Otsuka Pharm. Co. v. Burwell, Civil Action No. 15–cv–1688 (KBJ)

CourtUnited States District Courts. United States District Court (Columbia)
Citation302 F.Supp.3d 375
Docket NumberCivil Action No. 15–cv–1688 (KBJ)
Parties OTSUKA PHARMACEUTICAL CO., LTD., et al., Plaintiffs, v. Sylvia Mathews BURWELL, in her official capacity as Secretary of the United States Department of Health and Human Services, et al., Defendants, and Alkermes, Inc., et al., Intervenor–Defendants.
Decision Date28 July 2016

302 F.Supp.3d 375

OTSUKA PHARMACEUTICAL CO., LTD., et al., Plaintiffs,
Sylvia Mathews BURWELL, in her official capacity as Secretary of the United States Department of Health and Human Services, et al., Defendants,
Alkermes, Inc., et al., Intervenor–Defendants.

Civil Action No. 15–cv–1688 (KBJ)

United States District Court, District of Columbia.

Signed July 28, 2016

302 F.Supp.3d 380

Maggie T. Grace, Ralph Sargent Tyler, III, Venable LLP, Baltimore, MD, Seth Paul Waxman, Wilmer Cutler Pickering Hale & Dorr LLP, Hockessin, DE, for Plaintiffs.

Roger Joseph Gural, Andrew E. Clark, US Department of Justice, Consumer Protection Branch, Washington, DC, for Defendants.

Christopher T. Holding, Sarah K. Frederick, Goodwin Procter LLP, Boston, MA, William M. Jay, Goodwin Procter, LLP, Washington, DC, for Intervenor–Defendants.


KETANJI BROWN JACKSON, United States District Judge

302 F.Supp.3d 381

To incentivize the development and marketing of safe, effective, and affordable drug products, the Federal Food, Drug, and Cosmetic Act ("FDCA"), 21 U.S.C. § 321 et seq. , provides a variety of benefits for drug manufacturers, including prescribed periods of "exclusivity" in the marketplace. Drug manufacturers that develop and get approval for drug products containing entirely new chemical entities—i.e., drugs in which "no active ingredient" has ever before been approved for marketing—receive a five-year period of exclusivity for marketing that drug product, during which time the Food and Drug Administration ("the FDA") is prohibited from approving applications for the marketing of certain other drugs. 21 U.S.C. § 355(c)(3)(E)(ii) ; see also 21 C.F.R. § 314.108(b)(2). Similarly, if a manufacturer submits an application for a drug product that contains a previously approved active ingredient, and if certain "new clinical investigations" are included in that application, that manufacturer can claim a three-year period of marketing exclusivity for the drug in that application. See 21 U.S.C. § 355(c)(3)(E)(iii) ; see also 21 C.F.R. § 314.108(a), (b)(4). These provisions and others demonstrate Congress's clear intent to establish a statutory and regulatory scheme that provides a substantial reward (marketing exclusivity) for those pharmaceutical companies that either invest in the development of entirely new drug substances or that study existing chemical compounds to demonstrate that they can be safe and effective when prescribed for use in a new way.

In the instant case, Plaintiff Otsuka Pharmaceuticals Company Limited (along with related entities, collectively referred to herein as "Otsuka") asserts that the FDA has improperly truncated its right to marketing exclusivity for its drug Abilify Maintena, which the FDA approved in 2013 for the treatment of schizophrenia in acutely relapsed patients. It is undisputed that Abilify Maintena and a related supplement received three-year periods of exclusivity under the FDCA; in the instant lawsuit, Otsuka maintains that the FDA ran afoul of the FDCA and its own regulations in October of 2015, when it approved Intervenor Alkermes's application for Aristada—a drug product that also treats schizophrenia and is administered in the same way as Abilify Maintena but that contains a different "active moiety" than Otsuka's drug. (See Compl., ECF No. 1, ¶ 52 ("FDA denied Otsuka's citizen petition and approved the Alkermes [new drug application] in derogation of Otsuka['s] exclusivity rights.").) Otsuka's three-count complaint, which it filed against the FDA and other associated official-capacity defendants (referred to herein, collectively, as the "FDA"), specifically asserts that the FDA's approval of Aristada within the three-year windows of exclusivity that were afforded to Abilify Maintena and its supplement violated the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 701 – 06, because that approval contravened the FDCA (Count One) and the agency's own regulations (Count Two), and because, without implementing the APA's notice-and-comment procedures, the agency essentially promulgated a new rule regarding

302 F.Supp.3d 382

the circumstances under which the FDA will consider a subsequent drug application to be barred (Count Three). (See Compl. ¶¶ 51–74.)

