Supreme Court Kills Ad Restrictions for Compounding

June 1, 2002

First Amendment protection of commercial speech got a big boost last month when the US Supreme Court ruled 5-4 that FDA's policy to limit advertising for pharmaceutical compounding is unconstitutional.

First Amendment protection of commercial speech got a big boost last month when the US Supreme Court ruled 5-4 that FDA's policy to limit advertising for pharmaceutical compounding is unconstitutional. Because the plaintiffs failed to separate the advertising policy and general FDAMA compounding provisions, the ruling kills the entire provision in the FDA Modernization Act of 1997 (FDAMA) that established a legal procedure for pharmacists to compound medicines to meet patient needs.

The FDAMA compounding provision aimed to settle an ongoing dispute among FDA, pharmacists, and manufacturers about how to regulate pharmacists' preparation of customized medicines. FDA and pharma companies were concerned that some operators were skirting the agency's regulatory process by using compounding to disguise commercial operations. A key element in drawing a line between small-scale compounding and large-scale pharma manufacturing was to restrict pharmacists from advertising specific compounded medicines.

However, the justices decided that FDA had failed to explain why the ad ban was needed to prevent illegal compounding. The court said FDA could use other means to accomplish that purpose and that "regulating speech must be a last-not a first-resort." The court also rejected the "questionable assumption" that government should limit truthful information to protect people from making bad decisions. It noted that a ban on advertising does not necessarily prevent patients from obtaining the wrong medicine.

Compounding continues to be a legitimate pharmacy practice, regulated by the states, according to the American Pharmaceutical Association. But disputes between pharmacists and FDA are likely to continue over what constitutes legal compounding and what activities fall under the new drug approval process. FDA says it is developing a new legislative proposal to clarify those issues and may seek to attach it to user fee renewal legislation.

Ironically, pharma companies initially supported the FDA policy-including the advertising restrictions-but dropped out of the debate when it reached the Supreme Court. Although manufacturers want to curb widespread compounding, they decided that a ruling against FDA restrictions on pharmaceutical advertising was more valuable.

In the wake of that decision, FDA can no longer argue that it should suppress dissemination of truthful information to prevent people from making possibly unwise healthcare choices, comments Richard Samp of the Washington Legal Foundation. The court decision, he says, "puts those tired FDA arguments to bed." The decision is expected to discourage further FDA efforts to roll back its DTC advertising policy and may renew the legal battle against agency regulations limiting dissemination of off-label information.