Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 1 of 45 PageID 721 UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA OCALA DIVISION

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1 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 1 of 45 PageID 721 UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA OCALA DIVISION UNITED STATES OF AMERICA, ) ) Plaintiff, ) ) Civil Action No. 5:10-cv TJC-GRJ vs. ) ) FRANCK S LAB, INC., ) d/b/a FRANCK S COMPOUNDING LAB, ) a corporation, and ) PAUL W. FRANCK, an individual. ) ) DECLARATION OF SHELDON T. BRADSHAW IN SUPPORT OF DEFENDANTS OPPOSITION TO PLAINTIFF S MOTION FOR PRELIMINARY INJUNCTION I, Sheldon T. Bradshaw, hereby declare as follows: 1. I have been retained by defendants Franck s Lab, Inc., d/b/a Franck s Compounding Lab, and Paul W. Franck (collectively Franck s ) to provide expert opinion testimony on the U.S. Food and Drug Administration ( FDA ) and FDA regulatory matters. In particular, I have been asked to provide expert opinion testimony on FDA s regulation of pharmacy compounding. Background and Statement of Qualifications 2. I am a partner in the international law firm of Hunton & Williams LLP ( Hunton & Williams ), where I co-chair the firm s Food and Drug Practice Group. At Hunton & Williams, I represent food, drug, biologic, medical device, cosmetic, and dietary supplement manufacturers on the full range of issues confronting FDA-regulated firms. I

2 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 2 of 45 PageID 722 also represent clients that own and operate pharmacies. My practice includes providing advice on FDA regulatory matters; assisting companies in FDA enforcement matters; FDA compliance counseling; helping firms respond to FDA investigations and inquiries, including those alleging labeling violations; conducting litigation; carrying out legislative initiatives; performing due diligence and other transactional work; and advising clients on the practices of medicine and pharmacy. In the course of undertaking these activities I have advised several clients on issues related to pharmacy compounding. Since joining Hunton & Williams, I have given multiple presentations on issues related to FDA enforcement authorities. 1 One recent presentation dealt specifically with the FDA s regulation of animal drug compounding Prior to joining Hunton & Williams in October of 2007, I was Chief Counsel of the FDA. As Chief Counsel, I was responsible for overseeing an office of approximately 80 attorneys and for providing legal advice to the Secretary and Deputy Secretary of the U.S. Department of Health and Human Services and to FDA s senior leadership -- including the Commissioner, the Deputy Commissioners, and the Directors of the various FDA Centers. I provided advice on legal issues related to drugs, biologics, cosmetics, medical devices, food, animal feed and drugs, dietary supplements, and other products regulated under the Federal Food, Drug, and Cosmetic Act ( FD&C Act ) and the Public Health Service Act. 1 Presentations I have made on FDA issues are listed on my curriculum vitae which is attached hereto as Appendix A. 2 See Presentation, Animal Drug Compounding, FDLI 53 rd Annual Conference, Washington, D.C. (Apr. 22, 2010)

3 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 3 of 45 PageID As Chief Counsel, I personally reviewed and cleared every Warning Letter issued by the FDA that discussed pharmacy compounding. I also spoke with the recipients of such Warning Letters and, because I oversaw all FDA-related litigation, was involved in determining whether noncompliance would result in the FDA bringing an enforcement action. In addition, I regularly advised the senior leaders of FDA s Center for Drug Evaluation and Research ( CDER ), which is responsible for regulating human drugs, and FDA s Center for Veterinary Medicine ( CVM ), which is responsible for regulating animal drugs, on matters related to pharmacy compounding in general and the distinction between traditional pharmacy compounding and manufacturing (under the guise of pharmacy compounding) in particular. I also routinely advised senior leaders of FDA s Office of Regulatory Affairs ( ORA ), which is responsible for overseeing FDA field operations, and others within the FDA, including the FDA Commissioner, on the same subjects. 5. Prior to joining the FDA in March of 2005, I held several senior positions at the U.S. Department of Justice ( DOJ ), including the position of Deputy Assistant Attorney General in DOJ s Office of Legal Counsel ( OLC ). OLC provides authoritative legal advice on statutory and constitutional questions from the President and all the Executive Branch agencies. 3 While at OLC, I provided legal advice to the Chief Counsel of the FDA and twice testified before the U.S. Senate on legislation amending the FD&C Act. My curriculum vitae is attached to this Declaration as Appendix A. Information Relied Upon 6. In preparing this Declaration I have reviewed the following materials: 3 See

4 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 4 of 45 PageID 724 The FD&C Act, as amended, and its legislative history; Various FDA regulations and guidance documents, including compliance policy guides; Decisions of federal courts concerning pharmacy compounding; Academic literature regarding pharmacy compounding; Pleadings in this case; The Declarations of Paul W. Franck; Gigi S. Davidson; and Dr. Loyd V. Allen, Jr.; Photographs of Franck s compounding facility in Florida; and My own experiences in private practice and as Chief Counsel of the FDA. FDA Lacks Authority to Regulate Traditional Pharmacy Compounding 7. Traditional pharmacy compounding has historically been a core component of the practice of pharmacy in the United States. Indeed, drug compounding was performed by some of the very first colonists. For example, in the seventeenth century, John Winthrop, Jr., the son of the very first governor of Massachusetts, engaged in pharmacy drug compounding. 4 The United States Pharmacopoeia ( USP ), an official compendium of drug information recognized as authoritative by the FD&C Act 5 has included instructions on compounding since See Remington s Practice of Pharmacy 13 (12th ed. 1961). 5 See FD&C Act 201(j). 6 See Claudia C. Okeke, et al., History and Background Information on USP s Activities in Compounding Pharmacy Practices, 27 Pharmacopeial Forum 3169, 3169 (Sept.- Oct. 2001)

5 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 5 of 45 PageID Traditional pharmacy compounding has been described as the process by which a pharmacist or doctor combines, mixes, or alters ingredients to create a medication tailored to the needs of an individual patient. 7 That FDA does not have the authority to regulate traditional pharmacy compounding is supported by a number of factors that I discuss below. Interestingly, for approximately the first 60 years of its existence, the FDA never even hinted that it had such authority. Indeed, it was not until the mid-1990s, when FDA became concerned that certain entities were manufacturing drugs under the guise of pharmacy compounding, that FDA publicly asserted that it had the authority to regulate compounded drugs as new drugs. 9. The FDA s mistake, in my opinion, was its view that it had the authority to regulate all compounding, including what I would characterize as traditional pharmacy compounding, and its position that traditional pharmacy compounding had historically been allowed to take place due to the agency s (apparently silent) exercise of enforcement discretion. As an initial matter, the FDA s assertion that traditional pharmacy compounding is only allowed to take place due to its exercise of enforcement discretion is inconsistent with the FD&C Act and the historical record. If FDA were correct, Congress in 1938 criminalized a widespread practice as old as our nation itself, and did so with the unwitting support of the very people who practice the art and without the knowledge of the States, which have continued to closely regulate the practice of pharmacy compounding (just as they have done for centuries). It bears repeating that pharmacists, if FDA s view is correct, are engaging in criminal conduct whenever they engage in traditional pharmacy compounding, i.e., when 7 See Thompson v. Western States Med. Ctr., 535 U.S. 357, (2002)

