Appendix — Colahan v. United States

——

> ¢ ry ) | ., Supreme Court, U.S. ..

MAY 6 1987

No. JOSEPH — JR.

‘> whee

In the Supreme Court of the United States

October Term, 1986

JERRY J. COLAHAN, d/b/a IBA OF OHIO, NORMAN F.

BAUER, JOHN D. BURROWS, RUSSELL C. HUMPHREY,

JR., SIMON E. MILLER, IBA, INC., DANIEL BELSITO,

Petitioners,

vs.

UNITED STATES OF AMERICA,

Respondent.

APPENDIX TO

PETITION FOR WRIT OF CERTIORARI

To the United States Court of Appeals

For the Sixth Circuit

JoHN D. Mappox, Counsel of Record

ARTER & HADDEN

Suite 400

1919 Pennsylvania Avenue, N.W.

Washington, D.C. 20006

(202) 775-7100

STANLEY M. FISHER

ARTER & HADDEN

1100 Huntington Building

Cleveland, Ohio 44115

(216) 696-1100

Counsel for Petitioners

May 5, 1987

THE GATES LEGAL PUBLISHING CO., CLEVELAND, OHIO—TEL. (216) 621-5647

TABLE OF CONTENTS

Opinion of the United States Court of Appeals for the

Sixth Circuit (February 5, 1987) .....................sscsseee Al

Post-Judgment Memorandum Opinion and Order of

District Court (June 24, 1985)... teeeceee A24

Judgment Entry of District Court (May 25, 1985) ...... A29

Memorandum Opinion and Order of District Court

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Opinion of the United States Court of Appeals for

the Sixth Circuit (December 11, 1980) 0.0002... A49

Memorandum Opinion and Order of District Court

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APPENDIX

OPINION OF THE UNITED STATES COURT OF

APPEALS FOR THE SIXTH CIRCUIT

(Decided February 5, 1987)

No. 85-3608

UNITED STATES COURT OF APPEALS

For THE SIXTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

Ws

JERRY J. COLAHAN, d/b/a IBA OF OHIO, NORMAN F.

BAUER, JOHN D. BURROWS, RUSSELL C.

HUMPHREY, JR., SIMON E. MILLER,

IBA, INC., DANIEL BELSITO,

Defendants-Appellants.

[811 F.2d 287]

United States brought action against drug retailers to

enjoin distribution of animal drugs that were allegedly mis-

branded. Tie \’nited States District Court for the North-

ern District of Ohio, Thomas D. Lambros, J., determined

that Food and Drug Administration lacked authority to

promulgate misbranding regulation. The United States

appealed. The Court of Appeals, 635 F.2d 564, remanded.

Upon remand, the District Court entered judgment for

United States. Retailers appealed. The Court of Appeals,

Wellford, Circuit Judge, held that: (1) Administration

could reasonably require that new animal drugs be sold

A2

in conformity with labels proposed by manufacturer in

applications for new animal drug status, and (2) misbrand-

ing regulation, which permitted sale of animal drug to

veterinarian or only on prescription or other order of

veterinarian, required direct communication between vet-

erinarian and drug retailers and was not satisfied by vet-

erinarian giving prescription order to buyer.

Affirmed.

NATHANIEL R. JONES, Circuit Judge, concurred in part,

dissented in part, and filed opinion.

Before JoNES and WELLFoRD, Circuit Judges, and GIL-

MORE, District Judge.*

WELLFoRD, Circuit Judge

The government obtained an injunction which pro-

hibited defendants-appellants from distributing certain ani-

mal drugs on the ground that the drugs were misbranded

and not being sold in compliance with 21 C.F.R. § 201.105

(1985). We affirm the holding of the district court with

respect to the applicability of section 201.105 to the drug

sales in controversy.

Defendants-Appellants in this case are distributors of

drugs for use by dairy farmers. They had distributed cer-

tain drugs to users without a direct order from a veteri-

narian. FDA regulations require that some drugs must

have a veterinarian’s order to be dispensed, 21 C.F.R.

§ 201.105, and the government contends the drugs at issue

fall within those regulations. In November 1978, the gov-

ernment filed a complaint in the lower court seeking an

injunction under 21 U.S.C. § 331 (1982) against defendant

Jerry Colahan and others. The court issued a temporary

*The Honorable Horace W. Gilmore, United States District

Judge for the Eastern District of Michigan, sitting by designation.

A3

restraining order, which was soon replaced by a stipulated

order that the defendants would not distribute the drugs

without a prescription or other order of a veterinarian.

The defendants then instituted a practice, which came

to be called the “slip system,” whereby purchasers would

aver to the defendants that the drugs were being bought

on a veterinarian’s order. The buyers signed a form that

indicated their name, the drug bought (but not quantity)

and the date of purchase. The name of the veterinarian

and the date of the order were not indicated on these

forms.

On October 9, 1979, on defendant Colahan’s motion,

the district court dissolved the stipulated order, ruling

that the FDA lacked the authority to promulgate section

201.105. That court subsequently enjoined the government

from prosecuting a similar action in Massachusetts against

defendant IBA, Inc. The Massachusetts action was then

transferred to Ohio and consolidated with the Colahan

case.

The government appealed the district court’s October 9

order and on December 11, 1980, this court reversed, hold-

ing that section 201.105 was not invalid and that it was

within the agency authority under the statutory scheme.

This court remanded the case and directed that the stipu-

lated order be reinstated. See United States v. Colahan,

635 F.2d 564 (6th Cir.1980), cert. denied, 454 U.S. 831, 102

S.Ct. 127, 70 L.Ed.2d 108 (1981). Upon remand, after

further discovery, the parties submitted cross motions for

summary judgment, and the district court entered judgment

for the government. The district judge issued an order

enjoining defendants from distributing the drugs at issue

without a direct order from a veterinarian. Thereafter, on

defendants’ motion and the government’s stipulation, the

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court exempted the drug Nitrofurazone from the order

because it was currently available elsewhere without pre-

scription. The court denied defendants’ motion to clarify

or stay the injunction. Defendants appealed from that in-

junctive order.

I.

The government charged that 17 drugs sold by defen-

dants were “misbranded.” The violation alleged in this case

concerns the manner in which the drugs were sold or dis-

tributed with the restrictive labeling on the drugs involved.

Section 301 of the Federal Food, Drug, and Cosmetic

Act, 21 U.S.C. § 331 (1982), prohibits the “introduction

into interstate commerce of any ... drug... that is adul-

terated or misbranded.” 21 U.S.C. § 33l(a). A drug is

misbranded “[u]nless its labeling bears . . . adequate di-

rections for use... .” 21 U.S.C. § 352(f) “Adequate di-

rections for use” are defined in the regulations as “direc-

tions under which the layman can use a drug safely and

for the purpose for which it is intended.” 21 C.F.R. § 201.5.

The statute requiring adequate directions contains a

proviso that if such directions are “not necessary for the

protection of the public, the Secretary shall promulgate

regulations exempting such drug. . . from such require-

ment.” 21 U.S.C. § 352(f). Under this authority the Sec-

retary promulgated 21 C.F.R. § 201.105, which applies only

to ve.erinary drugs. This regulation was held valid in

the previous appeal. It provides (in part):

A drug intended for veterinary use which, because

of toxicity or other potentiality for harmful effect, or

the method of its use, is not safe for animal use except

under the supervision of a licensed veterinarian, and

hence for which “adequate directions for use” cannot

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be prepared, shall be exempt from [21 U.S.C. 352(f)

$32 se jae

(a) the drug is:

(1) ... to be sold only to or on the prescrip-

tion or other order of a licensed veterinarian for

use in the course of his professional practice; .

[and]

(b) The label of the drug bears:

(1) The statement “Caution: Federal law

restricts this drug to use by or on the order of

a licensed veterinarian”... .}

21 C.F.R. § 201.105.

Thus, an animal drug that is described in section

201.105, but either is not sold on the “prescription or other

order” of a veterinarian or does not bear the cautionary

label, is not in compliance with the regulation and, under

the statutory scheme outlined above is “misbranded.” All

of the drugs involved in this case are sold with the cau-

tionary label set out in subsection (b)(1) above. We

must determine whether the drugs in question are governed

by section 201.105 and, if so, whether they are sold on the

prescription or other order of a veterinarian.

II.

The remaining sixteen drugs covered by the injunc-

tion in dispute fall into three categories. Fourteen are

termed New Animal Drugs (NADs) and these form the

1. This regulation is nearly identical in substance to the

statute that governs whether human drugs must bear a cautionary

label and be scld only on prescription. See 21 U.S.C. §§ 353(b)

(1) (B) & 353(b) (4) (1982).

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basis of most of the controversy in this case.2 Two others,

Calphosan B-12 injectable and epinephrine, will be dis-

cussed separately.

A. New Animal Drugs

We first decide whether the fourteen New Animal

Drugs (NADs) are governed by section 201.105. The gov-

ernment argues that the drugs fall within section 201.105

and that these drugs are required to bear the cautionary

label as part of their approval as NADs.

The FDA’s interpretation of the misbranding provision

of the Food, Drug and Cosmetic Act, 21 U.S.C. § 352, is

that failure to disribute the controverted drugs in ac-

cordance with approved prescription labeling rendered the

drugs misbranded under 21 C.F.R. § 201.105. In our first

consideration of the issues raised by Colahan and other

animal drug distributors, we concluded that FDA had the

authority to exempt certain animal drugs from a misbrand-

ing action if certain prerequisites were satisfied. Deferring

to agency expertise, the prior panel found “correct” FDA’s

interpretation that “under the proviso contained in § 352(f),

it may require by regulation, as it has, that such drugs

[NADs] are exempt and thus approved for distribution

only if the requirements of 21 C.F.R. § 201.105 are met

since professional direction, in the words of the statute,

‘is necessary for the protection of the public health.”

United States v. Colahan, 635 F.2d 564, 567 (6th Cir.1980),

cert. denied, 454 U.S. 831, 102 S.Ct. 127, 70 L.Ed.2d 108

(1981) (emphasis in original). FDA now argues that the

2. The fourteen New Animal Drugs are: Naquasone Bolus,

Dexamycin, Dihydrostreptomycin injectable, Oxytocin, Predniso-

lone injectable, Dexamethasone, Flo-Cillin injectable, Polyflex

injectable, BO-SE injectable, Dry-Clox, Gentavet Solution, Heta-

cin-K, Chloramphenicol, and Mu-Se injectable. Nitrofurazon, the

drug removed from the injunction, is also a New Animal Drug.

A7

drugs in controversy were approved for distribution only

if distributors sold the drugs in conformity with the label-

ing, which required the drugs to be dispensed only on

order of a licensed veterinarian. Under the FDA’s con-

struction of the key statutory and regulatory provisions,

the approved labeling, therefore, rendered the drugs sub-

ject to 21 C.F.R. § 201.105, and defendants’ refusal to comply

with its requirements revoked the drugs’ exemption and

rendered them misbranded.

We should give proper weight to the construction of

the statute by FDA, the agency to whose skill and expertise

Congress entrusted the statute’s administration. Chevron

USA, Inc. v. Natural Resources Defense Council, Inc., 467

U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694

(1984), State of Tennessee v. Herrington, 806 F.2d 642, 653

(6th Cir.1986). When we review an agency’s construction

and implementation of the statutory scheme that it ad-

ministers, two questions must be resolved. Initially it is

necessary to determine whether Congress specifically re-

solved the same issue before us. “If the intent of Congress

is clear, that is the end of the matter, for the court, as well

as the agency, must give effect to the unambiguously ex-

pressed intent of Congress.” Chevron U.S.A., 467 U.S. at

842-43, 104 S.Ct. at 2781. If Congress failed to address

the precise issue in question, the court is not free merely

to formulate its construction of the statute. Id. at 843, 104

S.Ct. at 2781. Rather the reviewing court must defer to

the agency’s construction and implementation of its statu-

tory scheme as long as it represents a reasonable and per-

missible interpretation. Id.; see also Lyng v. Payne, ........

iP Seno , 106 S.Ct. 2333, 2341-42, 90 L.Ed.2d 921 (1986).

Especially when the statute is complex, as is the one in

controversy, the Court has admonished reviewing courts

not to substitute their judgment for that of the agency.

A8

Chemical Manufacturers Association v. Natural Resources

Defense Council, Inc., 470 U.S. 116, 125, 105 S.Ct. 1102, 1104,

84 L.Ed.2d 90 (1985); see also Young v. Community Nutri-

tion Institute, ........ ot Sie , 106 S.Ct. 2360, 2364, 90 L.Ed.2d

959 (1986).

In this case FDA contends that defendants’ failure to

comply with the use requirements indicated by the ap-

proved NADs’ “prescription” labeling renders the drugs

as distributed misbranded under 21 U.S.C. § 352(f) (1)

and 21 C.F.R. § 201.105. Defendants argue that NAD status,

including the requisite label, do not resolve whether the

drugs are misbranded under 21 C.F.R. § 201.105. Resolution

of these conflicting arguments cannot be made by refer-

ence to the statute itself or from legislative history. Since

Congress failed to address specifically when an animal

drug is deemed misbranded under the statutory scheme, it

implicitly delegated to FDA the authority to fill the gap

in a reasonable manner. Chevron U.S.A., 467 U.S. at 843,

104 S.Ct. at 2781. To determine whether FDA asserts a

permissive statutory construction, a review of the Act and

the underlying regulation is in order.

The Food, Drug and Cosmetic Act sets out a “compre-

hensive scheme for both premarketing clearance and post-

marketing regulation of the new animal drugs [by FDA].

..’ United States v. An Article of Drug Consisting of

4,680 Pails, 725 F.2d 976, 981 (Sth Cir.1984). In Wein-

berger v. Hynson, Westcott & Dunning, Inc., 412 U.S. 609,

93 S.Ct. 2469, 37 L.Ed.2d 207 (1973), the Supreme Court

delineated FDA’s role in reviewing new drug applications:

It is clear to us that FDA has power to determine

whether particular drugs require an approved NDA

in order to be sold to the public. FDA is indeed the

administrative agency selected by Congress to admin-

Ag

ister the Act, and it cannot administer the Act intelli-

gently and rationally unless it has authority to de-

termine what drugs are ‘new drugs’. .

« * * * *

.. . Judicial relief is available only after administra-

tive remedies have been exhausted.

