K-V Pharmaceutical Company v. United States Food and Drug Administration , 889 F. Supp. 2d 119 ( 2012 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
____________________________________
)
K-V PHARMACEUTICAL )
COMPANY, et al., )
)
Plaintiffs, )
)
v. ) Civil Action No. 12-1105 (ABJ)
)
UNITED STATES FOOD AND )
DRUG ADMINISTRATION, et al., )
)
Defendants. )
____________________________________)
MEMORANDUM OPINION
Plaintiff K-V Pharmaceutical Company (“KV”) and its wholly owned subsidiary,
plaintiff Ther-RX Corporation (“Ther-RX”), own and market a drug called Makena, which is a
hydroxyprogestoerone caproate injection. Makena was approved in 2011 for use by pregnant
women with a history of preterm birth to reduce the risk that they would experience another
preterm birth. Plaintiffs have sued the United States Food and Drug Administration (“FDA”), its
Commissioner Margaret A. Hamburg, the United States Department of Health & Human
Services (“HHS”), and HHS Secretary Kathleen Sebelius, alleging that defendants are violating
the Administrative Procedure Act (“APA”) and several provisions of the Food, Drug, and
Cosmetic Act (“FDCA”) by failing to take action against pharmacies that compound the drug
and thereby creating a cheaper alternative for doctors to prescribe. The compounded form of the
drug is referred to as “17P” in this action.
In particular, plaintiffs challenge a March 30, 2011 press release in which FDA
announced its intention not to take enforcement action against the compounders except under
certain circumstances. They also challenge FDA’s failure to block foreign shipments of the
active pharmaceutical ingredient (“API”) used in 17P from entering the United States.
According to plaintiffs, FDA’s actions have given rise to unlawful competition with Makena and
caused them irreparable economic harm.
Defendants have moved to dismiss the action under Federal Rules of Civil Procedure
12(b)(1) and 12(b)(6). [Dkt. # 7]. They argue that plaintiffs lack standing, and that the actions
they challenge are the types of discretionary enforcement decisions that the Supreme Court
found to be unreviewable in Heckler v. Chaney, 470 U.S. 821 (1985). Alternatively, they argue
that the complaint fails to state a claim upon which relief can be granted. The Court concludes
that Counts I through III of the complaint challenge FDA’s discretionary enforcement activities
and therefore assert unreviewable claims, and that Count IV fails to state a claim under Rule
12(b)(6).
BACKGROUND
Plaintiff KV is the owner of the drug Makena, which has been approved by the FDA.
Compl. ¶ 24. Plaintiff Ther-RX is a “wholly-owned subsidiary of KV [that] markets, sells, and
distributes Makena on behalf of KV.” Id. ¶ 25. On January 25, 2007, FDA designated Makena
as an “orphan drug” to be used for the prevention of preterm birth in women who have a
singleton pregnancy and a history of prior preterm delivery. 1 Id. ¶¶ 50–51.
Under the Orphan Drug Act, 21 U.S.C. §§ 360aa–ee (“ODA”), an “orphan drug” is a
drug used to treat a disease or condition that affects fewer than 200,000 people in the United
States. Compl. ¶ 36. Congress passed the ODA in 1983, as an amendment to the Federal Food,
1 Although now named “Makena,” the drug was named “Gestiva” when its application was
submitted to FDA for approval. Compl. ¶ 50. In addition, although now owned by KV, the drug
was owned by the company Adeza Biomedical at that time. Id. For the sake of convenience,
however, the Court will refer to the drug as “Makena” and the owner as “KV” throughout this
opinion.
2
Drug, and Cosmetic Act, 21 U.S.C. § 301, et seq (“FDCA”). 2 The congressional findings reflect
that Congress sought to create incentives for the development of drugs for rare conditions. Pub.
L. No. 97-414, § 1(b)(4), 96 Stat. 2049, 2049 (1983). Accordingly, when a drug receives the
FDA’s orphan drug designation, section 360cc(a) of the OCA prevents the Secretary of Health
from “approving another application under section 355 of this title . . . for such drug for [the
same] disease or condition” within seven years after the approval date of the orphan drug. 21
U.S.C. § 360cc(a).
Makena, a hydroxyprogesterone caproate injection is the first drug approved by FDA to
reduce the risk of preterm birth in women with a singleton pregnancy who have a history of
singleton spontaneous preterm birth. Compl. ¶ 1. Because it has been designated as an “orphan
drug,” its seven year exclusivity period began running on the day it was approved, February 3,
2011. Compl. ¶ 14.
However, for a number of years before FDA approved Makena, women were treated for
risk of preterm birth with versions of hydroxyprogesterone caproate that were compounded by
entities known as “compounding pharmacies” or “compounders.” Id. ¶ 9. According to the
complaint:
Drug compounding is a process by which a pharmacist or doctor
combines, mixes, or alters ingredients to create a medication customized
to the needs of an individual patient. Compounded drugs generally are not
reviewed or approved by FDA. Compounded versions of 17P were not
and are not reviewed or approved by FDA; and, in general, their individual
formulations, manufacturing processes, labeling, and adverse-event and
treatment-failure histories were and are unknown to FDA. The facilities in
which the compounding occurred and continues to occur generally were
not and are not registered with or routinely inspected by FDA.
2 Since this action was filed, the Food and Drug Administration Safety and Innovation Act,
Pub. L. No. 112-144, 126 Stat. 993 (2012), took effect, amending the FDCA. The provisions of
the FDCA at issue here were not changed by the amendments.
3
Compl. ¶ 9.
When Makena was released, the media began reporting on its high list price of $1,500 per
injection, or up to $30,000 for a course of treatment. Id. ¶ 68. Plaintiffs allege that these reports
were misguided, see id. ¶¶ 69–73, but that the press accounts prompted members of Congress to
pressure FDA to make the 17P injection available at a lower price than the initial list price for
Makena. Id. ¶ 74.
On March 30, 2011, FDA issued a statement for immediate release titled, FDA Statement
on Makena. 3 FDA Statement (Mar. 20, 2011), available at
www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm249025.htm (“March
Statement”). The statement explained that FDA had approved Makena on February 3, 2011, and
that as a result, Makena obtained seven years of exclusivity under the Orphan Drug Act. Id. It
further explained that for many years, a version of the active ingredient of Makena had been
available to patients whose physicians requested the drug from a pharmacist who compounded
the drug, and that FDA had generally exercised enforcement discretion with respect to those
drugs. Id. The March Statement went on:
Because Makena is a sterile injectable, where there is a risk of
contamination, greater assurance of safety is provided by an approved
product. However, under certain conditions, a licensed pharmacist may
compound a drug product using ingredients that are components of FDA
approved drugs if the compounding is for an identified individual patient
based on a valid prescription for a compound product that is necessary for
that patient. FDA prioritizes enforcement actions related to compounded
drugs using a risk-based approach, giving the highest enforcement priority
to pharmacies that compound products that are causing harm or that
amount to health fraud.
3 Although the complete press release is not attached to plaintiff’s complaint, it is
incorporated by reference in paragraphs 75–94. Compl. ¶¶ 75–94; see Gustave-Schmidt v. Chao,
226 F. Supp. 2d 191, 196 (D.D.C. 2002) (finding that a court may consider documents
incorporated by reference in the complaint for a motion to dismiss under Rule 12(b)(6)).
4
FDA understands that the manufacturer of Makena, KV
Pharmaceuticals has sent letters to pharmacists indicating that FDA will
no longer exercise enforcement discretion with regard to compounded
versions of Makena. This is not correct.
In order to support access to this important drug, at this time and
under this unique situation, FDA does not intend to take enforcement
action against pharmacies that compound hydroxyprogesterone caproate
based on a valid prescription for an individually identified patient unless
the compounded products are unsafe, of substandard quality, or are not
being compounded in accordance with appropriate standards for
compounding sterile products. As always, FDA may at any time revisit a
decision to exercise enforcement discretion.
Id.In their complaint, plaintiffs do not mention the language in the press release that
suggests that the March Statement may have been prompted by their own actions. Instead, they
allege that the March Statement was issued in response to public pressure about the price of
Makena. Compl. ¶ 75. They further allege that some Medicaid programs have interpreted the
March Statement as “authorizing the total displacement of Makena by compounded 17P.” Id. ¶
86. 4 Plaintiffs assert that “numerous compounded versions of 17P (not customized for individual
patients) have entered, re-entered, or remained on the U.S. market, some manufactured on a
commercial scale”; and that FDA is permitting unapproved 17P API to be imported into the
United States. Id. ¶ 15. According to the complaint, many or all of the compounders of 17P use
active ingredients manufactured in China by establishments that have not been identified in an
approved new drug application and are not inspected by FDA. Id. ¶ 89.
