Section 503A of the Food and Drug Administration Modernization Act of 1997 (FDAMA or Act), [citation], exempts

Question:

Section 503A of the Food and Drug Administration Modernization Act of 1997 (FDAMA or Act), [citation], exempts ‘‘compounded drugs’’ from the Food and Drug Administration’s standard drug approval requirements as long as the providers of those drugs abide by several restrictions, including that they refrain from advertising or promoting particular compounded drugs. Respondents, a group of licensed pharmacies that specialize in compounding drugs, sought to enjoin enforcement of the subsections of the Act dealing with advertising and solicitation, arguing that those provisions violate the First Amendment’s free speech guarantee. The District Court agreed with respondents and granted their motion for summary judgment, holding that the provisions do not meet the test for acceptable government regulation of commercial speech set forth in Central Hudson Gas & Elec. Corp. v. Public Serv. Comm’n of N. Y., [citation]. * * * The Court of Appeals for the Ninth Circuit affirmed in [relevant] part * * * agreeing that the provisions regarding advertisement and promotion are unconstitutional. * * * We conclude, as did the courts below, that §503A’s provisions regarding advertisement and promotion amount to unconstitutional restrictions on commercial speech, and we therefore affirm.

I

Drug compounding is a process by which a pharmacist or doctor combines, mixes, or alters ingredients to create a medication tailored to the needs of an individual patient. Compounding is typically used to prepare medications that are not commercially available, such as medication for a patient who is allergic to an ingredient in a mass-produced product. It is a traditional component of the practice of pharmacy, [citation], and is taught as part of the standard curriculum at most pharmacy schools, [citation]. Many States specifically regulate compounding practices as part of their regulation of pharmacies. * * *

   The Federal Food, Drug, and Cosmetic Act of 1938 (FDCA), [citation], regulates drug manufacturing, marketing, and distribution. Section 505(a) of the FDCA, [citation], provides that ‘‘no person shall introduce or deliver for introduction into interstate commerce any new drug, unless an approval of an application filed [with the Food and Drug Administration] * * * is effective with respect to such drug.’’ * * *

   * * * The FDAMA, which amends the FDCA, exempts compounded drugs from the FDCA’s ‘‘new drug’’ requirements and other requirements provided the drugs satisfy a number of restrictions. * * * Finally, and most relevant for this litigation, the prescription must be ‘‘unsolicited,’’ §353a (a), and the pharmacy, licensed pharmacist, or licensed physician compounding the drug may ‘‘not advertise or promote the compounding of any particular drug, class of drug, or type of drug.’’ §353a(c). The pharmacy, licensed pharmacist, or licensed physician may, however, ‘‘advertise and promote the compounding service.’’ Ibid.

   Respondents are a group of licensed pharmacies that specialize in drug compounding. They have prepared promotional materials that they distribute by mail and at medical conferences to inform patients and physicians of the use and effectiveness of specific compounded drugs. Fearing that they would be prosecuted under the FDAMA if they continued to distribute those materials, respondents filed a complaint in the United States District Court for the District of Nevada, arguing that the Act’s requirement that they refrain from advertising and promoting their products if they wish to continue compounding violates the Free Speech Clause of the First Amendment. Specifically, they challenged the requirement that prescriptions for compounded drugs be ‘‘unsolicited,’’ §353a(a), and the requirement that pharmacists ‘‘not advertise or promote the compounding of any particular drug, class of drug, or type of drug,’’ §353a(c). * * *

    * * *

      II

The parties agree that the advertising and soliciting prohibited by the FDAMA constitute commercial speech.

   In Virginia Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc., [citation], the first case in which we explicitly held that commercial speech receives First Amendment protection, we explained the reasons for this protection: ‘‘It is a matter of public interest that [economic] decisions, in the aggregate, be intelligent and well-informed. To this end, the free flow of commercial information is indispensable.’’ * * *

   Although commercial speech is protected by the First Amendment, not all regulation of such speech is unconstitutional. [Citation.] In Central Hudson, [citation], we articulated a test for determining whether a particular commercial speech regulation is constitutionally permissible. Under that test we ask as a threshold matter whether the commercial speech concerns unlawful activity or is misleading. If so, then the speech is not protected by the First Amendment. If the speech concerns lawful activity and is not misleading, however, we next ask ‘‘whether the asserted governmental interest is substantial.’’ [Citation.] If it is, then we ‘‘determine whether the regulation directly advances the governmental interest asserted,’’ and, finally, ‘‘whether it is not more extensive than is necessary to serve that interest.’’ [Citation.] Each of these latter three inquiries must be answered in the affirmative for the regulation to be found constitutional.

