## Facts

- The United States filed a civil in rem action under the Federal Food, Drug, and Cosmetic Act (FDCA) seeking seizure and condemnation of approximately 104 drums of bulk antibiotics manufactured by Kanasco, Ltd. and stored at its facilities in Baltimore, Maryland.
- The government alleged the antibiotics were “adulterated” under 21 U.S.C. § 351(a)(2)(B) because the methods, facilities, or controls used to manufacture, process, pack, or hold the drugs did not conform to “current good manufacturing practice” (cGMP).
- Federal marshals seized the drums. Kanasco filed a claim and answer contesting condemnation and requesting return of the drugs.
- In the district court, the government moved for summary judgment based on evidence that the antibiotics were not manufactured in conformity with cGMP.
- Kanasco did not dispute the asserted cGMP noncompliance for purposes of summary judgment. Instead, it argued the antibiotics were exempt from the FDCA’s manufacturing requirements because they were intended for export.
- Kanasco relied on the export exemption in 21 U.S.C. § 381(e)(1), which required (among other conditions) that an exported drug “accords to the specifications of the foreign purchaser” and “is not in conflict with the laws of the country to which it is intended for export.”
- The district court ruled for the government, concluding Kanasco had not shown the drums were made for a specific foreign purchaser or that the drums satisfied the laws of a specific destination country.
- Kanasco appealed, arguing that a general intent to export bulk antibiotics was enough to satisfy the export exemption.

## Issues

1. Does the FDCA export exemption in 21 U.S.C. § 381(e)(1) apply when a manufacturer shows only a general intent to export adulterated drugs?
2. To invoke § 381(e)(1), must the claimant show the seized drugs were made for a specific foreign purchaser and were not in conflict with the laws of a specific destination country?

## Decision

- The Fourth Circuit affirmed the district court’s grant of summary judgment for the United States.
- The court held that § 381(e)(1) requires more than a generalized plan to sell the drugs abroad.
- The court agreed with the district court that the exemption’s text calls for proof tied to an identifiable foreign purchaser (whose specifications the drugs meet) and an identifiable destination country (whose laws are not violated).
- Because Kanasco failed to present evidence connecting the seized drums to a specific foreign purchaser and specific destination-country legal requirements, the export exemption did not apply, and the antibiotics remained adulterated and subject to condemnation.

## Legal Principles

- A drug manufactured, processed, packed, or held in violation of cGMP is “adulterated” under 21 U.S.C. § 351(a)(2)(B) and may be condemned in an in rem FDCA action.
- The FDCA export exemption in 21 U.S.C. § 381(e)(1) is not satisfied by a generic intent to export; it requires evidence that the drug accords to the specifications of a foreign purchaser and is not in conflict with the laws of the country to which it is intended for export.
- The statutory references to “the foreign purchaser” and “the country to which it is intended for export” contemplate identifiable purchasers and countries, not undefined future export possibilities.
- On summary judgment, once adulteration is established and the claimant cannot produce evidence meeting the statutory export-exemption conditions, condemnation may be entered as a matter of law.

## Conclusion

United States v. Kanasco, Ltd. affirmed condemnation of 104 drums of bulk antibiotics that were admittedly manufactured outside cGMP, rejecting Kanasco’s argument that a general intention to export triggered the FDCA export exemption; the exemption required proof that the drugs were made to meet the specifications of a specific foreign purchaser and did not violate the laws of a specific destination country, and Kanasco offered no such proof.


United States v. Kanasco, Ltd., 123 F.3d 209 (1997)