6 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 6 of 45 PageID 726 they compound a drug that is not commercially available for an animal pursuant to a veterinarian s specific prescription. FDA maintains that such products are new animal drugs. Under the FD&C Act, it is a prohibited act to introduce into interstate commerce a new animal drug without FDA s approval, 8 and such an act is a strict liability criminal offense. 9 Even if the FDA decides not to bring criminal charges (pursuant to an exercise of enforcement discretion), the underlying act of compounding is nevertheless a criminal act if the FDA s view were to be adopted. 10. While I readily acknowledge that FDA has the authority to regulate drug manufacturing (including when done under the guise of pharmacy compounding) and fully support such actions, the FDA s current guidance on animal drug compounding, in which the agency discusses its current, non-binding thinking on what constitutes traditional pharmacy compounding (for which it will exercise enforcement discretion), purports to prohibit several types of compounding that, in my view, fall squarely within the definition of traditional pharmacy compounding, e.g., compounding from bulk substances and compounding on a large scale even when based on a history of the licensed pharmacist receiving valid prescription orders for the compounded drug product. In my expert opinion, pharmacists have traditionally compounded from bulk substances and, if compounding is based on known prescribing patterns, pharmacists may engage in anticipatory compounding. Indeed, as noted below, Congress made it clear in the Food and Drug Administration Modernization and Accountability Act of 1997 ( FDAMA ) that such compounding for human drugs is 8 See FD&C Act 201(g) & (v), 301(a), 501(a)(5), and 512(a)(1)(A). 9 See FD&C Act 303(a); see also United States v. Park, 421 U.S. 658 (1975)

7 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 7 of 45 PageID 727 permissible. If FDA wants to treat such compounding as manufacturing for animal drugs, it is my view that the agency would, at a minimum, first need to set forth the factors distinguishing compounding and manufacturing in a regulation that is promulgated through notice-and-comment rulemaking. Such a rulemaking would then be subject to legal challenge. The Federal Food, Drug, and Cosmetic Act of The FD&C Act s New Drug Provisions Were Intended To Reach Drug Manufacturers, Not Pharmacists Engaged In Traditional Pharmacy Compounding. The FD&C Act was enacted in 1938 against the backdrop of widespread pharmacy compounding conducted under state law and regulation. At that time, pharmacy compounding was widely practiced as it was often the only way to supply healthcare professionals with drugs needed to treat patients. In fact, with only a few (though steadily increasing number of) drug companies commercializing their drug products, pharmacists compounded more than 250 million prescriptions per year. 10 Of particular importance, every state s pharmacy law defined the practice of pharmacy to include compounding See Proceedings of the Local Branches, 14 J. Am. Pharm. Ass n 232, 233 (1935). 11 See Joint Session of the American Pharmaceutical Association, the American Association of Colleges of Pharmacy and the National Association of Boards of Pharmacy, 17 J. Am. Pharm. Ass n 1000, (1938)

8 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 8 of 45 PageID When Congress enacted section 505(a) of the FD&C Act in 1938, 12 prohibiting the introduction of new drugs into interstate commerce without prior approval by the federal government, its intent was to regulate the growing (and largely unregulated) field of drug manufacturers, not pharmacies engaged in traditional pharmacy compounding under state laws and regulations. 13 The legislative history of the FD&C Act reflects that section 505(a) was intended to apply solely to manufacturers, not to pharmacists or other healthcare professionals. For example, a 1935 report of the Senate Committee on Commerce on S. 5, which became the FD&C Act, explained that the bill is not intended as a medical practice act and will not interfere with the practice of the healing art by chiropractors and others in the States where they are licensed by law to engage in such practice. 14 In addition, 12 Prior to 1968, animal drugs were primarily governed by section 505 of the FD&C Act. According to one leading treatise, [t]o eliminate the overlapping regulatory requirements imposed by section 409, section 505, and the antibiotic drug provisions of section 507, Congress in 1968 enacted the Animal Drug Amendments, 82 Stat. 342 (1968), which added section 512 to the Act. Peter B. Hutt et al., Food and Drug Law: Cases and Materials 838 (3rd ed. 2007). 13 See United States v. Baxter Healthcare Corp., 901 F.2d 1401, 1409 (7th Cir. 1990) ( Congress has decided to treat commercial manufacturers of drugs differently from pharmacies and individual physicians.... Therefore, to the extent Congress has addressed this issue, it has decided to focus governmental resources upon the commercial distributors of drugs rather than upon the trained pharmacists and physicians.... (citation omitted)). 14 S. Rep. No. 361, at 3 (1935); see also H.R. Rep. No. 2755, at 5 (1936) ( The bill does not undertake to regulate the practice of the healing art. ). Physicians, as well as pharmacists, were permitted to compound drugs within the scope of their practice. See Robert L. Swain, Legislative Weather-Vanes, 15 J. Am. Pharm. Ass n 794, 795 (1936) ( About the only real privilege granted to pharmacists under the pharmacy laws was that of compounding physicians prescriptions, and this was no exclusive privilege as the pharmacist shared this right with the physician himself. )

9 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 9 of 45 PageID 729 a 1935 survey report of the drug industry conducted by the Senate Committee on Commerce, which had primary responsibility for drafting the FD&C Act, observed as follows: Federal and State laws governing the manufacture and distribution of drugs and medicines are inadequate. Legally, anybody can manufacture medicines, regardless of ability, skill, training, equipment, or knowledge of the dangers involved.... 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 That Congress intended section 505 to apply only to drug manufacturers, not to pharmacists, is reflected in the remarks of Representative Coffee during the debate on S. 5: Secretary [of Agriculture Henry] Wallace stated the case for licensing the manufacturers of potentially harmful drugs briefly and well: In the interest of safety, society has required that physicians be licensed to practice the healing art. Pharmacists are licensed to compound and dispense drugs. Electricians, 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 In short, the objective of the new legislation was to impose a level of federal regulatory oversight on drug manufacturers comparable to the regulatory oversight that was already in place in the States for pharmacists. There is no evidence in the legislative history of the 1938 Act suggesting that anyone involved in its enactment thought that the new drug provisions applied to the existing practice of pharmacy. If Congress had intended not only to ban, but actually to criminalize the widespread practice of traditional pharmacy compounding 15 Food, Drugs, and Cosmetics: Hearings Before a Subcommittee of the Committee on Commerce of the United States Senate on S.5, 74th Cong. 102 (1935) (emphases added) Cong. Rec (app.) (1938)

