Ranbaxy Laboratories Ltd. v. Leavitt

• Decision Date: 14 November 2006
• Docket Number: No. 06-5154.,06-5154.
• Citation: 469 F.3d 120
• Parties: RANBAXY LABORATORIES LIMITED, et al., Appellees v. Michael O. LEAVITT, Secretary of Health and Human Services, et al., Appellants.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 120

469 F.3d 120

RANBAXY LABORATORIES LIMITED, et al., Appellees v. Michael O. LEAVITT, Secretary of Health and Human Services, et al., Appellants.

No. 06-5154.

United States Court of Appeals, District of Columbia Circuit.

Argued September 12, 2006.

Decided November 14, 2006.

Appeal from the United States District Court for the District of Columbia (No. 05cv01838).

Howard S. Scher, Attorney, U.S. Department of Justice, argued the cause for appellants. With him on the briefs were Peter D. Keisler, Assistant Attorney General, Kenneth L. Wainstein, U.S. Attorney, Douglas N. Letter, Attorney, and Eric M. Blumberg, Deputy Chief Counsel, U.S. Department of Health and Human Services. Drake S. Cutini, Attorney, U.S. Department of Justice, entered an appearance.

Simon E. Dance was on the brief for amicus curiae Blue Cross & Blue Shield Association, Inc. in support of appellants.

Carmen M. Shepard argued the cause for appellees Ranbaxy Laboratories Limited, et al. With her on the brief were Kate C. Beardsley and William B. Schultz.

Jay P. Lefkowitz argued the cause for appellee Teva Pharmaceuticals, USA, Inc. With him on the brief were John C. O'Quinn and Michael D. Shumsky.

Theodore Case Whitehouse was on the brief for amicus curiae Generic Pharmaceutical Association in support of appellees.

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

Opinion for the Court filed by Chief Judge GINSBURG.

GINSBURG, Chief Judge.

The Hatch-Waxman Amendments to the Food, Drug, & Cosmetic Act provide a period of marketing exclusivity to the first drug manufacturer that either successfully challenges a patent listed by the Food and Drug Administration for an approved, branded drug and markets an approved generic version of that drug or prevails in litigation establishing that the patent is valid or not infringed. Ranbaxy Laboratories Limited and Ivax Pharmaceuticals, Inc., the latter since acquired by Teva Pharmaceuticals, USA, Inc., applied for approval of drugs to compete with an approved drug manufactured by Merck & Co. and challenged two patents covering it. Thereafter, at Merck's request, the FDA removed the challenged patents from the "Orange Book," its listing of patents covering approved drugs, thereby depriving the generic manufacturers of an opportunity to have a period of marketing exclusivity.

Ranbaxy and Teva each filed a "citizen petition" asking the FDA to relist the two patents. The FDA denied the petitions because Merck had not sued Ranbaxy or Teva for patent infringement. Ranbaxy and Teva then repaired to the district court, which entered a summary judgment for the plaintiffs, and the FDA appealed.

We hold the FDA's requirement that a generic manufacturer's patent challenge give rise to litigation as a condition of retaining exclusivity when a patent is delisted is inconsistent with the Act, which provides that the first generic manufacturer to file an approved application is entitled to exclusivity when it either begins commercially to market its generic drug or is successful in patent litigation. Accordingly, we affirm the judgment of the district court.

I. Background

Before marketing a new "branded" drug, the manufacturer must file with the FDA a New Drug Application (NDA), including evidence the drug is safe and effective and the identifying number and expiration date of any patent or patents covering the drug. 21 U.S.C. § 355(a)-(b)(1). When it approves the NDA, the FDA must publish the patent information, id. § 355(b)(1), (c)(2), which it does in Approved Drug Products with Therapeutic Equivalence Evaluations, better known as the Orange Book.

Before marketing a "generic drug," which is bioequivalent to a branded drug previously approved pursuant to an NDA, the manufacturer may submit an Abbreviated New Drug Application (ANDA). Unlike an NDA, an ANDA need not contain evidence of the drug's safety or efficacy. See 21 U.S.C. § 355(j)(2). Each ANDA, however, must contain:

a certification ... with respect to each patent which claims [a drug or a method of using a drug listed in the Orange Book] for which the applicant is seeking approval under this subsection and for which information is required to be filed under subsection (b) or (c) of this section —

(I) that such patent information has not been filed,

(II) that such patent has expired,

(III) [that] such patent will expire [on a specified date], or

(IV) that such patent is invalid or will not be infringed by the manufacture, use, or sale of the new drug for which the application is submitted[.]

