Controlled Substances Act

This isn’t the first time, but the Blog has a problem with its reporting on cases decided in the ongoing “Opioid” litigation.  As lawyers, our first obligations are to our clients, and in this instance some of our clients in the opioid litigation don’t want us talking about their cases.  So when that happens, we don’t.

That doesn’t mean that we aren’t looking for ways to help, but it can’t be through reporting on what went down in individual cases.  We can do concepts, however. That’s why we have been particularly intrigued with one aspect of the recent opioid decision in Floyd v Feygin, 2018 WL 6528728 (N.Y. Sup. Dec. 6, 2018), that dismissed the plaintiff’s “negligence” claim.  The defendant (not a RS client) in Floyd successfully argued the following:

In support of its motion, [defendant] argues that plaintiff’s negligence cause of action against it is, in effect, an attempt to privately enforce the Controlled Substances Act. [Defendant] asserts that plaintiff lacks the authority to regulate its conduct in this regard or to enforce the Controlled Substances Act since Congress has committed enforcement of the Controlled Substances Act exclusively to the Attorney General and the Department of Justice.

Id. at *5. Thus the defendant argued that this “negligence” claim was preempted.  Id.

As we discussed earlier, the Floyd court agreed that the Controlled Substances Act (“CSA”) could not be used in this way, because there isn’t any private right of action:

It has been held that pursuant to its plain terms, the [CSA] is a statute enforceable only by the Attorney General and, by delegation, the Department of Justice.  Based on the regulatory structure of the [CSA] federal courts have uniformly held that the [CSA] does not create a private right of action.  The manufacture, distribution, and dispensing of opioids is comprehensively regulated by the [CSA], and the DEA is the primary federal agency responsible for the enforcement of the Controlled Substances Act.

Id. (citing: Schneller v Crozer Chester Medical Center, 387 F. Appx. 289, 293 (3d Cir. 2010); Smith v Hickenlooper, 164 F. Supp.3d 1286, 1290 (D. Colo. 2016), aff’d, 859 F3d 865 (10th Cir. 2017); McCallister v Purdue Pharma L.P., 164 F. Supp.2d 783, 793 (S.D.W. Va. 2001); DEA, Practitioner’s Manual, at 4 (2006)) (citations and quotation marks omitted).  Further, the New York equivalent of the CSA likewise carried with it no private right of enforcement. Id. at *6 (discussing 10 N.Y.C.R.R. Part 80).

Because the CSA provided no means of private enforcement, its requirements could not create novel common-law duties that did not otherwise exist.

[P]ursuant to both the [CSA] and New York State regulations, [defendant’s] sole duty with respect to its manufacture and distribution of opioids was to collect and record data, and make reports to federal and state agencies.  Although these regulations define circumstances that trigger reports to federal or state agencies, there is nothing within these regulations that requires a manufacturer to stop or restrict its distribution of opioids. . . .  Thus, [defendant] had no duty to control the prescribing, dispensing, and use of its [drug].

Id. at *6 (citations omitted).

The rationale in Floyd – that a federal statute’s lack of a private cause of action preempts a common-law plaintiff from using its requirements to create a “duty” – is what Buckman Co. v. Plaintiffs Legal Committee, 531 U.S. 341 (2001), is all about.  Curiously, Buckman is nowhere cited in Floyd, although Buckman’s implied preemption principles are applicable to all similarly situated federal statutes.

Which raises the question – how much can we “Buckmanize” the CSA, replacing the FDA with the equivalent federal authority of the “Attorney General?  Buckman, of course depended on statutory designation of the FDA as the sole enforcer of the FDCA. So we looked through the CSA looking for similar designations. We found:

21 U.S.C. §811(a), which governs scheduling of the substances to be “controlled”:

The Attorney General shall apply the provisions of this subchapter to the controlled substances listed in the schedules . . . and to any other drug or other substance added to such schedules under this subchapter.

21 U.S.C. §821, which governs enforcement generally:

The Attorney General is authorized to promulgate rules and regulations and to charge reasonable fees relating to the registration and control of the manufacture, distribution, and dispensing of controlled substances and to listed chemicals.

21 U.S.C. §822(a), which governs registration of manufacturers and distributors generally:

(1) Every person who manufactures or distributes any controlled substance . . . shall obtain annually a registration issued by the Attorney General in accordance with the rules and regulations promulgated by him.

(2) Every person who dispenses, or who proposes to dispense, any controlled substance, shall obtain from the Attorney General a registration issued in accordance with the rules and regulations promulgated by him.

21 U.S.C. §823(a-b), which governs requirements imposed through registration

The Attorney General shall register an applicant to manufacture controlled substances in schedule I or II if he determines that such registration is consistent with the public interest. . . .

The Attorney General shall register an applicant to distribute a controlled substance in schedule I or II unless he determines that the issuance of such registration is inconsistent with the public interest.

Section 823 is particularly interesting because it also permits the federal government (through the attorney general) to register “practitioners” – that is, physicians – and contains a limited anti-preemption savings clause:

Notwithstanding section 903 of this title, nothing in this paragraph shall be construed to preempt any State law that . . . requires a qualifying practitioner to comply with additional requirements relating to . . . reporting requirements.

21 U.S.C. §823(l). Section 823 thus is further support for Buckman-type preemption arguments by manufacturers and distributors, since Congress only preserved state-law reporting requirements imposed on “practitioners,” but does not allow state law to impose reporting requirements on manufacturers or distributors of controlled substances.

21 U.S.C. §825(a), regarding labeling:

It shall be unlawful to distribute a controlled substance in a commercial container unless such container, when and as required by regulations of the Attorney General, bears a label . . . containing an identifying symbol for such substance in accordance with such regulations.