Id. at 624, 627, 93 S.Ct. at 2480, 2481.

Initially the Act “leaves it up to the manufacturer of

the animal drug to decide whether its product is subject

to the [statutory/regulatory] scheme in the first place.”*

Article of Drug, 725 F.2d at 981. In seeking FDA approval

of an NAD, a manufacturer submits an NAD application,

proposing labeling to conform to the application. 21 U.S.C.

§ 360b(a) (1). FDA has the power to determine whether

a drug is an NAD unless the manufacturer can show that

the drug product does not meet the conditions. See, e.g.,

Premo Pharmaceutical Laboratories, Inc. v. United States,

629 F.2d 795, 802 (2d Cir.1980) (discussing similar pro-

visions for new drugs for human consumption). Under

this statutory and regulatory scheme, the manufacturer

can avoid FDA regulation by satisfying its burden of

showing by tests, laboratory reports, and other scientific

3. Hynson involved drugs intended for human consumption,

but the agency process for approving new animal drugs is similar.

4. The manufacturer does not need prior FDA approval

to market animal drugs that are not NADs as defined at 21 U.S.C.

§ 360(a)(1). To fall outside of FDA’s regulatory power, the drug

must be “generally recognized” by qualified experts “as safe

and effective for use under the conditions prescribed, recom-

mended, or suggested in the labeling thereof. ...” See 21 U.S.C.

§ 321(w)(1). If the manufacturer opts not to seek premarketing

approval for an animal drug, it runs the risk of being later charged

with shipping adulterated animal drugs, in violation of 21 U.S.C.

§§ 331(a), 351(a) (5), if or when the Secretary later determines

that the manufacturer is producing an NAD which by definition

is not recognized generally to be safe and effective.

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or medical means that the proposed drug is safe for use

without the proposed labeling and is not therefore a new

animal drug; or the drug may receive NAD approval if

FDA is satisfied by the manufacturer’s documentation

that the proposed drug is safe for use as directed in the

labeling. The statute mandates that FDA refuse to ap-

prove applications for drugs that are not shown by the

manufacturers to be safe for use as directed in the pro-

posed labeling. 21 U.S.C. § 360b(d). A dissatisfied man-

ufacturer may appeal an adverse ruling to a federal court

of appeals. 21 U.S.C. §§ 355(h), 360b(h).

In this case the manufacturer submitted NAD appli-

cations for the controverted drugs and included the fol-

lowing cautionary labels: “Federal law restricts this drug

to use by or on the order of a licensed veterinarian.” This

language conforms to that mandated for a particular class

of animal drugs exempted from the misbranding provis-

ions in 21 C.F.R. § 201.105. That regulation exempts drugs

from misbranding actions despite their potential toxicity

if certain preconditions are satisfied. One requirement

mandates that these potentially toxic drugs be labeled to

indicate use only on a veterinarian’s prescription or other

order. Based upon the manufacturer’s submissions and this

proposed labeling, FDA approved NAD applications for

the drugs in question.

Subsequently, defendants-retailers sold these drugs

without veterinary supervision in contravention of the

labeling. FDA then brought a misbranding action, reason-

ing that its approval of these drugs was contingent upon

distributors reselling the drugs in conformity with the

drugs’ labeling, which limited its sale to “prescription or

other order of a licensed veterinarian for use in the course

of his professional practice. . . .”; defendants’ failure to

adhere to the restrictions set forth in 21 C.F.R. § 201.105

All

would, therefore, under FDA's interpretation, render the

drugs misbranded. The sole issue becomes whether FDA

can reasonably determine that approval of an NAD with

labeling, restricting resale of the drugs only upon a li-

censed veterinarian’s order, renders that NAD subject to

21 C.F.R. § 201.105 and the misbranding provisions with-

out requiring FDA to demonstrate the toxicity of the drugs

in a misbranding action.

It can be presumed from FDA’s approval of these

drugs’ NAD applications that the drugs in question are

safe with the cautionary label. FDA’s interpretation of

the Act follows logically from this presumption that fail-

ure to distribute these drugs in accordance with their

labeling, mandating a veterinarian’s order, renders the

drugs misbranded under 21 C.F.R. § 201.105. The burden

is not upon FDA to establish in a misbranding action that

the controverted drugs are in fact “not safe for animal

use except under the supervision of a licensed veterinar-

ian” because of “toxicity or other potentiality for harmful

effect, or the method of its use,” 21 C.F.R. § 201.105, when

the manufacturer itself proposes the label that states the

NAD is not to be used except upon the order of a licensed

veterinarian.

The statutory scheme places the burden on the man-

ufacturer in the first instance to show that a proposed

NAD is in fact safe for intended use. See, e.g., Article of

Drug, 725 F.2d 976. Pursuant to 21 C.F.R. § 201.105, FDA

may further impose on a manufacturer the additional bur-

den of showing that the proposed labeling and directions

permit a layperson to use the drugs safely and properly

without veterinary authorization or direction. In this case

the manufacturer did not attempt to make that showing

but conceded, for whatever reason, that the drugs must be

tia iit i

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dispensed only on a prescription or other order of a li-

censed veterinarian by placing labeling in compliance with

21 C.F.R. § 201.105. FDA may reasonably rely on the

manufacturer’s concession and mandate that the drugs

be sold in conformity with the labeling when it approved

the drugs’ NAD applications. Defendants should not be

permitted to bypass FDA procedures and policies and seek

to impose upon FDA the burden of proving a fact which

was conceded in the original process by which FDA gave

its approval to these NADs for the specific uses under

defined conditions.

A reviewing court is not free to substitute its own

judgment for that of the agency when the agency has set

forth a permissible reading of the statutory scheme. We

“need not conclude that the agency construction was the

only one it permissibly could have adopted to uphold the

construction, or even the reading the court would have

reached if the question initially had arisen in a judicial

proceeding.” Chevron U.S.A., 467 U.S. at 843 n. 11, 104

S.Ct. at 2782 n. 11. The agency’s construction of this

complex regulatory scheme is reasonable and therefore

permissible.

Defendants are not left without recourse. As the gov-

ernment conceded at oral argument, defendants could apply

to FDA for reconsideration of the drugs’ veterinary “pre-

scription” requirement, by showing that the drugs lack

the “potentiality for harmful effect” if used by laypersons

or farmers without the supervision of a licensed veterinar-

ian or that similar drugs are readily available over-the-

counter without order of a veterinarian. Accordingly, we

affirm the district court’s decision that these defendants

should be enjoined from attempting to distribute, sell, or

use these drugs without the express prescription or other

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written order of a veterinarian. We disagree with defen-

dants’ contention that new animal drug provisions are ir-

relevant in a misbranding action of this kind for the rea-

sons stated.

The drugs Calphosan B-12 and epinephrine require a

different analysis because they are not approved as NADs

as are the fourteen drugs discussed above. They are, how-

ever, sold with the cautionary label.

The district court stated that the issue before it was

‘whether the unapproved animal drug ought to be consid-

ered a new animal drug;” that issue, according to the court,

turned on whether the drug should be sold only to or on

the order of a licensed veterinarian.

These two unapproved drugs, however, bear the same

restrictive label as has been discussed concerning the four-

teen NADs. The district court granted summary judgment

with respect to these two drugs because it determined that

there were no material factual issues with respect to the

restriction for prescription use only.

In support of the government’s motion for summary

judgment, it subinitted affidavits of two experts and re-

ferred to testimony from the Massachusetts hearing on

these drugs to establish a scientific basis for the re-

quired prescription status of Calphosan and epinephrine.

Defendants provided no factual basis to support their

position that the two drugs are (or could be) labeled ade-

quately for lay use. Accordingly, we find the district

court’s injunction with respect to Calphosan B-12 and its

declaratory judgment as to epinephrine were appropriate,

and we affirm its actions.

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Iil.

We turn now to the question whether the defendants’

sales practices violated the regulation.

Section 201.105 requires that the drug be “sold only

to or on the prescription or other order of a licensed vet-

erinarian....” 21 C.F.R. § 201.105(a)(1). The govern-

ment contends, and the trial court held, that this requires

a direct communication between the veterinarian and the

vendor. The defendants argue that the regulation is satis-

fied if the “prescription or other order” is given by the

veterinarian to the buyer and the buyer assures the vendor

(the defendants ) that such an order exists. The defendants’

“slip system” was instituted to document that they had

received such an assurance from the buyer.

The defendants first argue that section 201.105 simply

does not state that a veterinarian’s order must be given

directly to the vendor and the court may not read such a

requirement into the regulations. We disagree. The

analogous provision for prescription human drugs permits

dispensing “only (i) upon a written prescription of a prac-

titioner .. ., or (ii) upon an oral prescription of such prac-

titioner which is reduced promptly to writing and filed

by the pharmacist, or (iii) by refilling any such written or

oral prescription if such refilling is authorized by the pre-

scriber....” 21 U.S.C. § 353(b)(1). While this section

makes clear that an oral prescription must be communi-

cated directly to the pharmacist, like section 201.105 it

does not state that a written prescription must be given

to the vendor. Yet it cannot be contended that the mere

representation of a buyer of human prescription drugs

that he has a prescription would satisfy section 353. The

procedures of both 201.105 and 353 are clearly intended

to insure that the respective drugs are used only “under

Ald

the supervision” of a veterinarian or practitioner. There

is no basis for concluding that section 201.105 does not re-

quire direct communication where section 353 does. A

buyer’s statement, even in writing, that he has the order

of a veterinarian does not reasonably assure that such an

order exists.

The defendants argue that the use of the phrase “pre-

scription or other order of a licensed veterinarian” in sec-

tion 201.105(a) (1) indicates an intent to permit greater

flexibility in the distribution of section 201.105 drugs than

of prescription human drugs and therefore the term “other

order” should be read to permit orders transmitted through

the buyer rather than directly to the vendor. The history

of the promulgation of this regulation indicates that, in-

deed, more flexibility was intended for the sale of section

201.105 drugs, but not of the sort argued for by the defen-

dants. As originally proposed, the predecessor of section

201.105(a) (1) read only “on the order of” and did not

contain the words “prescription or other.” See 17 Fed.

Reg. 1130, 1131 (1952) (proposed February 5, 1952). The

agency’s response to comments on the proposed regulation

contains the following passage:

The American College of Apothecaries and the

American Pharmaceutical Ass’n. call attention to the

omission of the word “prescription” in subparagraph

(1) and to the use instead of “order of a licensed vet-

erinarian.” This was done so as not to interfer with

the practice, legal in several states, for food stores, ani-

mal health stores, and other outlets who do not employ

pharmacists to sell restricted drugs on veterinarians’

orders. We see no objection to inserting, however,

“prescription or other” before “order of a licensed

veterinarian.”

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Memo. of Deputy Comm. of Food and Drugs, April 21,

1952, at 7; II Joint App. 534, 540. Thus, the difference

between prescription and order was intended to accom-

modate the difference between pharmacist and nonpharma-

cist vendors and not to indicate a relaxation in the manner

in which the veterinarian’s order could be communicated.

Finally, defendants argue that a requirement of direct

communication between veterinarian and vendor is im-

practicable in an industry in which direct contact with

veterinarians is difficult. Dairy farmers should be able,

they argue, to obtain a diagnosis and an order for a drug

by telephone to the veterinarian and then proceed to the

local vendor to purchase the drug. We do not see that

the farmer’s need for expediency would be significantly

hampered by having the veterinarian telephone the farmer’s

vendor to provide the direct prescription or other order

that the regulation requires. The defendants also assert

that the farmer’s freedom to choose his own vendor will

be limited and he will be somehow forced to purchase

drugs at greater cost directly from the veterinarian. If

such practices are actually engaged in by the nation’s

licensed veterinarians, we believe there are remedies avail-

able in the event of abuse. A requirement that unsafe

animal drugs be sold only on the direct order of a veteri-

narian in order to insure that the veterinarian actually

supervises their use does not significantly contribute to the

problems defendants predict but does protect the farmers,

the animals, and the public that consumes the food products

of the livestock against potential harm from improper use

or sale of these unsafe drugs. The district court’s ruling

on this issue is accordingly affirmed.

Al7

IV.

In summary, we AFFIRM the actions of the district

court with respect to both the NAD and the other two

drugs, Calphosan B-12 and epinephrine, and we also AF-

FIRM its ruling with repsect to requiring a written order

from a licensed veterinarian for their proper use.

NATHANIEL R. JONES, Circuit Judge, concurring in part

and dissenting in part.

The majority opinion affirms the district court’s de-

cision to enjoin the distribution of certain animal drugs

on the ground that the drugs are misbranded because they

are not sold in compliance with 21 C.F.R. § 201.105 (1986).

For the reasons discussed below, I disagree and would

reverse the judgment of the district court. I do, however,

concur in Part III of the majority opinion, where the

majority affirms the district court’s ruling requiring a

written order from a licensed veterinarian in order to

distribute the challenged drugs.

As discussed in the majority opinion, the district

court’s injunction covered sixteen drugs falling into three

categories. I will first address the appropriateness of the

injunction placed on the fourteen New Animal Drugs.

Next, I will discuss the injunctions placed on the two other

drugs, Calphosan B-12 injectable and epinephrine.

A.

The majority holds that the FDA can “determine that

approval of an NAD with labeling, restricting resale of the

drugs only upon a licensed veterinarian’s order, renders

that NAD subject to 21 C.F.R. § 201.105 and the misbrand-

ing provisions without requiring the FDA to demonstrate

the toxicity of the drugs in a misbranding action.” (Maj.

op. at 292) (emphasis added). In my view, it is improper

Al18

to allow the government to shortcut the proof necessary

to show the applicability of section 201.105 to these drugs.

The government did not attempt to show directly

that these drugs are ones which “because of toxicity or

other potentiality for harmful effect, or the method of

[their] use, [are] not safe for animal use except under

the supervision of a licensed veterinarian,” which is the

factual predicate for coverage by section 201.105 as stated

in the regulation. Rather, it argued that the drugs fall

within section 201.105 solely because they are required to

bear the cautionary label as part of their approval as New

Animal Drugs. Essentially the government’s position is

that by virtue of bearing the cautionary label for New

Animal Drug purposes these compounds have achieved the

status of “prescription animal drugs’! and, by that fact

alone, they fall within section 201.105 coverage. I find

nothing in the statutes or regulations that prescribes this

reasoning and I cannot accept it per se. I think we must

instead determine whether the findings necessarily made

during the NAD approval process, and which resulted in

a requirement that these drugs bear the cautionary label,

collaterally establish the factual predicate of section 201.105

that the drug is unsafe for use without veterinary super-

vision.