10 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 10 of 45 PageID 730 by applying the new drug provisions to it, this drastic change surely would have been the subject of at least some discussion and debate. Indeed, had Congress intended to criminalize traditional pharmacy compounding and to rely on FDA to exercise its enforcement discretion over this common and necessary practice, which was regulated by every state, surely at least one member of Congress would have expressed such intent (and surely upon the FD&C Act s passage FDA would have announced that it was exercising enforcement discretion given the widespread practice and the new criminal penalties). 15. The American Pharmaceutical Association Supported the 1938 Act. It is an interesting historical fact that the American Pharmaceutical Association ( APhA ), the first professional association of pharmacists, strongly supported the enactment of the 1938 Act. It did so because it shared Congress concerns regarding inadequate regulation of manufactured proprietary and patent medications under the Federal Pure Food and Drugs Act of In a 1936 article, Robert P. Fischelis, the President of APhA, opined that [p]assage of a revised Federal Food and Drug Law giving the [FDA] control over advertising, requiring the disclosure of the formulae of proprietary remedies and strengthening the public control over the drug industry, is essential to the public welfare and should be forthcoming at this session of Congress. 18 Similarly, in a 1935 editorial, Mr. Fischelis stated: It is difficult to understand why [opponents of the FD&C Act], whose chief interest in food and drug legislation is to block efforts to compel truthful labeling and advertising of foods and drugs and to ease the path of fakers in the food and drug industries, should be in a position to thwart the efforts of earnest legislators and respectable citizens in 17 Pub. L. No , 34 Stat. 768 (1906). 18 Fischelis, Golden Anniversary Address, 15 J. Am. Pharm. Ass n 476 (1936)

11 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 11 of 45 PageID 731 providing proper control of the manufacture and distribution of drug products If Congress had intended the 1938 legislation s new drug provisions to apply to drugs compounded by pharmacists, thereby criminalizing pharmacy compounding, the APhA (whose members all engaged in pharmacy compounding) presumably would have been aware of that intent and would have opposed the legislation. Indeed, their support of the legislation is, in my view, further evidence that the new drug provisions were simply not intended to apply to the traditional practice of pharmacy compounding. 17. The FD&C Act Incorporated The United States Pharmacopeia And National Formulary, Which Include Instructions And Standards For Compounding. The 1938 FD&C Act explicitly adopted the United States Pharmacopeia ( USP ) and the National Formulary ( NF ) as authoritative official compend[ia]. 20 At the time the FD&C Act was enacted, and in the years immediately following, both the USP and the NF contained monographs describing how to compound medications from bulk ingredients. 21 The USP and NF continue to recognize pharmacy compounding to this day. For example, the current edition of the USP includes a general chapter on the compounding of sterile medications. 22 In 19 Federal Drug Legislation Must Not Be Permitted to Die, 24 J. Am. Pharm. Ass n 349, 349 (1935) (emphasis added). 20 FD&C Act 201(j). 21 See, e.g., USP XII, at (1942) (instructions for compounding pills of ferrous carbonate); id. at (suppositories); id. at (tinctures); id. at (ointments); NF VII, at (1942) (syrups); id. at (tinctures); id. at (ointments). 22 See USP 31, <797> Pharmaceutical Compounding--Sterile Preparations (2008)

12 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 12 of 45 PageID 732 addition, FDA itself participates in the drafting of USP monographs. 23 None of these compounding monographs contain any suggestion that traditional pharmacy compounding is illegal. To the contrary, they expressly authorize compounding when the monographs are followed. 18. The Federal Government Directed Its Employees To Engage In Compounding Following Enactment Of The FD&C Act. In the years immediately following the enactment of the FD&C Act, the federal government authorized -- and even directed -- federal employees to engage in compounding as part of the practice of pharmacy in the armed forces and the civil service. 24 This is particularly relevant given the FDA s position that the FD&C 2003). 23 See Drug Information for the Health Care Professional, Vol. 1, at xix (23rd ed. 24 See Smith, Training Army Pharmacy Technicians, 1940 J. Am. Pharm. Ass'n 296, 297; Abraham T. Schwartz, Pharmacy in the U.S. Navy, 1940 J. Am. Pharm. Ass'n 299, 299; and A.S. Ernest, Pharmacists in the Civil Service, 1940 J. Am. Pharm. Ass'n 301, 301. Such authorization has continued to the present. The Department of Defense states in its policy on pharmacies at military treatment facilities that [t]he pharmacy may bulk compound pharmaceutical preparations using formulas from official compendiums, other references, or a locally developed formula. Memorandum to Ass t Sec. of the Army, Navy, and Air Force from Ass t Sec. of Defense re: Tri-Service Pharmacy Policy Guidance (July 26, 1995), available at (last visited August 5, 2010). The Veterans Health Administration similarly charges its Pharmacy Service with responsib[ility] for the controlled dispensing of all drugs required in the delivery of health care. Controlled dispensing includes the compounding of parenteral and other sterile admixtures, radiopharmaceuticals, and the total drug utilization review process required to maintain a high quality of health care. See Dep t of Veterans Affairs, Ch. 268: Veterans Health Administration - Pharmacy Service, at 3 (Mar. 2008), available at (last visited Aug. 6, 2010). The Department of Veterans Affairs hospitals continue to order compounded drugs from outside pharmacists. In addition, the Centers for Medicare & Medicaid Services reimburses claimants for the cost of compounded drugs. See Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule for Calendar Year 2005, 69 Fed. Reg. 66,236, 66,339 (Nov. 15, 2004)

13 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 13 of 45 PageID 733 Act applies to the federal government. 25 This constitutes actual evidence that the federal government contemporaneously interpreted the FD&C Act s new drug provisions as allowing (rather than criminalizing) compounding. This is not surprising, of course, as the FDA through the 1930s, 40s, 50s, 60s, 70s, and 80s never gave even the slightest indication that it viewed traditional pharmacy compounding as illegal (or that the only thing standing between pharmacists and criminal liability was the FDA s exercise of enforcement discretion). It was not until the mid-1990s that FDA, for the first time, made such an assertion. 19. Following Enactment Of The FD&C Act, Congress Established The Army Pharmacy Corps To Improve U.S. Servicemen s Access To Compounded Drugs. In 1943, five years after the enactment of the FD&C Act, Congress amended the National Defense Act of 1916 to create a commissioned Pharmacy Corps within the Medical Department of the United States Army. 26 Both the House and Senate Committees on Military Affairs held hearings on this legislation. Of note, most of the House and Senate Committee members who participated were members of the Congress that had passed the FD&C Act. 20. One of the principal reasons for establishing the Pharmacy Corps, as explained to the Senate Committee by the legislation s primary sponsor in the House, was to 25 FDA, Regulatory Procedures Manual (Mar. 2010) ( Government establishments should be held to the same standards as nongovernment establishments. The public health standards are identical; however, the method used to ensure compliance with these standards may vary. ), available at RegulatoryProceduresManual/UCM pdf (last visited Aug. 5, 2010). 26 See Pub. L. No , 57 Stat. 430 (1943)