21 U.S.C. §825(c), regarding drug warnings:

The Secretary shall prescribe regulations under section 353(b) of this title which shall provide that the label . . . contain[s] a clear, concise warning that it is a crime to transfer the drug to any person other than the patient.

The “secretary” refers to the HHS and thus the FDA.  See 21 U.S.C. §802(24). Section 825(c) thus seamlessly integrates federal enforcement authority.  Go directly to Buckman; do not pass “Go.”

21 U.S.C. §826(a, b), governing amounts of controlled substances it is legal to make:

The Attorney General shall determine the total quantity and establish production quotas for each basic class of controlled substance. . . .

. . .[U]upon application therefor by a registered manufacturer, the Attorney General shall fix a manufacturing quota for the basic classes of controlled substances . . . that the manufacturer seeks to produce.

21 U.S.C. §827(b, d-e), dealing with reporting requirements:

Every inventory or other record required . . . shall be in accordance with, and contain such relevant information as may be required by, regulations of the Attorney General, . . . and [] shall be kept and be available . . . for inspection and copying by officers or employees of the United States authorized by the Attorney General.

Every manufacturer registered . . . shall, at such time or times and in such form as the Attorney General may require, make periodic reports to the Attorney General of every sale, delivery or other disposal by him of any controlled substance, and each distributor shall make such reports with respect to narcotic controlled substances. . . .

[E]ach manufacturer registered . . . shall, with respect to narcotic and nonnarcotic controlled substances manufactured by it, make such reports to the Attorney General, and maintain such records, as the Attorney General may require. . . .  The Attorney General shall administer the requirements of this subsection. . . .

That’s a lot of “attorney general” references, thus further demonstrating that Floyd reached the correct result.  It seems very clear from the statute that reports about controlled substances are not the kind of thing that states have traditionally required or administered.

21 U.S.C. §830(a-b), imposing record-keeping and additional reporting requirements:

(1) Each regulated person who engages in a regulated transaction . . . shall keep a record of the transaction for two years after the date of the transaction.  (2) . . . Such record shall be available for inspection and copying by the Attorney General.  (3) . . . The Attorney General shall specify by regulation the types of documents and other evidence . . . for purposes of this paragraph.

(1) Each regulated person shall report to the Attorney General, in such form and manner as the Attorney General shall prescribe by regulation–(A) any regulated transaction involving an extraordinary quantity of a listed chemical, an uncommon method of payment or delivery, or any other circumstance that the regulated person believes may indicate that the listed chemical will be used in violation of this subchapter. . . . A regulated person may not complete a transaction . . . unless the transaction is approved by the Attorney General. The Attorney General shall make available to regulated persons guidance documents describing transactions and circumstances for which reports are required. . . .

Again, all reports are to the federal government, about information specified by the federal government, and subject to the approval of the federal government.

21 U.S.C. §843, concerning fraudulent reporting:

It shall be unlawful for any person knowingly or intentionally . . . to furnish false or fraudulent material information in, or omit any material information from, any application, report, record, or other document required to be made. . . .

In addition to any penalty provided in this section, the Attorney General is authorized to commence a civil action. . . .

Who can sue over fraudulent reporting to the Attorney General? The federal government.

21 U.S.C. §871(b), regarding the role of the Attorney General generally:

The Attorney General may promulgate and enforce any rules, regulations, and procedures which he may deem necessary and appropriate for the efficient execution of his functions under this subchapter.

21 U.S.C. §880(b), concerning inspections of regulated facilities:

[T]he Attorney General is authorized, in accordance with this section, to enter controlled premises and to conduct administrative inspections thereof. . . .  [E]ntries and inspections shall be carried out through officers or employees (hereinafter referred to as “inspectors”) designated by the Attorney General.

21 U.S.C. §882(c), providing for state enforcement against internet pharmacies:

[T]he State may bring a civil action on behalf of such residents in a district court of the United States with appropriate jurisdiction. . . .  No private right of action is created under this subsection.

In this rare instance where the CSA authorizes independent state enforcement, the statute specifically prohibits a private right of action.

21 U.S.C. §902, preserving the FDCA:

Nothing in this chapter, except [additional reporting requirements to the Attorney General, and prescription restrictions] shall be construed as in any way affecting, modifying, repealing, or superseding the provisions of the Federal Food, Drug, and Cosmetic Act.

Nothing in the CSA impairs the basis for Buckman preemption.

21 U.S.C. §903, concerning “field” preemption:

No provision of this subchapter shall be construed as indicating an intent on the part of the Congress to occupy the field . . ., to the exclusion of any State law on the same subject matter which would otherwise be within the authority of the State, unless there is a positive conflict between that provision of this subchapter and that State law so that the two cannot consistently stand together.

States can enforce their own laws against illegal drugs.  Notably, this savings clause expressly limits its scope to “field” preemption, and does not address other types of implied preemption, such as Buckman or “purposes and objectives” preemption.  To avoid preemption, the “subject matter” of the state law must be “otherwise within the authority of the State,” which would seem to preclude ad hoc imposition of reporting requirements on interstate commerce.  No private right of action is provided.

Probably the provision of the CSA that is most analogous to Buckman’s 21 U.S.C. §337(a) is §871(b) concerning the Attorney General’s general authority, but as we’ve detailed above, a lot of other CSA provisions reject private enforcement or specify federal enforcement.  Thus, as did the court in Floyd, we think that the structure of the CSA fully supports a preemption rationale, similar to Buckman, that because there is no private right of CSA action, would be private enforcers of the CSA – and in particular its reporting requirements to the federal government – are preempted from doing so under state law.