IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
July 18, 2008
No. 06-51583
Charles R. Fulbruge III
Clerk
MEDICAL CENTER PHARMACY; APPLIED PHARMACY;
COLLEGE PHARMACY; MED SHOP TOTAL CARE PHARMACY;
PET HEALTH PHARMACY INCORPORATED;
PLUM CREEK PHARMACEUTICALS INCORPORATED;
PREMIER PHARMACY; UNIVERSITY COMPOUNDING PHARMACY;
VETERINARY PHARMACIES OF AMERICA;
WOMEN’S INTERNATIONAL PHARMACY INCORPORATED,
Plaintiffs-Appellees,
v.
MICHAEL B. MUKASEY, U.S. Attorney General,
United States Department of Justice, in His Official Capacity;
MICHAEL O. LEAVITT, Secretary,
Department of Health and Human Services, in His Official Capacity;
ANDREW C. VON ESCHENBACH,
Commissioner of the United States Food and Drug Administration,
in His Official Capacity,
Defendants-Appellants.
Appeal from the United States District Court
for the Western District of Texas
No. 06-51583
Before HIGGINBOTHAM, DAVIS, and SMITH, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
In this appeal we clarify the extent to which the Federal Food Drug and
Cosmetic Act of 1938 (the “FDCA” or the “Act”), 21 U.S.C. §§ 301-397, permits
the Food and Drug Administration (“FDA”) to regulate a common practice of
pharmacies known as “compounding.” Ten pharmacies specializing in com-
pounding prescription drugs for human and animal use (the “Pharmacies”) sued
various federal agencies (collectively, the “FDA”) for declaratory and injunctive
relief permitting them to continue compounding drugs without obtaining the
FDA approval required for “new drugs” under the Act, 21 U.S.C. § 321(p) and (v).
Concluding that the FDCA, as amended, permits compounded drugs to avoid the
new drug approval process but that the exception applies only in certain statu-
torily-delimited circumstances, we vacate and remand.
I.
A.
Drug compounding is the process by which a pharmacist combines or al-
ters drug ingredients according to a doctor’s prescription to create a medication
to meet the unique needs of an individual human or animal patient.1 Com-
pounding is “typically used to prepare medications that are not commercially
available, such as medication for a patient who is allergic to an ingredient in a
mass-produced product.” W. States, 535 U.S. at 361. According to the American
1
See Thompson v. W. States Med. Ctr., 535 U.S. 357, 360-61 (2002) (defining com-
pounding); Prof’ls & Patients for Customized Care v. Shalala, 56 F.3d 592, 593 (5th Cir. 1995)
(same).
2
No. 06-51583
Pharmacists Association, as amici, pharmacists compound patient-specific medi-
cation for a variety of medical purposes, including cancer treatment, where dos-
ages must be calibrated to a “patient’s body size, the type of cancer, the size and
type of tumor, and the clinical condition of the patient;” pediatric treatment,
where available drug dosages must be modified and diluted for use in children;
elderly hospice care, where patients who no longer benefit from curative treat-
ment use compounded dosages therapeutically to “establish optimal pain and
symptom control;” and hospital stays, where “intravenous admixtures” must be
highly individualized to allow administration of drugs “not suitable for other
routes of administration.”
Compounding has deep roots; it “is a traditional component of the practice
of pharmacy and is taught as part of the standard curriculum at most pharmacy
schools.” Id. (citation omitted). Since 1820, pharmacists have relied on com-
pounding instructions contained in the U.S. Pharmacopeia,2 an independent
compendium of drug standards whose authority is recognized by reference in
federal law.3 “Many States specifically regulate compounding practices as part
of their regulation of pharmacies. Some require all licensed pharmacies to offer
compounding services.” Id. (citations omitted).
In 1938, Congress enacted the FDCA to regulate drug manufacturing,
marketing, and distribution. The Act empowers the FDA to require approval of
2
See CHARLES H. LAWALL, THE CURIOUS LORE OF DRUGS AND MEDICINES (FOUR THOU-
SAND YEARS OF PHARMACY) 485 (1927).
3
21 U.S.C. § 351(b) (referencing the U.S. Pharmacopeia’s strength, quality, and purity
standards).
3
No. 06-51583
any “new drug,”4 which the Act defines as “[a]ny drug (except a new animal drug
. . .) the composition of which is such that such drug is not generally recognized
. . . as safe and effective for use under the conditions prescribed, recommended,
or suggested in the labeling thereof.”5 The Act likewise requires approval of
“new animal drugs”6 and defines “new animal drug” in similar terms.7
To be deemed “safe and effective” and thereby obtain FDA approval, a new
drug must undergo an extensive application and approval process.8 Under the
FDCA, an FDA finding of “safe and effective” must be based on “substantial evi-
dence” of expert consensus.9 The “test is rigorous,”10 requiring expensive and
4
21 U.S.C. § 355(a) (“No person shall introduce or deliver for introduction into inter-
state commerce any new drug, unless an approval of an application [by the FDA] is effective
with respect to such drug.”).
5
21 U.S.C. § 321(p)(1).
6
See 21 U.S.C. § 360b(a)(1) (“A new animal drug shall, with respect to any particular
use or intended use of such drug, be deemed unsafe . . . unless . . . there is in effect an approval
of an application filed [with the FDA].”).
7
See 21 U.S.C. § 321(v)(1) (defining “new animal drug” as “any drug intended for use
for animals other than man . . . the composition of which is such that such drug is not generally
recognized . . . as safe and effective for use under the conditions prescribed, recommended, or
suggested in the labeling thereof”).
8
See 21 U.S.C. § 355(b) (detailing process for new human drugs), § 360b(b) (detailing
process for new animal drugs).
9
See 21 U.S.C. § 355(d), (e); Weinberger v. Hynson, Westcott & Dunning, Inc., 412 U.S.
609, 630 (1973) (“The Act requires the Commissioner to disapprove any application when there
is a lack of ‘substantial evidence’ that the applicant’s drug is effective.”).
10
Weinberger, 412 U.S. at 630. “Evidence may be accepted only if it consists of ‘ade-
quate and well-controlled investigations, including clinical investigations, by experts qualified
by scientific training and experience to evaluate the effectiveness of the drug involved . . . .’
The ‘substantial evidence’ requirement reflects the conclusion of Congress, based upon hear-
ings, that clinical impressions of practicing physicians and poorly controlled experiments do
(continued...)
4
No. 06-51583
time-consuming clinical trials estimated by some to cost more than $800 million
per drug.11
A question emerged from Congress’s enactment of the FDCA: When a
pharmacist creates a compounded medication to suit an individual patient, does
the resulting creation constitute a “new drug” requiring FDA approval? If each
individualized drug product produced through compounding required FDA ap-
proval, few would undergo the costly and arduous approval process. And the
lack of approval would in turn make nearly all compounding unlawful under the
FDCA. Although the question whether compounded drugs are “new drugs” was
not before it, the Court has noted in dictum that
it would not make sense to require compounded drugs created to
meet the unique needs of individual patients to undergo the testing
required for the new drug approval process. Pharmacists do not
make enough money from small-scale compounding to make safety
and efficacy testing of their compounded drugs economically feasi-
ble, so requiring such testing would force pharmacists to stop pro-
viding compounded drugs.
Id. at 369-70.12
10
(...continued)
not constitute an adequate basis for establishing efficacy.” Id. (citations omitted).
11
See, e.g., Joseph A. DiMasi, et al., The Price of Innovation: New Estimates of Drug De-
velopment Costs, 22 J. HEALTH ECON. 151 (2003).
12
In considering whether the FDA could deem bulk animal drugs held by a middleman
and intended for veterinarian compounding to be unlawfully “misbranded” under the FDCA,
the Seventh Circuit has observed the following:
No one may sell a new animal drug, or feed containing a new animal drug, with-
out the approval of the Food and Drug Administration. Obtaining approval
takes a long time and costs a lot of money, for the FDA requires thorough exper-
imentation to determine both the drug’s effects on animals and whether its resi-
(continued...)
5
No. 06-51583
For roughly fifty years following the FDCA’s enactment, the compounding
question lay dormant, without dispute and without answer. The FDA did not
seek to enforce “new drug” approval requirements against compounding pharma-
cists but instead left regulation of compounding to the states, and pharmacists
continued to compound drugs without seeking FDA approval.13 In the early
1990’s, however, the FDA became concerned that some pharmacies were pur-
chasing bulk quantities of drug products, “compounding” them into specific drug
products before receiving individual prescriptions, and marketing those drugs
to doctors and patients. Although the agency had long refrained from regulating
pharmacist compounding, it believed that pharmacies engaging in large-scale
bulk compounding were effectively manufacturing drugs under the guise of com-
pounding themSSusing the FDA’s traditional lenience toward compounding as
an end-run around the new drug approval, adulteration, and misbranding pro-
visions of the FDCA.14
12
(...continued)
dues persist in the animals and enter the food chain. . . . We must take it as giv-
en that for significant diseases there are no effective FDA-approved drugs. . . .
