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U.S. v. 1500 90-TABLET BOTTLES

August 12, 2005.

UNITED STATES OF AMERICA, Plaintiff,
v.
1500 90-TABLET BOTTLES, more or less, of an article of drug . . . and all articles of drugs imported by Local Repack from Genendo Pharmaceutical N.V., . . . Defendants-in-rem, and GENENDO PHARMACEUTICAL N.V., a Netherlands Antilles Corporation, Defendant.



The opinion of the court was delivered by: JAMES HOLDERMAN, District Judge

MEMORANDUM OPINION AND ORDER

This is an action by the government for the seizure and condemnation of certain prescription drugs and for a permanent inunction. This court has jurisdiction under 28 U.S.C. §§ 1331 and 1345, and under sections 332 and 334 of the Federal Food, Drug and Cosmetic Act, 21 U.S.C. §§ 301 et seq (the "Act"). Defendant Genendo Pharmaceutical N.V. ("Genendo") has asserted certain affirmative defenses that the prescription drugs, which are the subject of this action, are exempt from seizure and condemnation pursuant to 21 U.S.C. § 353(a) and 21 C.F.R. § 201.150 and that the government's requested injunction therefore should not issue.

Genendo is a corporation headquartered in Curacao, Netherlands, Antilles. As a regular part of its business, Genendo purchases, trades and sells pharmaceuticals, including purchasing prescription drugs worldwide and importing them to the United States with the intention that they will be repackaged, relabeled and then distributed to consumers in the United States. Some of the drugs Genendo imports were originally intended for distribution outside of the United States. The prescription drugs that Genendo introduced or caused to be introduced into interstate commerce which are the subject of this action are: Lipitor ("Seized Lipitor"), which Genendo purchased in Brazil; and Zocor ("Imported Zocor"), which Genendo purchased in Argentina. Upon its entry into interstate commerce in the United States, the Imported Zocor, after FDA inspecting and photographing, was delivered to Phil & Kathy's, Inc., of Richton Park, Illinois ("Phil & Kathy's) pursuant to an agreement between that company and Genendo.*fn1 Genendo had a written agreement with Phil & Kathy's regarding the repackaging and labeling of prescription drugs for human consumption ordered and paid for by Phil & Kathy's. The Seized Lipitor was seized by the government upon its entry into interstate commerce, and was held by the government. It was not delivered to Phil & Kathy's.

  The government now seeks condemnation of the Seized Lipitor and a permanent injunction against Genendo. The government does not dispute that the Seized Lipitor and Imported Zocor each have the same chemical composition, as well as other similarities to the respective drugs Lipitor and Zocor, that are sold legally in the United States. The similarities to the other respective drugs sold as Lipitor and Zocor in the United States notwithstanding, the government argues that the Seized Lipitor and Imported Zocor are subject to condemnation as unapproved new drugs in violation of 21 U.S.C. § 355(a), and misbranded drugs in violation of 21 U.S.C. § 352. Genendo disagrees, and relies upon an exemption embodied in 21 U.S.C. § 353(a) and 21 C.F.R. § 201.150 to argue that condemnation should not occur. Genendo waived its jury demand. A multi-day trial was set to begin on May 2, 2005, but due to the fine efforts and professionalism of counsel, the vast majority of the facts were agreed to and the remaining facts were presented to this court on the single day of May 2, 2005. For the following reasons, this court rules that Genendo by importing the Seized Lipitor and the Imported Zocor into the United States, introduced into interstate commerce unapproved new drugs in violation of 21 U.S.C. § 355(a). This court also grants the government's requested condemnation and injunctive relief as to Genendo's violations of 21 U.S.C. § 355.

  COURT'S FINDINGS OF FACT*fn2

  1. This action arises under the Constitution, laws, or treaties of the United States of America.

  2. Plaintiff is the United States of America. 3. This action is one for injunctive relief and seizure and condemnation under the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 301 et seq. ("Act").

  4. The in rem defendants are articles of drugs specifically, 60 boxes of Lipitor containing 10 mg tablets of Lipitor (lot 304-37521) in blister packs of ten tablets per blister sheet, 30 tablets per box, and 48 boxes containing 20 mg tablets of Lipitor (lot 304-37528) in blister packs of ten tablets per blister sheet, 30 per box, located in the northern judicial district of Illinois.

  5. A substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of this action is situated in the northern judicial district of Illinois.

  Statutory and Legal Background

  6. The United States Food and Drug Administration ("FDA") is authorized to implement, administer, and enforce the Act. 21 U.S.C. § 393(d)(2); 21 U.S.C. § 371(a).

  7. Defendant Genendo admits that a drug held for sale in interstate commerce that fails to meet the requirements of 21 U.S.C. § 352(c) and 21 C.F.R. § 201.15(c)(1) is deemed to be misbranded as a matter of law unless exempt by the Act.

