Sandoz Inc. v. Becerra
| Decision Date | 22 July 2022 |
| Docket Number | 21-cv-600 (DLF) |
| Parties | SANDOZ INC., Plaintiff, v. XAVIER BECERRA, Secretary, United States Department of Health and Human Services,[1] et al., Defendants. |
| Court | U.S. District Court — District of Columbia |
Sandoz Inc. challenges a decision of the Food and Drug Administration (FDA) that granted four years of market exclusivity to the sponsor of a new drug, Aubagio. See Compl. ¶ 1, Dkt. 1. Sandoz argues that the sponsor was not entitled to exclusivity because the FDA had previously approved the use of Aubagio's active ingredient in another drug, Arava. See id. ¶¶ 66-85. Before the Court is Sandoz's Motion for Summary Judgment, Dkt. 14, and the government's Cross-Motion for Summary Judgment, Dkt. 20. For the reasons that follow, the Court will grant the government's motion and deny Sandoz's motion.
The Food, Drug, and Cosmetic Act (FDCA) prohibits introducing “any new drug” into interstate commerce without prior approval by the FDA. 21 U.S.C. § 355(a). Pharmaceutical companies may obtain that approval in two ways. First, a company may submit a new drug application (NDA) under § 505 of the FDCA. 21 U.S.C. § 355(b). The FDA may then approve that application only if the company demonstrates that its drug is safe and effective for its proposed use-a process that often requires clinical trials. See id. § 355(d); see also id. § 355(b)(1)(A), (d) (specifying other requirements for NDAs). Alternatively, after the FDA has approved a new drug and certain rights of that drug's sponsor have expired, see, e.g., id. § 355(j)(5)(B)(ii), a second company may apply to market a generic version of the drug by submitting an abbreviated new drug application (ANDA), id. § 355(j). The FDA may approve an ANDA upon finding that a generic drug is equivalent to the original, listed drug in several respects-a process that rarely requires clinical trials. See id. § 355(j)(4); Ipsen Biopharm., Inc. v. Becerra, 2021 WL 4399531, at *1 (D.D.C. Sept. 24, 2021).
When a company obtains approval to market a new drug, the FDCA may also grant it a period of market exclusivity. See, e.g., 21 U.S.C. § 355(j)(5)(F)(ii). These periods are “designed to compensate manufacturers for research and development costs as well as the risk of litigation from patent holders.” Teva Pharms., USA, Inc. v. Leavitt, 548 F.3d 103, 104 (D.C. Cir. 2008). Although the FDCA contains multiple provisions that confer exclusivity, see Amarin Pharms. Ireland Ltd. v. FDA, 106 F.Supp.3d 196, 199 (D.D.C. 2015), only two are relevant here.[2]
First, the FDCA grants at least four years of exclusivity to companies that successfully submit an NDA for any new drug, “no active ingredient . . . of which has been approved in any other [NDA].”[3] 21 U.S.C. § 355(j)(5)(F)(ii) (2012). This benefit, which is commonly called new chemical entity (NCE) exclusivity, prevents other companies from submitting ANDAs that “refer[] to” the approved drug for at least four years. Id. For this purpose, the term “active ingredient” refers to “any component that is intended to furnish pharmacological activity or other direct effect in the diagnosis, cure, mitigation, treatment, or prevention of disease, or to affect the structure or any function of the body.” 21 C.F.R. § 314.3(b). The FDA determines a drug's active ingredients by looking to its chemical structure before it enters the human body, as opposed to after its metabolization. See A.R. 1580-82; see also Actavis Elizabeth LLC v. FDA, 625 F.3d 760, 764-66 (D.C. Cir. 2010) (approving this approach).
Separately, the FDCA grants 180 days of exclusivity to the “first applicant” that successfully submits an ANDA that contains a Paragraph IV “certification.” 21 U.S.C. § 355(j)(5)(B)(iv). By way of background, each application to market a generic drug must submit a certification regarding any patents that claim the associated listed drug. See Id. § 355(j)(2)(A)(vii). This certification may provide that a patent “has expired,” id. § 355(j)(2)(A)(vii)(II), that it “will expire,” id. § 355(j)(2)(A)(vii)(III), or-under Paragraph IV- that it “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)(IV). Submitting a Paragraph IV certification “comes with a risk” because it constitutes a technical act of patent infringement and may spark “costly litigation.” Teva Pharms. USA, Inc. v. Sebelius, 595 F.3d 1303, 1305 (D.C. Cir. 2010) (citing 35 U.S.C. § 271(e)(2)). It is for that reason that the FDCA confers a limited period of exclusivity to certain “first applicant[s].” 21 U.S.C. § 355(j)(5)(B)(iv). The benefit of exclusivity seeks to offset the cost of litigation, thereby “expediting the availability of generic equivalents.” Teva, 595 F.3d at 1305.
