non-voting). The FDA formed a selection committee,
see AR 6192-93, and evaluated nearly 100 nominees in a process chaired by the Assistant
Secretary for Health and Human Services, see AR 81-87; Defs.’ Am. Mem. in Supp. of
Defs.’ Mot. to Dismiss [Dkt. #22] at 1l.
In identifying the original TPSAC members and alternates, the selection
committee focused on the expertise and experience those members would bring to the
topics to be addressed by the TPSAC. See AR 90-93; AR 2 (DHHS memo regarding
establishment of TPSAC); AR 30 (Charter describing TPSAC’s duties). According to the
FDA, the voting members were selected in an effort "to recruit the best scientific experts
and to ensure that TPSAC has a balanced composition of expertise to handle the complex
tobacco-related issues that will come before it." AR 6141-42.
The FDA announced the initial nine voting members of the TPSAC on March 1,
2010.12 ln accordance with the TCA’s membership criteria, the selected voting members
included seven qualified health care professionals practicing in various relevant
specialties, one non-FDA government representative, and one public representative. And
these nine members included the three Challenged Members central to this litigation: (l)
Dr. Neal L. Benowitz, the Chief of the Division of Clinical Pharmacology at the
University of Califomia, San Francisco, with expertise in nicotine, substance abuse,
clinical pharmacology, and toxicology; (2) Dr. Jack Henningfield, Vice President of
Research and Health Policy at Pinney Associates, with expertise in addiction medicine,
12 See FDA News Release (Mar. 1, 2010),
http://www.fda.gov/newsevents/newsroom/pressannouncements/ucm202394.htm.
12
pharmacology, and health poliey; and (3) Dr. Jonathan M. Samet, the Chair of the
Department of Preventive Medicine at Keck School of Medicine, with expertise in
internal medicine, pulmonology, epidemiology, tobacco control, and public health, who
serves as Chair of the committee. AR 89. The FDA also appointed three-nonvoting
members to represent the tobacco industry. AR 112.
Before appointing the TPSAC members, the FDA conducted initial screenings to
address potential conflicts of interest. See 74 Fed. Reg. 43,147, 43,148 (Aug. 26, 2009)
(Notice, Request for Nominations for Voting Members on a Public Advisory Committee;
'l`obacco Products Scientific Advisory Committee) ("FDA will ask the potential
candidates to provide detailed information concerning matters related to financial
holdings, employment, and research grants and/or contracts.").l} The FDA required all
prospective voting members "to assure the agency that they had not received any salary,
grants, payment or support from the tobacco industry in the preceding 18 months," and
the agency then "reviewed each prospective member’s expertise and financial interests to
reduce the likelihood that conflicts of interests would arise from participating in
particular committee mcetings." AR 6192-93.
1n accordance with 21 U.S.C. § 379d-1(c), the FDA also conducted conflict of
interest screenings for TPSAC members before particular committee meetings that would
address particular matters. See AR 3937-4307; AR 4308-4510 (screenings of Benowitz);
AR 451l-46l5 (screenings of Samet); AR 4616-6027 (screenings of Henningfield).
13 See also Advisory Committees: Applying for Membership, http://vvvvw.fda.gov/Advisory
Committees/AboutAdvi soryCommittees/Committeel\/Iembership/App1yingforMembership/
default.htm.
13
Specifically, in accordance with procedures set out in Guidance for the Public, FDA
Advisory Committee Mernbers, and FDA Staff on Procedures for Deterrnining Conflicts
of interest and El igibility for Participatz`on in FDA Advisory Cornrnittees (Aug. 5,
2008),11 before each meeting the FDA developed a list of products, companies, or entities
that could be affected by the particular matter that was the subject of the Committee
meeting. AR 6445. 'l`he FDA then screened the Committee members for interests in
those products, companies, or entities and evaluated whether work on the "particular
matter" would have a "direct and predictable effect" on the individual’s financial
interests. See id. (citing 5 C.F.R. § 2640.103(a)).
immediately following the FDA’S appointment of TPSAC’s members in March
2010, and thereafter, various tobacco manufacturers, including plaintiffs, objected to the
agency that certain members were conflicted and biased based on their ongoing work as
expert witnesses in tobacco litigation, or their consulting work in connection with
smoking cessation products. 3d Am, Compl. 1111 35-50 (detailing objections submitted to
FDA and FDA’s responses). The agency rejected these objections. 1d. ln addition, the
l*`DA’s meeting-by-meeting approvals of the members repeatedly found no conflicts.15
11 See http://www.fda.gov/down1oads/Regu1atoryInformation/Guidances/UCM125646.pdf.
15 The meeting-by-meeting approvals are at: AR 393 7-49 (Mar. 30-31, 2010, TPSAC meeting),
AR 4025-50 (July 15-16, 2010, TPSAC meeting), AR 4067-89 (Aug. 30, 2010, TPSAC
meeting), AR 4125-45 (Oct. 7-8, 2010, TPSAC meeting), AR 4146-67 (Nov. 18, 2010, TPSAC
meeting), AR 4168-82 (Jan. 10-11, 2011, TPSAC meeting), AR 4183-203 (Feb. 10, 2011,
TPSAC meeting), AR 4219-36 (Mar. 2, 2011, TPSAC meeting), AR 4237-55 (Mar. 17-18, 201 l,
TPSAC meeting), AR 4256-75 (July 21-22, 201 l, TPSAC mecting), AR 4276-84, 4297-98 (Jan.
