Mylan Pharmaceuticals, Inc. v. Shalala, No. Civ.A 99-2995 (RWR).

• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)
• Writing for the Court: Roberts
• Citation: 81 F.Supp.2d 30
• Parties: MYLAN PHARMACEUTICALS, INC., Plaintiff, v. Donna SHALALA, Secretary, U.S. Department of Health and Human Services, et al., Defendants.
• Docket Number: No. Civ.A 99-2995 (RWR).
• Decision Date: 04 January 2000

81 F.Supp.2d 30 MYLAN PHARMACEUTICALS, INC., Plaintiff,
v.
Donna SHALALA, Secretary, U.S. Department of Health and Human Services, et al., Defendants. No. Civ.A 99-2995 (RWR). United States District Court, District of Columbia. January 4, 2000.

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E. Anthony Figg, Joseph Anthony Hynds, Rothwell, Figg, Ernst & Kurz, Washington, DC, for Mylan Pharmaceuticals.

Kevin Clark Maclay, Jones, Day, Reavis & Pogue, Washington, DC, Daniel E. Reidy, James A. White, Timothy J. Heverin, Jones, Day, Reavis & Pogue, Chicago, IL, for defendant-intervenor Abbott Labatories.

Martha Jennet Talley, Dewey Ballantine, LLP, Washington, DC, Wayne A. Cross, Robert A. Milne, Eamon O'Kelly, Dewey Ballantine LLP, New York City, for defendant-intervenor Geneva.

Drake Stephen Cutini, Andrew E. Clark, U.S. Department of Justice, Office of Consumer Litigation, Washington, DC, for defendant.

MEMORANDUM OPINION

ROBERTS, District Judge.

This suit challenges the validity of a Food and Drug Administration ("FDA") regulation governing the approval process for generic drugs. Plaintiff Mylan Pharmaceuticals, Inc. ("Mylan"), a generic drug manufacturer, alleges that pursuant to the regulation, the FDA has unlawfully refused to approve Mylan's application to market a generic version of a brand-name drug. Mylan sues for a declaratory judgment invalidating the regulation, and preliminary and permanent injunctions ordering the FDA to grant immediate and final approval of Mylan's application. Mylan

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also moves for summary judgment.¹ Because I find that the FDA's regulation is in derogation of an unambiguous statutory provision, Mylan's motion for summary judgment and request for declaratory relief will be granted. However, because the balance of the equities weighs against granting Mylan injunctive relief, Mylan's request for preliminary and permanent injunctions will be denied.

BACKGROUND

I. The Statutory and Regulatory Framework

The Federal Food, Drug, and Cosmetic Act ("FDCA"), 21 U.S.C. § 301 et seq. (1994), regulates the manufacture and distribution of pharmaceuticals. Having concluded that the FDCA's cumbersome drug approval process delayed the entry of relatively inexpensive generic drugs into the market place,² Congress passed the so-called "Hatch-Waxman Amendments" to the FDCA in 1984. See Drug Price Competition & Patent Term Restoration Act of 1984, Pub.L. No. 98-417, 98 Stat. 1585 (1984) (codified as amended at 21 U.S.C. § 355 (1994)). The stated purpose of this legislation was to "make available more low cost generic drugs[.]" H.R.Rep. No. 98-857, pt. 1, at 14 (1984), reprinted in 1984 U.S.C.C.A.N. 2647, 2647. As Chief Judge (then Judge) Edwards of the Court of Appeals for this Circuit later explained, the Hatch-Waxman Amendments "emerged from Congress' efforts to balance two conflicting policy objectives: to induce name-brand pharmaceutical firms to make the investments necessary to research and develop new drug products, while simultaneously enabling competitors to bring cheaper, generic copies of those drugs to market." Abbott Labs. v. Young, 920 F.2d 984, 991 (D.C.Cir.1990) (Edwards, J., dissenting) (citations omitted), cert. denied, 502 U.S. 819, 112 S.Ct. 76, 116 L.Ed.2d 49 (1991).

In pursuit of these competing ends, the Hatch-Waxman Amendments established new guidelines for the approval of generic drugs. Generic drug makers were permitted to file an Abbreviated New Drug Application ("ANDA") which incorporated data that the "pioneer" manufacturer had already submitted to the FDA regarding the pioneer drug's safety and efficacy. In order to obtain FDA approval, the ANDA must demonstrate, among other things, that the generic drug is "bioequivalent" to the pioneer drug. 21 U.S.C. § 355(j)(2)(A)(iv). As protection for pioneer drug makers, the applicant is also required to certify in one of four ways that the generic drug will not infringe on any patent which claims the pioneer drug. See id. at § 355(j)(2)(A)(vii). The only certification of relevance in this case is the fourth and most complicated type. It permits the applicant to allege that the patent for the pioneer drug is either invalid or will not be infringed by the marketing of the generic drug. See id. at § 355(j)(2)(A)(vii)(IV).

