Franck’s Lab Takes FDA to Task in the 11th Circuit; Picks Off Each of the Government’s Arguments

April 12, 2012

By Karla L. Palmer

Franck’s Lab Inc., a pharmacy that compounds veterinary drugs and whose bulk animal drug compounding activities were vindicated by a Florida federal district court last year, recently filed its Brief for the Appellees in the matter of United States v. Franck’s Lab, Inc., et al. (11th Cir. No.11-15350-BB).  Franck’s papers respond to the government’s earlier-filed opening brief arguing in favor of reversal of the district court’s decision.  As reported here, after engaging in a complex historical analysis of the statutory and regulatory framework concerning pharmacy compounding, the lower court denied the government’s request for an injunction against Franck’s animal dug compounding practices.  It held that FDA’s “maximalist position” of attempting to assert authority over traditional pharmacy compounding in the context of a pharmacist-veterinarian-patient relationship is contrary to the intent of the Federal Food, Drug and Cosmetic Act (“FDCA”). 

Franck’s Labs’ appellate brief describes how the government’s district court case rested solely on the FDA’s expansive authority to regulate pharmacy compounding of animal drugs as provided in the 1938 FDCA and nothing else.  Br. at 26.  Specifically, Franck’s Lab states that the government’s position below was a “per se” one: The 1938 FDCA prohibits all pharmacy compounding, which industry practice has continued only as a matter of FDA’s unreviewable enforcement discretion.  Thus, when Congress enacted the FDCA in 1938, it “quietly criminalized” all pharmacy compounding practices, yet had exercised enforcement discretion for 50 years.   

Franck’s chastises the government for purportedly abandoning on appeal its unsuccessful per se approach.  For example, the government argues on appeal that FDA’s authority to regulate animal drug compounding is found not only in the plain meaning and construction of the 1938 FDCA, but also in a host of various other authorities including: (1) statutory pronouncements including the Animal Medicinal Drug Use Clarification Act (“AMDUCA”) and the Food and Drug Administration Modernization Act of 1997 (“FDAMA”); (2) AMDUCA regulations; (3) compliance policy guides; and (4) case law.   

One by one, Franck’s picks off each of the government’s arguments, stating that the government did not assert them or unequivocally abandoned them at the district court.  Specifically, when addressing the government’s legal theory on appeal versus at the district court, Franck’s states that the “[G]overnment made clear that its legal theory in its papers and at various oral arguments that its case was based only on the “original law” of the 1938 statute (i.e., the government’s “per se” theory).  The government conceded as inapplicable to this case both AMDUCA (which “doesn’t touch compounded drugs.” Br. at 51); and FDAMA (which only intended to clarify application of the FDCA to compounded human drugs).  Br. at 23; 50-52.   

The Franck’s Labs appellees similarly state that the government raises other arguments that it abandoned below, including allegations that Franck’s engaged in illegal manufacturing in the guise of compounding, noting that the government’s argument below as not so constrained (i.e., the government asserted “from the get-go any kind of compounding,” using bulk ingredients “is unlawful”.)  Br. at 62.  Franck’s further claims that the government never attempted to promulgate an enforceable regulation that interprets the FDCA, FDAMA or AMCDUCA as prohibiting traditional pharmacy compounding of animal medications, which business FDA has recognized for over 50 years to be within the province of state laws.  Br. at 19.  Franck’s also argues that the government’s interpretation of the FDCA (a penal statute) invites arbitrary enforcement, rendering the government's understanding unconstitutional. 

Bolstering its argument, Franck’s Labs notes that, in five decades, FDA had never exercised its unreviewable enforcement discretion against a veterinary compounder other than Franck’s.  Thus, Franck’s Labs claims that the government’s enforcement action was at least arbitrary if not retaliatory, and thus not lawful enforcement activity.  Br. at 23.  In any event, Franck’s asserts, there can be no issue of whether the government may exercise enforcement discretion in this case, “unless the prohibition the government seeks to enforce exists.”  Br. at 60. 

The Washington Legal Foundation filed a brief of amicus curiae in support of affirmance of the lower court’s decision.  It adds that the FDA cannot be permitted to impose a new rule of general applicability on the compounding industry without engaging in notice-and-comment rulemaking pursuant to the Administrative Procedure Act, which point the district court strongly addressed in its ruling last year.  The Animal Health Institute and the Generic Animal Drug Alliance have each submitted a brief of amicus curiae in support of reversal of the lower court’s decision (here and here).  The government’s reply brief is due May 1.