18-20, 2012, TPSAC meeting), AR 4299-4307 (Mar. 1-2, 2012, TPSAC meeting). The FDA
repeatedly found that Drs. Benowitz and Henninglield had no conflict as to the Menthol Report
on the ground that they did not testify about menthol. See Pls.’ Reply at 17 n.29. On the other
14
b. Facts Regarding Challenged Members’ Alleged Conflicts of Interest
The facts regarding the Challenged Members’ alleged conflicts of interest are
relatively straightforward and uncontested. Plaintiffs contend that these individuals’
employment as consultants to the pharmaceutical industry regarding nicotine replacement
therapy ("NRT") products and other smoking-cessation products, as well as their service
as paid expert witnesses in litigation against tobacco product manufacturers, created both
financial conflicts of interest and appearance conflicts of interest. See 3d Am. Compl. 1111
51, 76; id. 1111 56-69 (detailing Challenged Members’ alleged conflicts).
i. Dr. Benowitz
Since the 1980s, Dr. Benowitz has consulted for numerous pharmaceutical
companies about the design of their NRT and other smoking-cessation drugs. AR 6163,
25488-91, 25499-500, 25508-09; see also AR 6130-31, 6377-78, 6411. He consulted for
affiliates of Pfizer, Inc. ("Pfizer") & GlaxoSmithKline plc ("GSK") as to such products,
even while serving on the TPSAC. AR 4257-58, 4423, 4448, 25499-500, 6163-64,
25508-09.16 He also has received grant support from them. AR 6164 & n.38. In 2010,
Dr. Benowitz co-authored a study, funded by Pfizer, ofa Pfizer smoking-cessation drug.
AR 6164.
Dr. Benowitz has also served as a paid expert witness for lawyers suing tobacco-
product manufacturers. AR 6164-65, 25469-79, 25485-500, 25503-09; see also AR
hand, the FDA did find that Dr. Henningfield had a conflict of interest due to his ownership
interest in a company developing an NRT drug and recused him from the July 21 and 22, 201 1,
TPSAC meetings regarding DTPs. AR 4293, 5344.
"’ Pfizer, Inc. is a manufacturer of NRTs and other smoking-cessation drugs. AR 4289. GSK
also markets NRT drugs. AR 25501, 27521.
15
6130. 1n that role, he has testified about the effect of menthol cigarettes on the public
health. See AR 6164, 25474-75, 25486-87, 25496; see also AR 6131. He testified as a
paid expert witness while serving on the TPSAC, AR 4402-03, and, as of June 30, 2010,
he was designated to testify in 585 pending tobacco cases, AR 6164.
ii. Dr. Henningfield
Before and while serving on the TPSAC, Dr. Henningfield consulted for GSK and
other drug companies as to NRT and other smoking-cessation drugs. AR 27065-66,
6377-78, 6411-12. He also had an ownership interest in a company that was developing
a patented NRT product. AR 4293, 6134-35, 6169.
Dr. Henningfield has testified as an expert for GSK, AR 3693, and for lawyers
suing tobacco-product manufacturers, AR 6169, 25639-70; see also AR 6134-35. 1n that
role_before, during, and since serving on the TPSACAhe has testified about the effect
of menthol cigarettes on the public health. See AR 6415 & nn.6-l 0, 6429-30, 26847-48,
26859. As of June 30, 2010, he was designated to testify in 350 pending tobacco cases.
AR 6169.
iii. Dr. Samet
Dr. Samet received grant support from GSK at least six times, including in 2010.
AR 6170 & n.64; see also AR 6136 & nn.37-38, 6378, 6412. He also led the Institute for
G1obal Tobacco Control, funded by GSK and Pfizer. Until 2009, he had received regular
honoraria from Pfizer for his service on the Pfizer Globa1 Tobacco Advisory Board. AR
6170, 25673-74. But he was not consulting for GSK or Pfizer when FDA appointed him
to the TPSAC or while serving on it.
16
Dr. Samet has also testified for lawyers suing tobacco-product manufacturers. AR
6170, 25673-78; see also AR 6135-36. As ofJune 30, 2010, he was designated to testify
in two pending tobacco cases. AR 6l70.
c. Activities of the TPSAC
Upon its formation, the TPSAC devoted its first meetings to the impact of menthol
in cigarettes on the public health, as directed by the TCA. Defs.’ Me1n. at 9-15; AR
6453~7482 (Mar. 30-31, 2010, TPSAC mecting); AR 8749-lO056 (July 15-16, 2010,
TPSAC meeting). Al`ter holding numerous public meetings and considering an array of
materials and submissions, the TPSAC discussed and adopted a complete version of the
Menthol Report at its March 18, 201 l, meeting. The TPSAC then held a follow-up
meeting on July 21, 2011, at which it considered proposed revisions, and then voted to
adopt the final Menthol Report and submitted it to the FDA. AR 19433-684 (Menthol
Report). In its Conclusions and Recommendations (Chapter 8), the Report concluded
that "[in]enthol cigarettes have an adverse impact on public health in the United States"
and "[t]here are no public health benefits of menthol compared to non-menthol
cigarettes." AR l9655. The Report further recommended that "[r]emoval of menthol
cigarettes from the marketplace would benefit the public health in the United States," AR
19660, but it offered no recommendations about FDA’S regulatory options. Further,
while the Report found that there is insufficient evidence to support a conclusion that
menthol cigarettes are more harmful than non-menthol cigarettes, AR 19633-38, it
nonetheless did conclude that there is sufficient evidence that, among certain groups and
among the general population, menthol cigarettes make it more likely that individuals
17
will start smoking and less likely that they will quit, increasing overall smoking rates.
ld."