A New Animal Drug is defined as an animal drug

that is

(1) ... not generally recognized, among experts

qualified . . . to evaluate the safety and effectiveness

of animal drugs, as safe and effective for use under

1. Although the government has used the term “prescrip-

tion animal drugs’ in arguments before the district court and

throughout its brief, the phrase does not appear in the statutes or

regulations. For this reason, and because the phrase supports

the government’s position through labeling rather than analysis,

I do not adopt it.

Alg

the conditions prescribed, recommended, or suggested

in the labeling thereof; ... or

(2) ... [which] has become so recognized but

which has not .. . been used to a material extent or

for a material time under such conditions. .. .

21 U.S.C. § 321(w) (1982) (emphasis added). Clearly

nothing in this definition establishes that, merely by being

an NAD, a drug is unsafe for use without veterinary super-

vision under section 201.105. The most this definition es-

tablishes is that the drug is not recognized as safe as labeled.

The introduction into interstate commerce of an NAD

is prohibited by the Act unless an NAD application has

been approved for the drug, and the drug and its labeling

conform to the application. 21 U.S.C. §§ 331(a), 351(a) (5),

360b(a) (1) (1982). A manufacturer who seeks NAD ap-

proval for a drug must submit, as part of the application,

reports of investigations of the safety and effectiveness of

the drug and “specimens for the labeling proposed to be

used for such drug.” 21 U.S.C. § 360b(b)(1) & (6). There

are no specific standards that the labeling must meet, but

the Secretary is directed to refuse approval of the appli-

catio’: if the reports submitted do not show that the drug

is safe for use as directed in the proposed labeling. 21

U.S.C. § 360b(d).

The approved application for each of the fourteen

NAD’s in this case provides that the drug carry the caution-

ary label. Under the approval scheme outlined above how-

ever, the approval of these applications does not amount

to a firrding by the Secretary that these drugs are unsafe

without such a label for two reasons. First, because label-

ing is proposed initially by the applicant, the Secretary

has only to consider whether such labeling is sufficient,

not whether it is necessary. The government admits that

A20

more than half of all approved NAD applications do not

provide for the cautionary label. The Secretary does not

decide what the label should contain, only whether the

proposed label is sufficient. It is possible that the appli-

cant for each of these NAD’s submitted labeling containing

the cautionary label in order to help ease approval, while

the Secretary might have approved the drug without the

cautionary label if it had been so submitted. Thus, all

that can be presumed from the NAD application approval

is that the drug is safe with the cautionary label; it does not

follow that the label is necessary to make the drug safe.

Second, even if the Secretary had specifically required

that these drugs bear the cautionary label, the factual pre-

requisites of that conclusion are not necessarily the same

as those for section 201.105. Assuming that the Secretary

has approved these NAD’s only if they carry the cautionary

label, the reasons for that decision could have been because,

at the time of approval, (1) the tests were insufficient to

establish whether or not the drug was safe for lay use, (2)

the tests although adequate, were inconclusive, or (3) the

tests in fact showed that the drugs were unsafe except

under supervision of a veterinarian. See generally 21

U.S.C. § 360b(d). Section 201.105 requires an affirmative

showing that a drug is unsafe for use without veterinary

supervision. Only one of several grounds for the Secre-

tary’s decision on a NAD approval would establish this

required showing.

The collateral use of the NAD status of these drugs

as proof that they are unsafe under section 201.105 thus

relies on two possibly invalid assumptions: first, that the

Secretary actually considered whether or not the drugs

required the cautionary label and, if so, second, that the

decision was based on a finding that the drugs were in

fact unsafe without the label. Additional facts about the

eo

A21

history of the NAD application approval of each of these

drugs are necessary in order to validate these assumptions,

but have not been presented. The district court accepted

the government’s argument, and its ruling that the New

Animal Drugs are covered by section 201.105 was based

solely on the improper collateral use of the NAD applica-

tion approval. Thus, there was no showing that the drugs

are in fact unsafe for use without veterinary supervision.

Therefore, I would vacate the injunction as to the four-

teen drugs.

The district court stated that the issue before it with

regard to Calphosan B-12 was “whether the unapproved

animal drug ought to be considered a new animal drug”;

that issue, according to the court, turned on whether the

drug should be sold only to or on the order of a licensed

veterinarian. Both statements are incorrect. First, be-

cause many NAD’s are approved without the cautionary

label, the need for veterinary supervision is not necessary

or sufficient for NAD status. Secondly, and more im-

portantly, NAD status does not establish that the drug is

unsafe under section 201.105. The government argues

that, regardless of these errors, the trial court’s finding—

that Caiphosan should be sold only on the order of a

veterinarian—is sufficient to establish the predicate find-

ing required by 201.105. I disagree.

The only evidence considered by the district court and

referred to by the government concerning the safety of

Calphosan was contained in the affidavit of Dr. Vitolis

Vengris and the hearing testimony of Dr. Arthur Aronson.

Dr. Vengris, a veterinarian who evaluates drugs for the

FDA, stated that Calphosan is a vitamin supplement and

that a diagnosis that the supplement is needed can be

A22

made only by a veterinarian with laboratory tests. Un-

needed use of the drug, Dr. Vengris stated, “would be

wasteful and costly to the owner,” and injections “might

needlessly expose the animals to possible infections.”

Dr. Aronson stated only that complex laboratory tests are

required to determine if the drug is needed. Neither of

these statements go to the finding required by section

201.105: ‘because of toxicity or other potentiality for

harmful effect, or the method of its use, [the drug] is not

safe’ for use without veterinary supervision. It is not

enough that a veterinarian is needed to determine whether

the drug is indicated; the regulation is concerned with

whether harm will result from unsupervised use. Neither

doctor stated that the drug is harmful. Dr. Vengris’s state-

ment about the risk of infection is ambiguous. The con-

cern may be based only on the fact that the drug is injected.

It does not appear to be the Secretary’s position that in-

jected drugs are conclusively unsafe under section 201.105,

for at least one drug, epinephrine, is allowed to be sold

over the counter in 10-milliliter vials for administration by

injection. See 21 C.F.R. § 500.65. This ambiguous state-

ment is not enough to support a finding that the drug is

unsafe under section 201.105, and I would vacate the in-

junction as it relates to Calphosan B-12 as well.

C.

The drug epinephrine is governed by its own regula-

tion. That regulation provides that epinephrine can be sold

without a prescription in dosage of 10 milliters or less. 21

C.F.R. § 500.65 (1986). The government claimed that the

defendants dispensed this drug in 30-milliliter vials. The

district court ruled, however, that, for lack of evidence,

the government was not entitled to summary judgment

on the question of whether section 500.65 was violated, and

A23

therefore an injunction could not issue. The court then

issued a declaratory judgment that epinephrine was not

to be sold in excess of 10-milliliter dosages, citing the

declaratory judgment statute, 28 U.S.C. § 2201 (Supp. III

1985).

In essence the court has done no more than declare

that section 500.65 applies to the drug and that it prohibits

sales in dosages of over 10 milliliters without a prescription.

The defendants do not challenge the regulation itself. Con-

sequently, there was no controversy about the issue that

the court decided. In absence of an actual controversy,

declaratory relief is not proper. See 28 U.S.C. § 2201(a);

Jervis B. Webb Co. v. Southern Systems, Inc., 742 F.2d

1388, 1399 (Fed.Cir.1984). Therefore, I would also vacate

the order as it relates to epinephrine.

A24

POST-JUDGMENT MEMORANDUM OPINION AND

ORDER OF THE UNITED STATES DISTRICT

COURT

(Filed June 24, 1985)

Nos. C 78-1470A and C 80-472A

UNITED STATES DISTRICT COURT

NORTHERN DIstTRICT OF OHIO

EASTERN DIVISION

UNITED STATES OF AMERICA,

Plaintiff,

Vv.

IBA, INC., et al.,

Defendants,

UNITED STATES OF AMERICA,

Plaintiff,

v.

JERRY J. COLAHAN, et al.,

Defendants.

POST-JUDGMENT MEMORANDUM OPINION

AND ORDER

Lamsros, District Judge

On May 25, 1985 judgm at was entered in these ac-

tions enjoining defendants from introducing certain vet-

erinary drugs into the stream of interstate commerce.

Defendants now move to stay that judgment pending ap-

peal and ask the Court to reinstate the November 9, 1978

A25

stipulated order that has governed the distribution of the

drugs at issue since the initiation of these actions. Addi-

tionally, defendants seek clarification of the Court’s ruling

that defendants have failed to comply with the provisions

of 21 C.F.R. §201.105. ;

In the May 25, 1985 memorandum opinion and order

accompanying the Court’s judgment in these actions, it was

determined that the slip system used by defendants to

distribute the drugs at issue fails to comply with the re-

quirement of 21 C.F.R. §201.105 that such drugs be sold

“only to or on the prescription or other order of a licensed

veterinarian. .. .” Defendants assert that the Court’s

ruling provides them with no guidance as to what type

of “order” other than a prescription will satisfy the man-

date of the regulation. The meaning of the Court’s order

with respect to this issue is perfectly clear—21 C.F.R.

§201.105 requires direct communication between a vet-

erinarian and the dispenser of the drug. This communi-

cation may take the form of a prescription or any other

oral or written instruction from a veterinarian that is

provided directly to the drug distributor. The slip system

employed by defendants does not necessitate the requisite

direct communication from a veterinarian to the dispenser,

but permits the distribution of regulated drugs solely on

the assertion of a customer that he has reecived a veteri-

narian’s order. Consequently, the Court concluded that

this system violates 21 C.F.R. §201.105. Inasmuch as the

Court’s ruling on this issue is set forth with lucidity in

its May 25, 1985 memorandum opinion and order, defen-

dants’ motion for clarification is denied.

Defendants seek a stay of the Court’s judgment pend-

ing appeal pursuant to Fed. R. Civ. P. 62(c). In order

to establish that they are entitled to a stay of judgment,

defendants bear the burden of showing: (1) that they

A26

are likely to succeed on the merits of the appeal; (2) that

they will suffer irreparable injury unless a stay is granted;

(3) that no substantial harm will come to other interested

parties; and (4) that a stay will do no harm to the public

interest. Reed v. Rhodes, 549 F.2d 1046, 1048 (6th Cir.

1976). Defendants contend that because of the complexity

of the issues presented in these actions, there is a sub-

stantial probability that they will prevail on appeal. Al-

though the issues raised in these cases are indeed complex,

the United States Court of Appeals for the Sixth Circuit

has already provided some indication as to how it is likely

to rule on these cases. In considering an appeal previously

filed in United States v. Colahan, the Court of Appeals

found that the Food and Drug Administration (FDA) was

authorized to promulgate 21 C.F.R. §201.105 pursuant to

the provisions of $502 of the Food, Drug, and Cosmetic Act

(Food and Drug Act), 21 U.S.C. §352(f). The Court of

Appeals stated in that decision that “[{i]mplementation

of the [Food and Drug] Act’s complex statutory scheme

is a job entrusted in the first instance to the FDA. There-

fore, since there is more than one reasonable interpreta-

tion of this statute, the court should follow the interpre-

tation urged by the FDA.’ United States v. Colahan,

635 F.2d 564, 567-68 (6th Cir. 1980). Thus, the Sixth

Circuit has clearly expressed a willingness to provide the

FDA with wide discretion in executing and enforcing the

regulatory scheme established under the Food and Drug

Act. Given these pronouncements by the Court of Ap-

peals, this Court cannot conclude that there is a sufficient

likelihood that defendants will previal on appeal so as to

warrant the issuance of a Stay.

Defendants also contend that the Court’s judgment

should be stayed in order to prevent irreparable harm to

their business. Although the brief supporting defendants’

A27

motion to stay contains several broad assertions concern-

ing the adverse effect that the Court’s judgment will have

on their business, defendants have provided no specific

information or economic data indicating the extent to

which their business will be impaired by the Court’s rul-

ing. Defendants have therefore failed to meet their burden

of demonstrating that they will suffer irreparable injury

in the absence of a stay. Additionally, a consideration of

the public interest as it relates to these cases does not

support the issuance of a stay. These cases involve the

distribution into interstate commerce of drugs which the

FDA considers to be dangerous unless sold under the

supervision of a veterinarian. The Court has determined

that the system employed by defendants to dispense these

drugs does not comply with the regulatory scheme prom-

ulgated by the FDA pursuant to the Food and Drug Act.

A stay of judgment would therefore subject the public

to an unreasonable risk of exposure to drugs which the

FDA has concluded to be dangerous. Defendant’s motion

for a stay of judgment pending appeal is denied.

Defendants also seek a reinstatement of the November

9, 1978 stipulated order governing the distribution of these

drugs pending appeal. In view of the fact that the Court

has rendered a final judgment with respect to these actions

and has determined a stay of that judgment should not

be issued, there ** no reason to warrant the reinstatement

of the November 9, 1978 stipulated order. Accordingly

defendants’ motion to reinstate the November 9, 1978

order is denied.

In support of their motion to stay, defendants have

submitted the affidavit of Mr. Daniel J. Belsito, president

of IBA, Inc. In that affidavit Mr. Belsito avers that the

drug Nitrofuranzone Solution is now permitted to be sold

over the counter without a prescription. Upon stipulation

A28

by the government that this drug is presently permitted

to be sold without a prescription, Nitrofuranzone Solution

shall be exempted from the dictates of the Court’s May

25, 1985 judgment.

In summary, defendants’ motions for clarification,

stay of judgment, and reinstatement of the November 9,

1978 stipulated order are each denied.

IT IS SO ORDERED.

/s/ THomas D. LAMBROS

United States District Judge

A29

JUDGMENT ENTRY OF THE UNITED STATES

DISTRICT COURT

(Filed May 25, 1985)

Nos. C 78-1470 and C 80-472A

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF OHIO

EASTERN DIVISION

UNITED STATES OF AMERICA,

Plaintiff,

V.

JERRY J. COLAHAN, et al.,

Defendants,

UNITED STATES OF AMERICA,

Plaintiff,

Wi

IBA, INC., et al.,

Defendants.

