Court Rules for FDA in Lane Labs Appeal

Darrell Miller

12/12/05

Date: December 12, 2005 09:44 AM
Author: Darrell Miller (dm@vitanetonline.com)
Subject: Court Rules for FDA in Lane Labs Appeal

A federal appeals court has ruled that Lane Labs (Allendale,NJ) may be ordered to pay back consumers for selling what the food and drug administration (FDA) considered unapproved new drugs. The three-judge panel upheld the 2004 decision by U.S. district Judge William G. Bassler of the District of New Jersey, which stated that FDA may demand that Lane Labs pay back every consumer who had bought the company’s top selling products—shark cartilage supplements that were allegedly marketed as treatments for diseases including cancer and HIV. The restitution amount is estimated at 109 million. The appeals court rejected the argument that FDA cannot demand restrictions because the Federal Food, Drug, & Cosmetic Act (FDCA) does not expressly provide for such a remedy. “Whether or not congress specifically contemplated restitution under the FDCA, the ability to order this remedy is within the broad equitable power granted to the district courts to further the economic protection purposes of the statute,” 3rd Circuit Judge Marjorie O. Rendell wrote in an opinion joined by Judges Maryanne Trump Barry and Edward R. Becker.

In its appeal, Lane Labs was supported by an amicus brief from the Washington Legal Foundation (WLF, Washington, DC) urging the court to reverse Bassler’s decision, on the grounds that restitution is not authorized anywhere in the text of the FDCA.

WLF attorneys Daniel J. Popeo and Richard A. Samp, joined by attorney Jeffrey A Lamken of Baker Botts in Washington, DC, argued that the FDCA gives courts the power to “restrain” violations, but does not allow FDA to seek “Backward-looking monetary relief.”

WLF argued that FDA, throughout most of its history, never asserted a right to seek restitution until recently, when it began asserting that power in order to have “a big club with which to intimidate manufacturers who might otherwise seek to challenge FDA directives,” including large pharmaceutical companies. However, the court upheld FDA’s authority to seek restitution on the grounds that the FDCA’s grant of authority to restrain violations of the Act should be read broadly to include all forms of equitable relief.

FDA cannot be allowed to get away with this power grab,” said Samp after reviewing the Third Circuit’s decision. “The American economy suffers, and public safety and health are jeopardized, when FDA seeks to exert power beyond its authority, upsetting to delicate balance struck by Congress in its attempt to both preserve the public welfare and encourage valuable pharmaceutical innovations.” He added that WLF has pledged to continue to litigate the issue and to support Lane Labs in any further appeals the company may file.

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