Durovic v. Richardson, 71-1658.

• Decision Date: 25 April 1973
• Docket Number: No. 71-1658.,71-1658.
• Citation: 479 F.2d 242
• Parties: Marko DUROVIC, an Individual and also known as Marko Durovic, formerly d/b/a Duga Laboratories et al., Plaintiffs-Appellants, v. Elliot RICHARDSON, Secretary of Health, Education & Welfare, and Charles C. Edwards, Commissioner of Food & Drugs, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

479 F.2d 242 (1973)

Marko DUROVIC, an Individual and also known as Marko Durovic, formerly d/b/a Duga Laboratories et al., Plaintiffs-Appellants, v. Elliot RICHARDSON, Secretary of Health, Education & Welfare, and Charles C. Edwards, Commissioner of Food & Drugs, Defendants-Appellees.

No. 71-1658.

United States Court of Appeals, Seventh Circuit.

Argued June 20, 1972.

Decided April 25, 1973.

As amended May 18, 1973.

COPYRIGHT MATERIAL OMITTED

Anna R. Lavin, Chicago, Ill., Solomon H. Friend, New York City, for plaintiffs-appellants.

James R. Thompson, U. S. Atty., William T. Huyck, James C. Murray, Asst. U. S. Attys., Chicago, Ill., and Cheryl S. Karner, Atty., Consumer Division Dept. of Justice, Washington, D. C., for defendants-appellees.

Before FAIRCHILD, CUMMINGS, and STEVENS, Circuit Judges.

FAIRCHILD, Circuit Judge.

Plaintiffs appeal from an unfavorable declaratory judgment entered on defendants' motion for summary judgment in plaintiffs' action for declaratory relief.

Plaintiffs are interested in the manufacture and distribution of the "drug product called Krebiozen as an agent for use in the management of malignant tumors". Defendants are charged with administration of the Federal Food, Drug and Cosmetic Act, as amended. 21 U.S. C. § 355(a) prohibits the introduction of a "new drug" into interstate commerce unless an approval of a new drug application under § 355(b) (an NDA) is effective.

21 U.S.C. § 335 calls for notice to a proposed defendant before a violation is reported to a United States attorney. Such notice was given to plaintiffs. Although § 335 also calls for an opportunity¹ administratively for presentation of views, it does not contemplate a proceeding leading to a final administrative order, subject to statutory judicial review. As a result of the notice, and, apparently, defendants' rejection of views that sale of Krebiozen in interstate commerce required no effective NDA, plaintiffs brought this action. They sought a declaration (1) that Krebiozen is not a new drug by reason of the operation of a "grandfather" provision, enacted in 1962, in other words, that Krebiozen was commercially sold or used and not a "new drug" under the law just before the 1962 amendments, or, alternatively (2) that if Krebiozen was a new drug, one or more NDA's became effective, one in 1954 and one in 1961.

Each side moved for summary judgment. The district court entered judgment that "Krebiozen is now and has always been a new drug within the meaning of the statutory definition for which no approved New Drug Application is now or has ever been effective." Findings and conclusions are reported at 327 F.Supp. 386. Plaintiffs appealed. We affirm.

Since summary judgment was granted, the questions on appeal are whether there was no genuine issue as to any material fact and whether the propositions declared were correct as a matter of law.

Plaintiffs' alternative claims, that of grandfather clause exemption because Krebiozen was not a new drug under the 1938 law, and that of an effective NDA under the 1938 law are inconsistent. Although plaintiffs chose to press the grandfather clause claim first, chronology makes it more logical to take up their claims in the opposite order.

I. The 1954 and 1961 NDA's.

Plaintiffs' activity in the United States with Krebiozen, previously unknown, began in 1949-1951. Undeniably it was then a new drug as defined in sec. 201(p) of the 1938 act, 52 Stat. 1040, then in force. Under sec. 505(a), unless an NDA was on file and effective, a new drug could not be introduced into interstate commerce except under regulations covering solely investigational use.

On April 15, 1954, consistently with the new drug status of Krebiozen, plaintiff Marko Durovic tendered an NDA. On May 25, 1954, the Secretary replied by letter stating that the application was incomplete in two particulars and accordingly that it may not be filed.

Plaintiffs contend that this NDA became effective by operation of law, 60, or at most 180, days after receipt. They rely on sec. 505(b) and (c). If this NDA were deemed an application filed when received, within the meaning of (b), (c) would indeed cause it to become effective on the sixtieth day after the filing unless postponed by the Secretary to a time not more than 180 days after filing. Clearly there were no notice and hearing under (d) which would support an order refusing to permit the NDA to become effective, nor under (e) which would support an order suspending effectiveness.

