This post is solely from the non-Reed Smith side of the Blog.
A court within the Fifth Circuit has held that the FDCA impliedly preempts unfair-competition and consumer-protection claims asserted by a drug manufacturer against a compounding pharmacy. Despite generally rooting for drug manufacturers, we are okay with the decision, Zyla Life Scis., LLC v. Wells Pharma of Houston, LLC, 2023 WL 6301651 (S.D. Tex. 2023), because it rejects the use of state law to impose requirements beyond those imposed by the FDA.
In general, a prescription drug must be approved by the FDA before it may be sold. 21 U.S.C. § 355(a). There is, however, an exception for drugs produced by a qualifying compounding pharmacy. Drug compounding is a “process by which a pharmacist combines or alters drug ingredients according to a doctor’s prescription to create a medication to meet the unique needs of an individual … patient.” Med. Ctr. Pharmacy v. Mukasey, 536 F.3d 383, 387 (5th Cir. 2008). Qualifying compounding pharmacies do not require FDA approval to sell compounded drugs.
The defendant in Zyla is a qualifying compounding pharmacy that sells without FDA approval a compounded product containing the active ingredient found in the plaintiff manufacturer’s FDA-approved product. The manufacturer sued the pharmacy, claiming that sale of the compounded product without FDA approval violated various states’ unfair-competition and consumer-protection statutes. The manufacturer claimed that sale of the compounded product violated state law because each of the relevant states has a law requiring that a drug sold in the state be FDA-approved.
Contending that the manufacturer’s claims were impliedly preempted, the compounding pharmacy moved to dismiss the manufacturer’s complaint. The court agreed and dismissed the complaint, rejecting the manufacturer’s assertion that preemption is an affirmative defense that cannot be decided on a motion to dismiss.
Quoting Spano v. Whole Foods, Inc., 65 F.4th 260 (5th Cir. 2023), a case involving food-labeling, the Zyla court said that a claim avoids preemption under the FDCA if it does “not (a) ‘add to’ federal requirements or (b) impinge on the FDA’s sole authority over food-labeling requirements.” 2023 WL 6301651, at *4. Applying this rubric, the court concluded that the drug manufacturer’s claims against the compounding pharmacy were preempted because a state law requiring that a compounding pharmacy drug obtain premarket approval from the FDA before selling a compounded drug “adds to the federal requirements under the FDCA—which does not require compounding facilities to acquire premarket approval.” Id. We agree.
We are, moreover, pleased that the Zyla court recognized that the Fifth Circuit’s Spano decision, bad though it may be, does not foreclose implied preemption when a plaintiff predicates state-law claims on purported FDCA requirements.
Spano, which reversed a district court decision that we had earlier touted as holding certain food-labeling claims impliedly preempted, is confused in its analysis and wrong in its result. To start, Spano conflates express- and implied-preemption principles, citing the concept of “parallel” claims to reject implied preemption in the particular case even though the concept is relevant only to express-preemption analysis. See Spano, 65 F.4th at 264. In a related error, Spano—following the Fifth Circuit’s misguided decision in Hughes v. Boston Scientific Corp., 631 F.3d 762 (5th Cir. 2011)—reads Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001), far too narrowly, holding that it preempts state-law claims only when “there is no independent state duty upon which the [plaintiff] can hang a particular claim.” 65 F.4th at 264.
That is wrong. As we have explained many times before, a claim’s reliance on an “independent state duty” (Spano, 65 F.4th at 265) is not by itself sufficient for the claim to escape implied preemption under Buckman. Rather,
the conduct on which the claim is premised must be the type of conduct that would traditionally give rise to liability under state law—and that would give rise to liability under state law even if the FDCA had never been enacted. If the defendant’s conduct is not of this type, then the plaintiff is effectively suing for a violation of the FDCA (no matter how the plaintiff labels the claim), and the plaintiff’s claim is thus impliedly preempted under Buckman.
Riley v. Cordis Corp., 625 F. Supp. 2d 769, 777 (D. Minn. 2009); accord, e.g., Blankenship v. Medtronic, Inc., 6 F. Supp. 3d 979, 986 (E.D. Mo. 2014); Caplinger v. Medtronic, Inc., 921 F. Supp. 2d 1206, 1214 (W.D. Okla. 2013), aff’d, 784 F.3d 1335 (10th Cir. 2015) (Gorsuch, J.).
So, Zyla represents a good result within the confines of bad Fifth Circuit precedent.