4 The complaint also alleges that on the same day that FDA issued the March Statement,
the Centers for Medicare and Medicaid Services (“CMS”), a unit of HHS, issued a coordinated
statement that allegedly “authorized and encouraged state Medicaid agencies to pay for
compounded 17P in substitution for Makena.” Compl. ¶¶ 17, 83.
5
Since issuing the March Statement, FDA has issued three additional press releases
regarding Makena, Compl. ¶ 94, two of which are relevant to this action. 5 On June 15, 2012,
FDA addressed safety concerns plaintiffs had raised about the 17P compounds, and it described
the enforcement approach it was following with respect to compounded 17P. It announced that it
had tested API from sixteen samples of 17P, and thirteen samples of compounded 17P prepared
by eight different pharmacies, and that it had not identified any major safety problems. Updated
FDA Statement on Compounded Versions of hydroxyprogesterone caproate (the active
ingredient in Makena) (June 15, 2012), available at
www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm308546.htm (“June
Statement”). However, it also stated that “approved drug products, such as Makena, provide a
greater assurance of safety and effectiveness than do compounded products.” Id.
The June Statement further explained:
The drugs that pharmacists compound (including compounded
hydroxyprogesterone caproate) are not FDA approved, which means they
do not undergo premarket review nor do they have an FDA finding of
safety and efficacy. Compounding large volumes of drugs that are copies
of FDA-approved drugs circumvents important public health
requirements, including the Federal Food, Drug, and Cosmetic Act’s drug
approval provisions. Consumers and health professionals rely on the
Act’s evidence-based drug approval process to ensure that drugs are safe
and effective. For that reason, one factor that the agency considers in
determining whether a drug may be compounded is whether the
prescribing practitioner has determined that a compounded product is
necessary for the particular patient and would provide a significant
difference for the patient as compared to the FDA-approved commercially
available drug product.
FDA emphasizes that it is applying its normal enforcement policies
for compounded drugs to compounded hydroxyprogesterone caproate.
The compounding of any drug, including hydroxyprogesterone caproate,
should not exceed the scope of traditional pharmacy compounding. As the
5 Although these documents are not attached to the Complaint, they are incorporated into
the complaint by reference in paragraph 94. See Gustave-Schmidt, 226 F. Supp. 2d at 196.
6
Agency has previously explained, FDA generally prioritizes enforcement
actions related to compounded drugs using a risk-based approach, giving
the highest enforcement priority to pharmacies that compound products
that are causing harm or that amount to health fraud.
Id.Then, in a press release titled, Questions and Answers on Updated FDA Statement on
Compounded Versions of hydroxyprogesterone caproate (the active ingredient in Makena), FDA
provided further clarification. (June 29, 2012), available at
www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm310215.htm (“Questions and
Answers”). It posed and answered the following questions:
Will the agency take any enforcement action against
pharmacies compounding versions of hydroxyprogesterone caproate
products?
The FDA may take enforcement action against compounding
pharmacies if warranted. The FDA makes its enforcement decisions about
compounded products on a case-by-case basis after considering the
particular facts at issue. As we explained in the June 15, 2012, statement,
the compounding of any drug, including hydroxyprogesterone caproate,
should not exceed the scope of traditional pharmacy compounding.
Are pharmacies free to compound large volumes of
hydroxyprogesterone caproate as long as none of their drugs are
tested and found to be unsafe?
No. The FDA does not consider compounding large volumes of
copies, or what are essentially copies, of any approved commercially-
available drug to fall within the scope of traditional pharmacy practice.
One factor that the agency considers in determining whether a drug may
be compounded is whether the prescribing practitioner has determined that
a compounded product is necessary for the particular patient and would
provide a significant difference for the patient as compared to the FDA-
approved commercially available drug product. . . .
The FDA stated it is using a risk-based approach to
enforcement action against compounding pharmacies. The FDA also
stated that its investigation did not identify a major safety issue, so
does that mean that the FDA does not intend to take enforcement
action against the compounders of hydroxyprogesterone caproate?
7
No. A risk-based approach to enforcement relates to how the FDA
generally prioritizes its enforcement efforts. The FDA’s June 15, 2012
statement should not be interpreted to mean that the FDA will take
enforcement action only if the agency identifies a particular safety
problem. We reiterate that the compounding of any drug, including
hydroxyprogesterone caproate, should not exceed the scope of traditional
pharmacy compounding.
Id.Plaintiffs complain that none of these statements evince an agency plan to take
enforcement action against those compounding and marketing 17P on a large scale basis as
opposed to individually customizing it for patients for whom Makena is medically inappropriate.
Compl. ¶ 94. They allege that notwithstanding FDA’s public statements, compounded versions
of 17P are still actively being sold on the U.S. market. Id. ¶ 95. See also Plaintiffs’ Opposition
to Def’s Motion to Dismiss and Reply Mem. in Support of Mot. for Temporary, Prelim., and
Permanent Relief [Dkt. # 12] at 4–5 (“Pls.’ Opp.”) (“FDA has failed to date to take any action
against the compounding of 17P. . . . In practical effect . . . FDA’s lack of enforcement against
unlawful compounding of 17P has not changed; and because FDA has done nothing to change
the perception in the marketplace that it will not act against unlawful compounding of 17P, the
unlawful compounding of 17P continues.”). In essence, what plaintiffs challenge is defendants’
failure to take enforcement action:
The bottom line is that Defendants have done and, unless ordered by the
Court, will do, nothing – nothing – to enforce the law against unlawful
uncustomized compounding of 17P, unless and until FDA learns that
patients have actually been harmed or defrauded by compounded 17P.
Pls.’ Opp. at 6.
Plaintiffs assert that FDA’s statements and inaction have undermined the exclusivity
conferred with the orphan drug designation and devalued their substantial investment in the drug.
8
Compl. ¶¶ 95–99. The complaint alleges that KV is almost entirely reliant on the success of
Makena to generate the cash it needs to finance its operations and to make obligatory debt
payments, id. ¶ 95, and that the illegal production of 17P has displaced Makena in the market and
substantially undercut plaintiffs’ sales, id. ¶ 96. Since the time the complaint was filed, plaintiffs
KV and Ther-Rx have filed voluntary Chapter 11 petitions in the United States Bankruptcy Court
for the Southern District of New York. 6 See Notice of Filing for Bankruptcy Protection by K-V
Pharma. Co., Ther-Rx Corp. [Dkt. # 18] (Aug. 6, 2012).
Plaintiffs filed a four-count complaint in this Court on July 5, 2012, [Dkt. # 1], along with
a motion for temporary restraining order and preliminary injunction, [Dkt. # 2].
Count I alleges that FDA’s March Statement and the policy it sets forth violate
section 360cc(a) of the FDCA by effectively nullifying Makena’s statutory seven-
year period of market exclusivity. It further alleges that by issuing the March
Statement for the purpose of “support[ing] access to” HPC injection, FDA failed to
comply with the procedural requirements of section 360cc(a), in violation of the
APA, 5 U.S.C. § 558(c); section 360cc(a) of the FDCA, 21 U.S.C. § 360cc; and the
Due Process Clause of the Fifth Amendment of the United States Constitution, and
acted arbitrarily, capriciously, in an abuse of discretion, and in excess of its authority,
in violation of the APA, 5 U.S.C. § 706(2)(A)–(D). Compl. ¶¶ 103–09.
Count II alleges that the March Statement and the policy it sets forth are contrary to
section 353a of the FDCA and are arbitrary, capricious, an abuse of discretion, and
exceed FDA’s authority, in violation of the APA, 5 U.S.C. § 706(2)(A), (C). Compl.
¶¶ 110–13.
Count III alleges that the March Statement and the policy it sets forth “approve,
authorize, invite, encourage, and permit the introduction, and delivery for
introduction, into interstate commerce of unapproved new drugs” in violation of
FDCA sections 355(a) and 301(d), 21 U.S.C. §§ 355(a), 331(d), and the APA, 5
U.S.C. § 706(2)(A), (C). Compl. ¶¶ 114–16.
Count IV alleges that by allowing the import of API for compounded 17P, FDA is
engaging in an ongoing violation of section 381(a) of the FDCA. Furthermore, the
March Statement “announcing implicitly that [FDA] would allow such imports” is
6 The notice indicates plaintiffs’ view that the automatic stay provision in the Bankruptcy
Code, 11 U.S.C. § 362(a)(1), does not stay this case. [Dkt. # 18]. The Court agrees.