III. ProceduralBackground
Plaintiffs initiated this action on February 25, 2011. See Compl. [Dkt. # l]. After
plaintiffs amended their complaint for the first time, see First Am. Compl. [Dkt. # 12],
defendants filed a Motion to Dismiss (regarding Counts One through Four) [Dkt. # 18] on
April 29, 201 1. After plaintiffs once again amended their complaint to add a fifth cause
of action, see Second Am. Compl. [Dkt. # 33], defendants filed an additional Motion to
Dismiss regarding Count Five [Dkt. # 37] on September 8, 2011. This Court heard oral
argument on the two motions on February 14, 2012, and after receiving supplemental
memoranda from the parties [Dkts. ## 42, 43], 1 denied defendants’ motions to dismiss.
See Mem. Order (July 31, 2012) ("2012 Order") [Dkt. # 44]. 1 concluded that: (l)
plaintiffs had standing; (2) their conflicts of interest challenges (Counts One and Two)
were justiciable; (3) their FACA "fair balance" and "special interest" challenges (Count
3) were justiciable; and (4) concerning Counts Four and Five, the Menthol Report
Subcommittee and its writing groups were advisory committees under FACA. Id. at 4-7.
Thereafter, plaintiffs again amended their complaint on April 25, 2013, see 3d Am.
Compl., and the parties briefed cross motions for summary judgment, the last of which
was filed on September 23, 20 l3. See supra note 6.
17 With respect to DTPS, the TPSAC considered their effect on the public health at its July 21-22,
2011, January 18-20, 2012, and March l, 2012 meetings, AR 19685-21983, and on March 1,
2012, the Committee submitted to the FDA an eight-page summary report of its advice and
recommendations regarding DTPs, AR 23495-502.
18
STANDARD OF REVIEW
I. Summary Judgment
Summary judgment is appropriate when the record evidence demonstrates that
"there is no genuine dispute as to any material fact and the movant is entitled to judgment
as a matter oflaw." FED. R. CIV. P. 56(a); see also Celotex Corp. v. Caz‘rez‘t, 477 U.S.
317, 322 (1986). The burden is on the moving party to demonstrate an "absence of a
genuine issue of material fact" in dispute. Celotex, 477 U.S. at 323. In a case involving
judicial review of final agency action under the APA, however, "the Court’s role is
limited to reviewing the administrative record.” Air Trcmsp. Ass ’n of Am. v. Nal ’Z
Medz'atz'on Bd., 719 F. Supp. 2d 26, 32 (D.D.C. 2010) (citations omitted). "[T]he function
of the district court is to determine whether or not as a matter of law the evidence in the
administrative record permitted the agency to made the decision it did." Select Speciallj)
Hosp.-Bloomz`nglon, Inc. v. Sebelz`us, 893 F. Supp. 2d 1, 2 (D.D.C. 2012) (citations and
internal quotation marks omitted).
II. Administrative Procedure Act
The APA "establishes a cause of action for those ‘suffering legal wrong because
of agency action, or adversely affected or aggrieved by agency action."’ Koretojj”v.
Vz`lsack, 614 F.3d 532, 536 (D.C. Cir. 2010) (quoting 5 U.S.C. § 702), Under the APA, a
court must set aside agency action if it is "arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with lavv." 5 U.S.C. § 706(2)(A). This standard of review is
"highly deferential and presumes the validity of agency action." Nez`ghborhoocz'
Assz'slance Corp. ofAm. v. CFPB, 907 F. Supp. 2d 112, 125 (D.D.C. 2012) (citing AT&T
19
Corp. v. FCC, 220 F.3d 607, 616 (D.C. Cir. 2000)) (internal quotation marks omitted)).
But while a court may not "substitute its judgment for that of the agency," Motor Vehz`cle
Mj’rs. Ass ’n ofthe US., Inc. v. Slate Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983), it
will set aside agency action as arbitrary and capricious if the agency committed a "clear
error of judgment," such as when "the agency has relied on factors which Congress has
not intended it to consider, entirely failed to consider an important aspect of the problem,
offered an explanation for its decision that runs counter to the evidence before the
agency, or is so implausible that it could not be ascribed to a difference in view or the
product of agency expertise." Ia’.
