immediately called that to the judge's attention and, needless to say, the judge was most unhappy about the incident, and he entered a new order, fortunately, and struck out the portion not in conformity with his opinion. Now, I say that this points up the fact that the FDA system breeds activities of this type, not only on the scientific level, but on the level of enforcement, and the level of management, and the level of consumer activity, indeed, on every single level. I would say to you gentlemen that, in my opinion, and I have had a great deal of experience to go on, the activities of this agency have reached an alltime low and are unique among all agencies. Now Senator BURDICK. In order to help you arrange your presentation, I would say that the hearing will end in 10 minutes. Mr. FRIEND. Senator, Mr. Fensterwald, I can only say that in my opinion the time has long since passed when the activities and the administrative setup of this agency should be carefully and seriously reviewed if the rights of our citizenry, the rights of business, the preservation of scientific integrity and investigation are to receive their proper places in our Government. I say that, in my opinion, and Mr. Bass touched upon some of these things, the way to solve this problem is to take this agency out of HEW and put it into a single administrative agency, as every other agency functions. It should be staffed not by a single Commissioner, but by at least three Commissioners, whose terms of office are fixed, so that the interests of all segments of our society can be balanced for the ultimate benefit of the Nation as a whole. Further, Senator, I would place enforcement in the hands of either a separate branch of that agency, as there is in the Federal Trade Commission, and the National Labor Relations Board, where there is a general counsel structure under the Administrative Procedure Act, or I might even put it in the hands, where there is a criminal case, of the district attorneys of the various districts, because I have found that I have more confidence in the procedures and tactics and methods used by the U.S. attorneys throughout the country, than I have in the methods used by the General Counsel's Office in the Food and Drug Administration, and the various other segments of our Bureau of Enforcement. I want to thank you, Senator, for the opportunity of appearing before you this morning, and you, too, Mr. Fensterwald, I appreciate the opportunity, and any documentation that you desire concerning statements that I have made, I will be happy to present to you and make it a part of the official record in these proceedings. Mr. FENSTERWALD. Mr. Chairman, I do have some questions, but I can put these in the form of a written request, to save time, if it is agreeable, and I will do that rather than do it here this morning. Senator BURDICK. Very well. Thank you, gentlemen. Your testimony will be considered very carefully. We asked Mr. Harvey to be present this morning, but I understand that Mr. Harvey is busy, or out of the city. Present here, however, is Mr. Rankin. Do you have anything to say at this time, Mr. Rankin? We are pressed for time. You can come back at 2 o'clock, or you may prepare a statement, as you wish. You may come back at 2 o'clock. Mr. RANKIN. I have no prepared statement, Mr. Chairman. It was my understanding that a representative of the Food and Drug Administration was requested to be present in case there were questions. Senator BURDICK. That is correct. Mr. RANKIN. Questions that the committee wish to ask. Senator BURDICK. Yes. STATEMENT OF WINTON B. RANKIN, ASSISTANT COMMISSIONER FOR PLANNING, FOOD AND DRUG ADMINISTRATION, WASHINGTON, D.C. Mr. FENSTERWALD. Mr. Rankin, could you tell us whether this agent that was referred to by the previous witness is still employed by the Food and Drug Administration? Mr. RANKIN. I do not know. I do not recognize that case at the moment. Mr. FENSTERWALD. Would you see if you could ascertain that fact, and also whether he wrote this letter of entrapment on his own or whether he did this on instructions of his superior? Mr. RANKIN. We will look into that, Mr. Fensterwald, and let you have a report on it. (A communication and the report referred to follows:) Mr. BERNARD FENSTERWALD, Jr., Chief Counsel, Subcommittee on Administrative Practice and Procedure, Committee on the Judiciary, U.S. Senate, Washington, D.C. DEAR MR. FENSTERWALD: As requested, we are returning the corrected transcript of Mr. Rankin's remarks before the committee on Monday, June 7. We will reply to the committee's questions about Inspector Boyle shortly. If we may be of further assistance, please do not hesitate to call upon us. Sincerely yours, JOHN L. HARVEY, Deputy Commissioner. Hon. EDWARD V. LONG, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, July 7, 1965. Chairman, Subcommittee on Administrative Practice and Procedure, Washington, D.C. DEAR SENATOR LONG: During the hearing before your committee on June 7, Mr. Fensterwald asked that we determine whether: (1) Inspector Boyle is still employed by FDA; and (2) whether he sent a letter in question under instructions from his superiors. The answers are that he is no longer employed by FDA, and he did send the letter under instructions from his superiors. The hearing record leaves the implication that this case, in which the letter was sent, was reversed by the court of appeals on the grounds of entrapment. Actually the basis for reversal was the application of an injunction to one not a party to the original proceeding. In this case (United Pharmacal Corp. v. United States), the Government obtained an injunction against Metabolic Products Corp. "and all other persons in active concert *** with them" from shipping the misbranded drug called "Prostall," "Prostex" and "Urex." Metabolic Products Corp. owned 30 percent of the stock in United Pharmacal Corp., Metabolic's distributor. United sued for a declaratory