Petitioners Brief — Thompson v. Western States Medical Center

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Supreme Gourt, U.S

FILED

» DEC 18 2001

No. 01-344

CLERK

IN THE SUPREME COURT OF THE UNITED STATES

TOMMY G. THOMPSON,

SECRETARY OF HEALTH AND HUMAN SERVICES,

ET AL., PETITIONERS

Vv.

WESTERN STATES MEDICAL CENTER, ET AL. ~-a7}

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ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT-OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE PETITIONERS ibs. fp

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THEODORE B. OLSON Fat “Cn %6. Ge

ALEX M. AZAR II Solicitor General “My, “Sp

General Counsel , Counsel of Record “4 “GY

U.S. Departmen. of Health Vy

and Human Services ROBERT D. McCALLUM, JR. ‘Gg a,

Assistant Attorney General ~¥y *

DANIEL E. TROY %

Chief Counsel BDWIN S. KNEEDLER

Deputy Solicitor General i-\>

PATRICIA J. KAEDING

Associate Chief Counsel MATTHEW D. ROBERTS

U.S. Food & Drug Assistant to the Solicitor General

Administration

Rockville, MD 20857 DOUGLAS N. LETTER

KATHERINE S. DAWSON

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QUESTION PRESENTED

The Food and Drug Administration Modernization Act of 1997

(FDAMA), 21 U.S.C. 353a (Supp. V 1999), provides a limited

exemption from the new drug approval (and certain other)

requirements of the Federal Food, Drug, and Cosmetic Act (FDCA), 21

U.S.C. 301 et seg., for drugs compounded by pharmacists. The

question presented is whether FDAMA's limitation of that exemption

to pharmacists who do not solicit prescriptions for or advertise

particular compounded drugs, 21 U.S.C. 353a(a) and (c) (Supp. V

1999), is consistent with the First Amendment.

(I)

PARTIES TO THE PROCEEDINGS

Petitioners are Tommy G. Thompson, Secretary of Health and

Human Services, and Bernard A. Schwetz, Acting Principal Deputy

Commissioner, United States Food and Drug Administration.

Respondents are Western States Medical Center, Women's

International Pharmacy, Health Pharmacy, mpothocure, College

Pharmacy, Lakeside Pharmacy, and Wedgewood Village Pharmacy.

(II)

IN THE SUPREME COURT OF THE UNITED STATES

No. 01-344

TOMMY G. THOMPSON,

SECRETARY OF HEALTH AND HUMAN SERVICES,

ET AL., PETITIONERS

Vv.

WESTERN STATES.MEDICAL CENTER, ET AL.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE PETITIONERS

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. la-15a) is

reported at 238 F.3d 1090. The opinion of the district court (Pet.

App. 16a-59a) is reported at 69 F. Supp. 2d 1288. The opinion of

the district court granting respondents' motion for a temporary

restraining order (Pet. App. 60a-70a) is unreported.

JURISDICTION

The judgment of the court of appeals was entered on February

6, 2001. A petition for rehearing was denied on April 27, 2001

(Pet. App. 78a-79a). On July 15, 2001, Justice O'Connor extended

the time within which to file a petition for a writ of certiorari

to and including August 25, 2901. The petition was filed on August

24, 2001, and was granted on October 29, 2001. The jurisdiction of

this Court rests on 28 U.S.C. 1254(1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

The First Amendment to the United States Constitution provides

that "Congress shall make no law * * * abridging the freedom of

speech." The pertinent provisions of the Food and Drug

Administration Modernization Act of 1997, 21 U.S.C. 353a (Supp. V

1999), and the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. 301

et_seg., are reprinted in the appendix to the petition for a writ

of certiorari. Pet. App. 80a-107a.

STATEMENT

1. a. The Federal Food, Drug, and Cosmetic Act (FDCA), 21

U.S.C. 301 et seg., establishes a comprehensive scheme for the

regulation of drug manufacturing, labeling, marketing, and

distribution in order to protect the public health and safety. The

FDCA defines a “new drug” as "[a)Jny drug * * * not generally

recognized * * * as safe and effective for use under the conditions

orescribed." 21-U.S.C. 321(p)(1). The FDCA generally requires

that, before a new drug may be introduced into interstate commerce,

the manufacturer or distributor must obtain the approval of the

Secretary of Health and Human Services, acting through the Food and

Drug Administration (FDA). See 21 U.S.C. 355(a), 331(d). To

obtain that approval, the manufacturer or distributor must

demonstrate to the FDA's satisfaction that the drug is both safe

and effective for each intended use. See 21 U.S.C. 355(b) (1994 &

Supp. V 1999); Weinberger v. Hynson, Westcott & Dunning, Inc., 412

U.S. 609, 613 (1973). The prohibition on introducing new drugs

that have not been approved by the FDA applies to all new drugs

except those for which Congress has created an exemption. See

United States v. Rutherford, 442 U.S. 544, 551 (1979).

The FDCA also imposes stardards for the manufacturing and

labeling of drugs to ensure that manufacturing processes and drug

ingredients are safe and effective and that physicians and

consumers have adequate information about drug contents, uses, and

effects. See 21 U.S.C. 351, 352 (1994 & Supp. V 1999). The FDCA

prohibits the sale and distribution of "adulterated" or

"misbranded" drugs. See 21 U.S.C. 331 (1994 & Supp. V 1999).

In addition, to facilitate regulatory oversight, the FDCA

imposes registration, inspection, and reporting requirements on

drug manufacturers. See 21 U.S.C. 360 (1994 & Supp. V 1999)

(requiring drug manufacturers to register with the Secretary); 21

U.S.C. 360(h) (subjecting drug manufacturers to at least one

government inspection every two years); 21 U.S.C. 360(j) (1994 &

Supp. V 1999) (requiring each registered drug manufacturer to "file

with the Secretary a list of all drugs" that it manufactures for

commercial distribution) .

The FDCA contains a limited exemption from its registration

and some of its inspection requirements for pharmacies that comply

with state regulations and dispense drugs “upon prescriptions of

practitioners licensed to administer such drugs" and that do not

“manufacture” or "compound" drugs other than in "the regular course

of their business of dispensing or selling drugs * * * at retail."

21 U.S.C. 360(g) (1), 374(a)(2)(A). There is no general exemption

for pharmacies, however, from the FDCA's new drug approval,

misbranding, and adulteration provisions. 21 U.S.C. 351, 352, 355

(1994 & Supp. V 1999); Pet. App. 72a (1992 FDA Compliance Policy

Guide). }

b. Compounding is a process by which a pharmacist “combines,

mixes, or alters ingredients to create a certain medication for a

patient." Professionals & Patients for Customized Care v. Shalala,

847 F. Supp. 1359, 1361 (S.D. Tex. 1994), aff'd, 56 F.3d 592 (Sth

Cir. 1995). The process encompasses a range of pharmacy

activities, including the modification of approved drugs “to

provide medications that are not commercially available, such as

diluted dosages for children, or to alter the form of a medication

for easier consumption." Jbid.

When a pharmacy compounds a drug, the pharmacy creates a "new

drug" because the compounded product is not “generally recognized,

among experts * * *, as safe and effective." See 21 U.S.C.

321(p) (1). A drug that differs in any material way (including in

composition, effect, or intended use) from an approved drug is a

new drug that must independently be established to be safe and

effective. See United States v. Generix Drug Corp., 460 U.S. 453,

460-461 (1983) (determination whether a product is a new drug takes

into account both active and inactive ingredients); 21 C.F.R.

310.3(h) (discussing factors that make a drug a “new drug"). Even

a drug that is identical to an approved product is a new drug that

must be independently established as safe and effective if it is

produced by a different manufacturer. See USV Pharm. Corp. v.

Weinberger, 412 U.S. 655, 664 (1973) ("[(Section 355] when applied

to [a new drug application) is personal to the manufacturer who

files it. Section [355], in other words, addresses itself to drugs

as individual products.") ; Pharmanex v. Shalala, 221 F.3d 1151,

1157 (10th Cir. 2000) (the new drug approval process is

manufacturer-specific). A newly created, customized compounded

drug will not have been subjected to the controlled clinical trials

that are necessary to establish its safety and effectiveness. See

Hynson, Westcott & Dunning, 412 U.S. at 630; Weinberger v. Bentex

Pharm., Inc., 412 U.S. 645, 652 (1973). Although the prescribing

physician presumably believes the compounded product is appropriate

for the patient receiving the prescription, neither the impressions

of practicing physicians nor the fact that-a number of physicians

throughout the country prescribe a compounded product is sufficient

to establish that it is generally recognized as safe and effective.

See Hynson, Westcott & Dunning, 412 U.S. at 630; United States v.

Sene X Eleemosynary Corp., 479 F. Supp. 970, 977 (S.D. Fla. 1979),

aff'd, (1982-1983 Transfer Binder] Food Drug Cosm. L. Rep. (CCH) q

38,207 (lith Cir. Jan. 12, 1983).

For those reasons, prior to the enactment of the Food and Drug

Administration Modernization Act of 1997 (FDAMA), Pub. L. No. 105-

115, 111 Stat. 2296, several courts of appeals had confirmed that

compounded drugs are “new drugs” subject to the FDCA's premarket

approval requirements. See Professionals & Patients for Customized

Care v. Shalala, 56 F.3d 592, 593 n.3 (Sth Cir. 1995); United

States v. Algon Chem. Inc., 879 F.2d 1154, 1158 (3d Cir. 1989);

United States v. 9/1 Kg. Containers, 854 F.2d 173, 179 (7th Cir.

1988); see also United States v. Baxter Healthcare Corp., 901 F.2d

1401, 1410-1411 (7th Cir. 1990) (reconstitution and freezing of

already approved drug creates new drug). Introduction of

compounded drugs into interstate commerce without the approval of

the FDA was thus illegal before enactment of DAMA, see

Professionals & Patients, 56 F.3d at 593 n.3; Pet. App. 72a, and it

remains illegal today unless the requirements in Section 353a are

satisfied.

