Could State Regulations be the Next Frontier in Preemption Jurisprudence? Drug Compounding as a Case Study
Nathan A. Brown
The industries regulated by the Food and Drug Administration (FDA) make products that are integral to our lives—medicines upon which we depend and literally the food that we eat. Moreover, these products account for a significant portion of our overall economy.1 It is not surprising then, that FDA-regulated industries are a frequent target of tort claims and government enforcement actions when people believe they have been harmed by these products. Given the many such actions brought under state law, there is extensive (yet unsettled) jurisprudence concerning the scope of federal preemption for such actions.
Less frequently considered, however, is the appropriate role of state regulation over FDA-regulated industries outside of the civil and criminal enforcement context—in other words, the prophylactic oversight that typically takes the form of licensing and reporting, quality standards, and sales and marketing restrictions. Such questions are likely to become more prominent as Congress continues to expand FDA’s jurisdiction, including into areas in which states have traditionally played a more prominent, and often predominant, oversight role. Moreover, as advancements in data management and technology have led to greater sophistication in surveillance of product quality, there has also been greater recognition of the value of an integrated and unified approach to quality management. This recognition calls for a reconsideration of the potential for multiple oversight regimes to interfere with federal oversight and undermine—rather than enhance—quality management. In other words, what is often referred to as “conflict” preemption should acknowledge the benefits of uniformity.
The Drug Quality and Security Act (DQSA), which became law in November of 2013,2 expanded and clarified FDA’s responsibilities over drug compounding. Among other things, the DQSA created a new statutory entity permitted to compound drugs subject to certain federal standards and federal registration—referred to as an “outsourcing facility.” The law, which is still being implemented, presents a potential test case for considering the optimal roles for state and federal oversight for protecting public health. Congress did not explicitly address the extent to which the DQSA supplants state oversight.3 Moreover, because compounding was previously conducted only under the auspices of a state pharmacy license, states have long been actively engaged in compounding oversight. As FDA has steadily implemented the new law, questions have arisen as to whether new or existing state regulations governing compounding should apply to outsourcing facilities, particularly those regulations that overlap with new FDA oversight.
This paper begins, in Part I, by reviewing the historical expansion of federal regulation of economic activity and analyzes the history of state regulation of FDA-regulated industries and the steady, if episodic, expansion of FDA’s jurisdiction, which has often been driven by public health tragedies. In Part II, we briefly explain federal preemption in the context of FDA law and suggest a lens for understanding the overlap between federal and state authorities. Part III then analyzes the potential preemptive effect of the compounding provisions in the DQSA, providing several examples of existing or proposed state requirements that would potentially interfere with the federal regulatory regime for outsourcing facilities. Part IV concludes by offering preliminary suggestions for properly balancing federal and state oversight in order best to protect the public health.