Ellis George obtained a significant victory this week when the Ninth Circuit affirmed a dismissal of unfair trade practice claims against its client Central Admixture Pharmacy Services, Inc. (CAPS).
CAPS, an affiliated company of B. Braun Medical and part of the B. Braun Group of Companies in North America, operates FDA-regulated outsourcing facilities that prepare compounded medications. Among the medications produced by CAPS is ephedrine sulfate used to regulate blood pressure during surgeries, conveniently pre-loaded into a syringe. CAPS compounds this product from FDA-approved drugs and in accordance with the Drug Quality & Security Act (DQSA), a section of the Federal Food, Drug, and Cosmetic Act (FDCA), which sets forth the circumstances under which compounding pharmacies can manufacture and sell drugs without FDA approval.
In August of 2020, Nexus Pharmaceuticals, Inc. (Nexus) sued CAPS, alleging that CAPS’s compounded ephedrine sulfate product was essentially a copy of Nexus’s ephedrine sulfate offering, allegedly rendering CAPS’s offering illegal under state unfair competition laws. CAPS moved to dismiss these claims on the ground that enforcement of the DQSA and regulation of the operations of compounders is the responsibility of the FDA, and suits seeking to privately enforce the DQSA, even if under the guise of state unfair competition laws, are impliedly preempted. The district court agreed, and in November of 2020, dismissed Nexus’s claims.
On September 13, 2022, in a published opinion with important consequences for the compounding industry, the Ninth Circuit affirmed the dismissal and found Nexus’s claims to be preempted. The Court explained: “Proceedings to enforce or restrain violations of the FDCA, including the compounding statute, must be by and in the name of the United States, not a private party. Nexus’s claim is such a proceeding, so it is barred by the exclusive enforcement statute.”
CAPS is represented by Ellis George attorneys Keith J. Wesley and Matthew L. Venezia.
Further coverage of the ruling is available on Law360.