JUDGMENT

Lampros, District Judge

In accordance with the memorandum opinion and

order issued this day in the above-styled causes, wherein

decisions were rendered upon cross motion for summary

judgment, the defendants are hereby enjoined from intro-

ducing the following veterinary drugs into the stream of

interstate commerce: Naquasone Bolus; Dexamycin, Di-

hydrostreptomycin injectable; Oxytocin; Prednisolone in-

A30

jectable; Dexamethasone; Flo-Cillin injectable; Polyflex

injectable; BO-SE injectable; Dry-Clox; Gentavet Solu-

tion; Hetacin-K; Chloramphenicol; Nitrofurazon Solution;

Mu-Se injectable; and Calphosan B-12 injectable. De-

fendants shall cease and desist distribution of these drugs

until it is established by defendants that the manner in

which they market the enumerated drugs complies with

21 C.F.R. §201.105.

It is further ordered that, epinephrine may not be sold

by defendants without a prescription or other order of a

veterinarian in dosage units of greater than 10 milliliters;

It is further ordered that defendants Robert L. Berk-

shire and Ralph A. Sharver are dismissed from these ac-

tions.

It is further ordered that the motion of defendants for

sanctions against the United States is denied.

These rulings on cross motion for summary judgment

are dispositive of all issues.

Accordingly, this action is terminated.

IT IS SO ORDERED.

/s/ THoMAs D. LAMBROS

United States District Judge

A31

MEMORANDUM OPINION AND ORDER OF THE

UNITED STATES DISTRICT COURT

(Filed May 25, 1985)

Nos. C 78-1470 and C 80-472A

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF OHIO

EASTERN DIVISION

UNITED STATES OF AMERICA,

Plaintiff,

V.

JERRY J. COLAHAN, et al.,

Defendants,

UNITED STATES OF AMERICA,

Plaintiff,

V.

IBA, INC., et al.,

Defendants.

MEMORANDUM OPINION AND ORDER

LAMBROS, District Judge

These actions were instituted by the United States

under the Food, Drug, and Cosmetic Act, 21 U.S.C. §§301-

392. to enjoin the introduction by defendants of certain

allegedly misbranded veterinary drugs into the stream

of interstate commerce. Defendants are: Independent

Buyers Association, Inc., (IBA), a Massachusetts corpora-

tion; Daniel J. Belsito, the president of IBA; and seven

A32

Ohio residents—Jerry J. Colahan, Norman F. Bauer, Robert

L. Berkshire, John D. Burrows, Russell C. Humphrey, Jr.,

Simon E. Miller, and Ralph A. Scharver—all seven of

whom the government alleges are engaged in the retail

distribution of misbranded veterinary drugs. At issue

are cross motions for summary judgment and defendant’s

motion for sanctions against the United States. Also pend-

ing is the motion of defendants Robert L. Berkshire and

Ralph Scharver to be dismissed from Case No. C 78-1470 -

because they are no longer affiliated with IBA.

“The Federal Food, Drug, and Cosmetic Act .. . pro-

vides a comprehensive scheme to protect the public from

drugs that may be unsafe or ineffective for their intended

uses.” United States v. An Art. of Drug Con. of 4680

Pails, 725 F.2d 976, 978 (5th Cir. 1984). As a part of this

scheme, the Act regulates the marketing of drugs used

in treating animals which are raised for human consump-

tion or whose by-products are consumed by humans. Id.

The government contends that defendants are marketing

certain veterinary drugs in a manner that causes these

drugs to be misbranded within the meaning of $502(f) (1)

of the Act, 21 U.S.C. §352. Defendants deny that these

drugs are misbranded.

Section 352 provides: “A drug or device shall be

deemed to be misbranded .. . (f) unless its labeling bears

(1) adequate directions for use....” Food and Drug Ad-

ministration (FD.. regulations define adequate directions

for use as “[D]irections under which [a] layman can

use a drug safely and for the purposes for which it is in-

tended. 21 C.F.R. §201.5.

The drugs marketed by defendants fall into two broad

categories, new animal drugs and unapproved animal

drugs.

|

A33

The term “new animal drug” means any drug intended

for use for animals other than man, including any

drug intended for use in animal feed but not in-

cluding such animal feed, - (i) the composition of

which is such that such drug is not generally recog-

nized, among experts qualified by scientific training

and experience to evaluate the safety and effectiveness

of animal drugs, as safe and effective for use under the

conditions prescribed, recommended, or suggested in

the labeling thereof. . .

Title 21 U.S.C. §321(w). The Act establishes a system

of premarketing clearance for new animal drugs by pro-

hibiting their introduction into interstate commerce unless

a Food and Drug Administration (FDA) approved New

Animal Drug Application (NADA) is in effect for that

drug. See 21 U.S.C. §§360b(a)(1)(A) and United States

v. An Art. of Drug. Con. of 4680 Pails, 725 F.2d 976, 978

(Sth Cir. 1984). FDA approved NADA’s are in effect for

the new animal drugs in issue here. NADA approval was

obtained from FDA by the various manufacturers of the

drugs prior to these drugs becoming available to distribu-

tors, such as the defendants, for interstate sale. An ap-

proved NADA establishes the terms and conditions under

which a given new animal drug may be marketed. The

defendants were not a party to the various proceedings

where FDA approved NADA’s for the drugs in issue here.

“A drug that is not a new animal drug can be mar-

keted without FDA approval.” Id. at 980. “For a drug

not to be considered a new animal drug, it must be “gen-

erally recognized” by qualified experts as safe and effec-

tive for each of its intended uses. 21 U.S.C. §321(w).” Id.

Two of the drugs in issue here that are marketed by de-

fendants, epinephrine and calphosan B-12, are not new

A34

animal drugs. These drugs are referred to herein as

unapproved animal drugs.

The government alleges that the new animal drugs

and sold by defendants are misbranded because the de-

fendant’s marketing practices with respect to these drugs

do not conform to FDA regulations, which provide in

pertinent part:

A drug intended for veterinary use which because of

toxicity or other potentiality for harmful effect, or the

method of its use, is not safe for animal use except

under the supervision of a licensed veterinarian, and

hence for which “adequate directions for use” cannot

be prepared, shall be exempt from [21 U.S.C. $352

(f) ] if all of the following conditions are met:

a. The drug is:

1. In the possession of a person (or his agents

or employees) regularly and lawfully engaged in the

manufacture, transportation, storage, or wholesale or

retail distribution of veterinary drugs and is to be

sold only to or on the prescription or other order of

a licensed veterinarian for use in the course of his

professional practice; or

2. In the possession of a licensed veterinarian

for use in the course of his professional practice.

b. The label of the drug bears:

1. The statement “Caution: Federal law re-

stricts this drug to use by or on the order of a li-

censed veterinarian.”

21 C.F.R. §201.105. If a new animal drug satisfies the

conditions set forth in 21 C.F.R. §201.105 it is exempt from

the labelling requirement under 21 U.S.C. $352. It is the

A35

contention of the government that the new animal drugs

in issue here are not marketed in accordance with 21

C.F.R. §201.105 and are thus misbranded.

These cases began as separate actions. United States

v. I.B.A., Inc., Case No. C 80-472A, was instituted in the

District Court of Massachusetts. United States v. Jerry

J. Colahan, Case No. C 78-1470 was initiated in the North-

ern District of Ohio. Because of the relationship between

the defendants, these cases were consolidated on the docket

of this Court. The defendants in the Ohio case, C 78-

1470, are the contractually constituted distributors of IBA

veterinary drugs in the Ohio area. Additionally the issues

raised in the Massachusetts case are related to the issues

raised in the Ohio case.

The government has moved for summary judgment in

Case No. C 80-472A, United States v. IBA, Inc. According

to the government, it has limited its motion to this case

because IBA, Inc., is the source of the veterinary drugs

distributed by the defendants in C 78-1470, United States

v. Colahan. It is the view of the government that the

sweep of the decision in the IBA case will embrace the

defendants in the Colahan case.

Defendants have moved for partial summary judgment

and have made their motion applicable to both cases. The

defendants have also filed briefs in opposition to the sum-

mary judgment motion of the government.

Oral arguments were heard in relation to the motions

of both parties on February 1, 1985.

Summary judgment may be granted only if it appears

from pleadings, depositions, admissions and affidavits, con-

sidered in the light most favorable to the nonmoving party

that there is no genuine issue as to any material fact and

A36

that the moving party is entitled to judgment as a matter

of law. See Fed. R. Civ. Proc. 56(e); Potter v. Columbia

Broadcasting System, Inc., 368 U.S. 464 (1962). The party

against whom the motion is directed is obliged to set forth

facts raising genuine issues of material fact. Berst v.

Adolph Coors Co., 650 F.2d 930 (8th Cir. 1981). Conclu-

sory and unsupported allegations do not meet a nonmoving

party’s burden of showing genuine issues of fact. Bryant

v. Commonwealth of Kentucky, 490 F.2d 1273 (6th Cir.

1974).

The first issue raised by the respective motions for

summary judgment is whether a defendant may challenge

in this action the FDA requirement that an approved

new animal drug carry on its label the words “Caution:

Federal law restricts this drug to use by or on the order

of a licensed veterinarian,” on the ground that the caution

label is unnecessary and/or that the drug is available for

sale without the caution label or must such challenges be

raised before the FDA by the manufacturer of such drug

or any person that seeks to question the drug’s status?

Defendants argue that a challenge to the caution label re-

quirement should be permitted in this Court because cau-

tion labels are frequently affixed to new animal drugs

voluntarily by animal drug manufacturers and not because

of FDA compulsion. Defendants also contend that they

should be permitted to challenge the caution label require-

ment in this Court because they were not parties to the

various administrative proceedings where FDA established

the condition that a caution label must be affixed to the

new animal drugs in issue. The government has stated

that the failure of defendants to support this aspect of

their motion with specific evidence indicating that the

manufacturers voluntarily placed certain labels on these

drugs renders defendants position on this issue of mere

A37

request for an advisory opinion. The government has

stated in the alternative, that this Court does not have ju-

risdiction to determine whether the caution label require-

ment imposed by FDA is valid.

A decision as to whether these defendants may chal-

lenge the FDA requirement that caution labels be placed

on the veterinary drugs in issue here is not an advisory

opinion. The scope of this decision however must be con-

fined to the controversy before the court. In this context,

the FDA has required the manufacturers of the new animal

drugs that defendants market to place caution labels on

these drugs. The FDA imposed this requirement as a

part of its authority under the Act to prohibit the intro-

duction into interstate commerce of any new animal drug

unless the Food and Drug Administration has approved

a new animal drug application in relation to it. Thus, the

requirement to place a caution label on these drugs stems

from their status as new animal drugs. See, 21 U.S.C.

§360(b). “The heart of the ... procedures designed by

Congress [for the regulation of new animal drugs] is the

grant of primary jurisdiction to FDA, the expert agency

it created.” Weinberger v. Hynson, Westcott, and Dun-

ning, 412 U.S. 609, 627 (1973).” “FDA does not have the

final say, for review may be had, not in a district court,

but a court of appeals.” Id. The purpose of the new

animal drug application process is to protect the public

against danger to human life arising from use of unsafe

and ineffective drugs by assuring that before any drug

is marketed it will have been carefully reviewed by FDA.

Premo Pharmaceutical Laboratories v. United States, 629

F.2d 795, 802 (2d Cir. 1980). The FDA has reviewed the

new animal drugs in issue here and determined that given

the level of safety and effectiveness of these drugs, it is

required they must bear the caution Jegend. It is not fora

A38

district court to second guess this determination. “[{Such

a] determination necessarily implicates complex chemical

and pharmacological considerations.” Id. at 814. Such

considerations are not within the conventional experience

of district courts. The FDA is better equipped by reason

of its expertise to make these determinations. See Far

Eastern Conference v. United States, 342 U.S. 576 (1952).

This is not to say that a district court may never

determine that a caution legend is unnecessary. For in-

stance, in situations where the FDA has not passed on

the question of whether a drug should be considered a

new animal drug and required to bear the caution legend

a district court has jurisdiction to decide whether the drug

should be considered a new animal drug. See United States

v. Western Serum Co., Inc., 498 F. Supp. 863 (D. Ariz.

1980). In exercising this jurisdiction the Court should

determine whether there is “general recognition” among

experts that a given drug is safe and effective. If it is

found that a drug is generally recognized as safe and

effective, then it may be held that this drug is not a new

animal drug and the district courts have jurisdiction to per-

mit marketing of the drug without FDA approval or a cau-

tion label. United States v. An Act of Drug Con. of 4680

Pails, 725 F.2d 976, 980 (5th Cir. 1984). This is not the

case here. In this case the FDA has already, designated

these drugs as new animal drugs. Under the rule set

forth in Weinberger v. Hynson, Westcott, and Dunning, 412

U.S. 609 (1973) a district court may not review this de-

termination. Review must be obtained at the circuit court

level.

The defendants have pointed out that the right to

judicial review of the NADA’s involved in these cases has

been lost because the time for seeking circuit court review

A39

under the statute has expired. Thus, the defendants argue

unless review is granted in this forum the right to judicial

review is unavailable.

Where a dispute exists as to whether a drug product

is “generally recognized” by the experts to be safe

and effective, [a] district court [may determine] that

issue, not whether the product is in fact safe and

effective. The latter issue is to be determined by

the FDA which as distinguished from a court, possesses

superior expertise usually of a complex scientific na-

ture, for resolving the issue. Premo Pharmaceuticals

Laooratories v. United States, 629 F.2d 795, 803 (2d

Cir. 1980).

Under the above approach a defendant may present evi-

dence in district court concerning whether there is gen-

ral recognition among experts as to the safety and effec-

tiveness of a new animal drug. The Court need not con-

sider the complex chemical and pharmacological aspects

of this issue or whether the drug is actually safe and

effective. It is only necessary to determine from the evi-

dence whether there is general recognition among experts

concerning the drug’s safety and effectiveness (emphasis

supplied). A determination that a drug is generally recog-

nized as safe and effective would free the drug from new

animal drug status and the requirement that the drug bear

a caution label. The availability of this procedure enables

a defendant that is the subject of a FDA enforcement action

to challenge the new animal drug status of a substance

without being required to go to FDA, the agency that is

suing the defendant, in order to contest the new animal

drug designation. It also mitigates the seeming harshness

of the situation where the drug’s sponsor did not seek

judicial review and the statutory period for any other

A40

person to seek review has expired. The Act provides for

the district courts and FDA to share some of the respon-

sibility for NADA determinations. The major distinction

between court and agency functioning in this regard is

that the courts do not determine whether a drug is ac-

tually safe and effective, but only whether there is a

general recognition among experts concerning a drug's

safety and effectiveness.