14 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 14 of 45 PageID 734 provide military servicemen with the same access to medications that were compounded and dispensed by properly trained pharmacists as civilians: The bill has two general purposes: (1) it would give men and women in our Army the same protection in the use of drugs and medicines that civilians receive; and (2) it would increase the efficiency of the Army by placing the purchase, storage, testing, standardization, compounding, and dispensing of drugs and medicines in the hands of qualified pharmacists under the supervision of a corps of pharmacy officers In addition, Rowland Jones, Jr., representing the National Association of Retail Druggists before a House Committee commented: The American public requires that those who compound and dispense drugs and medicines meet high requirements of education, training, and experience before they are entrusted with the responsibility of handling... potent drugs and poisons. The civilian pharmacist must be a graduate of a 4-year course in pharmacy in an accredited college of pharmacy, must serve a year or more of internship, and then must pass very stringent State examinations in order to be licensed. No corresponding protection is afforded the soldier. The Army permits drugs and medicines to be compounded by enlisted men; in some cases the man is given a 90-day instruction, but not all of the men who are today performing pharmaceutical tasks in Army hospitals and installations have had even this much training According to historian Dennis B. Worthen, Ph.D., at the time of these hearings, compounding was the norm [in the Army], at least at the large military posts. A number of products were routinely compounded Pharmacy Corps: Hearing Before the S. Comm. on Military Affairs, 78th Cong. 3-4 (1943) (statement of Rep. Carl T. Durham) (emphasis added). 28 To Create a Pharmacy Corps in the Regular Army: Hearing Before the H. Comm. on Military Affairs, 77th Cong (1943). 29 Worthen, Pharmacy in World War II, at 152 (2004)

15 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 15 of 45 PageID Although the practice of compounding was referenced throughout the Pharmacy Corps hearings, the issue of whether compounding was even legal was never even raised (much less called into doubt). As noted above, FDA takes the position that the FD&C Act applies to the federal government. If Congress had considered compounded drugs to be unapproved new drugs in 1938, it seems highly unlikely that it would have enacted legislation just five years later to enhance the efficiency of federal employees engaging in that very practice. That Congress created a commissioned Pharmacy Corps with the power to compound drugs is further evidence, in my opinion, that Congress considered the practice common and necessary rather than illegal (to be performed only under the FDA s (silent) exercise of enforcement discretion). 24. The District Of Columbia Pharmacy Law, Which Congress Oversaw Until 1977, Required Pharmacists To Have Experience In Compounding. From 1929 until 1977, Congress oversaw and published the laws of the District of Columbia. Six editions of the D.C. Code were issued during this timeframe (1929, 1940, 1951, 1961, 1967, and 1973), as well as interim supplements. All six editions and their supplements recognized traditional pharmacy compounding, which would have included compounding from bulk ingredients, as a lawful act. (1929 -Title 20, 191; Title 2, 2-601; Title 2, 2-601; Title 2, 2-601; Title 2, 2-601; Title 2, 2-601). All six versions of the D.C. Code required, as part of the licensing process for pharmacists, that the applicant list the experience which the applicant has had in compounding physicians' prescriptions under the direction of a licensed pharmacist. 30 If Congress made compounding illegal in 1938, 30 See section 193 of 1929 code, section 602 for 1940, 1951, 1961, 1967, and

16 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 16 of 45 PageID 736 Congress would not have required two years later, and at regular intervals thereafter, that pharmacists practicing in the nation s capital demonstrate experience in compounding. 25. Contemporaneous Documents Demonstrate That Neither FDA Nor APhA Interpreted The FD&C Act To Prohibit Compounding. In 1941, the Scientific Edition of the Journal of the American Pharmacy Association reported on the proceedings of the APhA House of Delegates. Mr. Fischelis, Chairman of the Special Committee on State Food and Drug Legislation, read a report which referenced the effect of the Federal Act and Regulations upon retail pharmacists. 31 Mr. Fischelis observed that [a] number of new regulations have been put into effect and noted that the journal has devoted considerable space to the developments as they occurred. 32 Of particular interest were the additions FDA made to the list of drugs determined to be dangerous drugs which could not be sold without a prescription. 33 Mr. Fischelis reported that [a] number of pharmacists have received citations to appear before [FDA] enforcement officials for over-the-counter sales of drugs deemed as dangerous. 34 In contrast, Mr. Fischelis report does not raise any questions about the legal status of pharmacy compounding. In light of the facts that pharmacy compounding was ubiquitous in 1941, and that the APhA had strongly supported the 1938 legislation, the legal status of pharmacy compounding would surely have been a focus of Mr. Fischelis report had the legality of pharmacy compounding been in doubt. 31 Fischelis, Food and Drug Legislation, 30 J. Am. Pharm. Ass n 508, 528 (1941). 32 Id. 33 Id. 34 Id

17 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 17 of 45 PageID In 1946, FDA Commissioner Dunbar addressed the APhA at its annual meeting, where he reviewed the intricacies of Federal law governing the distribution of drugs and explained why these are necessary for the protection of the public. 35 Dr. Dunbar also took occasion to remind pharmacists that under Federal law prescriptions for barbiturates and certain hypnotics and narcotics must carry the warning May Be Habit Forming, unless the prescription is not refillable. 36 There is no mention that Dr. Dunbar made any suggestion that compounding had just been criminalized under the FD&C Act, which change would have been much more significant than the new labeling requirement he actually discussed. 27. In 1947, the APhA Journal published a special issue of its Practical Pharmacy Edition. A section of that issue was devoted to federal regulation and featured an article by Robert P. Herwick, the Medical Director of FDA. The article states that [o]nce a given product is found to fall within the statutory definition of a new drug, each applicant must submit in duplicate certain information as a part of the application to show that the drug is safe under the conditions of use. 37 There is no suggestion in this article or elsewhere in this issue that compounding results in a new drug, thereby requiring FDA approval. If this had 35 7 J. Am. Pharm. Ass'n - Practical Pharm. Ed. 390, 396 (1946). In the same issue of the APhA s journal is a full-page advertisement for Merck Prescription Chemicals claiming that [w]hen compounding prescriptions - Merck workability saves you time[,] relieves you of annoyance[,] assures you of satisfied customers. Id. at XVIII. 36 Id. at J. Am. Pharm. Ass n - Practical Pharm. Ed. 157 (1947). In the same issue is a full-page advertisement for gelatin capsules made by Parke, Davis & Company, promising that Prescriber, compounding pharmacist and patient are assured of a superior product when Parke- Davis Empty Capsules are used

18 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 18 of 45 PageID 738 been FDA s position at that time, one would expect Mr. Herwick to have mentioned as much in an article directed to pharmacists. 28. Similarly, a leading treatise on food and drug law in 1942 contains no mention that the FD&C Act outlawed pharmacy compounding, though the author does note in the introduction that [t]his book is... the result of the cooperation and work of many Government officials and members of the industry, trade associations and their counsel. 38 If any government officials, industry representatives, or legal counsel who worked on the treatise understood the FD&C Act to have prohibited the common practice of pharmacy compounding, that prohibition surely would have been discussed in the treatise. The 1962 Drug Amendments 29. The Drug Amendments of 1962, 39 amended the 1938 Act to require that, in addition to being safe, a new drug be shown to be effective for its intended use. The 1962 Drug Amendment did not prohibit compounding within the bounds of traditional pharmacy practice. Like the 1938 Act, nothing in the text or legislative history of the 1962 amendments suggested that Congress intended the amended definition of new drug to apply to traditional pharmacy compounding. 30. The 1962 amendments also added section 510(b), which requires every establishment engaged in the manufacture, preparation, propagation, compounding, or processing of a drug to register with FDA. In drafting that section, Congress intent was to ensure that drug manufacturers were registered with the FDA. Although Congress also 38 H.A. Toulmin, Jr., The Law of Foods, Drugs, and Cosmetics, at xvi (1942). 39 Pub. L. No , 76 Stat. 780 (1962)

