No. 01-344 

In the Supreme Court of the United States 

TOMMY G. THOMPSON, 
SECRETARY OF HEALTH AND HUMAN SERVICES, 
ET AL., PETITIONERS 

v. 

WESTERN STATES MEDICAL CENTER, ET AL. 

ON PETITION FOR A WRIT OF CERTIORARI 
TO THE UNITED STATES COURT OF APPEALS 
FOR THE NINTH CIRCUIT 

REPLY BRIEF FOR THE PETITIONERS 

THEODORE B. OLSON 
Solicitor General 

Counsel of Record 
Department of Justice 
Washington, D.C. 20530-0001 
(202) 514-2217 

TABLE OF AUTHORITIES 

Cases: Page 

Central Hudson Gas & Elec. Corp. v. Public 

Serv. Comm’n, 447 U.S. 557 (1980) .................................... 

6 

Children’s Legal Found., Inc. v. Action for 

Children’s Television, 503 U.S. 913 (1992) ...................... 

2 

Florida Bar v. Went For It, Inc., 515 U.S. 618 

(1995) ........................................................................................ 7 

44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484 

(1996) ........................................................................................ 6 

Greater New Orleans Broad. Ass’n v. United States, 

527 U.S. 173 (1999) ................................................................ 

6 

Lorillard Tobacco Co. v. Reilly, 121 S. Ct. 2404 

(2001) ........................................................................................ 

6, 7, 8 

Nolasco v. United States, 502 U.S. 833 (1991) .................. 

2 

Ohralik v. Ohio State Bar Ass’n, 436 U.S. 447 

(1978) ........................................................................................ 7 

Professionals & Patients for Customized Care v. 

Shalala, 56 F.3d 592 (5th Cir. 1995) .................................. 

4, 5 

Rubin v. Coors, 514 U.S. 476 (1995) ................................... 

6 

United States v. Algon Chem., Inc., 879 F.2d 

1154 (3d Cir. 1989) ................................................................. 

4 

United States v. Edge Broad. Co., 509 U.S. 418 

(1993) ........................................................................................ 

6, 7 

United States v. Gainey, 380 U.S. 63 (1965) ..................... 

2 

United States v. 9/1 Kg. Containers, 854 F.2d 173 

(7th Cir. 1998) ......................................................................... 

4 

United States v. Rutherford, 442 U.S. 544 (1979) ............ 

2, 8 

United States v. Sene X Eleemosynary Corp., 479 

F. Supp. 970 (S.D. Fla. 1979), aff ’d, [1982-1983 

Transfer Binder] Food Drug Cosm. L. Rep. (CCH) 

¶ 38,207 (11th Cir. Jan. 12, 1983) ........................................ 

4 

Weinberger v. Bentex Pharm., 412 U.S. 645 

(1973) ........................................................................................ 4 

(I) 

II 

Case—Continued: Page 

Weinberger v. Hynson, Westcott & Dunning, Inc., 

412 U.S. 609 (1973) ................................................................ 

2, 4, 8 

Constitution, statutes and rule: 

U.S. Const. Amend. I ............................................................... 

1-2 

Federal Food, Drug, and Cosmetic Act, 21 U.S.C. 

301 et seq. ................................................................................. 

1 

21 U.S.C. 321(p) ................................................................. 

4 

21 U.S.C. 331(d) ................................................................. 

4 

21 U.S.C. 355(a) ................................................................. 

4 

Food and Drug Administration Modernization Act 

of 1997, 21 U.S.C. 353a et seq.: 

21 U.S.C. 353a (Supp. V 1999) ....................... 

1, 3, 4, 5, 6, 7 

21 U.S.C. 353a(a) (Supp. V 1999) .................................... 

1, 6 

21 U.S.C. 353a(c) (Supp. V 1999) .................................... 

1, 7 

Sup. Ct. R. 10 ............................................................................. 

