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
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
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
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
16. The FDA has issued Compliance Policy Guides ("CPG") and
other guidance documents relating to, among other things,
repacking and labeling of drugs.
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
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
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.,
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
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,
33. The Seized Lipitor falls within the meaning of
21 U.S.C. § 321(g), ...