United States District Court, D. Maryland, Southern Division
GEORGE JARROD HAZEL, District Judge.
This is an action brought by Plaintiff Hospira, Inc. ("Hospira") along with Plaintiff-Intervenor Sandoz, Inc. ("Sandoz") pursuant to the Administrative Procedure Act ("APA"), 5 U.S.C. § 701, et seq., challenging various actions taken by Defendant Food and Drug Administration ("FDA"). Specifically, Hospira and Sandoz contend that the FDA's August 18, 2014 decision authorizing the approval of generic versions of the drug dexmedetomidine hydrochloride violated § 355(j)(2)(A)(viii) of the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the "Hatch-Waxman Amendments." Additionally, Hospira and Sandoz contend that through its August 18, 2014 decision, FDA effected a change to settled law thereby adopting a new "rule" as defined by the APA, which was not promulgated in accordance with the formal rulemaking procedures required by the APA. Accordingly, Hospira and Sandoz sought a temporary restraining order and/or preliminary injunction that, among other things, stayed the effect of the FDA's August 18, 2014 decision. Mylan Institutional, LLC ("Mylan") intervened.
On August 19, 2014, after an emergency hearing, the Court granted Hospira's and Sandoz's motions and issued a temporary restraining order that day. After staying a portion of the Court's temporary restraining order, and then granting, in part, and denying, in part, Mylan's motion for reconsideration of the temporary restraining order, the Court consolidated the preliminary injunction motion with a final decision on the merits under Rule 65(a)(2) of the Federal Rules of Civil Procedure. Accordingly, on August 29, 2014, all of the parties (except Sandoz) filed cross-motions for summary judgment.
For the reasons stated below, the Court finds that the FDA's August 18, 2014 decision authorizing the approval of generic versions of Precedex® was not arbitrary, capricious, or otherwise not in accordance with law, but was instead based on a reasonable and sound interpretation of the relevant statute. Additionally, the Court finds that the FDA's August 18, 2014 decision was entirely consistent with the FDA's established practice of approving generic drugs and therefore did not effect a change to settled law. As such, no new "rule" was created by the FDA's decision and the FDA was therefore not required to follow the APA's formal rulemaking procedures. Hospira's motion for summary judgment is therefore DENIED, and summary judgment is GRANTED in favor of the FDA, Mylan, and Defendant-Intervenor Par Sterile Products, LLC ("Par Sterile").
A. Statutory and Regulatory Framework
This case involves issues relating to the interpretation of the Hatch-Waxman Amendments, which substantially amended the Federal Food, Drug, and Cosmetic Act ("FDCA"). See Pub.L. No. 98-417, 98 Stat. 1585 (1984), codified at 21 U.S.C. § 355. These complex amendments have been thoroughly explained by the District Court for the District of Columbia on numerous occasions. See e.g., Purepac Pharm. Co. v. Thompson, 238 F.Supp.2d 191, 193-96 (D.D.C. 2002) aff'd, 354 F.3d 877 (D.C. Cir. 2004); Mylan Pharm., Inc. v. Sebelius, 856 F.Supp.2d 196, 199-201 (D.D.C. 2012); Apotex Inc. v. Food & Drug Admin., 414 F.Supp.2d 61, 63-64 (D.D.C. 2006) aff'd, 226 F.Appx. 4 (D.C. Cir. 2007). Given the parties' desire to have a swift resolution of this matter, and in the interests of judicial economy, the Court will forgo its opportunity to dissect the statutory and regulatory framework of the Hatch-Waxman Amendments and instead will rely on the thoughtful discussion from Purepac Pharm. Co., 238 F.Supp.2d at 193-96 that fully describes the statutory and regulatory regime implicated in this case. The court in Purepac Pharm. Co. stated that:
[The Hatch-Waxman] amendments were designed to simplify and expedite the process by which generic drugs are brought to market. Generally, a company seeking FDA approval to market a particular drug must file a lengthy document called a New Drug Application ("NDA"), which, among other things, must include detailed data establishing the drug's safety and effectiveness. The NDA must also contain information on each patent that claims the drug or a method of using the drug that is the subject of the application and with respect to which a patent infringement claim could reasonably be asserted against a[n] unauthorized party. 21 U.S.C. § 355(b)(1); (c)(2). The FDA publishes the patent information that it receives in a publication entitled "Approved Drug Products With Therapeutic Equivalence Evaluations, " known in agency parlance as the "Orange Book." See Am. Bioscience, Inc. v. Thompson, 269 F.3d 1077, 1079 (D.C. Cir. 2001); Terry G. Mahn, Patenting Drug Products: Anticipating Hatch-Waxman Issues During the Claims Drafting Process, 54 FOOD & DRUG L.J. 245, 249-50 (1999).