Many veterinarians find this state of affairs deplorable. Because they cannot
buy in finished form the drugs they think they should be able to use, they have
elected to make their own. They purchase the active ingredients, mix them in
the proportions they think best, and administer their concoctions as professional
judgment dictates.
United States v. 9/1 Kg. Containers, 854 F.2d 173, 174-75 (7th Cir. 1988) (citations omitted);
see also United States v. Algon Chem., Inc., 879 F.2d 1154, 1155-56 (3d Cir. 1989) (“No veterin-
arian currently holds a [new animal drug application]; [the applications] are apparently held
exclusively by pharmaceutical and animal feed companies which, unlike the veterinarians,
have the resources to develop and test the drugs according to the rigors of the Act.”).
13
See W. States, 535 U.S. at 362; Prof’ls & Patients, 56 F.3d at 593 n.3.
14
See W. States, 535 U.S. at 362 (summarizing rationale); Professionals & Patients, 56
(continued...)
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No. 06-51583
Ostensibly to prevent this end-run around its regulation of drug manufac-
turing, the FDA in 1992 promulgated Compliance Policy Guide No. 7132.16
(Mar. 1992) (“CPG 7132.16”), deemed by this circuit in Professionals & Patients,
56 F.3d at 595-602, to be a valid agency rule under the Administrative Proced-
ures Act. The Guide explained that “while retail pharmacies . . . are exempted
from certain requirements of the [FDCA], they are not the subject of any general
exemption from the new drug, adulteration, or misbranding provisions.” CPG
7132.16, at 1.
Although asserting its expansive authority under the FDCA to require for-
mal approval of all compounded drugs, the FDA declared its intention “generally
[to] continue to defer to state and local officials regulation of the day-to-day prac-
tice of retail pharmacy and related activities.” Id. at 4. Nevertheless, the FDA
warned that it “may, in the exercise of its enforcement discretion, initiate federal
enforcement actions against entities and responsible persons when the scope and
nature of a pharmacy’s activity raises the kind of concerns normally associated
with a manufacturer.” Id. The FDA went on to list nine non-exhaustive factors
it would consider in exercising its enforcement discretion against certain kinds
of manufacturing-as-compounding considered to be hazardous to public health.15
14
(...continued)
F.3d at 593 (same).
15
The agency would consider whether the pharmacy engaged in any of the following
practices:
1. Soliciting business . . . to compound specific drug products . . . .
2. Compounding, regularly, or in inordinate amounts, drug products that are
commercially available in the marketplace and that are essentially generic
copies of commercially available, FDA-approved drug products.
(continued...)
7
No. 06-51583
A few years later, in a move the Pharmacies call a reaction to the FDA’s
1992 policy and the FDA characterizes as a confirmation of it, Congress amend-
ed the FDCA by enacting the Food And Drug Modernization Act of 1997
(“FDAMA”), Pub. L. No. 105-115, 111 Stat. 2296 (codified as amended at 21
U.S.C. § 353a (2000)). Explicitly addressing “pharmacy compounding,” FDAMA
sought to permit pharmacy compounding by exempting compounded drugs from
the FDCA’s new drug approval, adulteration, and misbranding provisions, but
FDAMA simultaneously conditioned the exemption on compliance with a num-
ber of restrictions on compounding practices and pharmacy advertising. Much
like the FDA’s 1992 policy, FDAMA created a safe harbor from the FDCA’s new
15
(...continued)
3. Receiving, storing, or using drug substances without first obtaining written
assurance from the supplier that each lot of the drug substance has been made
in an FDA-approved facility.
4. Receiving, storing, or using drug components not guaranteed or otherwise
determined to meet official compendia requirements.
5. Using commercial scale manufacturing or testing equipment or compounding
drug products.
6. Compounding inordinate amounts of drugs in anticipation of receiving pre-
scriptions in relation to the amounts of drugs compounded after receiving valid
prescriptions.
7. Offering compounded drug products at wholesale to other state licensed per-
sons or commercial entities for resale.
8. Distributing inordinate amounts of compounded products out of state.
9. Failing to operate in conformance with applicable state law regulating the
practice of pharmacy.
CPG 7132.16, at 5.
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No. 06-51583
drug approval requirements so long as a compounding pharmacist observed a
number of requirements designed to ensure the pharmacist was engaged in tra-
ditional compounding rather than disguised manufacturing.16
Although FDAMA did not cover animal drugs, Congress also amended the
FDCA by enacting the Animal Medicinal Drug Use Clarification Act of 1994
(“AMDUCA”), Pub. L. No. 103-396, 108 Stat. 4153 (codified as amended at
§ 360b(a)(4), (5)). In a similar manner as FDAMA, the AMDUCA amended the
FDCA by exempting some extra-label uses of animal drugs from the new drug
approval process while restricting this exemption to certain narrow circum-
stances.
Shortly after passage of FDAMA, however, trouble arose. In 2002, in West-
ern States, 535 U.S. at 368-77, the Court invalidated the advertising-related pro-
visions of FDAMA, affirming the Ninth Circuit’s holding that those portions
were unconstitutional restrictions on commercial speech. Although the Ninth
Circuit had deemed FDAMA non-severable and therefore had invalidated
FDAMA in its entirety, W. States Med. Ctr. v. Shalala, 238 F.3d 1090, 1096-98
(9th Cir. 2001), the Supreme Court declined to address the validity of the re-
maining non-advertising portions of FDAMA, because the parties had not ap-
pealed the severability issue. The Court explained, “Petitioners challenged only
the Court of Appeals’ constitutional holding in their petition for certiorari, and
respondents did not file a cross-petition. We therefore address only the constitu-
tional question, having no occasion to review the Court of Appeals’ severability
16
W. States, 535 U.S. at 364 (“Congress turned portions of [the FDA’s 1992] policy into
law when it enacted FDAMA in 1997. FDAMA, which amends the FDCA, exempts compound-
ed drugs from the FDCA’s ‘new drug’ requirements and other requirements provided the drugs
satisfy a number of restrictions.”).
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No. 06-51583
determination.” W. States, 535 U.S. at 360.
After the Court invalidated the advertising-related portions of FDAMA,
the FDA issued revised Compliance Policy Guides addressing the compounding
of human and animal drugs.17 Observing the Ninth Circuit’s severability hold-
ing, the agency took the position that “all of [FDAMA] is now invalid.” CPG
460.200, at 2. Like their 1992 forebearer, the new Guides assert that compound-
ed human and animal drugs are not exempt from the FDCA’s new drug approv-
al, adulteration, or misbranding provisions. But the Guides again assure phar-
macists that the FDA will use its enforcement discretion against compounding
only where a pharmacy’s activities raise the kinds of concerns normally associ-
ated with manufacturing. And again, the Guides list factors the FDA will use
in determining whether to bring enforcement actions.18
17
See FDA Compliance Policy Guide Sec. 460.200, Pharmacy Compounding (May 2002)
(“CPG 460.200”) (human drugs); FDA Compliance Policy Guide Sec. 608.400, Compounding
of Drugs for Use in Animals (July 2003) (“CPG 608.400”) (animal drugs).
18
For human drugs, these factors are very similar to the factors listed in the 1992
Guide, supra note 15, except that the FDA dropped the earlier Guide’s factors relating to ad-
vertising and out-of-state distribution and added two new factors:
2. Compounding drugs that were withdrawn or removed from the market for
safety reasons . . . .
3. Compounding finished drugs from bulk active ingredients that are not com-
ponents of FDA approved drugs without an FDA sanctioned investigational new
drug application . . . .
CPG 460.200, at 3-4. The thirteen factors applying to animal drugs are similar, though not
identical. CPG 608.400, at 4-5.
10
No. 06-51583
B.
The Pharmacies sued for declaratory and injunctive relief, challenging the
authority of the FDA to regulate compounded drugs under the FDCA. They
sought four principal declaratory judgments:19 first, that compounded drugs are
not “new drugs” or “new animal drugs” under § 321(p)(1) and (v)(1), and on this
basis, that they are not subject to the requirements and prohibitions imposed by
the FDCA on such drugs; second, that the FDCA permits pharmacists to com-
pound drugs from bulk ingredients for non-food animals; third, that the Phar-
macies’ compliance with 21 U.S.C. § 374(a)(2)(A) makes them exempt from the
heightened “records inspection” authorized by § 374(a)(1); and fourth, that CPG
608.400 violates the Administrative Procedures Act.
The district court granted in part and denied in part the motions for sum-
mary judgment. Med. Ctr. Pharmacy v. Gonzales, 451 F. Supp. 2d 854 (W.D.
Tex. 2006). The court granted the Pharmacies’ request for declaratory judgment
regarding the “records inspection” provision and denied their prayer regarding
the Administrative Procedures Act. The court also granted the Pharmacies’ re-
quest for declaratory judgment regarding compounding from bulk ingredients
for non-food animals. The court held, “Drugs compounded from legal bulk ingre-
dients [for non-food animals] do not violate the [FDCA’s] unsafe, adulterated or
misbranded provisions.” Id. at 868.