Id. § 355(j)(2)(A)(vii). The Act rewards the first manufacturer to file an approved ANDA containing the certification in paragraph IV by giving it a 180-day period of marketing exclusivity, which begins with the earlier of the applicant's first commercial marketing of the generic drug or when the applicant prevails in a suit over infringement or the validity of the patents covering the branded drug. Id. § 355(j)(5)(B)(iii)-(iv).^*

When a patent is removed from the Orange Book (or, in the parlance of the agency is "delisted"), the FDA by regulation requires the sponsor of the corresponding ANDA to delete its paragraph IV certification with respect to the delisted patent. 21 C.F.R. § 314.94(a)(12)(viii)(B).^** If no patent covering the branded drug remains listed, then the generic applicant must file a paragraph I certification, and the FDA treats the ANDA as though it had never contained a paragraph IV certification. As a result, the generic applicant that was first to file an approved application does not get the 180-day period of exclusivity. See id.

Merck, which marketed simvastatin under the brand name Zocor®, submitted to the FDA information with respect to three patents covering the drug: U.S. Patent Nos. 4,444,784 (the 784 Patent), RE 36,481 (the 481 Patent), and RE 36,520 (the 520 Patent). Teva and Ranbaxy each filed an ANDA to market generic simvastatin. The two ANDAs—both of which were eligible for a 180-day period of marketing exclusivity because they involved different dosages—each contained a paragraph IV certification with respect to the 481 and 520 Patents. With respect to the 784 Patent, Ranbaxy and Teva each filed a paragraph III certification that it would expire in December 2005.

Merck, however, did not sue Ranbaxy or Teva for patent infringement based upon their paragraph IV certifications. Instead, before their ANDAs were approved, Merck asked the FDA to delist the 481 and 520 Patents from the Orange Book, which the agency did in 2004. Consequently, under 21 C.F.R. § 314.94(a)(12)(viii)(B), Ranbaxy and Teva were required to delete the paragraph IV certifications from their ANDAs and thereby lost their eligibility for a period of marketing exclusivity. Ranbaxy and Teva accordingly petitioned the FDA to relist the 481 and 520 Patents in the Orange Book, restore their period of exclusivity, and refrain from approving any other manufacturer's ANDA for generic simvastatin until their period of exclusivity expired.

In a letter ruling denying the petitions, the FDA said it had considered three possible methods of handling the request of a manufacturer with an approved NDA to delist a patent. First, the FDA could always delist the patent, but that could unfairly deny a period of marketing exclusivity to the generic manufacturer that would later be the first to file an approved ANDA by depriving it of the opportunity to prevail in patent litigation. Second, it could refuse to delist the patent only if a generic manufacturer had filed an ANDA containing a paragraph IV certification with respect to the patent, but the agency rejected that possibility on the ground that "eligibility for exclusivity does not vest with a patent challenge," that is, upon the filing of a paragraph IV certification. Finally, the FDA could delist a patent only if a generic manufacturer had filed an ANDA containing a paragraph IV certification with respect to the patent and the NDA holder had not filed a lawsuit to contest the certification. The FDA chose the last option on the ground that it best balanced, on the one hand, the pro-competitive effect of the incentive for a generic drug manufacturer to be the first to challenge a patent listed in the Orange Book and thereby introduce generic competition to a branded drug and, on the other, the loss of competition among generic manufacturers caused by the 180-day period of marketing exclusivity for the first to file an approved ANDA containing a paragraph IV certification.

Ranbaxy and Teva then brought this action in the district court, which held the FDA's delisting policy was inconsistent with the Act because, by requiring the first generic manufacturer that filed a paragraph IV certification to remove that certification before its ANDA could be approved, it deprived the generic applicant of the opportunity to obtain a period of exclusivity pursuant to 21 U.S.C § 355(j)(5)(B)(iv)(I) by commercially marketing its drug. The court entered judgment for Ranbaxy and Teva and the FDA appealed.

II. Analysis

We review the FDA's interpretation of the Act it administers under the two-step analysis in Chevron, U.S.A. Inc. v. NRDC, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). See Teva Pharm. Indus. Ltd. v. Crawford, 410 F.3d 51, 53 (D.C.Cir. 2005) (reviewing under Chevron FDA ruling on citizen petition). First, we ask whether the "Congress has directly spoken to the precise question at issue." Chevron, 467 U.S. at 842, 104 S.Ct. 2778. "If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Id. at 842-43, 104 S.Ct. 2778. If, however, "the statute is silent or ambiguous with respect to the specific issue, the question ... is whether the agency's answer is based on a permissible construction of the statute." Id. at 843, 104 S.Ct. 2778.

Ranbaxy and Teva claim this...