Bristol-Myers Squibb Co. v. Shalala, BRISTOL-MYERS

• Decision Date: 16 August 1996
• Docket Number: BRISTOL-MYERS,No. 95-5399,95-5399
• Citation: 91 F.3d 1493,320 U.S.App. D.C. 32
• Parties: SQUIBB COMPANY, Appellant, v. Donna E. SHALALA, Secretary of Health and Human Services, and David A. Kessler, M.D., Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1493

91 F.3d 1493

320 U.S.App.D.C. 32

BRISTOL-MYERS SQUIBB COMPANY, Appellant, v. Donna E. SHALALA, Secretary of Health and Human Services and David A. Kessler, M.D., Appellees.

No. 95-5399.

United States Court of Appeals, District of Columbia Circuit.

Argued March 22, 1996.

Decided Aug. 16, 1996.

Appeal from the United States District Court for the District of Columbia (No. 94cv01516).

Michael B. Waitzkin, Washington, DC, argued the cause for appellant. Terry S. Coleman, John D. Kiser and Matthew D. Peterson were on the briefs.

Howard S. Scher, United States Department of Justice, Washington, DC, argued the cause for appellee, with whom Douglas N. Letter, Litigation Counsel, and Eric H. Holder, Jr., United States Attorney, were on the brief.

Before: GINSBURG, RANDOLPH and TATEL, Circuit Judges.

Opinion for the Court filed by Circuit Judge GINSBURG.

GINSBURG, Circuit Judge:

Bristol-Meyers Squibb brought an action in the district court to challenge the regulations of the Food and Drug Administration that govern approval of a new generic drug based upon research paid for by the manufacturer of the "innovator" or "pioneer" drug with which the generic product is therapeutically interchangeable. The district court dismissed the company's complaint on the ground that the allegations therein did not satisfy the constitutional requirements for standing to sue in federal court, as explicated by the Supreme Court in Lujan v. Defenders of Wildlife, 504 U.S. 555, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). The district court subsequently denied the appellant's motion for leave to file an amended complaint intended to cure the standing problem. That was an error; we hold that the supplemental allegations in the amended complaint suffice to establish the appellant's standing.

BMS urges us, in the interest of economy, also to determine the merit of its claim as a matter of law, and the Secretary does not object. For the reasons stated below, we read the Food, Drug, and Cosmetic Act, as amended, in the same way the Secretary does. Accordingly, we remand this case to the district court with instructions to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) and to enter judgment for the appellees.

I. Background

The Food, Drug, and Cosmetic Act, as amended by the Drug Price Competition and Patent Term Restoration Act of 1984, provides that "[n]o person shall introduce or deliver for introduction into interstate commerce any new drug, unless [FDA] approval ... is effective with respect to such drug." 21 U.S.C. § 355(a). In order to obtain such approval, a drug manufacturer must ordinarily file a new drug application (NDA), pursuant to 21 U.S.C. § 355(b); if the new drug is a generic version of a "listed" (i.e., previously approved) drug, however, then the manufacturer may file an abbreviated new drug application (ANDA), pursuant to 21 U.S.C. § 355(j).

The principal advantage of securing approval under § 355(j) is that the applicant may rely upon research paid for by the manufacturer of the listed drug. An NDA for a pioneer drug submitted under § 355(b) must include test data demonstrating that the drug is safe and effective for one or more indicated uses. Section 355(j) allows the manufacturer of a generic drug to prove that its generic product is safe and effective by demonstrating its similarity to a pioneer drug already found by the FDA to be safe and effective. (The generic drug must contain the same active ingredients as the pioneer drug, but need not contain the same inactive ingredients. United States v. Generix Drug Corp., 460 U.S. 453, 454-55, 103 S.Ct. 1298, 1299-300, 75 L.Ed.2d 198 (1983)).

The purpose of § 355(j) is to promote competition, but not without limitation. The Act offers the manufacturer of a pioneer drug protection from the competition of generic drugs for a period of five years from the date upon which the FDA approves an NDA submitted under § 355(b). During that period no applicant (with an exception not relevant here) may submit an ANDA "which refers to the drug for which the [§ 355(b) ] application was submitted." § 355(j)(4)(D)(ii). In addition, and of more immediate concern:

If a supplement to an application approved under [§ 355(b) ] is approved ... and the supplement contains reports of new clinical investigations (other than bioavailability studies) essential to the approval of the supplement and conducted or sponsored by the person submitting the supplement, the Secretary may not make the approval of an application submitted under [§ 355(j) ] for a change approved in the supplement effective before the expiration of three years from the date of the approval of the supplement under [§ 355(b) ]....