19 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 19 of 45 PageID 739 required establishments engaged in compounding to register, it specifically exempted from the new registration requirements pharmacies which do not manufacture, prepare, propagate, compound, or process drugs or devices for sale other than in the regular course of their business of dispensing or selling drugs or devices at retail. 40 In other words, a pharmacy engaged in traditional pharmacy compounding was not covered by the provision, while a pharmacy that was behaving as a manufacturer (even if it called its activities compounding) was required to register. 31. FDA s own publications confirm that the agency did not interpret the 1962 amendments to prohibit traditional pharmacy compounding, nor did it assume that the 1938 Act had already done so. In 1971, FDA published a manual intended to provide pharmacists with an overview of the FD&C Act, including its new drug provisions, and the FDA s regulations relevant to the practice of pharmacy. 41 Notably, the manual contains no suggestion that drugs compounded by a pharmacist are new drugs subject to the FD&C Act s new drug provisions. If FDA had thought that traditional pharmacy compounding was rendered illegal by the 1938 Act, the 1962 amendments, or both, the agency surely would have said so in a manual the agency wrote to educate pharmacists about their obligations under these laws. 40 FD&C Act 510(g)(1). 41 See FDA, The Rx Legend: An FDA Manual for Pharmacists (1971)

20 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 20 of 45 PageID 740 The Food and Drug Administration Modernization and Accountability Act of In my opinion, prior to 1997 Congress had never vested authority in FDA to regulate traditional pharmacy compounding. In 1992, FDA published a Compliance Policy Guide ( CPG ) purporting to offer non-binding guidance to pharmacies that compounded drugs for human use. Following that guidance, FDA took a series of enforcement actions against compounding pharmacies who were believed to have been engaged in manufacturing. In response, pharmacists sought clarification from Congress on FDA s authority to regulate the practice of pharmacy. In 1997, Congress responded by enacting section 127 of FDAMA. Section 127 confirmed that, for human drugs, pharmacists may compound drugs without having to comply with the FD&C Act s new drug approval requirements provided certain restrictions are followed. For example, compounding must (1) be performed by a licensed pharmacist in a licensed facility, and (2) be pursuant to a prescription for an identified individual patient made by a licensed practitioner. 42 In addition, pharmacists may compound limited quantities before the receipt of a valid prescription based on a history of the pharmacist receiving valid prescription orders for the compounding of the drug product, 43 and they may compound from bulk ingredients. 44 Pharmacists may not, however, compound products that are essentially copies of commercially available drug products. 45 In my 42 See FD&C Act 503A(a). 43 See id. 503(a)(2)(A)-(B). 44 See id. 503(b)(1)(A). 45 See id. 503(b)(1)(D)

21 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 21 of 45 PageID 741 opinion, these requirements are consistent with the well-established definition of traditional pharmacy compounding. 33. Nowhere in the legislative history of FDAMA does Congress indicate that compounded drugs were new drugs subject to FDA approval, or that the legislation was intended to create an exemption for pharmacies from the FD&C Act s new drug requirements that otherwise would apply to pharmacies. Instead, the legislative history reflects that Congress enacted section 127 to clarify the scope of traditional pharmacy compounding that had always been beyond FDA s authority. states: 34. For example, the Senate Committee on Labor and Human Resources Report [FDAMA] is intended to clarify the application of the [FD&C Act] to the professional practice of pharmacist compounding of drug products. States currently have the authority to license pharmacists and regulate pharmacies, including the scope of pharmacy practice. All States include compounding as a core component of the profession of pharmacy. While the [FD&C Act] specifically exempts pharmacies from inspection and registration provisions of the Act, it has been the contention of [FDA] that compounded products are not exempt from the Act s new drug provisions. The committee has found that clarification is necessary to address current concerns and uncertainty about [FDA s] regulatory authority over pharmacy compounding. The committee has worked extensively with [FDA] and other interested parties to reach consensus on how to ensure continued availability of compounded drug products Another provision of FDAMA further illustrates that Congress never intended that the FD&C Act s new drug provisions would apply to traditional pharmacy 46 Food and Drug Administration Modernization and Accountability Act of 1997, S. Rep. No , at 67 (1997) (emphases added)

22 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 22 of 45 PageID 742 compounding. Section 121(c) of FDAMA, which is uncodified, directed FDA to establish appropriate procedures for the approval of [compounded] positron emission tomography [ PET ] drugs pursuant to section 505 of the [FD&C Act] and to require the submission of new drug applications ( NDAs ) for this subcategory of compounded drugs. 47 If Congress had assumed in 1997 that all compounded drugs were new drugs, there would have been no reason to amend the FD&C Act to instruct FDA to require NDAs for compounded PET drugs. 36. Rather than exempting pharmacies from the provisions of the FD&C Act that, in FDA s view, had always applied to pharmacies, FDAMA gave to FDA, for the first time, some authority over traditional pharmacy compounding of human drugs. That said, FDAMA was limited by its own terms to the compounding of human drugs. While FDAMA does not apply directly to animal drug compounding, Congress understanding of traditional pharmacy compounding, which was set forth in section 127 of FDAMA and is codified in section 503A of the FD&C Act, shows that FDA s current interpretation of its authority to regulate drug compounding is unduly broad. The Animal Medicinal Drug Use Clarification Act of In 1994, Congress amended section 512 of the FD&C Act with the enactment of the Animal Medicinal Drug Use Clarification Act ( AMDUCA ). Prior to AMDUCA, section 512 of the FD&C Act provided that a new animal drug was deemed unsafe unless it was subject to an approved application and the drug, its labeling, and its use conformed to 47 Pub. L. No , 121(c), 111 Stat (1997)

23 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 23 of 45 PageID 743 such approved application. Therefore, the use of a new animal drug without an approved application or in a manner different from that set forth in an approved application (e.g., for an off-label or extra-label use), resulted in the drug being unsafe under the FD&C Act. (As noted elsewhere in this Declaration, under section 501(a)(5) of the FD&C Act, a new animal drug deemed to be unsafe under section 512 of the act is adulterated.) In contrast to human drugs, where off-label use is permitted, animal drugs could not be used off-label. 38. AMDUCA was enacted to ensure that off- or extra-label use also is permitted for animal drugs. As a result of AMDUCA, veterinarians may now prescribe extra-label uses of approved animal drugs and approved human drugs for animals without causing the drug to become adulterated. 39. Importantly, AMDUCA did not purport to regulate animal drug compounding practices. Instead, AMDUCA addressed only extra-label uses of new animal drugs, i.e., using an approved animal drug in a manner that does not accord with the FDA-approved uses. As discussed in this Declaration, I do not believe that Congress gave FDA the authority to regulate traditional pharmacy compounding, and nothing in AMDUCA is to the contrary. Indeed, AMDUCA simply does not address animal drug compounding. 40. In 1996, FDA promulgated rules for the extra-label use of animal drugs under AMDUCA. Although AMDUCA does not even address drug compounding and only gives FDA the authority to promulgate regulations to implement paragraphs (4)(A) and (5) of section 512(a) of the FD&C Act, as amended by AMDUCA, which do not deal with pharmacy compounding, FDA s regulations purport to address the compounding of animal drugs. While those regulations suggest that they should not be construed as permitting

