Sigma-Tau Pharmaceuticals, Inc. v. Schwetz, 01-2206.

• Citation: 288 F.3d 141
• Decision Date: 02 May 2002
• Docket Number: No. 01-2206.,01-2206.
• Parties: SIGMA-TAU PHARMACEUTICALS, INCORPORATED, Plaintiff-Appellant, v. Bernard A. SCHWETZ, Acting Principal Deputy Commissioner, Food and Drugs; Tommy G. Thompson, Secretary, Department of Health and Human Services, Defendants-Appellees, and Gensia Sicor Pharmaceuticals, Incorporated, Intervenor-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (4th Circuit)

288 F.3d 141

SIGMA-TAU PHARMACEUTICALS, INCORPORATED, Plaintiff-Appellant, v. Bernard A. SCHWETZ, Acting Principal Deputy Commissioner, Food and Drugs; Tommy G. Thompson, Secretary, Department of Health and Human Services, Defendants-Appellees, and Gensia Sicor Pharmaceuticals, Incorporated, Intervenor-Appellee.

No. 01-2206.

United States Court of Appeals, Fourth Circuit.

Argued April 3, 2002.

Decided May 2, 2002.

ARGUED: Mark D. Gately, Hogan & Hartson, L.L.P., Baltimore, Maryland, for Appellant. Barbara Jeanne Stradling, Office of Consumer Litigation, United States Department of Justice, Washington, D.C., for Federal Appellees; David G. Adams, Venable, Baetjer, Howard & Civiletti, L.L.P., Washington, D.C., for Appellee Gensia Sicor. ON BRIEF: Steven F. Barley, Hogan & Hartson, L.L.P., Baltimore, Maryland; Catherine E. Stetson, Hogan & Hartson, L.L.P., Washington, D.C., for Appellant. Robert D. McCallum, Jr., Assistant Attorney General, Larry D. Adams, Assistant United States Attorney, Office of Consumer Litigation, United States Department of Justice, Washington, D.C.; Daniel E. Troy, Chief Carl I. Turner Associate Chief, United States Food and Drug Administration, Washington, D.C., for Federal Appellees.

Before WILKINSON, Chief Judge, WIDENER, Circuit Judge, and Walter K. STAPLETON, Senior Circuit Judge of the United States Court of the United States Court of Appeals for the Third Circuit, sitting by designation.

Affirmed by published opinion. Chief Judge WILKINSON wrote the opinion, in which Judge WIDENER and Senior Judge STAPLETON joined.

OPINION

WILKINSON, Chief Judge.

Sigma-Tau Pharmaceuticals, Inc. claims that the Food and Drug Administration acted contrary to law in approving generic versions of its levocarnitine drug because the generics infringed on the seven-year period of orphan exclusivity that its drug currently enjoys under the Orphan Drug Act, 21 U.S.C. §§ 360aa-ee. The district court disagreed, concluding that the FDA did not act unlawfully in approving the generics for an indication that was no longer protected by market exclusivity under the Act. Because the district court correctly interpreted the governing statute's clear language, we affirm.

I.

Sigma-Tau Pharmaceuticals developed a drug to treat a rare condition known as carnitine deficiency in people with inborn metabolic disorders.¹ The FDA designated Sigma-Tau's levocarnitine drug an "orphan drug" — one designed to treat a rare disease or condition — and approved Sigma-Tau's application to market it. Under the Orphan Drug Act ("ODA"), 21 U.S.C. §§ 360aa-ee, Sigma-Tau was entitled to seven years of market exclusivity to sell its drug, known as Carnitor, for that orphan indication. Its exclusivity for inborn metabolic disorders expired in 1999.

Sigma-Tau later received FDA approval for use of its levocarnitine drug for the prevention and treatment of a second rare condition — carnitine deficiency in patients with end-stage renal disease ("ESRD") who are undergoing dialysis. Sigma-Tau's exclusivity for treating carnitine deficiency in ESRD patients expires in 2006.

The FDA recently approved the applications of two drug manufacturers, private intervenor Gensia Sicor Pharmaceuticals, Inc. and Bedford Laboratories, to market and sell generic forms of Sigma-Tau's levocarnitine drug. The agency approved the generics for the treatment of patients with inborn metabolic disorders, the unprotected indication. The generics compete with Carnitor.

As a result of these generic drug approvals, Sigma-Tau brought suit against the FDA on May 10, 2001. Sigma-Tau sought to have the approvals rescinded, or, in the alternative, to have the FDA change the generics' labeling to protect Sigma-Tau's orphan exclusivity. Sigma-Tau claimed that the FDA had violated the ODA Amendments to the Federal Food, Drug, and Cosmetic Act ("FDCA"), 21 U.S.C. §§ 360aa-ee, the ODA's implementing regulations, and the Administrative Procedure Act ("APA"), 5 U.S.C § 706(2)(A). In particular, Sigma Tau alleged that the FDA ignored substantial evidence that the generics were intended for use in an orphan-protected market, and that the agency's approvals were arbitrary and capricious because the generics infringed on the seven-year period of orphan exclusivity that Carnitor currently enjoys under the ODA.