9
arbitrary and capricious, an abuse of discretion, and otherwise not in accordance with
the law, in violation of the APA, 5 U.S.C. § 706(2)(A), (C)–(D). Compl. ¶¶ 117–25.
The complaint seeks a comprehensive regime of temporary, preliminary, and permanent
declaratory and injunctive relief. It asks the Court to order defendants to withdraw the March
and June statements in a formal announcement, and to discontinue the policy of non-enforcement
that was set forth in the March Statement. Compl. 42 ¶ 5(a). It requests that the Court order
defendants: to “take sufficient enforcement actions to stop the unlawful competition with
Makena” by non-customized compounded 17P, id. ¶ 5(b); to report to the Court quarterly for one
year and semi-annually for the following two years the actions they have taken to terminate
shipments of non-customized compounded 17P, id. ¶ 5(c); and to bar entry into the United
States, and release into domestic commerce, of any future shipments of foreign-manufactured
API for use in compounding non-customized 17P except in certain specified instances. Id. ¶
5(d).
After a telephone conference held on July 5, 2012, the Court consolidated the motion for
temporary restraining order and preliminary injunction with the merits and issued an accelerated
briefing schedule for a partial dispositive motion to be filed by defendants. Minute Order (July
5, 2012). In accordance with that schedule, defendants filed the instant motion to dismiss under
Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). In addition, this Court granted Alere
Women’s and Children’s Health, L.L.C. and several interested physicians leave to file an amicus
brief in support of defendants. [Dkt. # 11].
STANDARD OF REVIEW
In evaluating a motion to dismiss under either Rule 12(b)(1) or 12(b)(6), the Court must
“treat the complaint’s factual allegations as true . . . and must grant plaintiff ‘the benefit of all
inferences that can be derived from the facts alleged.’” Sparrow v. United Air Lines, Inc., 216
10
F.3d 1111, 1113 (D.C. Cir. 2000), quoting Schuler v. United States, 617 F.2d 605, 608 (D.C. Cir.
1979). Nevertheless, the Court need not accept inferences drawn by the plaintiff if those
inferences are unsupported by facts alleged in the complaint, nor must the Court accept
plaintiff’s legal conclusions. Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002).
I. Subject Matter Jurisdiction
Under Rule 12(b)(1), the plaintiff bears the burden of establishing jurisdiction by a
preponderance of the evidence. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992);
Shekoyan v. Sibly Int’l Corp., 217 F. Supp. 2d 59, 63 (D.D.C. 2002). Federal courts are courts of
limited jurisdiction and the law presumes that “a cause lies outside this limited jurisdiction.”
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994); see also Gen. Motors
Corp. v. Envtl. Prot. Agency, 363 F.3d 442, 448 (D.C. Cir. 2004) (“As a court of limited
jurisdiction, we begin, and end, with examination of our jurisdiction.”). Because “subject-matter
jurisdiction is an ‘Art[icle] III as well as a statutory requirement, . . . no action of the parties can
confer subject-matter jurisdiction upon a federal court.’” Akinseye v. District of Columbia, 339
F.3d 970, 971 (D.C. Cir. 2003), quoting Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de
Guinee, 456 U.S. 694, 702 (1982).
When considering a motion to dismiss for lack of jurisdiction, unlike when deciding a
motion to dismiss under Rule 12(b)(6), the court “is not limited to the allegations of the
complaint.” Hohri v. United States, 782 F.2d 227, 241 (D.C. Cir. 1986), vacated on other
grounds, 482 U.S. 64 (1987). Rather, a court “may consider such materials outside the pleadings
as it deems appropriate to resolve the question whether it has jurisdiction to hear the case.”
Scolaro v. D.C. Bd. of Elections & Ethics, 104 F. Supp. 2d 18, 22 (D.D.C. 2000), citing Herbert
v. Nat’l Acad. of Sciences, 974 F.2d 192, 197 (D.C. Cir. 1993); see also Jerome Stevens Pharms.,
11
Inc. v. FDA, 402 F.3d 1249, 1253 (D.C. Cir. 2005) (finding that a district court can “consider
materials outside the pleadings” to assess jurisdiction) (citations omitted).
II. Failure to State a Claim
“To survive a [Rule 12(b)(6)] motion to dismiss a complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted); see also Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible when the pleaded factual
content “allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 556 U.S. at 678. “The plausibility standard is not akin to a
‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted
unlawfully.” Id. (internal citation omitted). “[W]here the well-pleaded facts do not permit the
court to infer more than the mere possibility of misconduct, the complaint has alleged – but it has
not ‘show[n]’ ‘that the pleader is entitled to relief.’” Id. at 679, quoting Fed. R. Civ. P. 8(a)(2).
A pleading must offer more than “labels and conclusions” or a “formulaic recitation of the
elements of a cause of action,” id. at 678, quoting Twombly, 550 U.S. at 555, and “the tenet that a
court must accept as true all of the allegations contained in a complaint is inapplicable to legal
conclusions.” Id. In ruling upon a motion to dismiss, a court may ordinarily consider only “the
facts alleged in the complaint, documents attached as exhibits or incorporated by reference in the
complaint, and matters about which the Court may take judicial notice.” Gustave-Schmidt, 226
F. Supp. 2d at 196 (citations omitted).
12
ANALYSIS
I. Plaintiffs have standing to bring this action as their alleged injuries are
redressable.
A lack of standing is a defect in subject-matter jurisdiction. Haase v. Session, 835 F.2d
902, 906 (D.C. Cir. 1987). In order to establish constitutional standing, a plaintiff must
demonstrate that a case or controversy exists by showing that (1) he has suffered an “injury in
fact”; (2) that the injury is “fairly traceable” to the conduct of the defendant; and (3) that it is
likely that the injury will be redressed by a favorable decision. George v. Napolitano, 693 F.
Supp. 2d. 125, 129–30 (D.D.C. 2010), citing Friends of the Earth, Inc. v. Laidlaw Envtl. Servs.,
528 U.S. 167, 180–81 (2000). Defendants challenge plaintiffs’ standing under the third prong:
redressability.
To satisfy the redressability requirement of jurisdictional standing, a court must find that
it is “likely, as opposed to merely speculative, that the injury will be redressed by a favorable
decision” on the merits. Lujan, 504 U.S. at 561, quoting Simon v. E. Ky. Welfare Rights Org.,
426 U.S. 26, 38, 43 (1976) (quotation marks omitted). An injury is not redressable where the
“only apparent avenue of redress for plaintiffs’ claimed injuries . . . is unavailable.” Newdow v.
Roberts, 603 F.3d 1002, 1013 (D.C. Cir. 2010).
Plaintiffs’ claimed injury is the loss of their market exclusivity, and the attendant profits,
due to unlawful competition from non-customized compounded 17P. Pls.’ Opp. at 9. To remedy
this injury, plaintiffs ask the Court to order FDA to take enforcement actions against the
unlawful compounders. Id. This, plaintiffs argue, would greatly diminish, or eliminate, the
supply of unlawful 17P on the market. Id. at 16. As a result, Makena sales would rise,
increasing revenue for KV and Ther-Rx. Id. Medicaid agencies, in particular, would have to
change their policies as to Makena if the supply of compounded 17P were to diminish. Id.
13
Plaintiffs point to several enforcement mechanisms that FDA is authorized to, and
indeed does, use against unlawful compounders, such as issuing warning letters; imposing import
alerts; referring violators to the Department of Justice for a proposed civil action for seizure of
the unlawful compound, for an injunction, or for criminal prosecution. Pls.’ Opp. at 9–14.
While nothing ensures that these enforcement actions will induce all 17P compounders to stop
their unlawful production, the Court is satisfied that the complaint alleges sufficient facts to
support the inference that enforcement tools at FDA’s disposal would be “likely” to at least
reduce the presence of compounded 17P on the market, which would compel more health care
professionals to use Makena, or prompt insurers that have adopted policies favoring use of
compounded 17P over Makena to ease those policies. See Compl. ¶ 19 (explaining that “some
state Medicaid agencies have adopted policies” that make it challenging for pregnant women to
gain access to Makena and favoring 17P compounds); see also Lujan, 504 U.S. at 561 (“At the
pleading stage, general factual allegations of injury resulting from the defendant’s conduct may
suffice, for on a motion to dismiss we presume that general allegations embrace those specific
facts that are necessary to support the claim.”) (internal quotation marks and citations omitted).
