United States Court of Appeals

FOR THE EIGHTH CIRCUIT

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No. 05-3873

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In re: Canadian Import *

Antitrust Litigation *

____________________ *

*

Eileen Iverson; Hugh Hawkins; *

Juanita Huseby; David Schafer; *

Gregory Noonan; Bonnie Koch; *

Jennifer Mills; Minnesota Senior *

Federation; United Senior Action, of *

Indiana; LaPorte County *

Comprehensive Mental Health Council, *

doing business as Swanson Center, Inc.; *

Massachusetts Senior Action Council; *

Painters District Council No. 30 Health *

and Welfare Fund; Central Laborers *

Welfare Fund, on behalf of themselves *

and all others similarly situated, *

*

Appellants, *

* Appeal from the United States

____________________ * District Court for the 

* District of Minnesota. 

National Association of Shareholder *

and Consumer Attorneys, *

*

Amicus on Behalf of Appellant. *

*

v. *

*

 Pfizer, Inc.; GlaxoSmithKline, PLC; *

Abbott Laboratories, Inc.; Boehringer *

Ingelheim Pharmaceuticals, Inc., GmbH;*
1

The Honorable Joan N. Ericksen, United States District Judge for the District

of Minnesota, adopting the reports and recommendations of the Honorable Jonathan

Lebedoff, Chief United States Magistrate Judge for the District of Minnesota.

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Merck & Co., Inc.; Novartis AG; Wyeth *

Pharmaceuticals, Inc.; Eli Lilly & *

Company; Astrazeneca, PLC, *

* 

Appellees. * 

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Submitted: May 18, 2006

Filed: November 30, 2006

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Before LOKEN, Chief Judge, JOHN R. GIBSON, and COLLOTON, Circuit Judges.

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COLLOTON, Circuit Judge.

Plaintiffs, a group of consumers and organizations from Minnesota who have

purchased prescription drugs in the United States from the defendant drug companies

in the United States, filed suit pursuant to § 4 of the Clayton Act, 15 U.S.C. § 15, for

damages caused by alleged violations of § 1 of the Sherman Antitrust Act, 15 U.S.C.

§ 1, and pursuant to § 16 of the Clayton Act, 15 U.S.C. § 26, seeking injunctive relief.

Plaintiffs also alleged violations of various state statutes concerning restraint of trade.

The gravamen of the complaint was that the defendants unlawfully conspired to

suppress the importation of Canadian prescription drugs for personal use. The district

court1

 dismissed the federal antitrust claim and declined to exercise supplemental

jurisdiction over the remaining state law claims. We affirm.
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I.

The plaintiffs filed suit on May 19, 2004, alleging that the defendants had

“engaged in a concerted course of conduct designed to prevent brand name

prescription drugs purchased from Canadian pharmacies from entering the United

States.” (Complaint, R. Doc. No. 1, at ¶ 18). According to the complaint, the conduct

eliminated a legal source of prescription drugs and caused American consumers to pay

higher drug prices. The plaintiffs alleged that the defendant drug companies engaged

in anti-competitive conduct, including: (1) requiring Canadian pharmacies to certify

that they were not selling prescription drugs to persons whom the pharmacies knew

or should have known were taking the drugs outside the country, (2) monitoring

orders of Canadian pharmacies and limiting their purchases to historical levels, (3)

creating “blacklists” of pharmacies that were suspected of selling drugs to American

consumers and directing wholesalers not to sell to the blacklisted pharmacies, and (4)

cutting off supplies to wholesalers who did not comply with their policies. (Id. at

¶ 36). The plaintiffs alleged that this conduct violated the Sherman Act, and the

antitrust and unfair competition statutes of twenty-three states and the District of

Columbia. (Id. at ¶¶ 28, 73, 82). 

The district court consolidated several similar cases, and the plaintiffs filed an

amended complaint on September 30, 2004. The defendants moved to dismiss the

complaint for failure to state a claim. See Fed. R. Civ. P. 12(b)(6). Two defendants,

AstraZeneca PLC and Novartis AG, also moved to dismiss for lack of personal

jurisdiction and improper venue. A magistrate judge recommended granting the

motion to dismiss on the Sherman Act claims. The report concluded that because the

importation of Canadian prescription drugs was prohibited by the Federal Food, Drug,

and Cosmetic Act (“FFDCA”), the plaintiffs could not demonstrate that they have an

injury “of the kind the federal antitrust laws were designed to prevent.” The

magistrate judge also recommended that the state-law claims against AstraZeneca and

