Court Upholds Dismissal of Claims Against Drug Makers

The U.S. Court of Appeals for the Second Circuit has upheld a lower court's dismissal of claims against several drug manufacturers and retailers regarding the effectiveness of over-the-counter nasal decongestants. The court ruled that the Federal Food, Drug, and Cosmetic Act (FDCA) preempted state law claims, affecting consumers who purchased these products under the belief they were effective.

This ruling stems from a case involving nearly one hundred class actions filed by consumers and retail pharmacies, including Newton's Pharmacy, Inc. The plaintiffs alleged that drug manufacturers knowingly sold nasal decongestants containing phenylephrine, an ingredient that recent studies have shown to be ineffective. The court's decision highlights the complexities of federal drug regulations and their impact on consumer protection.

Background

The case, titled S Pharmacy, Inc. v. Johnson & Johnson Consumer Inc. (Docket No. 24-3296), began when consumers and pharmacies filed lawsuits against multiple drug manufacturers and retailers, including Johnson & Johnson, Walmart, and CVS. The plaintiffs claimed that these companies misled consumers by advertising nasal decongestants containing oral phenylephrine as effective, despite scientific evidence suggesting otherwise.

The controversy over the efficacy of oral phenylephrine dates back to 2007 when studies began to question its effectiveness. By 2016, some studies concluded that it was no more effective than a placebo. Despite these findings, the FDA continued to require manufacturers to label these products as effective decongestants, leading to the lawsuits.

In 2023, the Judicial Panel on Multidistrict Litigation consolidated the various class actions and transferred them to the Eastern District of New York. The plaintiffs filed a streamlined complaint that included state law claims and a federal claim under the Racketeer Influenced and Corrupt Organizations Act (RICO). The defendants responded with a motion to dismiss, arguing that the FDCA preempted the state law claims.

The Ruling

The Second Circuit, in its ruling dated July 30, 2026, affirmed the lower court's decision to dismiss the claims. The court concluded that the FDCA expressly preempted most of the plaintiffs' state law claims, stating, "Defendant Manufacturers followed the FDA's prescribed labeling requirements by designating their decongestants' purpose as decongestion. Defendant Manufacturers cannot now be sued for complying with those FDA specifications."

The court also ruled that the plaintiffs lacked standing to bring their RICO claim, reinforcing the idea that individual consumers cannot sue under the FDCA since it does not provide for a private right of action. The judges involved in the decision were Raggi, Chin, and Pérez.

Impact

This ruling has significant implications for consumers and the pharmaceutical industry. It reinforces the power of federal regulations over state laws in the context of drug labeling and marketing. Consumers who purchased these nasal decongestants under the impression they were effective may find it challenging to seek recourse due to the preemption of state law claims.

The decision also sets a precedent for future cases involving drug efficacy and labeling, potentially limiting consumers' ability to challenge manufacturers in court. As the FDA continues to evaluate the effectiveness of oral phenylephrine, the outcome may influence how similar cases are handled in the future.

What's Next

While the Second Circuit's ruling is final, the plaintiffs may consider seeking further review or appeal to the U.S. Supreme Court. Additionally, the FDA's ongoing review of oral phenylephrine's effectiveness could lead to changes in regulations that might impact future litigation.