These are my notes from class meeting 2 of Harvard Law School’s Food and Drug Law course, led by Prof. Peter Barton Hutt on January 4, 2017. Reading for today’s class meeting is pp. 163-289 and 1439-1485 of Food and Drug Law 4th Ed.
The Interstate Commerce Clause of the U.S. Constitution allows Congress to “regulate commerce… among the several States.” In early U.S. history this was interpreted to mean that Congress has no authority over intra-state matters. Over the past 75 years, however, the Supreme Court has upheld Congress’s authority to regulate products that are not only intra-state, but are produced and consumed within one household — originally wheat in Wickard v. Filburn (1942) and later marijuana Gonzales v. Raich (2005). Therefore, per today’s interpretation of the Constitution, Congress could ask FDA to regulate intra-state production and use of drugs.
Back in 1938, however, a more narrow interpretation prevailed, and so when Congress wrote the FD&C Act in that year it only granted FDA authority over interstate commerce. Through the various amendments to FD&C, Congress has loosened this restraint on FDA’s power, but not completely so. Since FDAMA in 1997, when FDA takes a regulatory action on a product, “the connection with interstate commerce required for jurisdiction in such an action shall be presumed to exist.” This shifts the burden of proof from the regulator to the regulated, but does not dispense with the underlying requirement, so someone subject to a specific FDA action could still challenge that action in court by demonstrating that the FDA had intervened where no interstate commerce existed.
Here are a few of the more interesting decisions regarding interstate limits on FDA authority:
- United States v. 7 Barrels… Spray Dried Whole Egg (1944) was a civil forfeiture case where it was determined that FDA cannot seize foods that the manufacturer is holding within the state and has not yet made a move to ship out of state.
- United States v. Sanders (1952) determined that FDA can intervene if somoene produces and sells drugs within their home state to out-of-state customers.
- United States v. Phelps Dodge Mercantile Co. (1946) ruled that FDA cannot take action against adulterated food if the adulteration occurred after interstate shipment was complete, but Congress didn’t like this and so in 1948 amended FD&C to also cover goods “while held forsale (whether or not the first sale) after shipment in interstate commerce.”
- United States v. Geborde (2002) concerned a DJ who gave away gamma hydroxy-butyrate (GHB) for free to groupies within California. One person died as a result. (GHB is now an illegal drug but was not so in 1995-1996 when the crime occurred). The 9th Circuit Court determined that FDA doesn’t have jurisdiction over things given away for free (no commerce).
- Baker v. United States (1991) concerned a man who made and sold “synthetic heroin” within California but using reagents purchased from out-of-state. The court ruled that this was enough of a link to interstate commerce to justify FDA authority.
In spite of the Sanders and Geborde decisions, a lot of questions about the exact boundary of FDA jurisdiction have not yet been answered by the courts. For example, if a drug were given away for free in the state where it was made (as in Geborde) but the recipients then transported it out of state for personal use (as in Sanders), would FDA have jurisdiction? It is likely that even the most remote connection to interstate commerce would allow FDA to claim jurisdiction — for example, if an ingredient used in the synthesis of the drug, or a syringe used to administer the drug, or even a pill bottle or paper for labels, had been purchased from out of state. Even if a drug maker could find some path to escape FDA jurisdiction, all 50 states have their own food and drug agencies, some of which are fairly active in enforcement and might well seek to take action against such a drug maker.
FD&C as currently amended gives FDA authority to stop the import or export of drugs either if those drugs are misbranded, unsanitary, out of compliance, etc., or if the drugs are illegal or restricted in the foreign country they are either going to or coming from (even if legal in the United States).
Cook v. FDA (2013) concerned importation of thiopental, a drug used in lethal injection executions. States had imported it from a U.K. manufacturer that was not registered with the FDA, and FDA acknowledged it had jurisdiction but declined to enforce, out of deference to law enforcement. A group of death row inmates sued and won in the D.C. District Court, which held that FD&C actively required FDA to regulate such a matter.
