Hynson, Westcott and Dunning, Inc. v. Richardson, 71-1717.

• Citation: 461 F.2d 215
• Decision Date: 24 May 1972
• Docket Number: No. 71-1717.,71-1717.
• Parties: HYNSON, WESTCOTT AND DUNNING, INCORPORATED, Petitioner, v. Elliot RICHARDSON, Secretary of Health, Education and Welfare and Charles C. Edwards, Commissioner of Food and Drugs, Respondents.
• Court: United States Courts of Appeals. United States Court of Appeals (4th Circuit)

461 F.2d 215 (1972)

HYNSON, WESTCOTT AND DUNNING, INCORPORATED, Petitioner, v. Elliot RICHARDSON, Secretary of Health, Education and Welfare and Charles C. Edwards, Commissioner of Food and Drugs, Respondents.

No. 71-1717.

United States Court of Appeals, Fourth Circuit.

Argued February 7, 1972.

Decided May 24, 1972.

COPYRIGHT MATERIAL OMITTED

Edward Brown Williams, Washington, D. C. (Jan Edward Williams and Harter, Calhoun & Williams, Washington, D. C., Robert H. Patterson, Jr., and McGuire, Woods & Battle, Richmond, Va., and John Kyle Worley on brief), for petitioner.

Gregory B. Hovendon, Atty., Dept. of Justice (Richard W. McLaren, Asst. Atty. Gen., and Peter Barton Hutt, Asst. Gen. Counsel, Food, Drugs and Environmental Health Division, Eugene M. Pfeifer, Atty., U. S. Dept. of Health, Education, and Welfare, on brief), for respondents.

Joel E. Hoffman, Washington, D. C. (Robert L. Wald, Selma M. Levine, and Wald, Harkrader & Ross, Washington, D. C., on brief), for amicus curiae.

Before BUTZNER, RUSSELL and FIELD, Circuit Judges.

DONALD RUSSELL, Circuit Judge:

The appellant, a drug manufacturer, seeks review of a final order withdrawing marketing approval (NDA) of the drug Lutrexin by the Commissioner of Food and Drugs, Department of Health, Education and Welfare.¹ The appellant alleges error in such order of withdrawal (1) for failure to sustain its claim of exemption from withdrawal on account of lack of "substantial evidence" of effectiveness of its drug and, if this claim of exemption is overruled, (2) for denial of a hearing, as required under the applicable statute, on its showing of effectiveness. We reverse.

The appellant was granted an approved NDA for Lutrexin in 1952. At that time, the Food, Drug and Cosmetic Act of 1938 conditioned such grant on general recognition of safety of the drug approved. In 1962 the Act was amended to authorize withdrawal of an approved NDA for any drug for which the Commissioner "after due notice and opportunity for hearing", found there was "a lack of substantial evidence" of effectiveness.² The term "substantial evidence" was defined in the Amendments as "consisting of adequate and well-controlled investigations, including clinical investigations, by experts qualified by scientific training and experience to evaluate the effectiveness of the drug involved, on the basis of which it could fairly and responsibly be concluded by such experts that the drug will have the effect it purports or is represented to have under the conditions of use prescribed, recommended, or suggested in the labeling or proposed labeling thereof."³ There was an exemption from these requirements for drugs, which, inter alia, were not covered on the day immediately before the enacting date of the Amendments (i. e., October 9, 1962) by an "effective NDA".⁴

In carrying out his new responsibilities under the Amendments, the Commissioner secured the services of the National Academy of Sciences-National Research Council (NAS-NRC) for reviewing the claims of effectiveness on behalf of any drugs NDA'd between 1938 and 1962.⁵ To facilitate its assignment, NAS-NRC set up a Drug Efficacy Study Group and all drug manufacturers with approved NDAs obtained between 1938 and 1962 were directed by the Commissioner to submit to this Group evidence "pertinent to the evaluation of the effectiveness of the(ir) drugs."⁶ The appellant submitted to the Group clinical data, investigations and studies in support of the effectiveness for its drug Lutrexin. After considering such data, NAS-NRC concluded that Lutrexin was "possibly effective" but indicated the supporting documentation was inadequate. The Commissioner advised the appellant of his concurrence with the conclusions of NAS-NRC and, as required by the statute, extended to it an opportunity for a hearing on the proposed withdrawal of the approved NDA for Lutrexin.⁷ At such a hearing, the appellant was advised it might "produce evidence and arguments why approval * * * should not be withdrawn."⁸ The appellant in due time requested such hearing. Under the Commissioner's regulations, a hearing was required within 90 days after such request, unless the parties agreed otherwise.⁹ However, although no delay was agreed on, hearing within such period was not had. The delay on the part of the Commissioner in setting a hearing was due to litigation over the procedure to be followed by the Commission in implementing its efficacy review and in conducting hearings resulting therefrom.¹⁰ It is unnecessary to review the difficulties encountered in developing valid regulations for such hearings. It is sufficient for the issues here that it was not until May 8, 1970, that the legal objections to the regulations were finally resolved. During this interregnum when the regulations of the Agency were under challenge and the Commissioner was delaying a hearing, the appellant, whose request for a hearing had been delayed for more than a year, sought in District Court a declaratory judgment to the effect that, under the exemption clause included in the 1962 Amendments, Lutrexin was not a "new drug" on and before October 10, 1962, and was thereby exempt from the requirement of evidence of effectiveness under the Amendments. Such action was dismissed on the ground that primary jurisdiction to resolve the issue of exemption under the Act rested with the Commissioner. No appeal was taken from this dismissal.