The FDA nevertheless recognized that compounding can serve an

important public purpose for which the health benefits outweigh the

“~nisks if the compounding is performed in response to a valid

prescription in order to meet the medical needs of an individual

patient for whom commercially available drugs are inadequate. See

Pet. App. 7la. Therefore, "the FDA as a matter of policy [did] not

historically [bring] enforcement actions against pharmacies engaged

in traditional compounding." 56 F.3d at 593 n.3.

The FDA did ache ecutan. however, when compounding was outside

the scope of normal pharmacy practice and compounded drugs were

mass-produced and distributed in a manner tantamount to the

manufacture of unapproved new drugs. See Pet. App. 73a-74a. The

FDA issued warning letters, see id. at 73a, and sometimes brought

judicial enforcement actions against pharmacies that engaged in

drug manufacturing under the guise of compounding. E.g., Sene X,

479 F. Supp. at 978; Cedars North Towers Pharmacy. Inc. v. United

States, [1978-79 Transfer Binder] Food Drug Cosm. L. Rep. (CCH) 4

38,200, at 38,828 (S.D. Fla. Aug. 28, 1978).

Among the factors that the FDA considered in determining

whether a pharmacy was engaged in conduct tantamount to

manufacturing drugs rather than in traditional compounding were

whether the pharmacy was "[s)oliciting business (e.g., promoting,

advertising, or using sales persons) to compound specific drug

products, product classes, or therapeutic classes of drug

products." Pet. App. 76a. Other considerations included the

extent to which the pharmacy was compounding drug products that

were essentially copies of a commercially available drug product,

was compounding drugs in advance of receiving valid prescriptions,

or was distributing compounded products out of State. Id. at 76a-

77a.

2. Congress addressed the compounding issue when it enacted

FDAMA in 1997. The section of FDAMA at issue in this case, now

codified at 21 U.S.C. 353a (Supp. V 1999), was intended to "bring

the legal status of compounding in line with FDA’s longstanding

enforcement policy of regulating only drug manufacturing, not

ordinary pharmacy compounding." 143 Cong. Rec. $9839 (daily ed.

Sept. 24, 1997) (statement of Sen. Kennedy). Section 353a seeks to

“ensure continued availability of compounded drug products as a

component of individualized therapy, while limiting the scope of

compounding so as to prevent manufacturing under the guise of

compounding.” H.R. Conf. Rep. No. 399, 105th Cong., lst Sess. 94

(1997); accord S. Rep. No. 43, 105th Cong., lst Sess. 67 (1997).

Rather than leaving to the enforcement discretion of the FDA

the determination of when compounding should be permitted, Congress

chose to delineate in the FDCA itself the limited circumstances

under which pharmacy compounding would be exempt as a matter of law

from certain requirements that apply to drug manufacturers. Thus,

if specified conditions are met, Section 353a exempts compounded

drug products from the FDCA's provisions governing new drug

approval, good manufacturing practice, and adequate directions for

use. Under those conditions, which echo the FDA's pre-1997

approach to compounding, (1) the compounding must be performed by

a licensed pharmacist or physician based on a valid prescription

made by a licensed practitioner, see 21 U.S.C. 353a(a)(1) (Supp. V

1999); (2) the compounding must use only ingredients that comply

with various quality-control standards, see 21 U.S.C. 353a(b) (1) (A)

and (B) (Supp. V 1999); (3) the compounded product may not be a

drug product identified by regulation as presenting difficulties

for compounding that would adversely affect safety or efficacy, see

21 U.S.C. 353a(b) (3) (A) (Supp. V 1999); (4) the compounding may not

produce a drug that has been withdrawn from the market for safety

reasons, see 21 U.S.C. 353a(b) (1) (C) (Supp. V 1999); and (5) the

pharmacist may not compound regularly or in inordinate amounts (as

defined by the Secretary) any drug products that are essentially

copies of a commercially available drug product, see 21 U.S.C.

_353a(b) (1) (D), 353a(b)(2) (Supp. V 1999). FDAMA also limits the

total volume of compounded drug products that a pharmacy may

distribute out of State. See 21 U.S.C. 353a(b)(3)(B) (Supp. V

1999).

In addition, FDAMA makes the exemption of compounded drugs

from the specified FDCA requirements contingent upon the pharmacy's

compliance with limitations on advertising and promotion of

compounded drug products. Section 353a(a) exempts pharmacy

compounding from the new drug approval and other requirements only

if the compounded drug is produced "based on the unsolicited

receipt of a valid prescription order or a notation, approved by

the prescribing practitioner, on the prescription order that a

compounded product is necessary for the identified patient." 21

U.S.C. 353a(a) (Supp. V 1999). Section 353a(c) further provides

that a pharmacy is entitled to the exemption only if it "does not

advertise or promote the compounding of any particular drug, class

of drug, or type of drug." 21 U.S.C. 353a(c) (Supp. V 1999). The

advertising limitation does not, however, prevent the pharmacy from

advertising that it performs compounding services generally. 21

U.S.C. 353a(c) (Supp. V 1999).

3. In November 1998, shortly before the relevant provisions

of FDAMA took effect, respondent pharmacies, which regularly

compound drugs in significant quantities, commenced this suit in

the United States District Court for the District of Nevada against

the Secretary of Health and Human Services and the Commissioner of

the FDA. Respondents sought a declaratory judgment tliat Sections

353a(a) and (c) violate the First Amendment and an order enjoining

enforcement of those provisions against them.

The district court initially granted respondents a temporary

restraining order that enjoined the government from enforcing

Section 353a(c). Pet. App. 60a-70a. The parties subsequently

filed cross-motions for summary judgment. The district court,

concluding that Sections 353a(a) and (c) violate aha First

Amendment, granted respondents' motion, denied the government's

motion, and permanently enjoined the FDA from enforcing the

solicitation and advertising restrictions in Sections 353a(a) and

(c). Pet. App. 16a-57a. The court further held that the

restrictions were severable from the remainder of Section 353a.

Id. at 57a-59a.

4. The United States Court of Appeals for the Ninth Circuit ~

affirmed in part and reversed in part. Pet. App. la-15a.

a. Applying the four-part test enunciated in Central Hudson

Gas_& Electric Corp. v. Public Service Commission, 447 U.S. 557

(1980), for determining the constitutionality of regulation of

commercial speech, the court of appeals affirmed the district

court's holding that Sections 353a(a) and (c) violate the First

Amendment. Pet. App. 4a-12a.

Because the government did not contest that the advertising

and solicitation limitations in Section 353a apply to lawful, non-

misleading speech, the court of appeals began its analysis with the

second element in the Central Hudson analysis -- whether the

governmental interests that underlie Section 353a's solicitation

and advertising conditions are substantial. Pet. App. Sa. The

court recognized that the government has substantial interests in

"protecting the public health and safety" and "preserving the

integrity of the drug approval process." Pet. App. Sa. The court

also recognized that “(t]he government's effort to balance

competing goals can be a substantial interest." Id. at 6a. The

court concluded, however, that the government had not demonstrated

that “its interest in striking a balance between ensuring

compounding availability and limiting widespread compounding is

substantial." Id. at 7a. The court reached that conclusion

because, in its view, "(t]here is insufficient evidence in the

record to conclude that the government has a substantial interest

in preventing widespread compounding." Ibid.

Turning to the third step in the Central Hudson analysis, the

court held that the solicitation and advertising limitations in

Section 353a do not directly advance either of the asserted

interests that the court did find to be substantial -- protecting

the public health and safety and preserving the integrity of the

new drug approval process. Pet. App. 7a-10a. The court reasoned

that the government "has not offered evidence or arguments to

explain sufficiently why such restrictions will reduce the type of

consumption of compounded drugs that is harmful, and even admits

that it has a substantial interest in ensuring the availability of

compounded drugs." Id. at 7a-8a. The court also concluded that,

"“{w]ithout the advertising restrictions, other safeguards exist to

protect the public." Id. at 8a (citing 21 U.S.C. 353a(a)

(requiring valid prescription for compounded drug products),

353a(b) (1) (limiting substances that pharmacists may use in

compounded products), and 353a(b)(1)(D) (Supp. V 1999) (preventing

pharmacists from regularly compounding drugs that are essentially

copies of commercially available products) ).

In addition, relying on Rubin v. Coors Brewing Co., 514 U.S.

476 (1995), and Greater New Orleans Broadcasting Ass'n v. United

States, 527 U.S. 173 (1999), the court concluded that Section 353a

"is so riddled with exceptions that it is unlikely that the speech

restrictions would actually succeed in depressing the volume of

compounded drugs." Pet. App. 9a. The court observed that

"pharmacists can advertise their compounding services and promote

their skills at medical trade events so long as they do not promote

the compounding of any particular drug," and that a pharmacist may

call a physician and recommend a compounded drug if a patient comes

in with a prescription for a commercial drug and provides

information to the pharmacist that indicates that the patient might

require a compounded product. Ibid. In addition, the court stated

that FDAMA permits compounded drugs to constitute 5% of the total

interstate distributions and 100% of the total intrastate

distributions by a particular pharmacy. Ibid. (citing 21 U.S.C.

353a(b) (3) (Supp. V 1999)).