Addressing whether compounded drugs are “new drugs” or “new animal
drugs,” the court first turned its attention to FDAMA. The court observed that
“when enacted, [FDAMA] exempted compounded drugs from the FDA’s drug ap-
19
The full list of requested declarations and injunctions totaled thirteen. See Med. Ctr
Pharmacy v. Gonzales, 451 F. Supp. 2d 854, 856 (W.D. Tex. 2006).
11
No. 06-51583
proval process, provided that drug compounders complied with various restric-
tions.” Id. at 861. The court therefore found it necessary to address, sua sponte,
whether FDAMA is non-severable and thus rendered void by the Supreme
Court’s invalidation of FDAMA’s advertising provision. The district court held,
“The offending [advertising] portions of § 353a [i.e., FDAMA] are severed and the
remainder of the statute remains in full effect.” Id. at 863.
The district court then reasoned that “the remaining provisions of
[FDAMA] demonstrate that Congress intended to declare that compounding is
an approved and legal practice.” Id. Somewhat curiously, in light of its earlier
acknowledgment of FDAMA’s “various restrictions,” the court fashioned a blan-
ket “implicit exemption” from the FDCA’s “new drug” definitions that appears
to exempt pharmacy compounders regardless of whether they comply with
FDAMA’s specific restrictions:
The existence of the remaining portions of the [FDAMA] permit
pharmacies to compound drugs. Because pharmacies are permitted
to compound, this Court finds that any drugs created by the com-
pounding process are authorized under § 353a and are therefore im-
plicitly exempt from the new drug approval process and the defini-
tions found in 21 U.S.C. § 321(p)(1) and (v)(1).
Id. (emphasis added).20 The court reiterated, “In conclusion, this Court finds
that compounded drugs, when created for an individual patient pursuant to a
prescription from a licensed practitioner, are implicitly exempt from the new
drug definitions contained in 21 U.S.C. §§ 321(p)(1) and (v)(1).” Id. at 865.
20
The court also framed the Pharmacies’ requested declaratory judgment as “a declara-
tion that drugs compounded by licensed pharmacists are not ‘new drugs’ or ‘new animal drugs’
per se under 21 U.S.C. §§ 321(p)(1) and (v)(1).” Med. Ctr. Pharmacy, 451 F. Supp. 2d at 856.
And the court concluded that summary judgment was “granted on [the Pharmacies’] claim that
compounded drugs do not fall under the new drug definitions.” Id. at 865.
12
No. 06-51583
The FDA appeals the holding that compounded drugs are “implicitly ex-
empt” from the “new drug” and “new animal drug” definitions. The agency also
appeals the holding that drugs compounded from bulk ingredients for non-food
animals do not violate the FDCA’s unsafe, adulteration, or misbranding provi-
sions. Neither party appeals the holdings regarding “records inspection” and the
Administrative Procedures Act.
In their briefing on appeal, both sides argue that we need not address
severability to decide whether the FDCA’s “new drug” definitions exempt com-
pounded drugs. For reasons explained below, we disagree and, having found it
necessary to reach the severability question, we requested supplemental briefing
on that issue.21
II.
We review de novo summary judgments and questions of statutory inter-
pretation. Southwestern Bell Tel., L.P. v. Pub. Util. Comm’n, 467 F.3d 418, 421
(5th Cir. 2006). Under Chevron U.S.A., Inc. v. Natural Resources Defense Coun-
21
Although the Pharmacies argue in their supplemental brief that the FDA waived any
challenge to the severability holding, we cannot agree. The FDA and the Pharmacies argued
principally that we need not reach the severability question, but presumably in anticipation
that we might reach the question, the FDA in its opening brief registered its opposition to that
holding. See Brief of Defendants-Appellants at 28-29 & 29 n.5.
A party does not waive an issue merely by suggesting that the court need not reach it
to render its decision, though of course, parties do waive an issue if they fail adequately to brief
it. United States v. Martinez, 263 F.3d 436, 438 (5th Cir. 2001). Here, however, the FDA
stated its position on severability in the body of its brief, made an argument (albeit an austere
one) in defense of that position, and cited relevant authority. Compare, e.g., United States v.
Thames, 214 F.3d 608, 611 n.3 (5th Cir. 2000) (waiver for failing to include arguments in body
of brief) with United States v. Beaumont, 972 F.2d 553, 563 (5th Cir. 1992) (waiver for failing
to “make any argument whatsoever”) and L&A Contracting Co. v. S. Concrete Servs., 17 F.3d
106, 113 (5th Cir. 1994) (waiver for failing to cite relevant authority).
13
No. 06-51583
cil, Inc., 467 U.S. 837 (1984), we apply a two-step inquiry to an agency’s inter-
pretation of its statutory authority. First, we ask “whether Congress has dir-
ectly spoken to the precise question at issue,” id. at 842, and if so, we “must give
effect to the unambiguously expressed intent of Congress,” id. at 843. Second,
if “Congress has not directly addressed the precise question at issue,” the statu-
tory provision is ambiguous and the court must defer to any “permissible con-
struction of the statute” by the agency. Id. Under Chevron’s second step, we
“reverse [an] agency’s decision only if it [is] ‘arbitrary, capricious, or manifestly
contrary to the statute.’” Tex. Coal. of Cities for Util. Issues v. FCC, 324 F.3d
802, 807 (5th Cir. 2003) (quoting Chevron, 467 U.S. at 844).
III.
Agreeing with the Pharmacies, the district court held that compounded
drugs are not “new drugs” within the meaning of § 321(p)(1) of the FDCA, and
on that basis, the court held that compounded drugs are uniformly exempt from
the FDCA’s new drug approval requirements. The FDA argues that compounded
drugs are “new drugs” and consequently must satisfy the new drug approval re-
quirements. We disagree with the district court and agree with the FDA as to
whether compounded drugs are “new drugs.” We disagree with both sides, how-
ever, regarding the implications of that conclusion.
Though compounded drugs are “new drugs,” they are neither uniformly ex-
empt from the new drug approval requirements nor uniformly subject to them.
Properly construed, the statutory scheme as amended by FDAMA creates a lim-
ited exemption from the new drug approval requirements for compounded drugs
that comply with conditions explicitly delineated in FDAMA.
14
No. 06-51583
A.
At the first step of a Chevron analysis, we must determine whether “Con-
gress has directly spoken” in a manner that reveals its “expressed intent.” Chev-
ron, 467 U.S. at 842-43. There is no better or more authoritative expression of
congressional intent than the statutory text: “[I]n all statutory construction
cases, we begin with the language of the statute.” Barnhart v. Sigmon Coal Co.,
534 U.S. 438, 450 (2002). And where “the statutory language is unambiguous
and the statutory scheme is coherent and consistent,” the language of the statute
is usually where we end.22
The FDCA defines “new drug” in § 321(p) as follows:
The term “new drug” means
(1) Any drug (except a new animal drug or an animal
feed bearing or containing a new animal drug) the com-
position of which is such that such drug is not generally
recognized, among experts qualified by scientific train-
ing and experience to evaluate the safety and effective-
ness of drugs, as safe and effective for use under the con-
ditions prescribed, recommended, or suggested in the la-
beling thereof . . . .
§ 321(p)(1) (emphasis added). The latter portion of this definitionSS“not gen-
erally recognized . . . as safe and effective”SSinvokes the statutory standard a
drug must meet to gain FDA approval. See § 355(d). Hence, “any drug . . . the
composition of which” has not already been approved by the FDA constitutes a
“new drug” within the meaning of the statute. And the FDCA makes it unlawful
22
Robinson v. Shell Oil Co., 519 U.S. 337, 340 (1997) (quotation omitted); see also, e.g.,
Garcia v. Gloor, 618 F.2d 264, 268 (5th Cir. 1980) (“[W]e start with [the statute’s] plain words
without pausing to consider whether a statute differently framed would yield results more con-
sonant with fairness and reason.”).
15
No. 06-51583
to dispense a “new drug” without establishing the safeness and effectiveness of
the new drug through the FDA approval process:
No person shall introduce or deliver for introduction into interstate
commerce any new drug, unless an approval of an application filed
pursuant to subsection (b) or (j) of this section is effective with re-
spect to such drug.
§ 355(a) (emphasis added). In other words, if a drug has not already been ap-
proved, it is a “new drug” that must first be approved before it can be dispensed.
The term “drug” is also given a broad definition, which includes “articles intend-
ed for use in the diagnosis, cure, mitigation, treatment, or prevention of disease
in man or other animals.” § 321(g)(1)(B).
The FDA argues that the language of the FDCA’s “new drug” definition is
both plain and expansive. A “new drug” is “any drug” the “composition of which”
has not already been approved for use in accordance with its labeling. Com-
pounded drugs are, after all, drugs. If a compounder changes the composition
of an approved drugSSby mixing or combining an approved drug with something
else to create a different substance or by creating special dosage or delivery
forms of an approved drug inconsistent with a drug’s labeling23SSthe composition
of the individualized concoction created by a compounding pharmacist will not
have been previously approved for use. The resulting substance is therefore a
23
Amici describe some specific practices that would be considered “compounding”:
Pediatric or geriatric patients may need extremely small doses, cancer patients
may need specific combinations of chemotherapy drugs to treat their disease, or
special dosage forms may be necessary to care for patients with AIDS, chronic
pain or other maladies. . . . Still other patients need preservative-free products,
liquids with special flavors, or delivery systems that are not commercially
available.
