Abbott Laboratories v. Young

• Citation: 920 F.2d 984
• Decision Date: 07 December 1990
• Docket Number: Nos. 89-5183,88-5260,s. 89-5183
• Parties: , 17 U.S.P.Q.2d 1027 ABBOTT LABORATORIES, Appellant, v. Frank D. YOUNG, Dr., Commissioner, Food and Drug Administration.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

Page 984

920 F.2d 984

287 U.S.App.D.C. 190, 17 U.S.P.Q.2d 1027

ABBOTT LABORATORIES, Appellant, v. Frank D. YOUNG, Dr., Commissioner, Food and Drug Administration.

Nos. 89-5183, 88-5260.

United States Court of Appeals, District of Columbia Circuit.

Argued Sept. 7, 1990.

Decided Dec. 7, 1990.

Harold D. Murry, Jr., with whom Robert P. Reznick was on the brief, for appellant. Bryan Jay Yolles, Washington, D.C., also entered an appearance, for appellant.

Irene M. Solet, Attorney, Dept. of Justice, with whom Stuart M. Gerson, Asst. Atty. Gen., Jay B. Stephens, U.S. Atty., and Anthony J. Steinmeyer, Washington, D.C., Atty., Dept. of Justice, were on the brief, for appellee. Jacqueline H. Eagle, Atty., Rockville, Md., Dept. of Justice, also entered an appearance, for appellee.

Peter R. Mathers, Washington, D.C., for amicus curiae Par Pharmaceutical, Inc., urging affirmance.

Before MIKVA, EDWARDS, and SILBERMAN, Circuit Judges.

Opinion for the Court filed by Circuit Judge SILBERMAN.

Dissenting Opinion filed by Circuit Judge EDWARDS.

SILBERMAN, Circuit Judge:

This is an unusual case in which both the appellant and the government present us with unreasonable interpretations of a statute we think ambiguous. We therefore direct the district court to remand to the agency for reconsideration.

I.

In 1984, Congress enacted the Drug Price Competition and Patent Term Restoration Act, Pub.L. No. 98-417, 98 Stat. 1585 (1984) (the "Hatch-Waxman Amendments"), amending the Federal Food, Drug, and Cosmetics Act, 21 U.S.C. Secs. 301-392. The statute created a new system for protecting both the interests of drug manufacturers who produce new drugs and the interests of generic drug manufacturers and their consumers. Facing the classic question of the appropriate trade-off between greater incentives for the invention of new products and greater affordability of those products, Congress struck a balance between expediting generic drug applications and protecting the interests of the original drug manufacturers. See H.R.REP. No. 98-857 (Pt. 1), 98th Cong., 2d Sess. 14, 15, reprinted in 1984 U.S.CODE CONG. & ADMIN.NEWS 2647, 2648. It reserved a longer period of market exclusivity for newly developed drugs than for drugs for which the approval process had already been completed in a prior application. The statute gives the original drug producer a specified period of market exclusivity depending primarily on the pharmaceutical novelty of a drug.

This case requires us to determine the scope of the exclusivity provisions, in particular the meaning of the phrase "active ingredient (including any ester or salt of the active ingredient)." 21 U.S.C. Sec. 355(j)(4)(D)(i) and (v). The full statutory language is set out in the margin, but the key parts of the two relevant subsections of the statute state that a two year exclu In 1978 the Food and Drug Administration ("FDA") approved for marketing Abbott Laboratories' ("Abbott") new drug application for Depakene, an anticonvulsant drug prescribed for control of epileptic and other seizures. The chemical ingredient of Depakene that performs the drug's therapeutic function is valproic acid. Valproic acid is both an "active ingredient" (the substance prior to introduction into the human body) and an "active moiety" (the substance that creates the actual therapeutic effect within the body). In 1982, the FDA approved Abbott's new drug application ("NDA") for another drug, Depakote, also prescribed for control of seizures. In its Depakote NDA, Abbott relied exclusively on the safety and efficacy findings established in the course of the prior Depakene application, because the "active moiety" of Depakote was the very same valproic acid. Depakote's active ingredient, we are told, is divalproex sodium which is converted into the valproic acid within the human body. Apparently divalproex sodium presents fewer gastrointestinal side effects than the valproic acid. Although the issue was disputed, the agency found divalproex sodium to be a salt of valproic acid. ² In simple terms, a salt is a chemical compound created when the "parent" substance reacts with another chemical. A salt is "formed when the hydrogen of an acid is replaced by a metal or its equivalent." Glaxo Operations UK Ltd. v. Quigg, 894 F.2d 392, 393 n. 3 (Fed.Cir.1990), citing The Condensed Chemical Dictionary 907 (G. Hawley rev. 10th ed. 1981). FDA determined that Depakote could only be granted a two year period of market exclusivity pursuant to the statute because it was a salt of the active ingredient of the prior-approved Depakene. On August 29, 1986 Abbott submitted