24 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 24 of 45 PageID 744 compounding from bulk drugs, they do not -- by their plain terms -- even apply to the traditional pharmacy compounding of products from bulk ingredients. 48 Congress Failure to Make A Clear Statement 41. Even if Congress did intend to criminalize traditional pharmacy compounding, it failed to do so for at least two reasons. First, it is well established that Congress should make its intention clear and manifest if it intends to pre-empt the historic powers of the States. 49 As noted above, Congress itself has recognized that regulation of the practice of pharmacy, including traditional pharmacy compounding, is a historic power of the states. 50 Under the FDA s theory, traditional pharmacy compounding is illegal. The FDA may allow aspects of the practice as a matter of its enforcement discretion, but the practice itself unquestionably is illegal if the FDA is to be believed. That position, of course, is difficult to square with the States continued regulation of pharmacy compounding as if it were legal. 42. For the reasons discussed above, Congress has not made clear and manifest any intention to prohibit traditional pharmacy compounding by enacting the FD&C Act, the C.F.R (a) ( This part applies to compounding of a product from approved animal or human drugs by a veterinarian or a pharmacist on the order of a veterinarian with the practice of veterinary medicine. ). 49 Gregory v. Ashcroft, 501 U.S. 452, 461 (1991) (citations omitted); see also Gonzales v. Oregon, 546 U.S. 243, 270 (2006) (observing that the structure and limitations of federalism... allow the States great latitude under their police powers to legislate as to the protection of the lives, limbs, health, comfort, and quiet of all persons ) (internal quotations and citations omitted). 50 See Food and Drug Administration Modernization and Accountability Act of 1997, S. Rep. No , at 67 (1997) ( States currently have the authority to license pharmacists and regulate pharmacies, including the scope of pharmacy practice. All states include compounding as a core component of the profession of pharmacy. )

25 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 25 of 45 PageID drug amendments, FDAMA, or AMDUCA. 51 Rather than pointing to explicit language in the statute, FDA must go through a six-step dance to establish that pharmacy compounding is illegal. First, FDA takes the position that compounded medications are drugs under the FD&C Act. 52 Second, FDA must then take the position that these compounded drugs are new animal drugs under the FD&C Act. 53 Third, in a different section of the FD&C Act new animal drugs are deemed unsafe unless approved by the FDA. 54 Fourth, under yet another section of the FD&C Act, new animal drugs deemed unsafe are deemed adulterated. 55 Fifth, under another section of the FD&C Act it is a prohibited act to introduce into interstate commerce an adulterated drug. 56 Finally, committing a prohibited act is a (strict liability) criminal offense. 57 (None of these provisions, which FDA relies upon, so much as mentions pharmacy compounding, let alone bans that long-standing, traditional practice.) In my opinion, this is not the type of clear statement that one would expect when Congress is criminalizing conduct historically regulated by the States. As such, these statutory provisions should not be interpreted to have pre-empted the States historic power to regulate the practice of pharmacy, including 51 Cf. Gonzales, 546 U.S. at 272 (observing that when Congress wants to regulate medical practice in the given scheme, it does so by explicit language in the statute ). 52 See FD&C Act 201(g). 53 See id. 201(v). 54 See id. 512(a)(1)(A). 55 See id. 501(a)(5). 56 See id. 301(a). 57 See id. 303(a)(1)

26 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 26 of 45 PageID 746 traditional pharmacy compounding, a core component of that practice. 43. Second, the Supreme Court has required that when Congress intends to criminalize a particular activity, it must speak in clear and definite language. 58 As noted above, Congress has not spoken in clear and definite language that it intended to criminalize traditional pharmacy compounding by enacting the FD&C Act or any of its subsequent amendments. 59 That FDA has chosen to bring a civil action against Franck s rather than a criminal action does not alter this requirement. Traditional Pharmacy Compounding Is Distinct From Drug Manufacturing 44. Traditional pharmacy compounding is fundamentally distinct from drug manufacturing. 60 Drug manufacturing generally is understood to consist of the mass commercialization of proprietary or patented drugs in standard formulations and dosages for a large-scale market. Drug manufacturers routinely produce batches consisting of millions of dosage units, such as tablets or capsules, for resale utilizing many personnel and large-scale manufacturing equipment. These drug products are distributed through the normal channels of interstate commerce to individuals unknown to the manufacturing company. 58 McNally v. United States, 483 U.S. 350, 360 (1987), superseded by statute as stated in United States v. Walker, 490 F.3d 1282, 1297 n.16 (11th Cir. 2007) (citations omitted). 59 Id. 60 See Thompson v. Western States Med. Ctr., 535 U.S. 357, 370 (2002) (recognizing the difference between small-scale compounding and large-scale drug manufacturing ); see also FDA, Compliance Policy Guides Manual (July 2003) [hereinafter CPG ], at 3-4 (acknowledging that the traditional, day-to-day... compounding by veterinarians and pharmacists of animal and human drugs that are intended for use in animals is different from animal drug compounding that is analogous to manufacturing )

27 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 27 of 45 PageID 747 Manufacturers are not required to, and do not, provide oversight of individual patients. Federal regulation of large-scale commercial manufacturing is intended to prevent the production of large quantities of ineffective or dangerous manufactured drugs that then are introduced into interstate commerce. 61 mean 45. Traditional pharmacy compounding, in contrast, is generally understood to the preparation of Components into a Drug product (1) as the result of a Practitioner s Prescription Drug Order based on the Practitioner/patient/Pharmacist relationship in the course of professional practice, or (2) for the purpose of, or as an incident to, research, teaching, or chemical analysis and not for sale or Dispensing. Compounding includes the preparation of limited amounts of Drugs or Devices in anticipation of receiving Prescription Drug Orders based on routine, regularly observed prescribing patterns Thus, one important difference between traditional pharmacy compounding and manufacturing is the existence of a pharmacist-prescriber-patient relationship that controls the preparation of the compounded drug product. Compounded drugs are not for resale, but rather are personal and responsive to the patient s immediate needs as diagnosed by the patient s licensed healthcare professional. 63 Moreover, pharmacists are licensed 61 See generally Final Rule, Human and Veterinary Drugs; Current Good Manufacturing Practice in Manufacture, Processing, Packing, or Holding, 43 Fed. Reg (Sep. 29, 1978). 62 National Association of Boards of Pharmacy, Model State Pharmacy Act and Model Rules of the National Association of Boards of Pharmacy, app B, subpt. A(a) (Aug. 2009), available at (last visited Aug. 2, 2010). 63 See Dinah G. Jordan, Pharmacist compounding vs. veterinarian compounding: Similarities and differences, JAVMA (July 15, 1995), at 258 ( There must exist a bona fide prescriber/pharmacist/patient relationship to distinguish compounding from manufacturing

