The U.S. Supreme Court on Monday asked the Trump administration to weigh in on whether state unfair competition laws can be used to block a competitor from selling compounded versions of prescription drugs, a move that temporarily leaves in place a lower court ruling favoring brand-name drugmaker Zyla Life Sciences.
The justices requested a brief from the U.S. solicitor general in a dispute over whether state law claims may be used to prevent Wells Pharma, a Texas-based compounding pharmacy, from selling non FDA approved versions of a rheumatoid arthritis medication in certain states. The order does not decide the case but signals the court’s interest in the federal preemption issues at its core.
For now, the request leaves standing a Fifth U.S. Circuit Court of Appeals decision that revived Zyla’s lawsuit and allowed it to proceed under state unfair competition and consumer protection laws. Zyla markets the drug as Indocin and sued Wells Pharma in 2022 over its sale of compounded suppository versions of the medication.
The Fifth Circuit unanimously rejected Wells Pharma’s argument that Zyla’s claims were preempted by the federal Food, Drug, and Cosmetic Act. The appeals court warned that accepting Wells Pharma’s position would have “staggering” consequences by sharply limiting states’ ability to enforce laws that parallel federal requirements.
In a 20-page opinion written by U.S. Circuit Judge Andrew S. Oldham, the court said the trial judge erred by siding with Wells Pharma and emphasized long-standing precedent allowing both state and federal governments to regulate similar conduct.
Judge Oldham wrote that Wells Pharma’s theory of preemption would undermine centuries of settled law recognizing that states may enact and enforce statutes that mirror federal regulatory schemes.
In its petition to the Supreme Court filed in September, Wells Pharma urged the justices to address whether the FDCA preempts state law unfair competition claims against compounding pharmacies and outsourcing facilities that sell compounded drugs without FDA premarket approval.
Wells Pharma argued that the case is not about whether federal and state standards can coexist. Instead, it said the issue is whether Zyla’s claims improperly rely on federal regulations while intruding on the federal government’s exclusive authority to enforce the FDCA.
The company warned that allowing the Fifth Circuit’s ruling to stand would “effectively end” compounding in multiple jurisdictions, saying it is impractical to obtain FDA approval for drugs that are modified for individual patients.
Zyla disputed that characterization in its response, arguing that Wells Pharma overstated the scope of the Fifth Circuit’s decision. Zyla said the case does not involve state law claims that add new requirements beyond federal law, making preemption irrelevant.
The Supreme Court’s request for the solicitor general’s views places the dispute on hold while the administration evaluates the implications of allowing state law claims to police the sale of compounded medications.
Zyla Life Sciences is represented by Jeffrey S. Bucholtz, Joseph Akrotirianakis, Matthew V.H. Noller, and Nicole Bronnimann of King and Spalding LLP. Wells Pharma of Houston is represented by Jeremy T. Grabill, David L. Patrón, and G. Todd Butler of Phelps Dunbar LLP.
The case is Wells Pharma of Houston LLC v. Zyla Life Sciences LLC, case number 25 257, before the U.S. Supreme Court.