Novartis be dismissed for lack of personal jurisdiction and improper venue.
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On review of the reports and recommendations, the district court concluded that

the plaintiffs lacked standing to pursue their federal antitrust claims because the

allegedly anticompetitive behavior discouraged only unlawful importation of drugs

and not lawful activity that the Sherman Act was designed to protect. In particular,

the court found that drugs imported from Canada, even when imported for personal

use, were “misbranded” under the laws of the United States because their labels did

not bear the required “Rx only” symbol. After dismissing the federal claims, the court

declined to exercise supplemental jurisdiction over the remaining state claims and

dismissed them without prejudice. The court also denied the motions to dismiss for

lack of personal jurisdiction as moot.

II.

We review the district court’s grant of a motion to dismiss de novo. Farm

Credit Servs. of Am. v. American State Bank, 339 F.3d 764, 767 (8th Cir. 2003). A

complaint is properly dismissed for failing to state a claim when the plaintiffs can

prove no set of facts that would entitle them to relief. Conley v. Gibson, 355 U.S. 41,

45-46 (1957).

The district court’s decision to dismiss the federal claims was premised on its

conclusion that federal law prohibits the importation of prescription drugs from

Canada for personal use. Plaintiffs continue to assert that the common assumption

that such importation is unlawful is based purely on “myth,” and that no federal statute

actually precludes a citizen from carrying prescription drugs purchased in Canada into

the United States.

The United States Food and Drug Administration (“FDA”) repeatedly has

expressed the view that virtually all importation of drugs into the United States by

individual consumers violates the FFDCA, because the drugs are not approved in

accordance with 21 U.S.C. § 355, are not labeled as required by 21 U.S.C. § 352, or
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are dispensed without a valid prescription in contravention of 21 U.S.C. § 353(b)(1).

The FDA’s Office of Compliance has cautioned that “[d]rugs from foreign countries

do not have the same assurance of safety as drugs actually regulated by the FDA,” due

to the risk that counterfeit or unapproved drugs will be sent to consumers, and also

because “[w]ithout regulation of repackaging, storage conditions, and many other

factors, drugs delivered to the American public from foreign countries may be very

different from FDA approved drugs with respect to formulation, potency, quality, and

labeling.” (Appellees’ App. at 8-9). The district court in this case focused on one

aspect of the approval process – the labeling requirements – and observed that it is

illegal to import drugs whose labels do not comport with the statutory and regulatory

requirements. 

We agree with the district court’s conclusion that the Canadian prescription

drugs at issue are not labeled in conformity with federal law, and that importation of

the drugs is therefore prohibited. Federal law requires that a drug shall be deemed

“misbranded if at any time prior to dispensing the label of the drug fails to bear, at a

minimum, the symbol ‘Rx only,’” 21 U.S.C. § 353(b)(4)(A), and the introduction of

misbranded drugs into interstate commerce is prohibited. Id. § 331(a). Drugs that are

dispensed by Canadian pharmacies are labeled “Pr,” as opposed to “Rx only.”

Plaintiffs argue that the Canadian symbol is the “functional equivalent” of “Rx only,”

but federal law does not provide for functional equivalence in labeling. The drugs do

not “bear, at a minimum, the symbol ‘Rx only,’” and they are therefore “misbranded.”

The plaintiffs argue that the even if the drugs are misbranded under federal law

when they are distributed to Canadian pharmacists, the American labeling

requirements do not apply to the drugs after they are dispensed by a pharmacy,

because of the so-called “pharmacist’s exception” set forth in 21 U.S.C. § 353(b)(2).

That provision says that “[a]ny drug dispensed by filling or refilling a written or oral

prescription of a practitioner licensed by law to administer such drug shall be exempt

from the requirements of section 352 of this title,” with some exceptions. Id. The
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exemption in § 353, however, applies only to the requirements in § 352. The “Rx

only” requirement appears in § 353(b)(4), and it is not exempted by § 353(b)(2). 

More fundamentally, that the Canadian drugs are mislabeled under federal law

illustrates why the Canadian drugs are “unapproved” drugs within the meaning of 21

U.S.C. § 355, and thus prohibited from importation on that basis as well. The FFDCA

comprehensively regulates the manufacture, importation, and sale of prescription

drugs. Before a new drug may be introduced into interstate commerce, the FDA must

approve the manufacturing process, labeling, and packaging. 21 U.S.C. § 355(b)(1).

