Ninth Circuit finds no private cause of action against pharmaceutical compound

It’s been just two years since the Central District of California dismissed the claims in Nexus Pharmaceuticals, Inc. v. Central Administration Pharmacy Services, Inc. as impermissible attempts to privately enforce the FDCA and therefore implicitly anticipated. We blogged about this decision at the time. At that time, we noted that although the case arose in the context of a commercial dispute, the preemptive principles it applied also apply to product liability and other liability claims. tort (including unfair competition actions) that are brought against our customers. For this reason, we have promised to continue to bring these types of decisions to the attention of our readers. Much to our delight, we now have a federal appeal decision confirming the dismissal.

The offending drug, ephedrine sulfate, is given to surgical patients if their blood pressure drops too low. The drug is usually sold in a concentration that must be diluted before it can be given to patients. The applicant has developed a ready-to-use version which has been approved by the FDA. Nexus Pharmaceuticals, Inc. v. Central Administration Pharmacy Services, Inc., — F.4e –, 2022 WL 4175106, *1 (9e Cir. September 13, 2022). The defendant, a network of compounding pharmacies, sells ephedrine sulfate in ready-to-use syringes. As a formulator, the defendant does not need to seek FDA approval for its product. But drug compounders are still subject to other FDA requirements, especially large-scale compounders. Large-scale compounders must register with the FDA, provide annual reports, and are subject to inspection. Identifier. at 2 o’clock. The concern is to ensure that formulators do not become generic drug manufacturers by “wholesale copying” FDA-approved drugs without any of the safeguards that govern generic drug manufacturing. Therefore, compounders are exempt from FDA approval for their drugs. unless compound drugs are “essentially a copy of one or more approved drugs”. Identifier.

The plaintiff’s theory of the case is that the laws of California, Florida, Connecticut, Pennsylvania and Arizona prohibit the sale of drugs not approved by the FDA. Further, defendant’s product is neither FDA approved nor subject to the exception to the FDA approval requirement because it is essentially a copy of plaintiff’s drug. Therefore, the defendant violates the laws of these states and the plaintiff is entitled to economic damages. Identifier. at 3. However, the FDA itself did not find that the defendant violated the FDCA. Thus, asking a court to find a violation is a form of private enforcement prohibited by the FDCA. In other words, if the FDA has not found that the defendant’s drugs are “essentially a copycat,” the plaintiff cannot ask a court to do so.

This was the first time the Ninth Circuit had interpreted this provision of the FDCA as to whether a compound drug is a “substantially a copy” of an FDA-approved drug. Thus, his analysis is like a walk down memory lane of implicit preemption. While the first stop is Medtronic versus Lohrthe court only dwelled on it for a moment, finding buckman be the most analogous crossing point. Allegations of fraud in buckman existed “solely under the FDCA” rather than ringing in the “traditional law of state tort”. Identifier. at 4 o’clock. Like the claims in the current case that seek to hold the defendant liable for the violation of a state law that itself is based on federal law, not the traditional tort law of the state. ‘State. Identifier. The court completed the medical device leg of the journey with Riegel, which, because it was based on an express preemption, was also not analogous to the present case. What the court found important Lohr, buckmanand Reigel to the issue under consideration was that the claims which were not anticipated, “were made by patients injured by defective medical devices, who litigated traditional common law tort claims”. Not present in this case. To go further in the prescription drug preemption cases, the court began by Wyeth vs. Levine. Again, finding it distinct because it was based on the traditional law of state tort when “a necessary element of [plaintiff’s] claim is the alleged violation of the FDCA. Identifier. at 6. The court’s next step was one of its own cases, which is very relevant. In Photomedex v. Irwin, a medical device manufacturer sued a competitor alleging that certain statements in its marketing materials violated the FDCA. The plaintiff manufacturer argued that the FDCA’s private enforcement bar did not apply because it was suing under the Lanham Act and state unfair competition laws. Relying on that decision here, the court said:

insofar as the claim was based on an arguably false assertion of FDA approval, it “would require litigation of the alleged underlying violation of the FDCA in a circumstance where the FDA did not itself concluded that there was a violation”, so the action was barred by the FDCA’s ban on private performance. This claim could only be authorized by the government. . . As PhotoMedexNexus’ claims would necessitate litigation over whether Central Admixture’s compound drugs are “essentially a copycat” of Emerphed where the FDA itself has not so concluded.

Identifier. (citing 601 F.3d 919 (9e Cir. 2022).

Sticking to the Ninth Circuit cases, the path to preemption takes a sharp turn to get to Stengel which the court distinguished as involving a traditional state tort law obligation and as not dealing with the FDCA’s private enforcement prohibition. With Stengel Putting aside, the Ninth Circuit Law is pretty clear:

allow [plaintiff] “Proceeding with a claim that defendants violated this law when the FDA has not determined that would actually allow [plaintiff] to assume enforcement power that the law does not allow and to require the trier of fact to make a decision that the FDA itself has not made. Proceedings to enforce or prevent violations of the FDCA, including the Composition Act, must be commenced by and on behalf of the United States, and not of any private party. The Nexus request is such a proceeding, so it is prohibited by exclusive enforcement law.

Identifier. at 7 O’clock.

Finally, the Ninth Circuit took this opportunity to state that Allergan versus Athena, 783 F.3d 1350 (Fed. Cir. 2013) was misjudged. In this case, the manufacturer of an FDA-approved product sued the manufacturer of a non-FDA-approved product for violating California’s unfair competition law. The Federal Circuit held that because California law “simply incorporated the requirements of the FDCA”, the laws were not in conflict and, therefore, the claims were not impliedly anticipated. However, the Federal Circuit did not address the ban on private performance. If it had been done, Photomedexwould have required a different result because a claim for economic harm due to an alleged violation of the FDCA is not a traditional common law tort that may have a way of escaping preemption. Identifier. at *7-8. On the issue of being “essentially a copycat,” the FDA issued guidance and said it plans to issue clarifying regulations. These are not agency decisions, but they show that the FDA is grappling with the issue. And the important question of whether Defendant’s drug is “substantially a copy” of Plaintiff’s drug is one that should be left to the discretion of the FDA in deciding how and when to apply the law.