ANALYSIS
Plaintiffs challenge final agency action under the APA: the FDA’s appointment of
the Challenged Me1nbers to the TPSAC and its March l, 2010, announcement of the
TPSAC roster, as well as the FDA’s subsequent meeting-by-meeting screenings of those
members for conflicts of interest as to menthol and DTPs. In assessing plaintiffs’ conflict
of interest claims, I will proceed in two steps.]g First, 1 must address whether plaintiffs’
m At the motion to dismiss stage, 1 concluded that plaintiffs had alleged sufficient facts to satisfy
the standing requirements. See 2012 Order at 4-5. ()n summary judgment, defendants again
contest plaintiffs’ standing to challenge the composition of` the TPSAC. .S`ee Defs.’ Mem, at 18-
19; Defs.’ Opp’n & Reply at 2-10. And, once again, 1 have concluded that plaintiffs have
standing because, of the four types of injury they allege_( 1) the Challenged Members’ access to
plaintiffs’ confidential information, which can influence their consulting advice and expert
testimony adverse to plaintif`fs; (2) the Challenged Members’ shaping of TPSAC reports to aid
such testimony; (3) the Challenged Members’ influence, through the TPSAC, on FDA to take
regulatory actions adverse to plaintiffs’ economic interests; and (4) an adverse effect on thc stock
price of plaintiff Lorillard, Inc. due to the composition of the TPSAC, see Pls.’ Mem. & Opp’n at
12; 3d Am. Compl. 1111 ll2-124_the first, second, and fourth types have occurred, and the third
type, a procedural injury, is substantially probable and not merely speculative. See Pls.’ Mem. &
Opp’n at 12-17 (articulating factual basis of plaintiffs’ standing); z`a’. at 43-45; Pls,’ Reply at ll-
20
claims are subject to judicial review. 1 conclude that they are, just as 1 did at the motion
to dismiss stage of this litigation. Next, 1 must determine whether the Challenged
Members did, in fact, have financial and/or appearance conflicts of interest under relevant
laws. Accordingly, 1 have to review and evaluate the conclusions the FDA reached when
performing its conflict screenings. For the following reasons, 1 have concluded that both
types of conflicts did exist, and the FDA’s determinations showed a "clear error of
judgment" and were thus arbitrary and capricious in violation of the APA.
I. Justiciability
1n order to address whether judicial review is available for the FDA’s conflicts
determinations, it is first important to properly characterize what this case is about. In
their motion to dismiss, defendants characterized plaintiffs’ complaint as "challeng[ing]
how the government enforces conflict of interest laws," Defs.’ Am. Mem. in Supp. of
Defs.’ Mot. to Dismiss at 29, which, in turn, led them to argue that such enforcement
decisions are "committed to agency discretion by law," 5 U.S.C. § 701(a)(2). See Defs.’
Am. Mem. in Supp. of Defs.’ Mot. to Dismiss at 29-33 (re1ying on, inter alz'a, Heckler v.
Chaney, 470 U.S. 821 (1985)). Defcndants briefly renew that "committed to agency
discretion by 1aw" argument in their motion for summary judgment. See Defs.’ Mem. at
25-26. But 1 rejected that argument before, see 2012 Order at 5, and 1 reject it again now
because it relies on a fundamental mischaracterization of plaintiffs’ legal challenge.
Plaintiffs do not seek to compel government enforcement of conflict of interest laws
15. Moreover, plaintiffs have shown traceability and redressability. See Pls.’ Mem. & Opp’n at
43-45; Pls.’ Reply at 11-15.
21
against third parties. See Pls.’ Opp’n to Defs.’ Mot. to Dismiss [Dkt. #27] at 26-28.
Rather, plaintiffs seek judicial review of` whether the FDA, itself, "in creating and
maintaining an advisory committee tainted by conflicts of interest," acted arbitrarily and
capriciously in violation of the APA. See id. at 26. Accordingly, judicial review is
available.
Undaunted, defendants have repackaged their argument for unreviewability,
emphasizing now in their summary judgment motion that plaintiffs’ appearance conflict
of interest claim (Count Two) is unreviewable for another reason-it is precluded by
regulation. See Defs.’ Mem. at 26. Defendants point to 5 C.F.R. pt. 2635 ("Standards of
Ethical Conduct for Employees of the Executive Branch")-the only set of regulations
that addresses appearance conflicts of interest-which includes a provision entitled
"Disciplinary and corrective action," providing, in relevant part:
A violation of this part or of supplemental agency regulations, as such, does
not create any right or benefit, substantive or procedural, enforceable at law
by any person against the United States, its agencies, its officers or
employees, or any other person. . . .
5 C.F.R. § 2635.106(c). Defendants argue that the express language of this regulation
bars plaintiffs from challenging whether the FDA complied with Part 2635, either
through a private right of action or under the APA. See Defs.’ Mem. at 26. 1n support,
they rely on a case from our Circuit Court which found that similar language in an
Executive Order ("E.O.") precluded private parties from bringing an APA action to
challenge whether the agency complied with the E.O. See Air Transp. Ass ’n v. FAA, 169
F.3d 1, 8-9 (D.C. Cir. 1999); accora’Deferza’ers of Wildlzfe v. Jacksorz, 791 F. Supp. 2d
2296, 120-21 (D.D.C. 2011). rdisagr@e.
Put simply, 1 am not persuaded either that the provision’s text overcomes the
"strong presumption" in favor of reviewability of agency action under the APA, see PDK
Labs. Inc, v. DEA, 362 F.3d 786, 792 (D.C. Cir. 2004), or that the cited Circuit precedent
is controlling here, First, § 2635.106(c) is not itself a judicial review provision, unlike
the provision of the E.O. at issue in Air Transportation Association, which is titled
‘“Judicial Review." See E.O. 12893, 59 Fed. Reg. 4233, 4235 (Jan. 31, 1994); PDK Labs.
