                   United States Court of Appeals
                         FOR THE EIGHTH CIRCUIT
                                 ___________

                                 No. 05-3873
                                 ___________

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;*
Merck & Co., Inc.; Novartis AG; Wyeth *
Pharmaceuticals, Inc.; Eli Lilly &      *
Company; Astrazeneca, PLC,              *
                                        *
           Appellees.                   *
                                   ___________

                               Submitted: May 18, 2006
                                  Filed: November 30, 2006
                                   ___________

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

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.




      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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                                           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

                                          -4-
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

                                          -5-
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

                                          -6-
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 non-
compliant 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).

                                          -7-
       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

                                          -8-
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

                                           -9-
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.” Carnegie-
Mellon 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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