Defendants argue that plaintiffs’ injuries are not redressable because FDA’s decision
whether to take enforcement action is committed to the agency’s discretion. Defs.’ Mem. in
Support of Defs.’ Mot to Dismiss and in Opp. to Pls.’ Mot. for Injunctive Relief [Dkt. # 7] at 15
(“Defs.’ Mem.”). But this argument imports the examination of the reviewability of the agency’s
decision into the redressability inquiry. For that reason, the cases defendants cite in support of
the argument are distinguishable from this case. Chaney, 470 U.S. at 821, Block v. SEC, 50 F.3d
141078 (D.C. Cir. 1995), and Coker v. Sullivan, 902 F.2d 84 (D.C. Cir. 1990) all concern the
reviewability of an agency’s enforcement decision and make no mention of redressability. 7
In the final case that plaintiffs cite, Judicial Watch, Inc. v. National Archives and
Records Administration, 845 F. Supp. 2d 288 (D.D.C. 2012), the plaintiffs asked the Court to
order the National Archives and Records Administration to take custody and control of
audiotapes created by former President Clinton and still in the President’s control. Id. at 289–90.
The Court found the plaintiff’s injury not redressable because the Archives had no authority or
means to obtain the records from the President at all. Id. at 304 (“Ultimately, plaintiff conceded
that even an order deeming the materials to be Presidential records and directing the defendant to
make an effort to retrieve them would not bind the former President to produce them. . . . This is
the problem at the heart of the lawsuit that requires its dismissal.”). Here, the FDA has the
means and the authority to bring enforcement actions that would likely decrease the incidence of
unlawfully compounded 17P, so Judicial Watch is inapplicable. 8
Furthermore, plaintiffs have standing to challenge FDA’s alleged permission of the active
ingredient in 17P compounds to be unlawfully imported into the United States. Defendants do
not challenge FDA’s authority to reject shipments of drugs meant for import. And since
plaintiffs allege that “many (possibly, all)” compounders of 17P use active ingredient
manufactured abroad, Compl. ¶ 89, it is certainly likely that if FDA were to reject the imports of
active ingredient meant for unlawfully compounded 17P, the amount of the compound that
7 Plaintiff also cites Norton v. S. Utah Wilderness Alliance, 542 U.S. 55, 64 (2004), but that
case involved the reviewability of agency inaction under the APA and did not address
redressability.
8 While it is the Department of Justice that has the ultimate authority to decide whether to
bring enforcement proceedings in Court, see Pls.’ Opp. at 13–14, plaintiffs identify several other
enforcement mechanisms within the FDA’s control. Id. at 9–13.
15
pharmacies could create would drop, at least temporarily. This, in turn, would likely drive health
care professionals to use Makena, or at least drive insurers like Medicaid to reverse its policies
regarding Makena. See Compl. ¶ 19.
Since plaintiffs have alleged sufficient facts to support standing, the Court proceeds to
defendants’ next argument: reviewability.
II. The actions challenged in Counts I–III are not reviewable.
All four of plaintiffs’ claims ask the Court to review agency conduct under section 706(2)
of the Administrative Procedure Act. 9 But section 701 of the APA precludes judicial review of
final agency action, including refusals to act, when review is precluded by statute or “committed
to agency discretion by law.” 21 U.S.C. § 701; see Chaney, 470 U.S. at 826.
Defendants contend that the Supreme Court’s decision in Heckler v. Chaney is
controlling here, and that the challenged agency action is not subject to judicial review because it
is committed to agency discretion. Defs.’ Mem. at 18–40, citing Chaney, 470 U.S. at 821. The
Court agrees. In Chaney, the Supreme Court held that an agency’s decision not to take
enforcement action is presumed to be immune from judicial review unless Congress has
expressed the intent to circumscribe agency enforcement discretion in the statute and provided
meaningful standards in the statute for defining the limits of that discretion. 470 U.S. at 834–35.
In this case, Congress has done neither.
In Chaney, a group of prison inmates sought to compel FDA to initiate an enforcement
action with respect to the drugs used for capital punishment. Chaney, 470 U.S. at 823. Plaintiffs
9 The Court notes that Count I of the complaint also alleges that FDA violated the Due
Process Clause of the Fifth Amendment to the United States Constitution. However, plaintiffs
do not raise this claim in their motion for temporary restraining order and preliminary injunction
and do not defend it in opposition to plaintiffs’ motion to dismiss the action, so the Court will
treat it as conceded.
16
initially petitioned the agency directly, arguing that the use of those drugs violated prohibitions
in the FDCA against misbranding and constituted the unapproved use of an approved drug. Id. at
824. They also argued that the FDCA’s requirements for approval of “new drugs” under section
355 applied, but were not being followed. Id. Accordingly, the plaintiffs asked FDA to take
various investigatory and enforcement actions to prevent the perceived violations, such as:
[A]ffix warnings to the labels of all the drugs stating that they were
unapproved and unsafe for human execution, to send statements to the
drug manufacturers and prison administrators stating that the drugs should
not be so used, and to adopt procedures for seizing the drugs from state
prisons and to recommend the prosecution of all those in the chain of
distribution who knowingly distribute or purchase the drugs with intent to
use them for human execution.
Id.The FDA Commissioner responded by letter, refusing to take the requested actions. Id.The letter explained, in part:
Generally enforcement proceedings in this area are initiated only when
there is a serious danger to the public health or a blatant scheme to
defraud. We cannot conclude that those dangers are present under State
lethal injection laws, which are duly authorized statutory enactments in
furtherance of proper State functions . . . .
Id. at 824–25. The plaintiffs then challenged this response in court under the judicial review
provisions of the APA, claiming the same violations of the FDCA and asking the Court to
require FDA to take the enforcement actions they had requested in the petition. Id. at 825.
The Supreme Court held that “an agency’s decision not to prosecute or enforce, whether
through civil or criminal process, is a decision generally committed to an agency’s absolute
discretion” and is therefore presumed to be unreviewable under the APA. Id. at 831. The Court
explained that the availability of judicial review is determined by the legislature in the first
17
instance, and that if Congress has not provided courts with “law to apply,” agency action will be
considered to be committed to the agency’s discretion. Id. at 834.
If [Congress] has indicated an intent to circumscribe agency enforcement
discretion, and has provided meaningful standards for defining the limits
of that discretion, there is law to apply under § 701(a)(2), and courts may
require that the agency follow that law; if it has not, then an agency refusal
to institute proceedings is a decision committed to agency discretion by
law within the meaning of that section.
Id. (internal quotation marks omitted). The Court determined that the action at issue in Chaney
was committed to the agency’s discretion because the statute was “drawn so that a court would
have no meaningful standard against which to judge the agency’s exercise of discretion.” Id. at
830. The Court reasoned:
[A]n agency decision not to enforce often involves a complicated balancing of a
number of factors which are peculiarly within its expertise. Thus, the agency
must not only assess whether a violation has occurred, but whether agency
resources are best spent on this violation or another, whether the agency is likely
to succeed if it acts, whether the particular enforcement action requested best fits
the agency’s overall policies, and, indeed, whether the agency has enough
resources to undertake the action at all. . . . The agency is far better equipped than
the courts to deal with the many variables involved in the proper ordering of its
priorities.
Id. at 831–32. A plaintiff may overcome the presumption that agency enforcement decisions are
unreviewable only by showing that “the substantive statute has provided guidelines for the
agency to follow in exercising its enforcement powers.” Id. at 833.
Here plaintiffs’ claims in Counts I through III fall squarely within the Chaney
presumption of unreviewability. Just as in Chaney, plaintiffs allege ongoing violations of
substantive provisions of the FDCA, and they request that the Court order FDA to take
investigatory and enforcement action to stop them. Compl. ¶¶ 103–116; pp. 40–43. A review of
the extensive prayer for relief demonstrates that this case is fundamentally an effort to get the
Court to direct and oversee the FDA’s enforcement activities, and that it cannot do.
18
A. Congress did not express an intent in the FDCA to circumscribe agency enforcement
discretion and it did not provide any law for the court to apply.
Under Chaney, the presumption of unreviewability can be overcome only if Congress
“has indicated an intent to circumscribe agency enforcement discretion, and has provided
meaningful standards for defining the limits of that discretion.” 470 U.S. at 834. And Chaney is
directly on point here because the Supreme Court was analyzing the very statute at issue in this
case.
In Chaney, the Court examined each of the enforcement mechanisms available to FDA
under the FDCA and found that “[t]he Act’s enforcement provisions . . . commit complete
discretion to the Secretary to decide how and when they should be exercised.” Id. at 835. That
finding continues to be controlling today. So the only remaining question is whether there is
some other provision in the FDCA that would authorize the review that plaintiffs are seeking.
