Justia Government & Administrative Law Opinion Summaries

A pharmaceutical manufacturer participating in the federal 340B Drug Pricing Program challenged a Missouri law that prohibits manufacturers from restricting the delivery of discounted 340B drugs to contract pharmacies associated with covered entities. The manufacturer argued that its policy of limiting deliveries to only one contract pharmacy conflicted with Missouri’s statute, which requires delivery to all contract pharmacies designated by covered entities. The manufacturer sought declaratory and injunctive relief, claiming the Missouri statute violated the dormant Commerce Clause and was preempted by federal law.The United States District Court for the Western District of Missouri granted a motion to dismiss the manufacturer’s preemption claims, finding Missouri’s statute did not conflict with federal patent or drug exclusivity laws or the 340B Program, and that Eighth Circuit precedent foreclosed the field preemption argument. The court denied the motion to dismiss the dormant Commerce Clause claim, but ultimately denied the manufacturer’s motion for a preliminary injunction, concluding the manufacturer was unlikely to succeed on the merits of its claims, had not shown irreparable harm, and that the balance of equities and public interest weighed against preliminary relief.The United States Court of Appeals for the Eighth Circuit reviewed the district court’s denial of preliminary injunction under the abuse of discretion standard. The appellate court affirmed the district court’s decision, holding that the Missouri statute regulates only in-state delivery of 340B drugs and does not impermissibly control extraterritorial commerce, discriminate against interstate commerce, or impose excessive burdens in relation to local benefits. The court also found the manufacturer’s preemption claims foreclosed by Eighth Circuit precedent and concluded the statute is neither field nor conflict preempted. The district court’s denial of preliminary injunctive relief was affirmed. View "Novartis Pharmaceuticals Corp. v. Hanaway" on Justia Law

Norwich Pharmaceuticals sought to market a generic version of Xifaxan, a drug invented by Salix Pharmaceuticals for treating irritable bowel syndrome with diarrhea and hepatic encephalopathy. Norwich submitted an Abbreviated New Drug Application (ANDA) to the FDA, identified as number 214369. Salix believed this ANDA infringed its patents and sued Norwich in the United States District Court for the District of Delaware. That court found Norwich’s ANDA infringed Salix’s patents related to hepatic encephalopathy, while the patents for irritable bowel syndrome were invalid as obvious. The court’s final judgment barred FDA approval of Norwich’s ’369 ANDA until Salix’s hepatic encephalopathy patents expired in October 2029.Following the judgment, Norwich amended its ’369 ANDA to remove the indication for hepatic encephalopathy and requested the Delaware District Court modify its judgment to allow immediate FDA approval of the amended ANDA. The court denied this motion, reasoning that Norwich could not change its ANDA after final judgment to circumvent the prior ruling. Norwich appealed to the United States Court of Appeals for the Federal Circuit, which agreed the judgment restricted approval of the entire ANDA, including non-infringing indications, until 2029, and affirmed the Delaware District Court’s decision.After the FDA declined to grant final approval of Norwich’s amended ANDA, instead issuing only tentative approval, Norwich sued in the United States District Court for the District of Columbia, arguing the FDA acted arbitrarily and capriciously. The court granted summary judgment to the FDA and Salix. On appeal, the United States Court of Appeals for the District of Columbia Circuit held that the Delaware District Court’s judgment applied to Norwich’s ANDA as amended, so the FDA correctly delayed final approval until October 2029. The appellate court affirmed the district court’s judgment. View "Norwich Pharmaceuticals, Inc. v. Kennedy" on Justia Law