* * *

  III
* * *

   The Government asserts that three substantial interests underlie the FDAMA. The first is an interest in ‘‘preserving the effectiveness and integrity of the FDCA’s new drug approval process and the protection of the public health that it provides.’’ [Citation.] The second is an interest in ‘‘preserving the availability of compounded drugs for those individual patients who, for particularized medical reasons, cannot use commercially available products that have been approved by the FDA.’’ [Citation.] Finally, the Government argues that ‘‘achieving the proper balance between those two independently compelling but competing interests is itself a substantial governmental interest.’’ [Citation.]

* * *

   Preserving the effectiveness and integrity of the FDCA’s new drug approval process is clearly an important governmental interest, and the Government has every reason to want as many drugs as possible to be subject to that approval process. The Government also has an important interest, however, in permitting the continuation of the practice of compounding so that patients with particular needs may obtain medications suited to those needs. And it would not make sense to require compounded drugs created to meet the unique needs of individual patients to undergo the testing required for the new drug approval process. Pharmacists do not make enough money from small-scale compounding to make safety and efficacy testing of their compounded drugs economically feasible, so requiring such testing would force pharmacists to stop providing compounded drugs. Given this, the Government needs to be able to draw a line between small-scale compounding and large-scale drug manufacturing. That line must distinguish compounded drugs produced on such a small scale that they could not undergo safety and efficacy testing from drugs produced and sold on a large enough scale that they could undergo such testing and therefore must do so.

   The Government argues that the FDAMA’s speech-related provisions provide just such a line, i.e., that, in the terms of Central Hudson, they ‘‘directly advance the governmental interests asserted.’’ [Citation.] Those provisions use advertising as the trigger for requiring FDA approval— essentially, as long as pharmacists do not advertise particular compounded drugs, they may sell compounded drugs without first undergoing safety and efficacy testing and obtaining FDA approval. If they advertise their compounded drugs, however, FDA approval is required. * * *

   * * * Assuming it is true that drugs cannot be marketed on a large scale without advertising, the FDAMA’s prohibition on advertising compounded drugs might indeed ‘‘directly advance’’ the Government’s interests. Central Hudson, [citation]. Even assuming that it does, however, the Government has failed to demonstrate that the speech restrictions are ‘‘not more extensive than is necessary to serve [those] interests.’’ [Citation.] In previous cases addressing this final prong of the Central Hudson test, we have made clear that if the Government could achieve its interests in a manner that does not restrict speech, or that restricts less speech, the Government must do so. * * *

   Several non-speech-related means of drawing a line between compounding and large-scale manufacturing might be possible here. * * *

* * *

   Even if the Government had argued that the FDAMA’s speech-related restrictions were motivated by a fear that advertising compounded drugs would put people who do not need such drugs at risk by causing them to convince their doctors to prescribe the drugs anyway, that fear would fail to justify the restrictions. Aside from the fact that this concern rests on the questionable assumption that doctors would prescribe unnecessary medications * * * this concern amounts to a fear that people would make bad decisions if given truthful information about compounded drugs. * * * We have previously rejected the notion that the Government has an interest in preventing the dissemination of truthful commercial information in order to prevent members of the public from making bad decisions with the information. * * *

 * * *

   If the Government’s failure to justify its decision to regulate speech were not enough to convince us that the FDAMA’s advertising provisions were unconstitutional, the amount of beneficial speech prohibited by the FDAMA would be. Forbidding the advertisement of compounded drugs would affect pharmacists other than those interested in producing drugs on a large scale. It would prevent pharmacists with no interest in mass-producing medications, but who serve clienteles with special medical needs, from telling the doctors treating those clients about the alternative drugs available through compounding. * * *

   Accordingly, we affirm the Court of Appeals’ judgment that the speech-related provisions of FDAMA §503A are unconstitutional.
   So ordered.

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