28 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 28 of 45 PageID 748 professionals engaged in the compounding of medications who must operate in conformance with applicable state laws that regulate the practice of pharmacy. 64 The Compliance Policy Guide Does Not Adequately Distinguish Between Traditional Animal Drug Compounding and the Manufacturing of Animal Drugs 47. Although Congress has never enacted a statute regulating animal drug compounding practices, the FDA nevertheless has issued regulatory guidance that purports to regulate animal drug compounding. In July 2003, the FDA issued CPG , a guidance document entitled, Compounding of Drugs for Use in Animals. CPG acknowledges the use of compounding within certain areas of veterinary practice and recognizes (somewhat obliquely) that animal drug compounding that is within the bounds of traditional pharmacy practice does not violate the FD&C Act. 65 The CPG then states that when the scope and nature of activities of veterinarians and pharmacists raise the kinds of concerns normally associated with a drug manufacturer..., FDA has determined that it will seriously consider enforcement action. 66 To determine whether the scope and nature of particular activities of veterinarians or pharmacists raise the kinds of concerns normally Manufactured products are for resale; compounded products are not.... Herein lies the basic difference between compounding and manufacturing. ). 64 See, e.g., Western States, 535 U.S. at 361 ( Many States specifically regulate compounding practices as part of their regulation of pharmacies. ); Jordan, Pharmacist compounding, note 63, supra at 257 ( The professions of pharmacy and veterinary medicine have historically been regulated principally at the state level. ). 65 CPG , at 3; see also id. ( Pharmacies and veterinarians who engage in activities analogous to manufacturing and distributing drugs for use in animals may be held to the same provisions of the Act as manufacturers. ). 66 Id. at

29 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 29 of 45 PageID 749 associated with a drug manufacturer, i.e., to ascertain whether the pharmacist or veterinarian is engaged in permissible animal drug compounding or prohibited drug manufacturing, FDA will consider a list of 13 factors set forth in the CPG One of the factors, according to the CPG, that suggests that the activity constitutes manufacturing and not compounding is compounding from unapproved drugs or bulk drug substances. 68 Indeed, FDA asserts in CPG that compounding from any unapproved drug or from bulk drug substances, more than just a factor suggestive of manufacturing, is conduct that per se is outside the bounds of the traditional pharmacy practice. 69 FDA s position in this case appears to be that any compounding from bulk substances is unlawful. 49. Other factors that the agency considers in determining whether the activity is traditional animal drug compounding, on the one hand, or drug manufacturing, on the other, include: Compounding of drugs in anticipation of receiving prescriptions, except in very limited quantities in relation to the amounts of drugs compounded after receiving prescriptions issued within the confines of a valid veterinarianclient-patient relationship ( valid VCPR ) 70 ; Using commercial scale manufacturing equipment for compounding drug products 71 ; 67 See id. at 4-5 (listing factors). 68 Id. at 5 (factor no. 4). 69 Id. at 3; see also id. (asserting that the Act does not permit veterinarians to compound unapproved finished drug products from bulk drug substances ). 70 Id. at 4 (factor no. 2). 71 Id. at 5 (factor no. 6)

30 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 30 of 45 PageID 750 Compounding of drugs for use in animals where an approved new animal drug or approved new human drug... will, in the available dosage form and concentration, appropriately treat the condition diagnosed 72 ; and Compounding from a human drug for use in food-producing animals if an approved animal drug can be used for the compounding In my opinion, these factors are imperfect proxies for ascertaining whether a veterinarian or pharmacist is engaged in compounding that falls within the bounds of traditional pharmacy practice. Based on my review of the relevant literature and my experience as Chief Counsel of the FDA, a veterinarian or pharmacist is engaged in compounding that falls within the bounds of traditional pharmacy practice when the veterinarian or pharmacist compounds a drug (1) in response to a prescription order based on a valid VCPR in the course of professional practice, or (2) for the purpose of, or as an incident to, research, teaching, or chemical analysis and not for sale or dispensing. 74 In addition, animal drug compounding within the bounds of traditional pharmacy practice includes the preparation of limited amounts of animal drugs for office use in accordance with state law 75 or in anticipation of receiving prescription orders based on routine, regularly- 72 Id. (factor no. 9). 73 Id. (factor no. 10). 74 See National Association of Boards of Pharmacy, Model State Pharmacy Act and Model Rules of the National Association of Boards of Pharmacy, app B, subpt. A(a) (Aug. 2009), available at (last visited Aug. 2, 2010). 75 Fla. Admin. Code r. 64B (3) (2008)

31 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 31 of 45 PageID 751 observed prescribing patterns. 76 This definition of compounding applies, whether or not the compounding is from bulk ingredients or approved drugs. Guidance Documents Do Not Establish Legally Enforceable Rights or Responsibilities 51. The factors listed in CPG , including the strict prohibition on compounding animal drugs from bulk substances, are not legally binding. FDA has stated that [g]uidance documents do not establish legally enforceable rights or responsibilities, and [t]hey do not legally bind the public or FDA. 77 CPG itself states that it does not create or confer any rights for or on any person and does not operate to bind the Food and Drug Administration (FDA) or the public. 78 Accordingly, parties are free to choose to use an approach other than the one set forth in a guidance document, so long as the alternative approach... [complies] with the relevant statutes and regulations With regard to CPG , the FDA did not publish a Notice in the Federal Register announcing the availability of CPG or otherwise seek comment from interested parties, in contrast to the way it developed and implemented prior guidances on the same subject. 80 In doing so, the FDA failed to follow its own good guidance practices 76 See National Association of Boards of Pharmacy, Model State Pharmacy Act and Model Rules of the National Association of Boards of Pharmacy, app B, subpt. A(a) (Aug. 2009), available at (last visited Aug. 2, 2010) C.F.R (d)(1). 78 CPG at C.F.R (d)(2). 80 Compare Notice, Compounding of Drugs for Use in Animals; Compliance Policy Guide; Availability, 61 Fed. Reg (July 3, 1996), with CPG

32 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 32 of 45 PageID 752 ( GGPs ), which provide that for Level 1 guidance documents like CPG , 81 the agency will publish a Notice in the Federal Register that a draft of the guidance is available; post the draft guidance on the Internet; and invite comments on the draft guidance from interested parties. 82 In addition, the FDA s own GGPs provide that Level 1 guidances will not be finalized and implemented until [a]fter providing an opportunity for public comment. 83 I do not know why FDA failed to follow its GGPs, which were adopted in 2000, 84 when it issued CPG in In my opinion, the agency s failure to do so calls into question the validity of that document s guidance. Compounding Conducted By Franck s 53. Based on my review of Declarations and other materials describing Franck s operations, including specifically my review of the Declaration of Paul W. Franck in Support of Defendants Opposition to Plaintiff s Motion for Preliminary Injunction ( Franck Decl. ); the Declaration of Gigi S. Davidson ( Davidson Decl. ); and the Declaration of Dr. Loyd V. Allen ( Allen Decl. ), it is my opinion that the animal drug compounding that Franck s carries out is within the bounds of traditional pharmacy practice. As such, it is the sort of compounding the day-to-day regulation of which FDA historically has deferred to state 81 Level 1 guidance documents include guidance documents that [s]et forth changes in interpretation or policy that are of more than a minor nature or [c]over highly controversial issues. 21 C.F.R (c)(1). 82 See 21 C.F.R (g)(ii). 83 Id (g)(iv). 84 See Final Rule, Administrative Practices and Procedures; Good Guidance Practices, 65 Fed. Reg (Sep. 19, 2000)