The Chaney plaintiffs pointed to substantive prohibitions in the FDCA, including the
rules against misbranding in section 355, but the Court flatly rejected the notion that those
sections supplied the necessary law to apply, saying: “These provisions are simply irrelevant to
the agency’s discretion to refuse to initiate proceedings.” Id. at 836. The Court finds that the
substantive provisions cited in this case are similarly irrelevant.
Count I points to 21 U.S.C. § 360cc, which is the grant of exclusivity under the Orphan
Drug Act. It provides that the Secretary “may not approve another application under section 355
of this title” within seven years of approving an orphan drug, and identifies some exceptions to
19
the rule. 21 U.S.C. § 360cc(a)(2). 10 Count II is premised upon section 353a, which exempts
compounded drugs from various provisions of the FDCA (including section 355 – the
prohibition against the introduction of a drug into interstate commerce without FDA approval)
under particular conditions, such as when the drug has been compounded for an individual
patient based on a valid prescription. 21 U.S.C. §353a. But neither of those provisions requires
FDA to proceed against unlawful compounders – they don’t say a word about it. And Count III
is based in part on section 355, which was the section considered and rejected by the Court in
Chaney. Section 355(a) states that “no person shall introduce or deliver for introduction into
interstate commerce any new drug,” without approval by FDA. 21 U.S.C. § 355(a). It is also
based on section 331(d), which states that “the introduction or delivery for introduction into
interstate commerce of any article in violation of” various sections of the FDCA, including
section 355, is prohibited. 21 U.S.C. § 331(d). So none of the cited provisions deal with the
scope of the agency’s enforcement discretion at all.
Indeed, in their papers, plaintiffs did not point to any specific language in these statutory
provisions that supposedly expressed the legislature’s desire to limit the agency’s enforcement
discretion or that could serve as the guide for a court’s review. Moreover, when asked directly at
the motions hearing, counsel for plaintiff would not concede the point, but he repeatedly failed to
direct the Court to any statutory provision that would satisfy the Chaney test and overcome the
presumption. Tr. of Motions Hearing (Aug. 7, 2012) (“Tr.”) at 31–33, 36–38, 46. Accordingly,
10 Plaintiffs cite section 360cc for the proposition that the FDA is prohibited from
“approving (formally or in any other way), authorizing, inviting, encouraging, or generally
permitting the introduction into interstate commerce of any compounded version of that same
drug product for the same orphan indication as to which the approved drug has been designated
as an orphan drug.” See e.g., Compl. ¶ 104. But that language does not appear anywhere in that
section of the statute, so the citation is somewhat disingenuous. The only express direction to
FDA in section 360cc is that the Secretary “may not approve another application under section
355 of this title.” 21 U.S.C. § 360cc(a)(2).
20
this Court finds that Congress did not express an intent to circumscribe FDA’s enforcement
discretion in the FDCA. And since the FDCA does not provide any law for the Court to apply,
the Court finds that FDA’s March Statement is unreviewable. 11
Plaintiffs emphasize the prospective nature of FDA’s pronouncement and argue that since
it addresses future conduct, it constitutes an “affirmative public invitation” to compound 17P that
is different from a mere failure to bring an enforcement action. Pls.’ Opp. at 39; Pls.’ Mot. for
Temporary Restraining Order and Preliminary Injunction (“Pls.’ Mot. for TRO/PI”) [Dkt. # 2] at
37. However, the letter that the plaintiffs challenged in Chaney contained language nearly
identical to the operative language in the March Statement. The Chaney response letter stated
that enforcement proceedings are generally initiated only when there is a serious danger to the
public health or a blatant scheme to defraud, and that FDA could not conclude that those factors
were present under State lethal injection laws. Chaney, 470 U.S. at 824–25. Similarly here, the
March Statement relays the factors FDA considers when deciding whether to bring enforcement
action, and recites its current determination that those factors do not warrant action against
pharmacies that compound 17P for individual patients, except under certain conditions.
Plaintiffs also contend that they fall outside Chaney because they are only requesting that
the Court require FDA to take some enforcement action, and they are not asking it to specify the
type of enforcement action. Pls.’ Opp. at 23–24. But this distinction does not save the case.
Plaintiffs’ requests that the Court order “sufficient” enforcement action to restore plaintiffs’
11 Perhaps because the statutory support is absent, plaintiffs argue vehemently that the
Court should grant relief in this case because “where agency action (or inaction) has harmed
plaintiffs, it is well within the equitable powers of a court to order the specific relief necessary to
cure the transgressions.” Pls.’ Opp. at 26–28. However, in light of the plain language of section
701 of the APA and the clear direction provided by Chaney, the Court declines to find that
FDA’s announcement of an enforcement decision that is well within its discretion constitutes the
type of harm that warrants equitable intervention.
21
competitive advantage and that it monitor FDA’s activities by requiring regular reports
demonstrate that they are asking the Court to get right smack in the middle of agency operations.
Directing the FDA to bring a particular sort of enforcement action, and a particular quantity of
those actions, is directing it how to allocate its finite enforcement resources – a decision that is
“peculiarly within the agency’s expertise and discretion.” 12 Crowley v Pena, 37 F.3d 671, 677
(D.C. Cir. 1994).
B. Plaintiffs cannot avoid the impact of Chaney by characterizing the March Statement as a
statement of agency policy.
Plaintiffs maintain that the case survives on the grounds that it is not actually about an
enforcement decision. They cite Crowley v. Pena, 37 F.3d 671 (D.C. Cir. 1994), and argue that
12 Plaintiffs’ argument that the March Statement is reviewable because FDA considered
price in deciding how to exercise its enforcement discretion – a factor that FDA may not
consider to determine whether a compound is legal under the FDCA – is also misguided. Compl.
¶¶ 80–81. The March Statement does not express a view that 17P compounds are legal because
Makena is too expensive. If that were the case, the statement might constitute a reviewable
agency policy. Rather, the statement explains why FDA does not intend to bring enforcement
actions against certain pharmacies, even if the pharmacies are engaging in unlawful conduct. It
is exactly that exercise of discretion that Chaney and Crowley explained is presumptively
unreviewable.
22
the case falls within an exception to Chaney for challenges to statements of agency policy.13
Pls.’ Opp. at 36–38. In Crowley, the D.C. Circuit confirmed that enforcement decisions are
presumptively unreviewable. 37 F.3d at 676–77. However, it noted in dicta that “an agency’s
statement of a general enforcement policy may be reviewable for legal sufficiency where the
agency has expressed the policy as a formal regulation after the full rulemaking process . . . or
has otherwise articulated it in some form of universal policy statement.” Id. at 676. Plaintiffs
argue that FDA’s statement is reviewable because it sets forth a general policy, not a decision in
an individual case. Pls.’ Opp. at 36–37. But the letter challenged in Chaney also involved a
broad class of alleged law violators, so the fact that the March Statement did not involve an
individual declination is not dispositive. More important, the March Statement is neither the
formal result of a rulemaking process nor a universal policy statement, so the limited
circumstances that the D.C. Circuit said may call for a different result are not present here.
In Crowley, the D.C. Circuit noted that a statement might be reviewable if it “actually
lay[s] out a general policy delineating the boundary between enforcement and non-enforcement
13 At the motion to dismiss stage, the Court takes all the factual allegations in plaintiffs’
complaint as true and makes all inferences that can be alleged from those facts in plaintiffs’
favor. See Sparrow, 216 F.3d at 1113. However, the Court need not accept the many legal
conclusions asserted in the complaint or any inferences unsupported by factual allegation.
Browning, 292 F.3d at 242. For example, the Court need not accept plaintiffs’ conclusion that
“FDA’s [March] Statement is not the exercise of case-by-case enforcement discretion as to past
conduct, but, rather, addresses future conduct and announces a general policy that is binding on
FDA personnel as long as it has not been revoked, and that approves, authorizes, invites,
encourages, and permits an unlimited and unknown number of ‘compounders’ to distribute
nationwide during plaintiffs’ exclusivity period and for an unlimited time and thereafter non-
customized 17P intended to be used for the same orphan indication for which Makena is
approved.” Compl. ¶ 80. Whether or not the March Statement is an exercise of enforcement
discretion or a policy is a legal conclusion. And plaintiffs’ characterization does not quite square
with the language in the statement that “FDA does not intend to take enforcement action against
pharmacies that compound hydroxyprogesterone caproate based on a valid prescription for an
individually identified patient unless the compounded products are unsafe, of substandard
quality, or are not being compounded in accordance with appropriate standards for compounding
sterile products.” (emphasis added). March Statement.