Defendants' position is that a document purporting to be an NDA, received, but deemed incomplete, is not a filed application under (b), so as to become effective by lapse of time under (c).

Sec. 701(a) vested authority in the Secretary to promulgate regulations for the efficient enforcement of the act. In 1954, 21 C.F.R. § 1.110 provided that an application shall not be accepted for filing if incomplete on its face by omission of required material, and called for notice to the applicant. We consider the regulation a reasonable means of determining the fact and time of filing an application and preventing the triggering of the automatic operation of the statute where an intended application is incomplete under the statute. Notice of incompleteness, conforming to the regulation, was given. It does not appear either that Durovic amended the application so as to supply the omitted information, which would, under the regulation, have resulted in a filing date at the time of receipt of the amendment, if then complete, or that he challenged the refusal to accept for filing in any legal proceeding.

On March 27, 1961, Dr. Stevan Durovic, another plaintiff, submitted another NDA. This act was consistent with continued new drug status of Krebiozen. The application was supplemented March 31 and April 13. On May 23, 1961, the Director of the Division of New Drugs replied by letter stating that the application as amended was regarded as received April 13, that a preliminary review showed the NDA was incomplete in specified areas, but that there would be a further letter. On June 9, the Director wrote an eight page letter listing areas in which the NDA was incomplete and inadequate, and stating that, accordingly, it may not be filed.

The applicable regulation at this time was 21 C.F.R. 130.5. It was similar to the earlier one in all material respects, but also provided a procedure whereby the applicant, if he disputed the finding of incompleteness, could request filing over protest, and thus set the statutory machinery in motion. There is no claim that Dr. Durovic made such request.

We consider the regulations valid and that the agency complied with them. Accordingly we conclude that neither the 1954 nor 1961 NDA was a filed application so as to cause it to become effective by operation of law with lapse of time.

II. The "grandfather" claim.

Until 1962 the controlling definition of a new drug depended upon the lack of general recognition among experts that it was "safe" for use according to its labeling. The Drug Amendments of 1962² enlarged the required general recognition to "safe and effective". 21 U. S.C. § 321(p), as amended in 1962, reads in material part:

"(p) The term `new drug\' means—

(1) Any drug . . . the composition of which is such that such drug is not generally recognized, among experts qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, as safe and effective for use under the conditions prescribed, recommended, or suggested in the labeling thereof, . . . or

(2) Any drug . . . the composition of which is such that such drug, as a result of investigations to determine its safety and effectiveness for use under such conditions, has become so recognized, but which has not, otherwise than in such investigations, been used to a material extent or for a material time under such conditions." (We have italicized the words added by the Drug Amendments of 1962. All the other material quoted appeared in the 1938 act.)

The Drug Amendments of 1962 were approved October 10, 1962. Sec. 107(c) (4), 76 Stat. 789, a grandfather clause, provided:

"In the case of any drug which, on the day immediately preceding the enactment date, (A) was commercially used or sold in the United States, (B) was not a new drug as defined by section 321(p) of the basic Act as then in force, and (C) was not covered by an effective NDA the amendments to section 321(p) made by this Act shall not apply to such drug when intended solely for use under conditions prescribed, recommended, or suggested in labeling with respect to such drug on that day."

The basic argument on behalf of plaintiffs is that on October 9, 1962, Krebiozen (A) was commercially used and sold in the United States, (B) was generally recognized as "safe" in the sense that it was non-toxic, and (C) was not, assuming their alternative argument be rejected, covered by an effective NDA. The basic argument of the government is (1) that, properly construed, the law before the 1962 amendments defined a drug which was to be used for treatment of a life-threatening disease as a new drug unless generally recognized as effective as well as otherwise safe; (2) that Krebiozen was not so recognized; (3) that its composition was not sufficiently known to enjoy general recognition as "safe" even in the narrow sense; i. e., non-toxic; and (4) that since Krebiozen was sold only for investigational use, it was not commercially used or sold within the meaning of the grandfather clause.

Activities of plaintiffs have been inconsistent with their present claim that Krebiozen had become a "recognized" rather than a "new" drug by October 9, 1962. The presentation of an NDA in 1954 and in 1961 implied that Krebiozen was a new drug on those dates. In June, 1963, plaintiff Stevan Durovic submitted a "Notice of Claimed Investigation Exemption" (IND) which, although withdrawn after a month, carried the same implication. In ...