Apotex, Inc. v. Food & Drug Admin.

• Decision Date: 06 June 2006
• Docket Number: No. 06-5105.,06-5105.
• Citation: 449 F.3d 1249
• Parties: APOTEX, INC., Appellant v. FOOD & DRUG ADMINISTRATION, et al., Appellees Teva Pharmaceuticals USA, Inc., et al., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1249

449 F.3d 1249

APOTEX, INC., Appellant v. FOOD & DRUG ADMINISTRATION, et al., Appellees Teva Pharmaceuticals USA, Inc., et al., Intervenors.

No. 06-5105.

United States Court of Appeals, District of Columbia Circuit.

June 6, 2006.

Appeal from the United States District Court for the District of Columbia (No. 06cv00627).

Jay P. Lefkowitz, Steven A. Engel, John C. O'Quinn, and Michael D. Shumsky filed the motion for summary affirmance and the reply thereto for intervenor Teva Pharmaceuticals USA, Inc.

Arthur Y. Tsien, William A. Rakoczy, and Christine J. Siwik filed the opposition for appellant.

Before: HENDERSON, TATEL, and BROWN, Circuit Judges.

Opinion for the Court filed PER CURIAM.

On Motion for Summary Affirmance

PER CURIAM.

This case is the latest flare-up in a long-running dispute between the Food and Drug Administration (FDA) and several generic drug manufacturers as to what qualifies under the Hatch-Waxman Act as "a decision of a court ... holding [a challenged] patent ... to be invalid or not infringed." 21 U.S.C. § 355(j)(5)(B)(iv) (2000) (amended 2003). The stakes are high: any such decision triggers the start of a 180-day exclusivity period during which one generic manufacturer — the first to file an abbreviated new drug application (ANDA) with FDA — can market its product without competition from other manufacturers. We assume familiarity with this complicated regulatory scheme, which we have described in detail elsewhere. See Mova Pharm. Corp. v. Shalala, 140 F.3d 1060, 1063-65 (D.C.Cir.1998).

The present dispute arises out of a 1998 FDA decision finding that a district court order dismissing a patent suit for lack of subject matter jurisdiction could not qualify as a "court decision" sufficient to trigger the exclusivity period. An aggrieved generic drug manufacturer, Teva Pharmaceuticals, challenged FDA's decision, which we set aside because "FDA[] fail[ed] to explain adequately its refusal to treat the ... dismissal as a triggering `court decision.'" Teva Pharms., USA, Inc. v. FDA, 182 F.3d 1003, 1012 (D.C.Cir.1999) (Teva I). We flagged three issues for FDA's attention. First, and most important, we observed that "the significance of a court's `decision' or `holding' often lies in its preclusive effect," id. at 1008, and pointed out that

the ... dismissal [for lack of jurisdiction] appears to meet the requirements of a triggering `court decision' because [the] court had to make a predicate finding with respect to whether [the patent holder] would ever sue [the generic drug manufacturer] for infringement in order to conclude that there was no case or controversy between the parties.... On remand, of course, the FDA will have the opportunity to explain why it fails to meet them.

Id. at 1009. Second, we noted that FDA never explained why a decision holding a patent unenforceable was a triggering court decision, but that a dismissal based on a finding of unenforceability was not. Id. at 1009-10. And third, we explained that FDA's position appeared to conflict with an internal agency guidance document as well as Granutec, one of the agency's earlier decisions. See Granutec, Inc. v. Shalala, No. 97-1873, 1998 WL 153410 (4th Cir. Apr.3, 1998) (reviewing FDA's Granutec decision). Teva I, 182 F.3d at 1010-11.

On remand, FDA reached the same conclusion. This time around, however, it justified its decision by establishing a hard-and-fast rule: the agency will never look beyond the face of a court order to ascertain whether it qualified as a triggering court decision. Because a dismissal for lack of subject matter jurisdiction does not, on its face, make any "holding" on the invalidity, noninfringement, or unenforceability of a patent, FDA found that the dismissal did not trigger exclusivity. As an "explanation" in support of this rule, FDA submitted a short affidavit from Douglas Sporn, then director of the Office of Generic Drugs. In his affidavit, Sporn gave just one reason for the new rule, namely, that a more sophisticated inquiry "could place an unbearable burden upon [FDA] staff and would require a substantial use of [FDA]'s limited resources" because "[FDA] lacks the expertise to make accurate determinations about the legal effect, such as estoppel, of representations relating to patents that are not embodied in a court decision." Sporn Aff. at 6, reprinted in Tsien Decl. Ex. F. We rejected this self-serving justification in Teva II, explaining that "FDA did not meaningfully address [the] question [posed in Teva I] on remand." Teva Pharms., USA, Inc. v. FDA, No. 99-5287, 2000 WL 1838303, at *1 (D.C.Cir. Nov.15, 2000) (Teva II).