Br. of Am. Pharmacists Ass’n as Amici Curiae for Appellees, at 8-9.
16
No. 06-51583
“new drug.”
Belying the Pharmacies’ argument that compounded drugs are not “new
drugs” by virtue of their creation by licensed pharmacists, the definition of “new
drug” focuses on the drug’s composition and use rather than on the process by
which it was created. Under the plain language of § 321(p)(1), it does not matter
that the substance has been created through compounding rather than manufac-
turingSSwhether it be through rigorous research and development by a pharma-
ceutical company, through individualized compounding by a pharmacist or
through cut-rate production by a rogue manufacturer. Regardless of how and by
whom it was created, “any” such substance constitutes a “new drug” within the
meaning of § 321(p)(1).
Moreover, the FDCA carves out specific exceptions to the sweeping “new
drug” definition for some “grandfathered” old drugs, see § 321(p)(1), and for
drugs intended only for investigational use, see § 355(i). Where Congress creates
specific exceptions to a broadly applicable provision, the “proper inference . . . is
that Congress considered the issue of exceptions and, in the end, limited the
statute to the ones set forth.” United States v. Johnson, 529 U.S. 53, 58 (2000).
The “new drug” definition contains no general exception for drugs created by
compounding.
The district court found no significant textual argument for exempting
compounded drugs and, instead, shuffled briskly past the statute’s text in search
of its purpose.24 The Pharmacies do little more in their briefs on appeal, except
24
The district court stated, “Taken alone, the new drug definitions might seem to in-
dicate that compound drugs fall within their provisions. However, after examining relevant
case and statutory law, as well as legislative intent, this Court finds that compound drugs are
implicitly exempt from the new drug definitions . . . .” Med. Ctr. Pharmacy, 451 F. Supp. 2d
(continued...)
17
No. 06-51583
to argue that “[t]he word ‘any’ does not always mean ‘all.’”25 The Pharmacies cite
Webster’s Dictionary for the proposition that “any” can mean “one, a, an, or
some.” They do not explain the implications of that assertion, however, and for
good reason: Substituting those words for “any” in the text of § 321(p) would
hardly change its meaning. The Pharmacies seek instead to swap the words
“any drug” for something like “only those drugs not compounded by a pharmacy.”
But neither the word “any” nor its textual context permits such linguistic crea-
tivity.
B.
Although the plain language of § 321(p) does not seem ambiguous as ap-
plied to compounding, the district court and the Pharmacies rely on their view
of the FDCA’s purpose as a trump against the statute’s text. Upon discovering
that a statute’s plain text is in tension with its supposed purpose, one usually
concludes that Congress has spoken ambiguously. Yet, for us to reject the FDA’s
interpretation of § 321(p), Chevron requires the Pharmacies to establish more
than ambiguity; it demands that we defer to the agency’s statutory interpreta-
tion unless it is contrary to Congress’s “unambiguously expressed intent.” 467
U.S. at 843 (emphasis added). Pharmacies can therefore avoid Chevron defer-
ence only by establishing that congressional intent is in fact not ambiguousSS
24
(...continued)
at 858.
25
Although “‘any’ can and does mean different things depending upon the setting,” Nix-
on v. Mo. Mun. League, 541 U.S. 125, 132 (2004), the word generally “has an expansive mean-
ing, that is, one or some indiscriminately of whatever kind,” Dep’t of Housing & Urban Dev.
v. Rucker, 535 U.S. 125, 131 (2002) (quotation omitted).
18
No. 06-51583
that the statute’s purpose is so clear and compelling, despite tension with its
plain text, that it leaves no doubt as to Congress’s intent. That is a heavy bur-
den.
The burden is somewhat eased, however, by what has come to be known
as the “elephant-in-mousehole doctrine” first invoked in Whitman v. American
Trucking Association, 531 U.S. 457, 468 (2001):
[R]espondents must show a textual commitment of authority to the
EPA to consider costs . . . . Congress, we have held, does not alter
the fundamental details of a regulatory scheme in vague terms or
ancillary provisionsSSit does not, one might say, hide elephants in
mouseholes.
American Trucking’s elephant-in-mousehole doctrine reaffirmed similar reason-
ing in FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000). There,
the Court held that nicotine was not a “drug” within the meaning of the FDCA
and thus could not be regulated by the FDA. Although nicotine seemed to fit the
FDCA’s technical definition of a “drug,” the Court declared, “we are confident
that Congress could not have intended to delegate a decision of such economic
and political significance to an agency in so cryptic a fashion.” Brown & Wil-
liamson, 529 U.S. at 160.
Most recently, the Court applied the elephant-in-mousehole doctrine in
Gonzales v. Oregon, 546 U.S. 243 (2006), holding that the Attorney General lacks
authority under the physician-registration provision of the Controlled Sub-
stances Act (“CSA”) to prohibit doctors from prescribing drugs for use in physi-
cian-assisted suicide. Citing American Trucking and Brown & Williamson, the
Court found implausible “[t]he idea that Congress gave the Attorney General
such broad and unusual authority through an implicit delegation in the CSA’s
19
No. 06-51583
registration provision.” Gonzales, 546 U.S. at 267.26
The Pharmacies argue, in essence, that this is an elephant-in-mousehole
case. They suggest that including compounded drugs under the FDCA’s “new
drug” definition would effectively outlaw the common practice of compounding
and that the “new drug” definition is too broad and indefinite to indicate congres-
sional intent for such result. In other words, Congress hid no such elephant in
§ 321(p)’s mousehole.
The Pharmacies reason that Congress never intended to regulate tradi-
tional pharmacy compounding and that the FDCA’s “new drug” provision was
intended only to cover drugs produced through large-scale manufacturing. The
Pharmacies contend that at the time of the FDCA’s enactment, compounding
was adequately regulated by the states, and the FDCA was passed in response
to a perceived lack of oversight of drug manufacturing, not compounding. To ap-
ply the provision to compounded drugs, the Pharmacies argue, would cause an
extraordinary expansion of the FDA’s regulatory authority.
To support their view of congressional intent, the Pharmacies quote two
statements from the FDCA’s legislative history. The President of the American
Pharmaceutical Association told a subcommittee of the Senate Committee on
Commerce the following:
26
Other circuits have begun applying the elephant-in-mousehole doctrine. Compare
Am. Bar Ass’n v. F.T.C., 430 F.3d 457 (D.C. Cir. 2005) (finding elephant-in-mousehole where
Federal Trade Commission claimed authority under financial consumer privacy statute to
regulate attorneys) with Am. Fed’n of Gov’t Employees, AFL-CIO v. Gates, 486 F.3d 1316 (D.C.
Cir. 2007) (finding no elephant-in-mousehole where Department of Defense claimed authority
under National Defense Authorization Act to curtail collective bargaining with civilian employ-
ees), cert. dismissed, 128 S. Ct. 1183 (2008); NISH v. Rumsfeld, 348 F.3d 1263, 1269 (10th Cir.
2003) (holding that “[w]e simply do not see the elephant in the mousehole” where the military
claimed statutory authority to give blind vendors priority in awarding mess hall contracts).
20
No. 06-51583
Regulations governing . . . the practice of pharmacy by pharmacists
are very strict, but the privileges of unlicensed persons operating
outside of pharmacies are so extensive that the public enjoys little
protection in the matter of sales of packaged medicines.27
In a similar vein, Representative Coffee made remarks to the House, approving-
ly quoting the Secretary of Agriculture:
Pharmacists are licensed to compound and dispense drugs. Electri-
cians, plumbers, and steam engineers pursue their respective trades
under license. But there is no such control to prevent incompetent
drug manufacturers from marketing any kind of lethal poison.28
“Floor statements from two Senators cannot amend the clear and unam-
biguous language of a statute.” Barnhart, 534 U.S. at 457. The Court has seen
“no reason to give greater weight to the views of two Senators than to the col-
lective votes of both Houses, which are memorialized in the unambiguous stat-
utory text.” Id. The same, or less, might be said for subcommittee testimony by
an industry spokesman and a statement by a Representative.
These bits of legislative history, moreover, establish only that their speak-
ers were concerned about regulating drug manufacturing; they do not express
any plain intent to refrain from further regulating the drugs created through
pharmacy compounding. To the contrary, “statutory prohibitions often go be-
yond the principal evil to cover reasonably comparable evils, and it is ultimately
the provisions of our laws rather than the principal concerns of our legislators
by which we are governed.” Oncale v. Sundowner Offshore Servs., Inc., 523 U.S.
27
Foods, Drugs, and Cosmetics: Hearings Before a Subcomm. of the Comm. on Com-
merce, 74th Cong. 100, 102 (1935) (statement of Robert P. Fischelis, President, American
Pharmaceutical Ass’n) (quoting survey by committee on costs of medical care).