Beginning in the early 2000s, various individuals, companies, and state benefit plans attempted to import prescription drugs from Canada, where drugs are cheaper than in the U.S. FDA issued a warning letter to RxDepot explaining that this was illegal because FDA does not just approve a drug, it approves a drug as manufactured by a specific manufacturer, and the Canadian producers of drugs had not been FDA approved, even if the drugs they were producing were known molecules for which other, U.S.-based, manufacturers had previously received FDA approval. RxDepot refused to stop, FDA pursued the case, and the courts sided with FDA. The State of Vermont also tried to buy Canadian drugs for its medical benefit plan, and again, courts sided with FDA. In the Medicare Prescription Drug Improvement and Modernization Act of 2003, Congress allowed that FDA could issue regulations or make case-by-case exceptions to its rules in order to allow Canadian imports, but only if the Secretary of HHS could “certify” to Congress that this will both offer cost savings and “pose no additional risk”. No Secretary since has ever stepped up to make such a claim, and therefore this part of the 2003 Act remains unimplemented. There is, however, a longstanding exemption for individuals to import personal-use quantities of drugs in luggage or by mail.
Only the United States (and in certain specific cases, individual states) may take to the courts to enforce the FD&C, private citizens cannot do so. The procedure is that the FDA’s Chief Counsel’s office comes up with what actions it wants to take, and refers them to the U.S. Department of Justice (USDOJ), Civil Division, Office of Consumer Product Litigation.
FDA has two types of enforcement powers: formal statutory powers (derived from 1906 or 1938 acts or subsequent amendments), and informal powers.
|enforcement mechanism||how it works||source of authority|
|seizure||FDA asks USDOJ to issue a writ to the District Court authorizing seizure. Distict Court then sends a U.S. Marshall to wrap a roll of yellow tape around the product in question. After the yellow tape is applied, no one can touch the goods until a civil trial has occurred. In the interim, this is considered a civil detention, and if the courts do allow FDA to destroy the product, then it can be described as a civil forfeiture. This type of legal procedure derives originally from admiralty or maritime law.||1906 Food and Drugs Act|
|injunction||FDA obtains court order from USDOJ for a company to stop a particular activity. This usually amounts to completely shutting down the company until they come into compliance. This is among the most seldom used of FDA actions, because 1) it costs FDA a lot of staff time to gather sufficient evidence to mount an injunction, and 2) the costs to the company are enormous, so FDA aims to be conservative about deploying such an extreme measure. Instead, FDA often pursues a consent decree, which can, for example, allow a company to continue making one unaffected, life-saving drug that it makes, while shutting down another part of its operation to bring it into compliance.||1938 Food Drug & Cosmetics Act|
|criminal prosecution||FDA asks USDOJ to prosecute either a company and/or individuals, such as a company’s president, for a company’s violations of FD&C Act. The Act specifies that the individual in question does not need to have initiated the illegal action or to have been aware of it (no requirement of actus reus nor mens rea), as long as they have a “responsible relation” to it. See discussion of United States v. Park (1975) below.||1906 Food and Drugs Act|
|inspection||FDA sends inspectors to facility. Includes both random inspections and “for cause” inspections. Because companies subject to FDA are considered to be regularly and routinely monitored (“closely regulated”), the courts have ruled that under the Colonnade-Biswell exception to the Fourth Amendment, FDA does not need a warrant to seize goods during an inspection.||1938 Food Drug & Cosmetics Act|
|civil suits||FDA asks USDOJ to bring civil suit.||post-1938 amendments|
|administrative detention||FDA asks an individual state’s food and drug agency to obtain a “red flag” order to prevent a product from being moved before FDA can get around to seizing it or taking some other action.||post-1938 amendments|
|debarment||FDA bans someone (always an individual, never a corporation) from submitting applications to FDA in the future. This means that the individual cannot even work for or provide services to a company that submits an application to FDA.||post-1938 amendments|
|mandatory recall||FDA orders a company to recall a product.||post-1938 amendments|
|voluntary recall||FDA sends a letter suggesting that a company recall a product. This is more common than mandatory recalls.||informal|
|voluntary shipment hold||FDA sends a letter asking a company to halt shipments||informal|
|warning letter||FDA sends a letter suggesting a company’s activities might be illegal. The company can choose how to respond.||informal|
|publicity||FDA sends officials to go appear on the nightly news and say anything they want.||informal|
FDA uses all of these mechanisms to varying degrees. Over the past several decades, FDA has used seizure, inspection, and criminal proceedings less and less often. This is partly because these are very costly to FDA in terms of staff time. FDA did a study of ten years of their own seizure actions, and found that they were pretty inefficient. In most cases, the company would rush to sell off all of their non-seized product and then immediately start re-labeling (or making whatever other changes) to bring the product in question into compliance. FDA asked, if this was the end result, couldn’t that just be accomplished through a warning letter? So FDA turned more to issuing warning letters, and companies would reply within 15 days, often saying something compromising like “we believe we did comply with the law, but since you raise a question, we are going to make the changes you requested, but it will take 6 months to fully switch over, and in the meantime, we are still going to sell the product we have on hand.” FDA can then either let that stand, or (rarely) respond by saying “no, we meant it, you need to fully comply now, or we’ll bring legal action.” The public issuance of warning letters is highly effective for several reasons: 1) negative publicity, 2) companies are eager to stay in FDA’s favor for future interactions with the agency, and 3) and because warning letters virtually guarantee that someone will bring a class action lawsuit against the company. In fact, there are law firms whose entire business is that they launch a class action lawsuit against the company in response to every warning letter.