As relevant here, the FDCA allows multiple companies to share “first applicant” status. See 21 U.S.C. § 355(j)(5)(B)(iv)(II)(bb). A company can obtain the status by being the first to submit a “substantially complete” ANDA that includes a Paragraph IV certification. Id. Other companies may also obtain the same status by filing “substantially complete” Paragraph IV ANDAs “on the [same] day” as the initial application. Id. When multiple companies share “first applicant” status, their periods of exclusivity overlap. See id. § 355(j)(5)(B)(iv)(I). And when any first applicant benefits from exclusivity, no other company may market a generic version of the same listed drug. See id. Accordingly, any generic manufacturer that intends to submit a Paragraph IV ANDA has an incentive to submit that application on the first possible date-i.e., four years from the approval of the initial, listed drug. See id. § 355(j)(5)(B)(iv).
This case arises from the approval of two drugs-Arava and Aubagio-that contain the same ingredient-teriflunomide.
The FDA approved Arava in 1998 for the treatment of “adults with active rheumatoid arthritis.” A.R. 19, 360. That approval identified Arava's sole active ingredient as leflunomide, see A.R. 265, 325-326-a chemical that is closely related to teriflunomide. When leflunomide enters the human body, it “is metabolized . . . to teriflunomide which is responsible for essentially all of [the former]'s in vivo activity.” A.R. 1455. Leflunomide also tends to degrade into teriflunomide over time, even before it enters the human body. See A.R. 1445, 1459. For that reason, the FDA noted that Arava contains trace amounts of teriflunomide. See A.R. 1459.
Specifically, the agency designated those amounts as impurities in Arava and provided that they could be no more than 0.3% of the drug. See A.R. 1459.
The FDA approved the second relevant drug, Aubagio, on September 12, 2012, to treat “patients with relapsing forms of multiple sclerosis.” A.R. 402, 1456. That approval noted that teriflunomide was the sole active ingredient in Aubagio. See A.R. 418-19, 1456-57. It also determined that the FDA had not previously approved another drug with the same active ingredient. See A.R. 1171, 1457. For that reason, the FDA granted Aubagio at least four years of NCE exclusivity pursuant to § 355(j)(5)(B)(iv). See A.R. 1457. In doing so, the FDA took the position that no generic manufacturer could submit a Paragraph IV ANDA that referenced Aubagio until September 12, 2016. See 21 U.S.C. § 355(j)(5)(B)(iv).
On August 31, 2016, Sandoz wrote to the FDA for the purpose of challenging Aubagio's exclusivity. See A.R. 1393. Sandoz argued that the exclusivity was unwarranted because teriflunomide was “physically present as a bioavailable and physiologically/pharmacologically active component of” Arava. A.R. 1401. It also argued that the sponsor of both Arava and Aubagio-Sanofi-Aventis U.S. LLC (Sanofi)[4]-was aware of the ingredient's presence in Arava and viewed it as beneficial. See A.R. 1396-97. On that issue, Sandoz pointed to several patent applications and patent infringement suits in which Sanofi claimed positive interactions between leflunomide and teriflunomide. See A.R. 1396-99; see, e.g., U.S. Patent No. 7,071,222, at [1] (filed Mar. 7, 1997) (issued July 4, 2006) ( that a “combination preparation” of leflunomide and teriflunomide “exhibits surprisingly advantageous immunosuppressive effects”). Finally, Sandoz insisted that its position did not rest on the fact that “teriflunomide is the active metabolite of leflunomide.” A.R. 1401. In this respect, Sandoz declined to challenge the FDA's general approach for identifying active ingredients, which looks to drugs' structure prior to their metabolization. See Actavis Elizabeth, 625 F.3d at 764-66.
Sandoz subsequently filed two Paragraph IV ANDAs to market generic teriflunomide. See A.R. 1403-10. Sandoz filed its first application on September 7, 2016-five days before Aubagio's exclusivity was set to expire. See A.R. 1403. That application referenced Sandoz's challenge letter and asked the FDA, if it accepted the challenge, to “deem [the application] received” on the date of its submission. Id. Sandoz then filed a second and nearly identical application on September 12-the first day after Aubagio's scheduled exclusivity. See A.R. 1407. The FDA acknowledged the receipt of both applications and advised that it would “take action on only one” of them. A.R. 1416. It also advised that, if Sandoz prevailed in its exclusivity challenge, Sandoz could choose which application would proceed. Id.
This arrangement positioned Sandoz to benefit from its exclusivity challenge. The FDA received twenty-one ANDAs on September 12 2016, that sought to market generic versions of teriflunomide. See FDA, Paragraph IV Patent Certifications, at 73,...
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