5 

Miscellaneous: 

143 Cong. Rec. S9839 (daily ed. Sept. 24, 1997) ................... 

5 

Robert L. Stern et al., Supreme Court Practice 
(7th ed. 1993) .......................................................................... 3 

In the Supreme Court of the United States 

No. 01-344 

TOMMY G. THOMPSON, 
SECRETARY OF HEALTH AND HUMAN SERVICES, 
ET AL., PETITIONERS 

v. 

WESTERN STATES MEDICAL CENTER, ET AL. 

ON PETITION FOR A WRIT OF CERTIORARI 
TO THE UNITED STATES COURT OF APPEALS 
FOR THE NINTH CIRCUIT 

REPLY BRIEF FOR THE PETITIONERS 

The Food and Drug Administration Modernization 
Act of 1997 (FDAMA), 21 U.S.C. 353a (Supp. V 1999), 
provides a limited exemption from the new drug ap- 
proval (and certain other) requirements of the Federal 
Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. 301 
et seq., for drugs compounded by pharmacists. This 
case concerns the constitutionality of FDAMA’s limita- 
tion of that exemption to pharmacists who do not solicit 
prescriptions for or advertise particular compounded 
drugs. 21 U.S.C. 353a(a) and (c) (Supp. V 1999). 

The court of appeals erroneously held that the solici- 
tation and advertising limitations on the new statutory 
exemption are unconstitutional under the First Amend- 

(1) 

2 

ment. See Pet. 16-25. In striking down those limita- 
tions, the court of appeals upset the careful balance that 
Congress established in specifying the point at which 
potentially harmful drug products should be subject to 
the FDCA’s generally applicable new drug approval 
requirements. See Pet. 11-16. Those requirements are 
the linchpin of the Nation’s laws regulating the manu- 
facturing and distribution of drugs and thus a central 
component of Congress’s efforts in the FDCA to pro- 
tect the public health and safety. See generally United 
States v. Rutherford, 442 U.S. 544 (1979); Weinberger v. 
Hynson, Westcott & Dunning, Inc., 412 U.S. 609 (1973). 
The court of appeals’ mistaken “exercise of the grave 
power of annulling an Act of Congress” warrants this 
Court’s review, particularly because it arises in the 
critical context of protecting public health and safety. 
United States v. Gainey, 380 U.S. 63, 65 (1965). 

1. Respondents take issue (Br. in Opp. 9) with the 
contention (Pet. 11, 25) that the decision of the court of 
appeals warrants review because that court held an Act 
of Congress unconstitutional. They point to two in- 
stances in which (they assert) this Court has denied 
petitions seeking review of the invalidation of federal 
statutes. See Br. in Opp. 9 (citing Children’s Legal 
Found., Inc. v. Action for Children’s Television (ACT), 
503 U.S. 913 (1992), and Nolasco v. United States, 502 
U.S. 833 (1991)). In one of those cases, however, the 
petitioner did not seek review of the appellate court’s 
invalidation of a federal statute; the petitioner sought 
review only of the court’s holding that the trial court 
was not required to define reasonable doubt. See Pet. 
at i-ii, Nolasco v. United States, supra (No. 90-8104). In 
the other case, the respondents opposed certiorari on 
the ground that the matter had been remanded to the 
Federal Communications Commission and the court of 

3 

appeals’ decision was therefore interlocutory, see Br. of 
Resp. ACT, et al. at 18, Children’s Legal Found., Inc. v. 
ACT, supra (No. 91-833), which is not true of the 
decision in this case. Thus, neither of the cases cited by 
respondents provides any basis for this Court to depart 
from its virtually uniform practice of granting the gov- 
ernment’s request for review of an appellate decision 
that holds an Act of Congress unconstitutional. See 
Robert L. Stern et al., Supreme Court Practice 185 (7th 
ed. 1993). 