The court next addressed the fourth Central Hudson factor and

concluded that the advertising and solicitation restrictions “are

more extensive than necessary to achieve the asserted government

interest." Pet. App. 10a. The court suggested that, instead of

limiting advertising, the FDA could require disclaimers stating

that the compounded drugs being advertised had not been subjected

to the FDA's approval process. Ibid. The court also offered the

alternative of requiring all compounded drugs, including those

created on an individual basis as part of the traditional practice

of pharmacy, to undergo the safety and effectiveness testing

required for new drugs under the FDCA. Ibid. The court rejected

the government's argument that those alternatives would not address

the government's interest in drawing a workable distinction between

traditional, patient-based compounding and the manufacturing of new

drugs, because the court had already determined that’ the

government's interest in balancing those competing goals is not

substantial. Id. at lla.

b. Although the court of appeals affirmed the district

court's judgment insofar as it held that the solicitation and

advertising conditions in Section 353a violate the First Amendment,

the court, accepting the government's submission, reversed the

district court's decision to sever those provisions from the rest

of Section 353a. Pet. App. 12a-15a. The court reasoned that

"Congress intended to provide access to compounded drugs while

preventing pharmacies from making an end run around the FDA's drug

manufacturing requirements." Id. at 12a. Because "Congress meant

to exempt compounding pharmacists from FDCA requirements only in

return for a prohibition on the promotion of specific’ compounded

drugs," the court concluded that the solicitation and advertising

restrictions could not be severed from the rest of Section 353a.

Id. at 13a-14a. Accordingly, the court invalidated Section 353a in

its entirety. Id. at 15a.

SUMMARY OF ARGUMENT

A. Section 353a attempts to achieve two important but

competing goals. It seeks to preserve the integrity of the FDCA's

new drug approval process, which protects the public health by

ensuring that new drugs are not widely distributed in interstate

commerce unless they are first proven safe and effective. It also

seeks to preserve the availability of compounded drugs for those

individual patients who, for particularized medical reasons, cannot

use commercial products that have been approved by the FDA.

Based on its long experience with the regulation of drugs,

Congress concluded that proof of the safety and effectiveness of a

new drug must be established by rigorous, scientifically valid

studies rather than the impressions of individual doctors, who ;

cannot by themselves compile and master the necessary information.

Historical experience also convinced Congress that a premarket

approval requirement is necessary to ensure that those who promote

and distribute new drugs, and realize profits from their

distribution, undertake the investigations necessary to establish

safety and effectiveness.

At the same time, Congress recognized that it is also

important to ensure that safe and effective drug treatments are in

fact available, and that goal is also reflected in the FDCA.

Consistent with that goal, the FDA historically refrained from

enforcing the new drug approval requirements against pharmacies

that compounded drugs in response to valid prescriptions to meet

the medical needs of individual patients. That policy recognized

that compounding in response to individual medical needs is a

traditional element of the practice of pharmacy that may have

important health benefits, but pharmacies often will be unable to

bear the burden and expense necessary to demonstrate to the FDA the

safety and effectiveness of the compounded drugs before they are

sold because of the limited market for them.

Experience showed, however, that some compounding was being

conducted in a manner that threatened the safeguarding function of

the new drug approval process. Some pharmacies were compounding

outside the scope of normal pharmacy practice and mass-producing

and distributing compounded drugs in. a manner tantamount to the

manufacture of new drugs. Compounding on that scale exposed

significant numbers of people to the health and safety risks that

had prompted enactment of the new drug approval requirements in the

first place. Moreover, such compounding threatened the integrity

and efficacy of the new drug approval process by making it less

likely that manufacturers would have the requisite incentive to

demonstrate that their new drugs are safe and effective for their

intended uses. Pharmacies could mass-produce a particular drug

product, stimulate demand for the product through soliciting and

advertising, and thereby effectively manufacture and introduce the

drug into interstate commerce without complying with the approval

requirements. That practice would significantly reduce the

incentives of manufacturers to bear the cost of establishing that

the drugs they seek to market are safe and effective, because a

manufacturer could obtain a pharmacy license and establish a

pharmacy entity to mass-produce drugs through compounding and thus

circumvent the premarket approval requirements. Before enactment

of Section 353a. the FDA therefore took enforcement actions against

pharmacies that were manufacturing under the guise of compounding.

When Congress enacted Section 353a, it sought to achieve

essentially the same balance of interests that the FDA had pursued

through its enforcement policy - ensuring the continued

availability of compounding to address the particularized needs of

individual patients in cases in which it would be impractical to

require a demonstration to the FDA of safety and effectiveness,

while limiting the scope of compounding to prevent unregulated

manufacturing that would threaten the integrity of the premarket

approval process and undermine the FDCA regulatory scheme.

Congress's effort to balance those two independently compelling but

competing interests is itself a substantial governmental interest.

B. Section 353a directly and materially advances that

mmqgennces interest. Under certain conditions, Section 353a

exempts compounded products from the FDCA's provisions governing

new drug approval, good manufacturing practice, and adequate

directions for use. The conditions at issue here are the

limitations on the solicitation of prescriptions for and

advertising of particular compounded drugs. Although those

conditions restrict promotion of particular drugs, they do not

restrict promotion of the compounding service in any other way.

The specific solicitation and advertising conditions advance the

government's interest because promotion of particular drugs

reasonably distinguishes drug manufacturing that should be subject

to the premarket approval process from compounding in response to

individual medical needs.

Traditional compounding involves the provision of a service in

response to a physician's prescription and an individual patient's

particular medical needs. Advertising the specific products

created in the provision of that service (as opposed to advertising

the compounding service itself) is mot necessary to or

characteristic of traditional compounding by a pharmacy. Drug

manufacturing, in contrast, is the mass production of a homogenized

product, typically for a substantial market, and advertising of

particular drugs is typically a critical component of a successful

manufacturing business. Restricting the compounding exemption to

compounded products that are not subject to promotional activities

characteristic of manufacturing ensures that the exemption does not

create a loophole that would undermine the new drug approval

process. -

Limiting the exemption from the regulatory approval process to

compounded drugs that are not advertised also reflects Congress's

judgment in enacting the FDCA that the public health is best served

when those who develop, distribute, and promote new drugs prove

that those drugs are safe and effective. By preventing

circumvention of the new drug approval requirements, the promotion

limitations preserve the incentives for drug manufacturers to

undertake the studies necessary to demonstrate that new drugs are

safe and effective. Conditioning the exemption from the drug

approval requirements on whether a compounder promotes particular

drugs is also consistent with the role that advertising and other

promotional material have long played in determining the scope of

regulation under the FDCA. For example, promotional activity has

been an important consideration by the FDA in determining both

whether a particular product is a drug subject to regulation under

the FDCA and whether a new drug or a supplemental new drug

application is required for a particular drug product.

The court of appeals therefore erred in concluding that the

advertising and solicitation conditions on the availability of the

exemption under Section 353a do not advance the government's

interests. The other conditions on the availability of the

exemption do not, as the court believed, provide adequate

safeguards to protect the public. Nor do other provisions in

Section 353a undermine the effectiveness of the advertising and

solicitation limitations. Indeed, those provisions serve different

purposes and ensure that the limitations are appropriately tailored

to the government's interests.

c. The advertising and solicitation conditions on the

availability of the exemption under Section 353a are carefully

crafted so as to be no more extensive than necessary to advance the

government's goals. They do not impose a prohibition on speech: a

pharmacy that wishes to mass-produce a particular drug product and

promote that product by advertising or by soliciting prescriptions

can do so by complying with the premarket approval requirements

that apply to other drug manufacturers.

The conditions on the availability of the exemption are also

tailored to accommodate commercial speech attendant to compounding

within the traditional practice of pharmacy. Section 353a(c)

permits a pharmacy to advertise and promote its general compounding

services. That kind of advertising promotes the availability of

compounding in response to individual medical needs and does not

threaten the integrity of the new drug approval process. Section

353a(a) permits compounding in limited quantities in anticipation

of a valid prescription when that compounding is based on an

established relationship among the pharmacist, the practitioner and

the patient. It also permits a pharmacist to call a physician ont

recommend a compounded drug if a patient seeks to fill a

prescription for a commercial drug and provides information that

leads the pharmacist to conclude that a compounded product is

required. Both of those practices are consistent with traditional

compounding by a pharmacy in response to particularized medical

needs and do not compromise the new drug approval requirements.

Finally, the alternatives to the advertising and solicitation

limitations suggested by the court of appeals would not advance,

but would undermine, the government's interests. Permitting

promotion of compounded drugs provided they include disclaimers

indicating that they have not been subject to premarket approval

by the FDA would undermine the premarket approval process and would

be fundamentally inconsistent with the protective framework of the

FDCA. The other alternative offered by the court of appeals --

requiring premarket approval for all -compounded drugs, even those

customized to meet the medical needs of specific patients -- would

eliminate the availability of those products because demand for

them is not sufficient to support the costs of the premarket

approval process.

ARGUMENT

FDAMA'S LIMITED EXEMPTION FROM THE NEW DRUG APPROVAL

REQUIREMENTS FOR DRUGS COMPOUNDED BY PHARMACISTS WHO DO

NOT SOLICIT PRESCRIPTIONS FOR OR ADVERTISE PARTICULAR

COMPOUNDED DRUGS IS CONSISTENT WITH THE FIRST AMENDMENT

Since 1938, the Federal Food, Drug, and Cosmetie-.Act (FDCA),

21 U.S.C. 301 et seg., has prohibited the introduction into

interstate commerce of a new drug without prior approval of the

Food and Drug Administration (FDA). 21 U.S.C. 355(a). In the Food

and Drug Administration Modernization Act of 1997 (FDAMA), Congress

provided a limited exemption from the new drug approval and certain

related requirements of the FDCA for drugs compounded by

pharmacists. See 21 U.S.C. 353a (Supp. V 1999). In this case, the

United States Court of Appeals for the Ninth Circuit held that the

solicitation and advertising limitations that Congress adopted as

conditions on the availability of that exemption violate the First

Amendment . Contrary to the Ninth Circuit's conclusion, the

limitations on the exemption provided by Section 353a are fully

consistent with the First Amendment .*

* The government agrees with the court of appeals' conclusion

(Pet. App. 12a-15a) that, if the solicitation and advertising

provisions in Sections 353a(a) and (c) are unconstitutional, they

are not severable from the remainder of Section 353a. For that

reason, the government did not seek this Court's review of the

severability issue. Respondents did not raise the issue in their

brief in opposition, and they did not file a cross-petition for a

writ of certiorari on the issue. The severability question is

nl 21

In Central Hudson Gas & Electric Corp. v. Public Service

Commission, 447 U.S. 557 (1980), this Court enunciated a four-part

inquiry to determine the constitutionality under the First

Amendment of government regulation of commercial speech: first,

whether the speech “accurately inform(s] the public about lawful

[commercial] activity," id. at 563; second, “whether the asserted

governmental interest [underlying the speech regulation) is

substantial," id. at 566; third, “whether the regulation directly

advances the governmental interest asserted," ibid.; and, finally,

“whether it is not more extensive than is necessary to serve that

interest" (ibid.).