                sivity period attaches to a drug whose new drug application ("NDA") "includes an active ingredient (including any ester or salt of the active ingredient) that has been approved in another [NDA]," 21 U.S.C. Sec. 355(j)(4)(D)(v) and a ten year exclusivity period attaches to a drug whose NDA has "no active ingredient (including any ester or salt of the active ingredient) of which has been approved in any other [NDA]," 21 U.S.C. Sec. 355(j)(4)(D)(i). 1   Congress thereby sought to encourage innovation in the drug industry, by rewarding a pioneer drug with a ten year exclusivity, while protecting consumers from unduly high prices by refusing to give a long period of market exclusivity to drugs which required no new research effort
                a Citizen Petition to the FDA pursuant to 21 C.F.R. Sec. 10.30 requesting a ten year exclusivity.  The FDA denied Abbott's petition, Abbott Labs, Docket No. 86P-0367 (FDA February 11, 1988), and Abbott filed a suit in the district court.  It appeals from a judgment below which affirmed the agency decision.  Abbott Labs. v. Young, 691 F.Supp. 462 (D.D.C.1988)
                

II.

Pursuant to the Supreme Court's guidance in Chevron, we must first determine whether Congress manifested an "unambiguously expressed intent" that resolves this dispute over the statute's meaning. Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984). Of course, the language of the statute itself is always the best indication of congressional intent. Abbott argues, with the support of the Federal Circuit, that the "plain meaning" of the language supports its interpretation. Both Abbott and the Federal Circuit, see Glaxo, 894 F.2d at 393-94, focus only on the phrase "active ingredient," claiming it has a well understood meaning. The district court, on the other hand, thought that the usage of the reference words "which," "of which," and "that" in sections (i) and (v) created an overlap and therefore an irreconcilable conflict between the sections because the same active ingredient was ostensibly covered by both provisions, resulting in different periods of exclusivity mandated for the same substance. See 691 F.Supp. at 472. The government disavows the district judge's perceived irreconcilable conflict. ³ Instead, the government reads the parenthetical phrase ("including any ester or salt of the active ingredient") to permit an interpretation of "active ingredient" that includes even more than salt or ester derivatives. According to the government, that phrase can be interpreted to mean that Congress was using the term active ingredient loosely, possibly as a virtual synonym for active moiety.

Indeed, it was at least suggested in an agency letter, subsequent to the decision in Abbott's case, that the phrase "active ingredient" itself, even without the parenthetical, could be interpreted to include active moiety notwithstanding that the FDA construes that term narrowly in another section of the act, 335(j)(4)(D). See McNeil Pharmaceutical 6, Docket No. 87P-0339 (FDA July 26, 1989). The agency appears to contend that the different purpose of that other section 335(j)(4)(D) (providing for expedited approval of generic drugs so agency caution is indicated) justifies a different interpretation of the same phrase. We note that it is not impermissible under Chevron for an agency to interpret an imprecise term differently in two separate sections of a statute which have different purposes. See National Ass'n of Casualty and Surety Agents v. Board of Governors of the Fed. Reserve Sys., 856 F.2d 282, 287 (D.C.Cir.1988) (upholding different agency interpretations of same phrase when based on reasonable explanation), cert. denied, 490 U.S. 1090, 109 S.Ct. 2430, 104 L.Ed.2d 987 (1989); Comite Pro Rescate v. Sewer Auth., 888 F.2d 180, 187 (1st Cir.1989) (same), cert. denied, --- U.S. ----, 110 S.Ct. 1476, 108 L.Ed.2d 613 (1990). But we cannot consider whether active ingredient is such a term because the agency did not in its decision on Abbott's application employ this theory.

Putting aside for a moment the relative merits of the various constructions offered, we first conclude the language is ambiguous as it relates to the issue before us. The parenthetical phrase ("including any ester or salt of the active ingredient") can refer to either the active ingredient of the original approved drug or to the active ingredient in the new drug, depending on how "the" in the parenthetical and the words surrounding the parenthetical--"no active ingredient ... of which has been approved"--is interpreted. In other words, the definition of an active ingredient as including both the active ingredient and an ester or salt of the active ingredient can In this section of the Act, Congress was concerned with defining the chemical entity on which a subsection (j) (generic drug) application is based. ⁴ When Congress used the definition "an active ingredient (or the salt or ester of the active ingredient)," Sec. 355(j)(4)(D)(v) (emphasis added), that definition arguably referred to all the subsection (b) applications in question. The FDA's authorization to approve a generic drug (subsection (j) application) depends on its relationship to all original drugs (subsection (b) applications). Therefore, Congress may have intended for its...