The End of the Road: Franck’s Compounding Case is Moot

October 16, 2012

By Kurt R. Karst & Jeffrey N. Gibbs –  

We’ve been following litigation involving the Florida veterinary compounding pharmacy Franck’s Lab, Inc. (“Franck’s”) for a couple of years.  We won’t get into all of the case details here – for that, see our previous posts here, here, here, and here – but here’s a summary . . . .

In September 2011, the U.S. District Court for the Middle District of Florida ruled that FDA did not have authority to enjoin the “long-standing, widespread, state-regulated practice of pharmacists filling a veterinarian’s prescription for a non-food producing animal by compounding from bulk substances.”  The court reached its decision after wading through the various guidance documents FDA had issued through the years laying out the Agency’s criteria for when it would decline to exercise “enforcement discretion,” and instead initiate enforcement action against a compounding pharmacy.  In November 2011, the government appealed that decision to the U.S. Court of Appeals for the Eleventh Circuit.  Briefing in the case was completed, several amici weighed in, and oral arguent was scheduled to take place on November 1, 2012.

That’s right . . .  we used the past tense in our last sentence. 

Our hopes for a decision out of the Eleventh Circuit were dashed when the government and Franck’s filed a Joint Motion to Vacate and Dismiss as Moot that we expect the Court will grant.  According to the motion, Franck’s was acquired by Wells Pharmacy Network, LLC (“Wells”) through an asset sale and “no longer engages in compounding and no longer owns or operates the facilities at issue.”  “Nor is there any reasonable probability that [Franck’s] will resume the challenged conduct,” and the company “has turned in the permits required by Florida law to operate as a compounding pharmacy, sold all its assets, and terminated all its employees.”  Moreover, Paul Franck, the owner of Franck’s and the individual defendant in the case, “is no longer engaged in veterinary compounding of any kind,” “has no intention of reentering that profession in the anticipated future,” and has “executed a seven-year non-competition agreement with Wells,” according to the motion.

Given these circumstances and controlling law (i.e., Laidlaw Envtl. Servs., 528 U.S. 167 (2000)), the parties agreed that the case has become moot and jointly moved the Eleventh Circuit not only to dismiss the appeal, but to vacate the Florida district court’s judgment, and remand the case with instructions to dismiss the complaint. 

That’s unfortunate.  As Hyman, Phelps & McNamara, P.C.’s Karla L. Palmer and Jeffrey N. Gibbs noted in a Legal Backgrounder published by the Washington Legal Foundation, if the Eleventh Circuit ultimately upheld the Florida federal district court ruling, the implications from such a decision would have extended broadly to other areas of FDA law, particularly as it relates to FDA’s increasing use of guidance documents to expand regulatory requirements (see our previous post here for more on that topic).  Why?  Because the decision “will be invoked by interested parties seeking to constrain FDA’s use of non-binding guidance documents to define prohibitions against which FDA may take enforcement action or impose new requirements on applicants, and to attack FDA assertions that it is entitled to Chevron deference,” wrote Ms. Palmer and Mr. Gibbs. 

It is also unfortunate because an Eleventh Circuit ruling could have brought greater clarity to a contentious issue: whether all compounding is illegal, as FDA has maintained.  Given recent developments and the renewed focus on FDA’s authorty to regulate compounding pharamcies (see our previous post here), such a decision would have been particularly timely.  C’est la vie!  Still, the logic of the district court decison will provide a roadmap for other parties disputing FDA’s use of guidance documents and FDA’s theory that pharmacists violate the law whenever they compound drugs. 

Adieu Franck’s.  We enjoyed the ride while it lasted.