Litigation Alert: Eighth Circuit Finds Adulterated Drug Claims Are Not Preempted

Date: Feb 01, 2011

Consumers can sue a drug company for selling a drug that was not manufactured pursuant to good manufacturing practices (cGMP) and was, thus, "adulterated" under the Food, Drug and Cosmetic Act (FDCA). Such claims are not preempted by federal law, said the Eighth Circuit Court of Appeals. (Allen LeFaivre v. KV Pharmaceutical Company, et al., 8th Cir., No. 10-1326, 1/19/2011.)

LeFaivre brought a class action lawsuit against KV Pharmaceutical Company and others (KV), alleging that KV failed to manufacture its hypertension drug in compliance with federal regulations and was in breach of the implied warranty of merchantability and other state laws. The suit was based, in part, on a Consent Decree between the Food and Drug Administration (FDA) and KV settling the FDA's civil allegations that the drug was not made in compliance with cGMP and, thus, was "adulterated" pursuant to the FDCA. Under the Consent Decree, KV agreed to destroy the remaining stock of adulterated drugs and issue a recall for all stocks of the adulterated product. The Consent Decree did not require KV to distribute its recall notice to individual purchasers of the medication, and it did not do so. KV moved to dismiss LeFaivre's lawsuit, alleging that his state law claims were preempted by federal law because the claims were based entirely on violations of federal regulations. The District Court granted the motion to dismiss.

The Eighth Circuit rejected KV's argument that LeFaivre's claim was preempted by the Supreme Court's fraud-on-the-FDA ruling in Buckman Co. v. Plaintiffs' Legal Committee, 531 U.S. 341 (2001). The Eighth Circuit noted that where the FDA determines that a company committed fraud, a state law claim based on that fraud would not interfere with FDA's enforcement - it would "supplement and facilitate" it. Since the Consent Decree between the FDA and KV established that KV had manufactured adulterated medication in violation of cGMP requirements, LeFaivre's state law claims were not "depend[ent] upon speculation as to the FDA's behavior" but were "grounded in the agency's explicit actions." The Eighth Circuit distinguished the present case from Buckman because the misrepresentations there were not made to the plaintiff, or the consumers at large, but to the FDA itself. Here, LeFaivre's claims focused on the harm perpetrated against him and the other consumers.

The Eighth Circuit also rejected KV's argument based on other preemption grounds because (1) "the FDA [has] traditionally regarded state law as a complementary form of drug regulation" and has "long maintained that state law offers an additional, and important, layer of consumer protection that complements FDA regulation"; and (2) it was not physically impossible for KV to comply with both state and federal laws, nor did the state law claims stand "as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress."

As LeFaivre illustrates, entering into a Consent Decree with the FDA may have serious collateral effects. Such agreements should be negotiated carefully.

For more information on this decision and other litigation matters, please contact Douglas Behr at behr@khlaw.com in Washington, D.C.