Before this Court at present are three cross-motions for summary judgment that the parties in this matter have filed. (See Pls.' Mot. for Summ. J. ("Pls.' Mot."), ECF No. 24; Defs.' Cross Mot. for Summ. J. ("Defs.' Mot."), ECF No. 26; Intervenor–Defs.' Mot. for Summ. J. ("Alkermes's Mot."), ECF No. 27.) Each motion first addresses a question of statutory interpretation regarding the meaning of the applicable exclusivity provisions of the FDCA, and in particular, the issue of whether or not the FDA may read that statute and its own regulations to establish an exclusivity bar that extends only to second-in-time applications for a drug with the same "active moiety" as the drug with exclusivity. This Court has applied the legal analysis established in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc. , 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), and as explained fully below, it concludes that the FDCA does not unambiguously prevent the FDA from determining that the FDCA's three-year exclusivity bar blocks only subsequent applications for drugs with the same active moiety, and that it was not unreasonable for the FDA to have employed that interpretation when it considered the applications at issue here. Similar reasoning compels the Court to reject Otsuka's contention that the FDA violated its own regulations, and Otsuka's notice-and-comment claim also necessarily fails because it is premised on the faulty contention that, when the FDA decided to approve Aristada despite Abilify Maintena's exclusivity, the agency thereby amended a regulation that unambiguously required the opposite result. Consequently, the summary judgment motions that the FDA and Alkermes have filed will be GRANTED and Otsuka's motion for summary judgment will be DENIED . A separate order consistent with this Memorandum Opinion will follow.


A. Marketing Approval And Exclusivity Under The FDCA

Originally enacted in 1938, the FDCA "governs the pharmaceutical drug approval process for both new and generic drugs." Veloxis Pharm., Inc. v. FDA , 109 F.Supp.3d 104, 107 (D.D.C. 2015) (citation omitted); see also Christopher v. SmithKline Beecham Corp. , 567 U.S. 142, 132 S.Ct. 2156, 2163 n.4, 183 L.Ed.2d 153 (2012). In 1984, Congress amended the statute via the Drug Price Competition and Patent Term Restoration Act ("Hatch–Waxman Amendments"), Pub. L. No. 98–417, 98 Stat. 1585, in a manner that strikes a balance between " ‘two competing interests in the pharmaceutical industry: (1) inducing pioneering research and development of new drugs[,] and (2) enabling competitors to bring low-cost, generic copies of those drugs to market[,]’ " Takeda Pharm., U.S.A., Inc. v. Burwell , 78 F.Supp.3d 65, 68 (D.D.C. 2015) (quoting Janssen Pharmaceutica, N.V. v. Apotex, Inc. , 540 F.3d 1353, 1355 (Fed. Cir. 2008) ). As mentioned, one critical aspect of this Hatch–Waxman balance is the period of marketing exclusivity that is afforded to pharmaceutical companies under certain circumstances, the primary purpose of which is to incentivize companies to invest substantial time and money into developing useful drug products. See, e.g. , Abbott Labs. v. Young , 920 F.2d 984, 985 (D.C. Cir. 1990) (noting that the exclusivity provisions aim, in part, to protect "the interests of drug manufacturers who produce new drugs" by providing "greater incentives for the invention of new products"); see also

302 F.Supp.3d 383

Abbreviated New Drug Application Regulations; Patent and Exclusivity Provisions ("1994 Rule"), 59 Fed. Reg. 50,338, 50,358 (Oct. 3, 1994) ("1994 Rule") (observing that the three-year-exclusivity provision was "created ... to protect products whose development required a significant time commitment and ‘an investment of some magnitude’ " (citing legislative history) ).

The first step on the road to receiving marketing exclusivity is to seek and obtain FDA approval for the marketing of a "new" drug pursuant to a process that is set forth in the U.S. Code and that has been fully explained in several published opinions in this district. See, e.g. , Takeda Pharm. , 78 F.Supp.3d at 71–72 (discussing 21 U.S.C. § 355 ); see also Ferring Pharm., Inc. v. Burwell , 169 F.Supp.3d 199, 203–04 (D.D.C. 2016) (same).1 Specifically, as amended, the FDCA "requires drug manufacturers seeking to market a new drug to first obtain FDA approval via one of three different application pathways: (1) a full New Drug Application (‘NDA’); (2) an Abbreviated New Drug Application (‘ANDA’); or (3) an intermediate process known as a Section 505(b)(2) NDA." Takeda Pharm. , 78 F.Supp.3d at 71 (citing 21 U.S.C. § 355 ). The requirements for the full NDA and Section 505(b)(2) pathways, which are the only methods implicated in the instant case, are set forth in section 505(b) of Hatch–Waxman, which has been codified at 21 U.S.C. § 355(b).2

Hatch–Waxman's subsection 505(b)(1) provides a detailed list of what a...

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