23
and purport[s] to speak to a broad class of parties.” Crowley, 37 F.3d at 677. But this is a
narrow exception to the presumption. As the Court of Appeals explained: “This will not be true
in the ordinary case, however, and the more reasonable inference when faced with a context-
bound non-enforcement pronouncement is that the agency has addressed the issue in
comparatively ad hoc terms inherently implicating its non-reviewable enforcement discretion.”
Id. As the court predicted, that is the appropriate inference to be drawn here, as there is no clear
demarcation set out in the statement at issue.
The language in the March Statement that animates the plaintiffs – that “FDA does not
intend to take enforcement action against pharmacies” – does not constitute an announcement of
policy that would differentiate this case from Chaney. March Statement. In Chaney, FDA’s
intention not to take enforcement action against states using the challenged drugs for lethal
injections was implicit in its denial of the plaintiffs’ petition. Chaney, 470 U.S. at 837–38.
States could have viewed it, as plaintiffs suggest here, as a “green light” to continue their
allegedly illegal behavior. Yet, the Supreme Court still found the decision enunciated in the
letter to be unreviewable. Id.Moreover, here, FDA did not disavow an intention to proceed against compounding
pharmacies as a general matter. What it said was: “FDA does not intend to take enforcement
action against pharmacies that compound . . . based on a valid prescription for an individually
identified patient unless the compounded products are unsafe . . . .” March Statement (emphasis
added). Inherent in that statement is a consideration of the individual circumstances of each
case: was there a valid prescription for an individually identified patient? So, contrary to
plaintiff’s assertion, the March Statement is not a universal policy statement “setting forth FDA’s
decision not to regulate the class of noncustomized compounded products that contain 17P (or
24
what purports to be 17P) . . . .” Pls.’ Opp. at 19. Furthermore, the March Statement was simply
a statement of present intent and it included the caveat, “[a]s always, FDA may at any time
revisit a decision to exercise enforcement discretion.” March Statement (emphasis added). It
does not bind FDA to any future action or inaction, and does not lay out any discrete boundary
between enforcement and non-enforcement. It is the sort of ad hoc, context-bound non-
enforcement pronouncement that the Crowley court suggested would inherently implicate an
agency’s unreviewable enforcement discretion. Crowley, 37 F.3d at 677.
This case is also distinguishable from those precedents where the courts were willing to
adopt the Crowley approach. In Crowley, the Court of Appeals observed that expressions of
broad enforcement policy are more likely to be direct interpretations of the commands of the
substantive statue rather than the sort of mingled assessments of fact, policy, and law that drive
an individual enforcement decision and are peculiarly within the agency’s expertise and
discretion. Crowley, 37 F.3d at 677. Thus, in the cases where courts have reviewed an
enforcement policy, they have emphasized that their review was limited to the question of
whether or not the agency’s express statement of policy unlawfully construed a statute. See, e.g.,
OSG Bulk Ships, Inc. v. United States, 132 F.3d 808, 812 (D.C. Cir. 1998) (considering the pure
question of statutory interpretation of whether the agency’s interpretation of section 506 of the
Merchant Marine Act of 1936 – permitting certain vessels built with federal aid for service in
foreign trade to be used for domestic trade after the expiration of its economic life – as a
challenge to agency policy and not as a decision not to enforce the statute’s ban on domestic
trade by that type of vessel); Edison Electric Institute v. EPA, 996 F.2d 326, 333 (D.C. Cir. 1993)
(explaining that petitioners are challenging EPA’s interpretation of the statute and its
implementing regulations, which “clearly . . . [have] to do with the substantive requirements of
25
the law; it is not the type of discretionary judgment concerning the allocation of enforcement
resources that [Chaney] shields from judicial review”); Roane v. Holder, 607 F. Supp. 2d 216,
226–27 (D.D.C. 2009) (finding that “to the extent the plaintiffs are claiming that the defendants
have made a general statement about their policy of enforcement of the CSA with respect to
federal lethal injections divorced from any fact-specific enforcement decision, the plaintiffs have
stated a claim outside the scope of the [Chaney] presumption against judicial review”); Alliance
for Bio-Integrity v. Shalala, 116 F. Supp. 2d 166, 171–72 (D.D.C. 2000), (“Although the Court
may not review FDA’s policy-laden individual enforcement decisions, the Court has jurisdiction
to review whether or not FDA’s Statement of Policy comports with Congressional directives.”).
In this case, FDA’s press release does not purport to interpret the commands of the
substantive statute. To the extent that it does convey some legal principle, plaintiffs concede that
FDA’s interpretation of the FDCA is in line with theirs: uncustomized compounding of 17P is
unlawful. Pls.’ Mem. in Opp. to Amici Curiae Brief [Dkt. # 14] at 2. The March Statement
simply assesses the considerations that have led it to anticipate that enforcement action against
particular compounding pharmacies will not be warranted. This is the type of analysis that the
Crowley court found to be peculiarly within the agency’s expertise and discretion, and therefore
presumptively unreviewable.
Along the same lines, the Crowley court also explained that agency policies – as opposed
to enforcement decisions – might be amenable to review because agencies generally provide
statements of reasons when they formally announce broadly applicable guidelines, while
statements justifying individual decisions to forego enforcement tend to be cursory, ad hoc, or
post hoc. Crowley, 37 F.3d at 677. “These latter cases confront courts . . . with the task of
26
teasing meaning out of agencies’ side comments, form letters, litigation documents, and informal
communications.” Id.This reasoning also suggests that the March Statement is not subject to review. It is a
short summary of FDA’s position, which appears to have been issued to quell confusion
generated by plaintiffs’ efforts to disseminate their own characterization of that position. March
Statement (“FDA understands that the manufacturer of Makena, KV Pharmaceuticals, has sent
letters to pharmacists indicating that FDA will no longer exercise enforcement discretion with
regard to compounded versions of Makena. This is not correct.”).
At the hearing, plaintiffs argued that the press release qualifies as a Crowley policy
statement, noting that even less formal documents have been found to be subject to review. Tr.
at 38–39, citing OGS Bulk Ships, Inc., 132 F.2d at 808 (agency letters); Center for Auto Safety,
Inc. v. National Highway Traffic Safety Administration, 342 F. Supp. 2d at 1 (D.D.C. 2004)
(same); Chiang v. Kempthorne, 503 F. Supp. 2d at 343 (D.D.C. 2007) (informal guidelines). But
even though the documents were “informal” in the sense that they were not subject to notice and
comment rulemaking procedures, they contained the elements the Crowley court described:
express statements of generally applicable policy and explanations for the reasons behind the
policies. OGS Bulk Ships, Inc., 132 F.3d at 811; Center for Auto Safety, 342 F. Supp. 2d at 6–8,
13; Chiang, 503 F. Supp. 2d at 347, 351–52. Thus, the courts were able to determine in those
cases whether the agencies’ policies were in accordance with Congressional intent, and those
cases are distinguishable from the situation here.
Finally, Crowley noted that it might be necessary to recognize an exception to the
presumption of non-reviewability for statements of enforcement policy because an
announcement of a broad policy against enforcement poses special risks that the agency has
27
consciously and expressly adopted a general policy that is “so extreme as to amount to an
abdication of its statutory responsibilities.” Crowley, 37 F.3d at 677, citing Chaney, 470 U.S. at833 n.4. Plaintiffs argue that is exactly what happened in this case:
FDA has abdicated its duty under 21 U.S.C. § 360cc(a) not to subvert the
grant of orphan drug exclusivity that Congress intended parties in
plaintiffs’ position to have . . . and its duty under . . . 21 U.S.C. § 393(a) to
“(1) promote the public health by promptly and efficiently reviewing
clinical research and taking appropriate action on the marketing of
regulated products in a timely manner; (2) with respect to such products,
protect the public health by ensuring that . . . (B) human . . . drugs are safe
and effective . . . .”
Pls.’ Opp. at 22 (internal quotation marks omitted).
But this argument has both legal and factual flaws that can be derived even from the
factual allegations in the complaint. FDA’s March Statement does not “consciously and
expressly” indicate that it will never bring enforcement actions against unlawful compounders,
or that it will never bring enforcement actions against unlawful compounders of 17P. Moreover,
the cases where courts find agency policy to be so extreme as to amount to an abdication of
governmental responsibility have been civil rights cases. See, e.g., Adams v. Richardson, 480
F.2d 1159 (D.C. Cir. 1973); Young v. Pierce, 544 F. Supp. 1010 (E.D. Tex. 1982). And the fact
that those opinions preceded Chaney suggests that they provide little precedential value here. 14
In Adams, the D.C. Circuit held that by continuing to give federal funding to segregated
public schools, appellants – the Secretary of Health, Education, and Welfare (“HEW”); and the
Director of HEW’s Office of Civil Rights – had abdicated their duty to enforce Title VI of the
Civil Rights Act of 1964. 480 F.2d at 1161–63. At the time of the Adams decision, as still
14 Citing Adams, Justice Rehnquist’s opinion in Chaney noted that “[w]e do not have in this
case . . . a situation where it could justifiably be found that the agency has ‘consciously and
expressly adopted a general policy’ that is so extreme as to amount to an abdication of its
statutory responsibilities,” but stated, “we express no opinion on whether such decisions would
be unreviewable under § 701(a)(2).” Chaney, 470 U.S. at 833 n.4.
