John Doe, Inc. v. Drug Enforcement Admin.

• Decision Date: 27 April 2007
• Docket Number: No. 06-1270.,No. 06-5201.,06-1270.,06-5201.
• Parties: JOHN DOE, INC., Petitioner v. DRUG ENFORCEMENT ADMINISTRATION, Respondent.
• Court: U.S. Court of Appeals — District of Columbia Circuit

484 F.3d 561

JOHN DOE, INC., Petitioner v. DRUG ENFORCEMENT ADMINISTRATION, Respondent.

No. 06-1270.

No. 06-5201.

United States Court of Appeals, District of Columbia Circuit.

Argued March 12, 2007.

Decided April 27, 2007.

On Petition for Review of an Order of the United States Drug Enforcement Agency.

Samuel H. Israel argued the cause for petitioner/appellant. With him on the briefs were Joseph P. Esposito and Terence J. Lynam.

Alisa B. Klein, Attorney, U.S. Department of Justice, argued the cause for respondent/appellees. With her on the brief were Peter D. Keisler, Assistant Attorney General, Jeffrey A. Taylor, U.S. Attorney, Mark B. Stern, Attorney, and Daniel Dormont, Senior Attorney, Drug Enforcement Administration.

Before: GINSBURG, Chief Judge, and BROWN and KAVANAUGH, Circuit Judges.

Opinion for the Court filed by Circuit Judge BROWN.

BROWN, Circuit Judge.

John Doe, Inc.¹ seeks review of the DEA's denial of a permit to import for bioequivalency testing a generic version of an FDA-approved drug. Doe challenges the permit denial as contrary to law, arbitrary and capricious, and violative of the Fifth Amendment to the United States Constitution. Doe further argues the district court erred in dismissing its complaint for lack of jurisdiction. We conclude the district court correctly determined exclusive jurisdiction over Doe's claims lies in the courts of appeals pursuant to 21 U.S.C. § 877. We further conclude the DEA acted within its discretion in denying Doe's permit application. We accordingly affirm the district court and deny Doe's petition.

I

Doe, a drug manufacturer, hopes to market a generic version of the drug Marinol — an FDA-approved drug containing the same active ingredient as marijuana and used to treat nausea and loss of appetite in cancer and AIDS patients. To get approval to market its generic alternative, Doe must successfully complete "bioequivalency" studies, demonstrating to the FDA that its drug is in all relevant aspects equivalent to Marinol. In order to conduct the necessary bioequivalency testing, Doe seeks to immediately import over half a million capsules of its drug from its overseas manufacturing partner.

Doe's plans, however, have been stymied by the DEA. Pursuant to the Controlled Substances Act ("CSA"), the DEA regulates importation of "controlled substances." 21 U.S.C. § 952.² Under the CSA, controlled substances are categorized into five schedules based on their potential for abuse or dependence, their accepted medical use, and their accepted safety for use under medical supervision. Schedule I is the most stringently controlled, and schedule V the least. Id. § 812. Only schedules I and III are at issue here. Schedule I substances are subject to very strict controls because they have "no currently accepted medical use in treatment in the United States," have "a lack of accepted safety for use . . . under medical supervision," and have "a high potential for abuse." Id. § 812(b)(1). Schedule III substances, in contrast, have "a currently accepted medical use in treatment in the United States," and less potential for abuse. Id. § 812(b)(3). Controlled substances were initially allocated to the various schedules by Congress when it first enacted the CSA. Gettman v. DEA, 290 F.3d 430, 432 (D.C.Cir.2002). Thereafter, Congress assigned primary responsibility to the DEA to add or remove substances from the schedules, or to transfer a drug or substance between schedules. Id. (citing 21 U.S.C. § 811(a)).

Dronabinol, the active ingredient in both Marinol and Doe's generic alternative, has been assigned to schedule I since Congress first enacted the CSA in 1970. See CSA, Pub. L. No. 91-513, § 202, schedule I ¶ (c)(17), 84 Stat. 1236, 1249 (1970). Dronabinol remains in schedule I today, with one notable exception. The FDA, after extensive testing and research, approved the drug Marinol — described as "[d]ronabinol (synthetic) in sesame oil and encapsulated in a soft gelatin capsule" — for treatment of nausea associated with cancer patients and anorexia associated with weight loss in AIDS patients. 51 Fed. Reg. 17,476, 17,478 (1986). As a result of this FDA approval, the DEA eventually assigned "Dronabinol (synthetic) in sesame oil and encapsulated in a soft gelatin capsule in a U.S. Food and Drug Administration approved product" to schedule III. 21 C.F.R. § 1308.13(g)(1) (emphasis added); 64 Fed. Reg. 35,928 (1999). DEA was careful to stress, however, that it was rescheduling dronabinol only "in a FDA approved drug product." 51 Fed. Reg. at 17,477. All other "mixtures, compounds and preparations" containing dronabinol "remain[ed] in Schedule I." Id. In practical effect, only the brand name drug Marinol was moved to schedule III.