While this declaratory action was pending, the Commissioner issued his new regulations detailing the circumstances under which an applicant might secure a hearing on a proposal by the Commissioner for withdrawal of an effective NDA. By these regulations, the Commissioner was authorized to deny a hearing, "When it clearly appears from the data in the application and from the reasons and factual analysis in the request for the hearing that there is no genuine and substantial issue of fact which precludes the refusal to approve the application or the withdrawal of approval of the application, e. g., no adequate and well-controlled clinical investigations to support the claims of effectiveness have been identified, the Commissioner will enter an order on this data, making findings and conclusions on such data".¹¹ After the regulation had been legally promulgated, which was more than a year after the appellant had requested a hearing, the Commissioner directed the appellant's attention to these new regulations and suggested that it amend its request for a hearing to comply. Though it contended it had, by its earlier request, perfected its right to a hearing and was not obligated to amend its request, the appellant did, following the dismissal of its declaratory action, submit a considerable amount of clinical medical studies and investigations in support of the claim of effectiveness for its product by way of compliance with the new regulations. The Commissioner, however, dismissed the appellant's request for a hearing on the basis of such showing, finding (1) that its drug was a "new drug" requiring proof of effectiveness, and (2) that its showing of effectiveness was insufficient to demonstrate a "genuine and material issue of fact" under the test of "substantial evidence" as defined in the Amendments. On the basis of these findings it withdrew the approved NDA for Lutrexin. It is from this order that appeal has been taken.

I

The appellant's claim to an exemption for its drug is easily disposed of. We have held in a related case that a drug covered by a pre-1962 approved NDA, which had not been withdrawn under the procedure set forth in Section 505(e), is not entitled to the exemption granted under Section 107(c) (4) of the Amendments.¹² The appellant's NDA was outstanding and had not been legally withdrawn on October 10, 1962. It cannot accordingly claim the benefit of the exemption statute for its drug. While the appellant was entitled to have this issue resolved by the District Court, it was not prejudiced by, and cannot complain of, the refusal by the District Court to exercise jurisdiction. Nor, for that matter, did the appellant appeal and is accordingly without standing in this proceeding to challenge that dismissal.

II

The crucial issue in this case, however, is posed by the appellant's second contention and revolves about the requirement in the Act that, before the entry of a final order of withdrawal, the applicant be given an "opportunity for hearing". At such a hearing, the procedure adopted by the Commissioner allows the applicant to "produce evidence and arguments to show why approvals of (its drugs) * * * should not be withdrawn."^12a Of course, the Commissioner might, as he did by his regulations issued in 1970, provide for the denial of a hearing where it clearly appeared from the applicant's own showing there was no "genuine and substantial issue of fact" on which the claim of the applicant might be sustained. Ciba-Geigy Corp. v. Richardson (2d Cir. 1971) 446 F.2d 466, 468. It may be assumed that such regulation, when issued will apply to all pending applications. United States v. Storer Broadcasting Co. (1956) 351 U.S. 192, 205, 76 S.Ct. 763, 100 L. Ed. 1081. But, in applying this regulation and in making his determination thereunder, the Commissioner's discretion is not absolute. Neither due process nor the Administrative Practice Act permits an arbitrary denial in any case where it can be fairly said there are "genuine and substantial issues of fact" in dispute.¹³ Such a denial would, in addition, be violative of the Congressional purpose expressed in the provision for a hearing. And the courts must see that such Congressional purpose is not thwarted by administrative usurpation; or, as the Court said in Environmental Defense Fund, Inc. v. Ruckelshaus (1971), 142 U.S.App.D.C. 74, 439 F.2d 584, 596, the courts have "an obligation to ensure that the administrative standards conform to the legislative purpose * * *." Accordingly, only if it can be...