Norwich Eaton Pharmaceuticals, Inc. v. Bowen

• Court: U.S. Court of Appeals — Sixth Circuit
• Writing for the Court: Before KENNEDY and NORRIS, Circuit Judges, and CONTIE; KENNEDY
• Citation: Norwich Eaton Pharmaceuticals, Inc. v. Bowen, 808 F.2d 486 (6th Cir. 1987)
• Decision Date: 09 January 1987
• Docket Number: No. 86-3397,86-3397
• Parties: NORWICH EATON PHARMACEUTICALS, INC., Plaintiff-Appellee, v. Otis R. BOWEN, Secretary of Health and Human Services; Frank E. Young, M.D., Ph.D., Commissioner of Food and Drugs; United States Food and Drug Administration, Defendants-Appellants.

Page 486

808 F.2d 486

NORWICH EATON PHARMACEUTICALS, INC., Plaintiff-Appellee, v. Otis R. BOWEN, Secretary of Health and Human Services Frank E. Young, M.D., Ph.D., Commissioner of Food and Drugs; United States Food and Drug Administration, Defendants-Appellants.

No. 86-3397.

United States Court of Appeals Sixth Circuit.

Argued Nov. 10, 1986.

Decided Jan. 9, 1987.

Gerald F. Kaminski, Asst. U.S. Atty., Cincinnati, Ohio, Kenneth L. Jost, Dept. of Justice, Washington, D.C., Mark A. Heller, Assoc. Chief Counsel for Enforcement, Rockville, Md., Robert S. Greenspan, Richard A. Olderman argued, Appellate Staff, Dept. of Justice, Washington, D.C., for defendants-appellants.

Jonathan M. Norman, Cincinnati, Ohio, for amicus curiae Lymphomed, Inc.

Frank C. Woodside, III argued, Cincinnati, Ohio, Linda E. Roesch, Thomas O. Henteleff, Alan H. Kaplan, Peter R. Mathers, Washington, D.C., for plaintiff-appellee.

Before KENNEDY and NORRIS, Circuit Judges, and CONTIE, Senior Circuit Judge.

KENNEDY, Circuit Judge.

Defendants-appellants Otis R. Bowen, Secretary of Health and Human Services, et al. ("the Government") appeal from a judgment for plaintiff-appellee Norwich Eaton Pharmaceuticals, Inc. ("Norwich") in an action seeking a declaration of rights under the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. Secs. 301-392 ("FFDCA"). The Government argues that the District Court exceeded the appropriate scope of review and that the District Court erroneously found that the Food and Drug Administration's ("FDA") denial of Norwich's citizen petition was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. We find that the District Court reviewed the agency action under the appropriate standard, but we reverse its determination that the agency's action was invalid.

I.

Norwich is licensed by Reckitt and Colman, Ltd., an English pharmaceutical company, to distribute buprenorphine hydrochloride in the United States under the trade name Buprenex Injectible ("Buprenex"). Buprenex is a new analgesic drug used for treatment of moderate to severe pain. Because it is derived from the opiate thebaine, buprenorphine hydrochloride is a narcotic drug subject to control by the Drug Enforcement Administration ("DEA") under the Controlled Substances Act, 21 U.S.C. Sec. 801 et seq. ("CSA"). As a derivative of thebaine, buprenorphine hydrochloride originally was automatically classified as a Schedule II substance under the CSA, which meant that it was subject to the most stringent controls applicable to a drug with legitimate medical use. Because of its unique molecular structure, however, buprenorphine hydrochloride does not have the physical dependence properties of the other opiates. This led to its reclassification in 1985 as a Schedule V drug, which is the lowest level of control short of decontrol.

On October 31, 1979, Norwich filed a New Drug Application ("NDA") with the FDA for Buprenex. At that time, buprenorphine hydrochloride had not been approved for marketing in the United States. On October 14, 1981, Dr. Marion Finkel of the FDA sent Norwich a letter stating that the NDA would be approved if Norwich made certain changes in the labeling. Dr. Finkel also stated that the drug was not marketable until the DEA had completed its final rulemaking procedures. At that time, efforts were underway before the DEA to reclassify the drug from Schedule II to Schedule V of the CSA.

On December 29, 1981, Dr. Finkel sent a second letter to Norwich, in which she stated:

We have completed the review of this application and have concluded that the drug is safe and effective for use as recommended in the labeling. As discussed in a telephone conversation between Dr. Alexander Neill and Dr. Marion J. Finkel on December 22, 1981, you have agreed to the conditional Phase IV bioavailability study and the labeling revisions outlined in our October 14, 1981 letter. Accordingly, the application is approved.

As you know, the Division is preparing documents to affect lesser controls for buprenorphine. This, however, in no way impairs your approval to market buprenorphine in its current controlled substances schedule.

Joint Appendix at 59 (emphasis added).

