Genus Lifesciences, Inc. v. Azar

• Decision Date: 15 September 2020
• Docket Number: Case No. 1:20-cv-00211 (TNM)
• Citation: 486 F.Supp.3d 450
• Parties: GENUS LIFESCIENCES, INC., Plaintiff, v. Alex M. AZAR II, et al., Defendants, Lannett Co., Inc., Intervenor-Defendant.
• Court: U.S. District Court — District of Columbia

486 F.Supp.3d 450

GENUS LIFESCIENCES, INC., Plaintiff,

v. Alex M. AZAR II, et al., Defendants,Lannett Co., Inc., Intervenor-Defendant.

Case No. 1:20-cv-00211 (TNM)

United States District Court, District of Columbia.

Signed September 15, 2020

Andrew D. Prins, John Richard Manthei, Philip Jonathan Perry, Ryan S. Baasch, Latham & Watkins LLP, Washington, DC, for Plaintiff.

Kathleen Braun Gilchrist, U.S. Department of Justice, Washington, DC, for Defendants.

David A. Hickerson, Lori Allison Rubin, Foley & Lardner LLP, Washington, DC, for Intervenor-Defendant.

MEMORANDUM OPINION

TREVOR N. McFADDEN, U.S.D.J.

In the pharmaceutical development arena, Congress created a "winner-take-all" prize. Under the Federal Food, Drug, and Cosmetic Act ("FDCA"), the first developer of a "new chemical entity" ("NCE")—a drug approved for the first time in the United States—receives a coveted period of exclusivity ("NCE exclusivity"). During that time, competing drugs generally cannot can enter the market.

Three years ago, Genus Lifesciences, Inc., won five-year NCE exclusivity for its new drug, Goprelto. But earlier this year, a competing drug sponsored by Lannett Co., Numbrino, entered the market.

Genus now cries foul. It claims that the U.S. Food and Drug Administration ("FDA") infringed on its exclusivity period when it approved Numbrino. It believes that under the FDCA, it is entitled to a five-year period of complete market exclusivity, barring all approval and submission of applications for competing drugs. FDA and Lannett, on the other hand, claim that everything is aboveboard. FDA explains that while Genus's exclusivity period prohibits FDA from accepting any new competing drug applications, it does not bar it from approving applications, like Lannett's, that were already in the approval process.

The Court agrees with FDA that Genus's NCE exclusivity does not cover approvals. But it disagrees with the agency's reasoning. The FDCA prescribes timelines for approval of applications like Lannett's based on the type of patent certification in the application. FDA admits that disregarded these timelines. Since the Court finds that FDA misinterpreted the FDCA, the Court's inquiry stops here for now.

I.

A.

Pharmaceutical companies may market new drugs only with FDA approval. See 21 U.S.C. § 355(a). Developing and seeking approval of a pioneer drug often involves much time and money. A company's new drug application ("NDA") to FDA must contain "full reports of investigations which have been made to show whether or not such drug is safe for use and whether such drug is effective in use." Id. § 355(b)(1). Most of those reports "rely in large measure on clinical trials with human subjects" and "several phases of clinical testing," often spanning years. See Abigail All. for Better Access to Dev. Drugs v. Von Eschenbach , 495 F.3d 695, 697–98 (D.C. Cir. 2007).

To streamline the approval process for some drugs, Congress enacted the Hatch-Waxman Amendments to the FDCA. See Pub. L. No. 98-417, 98 Stat. 1585 (1984). These amendments created two abbreviated pathways to new drug approval.

First, a company seeking to market a generic drug can submit an abbreviated new drug application ("ANDA"), which "piggy-back[s] on the brand's NDA." See Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S , 566 U.S. 399, 405, 132 S.Ct. 1670, 182 L.Ed.2d 678 (2012) (citing 21 U.S.C. § 355(j) ). "Rather than providing independent evidence of safety and efficacy, the typical ANDA shows that the generic drug has the same active ingredients as, and is biologically equivalent to, the brand-name drug." Id.

A second streamlined application option, relevant here, is a 505(b)(2) application. See 21 U.S.C. § 355(b)(2) (codifying Section 505(b)(2) of the FDCA). A 505(b)(2) applicant must show that its drug meets the "same safety and effectiveness standard[s] as a stand-alone NDA" (i.e. , a 505(b)(1) application). Defs.’ Mem. at 13, ECF No. 30-1.¹ Yet "unlike a stand-alone NDA, which relies entirely on studies conducted by its applicant, a ‘505(b)(2) application’ may rely on a combination of the applicant's own studies and other sources, such as published reports of studies and the Agency's findings of safety and/or effectiveness for one or more previously approved drugs, to meet the approval requirements." Id. (citing 21 U.S.C. § 355(b)(2) ).