The approval process addresses the chemical composition of the drug, id.

§ 355(b)(1)(B), (C), the drug’s safety and effectiveness, id. § 355(b)(1)(A), and

elements of the drug’s distribution, such as “the methods used in, and the facilities and

controls used for, the manufacture, processing, and packing” of the drug, id. §

355(b)(1)(D), and the “labeling proposed to be used” for the drug. Id. § 355(b)(1)(F).

The approval process is specific to each manufacturer and each product. See 21

C.F.R. § 314.50.

Drugs that are manufactured and distributed in Canada are not approved

pursuant to this statutory framework. The approval process requires, among other

things, that a manufacturer provide “the proposed text of the labeling for the drug.”

21 C.F.R. § 314.50(c). Because foreign labeling differs from domestic labeling,

approval granted to a particular manufacturer for a particular product to be distributed

in the United States does not constitute approval of another drug – even one with the

same chemical composition – to be distributed in Canada with different labeling, and

then imported into the United States. 

This is not, as plaintiffs would have it, merely a “hyper-technical” violation of

the FFDCA. It is, rather, a manifestation of a congressional plan to create a “closed

system” designed to guarantee safe and effective drugs for consumers in the United

States. Vermont v. Leavitt, 405 F. Supp.2d 466, 472 (D. Vt. 2005). Drugs that are not
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properly labeled for sale under federal law sometimes may be similar in substance to

those that are sold legally within the United States. In other cases, however, they may

be drugs with chemical compositions that are not yet approved by the FDA, drugs not

manufactured in accordance with FDA rules, or drugs not transported or stored in a

manner that is deemed safe by the FDA. The plaintiffs have attempted to limit this

action to drugs that are “the same” as drugs sold legally in the United States except

for the labeling, but the labeling requirements cannot be segregated from other

FFDCA requirements in this way. Instead, they work in conjunction with the other

statutory standards and FDA regulations to create a system that excludes noncompliant and potentially unsafe pharmaceuticals. This “closed system” ensures that

approved prescription drugs are “subject to FDA oversight” and are “continuously

under the custody of a U.S. manufacturer or authorized distributor,” thus helping to

ensure that the quality of drugs used by American consumers is consistent and

predictable. United States v. Rx Depot, Inc., 290 F. Supp.2d 1238, 1241-42 (N.D.

Okla. 2003).

Congress recently has legislated against the backdrop of this closed system with

respect to the very topic of the importation of prescription drugs from Canada. In

2000 and 2003, Congress enacted amendments to the FFDCA that would permit

limited importation of certain prescription drugs from Canada by pharmacists,

wholesalers, or individuals, 21 U.S.C. § 384(b), (j), but only if the Secretary of Health

and Human Services first certifies that the importation would “pose no additional risk

to the public’s health and safety” and that it would “result in a significant reduction

in the cost of covered products” for American consumers. 21 U.S.C. § 384 (l); see

Medicare Prescription Drug, Improvement, and Modernization Act, Pub. L. No. 108-

173, § 1121, 117 Stat. 2066, 2464-69 (2003); see also Medicine Equity and Drug

Safety Act, Pub. L. No. 106-387, § 745, 114 Stat. 1549A-35 (2000). Three Secretaries

of Health and Human Services in the last two presidential administrations have

declined to make the requisite certifications. (Appellees’ App. at 109, 111-13);

Montgomery County v. Leavitt, 445 F. Supp.2d 505, 510 (D. Md. 2006).
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That Congress created a special procedure for authorizing importation of

prescription drugs from Canada supports our conclusion that the pre-existing system

established by the FFDCA does not permit such importation. While it is true that no

federal statute by its express terms bans importation of prescriptions drugs from

Canada, such an explicit country-by-country prohibition is unnecessary to accomplish

the task. By creating the comprehensive regulatory system described above, Congress

has effectively precluded importation of these drugs absent the sort of special

authorization contemplated by 21 U.S.C. § 384.

Plaintiffs argue alternatively that even if personal importation of prescription

drugs from Canada is illegal, they nonetheless may pursue an action under the federal

antitrust laws based on the defendants’ allegedly anti-competitive behavior. Unlike

a governmental entity, however, see, e.g., FTC v. Indiana Fed’n of Dentists, 476 U.S.