On January 27, 1982, Norwich submitted revised draft labeling to the FDA. On February 3, 1982, John M. Kolbas, the president of Norwich, sent a letter to the FDA acknowledging that the FDA had "approved" Buprenex and noting that the drug was currently subject to Schedule II controls. The letter stated further: "Although the letter approving the Buprenex NDA indicated that we may market the product under Schedule II controls, there are many factors which adversely affect the feasibility of this option." Id. at 383. Kolbas requested a meeting regarding the scheduling issue. On May 24, 1982, the FDA sent a letter to Norwich acknowledging receipt of Norwich's "supplemental application" providing for labeling changes and requesting additional changes in the label. Norwich submitted further labeling changes in September, 1984 and February and March, 1985. On February 28, 1985, the DEA ruled that buprenorphine hydrochloride was a Schedule V Narcotic Controlled Substance. On June 20, 1985, the FDA made its last request for changes in the labeling. On June 24, 1985, the FDA received final printed labeling from Norwich. On June 28, 1985, the labeling was approved. Norwich began marketing Buprenex on June 29, 1985.

Meanwhile, the Drug Price Competition and Patent Term Restoration Act, Pub.L. No. 98-417, 98 Stat. 1585 (amending 21 U.S.C. Sec. 355) ("the Act"), became law on September 24, 1984. Title I of the Act is intended "to make available more low cost generic drugs by establishing a generic drug approval procedure for pioneer drugs first approved after 1962." H.R.Rep. No. 857, Part I, 98th Cong., 2d Sess. 14, reprinted in 1984 U.S.Code Cong. & Ad.News 2647, 2647. In addition, Title I provides a limited period of protection from competition to certain previously approved pioneer drugs by granting non-patent marketing exclusivity of ten years to new chemical entities approved on or after January 1, 1982 and on or before September 24, 1984, see 21 U.S.C. Sec. 355(j)(4)(D)(i), (c)(3)(D)(i), and non-patent marketing exclusivity of five years to drugs approved after September 24, 1984, see 21 U.S.C. Sec. 355(j)(4)(D)(ii), (c)(3)(D)(ii). Title II provides an incentive for pioneer drug research by "restor[ing] ... some of the time lost on patent life while the product is awaiting pre-market approval." H.R.Rep. No. 857, Part I, supra, at 15, reprinted in 1984 U.S.Code Cong. & Ad.News at 2648.

On August 19, 1985, Norwich filed a petition with the FDA seeking a declaration that Buprenex was entitled to exclusivity in marketing. Norwich argued that at the time of the 1981 "approval" there was no approved label under which the drug could have been marketed; thus, there was no valid approval. Norwich contended that approval actually came when the final printed label was submitted to the FDA in June, 1985. Norwich argued in the alternative that the approval became effective on January 8, 1982, which was the date on which Norwich received the FDA's letter of December 29, 1981. The FDA provided a detailed response denying this petition and stating that Buprenex had been approved on December 29, 1981, before the statutory date allowing exclusivity.

Norwich brought suit in the United States District Court for the Southern District of Ohio. The District Court, 645 F.Supp. 321, held that Buprenex was not approved on December 29, 1981, but rather on June 28, 1985, the date on which the FDA approved an application for labeling that contained a Schedule V designation under the CSA. The Government appeals.

II.

The Government first raises a procedural issue; i.e., that the District Court went beyond the administrative record in reviewing the agency's action. The District Court was required to review the agency's decision that Buprenex was approved in 1981 to determine whether that decision was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law," as specified in 5 U.S.C. Sec. 706(2)(A). The scope of review under this section is narrow: "In applying that standard, the focal point for judicial review should be the administrative record already in existence, not some new record made initially in the reviewing court." Camp v. Pitts, 411 U.S. 138, 142, 93 S.Ct. 1241, 1244, 36 L.Ed.2d 106 (1973). The Government asserts that the District Court erroneously conducted a trial de novo when it reviewed the FDA's action.

As this Court recently noted in Upjohn Mfg. Co. v. Schweiker, 681 F.2d 480 (6th Cir.1982), de novo review of agency action is the exception rather than the rule, unless required by statute. " '[D ]e novo review is appropriate only where there are inadequate factfinding procedures in an adjudicatory proceeding, or where judicial proceedings are brought to enforce certain administrative actions.' " Id. at 483 (quoting Camp v. Pitts, 411 U.S. 138, 142, 93 S.Ct. 1241, 1244, 36 L.Ed.2d 106 (1973)).

The District Court did not conduct a trial de novo here. The District Court did admit evidence not in the administrative record. The Government objected, and the District Court responded that it could not determine whether the administrative record was adequate without seeing the documents that Norwich was offering. As the Ninth Circuit has recognized:

It will often be impossible, especially when highly technical matters are involved, for the court to determine whether the agency took into consideration all relevant factors unless it looks outside the record to determine what matters the agency should have considered but did not.

Asarco, Inc. v. EPA, 616 F.2d 1153, 1160 (9th Cir.1980). Thus, consideration of evidence outside the administrative record is proper under some circumstances, e.g., "for background information ... or for the limited purposes of...