Moreover, as noted in the petition, this Court’s re- 
view is particularly warranted here, because the Act of 
Congress that the court of appeals invalidated is de- 
signed to protect the public health and safety from 
potentially dangerous drugs and to provide adequate 
and appropriate incentives for those who manufacture 
and promote new drugs to bear the costs of demon- 
strating the safety and efficacy of those drugs. See Pet. 
12, 15, 19-20, 25. Section 353a embodies a carefully bal- 
anced congressional effort to preserve the effectiveness 
and integrity of the FDCA’s new drug approval pro- 
cess, and, at the same time, to ensure the availability of 
compounded drugs for those individual patients who, 
for particularized medical reasons, cannot use com- 
mercially available products that have already been 
approved by the FDA. See Pet. 11-16. The new drug 
approval requirements are at the core of the Nation’s 
laws regulating the manufacturing and distribution of 
drugs. By unduly limiting Congress’s authority to 
define the scope of those provisions, the decision of the 
court of appeals impermissibly interferes with impor- 
tant congressional efforts to protect and to promote 
public health and safety. 

2. Respondents attempt to minimize the importance 
of the court of appeals’ decision by disputing (Br. in 

4 

Opp. 1) that compounded drugs are “new drugs” 
subject to the FDCA’s pre-market approval require- 
ments. Respondents also take issue (id. at 1-2) with the 
related conclusion that, before enactment of Section 
353a, it was illegal to distribute compounded drugs in 
interstate commerce without complying with those 
requirements. 

In fact, compounded drugs are “new drugs” because 
they are “not generally recognized * * * as safe and 
effective for use under the conditions prescribed.” 21 
U.S.C. 321(p). A drug’s safety and effectiveness must 
be demonstrated by controlled clinical trials conducted 
by qualified experts. See Hynson, Westcott & Dun- 
ning, 412 U.S. at 630; Weinberger v. Bentex Pharm., 
412 U.S. 645, 652 (1973). Neither the clinical impres- 
sions of practicing physicians nor the fact that a number 
of physicians throughout the country prescribe a pro- 
duct establishes that it is generally recognized as safe 
and effective. See Hynson, Westcott & Dunning, 412 
U.S. at 630; United States v. Sene X Eleemosynary 
Corp., 479 F. Supp. 970, 977 (S.D. Fla. 1979), aff ’d, 
[1982-1983 Transfer Binder] Food Drug Cosm. L. Rep. 
(CCH) ¶ 38,207 (11th Cir. Jan. 12 1983). 

Therefore, before enactment of Section 353a, several 
courts of appeals had determined that compounded 
drugs are “new drugs,” which are subject to the FDCA’s 
pre-market approval requirements. See Professionals 
& Patients for Customized Care v. Shalala, 56 F.3d 
592, 593 n.3 (5th Cir. 1995); United States v. Algon 
Chem. Inc., 879 F.2d 1154, 1158 (3d Cir. 1989); United 
States v. 9/1 Kg. Containers, 854 F.2d 173, 179 (7th Cir. 
1998); 21 U.S.C. 355(a). Distribution of compounded 
drugs in interstate commerce without the approval of 
the FDA was thus illegal before enactment of Section 
353a. See 21 U.S.C. 331(d), 355(a). Section 353a 

5 

establishes an exemption from FDA approval for 
compounded drugs but subjects that exemption to rea- 
sonable conditions, including that particular com- 
pounded drugs not be advertised and promoted in the 
manner that characterizes the manufacture and 
distribution of new drugs.* 

3. Respondents also contend (Br. in Opp. 4-5) that 
certiorari is not warranted because, in their view, the 
government seeks review of only “the misapplication of 
a properly stated rule of law.” Sup. Ct. R. 10. That 
mischaracterizes the government’s position. Review is 
sought to correct a mistaken exercise of the greatest 
power possessed by the federal courts—the power to 