With respect to the first part of the Central Hudson inquiry,

the government assumes that respondents' advertisements would be

accurate and concern an activity that is otherwise lawful under the

carefully circumscribed exemption that Congress has established for

compounding. It is important, however, to stress that this case,

unlike most commercial speech cases, does not involve a restriction

on advertising that has been imposed in connection with an activity

that the government otherwise has declined to’ prohibit. Before

1997, the introduction of compounded new drugs into interstate

commerce - like the introduction of all other unapproved new drugs

- was unlawful in all circumstances. In enacting Section 353a,

Congress created an exemption to that generally applicable

prohibition on the distribution of new drugs, but conditioned that

therefore not before the Court. See, e.g., Bates v. United

States, 522 U.S. 23, 32 n.7 (1997).

exemption on compliance with a number of requirements, including

restrictions on solicitation and advertising. As the court of

appeals explained, Congress “intended to provide access to

compounded drugs while preventing pharmacies from making an end run

around the FDA's drug manufacturing requirements." Pet. App. 12a.

Congress therefore “meant to exempt compounding pharmacists from

FDCA requirements only in return for a prohibition on the promotion

of specific compounded drugs." Id. at l3a-l4a. That is to say,

but for the advertising restrictions in Section 353a, the relevant

commercial conduct - the sale of new drugs that have not been shown

to be safe and effective - would be (and is) prohibited.

Accordingly, this case is not one in which the government

generally permits certain conduct and asserts a hypothetical (but

uninvoked) “greater power" to prohibit the advertised conduct as a

justification for exercising the "lesser power" of restricting the

advertising of that conduct. See 44 Liquormart, Inc. v. Rhode

Island, 517 U.S. 484, 510-513 (1996) (plurality opinion). Instead,

Congress has exercised the "greater power" to prohibit the

distribution of unapproved new drugs, and has permitted an

exception to that prohibition only on compliance with various

conditions, including restrictions on the solicitation and

advertising of that otherwise unlawful commercial activity. The

question, then, is whether Congress's inclusion of limitations on

solicitation and advertising among the conditions on the

availability of the exemption from certain of the FDCA's

requirements satisfies the remaining three Centra] Hudson factors.

A. Substantial Governmental Interests Underlie Section 353a

In enacting Section 353a, Congress attempted to balance two

goals, each of which is substantial. First, Congress sought to

preserve the effectiveness and integrity of the FDCA's new drug

approval process and the protection of the public health that it

provides. Second, Congress sought to preserve 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. Achieving the proper

balance between those two independently compelling but competing

interests is itself a substantial governmental interest.

1. There is a substantial governmental interest in protecting

the integrity of the FDCA's new drug approval process

As both Congress and this Court have recognized, the

widespread distribution of drugs that have not been shown to be

safe and effective poses significant health risks. See United

States v. Rutherford, 442 U.S. 544, 556-557 (1979); Weinberger v.

Hynson, Westcott & Dunning, Inc., 412 U.S. 609, 622 (1973). The

FDCA's new drug approval process is the culmination of a century of

congressionai efforts to advance the substantial interest in

preventing those risks.

In the 19th century, the United States, which lacked laws and

regulations of the sort that were in place in European countries,

was plagued by substandard and contaminated drugs. Injuries from

such drugs, such as a contaminated diphtheria vaccine that caused

the death of a dozen children in 1902, eventually led to enactment

of the Pure Food and Drugs Act of 1906, ch. 3915, 34 Stat. 768,

SS Oe ae oe

which prohibited interstate shipment of adulterated or misbranded

drugs. See W.F. Janssen, Qutline of the History of U.S. Drug

Regulation and Labeling, 36 Food, Drug & Cosm. L.J. 420, 422-425

(1981). The 1906 Act, however, proved insufficient to ensure that

marketed drugs were safe for use. Perhaps the most notorious

example of that insufficiency was the Elixir Sulfanilamide tragedy

of 1937. A company that had marketed sulfanilamide in capsule and

tablet form began marketing the drug in a liquid form without

adequately testing the safety of the liquid in which the

sulfanilamide was dissolved. Before the drug could be recalled,

107 people, mostly children, died from using the product. See

Elixir Sulfanilamide, S. Doc. 124, 75th Cong., 2d Session (1937);

V. Henry, Problems with Pharmaceutical Regulation in the United

States, 14 J. Leg. Med. 617, 619 (1993).

Congress enacted the FDCA in 1938 based on the historical

_ experience demonstrating that manufacturer self-interest and

physician screening were insufficient to protect the public from

the dangers of widespread distribution of unsafe drugs. See Act of

June 25, 1938, ch. 675, 52 Stat. 1040. At the heart of the new law

was the new drug approval requirement -- that the manufacturer or

distributor of a new drug must obtain approval from the FDA before

introducing the new drug into interstate commerce. § 505(a), 52

Stat. 1052 (now codified as amended at 21 U.S.C. 355(a)).

Further experience revealed, however, that the preapproval

requirements in the 1938 Act were still not sufficient to protect

the public health and safety. One problem was that the Act

required proof only that a new drug was safe for its intended uses

and not that it was effective for those uses. As a result, the FDA

was forced to approve many drugs for general distribution even when

there was no evidence that they would produce the therapeutic

benefits claimed by their manufacturers. See S. Rep. No. 1744,

87th Cong., 2d Sess. Pt. 1, at 15-16 (1962); Dr Industr

Antitrust Act: Hearinas on S. 1552 Before the Subcomm. on Antitrust

and Monopoly of the Senate Comm. on the Judiciary, Pt. 5, 87th

Cong., lst Sess. 2583-2585 (1961) (testimony ef Abraham Ribicoff,

Secretary of Health, Education, and Welfare). Because hundreds of

new drugs were introduced each year, and information about their

effectiveness took considerable time to develop and (when published

at all) was scattered among hundreds of medical journals,

physicians were unable to ascertain whether the drugs they were

prescribing were effective. See S. Rep. No. 1744, supra, Pt. 1, at

37 (views of Sens. Kefauver, Carroll, Dodd, Hart, and Long); S.

Rep. No. 448, 87th Cong., lst Sess. 171 (1961); 108 Cong. Rec.

19,925-19,926 (1962); Warner-Lambert Co. v. Heckler, 787 F.2d 147,

156 (3d Cir. 1986). Prescription of ineffective drugs could have

serious harmful consequences because, when an ineffective drug was

prescribed, it usually replaced an older but effective drug. See

S. Rep. No. 1744, supra, Pt. 1, at 37; see also Rutherford, 442

U.S. at 556-557 & n.13 (discussing danger that patients who use

ineffective drugs will, as a consequence, delay or forgo use of

effective drugs or other treatment).

Another problem with the 1938 Act was that a new drug

application became effective automatically after 180 days if the

FDA took no action. See S. Rep. No. 1744, supra, Pt. 1, at 40.

Because of the automatic approval~ provision and the lack of

independent and objective clinical studies to guide FDA physicians

in evaluating new drugs, many drugs were released for distribution

that were subsequently revealed to have serious (and sometimes

deadly) side effects. See id. at 43. The possible dangers of

automatic approval were graphically illustraf the thalidomide

experience, in which reports of serious birth defex caused by the

use of thalidomide in Europe surfaced shortly before he automatic

approval requirement might have forced the FDA to permit widespread

distribution of the drug in the United States. See id. at 40-43.

The Drug Amendments of 1962, Pub. L. No. 87-781, 76 Stat. 780,

addressed those problems by strengthening the new drug approval

process. The amendments eliminated the automatic approval

provision and required manufacturers and distributors to

demonstrate not only the safety but also the effectiveness of new

drugs. Under the amended provisions, a new drug may not be

introduced (or delivered for introduction) into interstate commerce

until the manufacturer or distributor obtains the FDA's affirmative

approval by establishing that the drug is safe and effective for

each of its intended uses. See 21 U.S.C. 321(p), 331(d), 355(a)-

(d); S. Rep. 1744, 87th Cong., 2d Sess. Pt. 2, at 4-5 (1962); 108

Cong. Rec. 17,366 (1962) (statement of Sen. Eastland).

The new drug approval requirements in effect today thus

reflect two related and reasonable conclusions that Congress and

the FDA drew from long experience with drug regulation. First,

proof of the safety and effectiveness of a new drug must be

established by rigorous, scientifically valid clinical studies

rather than the impressions of individual doctors, who cannot- by

themselves compile and master the necessary information; and,

second, a premarket approval requirement is necessary to ensure

that those who promote and distribute new drugs, and seek to

realize profits from their distribution, undertake the

investigations necessary to establish effectiveness and safety.

See Hynson, Westcott & Dunning, 412 U.S. at 619, 629-630; Warner-

Lambert Co., 787 F.2d at 156. For these reasons, the new drug

approval process is a critical component of the FDCA's regulatory

framework for the protection of the public health and safety. As

the district court and court of appeals both concluded (Pet. App.

S5a-6a, 40a-4la), there is a substantial governmental interest in

preserving the integrity of that process.

the availability cf compounding in response to individual

medical needs

At the same time that Congress sought, through the new drug

approval process, to protect the public from unsafe and ineffective

drugs, Congress recognized that it is also important to ensure that

drug treatments that are safe and effective are in fact available.