FDA regulations outline the 505(b)(2) application process. Within 60 days of an applicant submitting an NDA, FDA conducts a filing review to make "a threshold determination that the NDA is sufficiently complete to permit a substantive review." 21 C.F.R. § 314.101(a)(1). This review determines whether the application on its face includes all the required information, is in the correct form, and whether some other drug's exclusivity period blocks approval or submission. Id. § 314.101(a)(1), (d) – (e). If FDA files the application, it notifies the applicant and a 180-day review period begins to run. Id. § 314.101(a)(2). If, however, it determines that the application is deficient, the applicant must amend and resubmit the NDA before FDA will substantively review it. Id. § 314.101(a)(3).

Once FDA files an NDA, it conducts a substantive review of the application to determine whether it can approve the drug. If, during this review, it "determines that [it] will not approve the application or abbreviated application in its present form," it issues a "Complete Response Letter" ("CRL"). Id. § 314.110(a). This letter describes the NDA's deficiencies and "recommend[s] actions that the applicant might take to place the application or abbreviated application in condition for approval." Id. An applicant receiving a CRL has three options: it may (1) "[r]esubmit the application or abbreviated application, addressing all deficiencies identified in the complete response letter" (which begins a new review cycle period); (2) "[w]ithdraw the application"; or (3) "[r]equest opportunity for hearing." Id. § 314.110(b)(1)–(3).

Once FDA determines that an application meets all statutory requirements, it will approve the NDA and send the applicant an approval letter. Id. § 314.105. Approval of a 505(b) application—whether an abbreviated or stand-alone NDA—gives the "first-in-time innovator" a "period of exclusivity." Otsuka Pharm. Co. v. Price , 869 F.3d 987, 990 (D.C. Cir. 2017) (citing 21 U.S.C. § 355(c)(3)(E)(ii)–(iv) ).

The main issue here is the breadth of that exclusivity period.

B.

Doctors have used cocaine hydrochloride ("HCI") topical solutions in nasal and sinus surgeries

for decades, but FDA had never approved a drug that used it as an active ingredient. J.A. at 245, ECF No. 52. Beginning in 2008, Lannett began to market an unapproved cocaine HCI topical solution. Id. at 1075. The next year, Lannett discussed a proposal with FDA to submit a 505(b)(2) application for its drug. Id. at 607. Meanwhile, in 2013, Genus met with FDA to discuss developing a similar drug. Id. at 7–8.

In November 2016, Genus submitted an application to FDA for Goprelto, a cocaine HCI topical solution. Id. at 93. FDA reviewed the application and found it "sufficiently complete to permit a substantive review" and accepted it for filing. Id. at 122. It noted, though, that it had some substantive concerns about Goprelto's trials, labeling, and data, that Genus would need to address before FDA could approve the drug. Id. at 122–30. Genus addressed these concerns and FDA approved Goprelto on December 14, 2017. Id. at 577.

While FDA was conducting a substantive review of Genus's application, Lannett submitted its 505(b)(2) application for its cocaine HCI topical solution, Numbrino. On November 29, 2017—15 days before approving Goprelto—FDA filed Lannett's application. Id. at 840, 847.

During FDA's substantive review of Lannett's application, FDA issued Lannett a CRL, explaining that Lannett would need to submit additional data for it to approve Numbrino. Id. at 1182. As Lannett developed a response to this CRL, Genus filed two citizen petitions, urging FDA to rescind its acceptance of Lannett's application or to stop accepting additional submissions from Lannett, given Genus's NCE exclusivity. See id. at 1800, 1928. FDA denied both petitions. See id. at 1982, 2027. It approved Numbrino in January 2020. Id. at 1323.

Genus now brings its arguments here. See Compl., ECF No. 1. It claims that FDA's decision to approve Numbrino violated the FDCA and its own regulations. Id. at 26–28. It also argues that FDA applied inconsistent standards of review to Genus and Lannett's NDAs. Id. at 25–26. Lannett intervened, see Min. Order (Feb. 18, 2020), and the parties cross-moved for summary judgment, see Pl.’s Mot., ECF No. 24; Defs.’ Cross-Mot., ECF No. 30; Lannett's Cross-Mot., ECF No. 31.

After reviewing the parties’ motions, the Court requested supplemental briefing on the proper interpretation of the relevant FDCA exclusivity provision, 21 U.S.C. § 355(c)(3)(E)(ii). See Order, ECF No. 53. The parties submitted supplemental briefs, see Pl.’s Suppl., ECF No. 57; Defs.’ Suppl., ECF No. 56; Lannett's Suppl., ECF No. 55, and this matter is now ripe.²

II.

The Court reviews FDA's decision to approve Numbrino under the Administration Procedure Act's ("APA") standards of review. Normally, a court will grant summary judgment when there "is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). But Rule 56 ’s standards do not apply to a court's review of a final agency action under the APA. See Sierra Club v. Mainella , 459 F. Supp. 2d 76, 89 (D.D.C. 2006). In these cases, summary judgment "serves as the mechanism for deciding, as a matter of law, whether the agency action is supported by the administrative record and otherwise consistent with the APA standard of review." Id. at 90 (citing Richards v. INS , 554 F.2d 1173, 1177 & n.28 (D.C. Cir. 1977) ).

Under the APA, the Court will set aside FDA's decision only if it is "arbitrary, capricious, an abuse of...