28
Extension of Remarks of Rep. John M. Coffee, 83 Cong. Rec. 2279, 2279 (June 1, 1938)
(quoting Henry A. Wallace, Secretary of Agriculture).
21
No. 06-51583
75, 79 (1998).29
Given the apparent ubiquity of pharmacy compounding at the time Con-
gress passed the FDCA, it would have been unprecedented for the FDCA to regu-
late compounded drugs. But the same can be said for drugs produced through
manufacturing, which had also not previously been regulated by the federal gov-
ernment. The mere prevalence of a practice hardly establishes the obvious in-
tent not to regulate it.30 Nevertheless, it seems unlikely that Congress intended
to force compounded drugs to undergo the new drug approval process, a require-
ment that would have made compounding nearly impossible and thus nonexis-
tent.31 Construing the “new drug” definition in a way that makes compounding
effectively unlawful appears inconsistent with the likely expectation that com-
pounding would and should persist32 and with other provisions of the FDCA that
29
See also Brown & Williamson, 529 U.S. at 147 (deeming it “relevant” but “[o]f course
. . . not determinative” whether the Congress that enacted the FDCA specifically intended the
Act to cover tobacco products).
30
Cf. United States v. Sullivan, 332 U.S. 689, 693 (1948) (“When it is reasonably plain
that Congress meant its Act to prohibit certain conduct, [nothing] justifies a distortion of the
congressional purpose, not even if the clearly correct purpose makes marked deviations from
custom . . . .”).
31
By one estimate, pharmacists annually compounded more than 250 million
prescriptions around the time of the FDCA’s enactment, and the pharmacy laws of most states
defined the practice of pharmacy to include compounding. Proceedings of the Local Branches,
24 J. AM. PHARM. ASS’N 232, 233 (1935); Joint Session of the American Pharmaceutical Associa-
tion, the American Association of Colleges of Pharmacy and the National Association of Boards
of Pharmacy, 27 J. AM. PHARM. ASS’N 1000, 1010-13 (1938).
32
Cf. Brown & Williamson, 529 U.S. at 139 (“Congress’ decisions to regulate labeling
and advertising . . . reveal its intent that tobacco products remain on the market. Indeed, the
collective premise of these statutes is that cigarettes and smokeless tobacco will continue to
be sold in the United States. A ban of tobacco products by the FDA would therefore plainly
contradict congressional policy.”).
22
No. 06-51583
expressly acknowledge the existence of compounding.33
But this does not quite amount to the reductio ad absurdum it might at
first seem to be. There are two reasons, one small and one large, why the uni-
versally-appreciated practice of compounding would not be extinguished by in-
cluding compounded drugs within the “new drug” definition. First, if one con-
siders “compounding” to include creating specialized dosage forms consistent
with the instructions on a drug’s label, that would be a kind of compounding that
would not result in a “new drug” under the FDCA’s definition.34 That sort of on-
label compounding would be perfectly permissible even without exempting com-
pounded drugs from the “new drug” definition.
Second, and more significantly, even if compounded drugs are effectively
made unlawful by the “new drug” definition and approval requirements, phar-
macists still could continue compounding to the extent allowed by the FDA’s en-
33
For example, provisions of the 1962 amendments to the FDCA exempt from registra-
tion and inspection requirements licensed “pharmacies . . . which do not . . . compound . . .
drugs or devices for sale other than in the regular course of their business of dispensing or
selling drugs or devices at retail.” §§ 360(g)(1), 374(a)(2)(A). As the FDA points out, however,
this reference to compounding cuts another way, as it also suggests Congress’s awareness of
compounding and its ability to create exceptions for compounding when it chooses to do so.
That Congress chose not to do so with respect to the FDCA’s “new drug” definition is instruc-
tive. Where “‘Congress includes particular language in one section of a statute but omits it in
another section of the same Act, it is generally presumed that Congress acts intentionally and
purposely in the disparate inclusion or exclusion.’” Russello v. United States, 464 U.S. 16, 23
(1983) (quoting United States v. Wong Kim Bo, 472 F.2d 720, 722 (5th Cir. 1972)).
34
The specialized dosage form would not be a new drug, because it would be a composi-
tion used “under the conditions prescribed, recommended, or suggested in the [approved]
labeling” of the drug. § 321(p). Amici seem to admit this possibility: “The pharmaceutical
manufacturers recognize the need for compounding, because they include instructions for com-
pounding specialized dosage forms, such as oral suspensions, in some of their package inserts,
which are the instructions for use that accompany any drug product and must be approved pri-
or to distribution by the FDA.” Br. of Am. Pharmacists Ass’n as Amici Curiae for Appellees,
at 8 n.6.
23
No. 06-51583
forcement discretion. The FDA did not enforce the “new drug” requirement
against traditional compounding for decades, and the agency’s Compliance Policy
Guide declared only a limited intention to conduct future enforcement in cases
in which compounding looks more like disguised manufacturing. The FDCA ex-
plicitly permits the FDA to decline enforcement of “minor violations.” 21 U.S.C.
§ 336, and this court has affirmed such discretion in an analogous context, ob-
serving, “Although the [FDCA] makes illegal any amount of substance which
‘may render (food) injurious to health’ the FDA is not required to seek to enjoin,
prosecute or otherwise litigate ‘minor violations’ of the Act,” United States v.
Boston Farm Ctr., Inc., 590 F.2d 149, 151 (5th Cir. 1979) (citations omitted).
Indeed, the Supreme Court has suggested that we should not infer an ab-
surd result from a maximalist interpretation of the FDA’s authority where such
authority is tempered by enforcement discretion.35 When it comes to the slippery
task of distinguishing true compounding from disguised manufacturing, we
should question our own capacity, as a court, to make that distinction in future
cases. In exercising its discretion, the FDA relies on numerous factors and con-
siderations to determine whether a pharmacist is engaged in compounding as
distinguished from manufacturing.36 With no guidance from the statutory text,
we doubt we could do any better, and we are wary of trading the FDA’s discre-
tion for our own.
The Pharmacies may quite understandably find cold comfort in the FDA’s
35
“The scope of the offense which Congress defined is not to be judicially narrowed as
applied to drugs by envisioning extreme possible applications . . . . [The FDA] is given rather
broad discretionSSbroad enough undoubtedly to enable [it] to perform [its] duties fairly without
wasting [its] efforts on what may be no more than technical infractions of law.” United States
v. Sullivan, 332 U.S. at 694.
36
See supra notes 15, 18.
24
No. 06-51583
promised self-restraint. In light, however, of the agency’s statutorily-authorized
enforcement discretion and demonstrated willingness to accommodate tradition-
al compounding’s continued existence, there is reason to think pharmacies would
continue to compound even if compounded drugs were deemed “new drugs.”
Construing the FDCA to give the FDA authority over compounding would thus
not necessarily “lead to a result so bizarre that Congress could not have intended
it.” Johnson, 120 F.3d at 1319 (quotation omitted).
Nonetheless, it remains at least questionable that Congress would have
intended such a large expansion of the FDA’s regulatory authority. And it re-
mains no small burden for compounding pharmacists, as they put it, to “live in
sin”SStheir livelihood having no greater assurance than the FDA’s good graces.
C.
With only the original FDCA’s text, the elephant-in-mousehole doctrine,
and the uncertain evidence of congressional intent, this might have been a diffi-
cult case. A subsequent amendment to the FDCA, however, makes it easy.
In 1997, Congress enacted FDAMA as an amendment to the FDCA. That
amendment provides considerable evidence that Congress sought to address
pharmacy compounding directly and that it did so with the assumption that the
“new drug” provision applies to drugs created through pharmacy compounding.
Moreover, FDAMA alters the FDCA in such a way that reading an implicit com-
pounding exemption into the “new drug” definition would render other crucial
parts of the statute superfluous. If we read the FDCA in light of its amendment
in FDAMA, Congress’s intent to include compounded drugs within the FDCA’s
“new drug” definition becomes obvious: That intent becomes a necessary com-
ponent of the amended statutory scheme; and the feared chilling effect on the
25
No. 06-51583
common practice of compounding becomes a much diminished concern. What-
ever might have been Congress’s intent regarding compounding when it drafted
the FDCA, FDAMA substantially clarifies it.
There is potential trouble in relying on FDAMA, however, because the
validity of that amendment remains uncertain. In Western States, the Supreme
Court struck down the advertising provision of FDAMA but left open the ques-
tion whether the remaining portions of the statute were non-severable and thus
invalid in light of the stricken provision.37 Both sides here argue that we need
not decide the severability question, because we may look to FDAMA as evidence
of Congress’s understanding of the FDCA’s “new drug” provision, regardless of
whether FDAMA survives Western States. We disagree and therefore find it
necessary to address severability.