After two hearings, the district court ruled against Sigma Tau. In so ruling, the district court applied the well-settled principles of Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Under the first step of the Chevron analysis, id. at 842-43, 104 S.Ct. 2778, the court concluded that Congress had spoken directly to the issue, and that the FDA's approvals of the generic manufacturers' products were consistent with the clear language of the governing statute, § 360cc(a) of the ODA. Noting the statute's directive that the FDA "may not approve another application ... for such drug for such disease or condition ... until the expiration of seven years," id., the court reasoned that the FDA had not approved another drug application "for such disease or condition," but rather had done so for a disease or condition no longer subject to exclusivity.

Alternatively, the court held that even if the statute was not clear, the FDA's permissible construction of it was entitled to deference under the second step of the Chevron inquiry. See 467 U.S. at 843-44, 104 S.Ct. 2778. Further, the court concluded that the agency was entitled to substantial deference in interpreting its own regulations, especially on a complex and highly technical issue.

The court thus held that the FDA's approvals were "not arbitrary or capricious, an abuse of discretion, or otherwise a violation of law." It accordingly entered judgment in favor of the agency. Sigma-Tau appeals.

II.

In dispute here are provisions of the FDCA that govern orphan drugs. See 21 U.S.C. §§ 360aa-360ee. These sections were added to the FDCA by the Orphan Drug Act of 1983 ("ODA"), Pub.L. No. 97-414, 96 Stat.2049. The ODA was enacted in order to provide drug manufacturers with incentives to develop "orphan" drugs — that is, drugs for the treatment of rare diseases or disorders that affect only small patient populations. See Genentech, Inc. v. Bowen, 676 F.Supp. 301, 302-303 (D.D.C.1987). In pursuit of this objective, Congress offered research assistance, grants, and tax incentives to companies that undertake development of orphan drugs. Id. at 303. In addition, Congress provided for seven years of market exclusivity for approved orphan drugs. 21 U.S.C. § 360cc(a). As noted above, this provision of the ODA states that the FDA "may not approve another application ... for such drug for such disease or condition... until the expiration of seven years." Id.

Sigma-Tau challenges the FDA's approvals of generic versions of Carnitor. Sigma-Tau submits that the generics were in fact intended for use in patients with ESRD who are undergoing dialysis, and that they thereby infringed on the seven-year period of orphan exclusivity that Carnitor currently enjoys under the ODA.

III.

A.

Reviewing the district court's grant of summary judgment de novo, see Higgins v. E.I. DuPont de Nemours & Co., 863 F.2d 1162, 1167 (4th Cir.1988), we agree that the plain language of the ODA is unambiguous, and that the FDA's approvals of the generics in this case comported with the clear wording of the statute. It is apparent that the FDA did not "approve another application ... for such drug for such disease or condition" here, § 360cc(a), but rather approved "another application ... for such drug" for a different disease or condition, one that was no longer subject to exclusivity. That is, the agency approved generic versions of Sigma-Tau's levocarnitine drug for people with inborn metabolic disorders, for which the period of orphan exclusivity had expired. The FDA did not approve the generics for the treatment of ESRD patients.

By using the words "such drug for such disease or condition," Congress made clear its intention that § 360cc(a) was to be disease-specific, not drug-specific. In other words, the statute as written protects uses, not drugs for any and all uses. Congress could have written § 360cc(a) more broadly by prescribing that the FDA "may not approve another application ... for such drug," but it chose not to draft the statute in that way. Because Congress has spoken directly to the dispositive question before us, our inquiry is at an end. Chevron, 467 U.S. at 842-43, 104 S.Ct. 2778; see also Hillman v. IRS, 263 F.3d 338, 342 (4th Cir.2001) (citing Caminetti v. United States, 242 U.S. 470, 485, 37 S.Ct. 192, 61 L.Ed. 442 (1917)).

Understanding the implications of this analysis under the first step of Chevron, Sigma-Tau argues that the plain language of § 360cc(a) is ambiguous. Specifically, Sigma-Tau submits that the phrase "such disease or condition" may refer either to the disease or condition for which the drug is labeled, or to the disease or condition for which it is intended to be used.

But Sigma-Tau cannot create a genuine ambiguity in § 360cc(a) under Chevron by raising the evidentiary question of labeled use versus intended use. Section 360cc(a) simply provides that the FDA "may not approve" generics for a protected indication. Thus, the statute is clearly directed at FDA approved-use, not generic competitor intended-use. And in view of this textual emphasis on approved-use, the evidentiary basis for the agency's approvals must be the use for which the approvals are sought — that is, the use for which the generics are labeled. Thus, the FDA does not violate § 360cc(a) by relying upon the generic manufacturers' proposed labeling as opposed to the alleged evidence of intended use discussed below. This statute is not ambiguous.

B.

Sigma-Tau nevertheless urges us to look beyond the face of the ODA to the FDA's regulations. In particular, Sigma-Tau contends that if...