* As discussed in the petition (at 14-15, 18-19), Section 353a 
“bring[s] the legal status of compounding in line with FDA’s 
longstanding enforcement policy,” 143 Cong. Rec. S9839 (daily ed. 
Sept. 24, 1997) (Sen. Kennedy), pursuant to which the FDA did not 
enforce the FDCA’s new drug approval requirements against 
pharmacies engaged in traditional compounding on an individual- 
ized basis in response to the medical needs of particular patients. 
See Pet. App. 71a; Professionals & Patients, 56 F.3d at 593 n.3. 
The FDA did take action, however, when compounding was 
outside the scope of normal pharmacy practice and compounded 
drugs were mass-produced and distributed in a manner tanta- 
mount to the manufacture of unapproved new drugs. Pet. App. 
73a-74a. Among the factors that the FDA considered in deter- 
mining whether a pharmacy was manufacturing drugs rather than 
engaging in traditional compounding was whether the pharmacy 
was “[s]oliciting business (e.g. promoting, advertising, or using 
sales persons) to compound specific drug products, product classes, 
or therapeutic classes of drug products.” Id. at 76a. Thus, con- 
trary to respondents’ contention (Br. in Opp. 2), there were 
“restrictions on the advertising and promotion of compounded 
drugs by pharmacists” before enactment of Section 353a. As re- 
spondents acknowledge, “there was no constitutional challenge” to 
those restrictions (id. at 3), and there are no judicial decisions that 
call into question their constitutionality. 

6 

declare an Act of Congress unconstitutional—in the 
critical context of important laws promoting the public 
health and safety. 

Respondents are also incorrect in suggesting (Br. in 
Opp. 5) that an erroneous application of the test for 
determining the constitutionality of restrictions on 
commercial speech set out in Central Hudson Gas & 
Electric Corp. v. Public Service Commission, 447 U.S. 
557 (1980), is the kind of “misapplication of a properly 
stated rule of law” for which certiorari is rarely 
granted. On the contrary, this Court has repeatedly 
granted certiorari to review application of the general 
Central Hudson test to particular statutory contexts, 
especially where the constitutionality of an Act of Con- 
gress is at issue. See, e.g., Lorillard Tobacco Co. v. 
Reilly, 121 S. Ct. 2404 (2001); Greater New Orleans 
Broad. Ass’n v. United States, 527 U.S. 173 (1999); 44 
Liquormart, Inc. v. Rhode Island, 517 U.S. 484 (1996); 
Rubin v. Coors, 514 U.S. 476 (1995); United States v. 
Edge Broad. Co., 509 U.S. 418 (1993). 

Respondents mistakenly rely on what they assert is 
settled law that “absolute prohibitions upon truthful 
commercial speech, such as those that exist in this case, 
are unconstitutional.” Br. in Opp. 5. As an initial 
matter, Section 353a does not impose an absolute pro- 
hibition upon speech. Rather, it provides a limited 
exemption for pharmaceutical compounding from the 
FDCA’s otherwise generally applicable provisions 
governing the distribution of “new drugs” in interstate 
commerce, good manufacturing practices, and adequate 
directions for use. See 21 U.S.C. 353a(a) (Supp. V 1999). 
That exemption is subject to certain conditions, which 
include that the prescription for the compounded pro- 
duct must be “unsolicited,” 21 U.S.C. 353a(a) (Supp. V 
1999), and that the compounder may “not advertise or 

7 

promote the compounding of any particular drug, class 
of drug, or type of drug” (21 U.S.C. 353a(c) (Supp. V 
1999)). Pharmacies remain free, however, to solicit 
prescriptions for and to advertise particular 
compounded products provided that they (like others 
who manufacture new drugs and introduce them into 
interstate commerce) comply with the FDCA’s new 
drug approval and related requirements. 