“Over time, . . . subsequent acts can shape or focus” a statute’s “range of
plausible meanings,” and “[t]his is particularly so where the scope of the earlier
statute is broad but the subsequent statutes more specifically address the topic
at hand.” Brown & Williamson, 529 U.S. at 143. It is the act of subsequent
amendment that most significantly alters the meaning of a statute by altering
the statutory scheme as a whole and thereby affecting the context of a prior Con-
gress’s enactment.38 Where a subsequent Congress has not enacted a valid
37
See W. States, 535 U.S. at 366 (“We granted certiorari to consider whether FDAMA’s
prohibitions on soliciting prescriptions for, and advertising, compounded drugs violate the First
Amendment. Because neither party petitioned for certiorari on the severability issue, we have
no occasion to review that portion of the Court of Appeals’ decision.”) (citation omitted).
38
See Brown & Williamson, 529 U.S. at 143 (“The ‘classic judicial task of reconciling
many laws enacted over time, and getting them to ‘make sense’ in combination, necessarily as-
sumes that the implications of a statute may be altered by the implications of a later statute.’”)
(quoting United States v. Fausto, 484 U.S. 439, 453 (1988)).
26
No. 06-51583
amendment, however, the intent of the prior Congress is the best guide to the
meaning of the statute it promulgated. We must heed the “oft-repeated warning
that ‘the views of a subsequent Congress form a hazardous basis for inferring the
intent of an earlier one.’”39 Hence, absent a valid amendment to alter the stat-
utory structure, the opinion of the 1997 Congress informs us little in deciding
what the 1937 Congress intended when it drafted the “new drug” definition.
In short, Congress’s act of amendment gains lawful expression only
through enactment of a valid statute.40 If that act of amendment is invalidSSfor
instance, because its unconstitutional portions cannot be severedSSthe act is
void ab initio, and it is as though Congress had not acted at all. Accordingly, to
rely on FDAMA in construing the “new drug” definition, we first must address
FDAMA’s validity. After doing so, we consider precisely how FDAMA affects in-
terpretation of the “new drug” definition.
1.
In the supplemental briefing, the FDA argues against severability, and the
39
Consumer Prod. Safety Comm’n v. GTE Sylvania, Inc., 447 U.S. 102, 117 (1980)
(quoting United States v. Price, 361 U.S. 304, 313 (1960)) (giving little weight to post-enact-
ment legislative history in the interpretation of a statute); see also United States v. United
Mine Workers of Am., 330 U.S. 258, 281-82 (1947) (holding that statements of senators de-
bating a 1943 amendment to a 1932 act “cannot [be] accept[ed] . . . as authoritative guides to
the construction of” the 1932 act where “some of [the senators] were not members of the Senate
in 1932,” because “[w]e fail to see how the remarks of these Senators in 1943 can serve to
change the legislative intent of Congress expressed in 1932”); South Carolina v. Regan, 465
U.S. 367, 378 n.17 (1984) (“reject[ing]” any suggestion that the interpretation of a prior statute
can be informed by “the committee reports that accompany subsequent legislation”).
40
Cf. I.N.S. v. Chadha, 462 U.S. 919, 951 (1983) (holding that Congressional action
must satisfy bicameralism and presentment requirements, which “represent[] the Framers’ de-
cision that the legislative power of the Federal government be exercised in accord with a single,
finely wrought and exhaustively considered, procedure”).
27
No. 06-51583
Pharmacies argue in favor of it. The Ninth Circuit held that FDAMA is not sev-
erable. See Shalala, 238 F.3d at 1096-98. Agreeing with the Pharmacies and
differing with the FDA and the Ninth Circuit, we conclude that the invalidated
portion of FDAMA is severable and that its surviving portions therefore remain
in effect.
The Supreme Court has summed up the “well established” standard for
severability: “Unless it is evident that the Legislature would not have enacted
those provisions which are within its power, independently of that which is not,
the invalid part may be dropped if what is left is fully operative as a law.” Alas-
ka Airlines, Inc. v. Brock, 480 U.S. 678, 684 (1987) (internal quotation omitted).
This standard hinges decisively on congressional intent such that the “relevant
inquiry in evaluating severability is whether the statute will function in a man-
ner consistent with the intent of Congress.” Id. at 685 (emphasis added).
One crucial clue to that intent is Congress’s decision to include an express
severability provision in the statute. FDAMA amended Section 353 of Title 21
of the United States Code, which codifies the FDCA.41 Although FDAMA con-
tains no severability clause, Section 391 provides as follows:
If any provision of this chapter is declared unconstitutional, or the
applicability thereof to any person or circumstances is held invalid,
the constitutionality of the remainder of the chapter and the appli-
cability thereof to other persons and circumstances shall not be af-
fected thereby.
21 U.S.C. § 391.
41
The intent to amend the FDCA was explicit, for Congress dubbed FDAMA “An Act
to amend the Federal Food, Drug, and Cosmetic Act [(FDCA)] and the Public Health Service
Act to improve the regulation of food, drugs, devices, and biological products, and for other pur-
poses.” Pub. L. No. 105-115, 111 Stat. 2296 (1997).
28
No. 06-51583
In Koog v. United States, 79 F.3d 452 (5th Cir. 1996), we faced a similar
situation involving the severability of parts of an amendment to a statute. The
statute had a severability clause substantially the same as the clause here, but
the amendment had no such clause. We held that where its express intent was
to amend a statute, “[w]e can only assume that Congress was fully aware of [the
statute’s severability clause] when it chose to insert the [amendment] into Title
18, and that Congress intended the severability provision to apply equally to the
[amending] provisions.” Id. at 463. The same assumption is warranted here, so
“a presumption of severability arises” that “may be overcome only by ‘strong
evidence’ that Congress would not have enacted the law without the invalidated
portions of the statute.” Id. at 462 (quoting Alaska Airlines, 480 U.S. at 686).42
FDAMA carves out an exception to the new drug approval process for com-
pounding pharmacists who comply with a number of specific, mandatory require-
ments. One of those requirements, which permitted pharmacists to advertise
compounding services but barred them from advertising specific compounded
drugs, was the portion of FDAMA the Court invalidated in Western States.
FDAMA contained numerous other requirements, however, which the Court
enumerated and summarized as follows:
First, [the compounded drugs] must be compounded by a li-
censed pharmacist or physician in response to a valid prescription
for an identified individual patient, or, if prepared before the receipt
42
The Ninth Circuit worried, in contrast to Koog, that “Congress may have intended the
original provisions of the FDCA to be severable, but meant for FDAMA’s provisions to stand
or fall together.” W. States, 238 F.3d at 1098. That is an unlikely assumption. Congress
amended an Act that contained an obvious and explicit severability provision, and it made
plain its intention that FDAMA amendment be made part of the original Act (and codified in
the Act as § 353a). If Congress had intended for the newly-added § 353a, and only § 353a, to
be non-severable, it presumably would have said so.
29
No. 06-51583
of such a prescription, they must be made only in “limited quanti-
ties” and in response to a history of the licensed pharmacist’s or
physician’s receipt of valid prescription orders for that drug product
within an established relationship between the pharmacist, the pa-
tient, and the prescriber. 21 U.S.C. § 353a(a).
Second, the compounded drug must be made from approved
ingredients that meet certain manufacturing and safety standards,
§§ 353a(b)(1)(A)-(B), and the compounded drug may not appear on
an FDA list of drug products that have been withdrawn or removed
from the market because they were found to be unsafe or ineffective,
§ 353a(b)(1)(C).
Third, the pharmacist or physician compounding the drug
may not “compound regularly or in inordinate amounts (as defined
by the Secretary) any drug products that are essentially copies of a
commercially available drug product.” § 353a(b)(1)(D).
Fourth, the drug product must not be identified by the FDA
as a drug product that presents demonstrable difficulties for com-
pounding in terms of safety or effectiveness. § 353a(b)(3)(A).
Fifth, in States that have not entered into a “memorandum of
understanding” with the FDA addressing the distribution of “inordi-
nate amounts” of compounded drugs in interstate commerce, the
pharmacy, pharmacist, or physician compounding the drug may not
distribute compounded drugs out of state in quantities exceeding
five percent of that entity’s total prescription orders. § 353a(b)-
(3)(B).
Finally, and most relevant for this litigation, the prescription
must be “unsolicited,” § 353a(a), and the pharmacy, licensed phar-
macist, or licensed physician compounding the drug may “not adver-
tise or promote the compounding of any particular drug, class of
drug, or type of drug,” § 353a(c). The pharmacy, licensed pharma-
cist, or licensed physician may, however, “advertise and promote the
compounding service.” Ibid.
W. States, 535 U.S. at 364-65 (paragraph breaks added).
30
No. 06-51583
The Ninth Circuit reasoned that FDAMA was “intended to provide access
to compounded drugs while preventing pharmacies from making an end run
around the FDA’s drug manufacturing requirements.” W. States, 238 F.3d at
1096. Congress wanted to permit access to compounded drugs on a small scale
while preventing compounding pharmacies from acting like large-scale manufac-
turers, which would subvert the FDCA’s new drug approval and other require-
ments. To that end, FDAMA’s advertising restrictions help limit demand for
large-scale compounding. Thus, according to the Ninth Circuit, the unconstitu-
tional advertising portions of FDAMA were such a key part of Congress’s careful
balance that “Congress would not have passed FDAMA absent the restrictions
on commercial speech.” Id. at 1097.