After the Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization returned abortion regulation to the states, the Food and Drug Administration (FDA) changed its rules to allow the abortion drug mifepristone to be prescribed online and sent by mail, eliminating the prior requirement for in-person doctor visits. The State of Louisiana, joined by an individual plaintiff, challenged this 2023 regulation (the “2023 REMS”) under the Administrative Procedure Act (APA), arguing that the FDA’s decision was not supported by sufficient data and resulted in illegal abortions and increased Medicaid costs within the state.The United States District Court for the Western District of Louisiana found that Louisiana had standing, was likely to succeed on the merits, and was suffering irreparable harm. However, the district court declined to stay the regulation, reasoning that the balance of equities and public interest favored denying immediate relief. Instead, the district court stayed the litigation to allow the FDA to complete its ongoing review of mifepristone’s safety protocols, which the FDA admitted had previously lacked adequate consideration.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed whether a stay of the 2023 REMS pending appeal was warranted under 5 U.S.C. § 705. The Fifth Circuit concluded that Louisiana was strongly likely to succeed on the merits because the FDA’s removal of the in-person dispensing requirement was arbitrary and capricious, relied on insufficient data, and was inadequately explained. The court further found that Louisiana faced ongoing irreparable harm to its sovereign interests and financial losses. The appellate court determined that neither the FDA’s nor the manufacturers’ interests outweighed Louisiana’s injuries or the public interest, and that a stay of the regulation was appropriate. The court therefore granted Louisiana’s motion for a stay pending appeal. View "Louisiana v. FDA" on Justia Law

A group of businesses and consumers involved in the sale and manufacture of consumable hemp products containing manufactured delta-8 THC challenged actions taken by the Texas Department of State Health Services and its commissioner. Following federal and state legislative changes in 2018 and 2019 that removed “hemp” and certain tetrahydrocannabinols (THC) in hemp from the definition of controlled substances, the Texas commissioner objected to a federal rule that would have further decontrolled hemp-derived extracts, including delta-8 THC. The commissioner then amended the state schedules to clarify that manufactured delta-8 THC remained a Schedule I controlled substance, leading to substantial business disruption for the vendors who had entered the delta-8 market.The vendors sued in district court, arguing that the commissioner exceeded her authority both procedurally and substantively under Texas law by modifying the schedules in a way that contradicted the Texas Farm Bill, and that the Department’s website statement about delta-8 THC was an invalid rule under the Texas Administrative Procedure Act (APA). The trial court denied the Department’s plea to the jurisdiction (challenging standing and sovereign immunity) and issued a temporary injunction against enforcement of the amended schedules and the website statement. The Court of Appeals for the Third District of Texas affirmed, concluding that the vendors had standing, the claims were justiciable, and a temporary injunction was appropriate.The Supreme Court of Texas held that the vendors had standing and their claims were ripe for review. However, it concluded that the commissioner acted within her broad statutory discretion and followed proper procedures under Health & Safety Code § 481.034(g) in objecting to the federal rule and amending the schedules. The court also held that the website statement was not an APA “rule.” Accordingly, it reversed the injunction and rendered judgment for the Department, with the only affirmed portion being the finding of standing. View "TEXAS DEPARTMENT OF STATE HEALTH SERVICES v. SKY MARKETING CORP." on Justia Law

A group of pharmaceutical manufacturers that participate in the federal 340B drug pricing program challenged a new West Virginia law, S.B. 325, which imposed restrictions and penalties on manufacturers regarding the delivery of discounted drugs to contract pharmacies. The 340B program is a federal scheme where drug manufacturers provide discounts to designated health care providers (“covered entities”) in exchange for access to the Medicaid market. Dissatisfied with the federal program’s scope, West Virginia enacted S.B. 325, which specifically barred manufacturers from restricting delivery of 340B drugs to any location authorized by a covered entity (including contract pharmacies), and from requiring data submission as a condition for delivery, with significant penalties for violations.The manufacturers sued in the United States District Court for the Southern District of West Virginia seeking to enjoin enforcement of S.B. 325, arguing that it was preempted by federal law. The district court found that the manufacturers were likely to succeed on the merits of their preemption claim, that they faced irreparable harm, and that the balance of equities and public interest favored injunctive relief. The court granted a preliminary injunction against enforcement of the statute.On appeal, the United States Court of Appeals for the Fourth Circuit addressed whether S.B. 325 was preempted by federal law. The Fourth Circuit held that S.B. 325 likely interferes with the federal 340B program by imposing additional conditions on manufacturers solely because of their participation in a federal program, thereby intruding into a domain reserved for federal regulation. The court found that Congress had struck a careful bargain in the 340B program and that West Virginia’s law sought to alter that bargain in a way that conflicted with federal objectives and the enforcement scheme administered by the Department of Health and Human Services. The Fourth Circuit affirmed the district court’s preliminary injunction, barring enforcement of S.B. 325. View "Pharmaceutical Research & Manufacturers of America v. McCuskey" on Justia Law