33 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 33 of 45 PageID 753 authorities. 85 First, as an initial matter, the animal drug compounding that Franck s undertakes is, in my opinion, within the bounds of traditional pharmacy practice because it occurs only in response to prescription orders from veterinarians in the context of a valid VCPR, or within limited exceptions permitted under state law, and in the course of professional practice. 54. Second, the animal drug compounding that Franck s undertakes is within the bounds of traditional pharmacy practice because, contrary to FDA s assertion, nothing in the FD&C Act prohibits pharmacists from compounding drugs from bulk substances as part of the traditional practice of pharmacy. 86 The touchstone is not whether the compounding is from bulk ingredients, but instead whether it is in response to a prescription order based on a valid VCPR. In 1938, when the FD&C Act was enacted, all drug compounding -- by definition -- was from bulk substances, as there were no other substances approved by the FDA. Thus, not only was traditional drug compounding widely accepted and understood to be permissible under the FD&C Act, traditional drug compounding from bulk substances was widely accepted and understood to be permissible under the Act. In the context of human drugs, FDAMA specifically provides that bulk substances may be used in traditional compounding practices. It would not make sense to permit the use of bulk substances in human drug compounding but not animal drug compounding, especially where, as here, the 85 See CPG at See, e.g., Debora S. Chan, Regulatory Issues for the Use of Bulk Drugs in Veterinary Compounding, Int l J. Pharm. Compounding (Mar./Apr. 2001), at 97 (noting that AMDUCA does not address compounding products from bulk drugs, and that although FDAMA includes provisions for using bulk substances for use in humans to compound drugs..., it does not specifically address compounding for use in animals )

34 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 34 of 45 PageID 754 compounded medications are for non-food producing animals, such as equines and companion animals. Indeed, the need to use bulk substances in animal drug compounding is particularly acute (more acute than for human drug compounding), due to the relative lack of animal drug products manufactured and on the market and the abundance of animal species. Compounding from bulk substances can be more effective, reliable, and safe than compounding from finished drug products. 87 For example, a bulk substance has a certificate of analysis that includes detailed information that is not available for finished drug products, including the concentration and specification of all ingredients, expiry date, manufacture date, method of analysis, analysis results, and storage conditions. 88 In many cases, compounding is a necessity for the treatment of ailing animals Third, because the touchstone for ascertaining whether animal drug compounding falls within the bounds of traditional pharmacy practice is whether such compounding is in response to a prescription order based on a valid VCPR, the use of commercial scale manufacturing equipment is not necessarily relevant. After all, a successful compounding pharmacy may, because of the volume of incoming prescriptions that require compounding, be required for reasons of efficiency to employ commercial-scale 87 See Franck Decl. 47; Allen Decl See Franck Decl ; Allen Decl See Mark G. Papich, Drug Compounding for Veterinary Patients, The AAPS Journal (2005), at E282 ( Sometimes, compounding is a necessity. Despite advances in new drugs available for animals, many unmet needs still remain. ); Jordan, Pharmacist compounding, note 63, supra at 259 (if animal drug compounding from bulk ingredients is banned, then food animal veterinarians have no alternatives for effective treatment of acute poisoning attributable to lead, nitrate, or cyanide )

35 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 35 of 45 PageID 755 equipment in order to supply the needs of its customers. Even so, based on my review of photographs of Franck s compounding lab and my own experience viewing drug manufacturing facilities, I am of the opinion that the animal drug compounding that Franck s undertakes is not carried out using commercial scale manufacturing equipment. 56. Fourth, based on my review of Declarations and other materials describing Franck s operations, I understand that Franck s does not compound any drugs for use in animals where an approved new animal drug or approved new human drug is available in the appropriate dosage forms and concentrations to treat conditions diagnosed by its veterinarian customers in the context of a valid VCPR. Finally, based on my review of Declarations and other materials describing Franck s operations, I understand that Franck s does not compound any medications for use in food-producing animals. Indeed, I understand that Franck s does not compound any drugs for use in any food-producing animals at all. 57. Finally, I am surprised that FDA has brought the instant enforcement action against Franck s, and only against Franck s, for two reasons. First, numerous pharmacies are engaged in compounding medications from bulk ingredients. Indeed, compounding from bulk ingredients is a common, and in my view entirely appropriate, practice. Given that Franck s is similarly situated to countless other pharmacies in the United States, the FDA s decision to single Franck s out for disparate treatment is both puzzling and concerning to me. Second, while I view the compounding of medications from bulk ingredients to be well within the core tradition of pharmacy compounding, there are numerous practices that I, like the FDA, consider to be outside that tradition, e.g., large-scale compounding of commercially available drug products. Based on my experience both at the FDA and in private practice,

36 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 36 of 45 PageID 756

37 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 37 of 45 PageID 757 Appendix A

38 Case 5:10-cv TJC-TBS Document 35 Filed 08/06/10 Page 38 of 45 PageID 758 Partner Food and Drug Washington (202) Phone (202) Fax Sheldon T. Bradshaw In October 2007, Sheldon Bradshaw joined Hunton & Williams LLP as a partner and co-chair of the firm's Food and Drug Practice Group. Mr. Bradshaw came to the firm from the U.S. Food and Drug Administration (FDA), where he served as Chief Counsel. As Chief Counsel, Mr. Bradshaw was responsible for providing legal advice to the Secretary and Deputy Secretary of the U.S. Department of Health and Human Services and to the FDA's senior leadership - including the Commissioner, the Deputy Commissioners and the Directors of the various FDA Centers - on issues related to drugs, biologics, medical devices, food, animal feed and drugs, cosmetics, dietary supplements and other products regulated under the Federal Food, Drug and Cosmetic Act and the Public Health Service Act. In addition, he oversaw all FDArelated litigation and reviewed and approved every significant regulation and guidance document promulgated by the FDA and every significant warning letter issued by the FDA. Prior to his service at the FDA, Mr. Bradshaw held several senior positions at the U.S. Department of Justice where he, among other things, provided advice to FDA and testified before Congress on matters under the FDA's jurisdiction. At the firm, Mr. Bradshaw advises clients in the same areas in which he worked while Chief Counsel of FDA. Relevant Experience à Advised numerous pharmaceutical companies on drug approval strategies involving new drug applications, 505(b)(2) applications, suitability petitions, and abbreviated new drug applications (ANDAs). à Counseled clients regarding product life cycle management (including the development of new products and line extensions), Hatch-Waxman issues (including patent and non-patent exclusivities, 30-month stays and FDA's Orange Book); user fees, and risk evaluation and mitigation strategies (REMS). à Assisted pharmaceutical companies and device manufactures with postapproval issues, including labeling changes, adverse event reporting, good manufacturing requirements (GMPs), and promotional activities. à Helped clients respond to, and recover from, Warning and Untitled Letters sent by FDA. à Advised device manufacturers on 510(k) and pre-market approval (PMA) applications. à Advised clients regarding "intended use" and the types of claims that distinguish drugs and devices from cosmetics, dietary supplements and food. à Reviewed labeling of drugs, both Rx and OTC, devices, dietary supplements, food, and cosmetics for compliance with the FD&C Act. Hunton & Williams LLP