FDA Continues Efforts to Expand Power Over Intrastate Commerce

By Wiliam T. Koustas & John R. Fleder –

We recently reported on FDA’s attempt to assert its authority over intrastate commerce through a novel interpretation of “interstate commerce” under the Federal Food, Drug, and Cosmetic Act (“FDCA”).  Regenerative Sciences, Inc. (“Regenerative”) is challenging FDA’s claim that the company’s stem cell procedure, Regenexx, is subject to FDA jurisdiction and regulation under the FDCA and/or the Public Health Service Act (“PHSA”) as an unapproved drug and/or biologic.

The FDCA states that adulterated and misbranded products may not be introduced or delivered for introduction into interstate commerce.  FDCA § 301(a).  In addition, FDA has statutory jurisdiction over products that have been shipped in interstate commerce and thereafter become adulterated.  FDCA § 301(k).  There is absolutely no language in the statute to suggest that FDA has general authority over misbranded or adulterated products that do not move in interstate commerce but where the sale of those products merely “affects” interstate commerce.

Congress has explicitly permitted FDA to assert jurisdiction over certain products that do not move in interstate commerce in very limited circumstances.  Adulterated and misbranded products are subject to FDA’s jurisdiction if they are manufactured in any Territory.  FDCA § 301(g).  “Territory” is defined to include the District of Columbia and any territory or possession of the United States.  FDCA § 201(a)(2).  It is noteworthy that Congress explicitly chose to exclude states from these provisions.

The Supreme Court has noted that the Constitution permits the federal government to assert jurisdiction over products that either travel in, or affect, interstate commerce.  However, these constitutional powers are surely constrained by the relevant statutory language that establishes an agency’s jurisdiction.  In one of its court filings, the Government argues that the Regenexx Procedure is subject to regulation by FDA because it involves interstate commerce, in that Regenerative obtained components from out of state.  That in and of itself is not an unusual argument, but one of the Government’s two arguments involving interstate commerce was unusual, and indeed without any cited legal support.  The Government argues that interstate commerce is substantially affected because individuals traveling to Colorado to have the Regenexx Procedure would “depress the market for out-of-state drugs that are approved by FDA.”

Initially, we thought that this interpretation of interstate commerce was new ground for the FDA.  The Government even fails to cite any judicial precedent for their argument in the brief.  However, additional research revealed that FDA has previously argued that it can regulate products based on their effect on interstate commerce.

In the preamble to the Establishment and Maintenance of Records Under the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 rule, 69 Fed. Reg. 71,562 (Dec. 9, 2004), FDA asserts that it has the authority to require food manufacturers to keep certain records even if their food does not enter interstate commerce.  Citing Wickard v. Filburn, 317 U.S. 111 (1942), FDA argues that “given the collective impact on commerce of intrastate manufacturing, processing, packaging, transporting, distributing, receiving, or holding of food in the United States, FDA has concluded that the requirement to establish and maintain records should apply regardless of whether the food enters interstate commerce.”  69 Fed. Reg. at 71572.  This statement indicates that FDA believes that it has the authority to regulate a product that is never introduced or delivered into interstate commerce as long as it has a “collective impact” on interstate commerce.

More recently, in the preamble to the Current Good Manufacturing Practice in Manufacturing, Packaging, Labeling, or Holding Operations for Dietary Supplements rule, 72 Fed. Reg. 34,751 (June 25, 2007), FDA asserts that it may impose certain cGMP requirements on entities involved with the manufacture of dietary supplements, regardless of whether the process is entirely intrastate, as the collective impact of such entities on interstate commerce is “far from trivial.”  FDA cites both United States v. Lopez, 514 U.S. 549 (1995) and Wickard v. Filburn to try to support its argument.

FDA seems to confuse Congress’ constitutional authority to regulate interstate commerce with FDA’s authority under the FDCA.  While Congress can regulate economic activity that has a substantial effect on interstate commerce, the FDCA generally only permits the FDA to regulate products that travel in interstate commerce.

Congress has shown that it understands this distinction.  Where Congress has wanted agencies to have jurisdiction over matters that “affect” interstate commerce, it has done so explicitly. For example, the Federal Trade Commission Act provides the FTC with the authority to regulate unfair methods of competition and unfair or deceptive acts and practices “in or affecting” interstate commerce.  15 U.S.C. § 45(a)(1) (emphasis added).  The current language was enacted in 1975 after Congress determined that the previous statutory language of “in commerce” unduly restrained the FTC’s authority.  Similarly, Congress could amend the FDCA to provide FDA with jurisdiction over products that merely affect interstate commerce.  Until Congress does so, FDA is restrained by the language in the FDCA.  It cannot expand that authority by administrative fiat, and regulated entities should be vigilant against attempts to persuade courts to the contrary.