Before the Hatch-Waxman Amendments were enacted, a firm that hoped to manufacture and sell a generic version of an already-approved drug was required to submit a new NDA complete with new safety and effectiveness data. See Mova Pharm. Corp. v. Shalala, 140 F.3d 1060, 1063 (D.C. Cir. 1998). Obviously, this requirement imposed considerable burdens on would-be generic manufacturers, delaying and increasing the cost of bringing generic drugs to market. In order to benefit consumers, the amendments altered this requirement, creating a streamlined procedure for the approval of generic drugs whereby the generic applicant is permitted to piggyback on the original NDA filed by the manufacturer of the brand-name drug (the so-called "pioneer" or "innovator" drug). Under this new system, generic drugs may be approved through an Abbreviated New Drug Application ("ANDA"), which relies on the FDA's previous determination that the pioneer drug is safe and effective. See Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661, 675, 110 S.Ct. 2683, 110 L.Ed.2d 605 (1990) ("The ANDA applicant can substitute bioequivalence data for the extensive animal and human studies of safety and effectiveness that must accompany a full new drug application."). This allows applicants to avoid the costly and time-consuming process associated with NDAs, thus facilitating the approval and dissemination of low-costs generic drugs. See H.R.Rep. No. 98-857 (Part I) at 14 (June 21, 1984).
At the same time, Congress sought to protect patent holders whose rights could be threatened by the marketing of generic versions of their patented innovations. See Am. Bioscience, Inc. v. Thompson, 243 F.3d 579, 580 (D.C. Cir. 2001). To this end, the Hatch-Waxman Amendments require that ANDAs contain specified information about the patents protecting the pioneer drug, including "the patent number and the expiration date of any patent which claims the drug for which the applicant submitted the application or which claims a method of using such drug and with respect to which a claim of patent infringement could reasonably be asserted if a person not licensed by the owner engaged in the manufacture, use, or sale of the drug." 21 U.S.C. § 355(b)(1). There are two means by which applicants may satisfy this requirement....
First, in a situation in which the patent potentially implicated by the generic drug "claims the listed [ i.e. FDAapproved] drug... or which claims a use for such listed drug for which the applicant is seeking approval, " the ANDA applicant is required to certify that the new drug will not infringe the patent and explain why it will not. 21 U.S.C. § 355(j)(2)(A)(vii). The statute provides four bases on which this certification may be made: (I) that the required patent information has not been filed; (II) that the patent has expired; (III) that the patent will expire on a date certain; or (IV) that the patent is invalid or will not be infringed by the drug for which approval is sought. Id. [The fourth option is commonly referred to as a "paragraph IV certification."]
When an ANDA includes a paragraph IV certification, the applicant must give notice of the filing both to the owner of the patent and to the holder of the NDA for the approved drug. The statute then provides a 45-day window during which the patent owner may bring suit against the generic applicant. If a suit is initiated, the FDA's approval of the ANDA is automatically stayed for 30 months, a period that can be lengthened or shortened by the court hearing the case if either party fails to "reasonably cooperate in expediting the action." 21 U.S.C. § 355(j)(5)(B)(iii). If, before the expiration of the 30-month stay, the court finds that the patent is invalid or would not be infringed by the new drug, the FDA's approval of the ANDA becomes effective on the date of that ruling. See Andrx Pharms., Inc. v. Biovail Corp. Int'l, 256 F.3d 799, 802 (D.C. Cir. 2001). As an incentive to generic manufacturers willing to run the risk of defending against patent infringement actions, the statute provides that the first party to gain approval of an ANDA containing a paragraph IV certification is entitled to a 180-day period of market exclusivity. 21 U.S.C. § 355(j)(5)(B)(iv). During this "[e]denic moment of freedom from the pressures of the market, " Mova Pharm., 140 F.3d at 1064, the FDA may not allow any subsequent ANDAs for the drug in question to become effective, thus allowing the first mover to sell its drug without competition from other generic manufacturers. See Mylan Pharm., Inc. v. Shalala, 81 F.Supp.2d 30, 33 (D.D.C. 2000) ("In other words, no ANDA for the same generic drug product will be approved during those 180 days.").
As noted, however, the statute provides an alternative to a paragraph IV certification, known as a "section viii statement, " which applies where the patent in question is a "method of use patent which does not claim a use for which the applicant is seeking approval under this subsection." 21 U.S.C. § 355(j)(2)(A)(viii) (emphasis [in original]). By regulation, the FDA has provided that these statements are to be used when "the labeling for the drug product for which the applicant is seeking approval does not include any indications that are covered by the use patent" that has been submitted by the NDA holder. 21 C.F.R. § 314.94(b)(12)(iii)(A). In such circumstances, the ANDA applicant need not file a patent certification under paragraphs I-IV; instead, the ANDA must include a statement that the method of use patent at issue does not claim the use of the drug for which the applicant is seeking approval. Id; see also Mylan Pharms., Inc. v. Thompson, 139 F.Supp.2d 1, 6 (D.D.C. 2001), rev'd on other grounds, 268 F.3d 1323 (Fed. Cir. 2001). An applicant proceeding by means of a section viii statement need not inform the patent owner of its application, and does not face an infringement action under 35 U.S.C. § 271(e)(2)(A)... or the automatic 30-month stay applicable to paragraph IV certifications should the owner decide to file an infringement action. Thus, the FDA may approve a section viii application immediately, making it an attractive route for generic manufacturers, even though a section viii statement does not entitle a successful applicant to the 180-day period of exclusivity bestowed on paragraph IV applicants.