Several years later, Teva filed the first ANDA to market a generic version of Pravachol, a Bristol-Myers Squibb Co. (BMS) product, in ten, twenty, and forty milligram tablets. BMS's patent on the Pravachol molecule expired on April 20, 2006, at which point Teva expected to roll out its product and take advantage of its 180-day exclusivity period. But one of Teva's competitors had other plans. In an effort to trigger Teva's 180-day exclusivity period long before Teva could market its generic product, Apotex, Inc., appellant herein, filed suit against BMS in the Southern District of New York in October 2003 seeking a declaratory judgment that its own generic version of Pravachol did not violate various BMS patents. Although BMS moved to dismiss the complaint for lack of subject matter jurisdiction, BMS and Apotex ultimately resolved the dispute by agreeing to a "stipulation and order" stating that BMS had no intention of suing Apotex and that the complaint should be dismissed "for lack of subject matter jurisdiction." Stipulation & Order at 3, Apotex Inc. v. Bristol-Myers Squibb Co., No. 04 CV 2922 (S.D.N.Y. July 23, 2004), reprinted in Tsien Decl. Ex. I. The district court signed the "stipulation and order" on July 23, 2004.

Apotex then asked FDA whether the signed stipulation qualified as a triggering court decision. Believing itself bound by substantive holdings it saw in Teva I and Teva II, FDA replied that the signed stipulation did qualify and that Teva's 180-day exclusivity period had long since run its course. Determined not to lose its exclusivity period, Teva filed suit challenging FDA's decision. In Teva Pharmaceuticals USA, Inc. v. FDA, 441 F.3d 1, 5 (D.C.Cir. 2006) (Teva III), we held that "FDA mistakenly thought itself bound by our decisions" and that its "error render[ed] its decision arbitrary and capricious."

On remand from Teva III, FDA reversed itself, finding Apotex's "stipulation and order" insufficient to trigger Teva's 180-day exclusivity. Justifying this reversal, it re-adopted its earlier rule that a triggering "court decision" must include an "actual `holding' ... evidenced by language on the face of the court's decision showing that the determination of invalidity, noninfringement, or unenforceability has been made by the court." Letter from Gary Buehler, Dir., Office of Generic Drugs, to Tammy McIntire, Apotex Corp. 2 (Apr. 11, 2006), reprinted in Tsien Decl. Ex. A (Buehler Letter). Given the vagaries of patent law and FDA's lack of expertise in patent matters, the agency explained that inquiring into the estoppel effects of representations embodied in district court opinions would spawn litigation and lead to unpredictability in the marketplace. Concluding that "[i]t is in the public's interest, as well as FDA's own interest, to have exclusivity triggering determinations governed by a legal regime that is clear and easily administered," id. at 14, FDA found that the "stipulation and order" never triggered the 180-day exclusivity period.

Apotex filed suit challenging FDA's decision as arbitrary and capricious, and the district court granted Teva's motion to intervene. Apotex then moved for a temporary restraining order and a preliminary injunction forbidding FDA from allowing Teva to begin exclusive marketing of a generic version of Pravachol. The district court denied the motion, reasoning that Apotex had no chance of prevailing on the merits:

Not only did the agency's fifteen-page, single-spaced remand decision thoughtfully deconstruct the multifaceted implications of the estoppel and holding-on-the-merits approaches, but it also sufficiently addressed each of the three concerns raised in Teva I and recalled in Teva III. There is no "want of reasoned decisionmaking" here.

Apotex, Inc. v. FDA, No. 06-cv-00627, slip op. at 29-30 (D.D.C. Apr. 19, 2006).

Apotex now appeals, and Teva has moved for summary affirmance. On April 24, 2006 we denied Apotex's request for a stay pending appeal. Apotex, Inc. v. FDA, No. 06-5105 (D.C.Cir. Apr.24, 2006). We now summarily affirm the district court's refusal to grant the preliminary injunction.

Apotex argues that "FDA's decision merely regurgitates the same tired explanations and rationales that this Court previously rejected" in Teva II, Apotex's Emergency Mot. for Injunctive Relief Pending Appeal 6, and that therefore it has a strong likelihood of demonstrating the decision's unreasonableness. We disagree.

Apotex correctly points out that we rejected FDA's previous effort to adopt the rule that a holding of invalidity, noninfringement, or unenforceability must be evident on the face of a court order. See Teva II, 2000 WL 1838303. But we never suggested such a rule was untenable; rather, we found that it "fail[ed] for want of reasoned decisionmaking." Id. at *2. In sharp contrast to the decision at issue in Teva II, FDA's rejection of Apotex's "stipulation and order" as a triggering court decision addressed concerns identified in Teva I. Indeed, FDA provided entirely new justifications for declining to look beyond the face of a court order. To be sure, those justifications share a common premise with the drain-on-resources rationale laid out in the Sporn affidavit — that "applying the estoppel standard articulated by the Teva I court would often require FDA to resolve...