Congress therefore carefully crafted the new drug approval process

"to insure that governmental control does not become so rigid that

a le

the flow of new drugs to the market, and the incentive to undergo

the expense involved in preparing them for the market, become

stifled." S. Rep. No. 1744, supra, Pt. 1, at 14-15; see id. at 16;

H.R. Rep. No. 2139, 75th Cong., 3d Sess. 823 (1938); Hynson,

Westcott & Dunning, 412 U.S. at 639 n.2 (Powell, J., concurring)

(noting the public interest "in protecting the drugs that are

useful in the prevention, control, or treatment of illness").

Congress also has generally refrained from providing in the

FDCA for the FDA to limit a physician, as part of the practice of

medicine, from prescribing any legally available product for a

particular patient. See 37 Fed. Reg. 16,503 (1972) (noting

repeated references in the legislative history of the 1938 Act and

the 1962 amendments that Congress did not intend the FDA to

interfere with a physician's ability to prescribe legally approved

products for unapproved uses); e.g., S. Rep. No. 361, 74th Cong.,

lst Sess. 3 (1935); H.R. Rep. No. 2755, 74th Cong., 2d Sess. 5

(1936); S. Rep. No. 1744, supra, Pt. 1, at 56 (views of Sens.

Dirksen and Hruska). Consistent with that background, the FDA has

permitted physicians to prescribe approved drugs for uses that are

not identified in approved labeling. See 12 FDA Drug Bulletin 4-5

(1982); J.M. Beck & E.D. Azari, FDA, Off-Label Use, and Informed

Consent: Debunking Myths and Misconceptions, 53 Food, Drug, & Cosm.

L.J. 71, 76-79 (1998). That policy reflects the FDA's recognition

that certain off-label uses perform an important therapeutic role

in certain areas of medical practice, and that undue restrictions

on such uses could have adverse health consequences. See id., at

79-80; cf. Buckman Co. v. Plaintiffs' Legal Comm., 121 S. Ct.

1012, 1018-1019 & n.5 (2001) (discussing off-label uses prescribed

or administered by physicians in the ebavent of the FDCA's device

provisions). The FDA has followed that policy even though

manufacturers and distributors may not distribute approved products

for off-label uses -- and therefore may not promote off-label uses

-- without first demonstrating to the FDA that the products are

safe and effective for those uses and obtaining FDA approval. 12

FDA Drug Bulletin 4, 5.

Similar considerations led the FDA to refrain from taking

enforcement action against pharmacists who compounded drugs in

response to valid prescriptions to meet the medical needs of

individual patients, as determined by their physicians, even though

introduction of compounded drugs into interstate commerce without

FDA approval was illegal before enactment of Section 353a in 1977.

See pp. __, Supra. The FDA recognized that compounding in response

to a valid prescription to meet individual medical needs is a

traditional element of the practice of pharmacy. Pet. App. 71a;

see also L.V. Allen, Jr., The Art, Science, and Technology of

Pharmaceutical Compounding xvi, 1 (1998); C.M. Wyandt & J.S.

Williamson, Compounding: Regulatory and Management Issues, Drug

Topics, July 1999, at 43.’

See also Virginia State Bd. of Pharm. v. Virginia Citizens

Consumer Council, Inc., 425 U.S. 748, 752, 766 (1976) (noting

that, in the mid-1970s, approximately 5% of prescriptions were

compounded by pharmacists); S.H. Kalman & J.F. Schlegel,

Standards of Practice for the Profession of Pharmacy, NS19 No. 3

American Pharmacy 29 (1979) (discussing pharmacists' compounding

responsibilities); Complaint 4 20 reprinted in C.A. Excerpts of

30 ~

Like certain off-label uses, compounding in response to

individual medical needs may have important health benefits. It

allows physicians and pharmacists to work together to develop

customized therapies for patients for whom commercially

manufactured drugs are not suitable for various medical reasons.

For example, when a patient has an allergy to a component of a

commercially available product, or an approved drug does not come

in a dosage appropriate for an individual or in a delivery system

that the patient can tolerate, the physician and pharmacist can

work together to create a compounded product that addresses the

patient's particularized needs. See Professionals & Patients for

Customized Care v. Shalala, 56 F.3d 592, 593 (Sth Cir. 1995); Pet.

App. 41la-42a.’

Of course, it might theoretically be ideal if a pharmacy first

demonstrated to the FDA that a compounded drug is safe and

effective for its intended use before it is sold to an individual

Record (hereinafter C.A. E.R.) 5 ("Pharmacy compounding is a

time-honored, customary and traditional part of pharmacy

practice. It is a mandatory subject in most pharmacy schools.

Most, if not all, state laws require that pharmacists be

proficient in compounding and that they maintain special

compounding equipment.").

> See also C.A. E.R. 6 (giving examples of the benefits of

compounding); K. Ranelli, Extending the Family, The Hartford

Courant, Mar. 16, 2000, at El ("Compounding can include making a

natural, bio-identical drug for hormone therapy, changing an oral

medication into a topical cream for patients who can't swallow

easily, and tailoring drugs to children's taste by adding a fruit

extract.“); H. Dukes,

Comeback, South Bend Tribune, Jan. 31, 2001, at Cl (benefits of

compounding include pediatric dosages of drugs manufactured only

for adults and providing medications that drug companies no

longer make).

patient. However, because obtaining FDA approval of a new drug is

a costly process, requiring FDA approval of all drug products

compounded by pharmacies for the particular needs of an individual

patient would, as a practical matter, eliminate the practice of

compounding, and thereby eliminate availability of compounded drugs

for those patients who have no alternative treatment. The cost of

developing and obtaining approval of a new drug that is not closely

Similar to an already approved drug is generally estimated to

exceed $200 million dollars. See Henry, supra, at 617; J.A.

Henderson, Jr. & A.D. Twerski, Drug Designs Are Different, 111 Yale

L.J. 151, 164-165 (2091). The cost of developing drugs that

closely resemble approved products is still substantial -- ranging

from $300,000 to $500,000. See Balaji K., Generics: The

Opportunity Beckons (July 2001) <http://www. inpharm.com/

(iagence/frost01o

~ 1 .

hem

Perla #

Just as those costs have discouraged manufacturers from

developing drugs to treat rare illnesses, see Henry, supra, at

628-630, the high costs of the approval process would make it

uneconomical for a typical pharmacist to obtain approval for a drug

that is compounded for a limited number of people - sometimes only

a single individual - for whom the product is medically necessary.

Requiring approval in those circumstances would not be feasible,

and advance approval of such individual compounded drugs is less

central to protecting the broader public health than is the advance

approval of products that are distributed more widely to the

public. The FDA's policy of not enforcing the new drug approval

Le Oe ee ee

requirements against traditional pharmaceutical compounding was

thus a reasonable exercise of informed regulatory enforcement

discretion based on the conclusion that there is a substantial

governmental interest in permitting compounding in response to the

particularized medical needs of identified individuals -- a

conclusion with which the district court and court of appeals in

this case did not disagree (Pet. App. 7a-8a, 42a).

3. There is a substantial governmental interest in

balancing the interests in permitting compounding in

response to individual medical needs and protecting the

integrity of the new drug approval process

a. Although there are benefits from drug compounding in

appropriate individualized circumstances, experience under the

FDA's enforcement policy prior to 1997 showed that compounding can

also present significant health and safety risks. Some pharmacies

were compounding outside the scope of normal pharmacy practice and

were mass-producing and distributing compounded drugs in a manner

tantamount to the manufacture of new drugs. Pet. App. 72a.

Compounding on that scale exposed substantial numbers of the public

to the kinds of risks that had led to the enactment of the new drug

approval process in the first place. For example, some drug

products compounded by pharmacies contained impurities that caused

serious injuries, such as eye infections that required removal of

patients' eyes, and fatalities, including deaths of infants. 1d.

at 73a; TT. Nordenberg, Pharmacy Compounding: Customizing

Prescription Drugs, 34 FDA Consumer No. 4, at 11 (2000);-C.E.

Myers, Needed: Serious Attention to Sterile Products, 53 Am. J.

Health Sys. Pharm. 2582 (1996).

Even more significantly, compounding on a scale tantamount to

manufacturing was allowing wholesale circumvention of the new drug

approval process. Pet. App. 73a-74a. Pharmacies could mass-

produce a particular drug product, stimulate demand for the product

through advertising, and thereby effectively manufacture and

distribute the drug in interstate commerce without complying with

the new drug approval requirements. See FDA Reform Legislation:

Hearings Before the Subcomm. on Health and the Env't of the House

Comm. on Commerce, 104th Cong., 2d Sess. 31, 125 (1996) (FDAMA

Hearings) (testimony of Hon. David A. Kessler, Commissioner, FDA) ;

id. at 59 (FDA Analysis); Addressing the FDA's Performance,

££ ic: 1 Use of R H , Bef he s .

on Labor and Human Resources, 105th Cong., lst Sess. 28 (1997)

(testimony of Michael D. Friedman, M.D., and William Schultz,

Deputy Commissioners, FDA).

That practice presented far more serious potential

consequences than the possibility that small quantities of drugs

that might be unsafe or ineffective might be sold by a local

pharmacy in individual situations. The practice threatened to

undermine the new drug approval process and weaken the very core

mission of the FDCA itself. If drug producers could mass-produce

drugs through pharmacy entities engaged in widespread compounding,

and thus bypass the approval process, manufacturers would have far

less incentive to bear the cost of establishing that the drugs they

seek to market are in fact safe and effective. See FDAMA Hearings

31, 59; see also D.B. Brushwood, Responsive Regulation of Internet

Pharmacy Practice, 10 Annals Health L. 75, 85-86 (2001) (describing

high-volume compounding that occurred in the 1990s as an

“unregulated industry of clandestine drug manufacturers"). Cf.

