Pharmaceutical Manufacturers Sue to Block State-Level Importation Programs

Joseph L. Fink III, JD, DSC (Hon.), BSPHARM, FAPhA;

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Pharmaceutical Manufacturers Sue to Block State-Level Importation Programs

September 23, 2024

By Joseph L. Fink III, JD, DSC (Hon.), BSPHARM, FAPhA

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Article

Pharmacy TimesSeptember 2024

Volume 90

Issue 09

Federal court reviews standing to challenge to federal agency action.

In 2000, Congress authorized the FDA to adopt “regulations permitting pharmacists and wholesalers to import prescription drugs from Canada.”¹However, the law imposed an additional hurdle when it specified that the statute “shall become effective only if the Secretary of Health and Human Services [HHS] certifies to Congress that the implementation will meet 2 criteria: (1) Importation must ‘pose no additional risk to the public’s health and safety’; and (2) It will result ‘in a significant reduction in the cost of covered products to the American consumer.’ ”²

Medical healthcare pharmacy compliance law and regulation, rules and rights on prescription drugs for eligible patients - Image credit: neirfy | stock.adobe.com

Image credit: neirfy | stock.adobe.com

Several consecutive secretaries declined to make those determinations until 2019, when HHS proposed implementing the legislation through state- or tribal-run programs that would meet all the criteria. Such approaches would be for a limited time, and each would be referred to as a Section 804 Importation Program (SIP). HHS described this as a conditional approach because each program certification would be “conditioned on each authorized SIP meeting the relevant requirements.”³ The FDA finalized a regulation imposing 2 standards for any potential drug importation. First, the FDA must approve an application from the program sponsor, and second, the importer must file a preimport request to get FDA approval to bring any shipment of drugs into the country.²

About the Author

Joseph L. Fink III, JD, DSc (Hon), BSPharm, FAPhA, is emeritus professor of pharmacy law and policy and former Kentucky Pharmacists Association Professor of Leadership at the University of Kentucky College of Pharmacy in Lexington.

Several states started to prepare program proposals for FDA review, prompting 3 organizations to file a federal lawsuit challenging the agency’s action. The organizations were the Pharmaceutical Research and Manufacturers of America, the Partnership for Safe Medicines, and the Council for Affordable Health Coverage.⁴

The collective groups advanced 3 main arguments based on the federal Administrative Procedure Act to challenge the decision of the HHS secretary to begin to review and approve SIPs. First, they said such importation is dangerous and unlikely to reduce costs. Secondly, they said the agency made procedural errors when reviewing and adopting the regulations. And finally, they objected to perceived burdens placed on manufacturers to comply with the program.⁴

However, before turning attention to any of those assertions, the court was required to review the legal issue known as standing. That means that some interest of the plaintiff has been or will be adversely affected by the action being challenged. If plaintiffs lack standing, they may not pursue the matter in court.

The issue was presented for the judge when the defendant US agency moved for dismissal of the lawsuit due to the plaintiffs’ lack of standing. The federal trial court judge concluded that the plaintiff organizations did not have standing to pursue the matter. He ordered the case dismissed.⁴

The Court’s Reasoning

The court looked at prior cases to determine that a case must present 3 facets for standing to exist. “First, the plaintiffs must have suffered an injury in fact. Second, that injury must be fairly traceable to the challenged conduct of the defendant(s). Third, that bad action by the defendant(s) is likely to be redressed by a favorable judicial decision.” However, if the case was brought by a “membership-based entity” such as occurred here, the potential injuries are divided into 2 categories: injuries that inure to members of the plaintiff association(s), and injuries that occur directly to the plaintiff organization(s).⁴

The judge concluded that the plaintiff united groups lack “associational standing” because it is speculative whether, when, and how their membership will suffer injury. Second, the 3 organizations that brought the lawsuit lack “organizational standing” because they were unable to show the proposed agency action has “perceptibly impaired” their activities, resulting in a “drain on the organizations’ resources.”⁴

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