28
today, Title VI provided that “[n]o person in the United States shall, on the ground of race,
color, or national origin, be excluded from participation in, be denied the benefits of, or be
subjected to discrimination under any program or activity receiving Federal financial assistance.”
Id. at 1161 n.1. The statute “directed” all federal agencies with the authority to provide federal
funding to effectuate that provision by either terminating or refusing to grant assistance to
programs engaging in discriminatory conduct or by any other means authorized by law. Id. at
1162–63. HEW had continued to provide federal funds to schools without regard to whether
they engaged in racial segregation. Id. at 1162. The Court emphasized that HEW was not
simply neglecting certain schools while carrying out a “generally effective enforcement
program,” but rather, that it was funding all schools as matter of general policy. Id. at 1162.
This, it found, constituted a complete abdication of its statutory duty. Id. The Supreme Court in
Adams also found that the express language of Title VI not only required the agency to enforce
the Act, but also set out two alternative means of enforcement that the agency was bound to use.
Id. at 1162–63. By failing to adhere to one of these alternative means of enforcement, the Court
found, HEW was derelict in its duty to enforce the Act. Id.
The defendants in Adams argued that the enforcement of Title VI was committed to
agency discretion, and was therefore not reviewable by the courts. Id. at 1161. But here,
plaintiffs challenge only FDA’s decision with respect to compounded 17P; they do not allege
that FDA is refusing to enforce the FDCA’s compounding provisions across the board “as a
matter of general policy. Moreover, Adams did not implicate the concerns that would be raised
by telling an agency how to allocate its valuable enforcement resources; the case involved the
government’s continuing grant of federal funds to segregated institutions. Id. at 1161–62. Most
importantly, the Court found that Title VI expressly required the agency to enforce its provisions
29
and set forth specific enforcement procedures. Id. at 1162. This aligns with the Supreme
Court’s later decision in Chaney and is distinguishable from instant situation because those
provisions are absent from the FDCA. Therefore, this case involving one company’s
competitive advantage does not in any way resemble the extreme abdication of statutory
responsibility to enforce fundamental rights that the Supreme Court confronted in Adams. See
also Young, 544 F. Supp. at 1013–17 (finding, based in part on Adams, that the court could
review a class action claim that HUD had abdicated its duty under several statutes to eliminate
financial participation by the federal government in illegal racial discrimination by refusing to
decline federal funding to local housing authorities that engage in racially discriminatory housing
practices).
Accordingly, the Court finds that the March Statement is a presumptively unreviewable
exercise of FDA’s enforcement discretion, and not a reviewable statement of policy.
C. Even if the March Statement constitutes a reviewable enforcement policy, it has been
superseded.
Even if the Court were to assume that the March Statement constitutes a universally
applicable statement that FDA would, as a matter of policy, stay its hand and exercise
enforcement discretion with respect to the entire class of non-customized compounded products
that contain 17P, that policy has been superseded by FDA’s June Statement, along with the
Questions and Answers document. The June Statement states: “FDA emphasizes that it is
applying its normal enforcement policies for compounded drugs to compounded
hydroxyprogesterone caproate.” June Statement. It goes on to explain that compounding should
not exceed the scope of traditional pharmacy compounding and that the agency prioritizes
enforcement actions using a risk-based approach. Id. And if there was any lingering confusion,
the Questions and Answers document clears it up. It answers the question, “Does that mean that
30
the FDA does not intend to take enforcement action against the compounders of
hydroxyprogesterone caproate?” with a definitive “no.” Questions and Answers.
Plaintiffs argue that those two documents did not alter the agency’s previously announced
policy of non-enforcement because they did not expressly commit the agency to taking
enforcement action. Compl. ¶ 94. 15 To prove that point, plaintiffs point to the fact that the FDA
has not brought any enforcement actions against illegal compounders of 17P. See Pls’ Opp. at 4-
6; Tr. at 44 (Attorney for plaintiffs: “But they’re not enforcing it. Words without actions don’t
do anything.”). This argument simply serves to demonstrate the basic deficiency in the
complaint: the fact that plaintiffs are challenging an FDA decision (or series of decisions) not to
initiate enforcement action, rather than its stated policy on whether and how the statute should be
enforced. 16
III. Plaintiffs fail to state a claim under Count IV.
Count IV of the complaint alleges that FDA is permitting the foreign-manufactured active
pharmaceutical ingredient for compounded 17P to be imported into the United States in violation
of section 381(a) of the FDCA. Compl. ¶123.
The FDCA requires any foreign establishment that manufactures, prepares, propagates,
compounds, or processes a drug to be imported into the United States to both “immediately
register” with the Secretary of Health and Human Services, 21 U.S.C. §§ 321(d), 360(i)(1)(A),
15 This represents something of a reversal for plaintiffs, who advanced the position in
another lawsuit that FDA has become increasingly more direct in its public communications
concerning its enforcement priorities, and that it left “no room for doubt” that it considered bulk
compounding to be unlawful. Compl. and Appl. for Prelim. Inj., K-V Pharma. Co. v. Cook, Case
1:12-cv-2491, at ¶¶ 5, 47 (July 17, 2012 N.D. Ga).
16 The Court notes that plaintiffs’ complaint contains no claim that FDA has failed to act in
accordance with the “normal enforcement policies” FDA claims in its June Statement to be
applying with regard to illegal compounders of 17P.
31
and provide the Secretary with a list of all its imported drugs and devices, id. §§ 360(i)(2),
360(j). Under Section 381(a), the Secretary of the Treasury “shall deliver to the Secretary of
Health and Human Services, upon his request,” samples of the product being imported or offered
for import into the United States. Id. § 381(a). In addition, the Secretary of Health and Human
Services “shall furnish to the Secretary of the Treasury” a list of registered foreign
establishments and “shall request that if any drugs, devices, or tobacco products manufactured,
prepared, propagated, compounded, or processed in an establishment not so registered are
imported or offered for import into the United States, samples of such drugs, devices, or tobacco
products be delivered to the Secretary of Health and Human Services.” Id. 17 “If it appears from
the examination of such samples or otherwise that . . . such article is adulterated, misbranded, or
in violation of section 355 of this title . . . then such article shall be refused admission,” with
limited exceptions. Id. 18
Count IV alleges that the foreign-manufactured API for compounded 17P “appears to be
– and, indeed, is – an unapproved new drug and, when imported or offered for import into the
United States, appears to be – and, indeed, is – in violation of Section 355.” Compl. ¶ 121. It
asserts that FDA is in violation of section 381(a) because “[s]ince March 30, 2011 and
continuing to the present, Defendants have been, and are, allowing the import of such API for
compounded 17P.” Id. ¶ 123.
FDA submits that an alleged failure to enforce the rules against the importation of
unlawful substances is presumptively unreviewable, and plaintiffs do not contest that
17 The complaint does not specify whether the API for 17P that FDA is allegedly permitting
to enter into the United States is coming from registered or unregistered foreign facilities.
18 If an imported article is refused admission, the Secretary of the Treasury “shall cause the
destruction of any such article” unless it is “exported . . . within ninety days.” 21 U.S.C. §
381(a).
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proposition. Pls.’ Opp. at 33 n.34 (“[p]laintiffs do not dispute that . . . FDA’s decision as to a
particular article offered for import, like its decision as to enforcement against a particular
company in a particular factual setting, is within FDA’s enforcement discretion.”). But the
complaint does not allege the existence of a policy, and even if one concludes that section 381(a)
imposes a mandatory, and not a discretionary, obligation, the complaint fails to state a claim
upon which relief could be granted.
