A.  Supreme Court Rules Against

FDA on First Amendment Grounds

 

      In the latest of a series of rulings protecting commercial speech from government regulation, the U.S. Supreme Court ruled 5 to 4 in April 2002 against a federal law regulating a category of drug advertising.

      The ruling in Thompson v. Western States Medical Center, 535 U.S. 357 (2002), found that Congress violated the First Amendment by barring the advertising of “compounded” drugs – pharmaceuticals legally altered by druggists to meet the needs of individual patients.  Pharmacists add flavorings to make them more palatable to children, for example, or adjust dosages and ingredients to suit patients of different sizes and ages.

      The decision marked the first time the High Court has struck down a drug regulation on First Amendment grounds.  Observers say the ruling is likely to have a major impact on the way the Food and Drug Administration regulates labeling, advertising, and promotion in the future.

 

Background

      Until 1992, regulation of the traditional practice of compounding took place at the state level, if at all.  But the FDA grew increasingly concerned that pharmacists were exploiting the low level of scrutiny for compounded drugs to evade the approval process required for manufacture of new drugs.  The FDA issued new guidelines that, among other things, allowed compounding only to fill individual prescriptions and in small quantities.  Congress turned the guidelines into law in 1997 with passage of the Food and Drug Administration Modernization Act.

      Challenged on First Amendment grounds was the part of the law stating that pharmacists could not “advertise or promote the compounding of any particular drug.”  Pharmacists could, however, advertise the service of compounding in a general way.  The restrictions, the government said, were aimed at keeping pharmacists from developing a national market for compounds.  Because these formulations do not go through the normal approval process for new drugs, the government said the manufacture of large commercial amounts of these unconventional products could endanger public health.

      A group of compounding pharmacists challenged the law as an unconstitutional restriction on their ability to advertise and promote a lawful service.  They said they were fearful, for example, of being prosecuted for distributing brochures at medical conventions informing doctors of specific compounds that were available.    

      The pharmacists prevailed in rulings by the federal district court in Nevada and the U.S. Court of Appeals for the Ninth Circuit.  Western States Medical Center v. Shalala, 69 F. Supp. 2d 1288 (D. Nev. 1999), aff’d, 238 F.3d 1090 (9th Cir. 2001).  Both courts found that the restrictions failed to meet the test for commercial speech regulation first enunciated in Central Hudson Gas & Electric  Corp. v. Public Service Commission, 447 U.S. 557 (1980). 

 

Supreme Court Ruling

      While the viability of the Central Hudson test has been questioned by several justices, the Supreme Court invoked that test as it struck down the drug advertising law.  “There is no need in this case to break new ground,” Justice Sandra Day O’Connor wrote for the majority.

      Justice O’Connor found that the law passed the “substantial interest” prong of the Central Hudson test – namely, that the government’s interest in preventing widespread sales of untested drugs was substantial. She also suggested that, since advertising tends to accompany large-scale manufacturing, the ban on advertising might directly advance the government’s interest – the next requirement of the Central Hudson test.  But she said the law failed the final prong, which requires that the restriction be “not more extensive than is necessary.”  Congress, she said, should have tried other ways of achieving its goals before barring advertising.

      “If the First Amendment means anything, it means that regulating speech must be a last -- not first – resort,” wrote Justice O’Connor.  “Yet here it seems to have been the first strategy the Government thought to try.”  She said the government could, for example, restrict large-scale manufacturing of compounds, or limit the number of prescriptions for compounds issued by pharmacists for patients outside their own state.  

      Using language that cheered commercial speech advocates, Justice O’Connor added: “The First Amendment directs us to be especially skeptical of regulations that seek to keep people in the dark for what the government perceives to be their own good.”  Elsewhere, in reviewing the history of the Court’s commercial speech decisions, Justice O’Connor also observed that the Court has recognized that “a particular consumer’s interest in the free flow of commercial information may be as keen, if not keener by far, than his interest in the day’s most urgent political debate.”  She also said the law would repress “useful speech,” such as advertising that would alert children’s doctors and parents to the availability of medicines with different flavorings and in different forms that could be more palatable.

      Justice O’Connor was joined in the opinion by Justices Antonin Scalia, Anthony Kennedy, David Souter, and Clarence Thomas.  Justice Thomas wrote a concurring opinion stating that the law should have been struck down without resorting to the Central Hudson test.

      Justice Stephen Breyer wrote a dissenting opinion, joined by Justices John Paul Stevens, Ruth Bader Ginsburg, and Chief Justice William Rehnquist.  The chief justice has generally supported commercial speech rights, but has said in several cases that advertising restrictions are acceptable in industries that are or can be substantially regulated in other ways.

      Justice Breyer wrote that the majority opinion “seriously undervalues the importance of the Government’s interest in protecting the health and safety of the American public.”  The advertising restrictions, Justice Breyer said, “try to assure that demand is generated doctor-to-patient-to-pharmacist, not pharmacist-to-advertisement-to-patient-to-doctor.  And they do so in order to diminish the likelihood that those who do not genuinely need untested compounded drugs will not receive them.”

      Justice Breyer also advised that “an overly rigid commercial speech doctrine will transform what ought to be a legislative or regulatory decision about the best way to protect the health and safety of the American public into a constitutional decision prohibiting the legislature from enacting necessary protections.  As history in respect to the Due Process Clause shows, any such transformation would involve a tragic constitutional misunderstanding.”

 

--Tony Mauro