A generic drug manufacturer's filing of a so-called "Paragraph IV" certification has important legal ramifications. It automatically creates a cause of action for patent infringement. Upon receiving notice of a Paragraph IV certification's filing, the patent holder or pioneer manufacturer has 45 days within which to file suit against the generic manufacturer. See id. at § 355(j)(5)(B)(iii). If such an action is brought, the FDA cannot approve the generic manufacturer's ANDA for 30 months. See id. However, if the court hearing the infringement action rules before the expiration of the 30-month period that the patent at issue is "invalid or not

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infringed," then "the approval shall be made effective on the date of the court decision[.]" Id. at § 355(j)(5)(B)(iii)(I).

In order to encourage generic drug makers to incur the potentially substantial litigation costs associated with challenging pioneer drug makers' patents, the Hatch-Waxman Amendments provide an added incentive for generic drug producers to file Paragraph IV certifications. The first generic manufacturer to file an ANDA containing a Paragraph IV certification with respect to a specific patent is awarded a 180-day period of exclusive marketing rights for a generic version of the drug claimed by that patent. In other words, no other ANDA for the same generic drug product will be approved during those 180 days. The relevant statutory provision, clause (iv) of section 355(j)(5)(B), states:

(iv) If the [ANDA] contains a certification described in [Paragraph IV] and is for a drug for which a previous application has been submitted under this subsection [containing a Paragraph IV] certification, the application shall be made effective not earlier than one hundred and eighty days after —

(I) the date the Secretary receives notice from the applicant under the previous [ANDA] of the first commercial marketing of the drug under the previous [ANDA], or

(II) the date of a decision of a court in an action described in clause (iii) holding the patent which is the subject of the certification to be invalid or not infringed,

whichever is earlier.

21 U.S.C. § 355(j)(5)(B)(iv). As clause (iv) indicates, the "180-day exclusivity" awarded to the first applicant to file a Paragraph IV certification can be triggered in one of two ways — either (1) when the generic producer begins commercial marketing of its drug (the "commercial marketing trigger"),³ or (2) when there is a court decision finding the pioneer drug maker's patent invalid or not infringed (the "court-decision trigger").⁴ This case involves the operation of the court-decision trigger.

The FDA is charged with implementing the FDCA. The FDA determined that when the first applicant prevails at the district court level, it is in the public interest to prevent the 180-day exclusivity clock from triggering until the patent infringement litigation is ultimately resolved by the Federal Circuit.⁵ The FDA therefore promulgated a regulation which provides:

(e) Court actions. (1) References to actions of "the court" in paragraphs (b) and (c) of this section are to the court that enters final judgment from which no appeal can be or has been taken.

(2) For the purposes of establishing the effective date of approval based on a court judgment, the following dates shall be deemed to be the date of the final decision of the court on the patent issues:

(i) If the district court enters a decision that the patent is invalid, unenforceable, or not infringed, and the decision is not appealed, the date on which the right to appeal lapses.

(ii) If the district court enters a decision that the patent is invalid, unenforceable, or not infringed, and the decision is appealed, the date of the first

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decision or order by a higher court holding or affirming the decision of the district court that the patent is invalid, unenforceable, or not infringed.

(iii) If the district court enters a decision that the patent is infringed, and the decision is appealed, the date on which the district court enters a judgment decision that the patent is invalid, unenforceable, or not infringed pursuant to a mandate issued by the court of appeals.

21 C.F.R. § 314.107(e) (1999). Thus, when a district court decision favorable to the generic manufacturer is appealed, the FDA calculates the 180-day exclusivity period from the date that the court of appeals affirms. Plaintiff contends that this interpretation of the statutory phrase "a decision of a court" is contrary to the plain meaning of the FDCA and is thus beyond the scope of the FDA's enforcement authority.

II. The Factual Background of This Case

This controversy stems from Mylan's attempt to obtain FDA approval for a generic capsule version of a brand-name prescription drug called Hytrin. Abbott Laboratories ("Abbott") and Geneva Pharmaceuticals, Inc. ("Geneva") have both intervened,⁶ arguing that Mylan's attempt to force the FDA's hand should be rebuffed.

A. Abbott's Hytrin

Abbott developed Hytrin, which it markets in both capsule and tablet form. The active ingredient in Hytrin is a chemical compound known as terazosin hydrochloride which is used to treat hypertension and benign prostatic hyperplasia (i.e. enlarged prostate). Generic drug makers, including Geneva and Mylan, sought to market generic versions of Hytrin. These companies therefore filed ANDAs for their generic terazosin drugs, seeking to piggyback on Abbott's research and development in the hope of obtaining relatively swift FDA approval.

B. Geneva's ANDAs and the Ensuing Geneva-Abbott Litigation

Geneva was the first generic drug manufacturer to submit ANDAs containing Paragraph IV certifications with respect to patents...