Weinberger v. Bentex Pharm., Inc., 412 U.S. 645, 653 (1973) (noting

that it would be "inherently unfair" to require compliance by one

manufacturer with the new drug approval requirements "while his

competitors marketing similar drugs remain free to violate the

Act") .*

Because the FDA recognized the importance of balancing the

interest in permitting compounding to meet individual medical needs

with the interest in protecting the integrity of the new drug

approval process, the FDA, before the enactment of Section 353a in

1997, brought enforcement actions against pharmacies that were

engaged in compounding that was tantamount to manufacturing. Pet.

App. 73a-74a; see pp. _., Supra. When Congress addressed the

compounding issue by enacting Section 353a, it sought to achieve

essentially the same balance of interests that the FDA had pursued

through its enforcement policy. See H.R. Conf. No. 399, 105th

Cong., list Sess. Rep. 94 (1997) (explaining that Section 353a

* Attempts by drug manufacturers to bypass the new drug approval

process are not infrequent. See, e.g., United States v. Sage

Pharm. Inc. . 210 F.3d 475 (Sth Cir. 2000);

Inc. v. Solvay Pharm., Inc., No. 98-4606 (11th Cir. May 11,

1999); ‘United States v. Hiland, 909 F.2d 1114 (8th Cir. 1990);

50 Boxes More or Less, 909 F.2d 24 (1st Cir.

United States v

1990) ; United States v. Sandoz Pharm. Corp., 894 F.2d 825 (6th

Cir. 1990); United States v 225 Cartons, More or Less. of an

Article or Drug, 871 F.2d 409 (3d Cir. 1989);

- , 843 F. ~ 860

Atropine Sulfate 1.0 Mg. (Article of Drug) Dey-Dose

(Sth Cir. 1988); United States v. Articles of Drug, 826 F.2d 564

(7th Cir. 1987); Premo Pharm., Inc. v. United States, 629 F.2d

795 (2d Cir. 1980).

“ensure(s) continued availability of compounded drug products as a

component of individualized therapy, while limiting the scope of

compounding so as to prevent manufacturing under the guise of

compounding"); accord S. Rep. No. 43, 105th Cong., lst Sess. 67

(1997). -

b. The court of appeals refused to credit the government's

interest in achieving that balance because, in the court's view,

the government did not present "convincing evidence" of "the health

risks associated with large numbers of patients’ taking

[compounded] drugs." Pet. App. 6a-7a. That evidentiary demand was

wholly misplaced. In the first place, this Court has made clear

that the government may "justify [advertising and solicitation]

restrictions based solely on history, consensus, and 'simple common

sense.'" Lorillard Tobacco Co. v. Reilly, 121 S. Ct. 2404, 2422

(2001) (quoting Florida Bar v. Went For It, Inc., 515 U.S. 618, -628

(1995) (citations and internal quotation marks omitted)). As

described above, the substantiality of the government's interests

here is amply supported by the history of congressional regulation

of drug manufacturing, the FDA's regulatory experience with

compounding, and “simple common sense." Ibid.

Furthermore, the court of appeals' insistence that the

government produce “convincing evidence" in court was particularly

inappropriate in this case, because it was based on a rejection of

the fundamental premises of the FDCA itself, which in turn reflect

decades of agency and congressional experience -- that the

widespread distribution of drugs that have not been shown to be

safe and effective poses substantial health risks, and that the

FDCA's new drug approval requirements are a legitimate and

effective means to address those risks. This Court has

acknowledged the validity of those premises, see Rutherford, 442

U.S. at 556-557; Hynson, Westcott & Dunning, 412 U.S. at 619, 622,

and the court of appeals had no basis to question them.

The court of appeals' ruling on this point appears to have

stemmed from its failure to appreciate the full extent of the

government's interest. That interest is not sieply, as the court

of appeals characterized it, in "preventing widespread

compounding." Pet. App. 7a. Rather, as described above, the

government's interest is in preventing compounding that is

tantamount to manufacturing and therefore undermines the federal

scheme for ensuring that drugs are safe and effective before they

are introduced into commerce. Congress sought to balance that

substantial interest with the substantial but competing interest in

making compounded drug products available in circumstances in which

they are necessary to meet the particularized medical needs of

individual patients and a prior approval requirement generally

would not be feasible. See H.R. Conf. Rep. No. 399, Supra, at 94;

S. Rep. No. 43> supra, at 67; compare Buckman Co., 121 S. Ct. at

1018 (under the FDCA, "the FDA pursues difficult (and often

competing) objectives"). Balancing those two goals is a

substantial governmental interest in its own right. See United

States v. Edge Broad. Co., 509 U.S. 418, 428 (1993) (balancing

competing governmental concerns can be a substantial governmental

interest for purposes of the Central Hudson test).

B. Section 353a Directly And Materially Advances The

Government's Interests

Although Section 353a seeks to advance the same interests that

the FDA previously pursued through the exercise of its enforcement

discretion, Congress chose to endorse and lend the strength of its

backing to those goals by setting forth in the FDCA itself the

"parameters under which compounding is appropriate and lawful." S.

Rep. No. 43, supra, at 67. Section 353a thus exempts compounded

drug products from the FDCA's provisions governing new drug

approval, as well as the provisions concerning good manufacturing

practice and adequate directions for use, under certain specified

conditions.

The conditions at issue here involve limitations on the

solicitation of prescriptions and advertising. Section 353a(a)

exempts compounding from the new drug approval and related

requirements only if the compounded drug is produced "based on the

unsolicited receipt of a valid prescription order or a notation,

approved by the prescribing practitioner, on the prescription order

that a compounded product is necessary for the identified patient."

21 U.S.C. 353a(a) (Supp. V 1999). Section 353a(c) further provides

that a pharmacy is entitled to the exemption only if it “does not

advertise or promote the compounding of any particular drug, class

of drug, or type of drug." 21 U.S.C. 353a(c) (Supp. V 1999). The

advertising limitation does not, however, prevent the pharmacy from

advertising that it performs compounding services generally. 21

U.S.C. 353a(c) (Supp. V 1999). The solicitation and advertising

conditions on the application of the exemption directly and

materially advance the government's interest in balancing the

competing goals of ensuring the availability of compounding in

response to particularized medical needs of individual patients and

protecting the integrity of the new drug approval requirements.

1. Promotion of particular _ drugs _ reasonably

distinguishes drug manufacturing that is subject to the

premarket approval process from compounding in response

to individual medical needs

a. Before enactment of Section 353a, the FDA considered a

variety of factors to determine whether a pharmacy was

manufacturing under the guise of compounding and thus circumventing

the new drug approval requirements in a manner that materially

undermined the purposes of the FDCA. See pp. , Supra; Pet. App.

76a-77a. Among those factors was whether the pharmacy was

"(sloliciting business (e.g., promoting, advertising, or using

sales persons) to compound specific drug products, product classes,

or therapeutic classes of drug products." Id. at 76a. The FDA

explained that, in its experience, such practices “are far more

consistent with those of drug manufacturers and wholesalers than

with retail pharmacies." Id. at 72a. Building on the FDA's

experience, Congress found similar considerations useful and

appropriate in drawing the line between traditional, individualized

compounding and compounding that is tantamount to manufacturing.

See 143 Cong. Rec. $9839 (daily ed. Sept. 24, 1997) (statement of

Sen. Kennedy); ibid. (statement of Sen. Hutchinson).

As the FDA had previously determined, Congress reasonably

concluded that advertising of particular drug products is a

business practice that is characteristic of manufacturing but not

of traditional compounding by a pharmacy for an individualized

need. Traditional compounding involves the provision of a service

in response to a physician's prescription and an individual

patient's particular medical situation. See Pet. App. 71la-72a;

Allen, supra, at xv, 1 (National Association of Boards of Pharmacy

defines compounding as the preparation of a drug "as the result of

a practitioner's Prescription Drug Order or initiative based on the

pharmacist/patient/prescriber relationship.") ; Wyandt & Williamson,

Supra, at 43, 49 (same). Compounding is thus responsive: it arises

out of "specific practitioner/patient/pharmacist relationships" and

"result([s)" from the “practitioner's [p]rescription * * * or

initiative." Id. at 49 (emphasis added). Compounding in

anticipation of prescription drug orders occurs only based on

"routine, regularly observed patterns." Ibid.; Allen, supra, at

xv, 1. Compounding produces a medication that is "customiz[ed]"

for "the patient's unique needs." A. Joyner, Local Pharmacies

Invest In Compounding, Billings Gazette, Feb. 27, 2000, at 1D.°

See Dukes, Supra, at Cl, C2 (describing compounding as

providing "tailor-made" medicines); B.H. Thiers,

ice, 16 Dermatologi ini

No. 2, at 330 (1998) (compounding "allows the fndalen ra

individualize treatment to the patient's specific needs"); Allen

Supra, at xix (compounding involves providing "patient-specific

products") ; C.A. E.R. 5 ("It is common in the practice of

compounding for a physician, pharmacist, and patient to

collaborate to select the proper combination of ingredients,

Gosage, and method of application or ingestion.").

Advertising the particular products created in the provision of the

“compounding service (as opposed to advertising the Compounding

service itself) is not necessary to or characteristic of this type

of responsive and customized service. Although advertising is

useful in a broad market, it serves little purpose when a

medication is compounded in response to an individual and often

unique need.