For these reasons, FDA uses warning letters more and more, and other types of enforcement less and less. This is highly efficient, but does raise some worrisome questions. A company could be completely in the right and could theoretically fight a legal action and win, but the negative publicity caused by warning letters is unavoidable.
Among food and drug companies, it is well-known that you never make money by fighting the FDA; the consequences of going head-to-head with FDA are so extreme that you do everything you possibly can to please the agency. There are examples of cases where a company could very likely win against FDA in court, but it wouldn’t be worth the negative publicity, and so the company chooses to comply. Food and drugs are considered an area where individuals and companies don’t rely on crisp definitions of legal rights in the traditional sense, but rather on staying in the favor of regulators.
FDA does still use voluntary recalls a lot, with multiple recalls issued every week these days, and most are so minor that the news outlets have stopped covering them, with the result that potentially affected consumers may never hear about them. Part of FDA’s motivation for continuing to issue these recalls even though they may not be very effective is that it covers them against future Congressional inquiries alleging that FDA failed to act.
An interesting example of a criminal case was United States v. Park (1975). FDA had issued a warning about unsanitary conditions at several wholesale distributors, and some of them came into compliance, but one company, Acme International, still got caught with rodent infestation and bird droppings in breakfast cereal in their warehouse on a subsequent inspection. FDA therefore brought criminal proceedings against the company (which pled out) and the CEO, one Mr. Park, who fought it in court. It finally went to the Supreme Court, where most justices were initially quite strongly inclined against the FDA because they didn’t see evidence of actus reus or mens rea. But the Solicitor General made an argument focused on the disgusting conditions in the warehouse, presenting the case not as a question of law, but of what kind of food you want to be sold in the U.S., and the Supreme Court ultimately was swayed and ruled in FDA’s favor. Despite their victory, however, FDA has very seldom brought these types of criminal cases against individuals in the 42 years since then. This is probably for the reasons described above, and a general conservatism about taking extreme measures at FDA. In general, FDA only pursues criminal proceedings in cases where there are flagrant violations and most members of the public would agree that the individuals in question deserve to be prosecuted for what they did. For instance, in the Salmonella outbreak caused by Peanut Corporation of America, 9 people died and there was clear evidence that company officials knew about the contamination and shipped the product anyway.
FDA generally prefers to regulate by issuing rules rather than by prosecuting individual offenses on a case-by-case basis to create precedents. Prof. Hutt (when he was Chief Counsel) argued that rules provide regulatory certainty, are quick, and are decisive. By contrast, case law takes years to develop, during which time the regulatory environment is uncertain, and at the end of all that, sometimes the court’s decision doesn’t actually address all of the different variables in play.
In general, regulatory agencies are allowed to go after just one or a few of many bad actors all committing the same violation, unless the choice of individual actors to prosecute is discriminatory (based on race, religion, or something like that) in which case the defendant could employ the “Selective Prosecution” defense. However, in FDA’s case, however, in United States v. Undetermined Quantities of an Article of Drug Labeled Exachol (1989), the courts ruled that FDA could not go after just one bad actor. The defendant, Health Club, had apparently made unjustified health claims about a substance it was selling called Exachol, and the courts ruled that the Exachol situation was subtantially similar to that of fish oil pills or Kellogg’s All-Bran, and that FDA had to go after either all or none.
FDA has no jurisdiction whatsoever to regulate drug pricing, but nowadays it is criticized in the media almost every day for failing to do something about rising drug prices. FDA’s approval ratings in surveys of the public have plummeted from about 80% some years ago to about 50% today (citation needed), partly because of this issue.
Other than First Amendment cases, where FDA has lost 13 consecutive cases, FDA has a remarkably successful track record in the courts, particularly the Supreme Court, which has almost never ruled against FDA. This is in large part because FDA has been very careful about only taking to court those issues where it is pretty sure it can win.