A California-based company that produces lab-grown chicken sought to distribute and sell its product in Florida. After the company received federal approval from the USDA and FDA to market its lab-grown chicken, Florida enacted SB 1084, a law banning the manufacture, sale, and distribution of all lab-grown meat within the state. The company had previously held tasting events and developed business relationships in Florida but had no plans to manufacture its product there.Following the enactment of SB 1084, the company filed suit in the U.S. District Court for the Northern District of Florida against state officials, seeking declaratory and injunctive relief. The company argued that the federal Poultry Products Inspection Act (PPIA) preempted Florida’s ban, claiming the state’s law imposed “additional or different” ingredient or facilities requirements in violation of the PPIA. The district court denied the company’s motion for a preliminary injunction, finding the company unlikely to succeed on its preemption claims because SB 1084 did not regulate the company’s ingredients, premises, facilities, or operations. The court also addressed standing and procedural questions, ultimately dismissing the preemption claims after the company amended its complaint.On appeal, the United States Court of Appeals for the Eleventh Circuit reviewed whether the filing of an amended complaint or the district court’s dismissal order rendered the appeal moot and whether the company could challenge the Florida law as preempted. The Eleventh Circuit held the appeal was not moot and that the company could bring a preemption action in equity. However, the court concluded the company was unlikely to succeed on the merits. The court held that Florida’s ban did not impose ingredient or facilities requirements preempted by the PPIA, as it simply banned the product’s sale and manufacture. Therefore, the district court’s denial of a preliminary injunction was affirmed. View "Upside Foods Inc v. Commissioner, Florida Department of Agriculture" on Justia Law

A former employee of a pharmaceutical manufacturer brought a qui tam lawsuit under the False Claims Act, alleging that the company improperly calculated and reported its “Best Price” for certain drugs to the Centers for Medicare and Medicaid Services (CMS), as required under the Medicaid Rebate Statute. The plaintiff claimed that, during a period from 2005 to 2014, the company failed to aggregate multiple rebates and discounts given to different entities on the same drug, resulting in inflated “Best Price” reports and underpayment of rebates owed to Medicaid. The complaint asserted that the company was subjectively aware that CMS interpreted the statute to require aggregation of all such discounts, especially after the company’s communications with CMS during a 2006–2007 rulemaking process and the company’s subsequent internal audit.After the government and several states declined to intervene, the United States District Court for the District of Maryland dismissed the amended complaint, finding that, even under the subjective scienter standard established in United States ex rel. Schutte v. SuperValu Inc., the plaintiff had not plausibly alleged that the company acted with actual knowledge, deliberate ignorance, or reckless disregard as to the truth or falsity of its reports. The district court also suggested that ambiguity in the statute precluded a finding of falsity.On appeal, the United States Court of Appeals for the Fourth Circuit reviewed the dismissal de novo. The Fourth Circuit held that the plaintiff’s allegations—including the company’s awareness of CMS’s interpretation of the rule, its targeted audit and compliance efforts, and its continued use of non-aggregated reporting—plausibly alleged the requisite subjective scienter under the False Claims Act. The court clarified that statutory ambiguity does not, at the pleading stage, negate scienter or falsity, and remanded for the district court to address other elements, including falsity, in the first instance. The Fourth Circuit reversed the dismissal and remanded for further proceedings. View "United States ex rel. Sheldon v. Allergan Sales, LLC" on Justia Law