When Doe applied for a permit to import its drug containing dronabinol, it was registered with the DEA to import schedule III, but not schedule I, substances. On February 28, 2006, Doe applied for a permit to import 1,200 capsules of its drug to begin equivalency testing. On its permit application, instead of using the general DEA code number for dronabinol, Doe listed the DEA code number for "Dronabinol (synthetic) in sesame oil and encapsulated in a soft gelatin capsule in a U.S. Food and Drug Administration approved product." The DEA issued the permit, and Doe imported the 1,200 capsules.

Shortly thereafter, Doe sought another permit to import 525,000 capsules of its drug, again using the DEA code number for "Dronabinol . . . in a U.S. Food and Drug Administration approved product." This time, however, the large quantity prompted further investigation by the DEA. When the DEA learned that the substance Doe sought to import was not in fact Marinol, the DEA denied Doe's permit application. Because Doe's drug containing dronabinol has not been approved for marketing by the FDA, the DEA classifies the drug as falling within the general category of "dronabinol" in schedule I, not schedule III's narrow description of "[d]ronabinol . . . in a U.S. Food and Drug Administration approved product." 21 C.F.R. § 1308.13(g)(1) (emphasis added). Thus, Doe found itself in a catch-22 of sorts: while it sought to import its drug under schedule III so it could conduct testing necessary to obtain FDA approval, the DEA's interpretation of its regulatory provision effectively prohibits importation of a drug containing dronabinol under schedule III until the drug is FDA approved.

The DEA provided Doe written notice of its permit denial on June 12, 2006. The letter advised that Doe could request an agency hearing within thirty days. Doe opted not to pursue further agency consideration, but instead sought immediate redress from the courts.³ Because the law governing such appeals is unsettled, Doe filed two actions — one in district court, see John Doe, Inc. v. Gonzalez, No. 06-966, 2006 WL 1805685 (D.D.C. June 29, 2006), and one directly in this court.

On June 29, 2006, the district court dismissed Doe's case for lack of subject matter jurisdiction. In a lengthy and well-reasoned opinion, the court considered whether the DEA's denial of Doe's permit was sufficiently "final" to permit judicial review under the Administrative Procedure Act ("APA"), see 5 U.S.C. § 704, and, even if sufficiently final, whether 21 U.S.C. § 877 nonetheless divests the district court of original jurisdiction over Doe's claims, see id. (locating original jurisdiction in the courts of appeals over "[a]ll final determinations, findings, and conclusions" of the DEA under the CSA). Ultimately, the district court concluded it lacked jurisdiction. The court reasoned that, at least insofar as Doe's claims are concerned, § 877's reference to "final determinations, findings, and conclusions" encompasses the APA's requirement of final agency action. Thus, either the permit denial wasn't sufficiently final to confer jurisdiction under the APA, or, in the event it was sufficiently final, proper recourse lay in the court of appeals pursuant to § 877. Either way, the district court concluded it did not have jurisdiction, and dismissed Doe's complaint.

Doe appealed the dismissal. That case has been consolidated with Doe's petition seeking direct review in this court under 21 U.S.C. § 877, and we address both here. While the district court found it possible to resolve Doe's case without reaching a definitive conclusion on the issues of finality and the scope of our exclusive direct-review jurisdiction under 21 U.S.C. § 877, we must decide both issues.

II

Doe continues to press the argument that the DEA's denial of Doe's permit was not a "final determination[], finding[], [or] conclusion[]" sufficient to trigger this court's original jurisdiction under 21 U.S.C. § 877. But if the permit denial wasn't a "final determination[]" under § 877, it may also fail to constitute "final agency action" sufficient to comprise a claim under the APA, 5 U.S.C. § 704, effectively denying Doe any judicial review of its permit denial. Indeed, the district court expressed serious reservations about this possible lack of finality.

Doe's briefing addresses the finality question in a single sentence in a footnote, declaring the district court's concerns about finality "now moot" because the DEA concedes its permit denial constituted final agency action. Pet'r's Br. 22 n. 9. Finality is not synonymous with jurisdiction. When judicial review is sought under the APA, for example, the requirement of "final agency action" is not jurisdictional. See Trudeau v. Fed. Trade Comm'n, 456 F.3d 178, 183-84 (D.C.Cir. 2006); Fund for Animals, Inc. v. U.S. Bureau of Land Mgmt., 460 F.3d 13, 18 n. 4 (D.C.Cir.2006). But when, as here, review is sought under a specific statute prescribing finality as a prerequisite of judicial review, it is. See, e.g., North Am. Catholic Educ. Programming Found. v. FCC, 437 F.3d 1206, 1209 (D.C.Cir.2006); Indep. Equip. Dealers Ass'n v. EPA, 372 F.3d 420, 426 (D.C.Cir.2004); Molycorp, Inc. v. EPA, 197...