Drug manufacturing is the large scale production of a drug

product, typically for a substantial market. Promotion of the

manufactured product to physicians or the public is a common

feature of drug manufacturing. Pet. App. 72a; K.B. Leffler,

: ; Inf ion?__The E , f Pp es -

Advertising, 24 J.L. & Econ. 45, 46 (1981) (market for prescription

drugs is "characterized by very large promotional expenditures") ;

National Institute for Health Care Management, Prescription Drugs

and Mass Media Advertising, 2000, at 4 (Nov. 2001)

<http: //www.nihem.ore/DTCbrief2001 pdf> ($15.7 billion was spent on

promotion of prescription drugs in 2000, including $4 billion for

doctor's office detailing, $2.5 billion for direct advertisements

to consumers, and almost $500 million for advertisements in medical

journals). Successful competition in providing homogenous drug

products "requires the identification and knowledge of individual

manufacturers," and, thus, advertising typically is critical to

successful drug manufacture. Leffler, supra, at 48 (explaining how

centralized production of drugs increased the use of manufacturer

trademarks and brand-name promotion); see E. Kremers & G. Urdang,

History of Pharmacy 164 (2d ed. 1951) (stating that the rise of the

proprietary drug industry was "the product of the extension and

perfection of the art of advertising, furthered by the trade-mark

acts").° Expenditures on such advertising therefore are a fair

proxy for actual or intended large-scale manufacturing. Thus, by

restricting the compounding exemption to pharmacies that do not

engage in the promotional conduct characteristic of manufacturing,

Congress rationally calculated that "the exemption would not create

a loophole that would allow unregulated drug manufacturing to occur

under the guise of pharmacy compounding." 143 Cong. Rec. at $9839

(statement of Sen. Kennedy).

b. Conditioning exemption from the regulatory approval

process for compounded drugs on the absence of promotion of those

products also reflects the FDCA's underlying premise that the

public health is best served when those who develop and promote new

drugs prove that those drugs are safe and effective. See Hynson,

Westcott & Dunning, 412 U.S. at 619, 629-630; pp. _, supra. If

compounders could actively promote specific products through

advertising without having to bear the costs of the new drug

approval process, they would enjoy an unfair advantage over

_ See also Allen, supra, at 1 (defining drug manufacturing to

include "the promotion and marketing of [the manufactured]

drugs"); Wyandt & Williamson, supra, at 6 (same); Administered

Prices, Drugs, S. Rep. No. 448, supra, at 157 (noting that

virtually all who attempt to market some trademarked specialties

engage in journal advertising, direct mail, and the supplying of

free samples to physicians"); J. Avorn et al. Scientific versus

mm ibi

Physicians, 73 Am. J. of Med. 4, 7 (July 1982) (explaining that

(t]ypically, the initial promotion of a new drug is accompanied

by extensive advertisement of its virtues").

traditional drug manufacturers, who must comply with the approval

requirements. That unfair advantage would undermine the statutory

incentive for drug manufacturers to comply with the approval

requirements, which are the FDCA's central mechanism to ensure that

drugs introduced into interstate commerce are safe and effective

for their intended uses. See pp. _, supra (explaining that

manufacturers could by-pass the approval process by establishing

pharmacy subcomponents) .

c. Advertising and other promotional material have long been

critical factors in determining the scope of regulation under the

FDCA. For example, the FDA considers labeling, promotional

material, and advertising (among other things) to determine whether

a substance constitutes a "drug" that is subject to regulation

under the Act because it is intended to treat disease or otherwise

to affect the structure or function of the body. See 21 U.S.C.

321(g) (1); e.g., United States v. Storage Spaces Designated Nos.

"8" and "49" Located at 277 E. Douglas, Visalia, CA, 777 F.2d 1363,

1366-1367 & n.6 (9th Cir. 1985); National Nutritional Foods Ass'n

v. Mathews, 557 F.2d 325, 334 (2d Cir. 1977); United States v.

Article . . . Consisting of 216 Individually Cartoned Botties, 499

F.2d 734, 739 (2d Cir. 1969) (collecting cases).

Similarly, promotional representations can be an important

indicator of whether a new drug application or supplemental new

drug application is required for a product, e.g., as a result of

advertising recommending a new use for the product. The labeling

for a drug must indicate "all conditions, purposes, or uses for

which such drug is intended, including conditions, purposes, or

uses for which it is prescribed, recommended, or suggested in its

oral, written, printed, or graphic advertising." 21 C.F.R. 201.5;

see also 21 C.F.R. 201.128 (in determining a drug's intended uses,

the FDA considers, among other things, “labeling claims,

advertising matter, or oral or written statements" by the persons

legally responsible for the product's labeling or their

representatives). If a product is labeled for a new intended use,

as required by those regulations, it is a "new drug" (for which FDA

premarket approval is required), because it is not generally

recognized to be safe and effective for use "under the conditions

prescribed, recommended, or suggested in the labeling thereof," or,

while so recognized, has not been used for a material time or to a

material extent under such conditions. 21 U.S.C. 321(p); 108 Cong.

Rec. at 17,366 (statement of Sen. Eastland). The use claimed for

a drug in promotional material (and otherwise) thus may be an

important factor in determining whether or not it is a new drug and

whether FDA premarket approval is required. See S. Rep. No. 1744,

Supra, Pt. 1, at 17; id. at 59-60 (views of Sens. Dirksen and Sen.

Hruska); S. Rep. No. 1744, supra, Pt. 2, at 5; see also Hynson,

Westcott & Dunning, 412 U.S. at 613, 629, 632 (new drug is one not

generally recognized by experts as safe and effective for its

"intended use"). Therefore, denying the exemption from the FDA

approval requirements when compounded drug products are advertised

or otherwise promoted is entirely consistent with the overall

structure and administrative implementation of the FDCA.

advertising and solicitation conditions do not materially

advance the government's interests

a. The court of appeals erroneously concluded that limiting

the exemption from the premarket approval and other requirements to

pharmacies that do not promote particular compounded products does

not directly and materially advance the government's interests.

Pet. App. %a-10a. As an initial matter, the court faulted the

government for failing to demonstrate that Section "353a's speech

restrictions will keep the demand for particular compounded drugs

artificially low, and thereby protect unwary consumers." Id. at

8a. Once again, the court of appeals appears to have misunderstood

the government's argument and burden. As discussed above, the

government's argument is that Congress sensibly concluded that

advertising for a particular compounded drug product reasonably

identifies the point at which the interest in preserving the

integrity of the new drug approval requirements outweighs the

interest in protecting the availability of traditional

pharmaceutical compounding in response to individual medical needs.

That contention in no way requires a showing that Section 353a's

speech restrictions will suppress the demand for particular

compounded drugs.

The court of appeals also relied on its own assessment that

other "safeguards exist to protect the public." Pet. App. 8a. The

provisions of Section 353a to which the court referred, however, do

not advance the governmental interests underlying that Section.

For example, the court noted that, under FDAMA, "([n])o compounded

drug may be dispensed without a valid prescription from a licensed

physician." Id. at 8a-9a (citing 21 U.S.C. 355a(a) (Supp. V

1999)). . That requirement, however, is insufficient to advance the

government's interest in preserving the integrity and safeguarding

function of the FDCA's new drug approval process. That process

rests on the learning accumulated over decades by the FDA and

Congress that the ultimate determination whether a new drug is safe

and effective cannot be left to individual doctors, who canrot by

themselves compile and master the necessary information, but must

be made by the FDA on the basis of scientific evidence submitted by

the manufacturer. See Hynson, Westcott & Dunning, 412 U.S. at 619,

630; Warner-Lambert Co., 787 F.2d at 156.

The court of appeals also observed that a “pharmacist cannot

regularly compound drugs that are essentially copies of a

‘commercially available drug product." Pet. App. 9a (citing 21

U.S.C. 353a(b)(1)(D) (Supp. V 1999)). Although that limitation

does indeed further the government's interest in preventing

pharmacies from manufacturing products that are already available

without complying with the FDCA's requirements, it does not address

the problem of the manufacture through widespread compounding of

poatuane that are different from those that are commercially

available. That latter form of compounding is addressed by

Sections 353a(a) and ic), by ensuring that entities that promote

the distribution in interstate commerce of new drug products

comply, as must conventional manufacturers, with the new drug

approval requirements. By requiring such parity in treatment,

Section 353a preserves the integrity and protective function of the

new drug approval process and prevents the widespread distribution

of new drugs that have not been proven safe and effective.

Nor do 21 U.S.C. 353a(b)(1) (A) and (B), which limit the

substances that pharmacists may use in compounding, adequately

address the governmental interest in preventing the manufacturing

of new drugs under the guise of compounding. Those provisions

require that the ingredients used in compounded products meet

certain quality standards, which are less extensive than those that

apply to approved products under 21 U.S.C. 351(a)(2)(B) (Supp. Vv

1999). They do not ensure the safety and effectiveness of the

compounded drugs themselves, which are still unapproved new drugs;

and they do not operate to prevent compounding activity that is on

the scale and in the manner of manufacturing.

b. The Ninth Circuit also concluded that Section 353a fails

the third Central Hudson inquiry because, iu the court's view, it

"is so riddled with exceptions that it is unlikely that the speech

restricticns would actually succeed in depressing the volume of

compounded drugs." Pet. App. 9a. The court noted, for example,

that Section 353a permits pharmacies to advertise their general

compounding services (see 21 U.S.C. 353a(c) (Supp. V 1999)) and

does not prevent them from dispensing significant quantities of

drugs intrastate (see 21 U.S.C. 353a(b) (3) (Supp. V 1999)). Those

provisions, however, do not undermine the government's interest in

preventing manufacturing under the guise of compounding;

As discussed above, if compounders could actively promote

particular compounded drug products without complying with the new

drug approval requirements, they would enjoy an unfair advantage

over traditional drug manufacturers that would significantly reduce

the incentives for manufacturers to expend the resources necessary

to prove that their new drugs are safe and effective. Indeed,

under such a regime, traditional drug manufacturers could establish

compounding entities and circumvent the approval process.

Moreover, advertising of particular drug products is a

historical and critical characteristic of drug manufacturing but

not of traditional compounding. See pp. _., supra. General

advertising that a pharmacy provides compounding services does not

suggest the existence, or foster the growth, of a market for any

Particular compounded drug, and thus does not distort the

incentives of drug manufacturers to comply with the new drug

approval requirements. Permitting pharmacies to advertise that

they provide compounding services therefore is consistent with, not

at odds with, Congress's interest in ensuring that drugs are widely

distributed in commerce only after they have been proven to be safe

and effective for their intended uses. Allowing general

advertising of compounding services -- including information about

the pharmacist's experience, the timeliness of services, and

physician satisfaction -- also promotes Congress's interest in

preserving the availability of medically necessary treatments when

demand is insufficient to justify the costs of pre-approval.

