On January 7, 2014, a three-judge panel of the United States Circuit Court for the District of Columbia unanimously vacated the dismissal of claims against the U.S. Food and Drug Administration (“FDA”) and others by K-V Pharmaceutical Company (“K-V”) and its subsidiary, Ther-Rx Corporation (“Ther-Rx”).[1] K-V and Ther-Rx had sued claiming federal regulators unlawfully allowed pharmacies to compound[2] a cheaper alternative to the synthetic progesterone drug Makena. The United States District Court for the District of Columbia dismissed the suit in 2012 but was directed to reconsider its ruling last week in light of a 2013 D.C. Circuit decision addressing the reviewability of agency enforcement discretion, like the FDA’s.
The claims and contours of the Makena action test the limits of the FDA’s use of discretion to enforce drug importation and compounding rules. Its outcome, coupled with recently enacted compounding legislation, will carry important implications for different players in the pharmaceutical industry. We discuss below.
1. The run-up to the case of K-V Pharm. Co. v. U.S. Food & Drug Admin.
K-V is a pharmaceutical manufacturer focusing on women’s healthcare.[3] In February 2011, the FDA approved K-V’s new drug application for Makena (hydroxyprogesterone caproate), an injectable hormone medication used to reduce the risk of preterm birth in at-risk women.[4] Before 2011, a compounded version of Makena’s active pharmaceutical ingredient (“API”), commonly known as “17P,” had been made available to patients whose physicians requested the drug from a pharmacist.[5] Once approved, Makena obtained seven years of exclusivity under the Orphan Drug Act.[6], [7]
Apparently in response to negative media coverage and resulting pressure from members of Congress over Makena’s high list price, the FDA announced in March 2011 that
[i]n order to support access to this important drug, at this time and under this unique situation, FDA does not intend to take enforcement action against pharmacies that compound hydroxyprogesterone caproate based on a valid prescription for an individually identified patient unless the compounded products are unsafe, of substandard quality, or are not being compounded in accordance with appropriate standards for compounding sterile products.[8]
In October 2011, K-V provided information to the FDA that it claimed raised concerns about the potency and purity of the APIs in samples of compounded 17P.[9] In a June 2012 press release, the FDA said that “the analysis of this limited sample of compounded hydroxyprogesterone caproate products and APIs did not identify any major safety problems.”[10] It nonetheless cautioned that “[c]ompounding large volumes of drugs that are copies of FDA-approved drugs circumvents important public health requirements,” and that “it is applying its normal enforcement policies for compounded drugs to compounded hydroxyprogesterone caproate.”[11]
A month later, K-V and Ther-Rx filed a four-count complaint in federal court seeking a panoply of declaratory and injunctive relief based on the FDA’s alleged unwillingness to pursue compounders of 17P.[12] The failure to do so, they claimed, violated the Administrative Procedure Act (“APA”) and several provisions of the Federal Food, Drug, and Cosmetic Act (“FDCA”).[13] In particular, they alleged the government’s “policy of non-enforcement” against the import of 17P’s APIs and its compounding were “effectively approving, inviting, encouraging, and permitting. . . direct nationwide competition between an entire class of unapproved compounded drug products. . . and an approved orphan drug product.”[14]
2. The district court dismisses the case citing the FDA’s “enforcement discretion”
On September 6, 2012, the United States District Court for the District of Columbia dismissed K-V and Ther-Rx’s complaint, relying primarily on the United States Supreme Court’s 1985 decision in Heckler v. Chaney.[15] In Chaney - which, coincidentally, involved a challenge to the FDA’s enforcement discretion - the Court held that an agency’s refusal to take an investigative or enforcement action is presumptively unreviewable under the APA.[16] “[A]n agency’s decision not to take enforcement action should be presumed immune from judicial review under § 701(a)(2) [of the APA]. For good reasons, such a decision has traditionally been committed to agency discretion, and we believe that the Congress enacting the APA did not intend to alter that tradition.”[17]
The APA’s presumption of unreviewability, however, is a rebuttal one. “[T]he presumption may be rebutted where the substantive statute has provided guidelines for the agency to follow in exercising its enforcement powers.”[18] Where “the agency has consciously and expressly adopted a general policy that is so extreme as to amount to an abdication of its statutory responsibilities,” that, too, “might indicate that such decisions were not committed to agency discretion.”[19] This reflected the judgment by Congress not to “set agencies free to disregard legislative direction in the statutory scheme that the agency administers.”[20]
The D.C. federal district court determined that “plaintiffs’ claims. . . fall squarely within the Chaney presumption of unreviewability,” and that “this case is fundamentally an effort to get the Court to direct and oversee the FDA’s enforcement activities, and that it cannot do.”[21] The FDA’s March statement, it held, was not tantamount to a statement of a general enforcement policy capable of judicial review because of, among other things, its consideration of the individual circumstances surrounding the compounding of 17P.[22] That made it “the sort of ad hoc, context-bound nonenforcement pronouncement that. . . would inherently implicate an agency’s unreviewable enforcement discretion.”[23]
3. A Potential Silver Lining?
Ten months after K-V and Ther-Rx’s loss in the D.C. district court, the D.C. Circuit took up the case of Cook v. Food & Drug Admin.,[24] which involved allegations by death row prisoners that the FDA had wrongly failed to refuse importation of unapproved and/or misbranded sodium thiopental, the first in a sequence of drugs used...
