Lane Lawyers Plan To Challenge FDA Restitution Power Under FD&C Act

Lane Labs-USA plans to appeal a permanent injunction on sales of supplements marketed as cancer therapies handed down by a New Jersey federal court, according to Lane attorney Mark Ullman of New York-based Ullman, Shapiro and Ullman.

Lane filed a motion to stay the injunction on July 20 and requested the court amend provisions ordering consumer restitution "so that they do not take effect until after the resolution of an appeal."

The "key legal issue" is FDA's authority to demand consumer restitution from supplement manufacturers, Ullman maintained at the National Nutritional Foods Association's recent Natural Products Convention in Las Vegas.

In a July 13 statement, FDA Acting Commissioner Lester Crawford called the restitution provision "particularly significant because it puts promoters of such illegal products on notice that they cannot profit from this type of exploitation."

The issue of restitution "presents a 'serious question' on the merits of [Lane's] appeal" since there is little existing legal precedent on the matter, Lane attorneys' July 20 motion argues.

"The question of whether the FDA has the power to seek restitution under the Food, Drug & Cosmetic Act is a question of law which the Third Circuit will consider de novo on appeal," the motion contends, noting it is "in the public interest" for the court to rule on the matter.

The motion further contends that the restitution requirement "could well threaten the existence of Lane Labs and perhaps force it into bankruptcy and/or liquidation." Lane requests that the court amend its call for the destruction of the firm's existing BeneFin , MGN-3 supplement and SkinAnswer cosmetic inventory so that the firm can repackage and market the raw ingredients in a lawful manner.

"There are viable alternatives to the wanton destruction of millions of dollars of goods that can be lawfully sold under proper labeling," the motion maintains. Further, the destruction of the goods "deprives [Lane] of a valuable asset that could ultimately provide the funds for restitution."

The Newark, New Jersey district court issued the injunction July 9, barring Lane Labs and President Andrew Lane from selling the supplements as cancer therapies without an NDA or IND (¹ (Also see "Lane Labs To Pay Consumer Restitution Under Permanent Injunction" - Pink Sheet, 19 Jul, 2004.), p. 9).

At the NNFA convention, Ullman noted that the case raises additional questions regarding the proper use of third-party literature for both manufacturers and retailers.

"FDA picked Lane to raise these issues because they figured they had facts that would get the judge angry, and lawyers have a saying: bad facts make bad law," Ullman said. "The FDA hoped they would get the judge angry enough at Lane that he would do everything they asked him to do."

The attorney described the difficulty in mustering industry support given the facts of the case.

"We'd say 'here's the case, the facts are terrible and the company is Lane Labs,' and everybody would say 'we don't want anything to do with them,'" Ullman claimed.

Meanwhile, "the message from [FDA] was 'we don't like what you guys are doing, we don't like this company,' and part of the overall message of 'we don't like this industry.' In the end, to most of the people up at FDA, especially the career people, you're selling snake oil, and that's consistently the attitude that they give off to us," he concluded.

As for the future of third-party claims for supplements, Ullman described several third-party literature "red flags" retailers should be aware of when choosing which products to stock, and stressed that retailers should ensure research supporting the sale of products they carry is truly independent.

In the Lane case, the court "did a very detailed analysis of the relationship between the scientists and the company, was very skeptical of the notion that there was any independence and then turned to the substance of the text and said 'forget it,'" Ullman explained.

Ullman echoed statements made by Rep. Jim Cannon (R-Utah) at the NNFA convention that industry opponents are gathering strength (² (Also see "Cannon Backs FSA Supplement Coverage; NNFA Urges Public Involvement" - Pink Sheet, 26 Jul, 2004.), p. 13).

"We have enemies at FDA, we have enemies in Congress; and as an industry, we are giving them more than enough ammunition to turn right around on us," he conclude.