judgment that the injunction did not apply to it. Believing United to be "in active concert" with Metabolic, we had Inspector Boyle write to United as an ordinary mail-order customer to determine whether the firm would ship a quantity of the drug which it was still advertising. The firm did ship the drug and the Government filed a petition to punish for criminal contempt. The district court convicted United and two of its officers; the court of appeals reversed on the grounds that the two companies were separate corporate entities and that the only time a person not a party to an injunction decree may be punished for violating it is when he has abetted the defendant or is legally identifiable with him. The court then found that United was not legally identifiable with Metabolic nor did it abet Metabolic since that firm did not violate the decree. Mr. Bass' charge that our efforts to record public statements made by Lelord Kordel in New York City were efforts to record a factory inspection is not correct. Mr. Kordel was making a public lecture in a public hall. He was in no manner operating a factory and our investigation was not a factory inspection. I would like to assure the committee that the implications drawn by Mr. Bass from my letter of August 31, 1962, to Senator Javits are mistaken. The letter was accurate and was not designed to mislead Senator Javits or any other Member of Congress. Messrs. Bass and Friend made a number of other charges, but did not identify the cases to which they referred. We believe these cases to be United States v. Vitasafe Corp. and United States v. Unitrol; if, however, such is not the case and the committee will furnish us with the proper identification, we will submit a further report. In the Vitasafe case the court of appeals held that the 3,730,000 pieces of promotional literature were not labeling, and thus not subject to seizure, since they had not been introduced into interstate commerce. The injunction against continued use of the false claims made in literature was, however, upheld by the court of appeals. We are enclosing a copy of the district and court of appeals decisions. We are also enclosing a copy of the Unitrol decision in which the court comments upon the charge that FDA changed its position on the marketing of PPA. The study referred to by Mr. Friend was presented in court with full opportunity for opposing counsel to cross examine and to introduce evidence in rebuttal; the trial court accepted the study and issued a decree of condemnation which was upheld on appeal. The manufacturer of the drug was then enjoined from making further interstate shipments. We are returning the transcript which you kindly let us borrow. GEO. P. LARRICK, Commissioner of Food and Drugs, UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT NO. 14964 UNITED STATES OF AMERICA v. AN UNDETERMINED NUMBER OF SHIPPING PACKAGES, ETC., VITASAFE CORPORATION, Appellant NO. 15066 UNITED STATES OF AMERICA v. VITASAFE CORPORATION, A CORPORATION, NUTRITIONAL QUALITY CONTROLS, INC., A CORPORATION, THE DOLLAR VITAMINE PLAN, INC., A CORPORATION, LIFE NUTRITION, INC., A CORPORATION, INTERNATIONAL OIL AND METALS CORPORATION, A CORPORTION, DR. PARKER MEDICINE COMPANY, A CORPORATION, PHILIP S. VOLOSOV, AN INDIVIDUAL AND HENRY D. COHEN, AN INDIVIDUAL, Appellants APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY Argued October 19, 1964 Before MCLAUGHLIN, KALODNER and HASTIE, Circuit Judges. OPINION OF THE COURT KALODNER, Circuit Judge. 2 3 (Filed May 27, 1965) The District Court, in an in rem proceeding under the Federal Food, Drug and Cosmetic Act1 (Appeal No. 14964), condemned and forfeited (1) some 900. seized packages of Vitasafe vitamin-mineral capsules, which it found to be "foods" and "drugs" introduced into interstate commerce, with "labeling" claims that were false and misleading, and with inadequate directions for their use; and (2), approximately 3,730,000 pieces of written, printed and graphic material designed to promote the sale of the capsules, seized in the warehouse of the Vitasafe Corporation in Middlesex, New Jersey, which were held to be "labeling". The District Court, in a subsequent injunction proceeding (Appeal No. 15066), granted a Preliminary Injunction imposing restrictions on the defendants named therein with respect to the distribution of their products, their "labeling," and accompanying literature. The critical issues presented by this consolidated appeal from the Condemnation Decree and Preliminary Injunction are: (1) Were the District Court's fact-findings that the condemned capsules were misbranded "clearly erroneous." (2) Did the District Court err in ruling that the 3,730,000 pieces of promotional literature seized in the warehouse of Vitasafe Corporation constituted "labeling". (3) Did the District Court, in its Preliminary Injunction, abuse its legal discretion in imposing challenged restraints on the defendants' sale and distribution of its vitamin-mineral capsules. The record discloses that the Vitasafe Corporation carried on a mail-order business for the sale of a vitamin-mineral dietary suplement. It purchased large quantities of vitamins from various manufacturers, and repackaged them under its own label at its headquarters in Middlesex, New Jersey. It thereafter sold to persons who responded to its advertising and promotional literature which appeared in magazines, newspapers and Sunday supplements throughout the United States. It also made sales to persons to whom it had mailed its promotional literature. It did not retain a record of persons to whom the literature was sent. The Libel of Information alleged that the "labeling" which accompanied the Vitasafe product, a series of ten different pieces of promotional literature, falsely implied and suggested (1) that Vitasafe "Formula M" and Vitasafe "Formula W" were designed to satisfy the special nutritional needs of men and women respectively; (2) that the nutritional value of the Vitasafe capsule was enhanced by the addition of several ingredients which were in fact of "no nutritional significance for dietary supplementation;" (3) that the minimum adult daily requirements of vitamins and minerals, specified in the "labeling." were the recommendations of the Food and Nutrition Board, National Academy of 121 U.S.C.A. § 334. 