Inc., 362 F.3d at 792-93. Second, unlike the language of the provision of the E.O. at
issue in Air Transportation Association-which provides, "T his order is intended only to
improve the internal management of the executive branch and does not create any right or
benefit, substantive or procedural, enforceable by a party against the United States, its
agencies or instrumentalities, its officers or employees, or any other person, " E.O. 12893
(emphasis added)~there is no such limiting language of intent in § 2635.106(c) See Air
Transp. Ass ’n., 169 F.3d at 8; see also Meyer v. Bush, 981 F.2d 1288, 1296 n.8 (D.C. Cir.
1993). Accordingly, as 1 found at the motion to dismiss stage, 1 again find that plaintiffs’
conflicts of interest claims are indeed subject to judicial review under the APA.
II. The lV[erits
On the merits, plaintiffs contend that the Challenged Members had financial and
appearance conflicts of interest because they (l) consulted for manufacturers of NRT
drugs and other smoking-cessation drugs that would benefit from a ban or restriction on
menthol cigarettes and/or DTPs, and (2) testified in lawsuits against tobacco product
manufacturers. See Pls.’ Mem. & Opp’n at l; 3d Am. Compl. 1111 51-69, 76-77, 129-140.
23
As a result of these alleged conflicts, plaintiffs seek judicial review of the FDA’s
"creati[on] and maint[enance of] an advisory committee tainted by conflicts of interest."
Pls.’ Opp’n to Defs.’ Mot. to Dismiss at 26. As 1 noted in my ruling on defendant’s
motion to dismiss, "[a]ny review of these actions by the Court would, of course, be
highly deferential." 2012 Order at 5. But such deference is not boundless. Having
reviewed the record in its entirety, 1 conclude that applicable ethics laws do not permit
the FDA to do what it did here and compose a committee including a number of members
with financial and appearance conflicts of interest.
As an initial matter, it is important to note that plaintiffs do not allege any direct
violations ofthe TCA’s specific conflicts of interest provision applicable to members of
the TPSAC. See 21 U.S.C. § 387q(b)(1)(C). That is because this provision only
contemplates conflicts arising from one perspective: it bars voting members from
receiving any remuneration from tobacco industry businesses. Ia'. But notwithstanding
how narrowly Congress drafted this specific conflicts provision, other general conflicts
laws apply to FDA’s composition of the Committee, and failure to adequately consider
potential conflicts arising from the opposite end of the spectrum_i.e. entities with
interests adverse to tobacco companies_would amount to "fail[ure] to consider an
important aspect of the problem," State Farm Mut. Auto. Ins. Co., 463 U.S. at 43. And to
the extent the FDA did consider these potential conflicts, 1 must review its determinations
for any "clear error of judgment," such as if the agency "offered an explanation for its
decision that runs counter to the evidence before the agency," State Farm Mut. Auto. Ins.
Co., 463 U.S. at 43.
24
a. Financial Conf`licts of Interest
1n Count One of their complaint, plaintiffs allege that the three Challenged
Members have financial interests that create conflicts in violation of 18 U.S.C. §§ 202(a)
and 208, 21 U.S.C. § 379d-l, and 5 C.F.R. Parts 2635 and 2640. These laws prohibit
government employees from working on "particular matters" in which they have a
financial interest. 1n plaintiffs’ view, therefore, the FDA’s appointment of the
Challenged Members to the TPSAC was arbitrary and capricious in violation of the APA,
5 U.S.C. § 706(2)(A). See 3d Am. Compl. 1111 130, 132. Plaintiffs also contend that the
meeting-by-meeting screening and approval of these members by the FDA as to menthol
and DTPs violated these ethics laws, and thus the APA. Pls.’ Reply at 17. For the
following reasons, 1 agree.
As a preliminary matter, defendants argue that plaintiffs’ challenge to the
appointment of individual TPSAC members should fail as a matter of law because the
FDA’s act of appointing is not a "particular matter" within the purview of applicable
conflict of interest laws, See Defs.’ Mem. at 27 (suggesting that the issuance of a report
by TPSAC may be a "particular matter," but the appointment of a member to TPSAC is
not).w But defendants miss the point here by once again misconstruing plaintiffs’
19 The applicable regulation defines "particular matter" as follows:
The tenn "particular matter" includes only matters that involve deliberation,
decision, or action that is focused upon the interests of specific persons, or a
discrete and identifiable class of persons. . . . lt does not, however, cover
consideration or adoption of broad policy options directed to the interests of a
large and diverse group of persons.
5 C.F.R. § 2640.103(3)(1).
25
complaint. Plaintiffs’ legal claim is that the FDA’s appointment of members with
financial conflicts of interest (as to a "particular matter") was arbitrary and capricious in
violation of the APA. Therefore it is irrelevant whether the appointment itself is a
"particular matter" because that definitional phrase is part of determining whether a
conflict of interest exists, not whether an APA violation has occurred. See Pls.’ Mem. &
Opp’n at 46.