Although we generally agree with the Ninth Circuit’s understanding of
FDAMA’s purpose and the advertising provision’s role in furthering it, we do not
see the advertising provision as so central to the purpose of FDAMA that Con-
gress would not have passed the statute without it. The advertising requirement
indeed helped further Congress’s intended balance, but so did FDAMA’s five oth-
er requirements mentioned above. Much like the advertising provision, those
other requirements function to create permissible space for compounding phar-
macists while limiting pharmacists’ ability to engage in large-scale manufactur-
ing.
Severing the advertising requirement would leave those other considerable
requirements intact, and they would continue to effect Congress’s purpose.43
43
Indeed, the Supreme Court recognized this consequence in reaching its decision that
FDAMA’s advertising provision was more restrictive than necessary to advance the govern-
ment’s interests and thus violated the final prong of the Central Hudson, 447 U.S. 557, 566
(1980), test for regulation of commercial speech:
(continued...)
31
No. 06-51583
Where a statute’s invalidated provision is one of a series of conditions, each of
which is designed to promote a common goal, courts have deemed such a statute
severable.44 In light of the five other requirements in FDAMA, excising the ad-
vertising provision would not render FDAMA “incapable of functioning indepen-
dently.” Alaska Airlines, 480 U.S. at 684.
The Ninth Circuit also relied on legislative history to divine Congress’s in-
tent, which is inconclusive at best. The Ninth Circuit argued that Congress add-
ed the advertising-related provision to FDAMA after the FDA Commissioner had
pointed out that the proposed version of the bill “‘has no constraints on the vol-
ume of compounding,’” “‘would allow bulk drug suppliers or drug manufacturers
to circumvent the approval requirements,’” and “‘is likely to develop . . . a sha-
dow industry of unapproved generic drugs.’” W. States, 238 F.3d at 1097 (quot-
ing FDA Commissioner’s statement to House subcommittee).
43
(...continued)
Several non-speech-related means of drawing a line between compounding and
large-scale manufacturing might be possible here. . . . It might even be suffi-
cient to rely solely on the non-speech-related provisions of FDAMA, such as the
requirement that compounding only be conducted in response to a prescription
or a history of receiving a prescription, 21 U.S.C. § 353a(a), and the limitation
on the percentage of a pharmacy’s total sales that out-of-state sales of com-
pounded drugs may represent, § 353a(b)(3)(B). . . . Nowhere in the legislative
history of FDAMA or petitioners’ briefs is there any explanation of why the Gov-
ernment believed forbidding advertising was a necessary as opposed to merely
convenient means of achieving its interests.
W. States, 535 U.S. at 372-73.
44
See, e.g., New York v. United States, 505 U.S. 144, 186-87 (1992) (severing statute
where invalid provision was one of multiple provisions designed to give states incentive to be-
come self-sufficient in disposal of radioactive waste); Koog, 79 F.3d at 462-63 (severing statute
where invalid provision was one of multiple provisions designed to regulate firearms purchas-
es).
32
No. 06-51583
The Ninth Circuit concluded that the subsequent decision to add the ad-
vertising provision, which reduced the threat of high-volume compounding, sug-
gests that Congress would not have passed FDAMA without the advertising pro-
vision. Id. That conclusion does not follow. The mere fact (or rather, assump-
tion) that Congress responded to the FDA’s concerns does not mean that it
would have refrained from enacting the bill if it could not have satisfied those
concerns. The Ninth Circuit’s suppressed premiseSSand as far as we are aware,
a premise unsupported by the legislative historySSis that satisfying the FDA was
necessary to passage of the legislation.
Moreover, and perhaps more significantly, the advertising provision was
merely one of multiple provisions added to the original bill in response to the
FDA’s concerns. The restrictions on compounding copies of commercially avail-
able drugs, the safety restrictions, and the restrictions on out-of-state distribu-
tion were added in subsequent versions of the bill, and all respond to the FDA’s
same basic concern of limiting the volume of unregulated manufacturing dis-
guised as compounding.45 Therefore, even assuming it would not have enacted
the bill without allaying FDA’s concerns, Congress had multiple ways of doing
so. The advertising provision was one way, and the other three provisions added
to the original bill were alternate ways. It is unfounded, on the basis of this leg-
islative history alone, to elevate the advertising provision over the others and
treat it as a necessary provision without which the bill would not have passed.
Neither FDAMA’s text nor the inconclusive legislative history amounts to
45
The requirements in the originally-proposed bill were much slimmer than those in
the enacted version. The operative portion of the proposed bill required only that the drug be
“compounded by a licensed pharmacist on the order of a licensed physician.” H.R. 3199, 104th
Cong. 2d Sess. § 18 (1996).
33
No. 06-51583
“‘strong evidence’ that Congress would not have enacted the law without” the ad-
vertising provisions. Koog, 79 F.3d at 462 (quoting Alaska Airlines, 480 U.S. at
686). Far from strong, the evidence is at best inconclusive. We therefore apply
the statute’s explicit severability provision, and FDAMA is severable.
2.
Because FDAMA remains valid, we must construe the FDCA’s “new drug”
definition in light of it. FDAMA distinguishes between compounding and manu-
facturing in much the same way as the Pharmacies urge us to narrow the “new
drug” definition. It does so, however, not by changing the definition of “new
drug” but instead by explicitly “exempt[ing] compounded drugs from the FDCA’s
‘new drug’ requirements and from other requirements provided the drugs satisfy
a number of restrictions.” W. States, 535 U.S. at 364. Accordingly, compounded
drugs are not exempt from the FDCA’s “new drug” definition, § 321(p), nor are
they uniformly exempt from the FDCA’s “new drug” requirements, §§ 351(a)-
(2)(B), 352(f)(1), 355. Rather, compounded drugs are in fact “new drugs” as de-
fined by § 321(p) but are exempt from the requirements of §§ 351(a)(2)(B),
352(f)(1), and 355 if and only if they comply with the conditions set forth in
§ 353a.
FDAMA’s conditional exemption reads in part as follows:
Sec. 353a. Pharmacy compounding
(a) In general
Sections 351(a)(2)(B) [adulteration provision], 352(f)(1)
[misbranding provision], and 355 [new drug approval
34
No. 06-51583
provision][46] of this title shall not apply to a drug prod-
uct if the drug product is compounded for an identified
individual patient based on the unsolicited receipt of a
valid prescription order or a notation, approved by the
prescribing practitioner, on the prescription order that
a compounded product is necessary for the identified
patient, if the drug product meets the requirements of
this section, and if the compounding [is done by a li-
censed pharmacist or physician].
§ 353a(a) (emphasis added). FDAMA thus creates a safe harbor for compound-
ing but does so in a particularly significant way within the context of the statute.
It does not outlaw all compounding or create a general limitation on the FDA’s
authority over traditional compounding. Instead, it starts from the default
premise that the FDCA’s adulteration, misbranding, and new drug approval pro-
visions apply toSSand thereby restrictSSall drugs created by any means.
Against that statutory background, FDAMA instructs that the adultera-
tion, misbranding, and “new drug” approval provisions “shall not apply . . . if the
drug product is compounded” and “if the drug product meets the requirements”
of FDAMA. The requirements themselves are thus not freestanding but instead
serve to trigger an exemption from the adulteration, misbranding, and new drug
approval provisions. If the requirements are not met, the exemption does not ap-
ply.
46
Section 355 states,
(a) Necessity of effective approval of application
No person shall introduce or deliver for introduction into interstate commerce
any new drug, unless an approval of an application filed pursuant to subsection
(b) or (j) of this section is effective with respect to such drug.
§ 355(a) (2000) (emphasis added).
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No. 06-51583
The district court and the Pharmacies reach a different construction of the
statute whereby § 321(p)’s definition of “new drug” contains a categorical “impli-
cit” exemption for compounded drugs wholly apart from the narrow, conditional,
and explicit exceptions enumerated in § 353a. We disagree, because reading the
“new drug” definition implicitly to exclude compounded drugs would make
§ 353a’s explicit, conditional exceptions superfluous.
It is “a cardinal principle of statutory construction” that a statute be con-
strued such that “no clause, sentence, or word shall be superfluous, void, or in-
significant.” Duncan v. Walker, 533 U.S. 167, 174 (2001) (quotation omitted).
If, by the Pharmacies’ desired construction, compounded drugs are not “new
drugs,” it would make no sense for § 353a to state that the “new drug” approval
provision “does not apply . . . if the [compounded] drug product meets the re-
quirements of this section.” Under the Pharmacies’ construction, the compound-
ed drug would be immune from the new drug approval provision regardless of
whether it “met the requirements” of § 353a. The Pharmacies’ construction of
the “new drug” definition would thereby render much of § 353a superfluous.