The defendants have failed to demonstrate that there

is a genuine issue of material fact as to the general recog-

nition among experts of the safety and effectiveness of

any of the new animal drugs which they market. Defen-

dants have presented no evidence of expert opinion to

support this contention. On the other hand following

regulatory proceedings conducted by FDA, each of these

drugs has been designated as a new animal drug. Under

these circumstances the government is entitled to a judg-

ment as a matter of law that the new animal drugs mar-

keted by IBA are required to bear the caution legend and

be designated as new animal drugs within the meaning of

21 U.S.C. §321(w).

The second issue presented in the motions for sum-

mary judgment is whether a veterinary drug which has

a caution label is misbranded within the meaning of the

relevant statutes if it also carries sufficient instructions

for such drug’s application and usage such that a reason-

ably prudent ultimate user could administer the drug. A

new animal drug is one which is not generally recognized

by experts as safe and effective. Title 21 U.S.C. §321(w),

see also Cutler v. Kennedy, 475 F. Supp. 838, 842 (D.C.D.C.

1979). The regulations which implement the Food, Drug,

and Cosmetic Act, 21 U.S.C. §301, et seq state that ade-

quate directions for use can not be written for unsafe drugs.

A4l

See 21 C.F.R. §201.105. Read together, the plain meaning

of the language within 21 U.S.C. §321(w) and 21 C.F.R.

$201.105 is that adequate directions for use can not be

written for a drug that is not generally recognized by ex-

perts as safe and effective.

Title 21 C.F.R. §201.105 sets forth the conditions that

must be satisfied in order to exempt a drug for which

adequate directions for use cannot be prepared, from the

labelling requirements of the Act. It has been dete:-

mined that Congress has vested the FDA with the au-

thority to promulgate these regulations. See United States

v. Colahan, 635 F.2d 564 (6th Cir. 1980). Thus, whether

a new animal drug is misbranded can only be determined

by comparing how the drug is marketed to the marketing

standards established under 21 C.F.R. §201.105. This com-

parison is closely related to the third issue that the parties

address in their respective motions for summary judgment

and is discussed in the succeeding paragraphs.

The third issue is whether a sale of a new animal drug

be made “on the prescription or other order of a licensed

veterinarian” pursuant to 21 C.F.R. §201.105, by any means

other than upon a prescription slip of a veterinarian or

direct contact by such veterinarian with the drug’s vendor.

Title 21 C.F.R. §201.105 provides that a new animal drug

must be “sold only to or on the prescription or other order

of a licensed veterinarian. .. .” The defendants have

stated that the plain meaning of this provision is that

a prescription is not necessary and the order of a licensed

veterinarian will satisfy the regulation. In this connec-

tion the defendants employ a slip system. The defendant’s

slips are statements which IBA dealers obtain from cus-

tomers. The slips are in the following form:

A42

Hi can ssencepensisnecaeaeeeesnaais request to purchase these drugs

based on an order from a veterinarian ............................

(Drug names listed here).

PONG? ine (32OGRD | 3uccascceen

It is the contention of the defendants that if a “slip” is

obtained from a customer, that obtaining this slip con-

stitutes compliance with the requirement of 21 C.F.R.

§201.105 that drugs be sold only to or on the order of a

licensed veterinarian.

As stated earlier, “[E]ffect must be given to the plain

meaning of statutory language.” Caminetti v. United States,

242 U.S. 471 (1971). It is clear from 21 C.F.R. §201.105

(a) (1) that it is not necessary that a written prescription

from a veterinarian accompany every sale of animal drugs.

The regulation clearly provides for a sale on the “other

order” of a licensed veterinarian. It is clear from the

plain language in the regulation that the order must orig-

inate from a veterinarian. Nothing else can be considered

the order of a veterinarian.

The defendant’s slip system does not satisfy the con-

dition established under 21 C.F.R. §201.105(a)(1) con-

cerning an order of a veterinarian. In effect, the slip

that defendants require from their customers is actually

the order of the customer. The slips do not even require

that the name of the prescribing veterinarian be disclosed.

There is too much room for misrepresentation under the

slip system for it to pass muster. “It is well established

that the task [of the court’s] in interpreting a single act

is to give the Act the most harmonious, comprehensive

meaning possible in light of the legislative policy and pur-

pose.” Weinberger v. Hynson, Westcott and Dunning, 412

U.S. 609. 631 (1973). A system that allows a consumer

to simply assert that a veterinarian has directed the pur-

A43

chase of highly toxic or unsafe drugs can not be reconciled

with the language in 21 C.F.R. §201.105(a)(1) or the

purpose of the Food, Drug, and Cosmetic Act. Reasonable

minds can come to but one conclusion as to the propriety

of the defendant’s slip system. The slip system is violative

of the regulatory criteria set forth in 21 C.F.R. §201.105

(a)(1). The government is entitled to a judgment con-

cerning this issue as a matter of law.

The fourth issue is whether the distributors of the

defendants products are regularly and lawfully engaged

in the manufacture, transportation, storage, or wholesale

and retail distribution of veterinary drugs as required

under 21 C.F.R. §201.105. In order to determine whether

one is “regularly and lawfully engaged” in the distribu-

tion of drugs, it has been the practice of FDA to require

that these persons are licensed under state law. The gov-

ernment has asserted that numerous IBA dealers are not

properly licensed under state law. It is the government’s

contention that where it is shown that an IBA dealer is

not licensed under state law, that the failure to obtain

proper licensing constitutes non compliance with 21 C.F.R.

$201.105.

It is not necessary to determine the fourth issue in

order to resolve these motions for summary judgment.

Assume arguendo that all IBA distributors are regularly

and lawfully engagee in the distribution of drugs. IBA

would still be in violation of the provisions in 21 C.F.R.

$201.105(a) (1) because of the deficiencies in the IBA slip

system. Title 21 C.F.R. §201.105 requires satisfaction of

all of the conditions enumerated within it in order to

qualify for an exemption from 21 U.S.C. §352(f) (1). In-

asmuch as the defendant’s slip system violates an aspect

of 21 C.F.R. §201.105, the defendants are in violation of

the entire regulation. See 21 C.F.R. §201.105. It is there-

A44

fore unnecessary to undertake a lengthy state by state

analysis of the various state licensing requirements to

which IBA must conform.

It is well settled that before an injunction may be

issued under 21 U.S.C. $332 the government must demon-

strate that the Act has been violated in a meaningful and

ongoing way that is likely to result in public harm. United

States v. Diapulse Corp. of America, 457 F.2d 25 (2d Cir.

1972). The government has demonstrated through the

affidavits of FDA inspectors and IBA dealers, that new

animal drugs are being sold to end users under the IBA

slip system. This system is deficient as a matter of law

in that it does not meet the requirement of 21 C.F.R.

$201.105 that drugs be sold only to or on the order of a

licensed veterinarian. The motion of the government for

a summary judgment in relation to the new animal drugs

marketed by the defendant is therefore granted. The

motion of the defendants for a summary judgment in rela-

tion to these drugs is denied. IBA is hereby enjoined

from the introduction of the new animal drugs in issue

here into interstate commerce.

The government has also moved for a summary judg-

ment in relation to two unapproved animal drugs that are

marketed by the defendants, epinephrine and calphosan

B-12. The government has alleged that IBA, Inc. is selling

epinephrine in unit dosages greater than 10 milliliters with-

out a prescription in violation of 21 C.F.R. $500.65. The

government has also alleged that IBA, Inc. is selling cal-

phosan B-12 without prescriptions.

The record in case C80-472A, United States v. IBA, Inc.

and the brief of the government have been reviewed for

evidence of the quantity of epinephrine sold by IBA. No

reference is contained in the government’s brief to a basis

A45

in the record for the assertion that IBA sells epinephrine

without a prescription in quantites in excess of 19 ml.

Therefore, on the basis of the record in this case, the gov-

ernment can not be granted a judgment as a matter of

law in relation to defendants’ epinephrine marketing prac-

tices. However, FDA regulations are clear concerning the

amount of epinephrine that may lawfully be sold without

a prescription. FDA Regulations provide plainly in perti-

nent part:

(b) [T]he Commissioner of Food and Drugs has

concluded that it is in the public interest to make

epinephrine injection 1:1,000 available for sale with-

out a prescription provided that it is packaged in

vials not exceeding 10 milliliters and its label bears

in addition to other required information, the follow-

ing statement in a prominent and conspicuous man-

ner: “For emergency use in treating anaphylactoid

shock . . . inject subcutaneously.”

Although the United States has failed to establish that

it is entitled to an injunction, the absence of a factual dis-

pute regarding epinephrine in this case renders it appro-

priate to accord declaratory relief to the government on

this issue. See 28 U.S.C. $2201. It is therefore ordered,

that epinephrine may not be sold in dosage units in excess

of that amount set forth in 21 C.F.R. $500.65, to wit: 10

milliliters.

The United States contends that IBA should restrict

its sales of calphosan B-12 to veterinarians or for use under

veterinary supervision. Toward this end, the United

States has moved for an injunction that will prohibit IBA

sales of calphosan B-12 unless the drug is sold in con-

tainers that bear a “caution” label. The United States has

moved for summary judgment regarding this issue.

A46

Defendants oppose the motion for summary judgment

on the ground that the testimony of Vitolis E. Vengris,

D.V.M., Ph.D. and Dr. Arthur Aronson, Professor Veteri-

nary Pharmacology at Cornell University, as reflected in

their affidavits that are appended to the government’s

motion, refutes the position of the government that if, “a

[drug] bears a [caution label] it automatically cannot be

administered by a layman.” Defendants’ brief at 10. IBA

argues that this testimony contradicts the position of the

government concerning the import of a caution legend,

making it inappropriate to decide this issue in a summary

judgment context. IBA contends that an evidentiary hear-

ing must be held to consider the calphosan B-12 issue.

Under the regulatory scheme enacted pursuant to the

Act, when an injunction is sought by FDA in relation to

an unapproved animal drug, this initiative is in some

cases tantamount to a request for a determination as to

whether the unapproved animal drug ought to be consid-

ered a new animal drug. This is the situation here. A

review of the affidavits of Dr. Aronson and Dr. Vengris,

clearly demonstrates that these doctors agree that B-12

injectable drugs like Calphosan B-12, should be used only

by or on the order of a licensed veterinarian. Defendants

have produced no evidence whatsoever to rebut this testi-

mony. Hence there is not a genuine dispute concerning

the material issue of whether there is general recognition

among experts as to the safety and effectiveness of Cal-

phosan B-12; Drs. Aronson and Vengris agreed it should

be sold only to or on the order of a licensed veterinarian.

This is the only evidence in the record concerning the

issue. It is determined therefore that Calphosan B-12

should not be marketed as an unapproved animal drug,

but should be considered a new animal drug to be sold

subject to terms and conditions established by FDA in

A47

connection with a NADA. The motion of the United States

in relation to Calphosan B-12 is granted.

IBA, Inc. has asserted in its motion for summary judg-

ment that it intends to challenge at trial the constitutional-

ity of the veterinary drug regulatory framework. The

constitutional arguments asserted in defendants’ motion

have been reviewed. To the extent that these arguments

attack the incorporation of state law into the regulations

that are relevant to this action, these arguments are with-

out merit because the violations of IBA arise from its slip

system, not failure to comply with state law. Thus, the

state law issue is not before this Court. Moreover, the

validity of these regulations has been long established.

These regulations have been considered by federal courts

on numerous occasions. In each instance they have with-

stood scrutiny. Hence, it is my view that the regulatory

scheme operative in these actions is constitutionally valid

and that no arguable basis exists for a constitutional chal-

lenge. It is therefore unnecessary to conduct further evi-

deniary proceedings or hearings to address these issues.

IBA has also moved for sanctions against the govern-

ment on the grounds that the government violated the

May 10, 1982 order of this Court that prohibited the gov-

ernment from using information learned through discovery

in these cases as a basis for the continued investigation of

IBA activities. In support of its motion for sanctions IBA

has provided the affidavits of the following IBA distrib-

utors: Milton Brandow, K. William Allen, and John D.

Bailey. The government has denied that it used informa-

tion learned in the course of this litigation as a basis for

investigations of IBA. In support of the government’s

response are various affidavits of FDA inspectors.

The weight of the evidence adduced does not support a

finding that the government has violated this Court’s May

A48

10, 1982 order and used information learned in this liti-

gation to the detriment of IBA. The motion of IBA for

sanctions is therefore denied and overruled.

IBA has also moved to dismiss two of the defendants

in case no. C 78-1470A, United States v. Colahan, Robert L.

Berkshire and Ralph A. Scharver, on the grounds that these

individuals are no longer affiliated with IBA. The gov-

ernment has filed no opposition to this motion. It is

hereby determined ..............2..2..0.:0:000+: basis of the represen-

tions of counsel for IBA, no opposition having been filed

by the government, that Robert L. Berkshire and Ralph

A. Scharver are hereby dismissed as defendants in case

no. C 78-1470A, United States v. Jerry J. Colahan.

This action is terminated.

IT IS SO ORDERED.

/s/ Tuomas D. LAMBROS

United States District Judge

A49

OPINION OF THE UNITED STATES COURT OF

APPEALS FOR THE SIXTH CIRCUIT

(Decided December 11, 1980)

No. 79-3767

UNITED STATES COURT OF APPEALS

FoR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellant,

V.

JERRY J. COLAHAN, et al.,

Defendants-Appellees.