Defendants nonetheless proceed to argue that if it is irrelevant whether or not the
appointment itself is a "particular matter," then this Court could only review the
appointment under the APA if the challenged TPSAC member "had a foreseeable conflict
as to every future particular matter TPSAC was to address." Defs.’ Opp’n & Reply at 24.
Not so. The legislation establishing the TPSAC specifically mandated not just that the
Committee would address menthol and D"l`Ps, but that it would do so within its first and
second years of existence, respectively. See 21 U.S.C. § 387g(e), (f). Accordingly, if
any prospective members already had a conflict as to either or both of those particular
two issues-which defendants do not dispute are, in fact, "particular matters"-then the
very act of appointment itselfimplicates those two particular matters because the TPSAC
was certain to address them. Put differently, screening potential members for
appointment to the TPSAC was functionally no different from screening them before
particular meetings to address menthol and DTPs.
Turning to the merits, plaintiffs contend that the Challenged Members had
financial conflicts of interest because they: (l) consulted for manufacturers of NRT drugs
and other smoking-cessation drugs that would benefit from a ban or restriction on
26
menthol cigarettes and/or DTPs; and (2) testified in lawsuits against tobacco product
manufacturers, before, during, and after serving on the TPSAC. See Pls.’ Mem. & Opp’n
at 18-20. An SGE, such as a TPSAC member, "is prohibited . . . from participating
personally and substantially in an official capacity in any particular matter in which, to
his knowledge, he . . . has a financial interest, if the particular matter will have a direct
and predictable effect on that interest." 5 C.F.R. § 2635.402; see also § 2640.103.
Plaintiffs argue that the Challenged Members’ participation in the TPSAC’s
consideration of menthol and DTPs had a "direct and predictable effect" on their
financial interests in consulting and expert testimony work. Under the circumstances of
this case, 1 agree.
i. Consulting Work
As described above, Drs. Benowitz and Henningfield consulted for manufacturers
of NRT drugs and other smoking-cessation drugs, and Dr. Samet had the prospect of
future fees from them. See supra 15-17 (Factual Background). Defendants contend that
the FDA "conducted extensive screenings" of each TPSAC member (and, where
appropriate, recused members). See Defs.’ Mem. at 28; AR 4022, 4062, 4089, 4275. 1n
particular, defendants argue that the FDA considered the specific possibility of conflicts
stemming from consulting work, determined that no such conflicts existed, and this Court
should defer to the agency’s determination. F or the following reasons, however, 1
disagree and find the agency’s "explanation for its decision . . . runs counter to the
evidence before the agency," State F arm Mut. Auto. Ins. Co., 463 U.S. at 43, and
therefore its conflicts determinations were arbitrary and capricious.
27
First, as regards menthol, the FDA solicited advice from the DHHS Designated
Agency Ethics Official, who concluded that the TPSAC’s advice on menthol would have
no "direct and predictable effect" on the financial interests of drug companies that
manufacture smoking-cessation drugs. AR 4121. Further, the memorandum concluded
that even "an outright ban on menthol cigarettes[] cannot be determined to result in an
increased demand for tobacco cessation products." Id. Accordingly, in the agency’s
view, TPSAC members who performed consulting work for such drug companies had no
financial conflict of interest. P1ease!
This conclusion defies common sense. A ban or sales restriction on menthol
cigarettes would have a "direct and predictable effeet" on the Challenged Members’
financial interests because it would likely increase the sales of such smoking-cessation
drugs by some amount, which would in turn lead the manufacturers of such drugs to
demand further consulting services from the challenged members. See Pls.’ Mem. &
Opp’n at 51. Indeed, the TPSAC’s own Menthol Report suggests that removing menthol
cigarettes from the market would lead a substantial number of menthol smokers to try to
quit, which would increase demand for cessation services, including smoking-cessation
drugs. See AR 19660-62; Pls.’ Mem. & Opp’n at 51-52. Suffice it to say, the causal
connection between any recommendation by the TPSAC on menthol and the effect on the
Challenged Members’ financial interests in consulting fees from manufacturers of
smoking-cessation drugs is sufficiently "close," and that effect (of whatever magnitude) 20
20 The magnitude of any potential financial gain or loss is immaterial See 5 C,F.R.
2635.402(b)(l)(ii).
28
is sufficiently "real" and not merely "speculative," to render the FDA’s conflicts analysis
flawed on this front and not worthy of deference. Put simply, if a Challenged Member
stands to profit from the sale of products that help people quit smoking, then he faces a
conflict in his duty to render impartial advice regarding the regulation of menthol
cigarettes, which comprise a substantial share of the cigarette marketplace.zl
Next, as regards DTPs, defendants similarly argue that the FDA adequately
screened the Challenged Members with regard to financial interests in consulting work
related to smoking cessation products. See Defs.’ Mem. at 29. In this case, the FDA
actually did find that one of the Challenged l\/lembers, Dr. Henningfield, had a conflict of
interest due to his ownership interest in a company developing an NRT drug and recused
him from the July 21 and 22, 2011, TPSAC meetings regarding DTPs. AR 4293, 5344.