Section 353a thus does not permit “speech that poses the same risks

the Government purports to fear." Greater New Orleans Broad., 527

U.S. at 195.

Nor does 21 U.S.C. 353a(b)(3) (Supp. V 1999) undermine the

government's interest. Section 353a(b) (3) provides that a pharmacy

may avail itself of the compounding exemption only if it is located

in a State that has entered into an agreement with the Secretary

that addresses the interstate distribution of inordinate amounts of

———

compounded drugs, or if the pharmacy's otal interstate

distribution of compounded drug products does not exceed 5 percent

of its total prescription orders. See 21 U.S.C. 353a(b) (3) (Supp.

V 1999). That provision imposes a restraint in addition to and

somewhat different in purpose from the restrictions on advertising

and solicitation of prescriptions for individual drugs. The

advertising and solicitation limitations prevent the manufacture of

Particular drug products under the guise of compounding. Section

353a(b) (3) limits the volume of the pharmacy's overall interstate

sales of compounded drugs to ensure that the pharmacy retains its

general character as a retail pharmacy rather than a drug

manufacturer.

The volume limitation in Section 353a(b)(3) applies only to

interstate distributions so that the States may continue to play

their traditional role in regulating the practice of pharmacy. See

143 Cong. Rec. $12,242 (daily ed. Nov. 9, 1997) (statement of Sen.

Jeffords) (Congress intended "to establish a rational framework for

pharmacy compounding [that] respects the State regulation of

pharmacy while allowing an appropriate role for the FDA"). The

absence of volume limitations on overall intrastate distributions

does not, however, undermine the advertising and solicitation

restrictions, which continue to prevent compounding of a particular

drug that would be tantamount to the manufacturing of new drugs.

C. Section 353a Does Not Burden An Excessive Amount Of

Speech In Relation To Its Purposes

The final consideration under Central Hudson is whether the

advertising and solicitation limitations in Section 353a are "more

extensive than * * * necessary" to serve the governmental interests

that they advance. 447 U.S. at 566. As this Court recently

reiterated, that inquiry is not a “least restrictive means" test.

Lorillard Tobacco Co., 121 S. Ct. 2422 (2001) (quoting Went For It,

515 U.S. at 632). Instead, the First Amendment requires only a

"reasonable ‘fit between the legislature's ends and the means

chosen to accomplish those ends.'" Ibid. (quoting in turn Board of

Irs. of State Univ. of N.Y. v. Fox, 492 U.S. 469, 480 (1989)). The

limitations in Section 353a satisfy that requirement.

i.__The advertising and solicitation limitations are

carefully crafted to meet the government's goals

The limitations on advertising and solicitation in Section

353a are not more extensive than necessary to advance the

government's goals. Most significantly, Section 353a does not

absolutely prohibit any speech. A pharmacy that wishes to mass-

produce a particular drug product and promote that product by

advertising or soliciting prescriptions can do so -- just as any

other drug manufacturer can -- if it complies with the FDCA's new

drug approval and related requirements. It is only if the pharmacy

~ wer a

desires to avail itself of the exemption from those otherwise

generally applicable requirements on conduct that it must limit its

promotional activities. As explained above, if a pharmacy could

produce and promote compounded drugs without complying with the new

drug approval requirements, the requirements would be substantially

undermined. The limitation on promotion is thus well calibrated to

the government's interest in protecting the integrity of the new

drug approval requirements. Cf. Dolan v. City of Tigard, 512 U.S.

374, 385, 391 (1994) (government may condition a benefit on the

relinquishment of a constitutional right if waiver of the right is

reasonably related to the benefit) (citing Pickering v. Board of

Educ., 391 U.S. 563, 568 (1968) (government may impose limitations

on the speech of its employees when justified by its interests as

an employer)). _

The advertising limitation is also tailored to accommodate the

commercial speech necessary to the practice of traditional

compounding. Section 353a(c) expressly permits advertising for and

promotion of "the compounding service provided by the licensed

pharmacist." 21 U.S.C. 353a(c) (Supp. v 1999). Therefore,

compounders may, consistent with FDAMA, advertise that they perform

compounding services, that they are experts in compounding, and

that they stand ready to fill prescriptions for compounded drug

products. They may also advertise other information that relates

to their general compounding practice, such as the mark-up that

they charge in exchange for their compounding services. This kind

of advertising is consistent with the government's interest under

FDAMA in ensuring the availability of compounding in response to

individual medical needs without undermining the integrity of the

new drug approval process. See pp. , Supra. Advertising of

particular compounded drugs, in contrast, is not necessary to the

practice of traditional compounding and would permit compounding

pharmacists to engage in manufacturing and thus threaten the

integrity and safeguarding function of the new drug approval

requirements. See pp. _, supra.

The solicitation provisions are also narrowly drawn. Section

353a(a) (2) permits compounding "in limited quantities" before the

receipt of a valid prescription for a particular patient if the

decision to compound is based on an established relationship among

the pharmacist, the practitioner, and the patient. 23 V8...

353a(a)(2) (Supp. V 1999). That provision accords with the

traditional practice of compounding, as defined by the National

Association of Boards of Pharmacy. See Allen, supra, at xv

(compounding is the preparation of a drug “as the result of a

practitioner's Prescription Drug Order or initiative based on the

pharmacist/patient/prescriber relationship," but "also includes the

preparation of drugs * * * in anticipation of Prescription Drug

Orders based on routine, regularly observed patterns").

As the court of appeals noted, the FDA interprets Section

353a(a) to permit a pharmacist to "call a physician and recommend

a drug compound when a patient comes in with a prescription for a

commercial drug and provides information to the pharmacist that

indicates that the patient might require a compounded product."

Pet. App. 9a; see also C.A. E.R. 153. That interpretation derives

from the language in Section 353a(a) that permits preparation of a

compounded drug based on "a notation, approved by the prescribing

practitioner, on the prescription order that a compounded product

is necessary for the identified patient." 21 U.S.C. 353a(a) (Supp.

V 1999). The FDA's reasonable interpretation of that language is

not, as the court of appeals viewed it (Pet. App. 9a), an exception

that undermines the ability of Section 353a to achieve the

government's goals. It is instead an example of how Section 353a

is marrowly tailored. The pharmacist undertakes the permitted

activity in response to the particularized medical needs of an

identified patient in the context of an existing

practitioner/patient/pharmacist relationship. The activity

therefore does not pose a significant danger that the pharmacist is

engaging in drug manufacturing, but rather fits squarely within the

traditional practice of pharmacy compounding. See pp. _.. Supra

(explaining that traditional compounding customizes medications in

response to a patient's special needs and based on a relationship

among the pharmacist, the patient, and the prescribing physician).

2. __The alternatives suggested by the court of appeals

would undermine the government's interests

The court of appeals mistakenly believed that "clear

alternatives exist that can advance chip government's asserted

interest in a manner far less intrusive to the pharmacists' free

speech rights." Pet. App. 10a. In fact, the alternatives

suggested by the court of appeals -- “disclaimers on compounded

drugs explaining that they had not been subject to FDA approval,"

ort pe

RS Si OE

a «=

or subjecting all compounded drug products to the FDCA's new drug

approval requirements, ibid. -- not only would fail to advance, but

would actually undermine, the government's interests.

Reliance on disclaimers is inconsistent with the FDCA's

premarket approval process. That regime prohibits the interstate

distribution of drugs that the FDA has not found to be safe and

effective. Congress has determined that public health and safety

are best ensured by requiring manufacturers to establish to the FDA

that their drugs are safe and effective for their intended uses

See Hynson,

Westcott & Dunning, 412 U.S. at 619, 630; pp. _, supra. That

determination is amply supported by Congress's experience over the

before they are distributed widely in commerce.

course of the last century in regulating the manufacture of drugs.

See pp-_, supra. Disclaimers would not prevent widespread

distribution of drugs that have not been demonstrated to be safe

and effective. They thus would not provide a satisfactory

alternative for the new drug approval regime that Congress, based

on many years of experience, reasonably determined to be necessary

to protect the public.

The other alternative suggested by the court of appeals --

subjecting all compounded drugs to the new drug approval process --

would undermine Congress's competing goal of making compounded

drugs available in the limited circumstances in which a compounded

product is necessary to meet an individual patient's medical needs.

As described above, because those circumstances are so limited, and

the costs of the premarket approval process are usually so

substantial, requiring compliance with the new drug approval

requirements in all cases would effectively eliminate the

availabi’ity of compounded products to meet individual medical

needs. See pp. __, gupra.

The court of appeals therefore erred in concluding that

Section 353a is not narrowly tailored to achieve the government's

substantial interest in balancing the availability of compounding

in response to the particular medical needs of individual patients

with preventing compounding that is tantamount to manufacturing,

which would threaten the integrity of the new drug approval

requirements.

CONCLUSION

The judgment of the court of appeals should be reversed, and

the case should be remanded with instructions to enter judgment for

the petitioners. -

Respectfully submitted.

THEODORE B. OLSON

ALEX M. AZAR II Solicitor General

General Counsel

U.S. Department of Health ROBERT D. McCALLUM, JR.

and Human Services As

DANIEL E. TROY EDWIN S. KNEEDLER

Chief Counse] Deputy Solicitor General

PATRICIA J. KAEDING MATTHEW D. ROBERTS *

Associate Chief Counsel Assistant to the Solicitor Genera]

U.S. Food & Drug

Administration DOUGLAS N. LETTER

KATHERINE S. DAWSON

Attorneys

DECEMBER 2001 2

of ee Te ney

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