As the above description makes clear, the availability of section viii statements turns on whether the method of use patent covering the pioneer drug actually "claims" the use for which the ANDA applicant seeks to market the generic version of that drug. To understand how this works requires a more detailed examination of the process by which patents claiming certain uses for drug products come to be registered with the FDA. As already described, every NDA must contain patent information regarding the drug for which the applicant seeks approval. 21 U.S.C. § 355(b)(1). By regulation promulgated on October 3, 1994, however, the FDA added a caveat to this statutory mandate: "For patents that claim a method of use, the applicant shall submit information only on those patents that claim indications or other conditions of use of a pending or approved application." 21 C.F.R. § 314.53(b). Once the NDA is approved, the applicant then has 30 days in which to amend its patent submissions to ensure that they list only those patents "that claim[ ] the formulation, composition, or the specific indications or other conditions of use that have been approved." 21 C.F.R. § 314.53(c)(2)(ii). If a patent for an approved drug is obtained after the NDA has been accepted, the owner must list the new patent information within 30 days after the patent is issued. 21 U.S.C. § 355(c)(2). The FDA lists all of these patent submissions in the Orange Book.
* * * *
[T]he FDA does not take it upon itself to review the patent submissions it receives from NDA applicants and holders in order to determine whether they actually relate to approved drugs and uses. Instead, the agency views its role as purely ministerial. Lacking the resources or the expertise to determine the validity or scope of patent claims, the FDA simply lists the patent information that it receives from brand manufacturers, expecting those parties to understand and abide by the regulatory mandates. See Abbreviated New Drug Application Regulations, Patent and Exclusivity Provisions, 59 Fed.Reg. 50, 338, 50, 345 (Oct. 3, 1994) (hereinafter "ANDA Rulemaking"); Mahn, supra, at 250 (noting the FDA's "willingness to list in the Orange Book virtually any patent submitted by an NDA holder").
Indeed, in formulating its regulations governing patent submissions, the FDA explicitly declined to establish "a mechanism for review of submitted patent information to determine, at least on a very general basis, applicability to the particular NDA in question." ANDA Rulemaking, 59 Fed. Reg. at 50, 343; see aaiPharma Inc. v. Thompson, 296 F.3d 227, 243 (4th Cir. 2002) (upholding the FDA's "purely ministerial approach to the Orange Book listing process" as a reasonable interpretation of its statutory responsibilities). The duty to ensure that the Orange Book only lists patents that actually claim approved drugs thus lies with NDA holders. See Watson Pharm. v. Henney, 194 F.Supp.2d 442, 445-46 (D. Md. 2001) ("In making its decision to list a patent... it is entirely appropriate and reasonable for the FDA to rely on the patentee's declaration as to coverage, and to let the patent infringement issues play out in other, proper arenas, as is the clear intent of the Hatch-Waxman Amendments.").
Purepac Pharm. Co., 238 F.Supp.2d at 193-96 (D.D.C. 2002) (footnotes omitted).
B. Case-Specific Background
1. NDA Holder - Hospira
Dexmedetomidine hydrochloride, the drug product at issue in this case, is currently marketed and sold by Hospira under the brand name Precedex®. The FDA has approved Precedex® for two uses, commonly referred to as "indications." These indications include (1) "sedation of initially intubated and mechanically ventilated patients during treatment in an intensive care setting." ( i.e., Intensive Care Unit Sedation); and (2) "sedation of non-intubated patients prior to and/or during surgical and other procedures." ( i.e., Procedural Sedation). ECF No. 1 at ¶ 26. The FDA-approved label for Precedex® includes "Intensive Care Sedation" and "Procedural Sedation" as two separate indications. Additionally, the FDA-approved label for Precedex® indicates that these separate uses call for different dosages, provide different warnings regarding withdrawal, and describe different adverse event information. Furthermore, the FDA-approved label for Precedex® reveals that there were separate clinical trials for "Intensive Care Unit Sedation" and "Procedural Sedation" that were considered by the FDA in granting Hospira's NDA. Accordingly, Precedex® is FDA-approved as safe and effective for either "Intensive Care Sedation" or "Procedural Sedation."
Hospira has, over time, listed several patents covering Precedex®. Today, only a method-of-use patent remains: U.S. Patent No. 6, 716, 867 (the 867 patent), which expires on October 1, 2019. Hospira originally listed the 867 patent in the Orange Book in May 2004 with the following use code (U-572): "Intensive Care Unit Sedation." In November 2008, Hospira listed U.S. Patent No. 5, 344, 840 (the 840 patent) with the following use code (U-912) in the Orange Book: "Sedation of nonintubated patients prior to and/or during surgical and other procedures." The 840 patent, however, expired on September 6, 2011. Thus, the '867 patent is the only patent at issue in this case.
2. ANDA Sponsors - Sandoz, Mylan, and Par Sterile
This case also involves three ANDA sponsors: Plaintiff-Intervenor Sandoz, who pursued generic Precedex® approval through the Paragraph IV certification process; and Defendant-Intervenors Mylan and Par Sterile who sought and obtained approval to ...