447 (1986), a private plaintiff must demonstrate that he has suffered an “antitrust

injury” as a result of the alleged conduct of the defendants, and that he has standing

to pursue a claim under the federal antitrust laws. Because § 4 of the Clayton Act was

designed primarily as a remedial provision, private plaintiffs proceeding thereunder

must prove an “injury of the type that the antitrust laws were intended to prevent and

that flows from that which makes defendants’ acts unlawful.” Brunswick Corp. v.

Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977). Injunctive relief under § 16 of

the Clayton Act is likewise available only to plaintiffs who have suffered an injury

cognizable under § 4. Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104, 111-13

(1986). 

The requisite antitrust injury must “reflect the anticompetitive effect either of

the violation or of the anticompetitive acts made possible by the violation,” and

represent “the type of loss that the claimed violations . . . would be likely to cause.”

Brunswick Corp., 429 U.S. at 489. To determine whether the requirements of antitrust

standing are satisfied, we also consider the causal connection between the alleged

antitrust violation and harm to the plaintiff, the directness or indirectness of the
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asserted injury, and the degree to which the alleged damages are speculative in a § 4

action. Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters,

459 U.S. 519, 537-45 (1983); see Cargill, 479 U.S. at 110 n.5.

We agree with the district court that plaintiffs have not established antitrust

standing to pursue their federal antitrust claims. Plaintiffs allege that they are injured

by increased prices for prescription drugs in the United States, which they say result

from their inability to import less expensive drugs distributed by Canadian

pharmacies. As we have explained, however, the importation of drugs from Canada

is prohibited by federal law. The absence of competition from Canadian sources in

the domestic prescription drug market, therefore, is caused by the federal statutory and

regulatory scheme adopted by the United States government, not by the conduct of the

defendants. Consequently, the alleged conduct of the defendants did not cause an

injury of the type that the antitrust laws were designed to remedy. See RSA Media,

Inc. v. AK Media Group., Inc., 260 F.3d 10, 15 (1st Cir. 2001) (plaintiff lacked

antitrust standing where it “was not excluded from the market for outdoor billboards

because of [defendant’s] threats,” but rather “because of the Massachusetts regulatory

scheme that prevents new billboards from being built”); City of Pittsburgh v. West

Penn Power Co., 147 F.3d 256, 265 (3d Cir. 1998) (City suffered no antitrust injury

and had no antitrust standing because “any injury suffered by the City did not flow

from the defendants’ conduct, but, rather, from the realities of the regulated

environment in which all three were actors”); 2 P. Areeda & H. Hovenkamp, Antitrust

Law § 338, at 320 (2d ed. 2000) (explaining that antitrust standing is lacking where

“a force other than the antitrust violation fully accounts for the plaintiff’s injury”).

The plaintiffs do allege that prior to the alleged anti-competitive conduct of the

defendants, Americans were able to import prescription drugs from Canada for

personal use, because the FDA declined to enforce a legal prohibition on personal

importation of Canadian drugs. They do not allege, however, that the government’s

lack of enforcement resulted in the injury alleged in their complaint – i.e., increased
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prices for prescription drugs in the United States – presumably because the chain of

causation would be too speculative to support such an assertion. To establish antitrust

standing based on higher drug prices in the United States, the plaintiffs would have

to prove that absent the alleged anti-competitive conduct of the defendants,

pharmacists and wholesalers in Canada would sell additional prescription drugs to

American consumers, Americans routinely would travel to Canada to fill their

prescriptions, those consumers would avoid enforcement when transporting their

prescriptions illegally across the border, and the number of consumers engaging in

this illegal behavior would be so large as to drive down prices in the United States.

These “vaguely defined links” in the chain of causation, even if alleged by the

plaintiffs, would be insufficient to establish antitrust standing. See Associated Gen.

Contractors, 459 U.S. at 540.

Finally, the plaintiffs argue that the district court abused its discretion when it

dismissed their state law claims. When a district court dismisses federal claims over

which it has original jurisdiction, the balance of interests usually “will point toward

declining to exercise jurisdiction over the remaining state law claims.” CarnegieMellon Univ. v. Cohill, 484 U.S. 343, 350 n.7 (1988); see also Gibson v. Weber, 433

F.3d 642, 647 (8th Cir. 2006); 28 U.S.C. § 1367(c)(3). The district court’s decision

to dismiss the state law claims was in accord with these principles. The advent of the

Class Action Fairness Act, Pub. L. No. 109-2, 119 Stat. 4 (2005), and the potential for

the future removal of the state claims to federal court, are not sufficient grounds to

require the district court to retain federal jurisdiction.

The judgment of the district court is affirmed.

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