§ 355(j)(4)(D)(iv).

The precise scope of the protection thus conferred upon the manufacturer of a pioneer drug is at issue in this dispute, but our resolution of that issue depends upon whether the Secretary has correctly construed another provision in the same section of the Act. That provision, § 355(j)(2)(A)(v), describes one of the ways in which a new generic drug product must resemble a pioneer drug if the manufacturer of the generic is to benefit from research undertaken in order to secure FDA approval of the pioneer: The § 355(j) applicant must

show that the labeling proposed for the new drug is the same as the labeling approved for the listed drug ... except for changes required because of differences approved under a petition filed under [§ 355(j)(2)(C) ] or because the new drug and the listed drug are produced or distributed by different manufacturers.

The FDA regulation implementing this provision, 21 C.F.R. § 314.94(a)(8)(iv), states:

Labeling (including the container label and package insert) proposed for the new drug product must be the same as the labeling approved for the reference listed drug, except for .... omission of an indication or other aspect of labeling ... accorded exclusivity under [§ 355(j)(4)(D)].

See also 21 C.F.R. § 314.127(a)(7) (grounds upon which FDA will deny ANDA).

BMS takes issue with the exception, arguing that it "virtually eliminate[s]" any benefit that the manufacturer of a pioneer drug might have obtained from the three-year exclusivity that § 355(j)(4)(D)(iv) provides with respect to supplemental indications. Under the regulation, the FDA will not reject an ANDA merely because the agency has approved, within the preceding three years, a supplemental indication for the pioneer drug upon which the new generic is based. The agency will not approve the generic version for the supplemental indication, but may approve it for others.

To illustrate, in its proposed supplemental complaint BMS alleged that it holds the marketing rights for the pioneer drug Capoten TM, generically known as "captopril." The FDA initially approved an NDA for the use of Capoten in treating hypertension. Based upon new clinical investigations, it has since approved two supplemental indications for use: one (in September 1993) for left ventricular dysfunction following myocardial infarction, and another (in January 1994) for diabetic nephropathy in patients with Type I insulin-dependent diabetes mellitus and retinopathy. Under the agency's interpretation of the Act, as manifested in the challenged regulations, the FDA could approve an ANDA for generic captopril for use in the treatment of hypertension five years after it approved the original NDA for Capoten; not until 1997, however, will the FDA approve the listing of diabetic nephropathy as an indication for use on the label of a generic version of Capoten.

BMS argues that § 355(j)(2)(A)(v) bars the FDA from approving any ANDA for generic captopril before 1997 if that application refers to research submitted to secure the approval of Capoten. Its argument is this: once the FDA has approved the listing of a supplemental indication on the label of a pioneer drug, the label of a generic version approved under § 355(j) less than three years later would necessarily include at least one fewer indication than the label approved for the pioneer drug. Section 355(j) prohibits that result, according to BMS, by requiring that the labels of the pioneer and of the generic version be "the same." Moreover, although the generic drug will not have been approved for the supplemental indication, physicians and pharmacists may--and in some cases state law or health insurance contracts require them to--use the generic product for the supplemental indication.

The FDA acknowledges that it "does not regulate ... the possible substitution of a generic drug for the pioneer by doctors or pharmacists." See Federal Trade Comm'n v. Simeon Mgmt. Corp., 391 F.Supp. 697, 706 (N.D.Cal.1975) (Act does not "interfere in or [ ] regulate the practice of medicine between the physician and the patient"); Legal Status of Approved Labeling for Prescription Drugs; Prescribing for Uses Unapproved by the Food and Drug Administration, 37 Fed.Reg. 16503 (1972) (Notice of Proposed Rulemaking) ("the new drug provisions apply only at the moment of shipment in interstate commerce and not to action taken subsequent[ly].... Once the new drug is in a local pharmacy ... the physician may, as part of the practice of medicine, lawfully ... vary the conditions of use from those approved in the package insert"). This explains why BMS considers it cold comfort that the FDA would withhold approval of a generic version of captopril for some indications but not others; once the FDA approves the sale of generic captopril for hypertension, the agency can offer BMS no assurance that physicians and pharmacists will not substitute it for Capoten in the treatment of diabetic nephropathy.

BMS first challenged the regulations by concurrently filing with the agency a citizen's petition, 21 C.F.R. § 10.30, and a petition for stay of action, 21 C.F.R. § 10.35. In the former, BMS asked the agency to repeal the offending regulations. In the latter, BMS...