Furthermore, this Court has never held that pro- 
hibitions upon truthful commercial speech are per se 
unconstitutional, or even that they are subject to strict 
scrutiny. Rather, the Court has analyzed such pro- 
hibitions under the four-part Central Hudson test. See 
Lorillard, 121 S. Ct. at 2421 (rejecting petitioners’ re- 
quest that the Court apply strict scrutiny rather than 
Central Hudson). Although the Court has found re- 
strictions on commercial speech to be unconstitutional 
in some cases, it has not invariably reached that con- 
clusion, as even respondents acknowledge. See Br. in 
Opp. 7-8 (citing Lorillard, 121 S. Ct. at 2429; Florida 
Bar v. Went For It, Inc., 515 U.S. 618 (1995); United 
States v. Edge Broad. Co., 509 U.S. 418 (1993); Ohralik 

v. Ohio State Bar Ass’n, 436 U.S. 447 (1978)). 

4. In order to determine whether a limitation 
on commercial speech is permissible under the First 
Amendment, a court must carefully apply the general 
principles set forth in Central Hudson and this Court’s 
other commercial speech cases to the particular limita- 
tion that is challenged. As explained in the petition, the 
court of appeals misapplied those principles in striking 
down Section 353a. 

In particular, the court of appeals erroneously failed 
to credit as substantial the government’s interest in 
preserving the integrity of the drug approval process 
by preventing the widespread distribution of drugs that 

8 

have not been proven safe and effective, on the one 
hand, and permitting the compounding of drugs in 
limited circumstances to address the particularized 
medical needs of individual patients, on the other. See 
Pet. 16-19. The court of appeals concluded (and re- 
spondents continue to contend (Br. in Opp. 4, 7, 8)) 
that the government presented insufficient evidence to 
demonstrate that the widespread distribution of drugs 
that have not been proven safe and effective poses 
substantial health risks. But that is a fundamental 
premise of the FDCA, the validity of which this Court 
itself has acknowledged. See Rutherford, 442 U.S. at 
556-557; Hynson, Westcott & Dunning, 412 U.S. at 619, 
622. The court of appeals had no basis to insist that the 
government introduce evidence in court to establish the 
manifest importance of that central purpose of the 
FDCA. See Pet. 17-18; see also Lorillard, 121 S. Ct. at 
2422 (explaining that restrictions on commercial speech 
may be justified “based solely on history, consensus, 
and ‘simple common sense’ ”). 

Because of its failure to credit the government’s sub- 
stantial interest in preserving both the integrity of the 
drug approval process and the availability of com- 
pounding on an individualized basis in response to 
particular medical needs, the court of appeals also 
erroneously concluded that limiting the compounding 
exemption to pharmacies that do not promote parti- 
cular compounded products does not directly and 
materially advance the government’s interests and is 
not narrowly tailored. See Pet. 19-25. In fact, Congress 
properly concluded that advertising and promotion of a 
particular compounded drug to the public reasonably 
identifies the point at which the interest in preserving 
the integrity of the drug approval requirements out- 
weighs the interest in protecting the availability of 

9 

traditional pharmaceutical compounding in response to 
the special medical needs of identified individuals. That 
determination reflects the judgment by Congress that 
advertising and promotion of particular drugs are 
characteristics of manufacturing, as distinguished from 
traditional pharmacy compounding in response to parti- 
cularized medical needs. See Pet 14-15. It also reflects 
the FDA’s prior enforcement experience (see Pet. 4-5), 
and conforms to the FDCA’s premise that those who 
promote and seek to profit from an expanded market 
for new drugs should be required and encouraged to 
bear the cost of proving that those drugs are safe and 
effective before they are widely disseminated in 
interstate commerce. See Pet. 12, 15-16. The court of 
appeals incorrectly rejected those reasonable con- 
gressional determinations and improperly invalidated 
as unconstitutional an Act of Congress designed to 
promote the public health and safety. That decision 
warrants this Court’s review. 

* * * * * 

For the reasons stated above and in the petition for a 
writ of certiorari, the petition should be granted. 

Respectfully submitted. 

THEODORE B. OLSON 
Solicitor General 

OCTOBER 2001