In our first appellate oral argument we found ourselves in front of a very hot Ninth Circuit panel (that means lots of questions). We danced our hardest to affirm the district court’s denial of a criminal defendant’s motion to suppress. The problem was that the lower court had wandered onto shaky ground. We knew it. We had tried to avoid it. We knew our best chance for affirmance was persuading the Ninth Circuit to affirm on alternative grounds (the ones we had urged below). Thankfully, they did it. For some reason, winning on alternative grounds made us feel extra proud. At least the appellate section nerds in the U.S. Attorney’s office would continue to let us handle our own appeals.
In Azurity Pharmaceuticals, Inc. v. Edge Pharma, LLC, 2022 WL 3335823 (1st Cir. Aug. 12, 2022), the appellee managed to save most of the lower court’s decision in its favor by resorting to alternative grounds. That must have made the appellee’s lawyers feel pretty good. But note that we said “most.” There was a partial reversal, and that must have made the appellee lawyers feel pretty bad. And we feel pretty bad about that, because we like the lower court decision to the extent it chose to defer to the Food and Drug Administration (FDA). If that sort of deference was more prevalent, we could get rid of a lot of silly food and drug litigation from our courts, leaving those courts to handle the things that really matter — you know, like criminal cases and celebrity defamation lawsuits.
The Azurity case was a beef between a specialty pharmaceutical company that sold an FDA premarket approval drug and a drug compounding company that sold a competing drug that had not been given FDA premarket approval. Section 503B of the Food, Drug and Cosmetic Act permits drug compounders to market their compounded drugs without FDA approval as long as they meet certain conditions. On its website, the compounder stated that it complied with FDA regulations, that it was a registered and inspected FDA outsourcing facility, and that “commercially available options are not ideal for use in the hospital setting.” That last point was a shot at the premarket approval drug. The manufacturer of that premarket approval drug alleged that the statement was an inaccurate superiority claim, and that, in fact, much of what was on the compounder’s website was either flat-out false or misleading. These allegations resided in a complaint that included causes of action under both the Lanham Act and a Massachusetts consumer protection law.
The district court granted the compounder’s motion to dismiss, holding that the claims would require the court to interpret section 503B “in a way that would interfere with the FDA’s authority to administer and enforce the FDCA.” The court referred to “FDA preclusion,” which is not the same thing as FDA preemption (an argument that was not raised by the plaintiff). The district court also premised its dismissal on primary jurisdiction. In short, let the FDA sort these issues out, because they seem too gnarly for the court.
The First Circuit disagreed with the district court’s fundamental rationale that the issues in the case called for FDA expertise. To the appellate court, the FDA issues were fairly straightforward (but go ahead and read the First Circuit’s lengthy opinion and see if you agree — we’ve read epidemiology and epistemology and eschatological (but not scatological) articles that were less dense and dull), and handling the Lanham Act analysis was a walk in the park. For the most part, that Lanham Act analysis still worked in the defendant compounder’s favor. The plaintiff argued that the compounder was not in compliance with FDA rules because its compounded drug was essentially a copy of the premarket approval drug — which would yank the compounder out of section 503B eligibility — but the First Circuit held that the plaintiff had not plausibly shown that the compounder “made any literally false description or representation of fact.” The plaintiff relied on an FDA non-binding guidance to explain what it meant for a compound to be “essentially a copy” of another drug, but there was some looseness in the non-binding guidance, plus it was … non-binding. Similarly, the First Circuit concluded that the compounder’s statement that other drugs were “not ideal” was not a superiority claim. What it was, dear reader, was “nonactionable puffery.”
We will pause for a moment to allow you to rinse out of your mind bad memories of your law school first year contracts class. Remember how ridiculous advertising escaped the clutches of the law by riding the greasy wheels of “puffery”? For that matter, do you remember the room said to offer a view of the King’s coronation? What about that pregnant cow? And what exactly is a chicken?
But we digress.
Anyway, up to this point, the First Circuit upheld the dismissal of the complaint (both the Lanham Act and Massachusetts consumer act claims, since they traveled together and tested on the same theories) but on different grounds from those relied upon by the district court. But here is where the First Circuit parted company with the district court, revived the lawsuit, sent things back, and brought woe upon the compounder: the plaintiff alleged that the bulk substance used by the compounder was not on the section 503B bulk substance list (which appears to focus on clinical needs and/or shortages). The compounder had some decent arguments why that issue should be punted to the FDA, based on FDA practice and policy, but the First Circuit said that nothing sufficiently on point supporting that notion had been identified, that the court was in a solid enough position to look at the issue, and what the court saw was (and now, given that it is now March, we will shift the sports analogy from football to basketball) a jump ball. Maybe the plaintiff was right, maybe the plaintiff was wrong, but there was inadequate basis, at least at the point of a motion to dismiss, to throw the plaintiff out of court.
As we said, we rather liked the defendant’s and the district court’s reliance on deference to the FDA. The First Circuit’s opinion was certainly thoughtful and thorough. It might even be right. But even that very thoughtfulness and thoroughness might make one wish for more deference to the FDA.