Spectrum Pharm., Inc. v. Burwell
| Decision Date | 03 June 2016 |
| Docket Number | No. 15-5166,15-5166 |
| Citation | 824 F.3d 1062 |
| Parties | Spectrum Pharmaceuticals, Inc., Appellant v. Sylvia Mathews Burwell, in her official capacity as Secretary, U.S. Department of Health and Human Services, et al., Appellees. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Jessica L. Ellsworth, Washington, DC, argued the cause for appellant. With her on the briefs were Susan M. Cook, Eugene A. Sokoloff, Washington, DC, and Elizabeth Austin Bonner.
Jonathan M. Ettinger, Boston, MA, was on the brief for amicus curiae National Organization for Rare Disorders in support of appellant.
Christopher M. O'Connell, Trial Attorney, U.S. Department of Justice, argued the cause for federal appellees. With him on the brief were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, William B. Schultz, General Counsel, Food and Drug Administration, and Annamarie Kempic, Deputy Chief Counsel, Litigation.
Douglas B. Farquhar, Washington, DC, argued the cause for intervenor-appellee Sandoz Inc. With him on the brief were James P. Ellison and Jennifer M. Thomas, Washington, D.C.
Before: Griffith, Kavanaugh, and Wilkins, Circuit Judges.
Griffith
, Circuit Judge:
In this case, Spectrum Pharmaceuticals claimed that the Food and Drug Administration's approval of a cancer
drug violated Spectrum's exclusive marketing rights. The district court granted summary judgment against Spectrum, and we affirm.
Levoleucovorin is better known by the brand-name Fusilev, which Spectrum has sold since 2008 for the purpose of counteracting liver damage during a type of chemotherapy known as methotrexate
therapy (the “Methotrexate Indications”). Fusilev is an “orphan drug,” so called because it is designed to treat a rare disease or condition that historically received little attention from pharmaceutical companies, and hence became “orphaned” because the comparatively small demand for treatment left little motive for research and development. Pub. L. No. 97–414, § 1(b), 96 Stat. 2049 (1983). Under the Orphan Drug Act amendments to the Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 360aa -ee, intended to increase incentives for companies to develop new orphan drugs, Spectrum received exclusive marketing rights to the Methotrexate Indications for seven years. In other words, because Spectrum was the first to develop levoleucovorin as an orphan drug for methotrexate therapy, no other company could sell a generic version of the drug for that purpose until 2015.
In 2011, Spectrum received approval from FDA to market Fusilev for an altogether new use: helping patients with advanced colorectal cancer
to manage their pain (the “Colorectal Indication”). Spectrum has exclusive marketing rights for the Colorectal Indication until 2018.
On March 7, 2015, Spectrum's exclusivity period expired for the Methotrexate Indications. Two days later, Sandoz Inc. received FDA approval to market a generic version of levoleucovorin for the Methotrexate
Indications, having had its application expedited in 2012 to address a drug shortage. Unlike Fusilev, which is sold in a freeze-dried powder that must be mixed with another chemical before it can be used, Sandoz sells its generic drug in a ready-to-use form. Pursuant to FDA regulations, Sandoz's label contains only the Methotrexate Indications and makes no mention of the Colorectal Indication. Shortly after Sandoz launched its product, Spectrum filed suit to enjoin FDA's approval of Sandoz's drug.
Spectrum argued to the district court that Sandoz's sole intended use of the generic was to treat patients with colorectal cancer
, even though the label provided for use only in patients undergoing methotrexate therapy. Spectrum urged that FDA was willfully blind to the fact that the generic drug would not be used for counteracting liver damage, but for managing pain, which is Spectrum's exclusive domain. This intended use made the agency's approval of the generic unlawful, argued Spectrum, because it violated Spectrum's exclusive marketing rights for the Colorectal Indication.
Spectrum's argument focused largely on Sandoz's vial sizes. The record shows the standard dose of levoleucovorin for the Methotrexate
Indications is 7.5 mg, although some patients need a 75 mg or 85 to 90 mg dose in certain rare situations. In contrast, the Colorectal Indication regularly requires a much larger dose of 150 mg. Spectrum sells Fusilev in 50 mg vials, but Sandoz sells its generic in 175 mg and 250 mg vials, sizes that Spectrum argues are intended to treat the Colorectal Indication despite being labeled for only the Methotrexate Indications.1
Spectrum also challenged FDA's approval on two additional grounds: Spectrum urged that the approval was arbitrary and capricious, in violation of the Administrative Procedure Act, because FDA changed its position on the safety and efficacy of large vials of levoleucovorin without explanation. Finally, Spectrum contended that it was entitled to notice before FDA expedited review of Sandoz's generic drug.
