Mainers and FDC Act Preemption “In”, and PhRMA and Foreign Commerce Clause “Out” in Dispute Over Drug Importation LawMay 20, 2014
By Kurt R. Karst –
Earlier this week, the U.S. District Court for the District of Maine came one step closer to a merits ruling in a lawsuit filed last September by two Maine pharmacists, three Maine trade associations (the Maine Pharmacy Association, Maine Society of Health-System Pharmacists, and Retail Association of Maine), and the Pharmaceutical Research and Manufacturers of America (“PhRMA”) against Maine’s Attorney General (Janet T. Mills) and Commissioner of Administrative & Financial Services (H. Sawin Millett, Jr.) in an effort to stop implementation of a state law permitting the importation of drug products into the U.S. from licensed retail pharmacies located in certain foreign countries. That state law, titled “An Act To Facilitate the Personal Importation of Prescription Drugs from International Mail Order Prescription Pharmacies,” 2013 Me. Legis. Serv. Ch. 373 (S.P. 60) (L.D. 171) (West) (the “2013 Act”), went into effect on October 9, 2013, and has been challenged as preempted by the FDC Act pursuant to the U.S. Constitution’s Supremacy Clause (U.S. Const. art. VI, cl. 2) and by the Foreign Commerce Clause of the U.S. Consittution (U.S. Const. art. I, § 8 cl. 3). We’ve previously reported on the case here and here, so you can refer to those posts for additional background information.
The challenge to the 2013 Act is the topic of a fully briefed Motion for Preliminary Injunction (here, here, and here) and a fully briefed Motion to Dismiss for lack of standing and for failure to state a claim for which relief may be granted (here, here, and here). Both motions came under advisement late last October. Several weeks later, the Plaintiffs filed a notice of intent to file a Motion for Summary Judgment saying that the case can be resolved purely as a matter of law on Cross-Motions for Summary Judgment on the issue of whether the 2013 Act is preempted by federal law. Summary Judgment motions have not yet been filed – and there’s been some dispute about that process, leading up to a recent Motion for Expedition and request to initiate summary judgment briefing – but before even going there, the Court must first dispense with the Defendants’ Motion to Dismiss (and Motion for Preliminary Injunction, unless it is withdrawn).
Earlier this week, Judge Nancy Torresen issued a 17-page Order dispensing with Defendants’ Motion to Dismiss. The outcome: trimmed down lists of Plaintiffs and claims.
In its Motion to Dismiss, the State contends that the Plaintiffs lack both constitutional and prudential standing to challenge the 2013 Amendment (and also argues that all claims against Commissioner Millett should be dismissed). According to the State:
This suit should be dismissed because no plaintiff has standing to assert violations of these constitutional provisions. The 2013 [Act], which restricts the reach of the Maine Pharmacy Act, does not directly affect plaintiffs. . . . In short, no plaintiff alleges that it has engaged or plans to engage in conduct covered by the 2013 Amendment. Plaintiffs seek to enjoin the enforcement of an amendment that does not apply to them. . . . Moreover, plaintiffs purportedly seek to vindicate the interests of third persons. . . . Finally, plaintiffs’ constitutional claims fall far outside the “zone of interests” protected by the constitutional provisions they invoke.
Plaintiffs struck back, saying that the Motion to Dismiss should be denied in its entirety:
The [2013 Act] exposes Maine patients to the exact risk of harm from unregulated imports of prescription drugs that Congress sought to eliminate in the FDCA. The Law inflicts this injury by subjecting licensed Maine pharmacists to unlicensed foreign competition, stripping them of their exclusive right to dispense prescription drugs in Maine, and imposing significant obstacles to the discharge of their legal, ethical, and fiduciary duties to their patients. The Law also threatens reputational harm to domestic drug manufacturers, who will lose consumer confidence and goodwill if Maine consumers receive from a foreign source adulterated, counterfeit, or expired prescription drugs purporting to be genuine. And the Law has frustrated the mission of several trade associations and forced them to divert resources away from other purposes and toward advocating against the Law.
Any one of these injuries in fact is sufficient to invoke the Court’s jurisdiction and to allow it to adjudicate Plaintiffs’ claims for injunctive and declaratory relief. Defendants’ motion to dismiss thus not only overlooks Plaintiffs’ well-pleaded allegations, but also fails to address the controlling case law.
In her May 15th Order, Judge Torresen agreed that the Mainers in the case (i.e., the pharmacists and trade associations) have Article III standing under a theory of loss of market share, but tossed PhRMA from the case. “PhRMA’s claims rest on a ‘chain of contingencies’ that amount to ‘mere speculation’ that it and its member companies may suffer reputational injuries arising out of physical injuries to Maine consumers who, following the 2013 Act, may be injured by unsafe foreign drugs associated with PhRMA member companies” (emphasis in original), wrote Judge Torreson. Moreover, “PhRMA has no standing to assert harm to the public arising out of the 2013 Act’s dilution of [FDC Act § 801(d)(1)],” which generally prohibits reimportation into the U.S. of domestically manufactured drug products.
Moving on to the Mainers’ prudential standing under the FDC Act (Supremacy Clause) and the Foreign Commerce Clause in light of the State’s claim that Plaintiffs lack standing because they are not within the so-called “zone of interests,” Judge Torresen made another split decision. Relying on the First Circuit’s decision in Pharm. Research and Mfrs. of Am. v. Concannon, 249 F.3d 66 (1st Cir. 2001) aff'd sub nom. Pharm. Research & Mfrs. of Am. v. Walsh, 538 U.S. 644 (2003) – a case in which PhRMA challenged, under the Supremacy Clause, a Maine statute requiring drug companies to participate in a rebate program or else have their products subject to the State Medicaid program’s prior authorization requirements – Judge Torresen ruled that the Mainers “are entitled under the Supremacy Clause to argue that the FDCA preempts the 2013 Act.” But the Court declined to adjudicate Plaintiffs’ Foreign Commerce Clause claims (and dismissed Count II of the Complaint) not finding any “zone of interests.” “The Plaintiffs have not identified any Foreign Commerce Clause case where the plaintiffs were United States citizens and the object of their complaint was a state law,” wrote Judge Torreson. “The interest of certain Maine citizens in striking down a Maine law which addresses foreign trade does not logically fit within the zone of any interest the Foreign Commerce Clause seeks to protect. ”
Judge Torreson also denied the State’s plea for Commissioner Millett to exit the case on the basis that he has no responsibility for enforcement or oversight of the 2013 Act, saying that it is at least plausible that the Plaintiffs’ requested relief will encompass his actions.