[635 F.2d 564]

Government brought suit against veterinarians, alleg-

ing that they sold veterinary drugs directly to dairy farm-

ers without a prescription in violation of a regulation

promulgated by the Food and Drug Administration. The

parties stipulated to an order in which defendants agreed

not to distribute nine drugs until further order of the

court. Thereafter, the United States District Court for

the Northern District of Ohio, Eastern Division, Thomas

D. Lambros, J., granted a defense motion to vacate the

stipulated order, and the Government appealed. The Court

of Appeals, Bailey Brown, J., held that: (1) the district

court’s action in granting motion to vacate the stipulated

order was appealable, and (2) the district court erred

as a matter of law in dissolving the stipulated order; de-

fendants’ interpretation of the Federal Food, Drug, and

Cosmetic Act would require that the FDA either allow un-

A50

restricted over-the-counter sale of all veterinary drugs,

or withdraw useful drugs from the market that the FDA

considers to be dangerous unless sold by prescription.

Remanded with instructions.

Before Merritt and Brown, Circuit Judges, and Guy,

District Judge.*

BAILEY Brown, Circuit J udge.

The government brought this action against Colahan

and others (herein collectively referred to as Colahan),

alleging that Colahan sold veterinary drugs directly to dairy

farmers without a prescription in violation of an applicable

regulation promulgated by the Food and Drug Administra-

tion (FDA). The district court issued a temporary re-

straining order. This was replaced six days later by a

stipulated order in which Colahan agreed not to distribute

nine veterinary drugs until further order of the court.

Colahan moved the court after about two months to va-

cate the stipulated order on the ground that FDA did not

have authority to require a prescription in connection

with the sale of these drugs. Almost a year later, the dis-

trict court, recognizing that the question before it was

whether the FDA had authority to promulgate the regu-

lation upon which it relied and concluding that FDA

did not have such authority, granted the motion to vacate.

The district court denied the government’s motion to re-

consider, denied a certification under 28 U.S.C. § 1292(b),

and denied a stay pending appeal. The government now

appeals.

The government’s appeal raises two issues. First,

whether the court’s action in granting the motion to va-

*Honorable Ralph B. Guy, Jr., United States District Judge

for the Eastern District of Michigan, sitting by designation.

A351

cate the stipulated order prohibiting the dispensing of the

drugs except by veterinarian’s prescription is appealable.

Second, if the order is appealable, whether the court’s rul-

ing was in error and requires reversal by this court.

The government contends that the district court’s

ruling is appeatable under 28 U.S.C. § 129Z(a)(1).!. This

section provides a right of appeal from interlocutory de-

cisions which grant, deny, or dissolve injunctions. The

record here shows that the order from which the govern-

ment appeals dissolved, over the government’s objection,

the stipulated order which prohibited distribution of drugs

except by prescription.

We conclude that the order vacating the stipulated or-

der amounted to the dissolution or refusal of an injunction

within the meaning of § 1292(a)(1). The basis for the

district court’s vacating of the order was its opinion that

the FDA had no authority, as a proposition of law, to re-

quire that the drugs be distributed only pursuant to a

prescription. Thus the injunction was dissolved or re-

fused on the merits. Gardner v. Westinghouse Broadcast-

ing Co., 437 U.S. 478, 481, n. 7, 98 S.Ct. 2451, 2453 n. 7, 57

L.Ed.2d 364 (1978).

As we find the order is appealable, we must consider

whether it was an error to vacate the order enjoining

1. § 1292. Interlocutory decisions

(a) The courts of appeals shall have jurisdiction of ap-

peals from:

(1) Interlocutory orders of the district courts of the

United States, the United States District Court for the District

of the Canal Zone, the District Court of Guam, and the Dis-

trict Court of the Virgin Islands, or of the judges thereof,

granting, continuing, modifying, refusing or dissolving in-

junctions, or refusing to dissolve or modify injunctions, ex-

cept where a direct review may be had in the Supreme

Cees ck a

|

A52

Colahan from distributing the nine veterinary drugs.

While a district court’s refusing or dissolving of a tem-

porary injunction can be reversed on appeal only if it is

determined that the district court abused its discretion,

if the district court erred as a matter of law, as the gov-

ernment here contends, such would be an abuse of dis-

cretion. United States v. Beaty, 288 F.2d 653 (6th Cir.

1961).

FDA contends that, in selling the involved drugs to

dairy farmers, the drugs thereby become “misbranded”

within the meaning of 21 U.S.C. § 352(f) which provides:

A drug or device shall be deemed to be misbranded—

(f) Unless its labeling bears (1) adequate direc-

tions for use... . . Provided, That where any require-

ment of clause (1) of this subsection, as applied to

any drug or device, is not necessary for the protection

of the public health, the Secretary shall promulgate

- regulations exempting such drug or device from such

requirement.

In this connection, FDA relies on 21 C.F.R. § 201.5 which

provides in part:

“Adequate directions for use” means directions under

which the layman can use a drug safely and for the

purposes for which it is intended.

The FDA further relies on 21 C.F.R. § 201.105 which pro-

vides in part:

A drug intended for veterinary use which, because

of toxicity or other potentiality for harmful effect, or

the method of its use, is not safe for animal use except

under the supervision of a licensed veterinarian, and

ee |

A53

hence for which “adequate directions for use” can-

not be prepared, shall be exempt from section 502

(f)(1) of the Act if all the following conditions are

met:

(a) The drug is:

(1) In the possession of a person (or his agents

or employees) regularly and lawfully engaged in the

manufacture, transportation, storage, or wholesale or

retail distribution of veterinary drugs and is to be sold

only to or on the prescription or other order of a li-

censed veterinarian for use in the course of his pro-

fessional practice; or

(2) In the possession of a licensed veterinarian

for use in the course of his professional practice.

(b) The label of the drug bears:

(1) The statement “Caution: Federal law re-

stricts this drug to use by or on the order of a licensed

veterinarian” ....

(c)(1) Labeling on or within the package from

which the drug is to be dispensed bears adequate in-

formation for its use, including indications, effects,

dosages, routes, methods, and frequency and duration

of administration, and any relevant hazards, contrain-

dications, side effects, and precautions under which

veterinarians licensed by law to administer the drug

can use the drug safely and for the purposes for which

it is intended, including all purposes for which it is

advertised or represented... .

FDA contends that directions cannot be written which

would permit a layperson to use these drugs safely. There-

fore, under 21 U.S.C. § 352(f), “adequate directions for

A54

use” cannot be written. Thus, contends FDA, under the

proviso contained in § 352(f), it may require by regulation,

as it has, that such drugs are exempt and thus approved

for distribution only if the requirements of 21 C.F.R.

§ 201.105 are met since professional direction, in the words

of the statute, “is necessary for the protection of the public

health.”

Colahan contends, and the district court ruled, that

FDA had no authority to issue the regulation 21 C.F.R.

§ 201.105. As stated in the district court’s opinion vacating

the stipulated order:

The above-emphasized statutory proviso allows

the Secretary to act only when the condition stated in

§ 352(f) exists: adequate directions for use as part

of the label and packaging contents are unnecessary

for protection of the public health. The Secretary may

not act when that condition is not evident. If ade-

quate directions for use are necessary for the protection

of the public health, § 352(f) does not provide the

Secretary with authority to draft and adopt regulations.

Additionally, even when that condition is met, the

Secretary is only empowered to make exemptions

from regulation, not enact more stringent restrictions

such as § 201.105. However, it is clearly the Secre-

tary’s position that adequate directions for use are nec-

essary here to protect the public health, as evidenced

by the requirement of a prescription and the cautionary

legend. The statute just does not provide regulatory

authority for situations such as this where it is

claimed that “adequate directions for use” can never

be written for the protection of the general public

because the drug and its side-effects are so complex

that it can be dispensed properly only on the advice

of a veterinarian.

A55

We conclude that, while the language of 21 U.S.C.

§ 352(f) and particularly the proviso therein would sug-

gest that the FDA could exempt a drug only when direc-

tions for use are not needed, the proviso is also subject to

the interpretation argued by the government. We further

conclude that the government’s interpretation is the cor-

rect one. We therefore reverse the decision of the district

court. The reasons for our conclusion are as follows:

First, Colahan’s interpretation of the statute reaches

a totally unreasonable result. His interpretation would

require that the FDA either allow unrestricted over-the-

counter sale of all veterinary drugs or withdraw useful

drugs from the market that the FDA considers to be dan-

gerous unless sold by prescription.

We are also persuaded by the FDA’s longstanding ex-

ercise of authority to issue and enforce this regulation.

FDA first promulgated the challenged regulation in 1938.

This administrative interpretation over many years is en-

titled to great weight. Commissioner v. First Security

Bank, 405 U.S. 394, 403, n. 16, 92 S.Ct. 1085, 1091, 31 L.Ed.2d

318 (1972). Implementation of the Act’s complex statu-

tory scheme is a job entrusted in the first instance to the

FDA. Therefore, since there is more than one reasonable

interpretation of this statute, the court should follow the

interpretation urged by the FDA. Udall v. Tallman, 380

U.S. 1, 85 S.Ct. 792, 13 L.Ed.2d 616 (1965); United States

v. Articles of Drug, 625 F.2d 665 (5th Cir. 1980).

Further supporting FDA’s position is the clear indi-

cation that Congress has been aware since 1938 of the

FDA’s interpretation of its statutory authority while it

was legislating in this area, and yet Congress has not re-

stricted such FDA authority. Congress passed the Dur-

ham-Humphrey Amendments in 1951. 65 Stat. 648 (1951).

A56

This amended parts of the Act’s regulatory scheme. The

House report noted awareness of the authority asserted by

the FDA. In discussing “adequate directions for use,” the

report stated:

Drugs suitable for use only by or under the direction

of a licensed practitioner have been exempted from

the adequate directions requirement on condition that

they be labeled .. . [with the prescription legend].

H.R. Rep. No. 700, 82d Cong., Ist Sess. 4 (1951).

Despite Congressional awareness of the FDA’s interpreta-

tion of its authority under the Act, and despite revisions

of the Act in 1951 and 1962, Congress has not eliminated

or modified FDA’s asserted authority. “|AJn agency’s

longstanding construction of its statutory mandate is en-

titled to great respect, ‘especially when Congress has re-

fused to alter the administrative construction.’” Board of

Governors v. First Lincolnwood Corp., 439 U.S. 234, 248,

99 S.Ct. 505, 513, 58 L.Ed.2d 484 (1978). Once an agency’s

interpretation of a statute has been brought to the atten-

tion of Congress, and Congress has not sought to alter that

interpretation although it has amended the statute in other

respects, then presumably the legislative intent has been

correctly discerned. United States v. Rutherford, 442 U.S.

544, 554, n. 10, 99 S.Ct. 2470, 2476 n. 10, 61 L.Ed.2d 68

(1979).

Lastly, this assertion of FDA authority has been rec-

ognized and approved by the courts. United States v.

El-O-Pathic Pharmacy, 192 F.2d 62 (9th Cir. 1951); United

States v. Articles of Drug, 625 F.2d 665 (5th Cir. 1980).

2. See Drug Amendments of 1962, Pub.L.No. 87-781, 76

Stat. 780 (1962); Federal Food, Drug, and Cosmetic Act Amend-

ments (Durham-Humphrey amendments) Pub.L.No. 82-215, 65

Stat. 648 (1951).

A57

Therefore, we conclude that the district court erred

as a matter of law in dissolving the stipulated order pre-

venting Colahan from dispensing certain veterinary drugs

without prescription on the ground that FDA had no au-

thority to require prescriptions as a prerequisite to dispens-

ing of the drugs. We remand with instructions to the

district court to reinstate the stipulated order and for

further proceedings not inconsistent with this opinion.

A58

MEMORANDUM OPINION AND ORDER OF THE

UNITED STATES DISTRICT COURT

(Filed October 9, 1979)

No. C 78-1470 A

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF OHIO

EASTERN DIVISION

UNITED STATES OF AMERICA,

Plaintiff,

V.

JERRY J. COLAHAN, et al.,

Defendants.

MEMORANDUM OPINION AND ORDER

Lampros, District Judge

This action was brought by the United States un-

der the Food, Drug and Cosmetic Act, 21 U.S.C. §301, et

seq. (“the Act”), to enjoin defendants (individual dis-

tributors of veterinary drugs) from selling certain prescrip-

tion veterinary drugs directly to dairymen and other

customers. A Temporary Restraining Order and a stip-

ulated order were issued, based on the presumed validity of

a federal regulation, 21 C.F.R. §201.105. That regulation

was promulgated by the Secretary of the then Depart-

ment of Health, Education and Welfare under the cited

statutory authority of 21 U.S.C. §352(f). The question

now before the Court is whether §201.105 is a valid and

enforceable regulation. It is agreed that the Act pro-

hibits the introduction or delivery of adulterated or mis-

A59

branded foods, drugs, devices or cosmetics into interstate

commerce, and the

“adulteration, mutilation, destruction, obliteration or

removal of the whole or any part of the labeling of, or

the doing of any other act with respect to, a food,

drug, device, or cosmetic, if such act is done while

such article is held for sale (whether or not the first

sale) after shipment in interstate commerce and re-

sults in such article being adulterated or misbranded.”

21 U.S.C. §§331(a), (kK). The federal regulation, 21 C.F.R.

§201.105, was issued by the Secretary under the authority

of 21 U.S.C. §352(f£), which provides the following:

A drug or device shall be deemed to be misbranded—

* * *

(f) Unless its labeling bears (1) adequate directions

for use; and (2) such adequate warnings against use

in the pathological conditions or by children where

its use may be dangerous to health, or against unsafe

dosage or methods or duration of administration or

application, in such manner and form, as are neces-

sary for the protection of users: PROVIDED, That

where any requirement of clause (1) of this subsec-

tion, as applied to any drug or device, is not necessary

for the protection of the public health, the Secretary

shall promulgate regulations exempting such drug

or device from such requirement. (emphasis supplied).

Finally, the controversial regulation, $201.105, reads in part

as follows:

A drug intended for veterinary use which, because of

toxicity or other harmful potentiality for harmful ef-

fect, or the method of its use, is not safe for animal use

ei

A60

except under the supervision of a licensed veterinarian,

and hence, for which “adequate directions for use”

cannot be prepared, shall be exempt from [21 U.S.C.

§352(f)(1)] if all the following conditions are met:

(a) The drug is. . . sold only to or on the prescription

or other order of a licensed veterinarian for use in

the course of his professional practice.... (b) The

label of the drug bears: (1) The statement: “Cau-

tion: Federal law restricts this drug to use by or on

the order of a licensed veterinarian”; and (2) The

recommended or usual dosage; and (3) The route of

administration, if it is not for oral use; and (4) The

quantity or proportion of each active ingredient... .

