U.S. Urges High Court Rejection of Compounding Case

The U.S. government has urged the Supreme Court to reject an appeal by a Texas compounding pharmacy in a closely watched case over whether federal drug law preempts state-law claims challenging the sale of compounded medications.

In a brief filed 5/21 at the invitation of the justices, solicitor general D. John Sauer said the Fifth Circuit correctly ruled that the Federal Food, Drug, and Cosmetic Act (FDCA) does not automatically block state unfair-competition claims targeting the in-state sale of drugs lacking FDA approval.

The case, Wells Pharma of Houston, L.L.C. v. Zyla Life Sciences, L.L.C., stems from a dispute over compounded indomethacin suppositories sold by Wells Pharma and challenged by Zyla Life Sciences under a California unfair-competition law.

The government told the high court that Congress “took care to preserve state law” when enacting the FDCA and argued that state-law claims mirroring federal requirements are not necessarily preempted.

The brief also emphasized that traditional pharmacy compounding has historically been regulated largely by states, although Congress tightened federal oversight after the 2012 fungal meningitis outbreak linked to contaminated compounded drugs.

At issue is whether private plaintiffs may use state consumer-protection and unfair-competition laws to challenge allegedly unlawful compounded drugs, or whether such claims intrude on the FDA’s exclusive authority to enforce the FDCA.

The Justice Department argued that the Fifth Circuit properly distinguished the case from the Supreme Court’s 2001 decision in Buckman Co. v. Plaintiffs' Legal Committee, which barred certain state-law fraud-on-the-FDA claims. According to the government, Zyla’s claims do not seek to police the relationship between Wells Pharma and the FDA, but instead rely on state laws that parallel federal requirements.

The solicitor general nevertheless acknowledged a conflict with a Ninth Circuit ruling cited by Wells Pharma, but described the split as “shallow and uncertain.” The government also argued the case is a poor vehicle for Supreme Court review because the FDA is currently considering possible regulatory action involving the drug at issue, which could alter the legal analysis while the case is pending.

The Fifth Circuit revived Zyla’s lawsuit last year after reversing a Texas federal judge who had found the claims impliedly preempted by federal law. The appellate court held that state laws incorporating federal standards do not inherently conflict with the FDCA.

The case is being closely watched by the pharmaceutical and compounding industries because it could affect ongoing litigation involving compounded GLP-1 obesity drugs and define the extent to which brand-name drugmakers can invoke state law to challenge compounders.