But the FDA also concluded that the other Challenged Members, Drs. Benowitz and
Samet, did not have conflicts of interest for two reasons: (l) past consulting work did not
create a conflict because a current TPSAC meeting would not have a "direct and
predictable eff`ect" on their financial interests, AR 6445, 4291-92, and (2) even ongoing
relationships with pharmaceutical companies are "not per se disqualifying interests," AR
6445, AR 4285-96; see also Defs.’ Mem. at 29. While the agency correctly concluded
that past work, alone, cannot create a financial conflict in light of the applicable
regulation’s forward-looking language, see 5 C.F.R. § 2640.103(a)(3)(ii) (defining
"predictable effect" as "a real, as opposed to speculative, possibility that the matter will
21 See AR 19476 (Menthol Report) ("menthol smokers as a group account for between 28
percent and 34 percent of all U.S. cigarette smokers, depending on the data used").
29
affect the financial interest" (emphasis added))_and therefore Dr. Samet was not
conflicted-1 find the agency’s conclusions show a "clear error of judgment" with regard
to Dr. Benowitz and his ongoing consulting work.zz How so?
The FDA erred in concluding that current, ongoing financial relationships with
smoking-cessation drug manufacturers did not constitute a conflict. Since manufacturers
of such smoking-cessation drugs compete with manufacturers of DTPs, see Pls.’ Mem. &
Opp’n at 24-25, and since Dr. Benowitz stood to profit from the sale of NRT drugs, he
faced a conflict with regard to providing advice in the TPSAC’s report on DTPs. See
Pls.’ Mem. & Opp’n at 54. lndeed, the regulations’ own illustrative examples support
this conc1usion. As a specific example of a "disqualifying financial interest," Part 2640
includes the following scenario:
Example 3: A special Government employee serving on an advisory
committee studying the safety and effectiveness of a new arthritis drug is a
practicing physician with a specialty in treating arthritis. The drug being
studied by the committee would be a low cost alternative to current
treatments for arthritis. 1f the drug is ultimately approved, the physician
will be able to prescribe the less expensive drug. The physician does not
own stock in, or hold any position, or have any business relationship with
the company developing the drug. l\/loreover, there is no indication that the
availability of a less expensive treatment for arthritis will increase the
volume and profitability of the doctor’s private practice. Accordingly, the
physician has no disqualifying financial interest in the actions of the
advisory committee.
5 C.F.R. § 2640.l03(b) (emphasis added). lt is plain in this example that if the SGE
physician did currently have "any business relationship" with the company developing
the drug, he would have a conflict. And that is very nearly the situation in the instant
22 Dr. Samet did not have any current, ongoing business relationships with smoking-cessation
drug manufacturers while serving on the TPSAC. See supra 16-17.
30
case: the TPSAC was charged with studying the public health impact of a drug (i.e.
DTPs), and Dr. Benowitz had an ongoing business relationship (i.e. consulting work)
with companies developing "alternative" or competing drugs (i.e. smoking-cessation
drugs). Accordingly, 1 find that the FDA’s conclusion with regard to Dr. Benowitz was a
"clear error of judgment."
ii. Expert Litigation Testimony
Next, turning to the Challenged Members’ previous work as paid expert witnesses
in litigation against tobacco manufacturers, the FDA again concluded that such activity
did not constitute a financial conflict of interest. Despite plaintiffs’ protests, the FDA
concluded that Drs. Benowitz’s and Samet’s testimony did not pose a conflict regarding
the TPSAC’s work on DTPs, AR 6446, 4291, 4293; Defs.’ Mem. at 30, and that Dr.
Henningfield’s testimony did not pose a conflict regarding menthol, AR 6427. 1n
reaching these conclusions, the FDA analyzed the issue by posing the following test for a
financial conflict: "where there is an expert witness relationship [the test for a financial
conflict] is whether the particular matter discussed at the [TPSAC] meeting will have a
direct and predictable effect on that expert witness contract-specifically on the
individual’s ability to continue earning fees as an expert witness or consultant in a given
case." AR 4287 (FDA Memorandum) (emphasis added); see also AR 6446. By
confining the focus to the context of a given case, however, the FDA disregarded both
common sense and the factual information they had about these voting members.
As outlined in the Factual Background above, the Challenged Members not only
testified in the past, but at the time of their appointment were slated to testify in pending
31
cases. 1n particular, Drs. Benowitz and Henningfield and were designated to testify in
hundreds of pending tobacco cases and had testified about menthol in the past. See supra
15-16. Those two Challenged Members thus had ongoing relationships with lawyers or
firms extending into the future, regarding multiple cases in which they could be expected
to give the same or similar testimony, which related to menthol. See Pls.’ Mem. & Opp’n
at 48-49. Accordingly, Drs. Benowitz and Henningfield had a conflict because they had
a financial incentive to ensure that the Menthol Report did not include recommendations
or statements that would undermine that future testimony. See Pls.’ Mem. & Opp’n at
50.