The Pharmacies counter by claiming that Congress enacted FDAMA to
“clarify” that it “never intended” to include compounded drugs within the “new
drug” definition. The Pharmacies contend that “[n]owhere in the legislative his-
tory of FDAMA does Congress state . . . that it intended for FDAMA to serve as
a new statutory exemption for pharmacies from the ‘new drug’ requirements.”
Though Congress might not have stated in the legislative history its intention
to create such an exemption, it did say that plainly in the statute itselfSS“shall
not apply . . . if”SSand we need not entertain negative implications from the
legislative history in the face of plain statutory text.
The Pharmacies also argue that “Congress enacted FDAMA to prevent
36
No. 06-51583
FDA from regulating pharmacy compounds as ‘new drugs’ in the face of FDA’s
attempt to do so.” As support, they quote a Senate committee report that notes,
“The committee has found that clarification is necessary to address current con-
cerns and uncertainty about [the FDA’s] regulatory authority over pharmacy
compounding.”47 That snippet of legislative history, however, tells us nothing
about how Congress intended to “clarify” uncertainty over the FDA’s authority;
for that, we must look to the statute itself. Congress easily could have “clarified”
the uncertainty by amending and limiting the “new drug” definition directly; in-
stead, in promulgating § 353a, it created a conditional exception triggered by nu-
merous very specific new statutory requirements. The conditional exception
makes sense only if the “new drug” definition is construed to apply to compound-
ed drugs.
In summary, 321(p)’s definition of “new drug” applies to drugs created by
compounding. Because compounded drugs are “new drugs,” the restrictions on
“new drugs” set forth in §§ 351(a)(2)(B), 352(f)(1), and 355 generally apply to
compounded drugs. Against that backdrop, however, § 353a carves out explicit,
conditional exceptions for compounded drugs that comply with its enumerated
conditions. If and only if the compounded drugs satisfy § 353a’s conditions, those
drugs are exempt from the requirements of §§ 351(a)(2)(B), 352(f)(1), and 355.
IV.
The district court also considered application of the FDCA to compounded
drugs designed for animal use. If it has not been approved, a “new animal drug”
47
S. Comm. on Labor and Human Resources, Food and Drug Administration Moderni-
zation and Accountability Act of 1997, S. Rep. No. 105-43, at 67 (1997).
37
No. 06-51583
is “adulterated” under § 351(a)(5) and “unsafe” under § 360b(a)(1).48 An unap-
proved “new animal drug” created from bulk ingredients and lacking “adequate
directions for use” is “misbranded” under § 352(f) and FDA regulations.49 Hence,
to avoid being deemed “adulterated,” “unsafe,” or “misbranded,” a drug product
compounded by a veterinarian must either go through the new animal drug ap-
proval process or fall outside the definition of “new animal drug.”
The district court concluded, and the Pharmacies argue, that drug prod-
ucts compounded in bulk by pharmacists and veterinarians are not “new animal
drugs” and therefore are not “adulterated,” “unsafe,” or “misbranded” (when
lacking “adequate directions for use”). We conclude, to the contrary, that com-
pounded drugs are “new animal drugs” under the FDCA.
The FDCA defines “new animal drug” in a manner substantially identical
to its definition of “new [human] drugs”:
(v) 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,SS
(1) the composition of which is such that such drug is
not generally recognized, among experts qualified by
scientific training and experience to evaluate the safety
and effectiveness of animal drugs, as safe and effective
48
Section 351(a)(5) of the FDCA deems an animal drug “adulterated” if it is a “new ani-
mal drug which is unsafe.” Section 360b(a)(1) defines a “unsafe” animal drug as any “new ani-
mal drug” that has not received FDA approval. A animal drug is thus adulterated and unsafe
if it is a “new animal drug” that has not received FDA approval.
49
Section 352(f) of the FDCA deems any drug to be “misbranded” if its label lacks “ade-
quate directions for use.” An FDA regulation, 21 C.F.R. § 201.122 (2008), exempts from the
misbranding requirement bulk drugs used to manufacture other animal drugs, so long as the
finished product is not a unapproved “new drug.” But if the drug created from the bulk drugs
constitutes an unapproved “new drug,” it is “misbranded” unless it bears “adequate directions
for use.”
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No. 06-51583
for use under the conditions prescribed, recommended,
or suggested in the labeling thereof . . . .
§ 321(v)(1). Hence, similarly to human drugs, “any drug . . . the composition of
which” has not already been approved by the FDA constitutes a “new animal
drug” within the meaning of the statute.
Although FDAMA’s conditional exception to the FDCA’s new drug defini-
tion applies only to human drugs, Congress passed a similar amendment to the
FDCA relating to animal drugs, AMDUCA, that exempted compounded “new an-
imal drugs” from the new drug approval process in certain circumstances:
(4)(A) Except as provided in subparagraph (B) [FDA finding that use
of the drug would present health risk], if an approval of an applica-
tion filed under subsection (b) [new animal drug approval provision]
is in effect with respect to a particular use or intended use of a new
animal drug, the drug shall not be deemed unsafe for the purposes
of paragraph (1) and shall be exempt from the requirements of sec-
tion 352(f) of this title with respect to a different use or intended use
of the drug, other than a use in or on animal feed, if such use or in-
tended useSS
(i) is by or on the lawful written or oral order of a li-
censed veterinarian within the context of a veterinarian-
client-patient relationship, as defined by the Secretary;
and
(ii) is in compliance with regulations promulgated by
the Secretary that establish the conditions for such dif-
ferent use or intended use. . . .
(5) If the approval of an application filed under section 355 of this
title [new human drug approval provision] is in effect, the drug un-
der such application shall not be deemed unsafe for purposes of par-
agraph (1) and shall be exempt from the requirements of section
352(f) of this title with respect to a use or intended use of the drug in
animals if such use or intended useSS
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No. 06-51583
(A) is by or on the lawful written or oral order of a li-
censed veterinarian within the context of a veterinarian-
client-patient relationship, as defined by the Secretary;
and
(B) is in compliance with regulations promulgated by
the Secretary that establish the conditions for the use
or intended use of the drug in animals.
§ 360b(a)(4), (5) (emphasis added).
Accordingly, paragraph (4) establishes that if a new animal drug is ap-
proved for one animal use, it can be used for a different unapproved use (i.e.,
compounded), and paragraph (5) provides that if a new drug is approved for
human use, it can be used for a different unapproved animal use (i.e., compound-
ed). In both cases, the drug must be used pursuant to the order of a licensed vet-
erinarian and is subject to the FDA’s discretionary finding that it poses a risk
to public health.
Although its provisions are different from FDAMA’s, AMDUCA’s effect on
construction of the “new animal drug” definition is much the same as FDAMA’s
effect on construction of the “new [human] drug” definition. AMDUCA suggests
that the FDCA’s use of the term “new animal drug” includes compounded drugs.
If the definition of “new animal drug” excluded compounded drugs, and thereby
did not trigger the new drug approval process for compounded drugs, the com-
pounded drugs would not be deemed “unsafe” within the meaning of § 360b(a)(1)
and would not be deemed “misbranded” within the meaning of § 352(f). But if
that were so, it would render superfluous AMDUCA’s requirement that certain
compounded drugs “shall not be deemed unsafe . . . and shall be exempt from the
requirements of [§ 352(f)] . . . if” they comply with AMDUCA’s conditions.
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No. 06-51583
We therefore conclude, in agreement with the two other circuits that have
considered the issue,50 that compounded drugs are “new animal drugs” within
the meaning of § 321(v)(1) of the FDCA. And unless the compounded drugs are
exempt under the FDCA’s AMDUCA provisions, § 360b(a)(4) and (5), compound-
ed animal drugs are subject to the FDCA’s unsafe, adulteration, and misbrand-
ing requirements. As with human drugs, the FDCA contains no blanket “impli-
cit exemption” for animal drugs produced by compounding.
V.
In summary, compounded drugs are not subject to a general exemption
from the definitions of “new drug” and “new animal drug” contained in § 321-
(p)(1) and (v)(1). But because the severed portions of FDAMA are valid and in
force, new human drugs that result from compounding are exempt from the
adulteration, misbranding, and new drug approval provisions of §§ 351(a)(2)(B),
352(f)(1), and 355 if they comply with the conditions in § 353a. Likewise, new
animal drugs that result from compounding are exempt from the unsafe, adul-
teration, and misbranding provisions of §§ 360b(a)(1), 351(a)(5), and 352(f) if
they comply with the conditions in § 360b(a).
The judgment is VACATED and REMANDED for further proceedings as
appropriate in accordance with this opinion.
50
See Algon Chem., 879 F.2d at 1158; 9/1 Kg. Containers, 854 F.2d at 178. The Third
and Seventh Circuits held that compounded drugs from bulk suppliers constitute “new animal
drugs.” The district court sought to distinguish those cases by reasoning that unlike bulk drug
suppliers and veterinarians, pharmacies compounding drugs from “legal bulk materials” fall
outside the “new animal drug” definition. That distinction between traditional compounding
and large-scale manufacturing, however, has no basis in the text of the FDCA’s “new animal
drug” definition.
41