An attorney based in Oklahoma developed a business model to help out-of-state clients enter the state’s medical marijuana industry, which is governed by strict residency and disclosure requirements. He created a two-entity structure: one company, with nominal Oklahoma-resident owners, obtained the necessary state licenses, while a second company, owned and operated by out-of-state clients, ran the actual marijuana operations. The attorney did not disclose the true ownership structure to state authorities, and in some cases, marijuana was grown before the required state registrations were obtained. State authorities began investigating after noticing irregularities, such as multiple licenses listing the same address and repeated use of the same Oklahoma residents as owners, many of whom had little or no involvement in the businesses.Oklahoma state prosecutors charged the attorney with multiple felonies related to his business practices, including conspiracy and submitting false documents. While those charges were pending, a federal grand jury indicted him for drug conspiracy and maintaining drug-involved premises, based on the same conduct. In the United States District Court for the Western District of Oklahoma, the attorney moved to enjoin his federal prosecution, arguing that a congressional appropriations rider barred the Department of Justice from spending funds to prosecute individuals complying with state medical marijuana laws. The district court held an evidentiary hearing and denied the motion, finding that the attorney had not substantially complied with Oklahoma law, particularly due to nondisclosure of ownership interests and failure to obtain required registrations.On appeal, the United States Court of Appeals for the Tenth Circuit affirmed. The court held that the appropriations rider does bar the Department of Justice from spending funds to prosecute private individuals who comply with state medical marijuana laws. However, the court found that the attorney failed to substantially comply with Oklahoma’s requirements, so the rider did not protect him. The court concluded that the district court did not abuse its discretion in denying the injunction. View "United States v. Stacy" on Justia Law

Novartis Pharmaceuticals Corporation manufactures Entresto, a drug used to treat chronic heart failure. MSN Pharmaceuticals, Inc. sought approval from the Food and Drug Administration (FDA) to market a generic version of Entresto by submitting an abbreviated new drug application (ANDA). MSN’s application excluded certain methods of use protected by Novartis’s patents and claimed that the generic drug contained the same active ingredients as Entresto. The FDA approved MSN’s application, prompting Novartis to challenge the approval, arguing that the generic’s labeling and composition were unlawfully different from Entresto.The United States District Court for the District of Columbia reviewed Novartis’s claims under the Administrative Procedure Act. Novartis argued that the FDA’s approval of MSN’s ANDA and denial of Novartis’s citizen petitions were arbitrary and capricious, particularly regarding the omission of patented dosing regimens and indications from the generic’s label, and the determination that the generic contained the same active ingredients as Entresto. The district court granted summary judgment in favor of the FDA, finding that the agency’s actions were reasonable and consistent with statutory and regulatory requirements. Novartis appealed this decision.The United States Court of Appeals for the District of Columbia Circuit affirmed the district court’s judgment. The appellate court held that the FDA reasonably concluded the generic drug’s labeling changes were permissible to avoid patent infringement and did not render the generic less safe or effective for non-patented uses. The court also found that the FDA’s determination that the generic and Entresto shared the same active ingredients was supported by scientific evidence and regulatory guidance. The court applied de novo review to legal questions and deferred to the FDA’s scientific expertise, ultimately upholding the agency’s approval of MSN’s ANDA. View "Novartis Pharmaceuticals Corp. v. Kennedy" on Justia Law

Two pharmaceutical companies challenged a federal program created by the Inflation Reduction Act of 2022, which directs the Centers for Medicare and Medicaid Services (CMS) to negotiate prices for certain high-expenditure prescription drugs lacking generic competition. Under this program, manufacturers of selected drugs must either negotiate a price with CMS or face steep excise taxes on all sales of those drugs, unless they withdraw all their products from specific Medicare and Medicaid programs. Both companies had drugs selected for negotiation and, while litigation was pending, agreed to participate and reached negotiated prices.The United States District Court for the District of New Jersey resolved the cases on cross-motions for summary judgment, as the parties agreed there were no material factual disputes. The District Court ruled in favor of the government, holding that the program did not violate the Takings Clause, the First Amendment, or the unconstitutional conditions doctrine. The companies appealed, and the United States Court of Appeals for the Third Circuit consolidated the appeals.The Third Circuit affirmed the District Court’s orders. It held that participation in Medicare and the negotiation program is voluntary, so there is no physical taking under the Fifth Amendment. The court found that economic incentives to participate do not amount to legal compulsion. It also held that the program’s requirements do not compel speech in violation of the First Amendment, as any speech involved is incidental to the regulation of conduct and participation is voluntary. Finally, the court concluded that the program does not impose unconstitutional conditions, as any compelled speech is limited to the contracts necessary to effectuate the program and does not restrict speech outside those contracts. The court affirmed summary judgment for the government. View "Bristol Myers Squibb Co v. Secretary United States Department of HHS" on Justia Law