Of course, the ethics laws cannot be applied so broadly as to disqualify from
membership inan advisory committee every scientist who has ever testified as an expert
witness. But where, as here, the two Challenged Members repeatedly testified against
tobacco manufacturers, to similar opinions (which concemed menthol), and were
committed to do so in the future, there is a conflict ofinterest because they have a
financial incentive in protecting their opinions. The TPSAC’s conclusions about menthol
would undoubtedly have a "direct and predictable eff`ect" on their ability to continue
eaming fees as expert witnesses. Pls.’ Mem. & Opp’n at 50. Accordingly, 1 find that the
FDA acted arbitrarily and capriciously in concluding that the Drs. Benowitz’s and
Henningfield’s commitments to testify in the future did not constitute financial conflicts
of interest.
b. Appearance Conf`licts of Interest
For similar reasons, 1 also conclude that all three Challenged Members’ consulting
32
and expert testimony activities created appearance conflicts of interest. Unlike the
financial conflicts plaintiffs raised to the FDA, the agency failed to even address these
appearance conflicts and respond to plaintiffs’ objection letters, see Pls.’ Mem. & Opp’n
at 20 n.30, and therefore acted arbitrarily and capriciously by "entirely fail[ing] to
consider an important aspect of the problem." State F arm Mut. Auto. Ins. Co., 463 U.S.
at 43.
An appearance conflict exists "[w]here an employee knows that a particular matter
involving specific parties is likely to have a direct and predictable effect on the financial
interest of a member of his household . . . and where the employee determines that the
circumstances would cause a reasonable person with knowledge of the relevant facts to
question his impartiality in the matter . . ." 5 C.F.R. 2635.502(a) (emphasis added).z3
Plaintiffs contend that the Challenged Members had "staked out [their] opinions,"
"already made up [their] mind[s]," and "had a firm position" regarding menthol and
D'l`Ps, which, in addition to their financial conflicts of interests, created appearance
conflicts ofinterest. See Pls.’ Mem. & Opp’n at 21-22; Pls.’ Reply at 19. But 1 need not
delve into whether the Challenged Members’ litigation testimony (or consulting work)
evinced finn opinions or a "closed mind" on the subjects of rnenthol and DTPs, because 1
find that their financial conflicts resulting from the combination of their expert testimony
and consulting sufficed, in themselves, to create appearance conflicts. 1ndeed, the very
fact that these apparent financial conflicts of interest led numerous observers and media
23 As discussed above, notwithstanding the language of § 2653.502(a), a financial conflict is not
necessary for an appearance conflict to exist, and agencies are obligated to address such conflicts
even absent initiation by an employee. See supra note ll.
33
outlets to publicly question the impartiality of the TPSAC members is strong evidence
that appearance conflicts existed. See Pls.’ Mem. & Opp’n at 22, 22-23 n.32 (citing
Boston Globe editoral, Wall Street Journal column, Washington Examiner column,
objections raised by three organizations, and other commentators discussing the
composition of the TPSAC and the financial ties of its members to drug companies).
Moreover, whereas the plain language of the general conflict of interest
regulations precludes viewing past business relationships as technically "financial
conflicts," see supra 29-30, past relationships can nevertheless constitute appearance
conflicts because they bear directly on a member’s impartiality. 1ndeed_, it is telling that
the specific tobacco conflicts provision contained in the TCA has a retrospective focus,
expressly disqualifying members who received "any salary, grants, or other payment or
support" from any tobacco company in the 18-month period prior to serving on the
TPSAC. 21 U.S.C. § 387q(b)(1)(C). 1f Congress deemed that past remuneration from
tobacco companies constituted a conflict of interest, it stands to reason that past
remuneration from direct competitors of those companies, such as manufacturers of
smoking-cessation drugs, would also constitute a conflict of interest.
III. Remedy
1n picking the TPSAC, Congress specifically recognized that in order for the
Committee’s work product to be credible and reliable, it had to be perceived by both the
public and the interested industries as being free of bias_in either direction. 1n short,
conflicts of interest_whether actual or perceived_undermine the public’s confidence in
the agency’s decision-making process and render its final product suspect, at best. Here,
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the presence of conflicted members on the Committee irrevocably tainted its very
composition and its work product. 1n turn, the Committee’s findings and
recommendations, including reports such as the Menthol Report, are, at a minimum,
suspect, and, at worst, untrustworthy.zl The only way the agency can correct its error of
law in evaluating the credentials of future members of the TPSAC is for this Court to
remand the case to the agency for the appointment of a newly-constituted, interest free,
TPSAC panel of authorities consistent with the applicable ethics laws,
CONCLUS1ON
Thus, for the foregoing reasons, the Court GRANTS, in part, plaintiffs’ Motion for
Summary Judgment [Dkt. # 67] and DENIES defendants’ Motion for Summary judgment
[Dkt. # 65]. Accordingly, 1 will enter an order that (l) enjoins the FDA to reconstitute
TPSAC’s membership so that it complies with the applicable ethics laws, and (2) bars
defendants from using the Menthol Report.
(/,
| .
RICHARD J. LfgoN
United States Distr1ct Judge
24 1 am mindful that our Circuit Court-in the context of a FACA violation_has cautioned that a
use injunction on an advisory committee’s report "should be awarded only rarely," in part due to
concerns about the waste of resources expended in preparing that report. See NRDC v, Pena,
147 F.3d 1012, 1025-27 (D.C. Cir. 1998). But where, as here, a report such as the Menthol
Report is prepared by an advisory committee that has multiple members with clear conflicts of
interest, giving reason to question the impartiality of its conclusions and recommendations, it is
not a "waste" to reject it.
35