  8. Genendo admits that the packaging of a drug can be critical to its safety and effectiveness.

  9. Genendo admits that 21 U.S.C. § 331(a) prohibits the "introduction or delivery for introduction into interstate commerce of any . . . drug . . . that is adulterated or misbranded."

  10. Genendo admits that the Act prohibits distribution in interstate commerce of unapproved new drugs and that the definition of a "new drug" includes any drug, "the composition of which is such that such drug is not generally recognized among experts qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, as safe and effective for use under the conditions prescribed, recommended, or suggested in the labeling thereof, . . ." 21 U.S.C. § 321(p)(1).

  11. Genendo admits that pursuant to the Act, a manufacturer must obtain FDA approval of a new drug application ("NDA") or an abbreviated new drug application ("ANDA") for each new drug before it may legally be introduced into interstate commerce pursuant to 21 U.S.C. § 355.

  12. Genendo admits that an NDA must contain, among other things, information regarding the manufacturer and specification of the drug substance including the name and address of the facility at which it will be manufactured, the process and controls used during manufacturing and packaging, the strength and dosage form of the drug, the specifications related to the drugs' containers and closure systems, and the labeling for the product.

  13. Genendo admits that the Act requires that the methods used in, and the facilities and controls used for, the manufacture, processing, packaging, and holding of drugs conform to and be operated and administered in conformity with, current good manufacturing practice ("CGMP").

  14. Genendo admits that 21 U.S.C. § 351(a)(2)(B) provides that a drug shall be deemed adulterated "if it is a drug and the methods used in, or the facilities or controls used for, its manufacture, processing, packing, or holding do not conform or are not operated or administered in conformity with current good manufacturing practice to assure that such drug meets the requirements of [the Act] as to safety and has the identity and strength, and meets the quality and purity characteristics, which it purports or is represented to possess." Genendo further admits that the failure to comply with CGMP adulterates a drug as a matter of law.

  15. 21 U.S.C. § 353(a) states, in pertinent part:
The Secretary is directed to promulgate regulations exempting from any labeling or packaging requirement of this chapter drugs and devices which are, in accordance with the practice of the trade, to be processed, labeled, or repackaged in substantial quantities at establishments other than those where originally processed or packed, on condition that such drugs and devices are not adulterated or misbranded under the provisions of this chapter upon removal from such processing, labeling, or repacking establishment.
  16. The FDA has issued Compliance Policy Guides ("CPG") and other guidance documents relating to, among other things, repacking and labeling of drugs.

  Genendo's Activities

  17. Genendo is a corporation headquartered in Curacao, Netherlands, Antilles. Genendo, as a regular part of its business either individually or through affiliates, purchases, trades and sells pharmaceuticals.

  18. Genendo is not licensed as a drug wholesaler in any state in the United States.

  19. Genendo's importation of drugs into the United States has occurred in interstate commerce.

  20. Genendo admits that it caused to be imported pharmaceuticals to Phil & Kathy's, on two occasions not related to the in rem action involving the Seized Lipitor.

  21. Genendo admits that at least some of the prescription drugs that Genendo imported into the United States in 2003 were originally intended for foreign distribution.

  22. Genendo admits that some of the drugs that it caused to be imported to Phil & Kathy's Inc., were not labeled in English. 23. Genendo introduced or caused to be introduced the Seized Lipitor in interstate commerce intending to repackage and relabel it.

  24. Genendo's prescription drug importation activities are subject to the Act and any exemptions that may be available under the Act and its implementing regulations.

  25. The Seized Lipitor bears foreign-language labeling (i.e., Portuguese labeling).

  The Seized Lipitor

  26. On August 20, 2003, Genendo filed an action for Declaratory Judgment that imports such as the Seized Lipitor were permitted under the Act.

  27. The United States moved to dismiss the declaratory judgment action on jurisdictional grounds; specifically, there was no case or controversy because there was no agency action ripe for review.

  28. On December 23, 2003, Judge Andersen granted the United States's motion to dismiss.

  29. In September, 2003, Genendo advised the United States that it intended to import a shipment of Lipitor.

  30. Genendo imported the Lipitor pursuant to an invoice dated September 17, 2003.

  31. In an October 24, 2003 letter to the United States Attorney's Office, Genendo advised the United States that it intended to ship the Lipitor imported pursuant to the September 17, 2003, invoice, to be repackaged and labeled and then distributed and dispensed.

  32. On or about December 16, 2003, the United States seized the Lipitor that Genendo had imported pursuant to the September 17, 2003, invoice.

  33. The Seized Lipitor falls within the meaning of 21 U.S.C. § 321(g), ...


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