(c) (1) Labeling on or within the package from which

the drug is to be dispensed bears adequate information

for its use, including indications, effects, dosages,

routes, methods, and frequeney and duration of ad-

ministration, and any relevant hazards, conta-indica-

tions and precautions under which veterinarians . . .

can use the drug safely and for the purposes for which

it is intended, including all purposes for which it is

advertised or represented. ...

The above-emphasized statutory proviso allows the

Secretary to act only when the condition stated in §352(f)

exists: adequate directions for use as part of the label and

packaging contents are unnecessary for protection of the

public health. The Secretary may not act when that con-

dition is not evident. If adequate directions for use are

necessary for the protection of the public health, §352(f)

does not provide the Secretary with authority to draft and

adopt regulations. Additionally, even when that condition

is met, the Secretary is only empowered to make exemp-

tions from regulation, not enact more stringent restrictions

such as $201.105. However, it is clearly the Secretary’s

:

A§1

position that adequate directions for use are necessary here

to protect the public health, as evidenced by the require-

ment of a prescription and the cautionary legend. The

statute just does not provide regulatory authority for sit-

uations such as this where it is claimed that “adequate

directions for use” can never be written for the protection

of the general public because the drug and its side-effects

are so complex that it can be dispensed properly only

on the advice of a veterinarian. Thus the Secretary has

over the years adopted the position that §352(f) gives

him the inherent authority to fill the hiatus in that statute

—i.e., the area where certain drugs are necessary for the

public health but will always be technically misbranded

because “adequate directions for use” are impossible to

devise—by enacting regulations such as §201.105. But such

administrative action, albeit logical, does not justify judicial

addition to the language of the statute because this Court

should not be required ‘“‘to supply an omission in the stat-

ute or to hold that Congress must have intended to do

that which it has failed to do.” United States v. Golden-

berg, 168 U.S. 95, 103 (1897).

In United States v. Sullivan, 332 U.S. 689 (1948), a

retail druggist took several pills from a container properly

labeled for human drugs and placed them in another

container which was not properly labeled. The druggist

then sold the pills in the new container. The Supreme

Court, in a decision delivered by Justice Black, held that

the acts of the druggist violated the requirements of “ade-

quate directions for use.” In so holding, the Supreme

Court gave a literal construction to the Act. The pharma-

cist argued in opposition that such a strict ruling would

apply to similar sales of foods, drugs and cosmetics. The

majority noted that that conclusion would not necessarily

follow, and that statement was further explained in the

A62

concurring opinion of Justice Rutledge. In his analysis,

Justice Rutledge discussed the proviso to $352(f), which

of course concerns the Court today:

... The intent to protect the public health is further

emphasized with the limited scope of the proviso,

which directs the [Secretary] to make exemptions only

when compliance with clause (1) “is not necessary for

the protection of the public health.” ... Under [§352

(f{), the Secretary] is given no power to exempt on

the ground that compliance is impracticable. He can-

not weigh business convenience against protecting the

public health. Only where he finds that labeling is not

necessary to that protection is he authorized to create

an exemption for drugs and devices. Health security

is not only the first, it is the exclusive, criterion.

332 U.S. at 702-703. It is thus clear to this Court that

a common sense, literal reading of §352(f) is called for,

although the Court is aware that such a position may come

as a shock to the FDA at this late date, especially since

other courts have long since allowed the Secretary the

wide latitude and discretion claimed here. See, e.g., United

States v. El-O-Pathic Pharmacy, 192 F.2d 62 (9th Cir. 1951).

Although administrative regulations are entitled to a

presumption of validity, they can be annulled and found

unenforceable when in excess of statutory authority as de-

termined by the natural and plain meaning of the Con-

gressional enactment. See, e.g. Osaka Shosen Kaiska Line

v. United States, 300 U.S. 98, 101 (1937); Western Union

Tel. Co. v. F.C.C., 542 F.2d 346 (3rd Cir.), cert. denied, 429

U.S. 1092 (1976); Diamond Roofing Co. v. O.S.H.R.C., 528

F.2d 645 (5th Cir. 1976). Despite the equities of this case

and the Secretary’s admirable concern for the health of

A63

all citizens, the Court feels it is bound by that principle

to reach the result found here. Finally, the Court does not

view this case as one where the agency’s historical inter-

pretation of one of its enabling statutes is to be afforded

considerable deference. See, e.g., Young v. Tennessee Val-

ley Authority, ........ en , No. 77-1243 (6th Cir., Sept.

24, 1979). At least at this juncture, it is not clear that

Congress has explicitly ratified the agency’s interpretation

asin Young. But most importantly, the statute in question

in Young was arguably ambiguous on its face, whereas

here the proviso to §352(f) speaks plainly and unequi-

vocally. See discussion infra.

From the beginning of this action, the Government has

relied upon §352(f) as the statutory authorization for

§201.105. However, the Government has since modified its

position to assert additional statutory authority under 21

U.S.C. §360b(d) (1), the New Animal Drug Amendment,

as well as 21 U.S.C. §371(a). To begin with, §360b was not

enacted until 1968, whereas the key language of §201.105

was promulgated years earlier. Therefore, §360b cannot

have been the statutory basis for §201.105. Whether the

Secretary could in the future require a prescription and

cautionary legend under §360b is an entirely different

issue than the one presently before the Court; application

of §360b to the facts here is still an undetermined question,

and further consideration may well result in an alter-

native basis for liability. The primary question at this

time is still whether the §201.105 stood upon firm stat-

utory footing when promulgated.

Second, $371(a) provides as follows:

The authority to promulgate regulations for the effi-

cient enforcement of this chapter; except as otherwise

provided in this section, is vested in the Secretary.

A64

The authority of the Secretary to make binding regulations

under §371(a) is not challenged. Surely, such a challenge

would be fruitless, as demonstrated by the Second Circuit

in National Nutritional Foods Association v. Weinberger,

512 F.2d 688, 696-697 (2nd Cir.), cert. denied, 423 U.S.

823 (1975):

Whatever doubts might have been entertained regard-

ing the FDA’s power under [§371(a)] to promulgate

binding regulations were dispelled by the Supreme

Court’s recent decision in Weinberger v. Hyson, West-

cott & Dunning, nc., 412 U.S. 609, 93 S. Ct. 2469, 37

L.Ed. 2d. 207 (1973), and its companion cases, Ciba

Corp. v. Weinberger, 412 U.S. 640, 93 S. Ct. 2495, 37

L.Ed. 2d. 230 (1973); Weinberger v. Bentex Pharama-

ceuticals, Inc., 412 U.S. 645, 93 S.Ct. 2488, 37 L.Ed. 2d.

235 (1973); U.S.V. Pharmaceutical Corp. v. Weinberger,

412 U.S. 655, 93 S.Ct. 2498, 37 L.Ed. 2d. 244 (1973).

Those decisions interpreted [§371(a)] as giving FDA

the power to promulgate substantive regulations hav-

ing the binding force of law rather than mere “in-

terpretive” standards enforceable only on a case-by-

case basis through plenary suits against those refus-

ing to comply. -

However, what is challenged here is whether §201.105 was

properly promulgated in the first place, and hence entitled

to the binding effect afforded by §371(a). The Government

asserts that FDA interpretations of §371(a) and the regula-

tion cloaks §201.105 with an authoritive blanket. How-

ever, the rule that agency construction of its own regula-

tions is entitled to great weight only applies where the

relevant statutory language is unclear or susceptible to

differing interpretations. See Young v. Tennessee Valley

Authority, supra; Air Transport authority Association of

America v. Brownell, 124 F.Supp. 909 (D.D.C. 1954). Thus,

A65

where the language of a statute is clear on its face, a court

cannot avoid its duty of so construing the statute by de-

ferring to a prior, contrary agency interpretation. Avia-

tion Consumer Action Project v. C.A.B., 412 F.Supp. 1028

(D.C. 1976), motion granted in part, denied _in part, 418

F.Supp. 634 (1976). Furthermore, agency decisions which

rest on an erroneous legal foundation, or which are incon-

sistent with a statutory mandate, should be struck down,

N.L.R.B. v. Brown, 380 U.S. 278, 291-292 (1965), and are

not persuasive in judicial proceedings. Florida Citus Ex-

change v. Folsom, 246 F.2d 850 (5th Cir. 1957), reversed

on other grounds, 358 U.S. 153, reh. denied, 358 U.S. 948

(1958).

The Government asserts that the Secretary relied on

$371(a) in enacting §1.106, now §201.105, as evidenced by

Exhibit A attached to its Third Memorandum. Section

371(a) is a general grant of authority to enact regulations

for the limited purpose of efficient enforcement of the Act.

Accordingly, a regulation exempting veterinary drugs from

providing adequate directions for use must necessarily be

consistent with the Congressional mandate of §352(f)

that exemptions from such regulation be limited to the cir-

cumstances stated therein. Thus the regulation, being in

excess of the narrow authority granted by §352(f), could

not properly be found valid under the general grant of

authority in §371(a). The regulation could not have been

promulgated for the “efficient enforcement” of the Act

when the Act specifically limits such regulation in §352(f).

As with the direct analysis under §352(f), the Secretary

has also gone beyond the broader, but still limited grant

of authority of §371(a). It is not the function of the courts

to vindicate the wisdom of the law, Merchants’ Insurance

Company v. Ritchie, 5 Wall 541, 18 L.Ed. 540, 544, 545

(1867), but rather it is the duty of the Court to interpret

A66

a statute as it finds it, without reference to whether its

provisions are wise or unwise. United States v. South-

Eastern Underwriters Association, 322 U.S. 533, 561 (1943);

Olsen v. Nebraska, 313 U.S. 236, 247 (1940). Finally, the

Secretary has amended the complaint to allege (1) adulter-

ation of drugs and (2) improper application for permission

to sell new animal drugs under 21 U.S.C. §360b. While

the government legitimately may be able to proceed against

the defendants for the relief it seeks under those amend-

ments, the Temporary Restraining Order and the stipulated

order were not entered on the basis of either of those le-

gal theories. Hence the Court chooses not to address them.

In light of the above discussion the Court finds that

there is considerable doubt at this stage whether plaintiff

would prevail on the merits, and thus the Temporary Re-

straining Order and the accompanying stipulated order

must be vacated. Rule 65(b), Fed. R. Civ.P. That is

not to say, however, that further proceedings will not

vindicate the Secretary’s position and ultimately entitle

plaintiff to the relief sought. Accordingly, the Court cau-

tions against incorrect interpretation of this order. The

Court does not hold that the Secretary cannot protect the

public health. The Court does not hold that defendants

did not violate the Act and that defendants cannot at some

point be prevented from selling dangerous drugs which

humans may indirectly consume. Those issues have yet

to be decided. Rather, the Court holds only that these

defendants cannot be enjoined at this time from the con-

duct complained of under the authority of §201.105.

A pretrial conference with the Court is scheduled for

November 15, 1979 at 1:30 p.m.

IT IS SO ORDERED.

/s/ THomas D. LAMBROS

United States District Judge

A67

21 U.S.C. § 321(w)

§ 321. Definitions; generally

For the purposes of this chapter—

(w) The term “new animal drug” means any drug

- intended for use for animals other than man, including any

drug intended for use in animal feed but not including

such animal feed,—

(1) the composition of which is such that such

drug is not generally recognized, among experts qual-

ified by scientific training and experience to evaluate

the safety and effectiveness of animal drugs, as safe

and effective for use under the conditions prescribed,

recommended, or suggested in the labeling thereof; ex-

cept that such a drug not so recognized shall not be

deemed to be a “new animal drug” if at any time prior

to June 25, 1938, it was subject to the Food and Drug

Act of June 30, 1906, as amended, and if at such

time its labeling contained the same representations

concerning the conditions of its use; or

(2) the composition of which is such that such

drug, as a result of investigations to determine its

safety and effectiveness for use under such conditions,

has become so recognized but which has not, other-

wise than in such investigations, been used to a ma-

terial extent or for a material time under such con-

ditions; or

(3) which drug is composed wholly or partly of

any kind of penicillin, streptomycin, chlortetracycline,

chloramphenicol, or bacitracin, or any derivative there-

of, except when there is in effect a published order

of the Secretary declaring such drug not to be a new

A68

animal drug on the grounds that (A) the requirement

of certification of batches of such drug, as provided

for in section 360b(n) of this title, is not necessary

to insure that the objectives specified in paragraph

(3) thereof are achieved and (B) that neither sub-

paragraph (1) nor (2) of this paragraph (w) applies

to such drug.

21 U.S.C. § 331(a-d)

§ 331. Prohibited acts

The following acts and the causing thereof are pro-

hibited:

\

(a) The introduction or delivery for introduction into

interstate commerce of any food, drug, device, or cosmetic

that is adulterated or misbranded.

(b) The adulteration or misbranding of any food,

drug, device, or cosmetic in interstate commerce.

(c) The receipt in interstate commerce of any food,

drug, device, or cosmetic that is adulterated or misbranded,

and the delivery or proffered delivery thereof for pay or

otherwise.

(d) The introduction or delivery for introduction into

interstate commerce of any article in violation of section

344 or 355 of this title.

* * * + *

21 U.S.C. § 332(a-b)

§ 332. Injunction proceedings—Jurisdiction of courts.

(a) The district courts of the United States and the

United States courts of the Territories shall have jurisdic-

A69

tion, for cause shown, and subject to the provisions of

section 381 (relating to notice to opposite party) of Title

28, to restrain violations of section 331 of this title, except

paragraphs (h)-(j) of said section.

Violation of injunction

(b) In case of violation of an injunction or restrain-

ing order issued under this section, which also constitutes

a violation of this chapter, trial shall be by the court, or,

upon demand of the accused, by a jury. Such trial shall

be conducted in accordance with the practice and proce-

dure applicable in the case of proceedings subject to the

provisions of section 387 of Title 28.

21 U.S.C. § 352(f)

§$ 352. Misbranded drugs and devices

A drug or device shall be deemed to be mis-

branded—

* * *x ae *

Directions for use and warnings on label

(f) Unless its labeling bears (1) adequate directions

for use; and (2) such adequate warnings against use in

those pathological conditions or by children where its use

may be dangerous to health, or against unsafe dosage

or methods or duration of administration or application,

in such manner and form, as are necessary for the pro-

tection of users: Provided, That where any requirement

of clause (1) of this subsection, as applied to any drug

or device, is not necessary for the protection of the public

health, the Secretary shall promulgate regulations exempt-

ing such drug or device from such requirement.