2 "Food" within the meaning of 21 U.S.C.A. § 321(f). 3 "Drug" within the meaning of 21 U.S.C.A. § 321 (g). In contravention of 21 U.S.C.A. § 343 (a) and § 352. Section 343 (a) provides : "A food shall be deemed to be misbranded (a) If its labeling is false or misleading in any particular.” Section 352 provides in relevant part: "A drug or device shall be deemed to be misbranded— (a) If its labeling is false and misleading in any particular. * * * * * "(f) Unless its labeling bears (1) adequate directions for use. 521 U.S.C.A. § 321(m) provides: "The term labeling' means all labels and other written, printed, or graphic matter (1) upon any article or any of its containers or wrappers (or (2) accompanying such article." Science, National Research Council and (4) that large amounts of common foods would be needed to provide the nutrients supplied by one Vitasafe capsule. The Libel also alleged that the "labeling" falsely and misleadingly implied and suggested that Vitasafe, as a drug, was an adequate and effective treatment for several common maladies; that practically everyone in the country was suffering from, or in danger of suffering from, a dietary deficiency of vitamins, minerals, and proteins, which was likely to cause certain deficiency diseases, and that the deficiencies suggested were caused by a loss of nutritive value due to the soil in which food was grown, and the storage, processing, and cooking of foods. The Libel further alleged that the "labeling" represented Vitasafe to be "a lipotrope factor or agent" without adequately stating directions for its use as such. The Government, in condemnation proceeding, presented several expert witnesses in support of its position. Vitasafe Corporation, as claimant, also presented expert witnesses. The District Court, 226 F. Supp, 266 (D.N.J. 1964) found that Vitasafe was a "food" within the meaning of 21 U.S.C.A. §321 (f) because its "labeling" recommended "its use and represent[ed] it to be of value as a dietary and nutritional supplement;" that it was also à "drug" within the meaning of 21 U.S.C.A. § 321 (g) because its "labeling" recommended "its use and represent[ed] it to be of value as a curative or preventive of disease conditions in man affecting the structure and function of the body of man". It further found that the seized packages of Vitasafe were "misbranded when introduced into, while in, and while held for sale after shipment in interstate commerce," in that their "labeling" was false and misleading," and that there did not appear adequate directions for the use of Vitasafe as a lipotropic factor or agent.7 The District Court, on the basis of the stated factfindings, held that the seized 900 packages of Vitasafe capsules were subject to condemnation as "misbranded," under 21 U.S.C.A. § 334, and so ordered. The record amply supports both the factfindings and the order of condemnation with respect to these seized packages. It would serve no useful purpose to dwell on this aspect of this appeal in view of the exhaustive analysis relating to these packages in the District Court's opinion. We are, however, of the opinion that the District Court erred as a matter of law in ruling that the 3,730,000 pieces of promotional literature seized while at rest in the Vitasafe warehouse in Middlesex. New Jersey, were "labeling" within the meaning of 21 U.S.C.A. § 321(m), and as such subject to condemnation under 21 U.S.C.A. § 334. The Government urges with respect to these 3,730,000 pieces that "all of the promotional matter seized was obviously intended to promote Vitasafe, and had no other useful purpose," and that "it supplements the label on the bottle of capsules, and was intended by the claimants to be ultimately used in the sale of Vitasafe," and thus it was "labeling" subject to condemnation under the Act. The claimant, Vitasafe Corporation, does not deny the alleged intended use of the seized material, but contends that it was never actually employed for such purposes, and therefore could not have been subject to condemnation under the Act. Under Section 321 (m) the term "labeling" applies inter alia to "written, printed, or graphic matter" which appears upon any article or any of its containers or wrappers or "accompanying such article." [Emphasis supplied.] Section 331, 21 U.S.C.A. which prohibits, in subsection (a) “The introduction of delivery for introduction in interstate commerce of any food, drug, device, or cosmetic that is adulterated or misbranded", also proscribes in subsection (1) the use of "any advertising" matter thus used relating to the misbranded article. Although the District Court found the "labeling" to be false and misleading in almost every particular asserted by the Government it failed to find, without indicating its reason, that the "labeling" suggested the practically everyone in this country was suffering from, or in danger of suffering, dietary deficiencies which were likely to be the cause of a number of diseases, and that such deficiencies were caused by the soil in which food was grown and the storage, processing and cooking of foods; or that such suggestions were false and misleading. 7 The District Court found that lipotropic factors "are substances which affect the mobilization of fat, particularly in the liver", and that "Nowhere in the labeling does there appear the conditions for which the Vitasafe capsule is to be used as a lipotropic factor or the collateral measures necessary for the safe use of Vitasafe by a layman as a lipotropic factor." 226 F. Supp. at page 278 (Para. 6, Fndings of Fact). |