The district court granted summary judgment against Spectrum, holding that FDA's approval of Sandoz's generic drug was lawful. The district court reasoned that the Orphan Drug Act allows FDA to approve Sandoz's drug so long as the generic's label omits the Colorectal Indication. The district court rejected Spectrum's remaining arguments as well, holding that the agency did not improperly change positions without explanation, and any error in expediting the agency's review of the generic was harmless.
Spectrum appeals the judgment of the district court. We have jurisdiction under 28 U.S.C. § 1291
.
Our review is de novo. Purepac Pharm. Co. v. Thompson , 354 F.3d 877, 883 (D.C. Cir. 2004)
(); Serono Labs., Inc. v. Shalala , 158 F.3d 1313, 1319 (D.C. Cir. 1998) (). Because Spectrum challenges the decision of an administrative agency, de novo review means that we will “review directly the decision of the [agency].” Purepac , 354 F.3d at 883 (quoting Lozowski v. Mineta , 292 F.3d 840, 845 (D.C. Cir. 2002) ). Accordingly, we will uphold FDA's approval of Sandoz's generic drug under the Administrative Procedure Act unless that decision was “ ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’ ” Id. (quoting 5 U.S.C. § 706(2)(A) ).
Spectrum's primary argument on appeal is that FDA violated Spectrum's exclusive marketing rights by ignoring that doctors and patients would use Sandoz's generic for the Colorectal Indication.
The Food, Drug, and Cosmetic Act governs FDA's approval of a pharmaceutical drug. AstraZeneca Pharm. LP v. FDA , 713 F.3d 1134, 1136 (D.C. Cir. 2013)
. To secure FDA approval to market a new drug, a company files a new drug application (NDA) that triggers a process through which FDA approves new drugs shown to be safe and effective. 21 U.S.C. § 355(a) -(j). In its application, the company specifies what the drug will be used for and the volume in which it will be sold. Id. § 355(b). FDA's approval of an NDA allows the company to sell the drug at the proposed volume and with a label indicating the proposed purpose. Id. § 355(a). The first drug to be approved for a particular use through the NDA process is called a “pioneer.”
Recognizing that this process can be lengthy and expensive, due in part to the clinical trials required to determine a drug's safety and effectiveness, Congress crafted a statutory scheme that balances two interests: innovation and affordability. Teva Pharm. Indus. Ltd. v. Crawford , 410 F.3d 51, 54 (D.C. Cir. 2005)
. To promote innovation, Congress gave producers of pioneer drugs different periods of market exclusivity, depending in part on the type of drug they develop. 21 U.S.C. § 355(a) -(j). In 1983, Congress passed the Orphan Drug Act to lengthen the exclusive marketing period to seven years for drugs that treat rare diseases. Id. § 360cc(a). During that period, FDA may not, subject to certain exceptions not applicable here,2 approve another company's application “for such drug for such disease or condition.” Id.
Although market exclusivity promotes development of new drugs, it also risks increasing their price by eliminating competition. In an effort to hold down drug prices, Congress created a streamlined approval process for generic drugs in 1984. See Drug Price Competition and Patent Term Restoration Act (Hatch–Waxman Amendments), 21 U.S.C. § 355(j)
; Mead Johnson Pharm. Grp., Mead Johnson & Co. v. Bowen , 838 F.2d 1332, 1333 (D.C. Cir. 1988). Under that process, a company can file what is known as an abbreviated new drug application (ANDA) that relies on clinical research data for the pioneer rather than new studies for the generic. To secure FDA approval, an ANDA need show only that the generic drug is equivalent in all material respects to the pioneer drug. 21 U.S.C. § 355(j)(2)(A) ; Mead Johnson , 838 F.2d at 1333. FDA will not approve the generic until the exclusive marketing period for the pioneer expires.
A complication arises when a pioneer drug can be used for multiple purposes, and the exclusive marketing period for one use of the drug expires, while it continues for another. In this situation, FDA permits what is called a labeling “carve-out” that allows producers to sell a generic if they exclude from its label any indication that is still protected by exclusive marketing rights. 21 C.F.R. § 314.94(a)(8)(iv)
. Labeling carve-outs are so named because any exclusive use is carved out, i.e. , omitted, from the list of approved uses on the generic's label. FDA allows labeling carve-outs under the Orphan Drug Act just as it does for generics generally under the Food, Drug, and Cosmetic Act. No matter what use for the drug is described on the label, however, FDA does not prevent a doctor from prescribing a drug for some other use, called an “off-label” use. See
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