A70

21 U.S.C. § 360b

§ 360b. New animal drugs—Unsafe new animal drugs

and animal feed containing such drugs;

conditions of safety; exemption of drugs for

research

(a) (1) A new animal drug shall, with respect to any

particular use or intended use of such drug, be deemed

unsafe for the purposes of section 351(a) (5) and section

342(a)-(2) (D) of this title unless—

(A) there is in effect an approval of an applica-

tion filed pursuant to subsection (b) of this section

with respect to such use or intended use of such drug.

(B) such drug, its labeling, and such use conform

to such approved application, and

(C) in the case of a new animal drug subject to

subsection (n) of this section and not exempted there-

from by regulations it is from a batch with respect to

which a certificate or release issued pursuant to sub-

section (n) is in effect with respect to such drug.

A new animal drug shall also be deemed unsafe for such

purposes in the event of removal from the establishment

of a manufacturer, packer, or distributor of such drug

for use in the manufacture of animal feed in any State

unless at the time of such removal such manufacturer,

packer, or distributor has an unrevoked written statement

from the consignee of such drug, or notice from the Sec-

retary, to the effect that, with respect to the use of such

drug in animal feed, such consignee—

(i) is the holder of an approved application under

subsection (m) of this section; or

A71

(ii) will, if the consignee is not a user of the

drug, ship such drug only to a holder of an approved

application under subsection (m) of this section.

(2) An animal feed bearing or containing a new ani-

mal drug shall, with respect to any particular use or in-

tended use of such animal feed, be deemed unsafe for

the purposes of section 351(a) (6) of this title unless—

(A) there is in effect an approval of an applica-

tion filed pursuant to subsection (b) of this section

with respect to such drug, as used in such animal feed,

(B) there is in effect an approval of an applica-

tion pursuant to subsection (m) (1) of this section

with respect to such animal feed, and

(C) such animal feed, its labeling, and such use

conform to the conditions and indications of use pub-

lished pursuant to subsection (i) of this section and

to the application with respect thereto approved under

subsection (m) of this section.

(3) A new animal drug or an animal feed bearing or

containing a new animal drug shall not be deemed unsafe

for the purposes of section 351(a) (5) or (6) of this title

if such article is for investigational use and conforms to

the terms of an exemption in effect with respect thereto

under subsection (j) of this section.

Filing application for uses of new animal

drug; contents

(b) Any person may file with the Secretary an ap-

plication with respect to any intended use or uses of a

new animal drug. Such person shall submit to the Sec-

retary as a part of the application (1) full reports of in-

vestigations which have been made to show whether or

A72

not such drug is safe and effective for use; (2) a full list

of the articles used as components of such drug; (3) a full

statement of the composition of such drug; (4) a full de-

scription of the methods used in, and the facilities and

controls used for, the manufacture, processing, and packing

of such drug; (5) such samples of such drug and of the

articles used as components thereof, of any animal feed

for use in or on which such drug is intended, and of the

edible portions or products (before or after slaughter) of

animals to which such drug (directly or in or on animal

feed) is intended to be administered, as the Secretary may

require; (6) specimens of the labeling proposed to be used

for such drug, or in case such drug is intended for use in

animal feed, proposed labeling appropriate for such use,

and specimens of the labeling for the drug to be manu-

factured, packed, or distributed by the applicant; (7) a

description of practicable methods for determining the

quantity, if any, of such drug in or-on food, and any sub-

stance formed in or on food, because of its use; and (8)

the proposed tolerance or withdrawal period or other use

restrictions for such drug if any tolerance or withdrawal

period or other use restrictions are required in order to

assure that the proposed use of such drug will be safe.

Period for approval of application; period for, notice,

and expedition of hearing; period for issuance

of order

(c) Within one hundred and eighty days after the

filing of an application pursuant to subsection (b) of this

section, or such additional period as may be agreed upon

by the Secretary and the applicant, the Secretary shall

either (1) issue an order approving the application if he

then finds that none of the grounds for denying approval

specified in subsection (d) of this section applies, or (2)

A73

give the applicant notice of an opportunity for a hearing

before the Secretary under subsection (d) of this section

on the question whether such application is approvable.

If the applicant elects to accept the opportunity for a hear-

ing by written request within thirty days after such notice,

such hearing shall commence not more than ninety days

after the expiration of such thirty days unless the Sec-

retary and the applicant otherwise agree. Any such hear-

ing shall thereafter be conducted on an expedited basis

and the Secretary’s order thereon shall be issued within

ninety days after the date fixed by the Secretary for filing

final briefs.

Withdrawal of approval; grounds; immediate

suspension upon finding imminent hazard to

health of man or animals

(e) (1) The Secretary shall, after due notice and

opportunity for hearing to the applicant, issue an order

withdrawing approval of an application filed pursuant to

subsection (b) of this section with respect to any new

animal drug if the Secretary finds—

(A) that experience or scientific data show that

such drug is unsafe for use under the conditions of

use upon the basis of which the application was ap-

proved;

(B) that new evidence not contained in such ap-

plication or not available to the Secretary until after

such application was approved, or tests by new meth-

ods, or tests by methods not deemed reasonably ap-

plicable when such application was approved, evaluated

together with the evidence available to the Secretary

when the application was approved, shows that such

drug is not shown to be safe for use under the condi-

A74

tions of use upon the basis of which the application

was approved or that subparagraph (H) of paragraph

(1) of subsection (d) of this section applies to such

drug;

(C) on the basis of new information before him

with respect to such drug, evaluated together with the

evidence available to him when the application was

approved, that there is a lack of substantial evidence

that such drug will have the effect it purports or is

represented to have under the conditions of use pre-

scribed, recommended, or suggested in the labeling

thereof;

(D) that the application contains any untrue state-

ment of a material fact; or

(E) that the applicant has made any changes from

the standpoint of safety or effectiveness beyond the

variations provided for in the application unless he

has supplemented the application by filing with the

Secretary adequate information respecting all such

changes and unless there is in effect an approval of

the supplemental application. The supplemental ap-

plication shall be treated in the same manner as the

original application.

If the Secretary (or in his absence the officer acting as

Secretary) finds that there is an imminent hazard to the

health of man or of the animals for which such drug is

intended, he may suspend the approval of such application

immediately, and give the applicant prompt notice of his

action and afford the applicant the opportunity for an

expedited hearing under this subsection; but the authority

conferred by this sentence to suspend the approval of an

application shall not be delegated.

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(2) The Secretary may also, after due notice and op-

portunity for hearing to the applicant, issue an order

withdrawing the approval of an application with respect

to any new animal drug under this section if the Secre-

tary finds—

(A) that the applicant has failed to establish a

system for maintaining required records, or has re-

peatedly or deliberately failed to maintain such rec-

ords or to make required reports in accordance with

a regulation or order under subsection (1) of this sec-

tion, or the applicant has refused to permit access to,

or copying or verification of, such records as required

by paragraph (2) of such subsection;

(B) that on the basis of new information before

him, evaluated together with the evidence before him

when the application was approved, the methods used

in, or the facilities and controls used for, the manu-

facture, processing, and packing of such drug are in-

adequate to assure and preserve its identity, strength,

quality, and purity and were not made adequate within

a reasonable time after receipt of written notice from

the Secretary specifying the matter complained of; or

(C) that on the basis of new information before

him, evaluated together with the evidence before him

when the application was approved, the labeling of

such drug, based on a fair evaluation of all material

facts, is false or misleading in any particular and was

not corrected within a reasonable time after receipt of

written notice from the Secretary specifying the mat-

ter complained of.

(3) Any order under this subsection shall state the

findings upon which it is based.

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Service of orders

(g) Orders of the Secretary issued under this section

(other than orders issuing, amending, or repealing regu-

lations) shall be served (1) in person by any officer or

employee of the department designated by the Secretary

or (2) by mailing the order by registered mail or by

certified mail addressed to the applicant or respondent at

his last known address in the records of the Secretary.

Appeal from order

(h) An appeal may be taken by the applicant from

an order of the Secretary refusing or withdrawing ap-

proval of an application filed under subsection (b) or (m)

of this section. The provisions of subsection (h) of section

355 of this title shall govern any such appeal.

Publication in Federal Register; effective date and

revocation or suspension of regulation

(i) When a new animal drug application filed pur-

suant to subsection (b) of this section is approved, the

Secretary shall be notice, which upon publication shall

be effective as a regulation, publish in the Federal Reg-

ister the name and address of the applicant and the con-

ditions and indications of use of the new animal drug cov-

ered by such application, including any tolerance and with-

drawal period or other use restrictions and, if such new

animal drug is intended for use in animal feed, appropriate

purposes and conditions of use (including special labeling

requirements) applicable to any animal feed for use in

which such drug is approved, and such other information,

upon the basis of which such application was approved,

as the Secretary deems necessary to assure the safe and

effective use of such drug. Upon withdrawal of approval

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of such new animal drug application or upon its suspen-

sion, the Secretary shall forthwith revoke or suspend,

as the case may be, the regulation published pursuant to

this subsection (i) insofar as it is based on the approval of

such application.

21 C.F.R. § 201.105 (1986)

3 201.105 Veterinary drugs.

A drug intended for veterinary use which, because of

toxicity or other potentiality for harmful effect, or the

method of its use, is not safe for animal use except under

the supervision of a licensed veterinarian, and hence for

which “adequate directions for use” cannot be prepared,

shall be exempt from section 502(f)(1) of the act if all

the following conditions are met:

(a) The drug is:

(1) In the possession of a person (or his agents or

employees) regularly and lawfully engaged in the manu-

facture, transportation, storage, or wholesale or retail dis-

tribution of veterinary drugs and is to be sold only to or on

the prescription or other order of a licensed veterinarian

for use in the course of his professional practice; or

(2) In the possession of a licensed veterinarian for

use in the course of his professional practice.

(b) The label of the drug bears:

(1) The statement “Caution: Federal law restricts

this drug to use by or on the order of a licensed veteri-

narian”; and

(2) The recommenced or usual dosage; and

(3) The route of administration, if it is not for oral

use; and

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(4) The quantity or proportion of each active ingredi-

ent as well as the information required by section 502(e) -

of the act; and

(5) If it is for other than oral use, the names of all

inactive ingredients, except that:

(i) Flavorings and perfumes may be designated as

such without naming their components.

(ii) Color additives may be designated as coloring

without naming specific color components unles the nam-

ing of such components is required by a color additive

regulation prescribed in Subchapter A of this chapter.

(iii) Trace amounts of harmless substances added

solely for individual product identification need not be

named.

If it is intended for administration by parenteral injection,

the quantity or proportion of all inactive ingredients, except

that ingredients added to adjust the pH or to make the

drug isotonic may be declared by name and a statement

of their effect; and if the vehicle is water for injection, it

need not be named.

(6) An identifying lot or control number from which

it is possible to determine the complete manufacturing his-

tory of the package of the drug;

Provided, however, That in the case of containers too small

or otherwise unable to accommodate a label with sufficient

space to bear all such information, but which are packaged

within on outer container from which they are removed

for dispensing or use, the information required by para-

graphs (b) (2), (3), and (9) of this section may be con-

tained in other labeling on or within the package from

which it is to be so dispensed, and the information referred

to in paragraph (b)(1) of this section may be placed on

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such outer container only, and the information required by

paragraph (b)(6) of this section may be on the crimp

of the dispensing tube.

(c)(1) Labeling on or within the package from which

the drug is to be dispensed bears adequate information for

its use, including indications, effects, dosages, routes,

methods, and frequency and duration of administration,

and any relevant hazards, contraindications, side effects,

and precautions under which veterinarians licensed by law

to administer the drug can use the drug safely and for the

purposes for which it is intended, including all purposes

for which it is advertised or represented; and

(2) If the article is subject to section 512 of the act,

the labeling bearing such information is the labeling au-

thorized by the approved new animal drug application or

required as a condition for the certification or the exemp-

tion from certification requirements applicable to prepara-

tions of antibiotic drugs: Provided, however, That the

information required by paragraph (c) (1) of this section

may be omitted from the dispensing package if, but only

if, the article is a drug for which directions, hazards, warn-

ings, and use information are commonly known to veteri-

narians licensed by law to administer the drug. Upon writ-

ten request, stating reasonable grounds therefore, the Com-

missioner will offer an opinion on a proposal to omit such

information from the dispensing package under this proviso.

(d) Any labeling, as defined in section 201(m) of the

act, whether or not it is on or within a package from which

the drug is to be dispensed, distributed by or on behalf of

the manufacturer, packer, or distributor of the drug, that

furnishes or vurports to furnish information, or suggests

a dosage for the use of the drug (other than dose informa-

tion required by paragraph (b)(2) of this section and

$ 201.100(b) (2) ) contains:

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(1) Adequate information for such use, including in-

dications, effects, dosages, routes, methods, and frequency

and duration of administration, and any relevant warnings,

hazards, contraindications, side effects, and precautions,

and including information relevant to compliance with the

new animal drug provisions of the act, under which veteri-

narians licensed by law to administer the drug can use

the drug safely and for the purposes for which it is in-

tended, including all conditions for which it is advertised

or represented; and if the article is subject to section 512

of the act, the parts of the labeling providing such infor-

mation are the same in language and emphasis as labeling

approved or permitted under the provisions of section 512,

and any other parts of the labeling are consistent with

and not contrary to such approved or permitted labeling;

and

(2) The same information concerning the ingredients

of the drug as appears on the label and labeling on or

within the package from which the drug is to be dispensed;

Provided, however, That the information required by para-

graphs (d) (1) and (2) of this section is not required on

the so-called reminder-piece labeling which calls attention

to the name of the drug but does not include indications

or dosage recommendations for use of the drug.

(e) All labeling, except labels and cartons, bearing

information for use of the drug also bears the date of the

issuance or the date of the last revision of such labeling.

(f) A prescription drug intended for both human and

veterinary use shall comply with paragraphs (e) and (f)

of this section and § 201.100.

(40 FR 13998, Mar. 27, 1975, as amended at 42 FR 15674,

Mar. 22 1977]