A. The complaint does not allege the existence of a reviewable policy.
At the outset, the Court notes that plaintiffs do not point to any reviewable FDA
statement of policy that explicitly or implicitly permits unlawful imports, and the complaint
contains no non-conclusory allegation that such a policy exists. To the extent plaintiffs are
arguing that the language in the complaint asserting that “[s]ince March 30, 2011, and continuing
to the present, Defendants have been, and are, allowing the import of [the] API for compounded
17P,” reasonably leads to the inference that FDA has a policy, the Court finds that this vague
statement is insufficient to support such an inference under Twombly and Iqbal. Iqbal, 556 U.S.
at 678 (A pleading must offer more than “labels and conclusions” or a “formulaic recitation of
the elements of a cause of action.”), quoting Twombly, 550 U.S. at 555; see Compl. ¶¶ 121–23.
Furthermore, although the complaint asserts that the March Statement “announc[es] implicitly
that they would allow such imports,” Compl. ¶ 124, the March Statement does not even mention
the import of components of compounded 17P. The only subjects of the statement are the
“pharmacies that compound” 17P. March Statement; see O’Gilvie v. Corp. for Nat’l Cmty. Serv.,
33
802 F. Supp. 2d 77, 82 (D.D.C. 2011) (conclusory allegations “need not be treated as true, and . .
. are insufficient to defeat [a] motion to dismiss.”). 19
B. Even if the complaint contained sufficient factual allegations to support the existence of a
reviewable policy, it does not allege that the policy violates section 381(a).
Moreover, even if the Court were to accept the conclusory assertions in the complaint as
supporting the existence of a reviewable policy, Count IV fails to state a claim under section
381(a) because the complaint does not allege that the policy is illegal.
Plaintiffs maintain that the section 381(a) “mandates the universal exclusion of foreign
drugs that are in violation of Section 355, whether the factories that manufactured them are
registered or not,” and they cite Beaty v. FDA, -- F. Supp. 2d --, Civ. Case No. 11-289(RJL),
2012 WL 1021048 (D.D.C. Mar. 27, 2012), in support of that contention. Pls.’ Opp. at 31. In
Beaty, another court in this district examined the language of section 381(a) to determine
whether it satisfied the Chaney requirements. Id. at *1. In that case, a foreign wholesaler of a
drug began exporting the drug to state departments of corrections within the United States for
use in lethal injections. Id. at *2. The company had neither registered with the FDA nor listed
its drug product with the FDA. Id. FDA detained one shipment of the drug on the ground that it
was misbranded, yet proceeded to release the shipment into the United States anyway. Id. It
19 The Court also struggles to find any “final agency action” to review here. Only “final
agency actions” are reviewable under the APA. See Nat’l Ass’n of Home Builders v. U.S. Army
Corps of Eng’rs, 417 F.3d 1272, 1278 (D.C. Cir. 2005). For an action to be “final,” it must
“mark the consummation of the agency’s decisionmaking process,” and “be one by which rights
or obligations have been determined, or from which legal consequences will flow.” Bennett v.
Spear, 520 U.S. 154, 177–78 (1997). In the D.C. Circuit, the second requirement is met if an
action “imposes an obligation, denies a right or fixes some legal relationship.” Home Builders,
417 F.3d at 1278 (internal citation and quotation marks omitted). Plaintiffs have not identified
any action that imposes any obligation, denies any right, or fixes any legal relationship. They do
not allege that FDA engaged in some decisionmaking process which led to the decision to allow
imports of the API for 17P. And they have not pointed to any particular shipment or shipments
of the API that FDA permitted into the United States.
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detained another shipment shortly after on the basis that the drug was an “unapproved new
drug,” yet after receiving correspondence from a state department of corrections indicating that
the drug was necessary for use in lethal injections, it released the shipments into the United
States. Id. In total, FDA released seven shipments into the United States. Id. The amended
complaint in that case alleged that FDA had acted contrary to law, in an arbitrary and capricious
manner, and in abuse of its discretion when it allowed shipments of the misbranded and
unapproved new drug to be imported into the United States, and sought a permanent injunction
prohibiting the FDA from releasing future shipments into interstate commerce. Id. at *3. FDA
argued that the release of the drug was an act of “enforcement discretion.” Id.
In analyzing section 381(a) under the Chaney test, the court first focused on the word
“shall”: “if it appears from the examination of such samples,” or otherwise, that the article is
misbranded, “then such article shall be refused admission,” id. at *1, citing 21 U.S.C. § 381(a)
(emphasis added). The court found that Congress’s use of the word “shall” revealed sufficient
intent to circumscribe agency enforcement discretion. Id. at *5–6. Furthermore, it found that
“the statute provides the FDA with a standard to apply during its examination of the imported
drugs – specifically, to determine whether the drug ‘appears’ to be misbranded, adulterated, or
unapproved.” Id. at *8. Accordingly, the court found that “[h]aving taken the steps to detain
and determine that the foreign shipments contained a misbranded and unapproved new drug, the
FDA was required under the FDCA to reject the shipments in the interest of public safety.” Id.
at *7.
Here, “plaintiffs are not seeking review of any particular FDA decision as to an article
offered for import.” Pls.’ Opp. at 33 n.34. Indeed, they concede – apparently in direct conflict
with Beaty – that “FDA’s decision as to a particular article offered for import, like its decision as
35
to enforcement against a particular company in a particular factual setting is within FDA’s
enforcement discretion.” Id. Rather, they argue that in accordance with Beaty, section 381(a)
requires FDA to deny admission to a drug offered for import that appears to be in violation of
section 355. See Pls.’ Mot. for TRO/PI at 35–36. And they assert that FDA has neglected that
duty by failing to reject shipments of “unapproved 17P API not shown to be destined for lawful
use.” Pls.’ Opp. at 31–32.
But the problem is that the complaint simply assumes that every shipment of the
ingredient for 17P appears to violate section 355. Yet the complaint itself establishes that 17P
can be compounded lawfully under certain circumstances, Compl. ¶ 46, and plaintiffs concede
that the API can therefore be lawfully imported in certain circumstances, Tr. at 34:18–22
(Counsel for plaintiffs: “if it appears from the description of the shipment that what it is is active
pharmaceutical ingredient from an unapproved source and it’s not for personal importation, then
it appears to be in violation of Section 355”) (emphasis added); id. 53:6–20 (conceding that there
are a group of patients using compounded 17P legally and that these 17P compounds are lawful).
In cases where the substance is being imported for lawful customized compounding, it would be
exempt from section 355. Pls.’ Opp. at 32.
According to FDA, “it is usually not possible to evaluate at the border whether the
pharmacy that eventually receives the foreign-manufactured API will compound it [lawfully],”
which would render the API exempt from section 355 and permissible for import. 20 Defs.’ Mem.
at 28. And plaintiffs agree that API that will be used for lawful compounding is exactly the same
20 Plaintiffs attempt to get around this ambiguity by arguing that there are methods FDA
could use at the border to determine whether a particular sample of API is intended for use in
lawful or unlawful compounds. Pls.’ Opp. at 32. But this does not cure the problem that the
complaint fails to sufficiently allege that any shipment of API for 17P “appeared” to violate
section 355 at the time of import.
36
substance as API that will be used for unlawful compounding. Pls.’ Opp. at 32. So, while the
complaint alleges that shipments of the API for compounded 17P have entered and are
continuing to enter the United States, and that FDA is permitting their entry, the complaint is
devoid of the factual allegations needed to support the conclusory assertion in Count IV that the
shipments contain a substance that “appears” to violate section 355. Thus, it fails to state a claim
that FDA ever violated section 381(a).
C. This case is not controlled by Adams.
To the extent plaintiffs once again point the Court to the Supreme Court’s pre-Chaney
decision in Adams and argue that an agency’s dereliction of duty is reviewable, the Court finds
that Adams does not apply here.
First, as stated above, the Court finds that plaintiffs’ complaint fails to assert that FDA
has neglected any statutory duty, so Adams is inapplicable. Moreover, as with plaintiffs’
allegations in Counts I through III, the allegations in Count IV that FDA has permitted illegal
substances to enter the country concern only a small subset of violators in the course of a
generally effective program. Cf. Adams, 480 F.2d at 1162. The complaint does not allege that
FDA has failed to enforce a particular import restriction in the FDCA altogether. It merely
alleges that FDA has permitted the import of one particular unlawful compound. This does not
amount to the sort of abdication of a statutory duty that troubled the Supreme Court in Adams.
Accordingly, plaintiffs’ allegations under Count IV are insufficient to state a claim under
Federal Rule of Civil Procedure 12(b)(6).
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CONCLUSION
Because the claims in Counts I through III of plaintiffs’ complaint are unreviewable and
Count IV fails to state a claim under Federal Rule of Civil Procedure 12(b)(6), defendants’
motion to dismiss will be granted. A separate order will issue.
AMY BERMAN JACKSON
United States District Judge
DATE: September 6, 2012
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