Teva Pharmaceuticals Usa v. Food and Drug Admin.

• Decision Date: 21 October 2005
• Docket Number: No. CIV.A. 051469JDB.,CIV.A. 051469JDB.
• Citation: 398 F.Supp.2d 176
• Parties: TEVA PHARMACEUTICALS USA, INC. Plaintiff, v. FOOD AND DRUG ADMINISTRATION, et al., Defendants, Apotex Inc., Intervenor-Defendant.
• Court: U.S. District Court — District of Columbia

398 F.Supp.2d 176

TEVA PHARMACEUTICALS USA, INC. Plaintiff, v. FOOD AND DRUG ADMINISTRATION, et al., Defendants Apotex Inc., Intervenor-Defendant.

No. CIV.A. 051469JDB.

United States District Court, District of Columbia.

October 21, 2005.

COPYRIGHT MATERIAL OMITTED

Jay P. Lefkowitz, Kirkland & Ellis LLP, John Caviness O'Quinn, Kirkland & Ellis, LLP, Steven Andrew Engel, Kirkland & Ellis, LLP, Washington, DC, for plaintiff.

Andrew E. Clark, U.S. Department of Justice, Office of Consumer Litigation, Washington, DC, Jeffrey Bucholtz, U.S. Department of Justice, Washington, DC, for defendants.

Arthur Y. Tsien, Olsson, Frank and Weeda, PC, Washington, DC, Christine J. Siwik, Rakoczy Molino Mazzochi Siwik LLP, Chicago, IL, Olsson, Frank & Weeda, P.C., Washington, DC, William A. Rakoczy, Rakoczy Molino Mazzochi, LLP, Chicago, IL, for intervenor-defendants.

Theodore C. Whitehouse, Willkie Farr & Gallagher LLP, Washington, DC, for amicus curiae.

MEMORANDUM OPINION

BATES, District Judge.

Plaintiff Teva Pharmaceuticals USA, Inc. ("Teva"), has sued defendant Food and Drug Administration ("FDA"), and defendants Michael O. Leavitt and Lester M. Crawford in their official capacities as the Secretary of Health and Human Services and the Commissioner of Food and Drugs, respectively. This action is the latest step in an ongoing dispute relating to whether dismissals of patent infringement declaratory judgment actions are recognized as court "decisions" under the law addressing abbreviated new drug applications. Teva challenges FDA's actions under: (1) the Federal Food, Drug and Cosmetic Act ("FDCA"), 21 U.S.C. §§ 301 et seq., as amended by the Drug Price Competition and Patent Term Restoration Act of 1984 ("Hatch-Waxman Act"), codified at 21 U.S.C. § 355; and (2) the Administrative Procedure Act, 5 U.S.C. § 706(2). Teva seeks declaratory relief under the Declaratory Judgment Act, 28 U.S.C. §§ 2201, 2202, and the issuance of injunctive relief. For the reasons discussed below, the Court finds that FDA's actions were "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law" under § 706(2) and that Teva is therefore entitled to the relief sought.

BACKGROUND

Teva is a pharmaceutical company, incorporated in Delaware and headquartered in Pennsylvania, that "develop[s], manufacture[s], and market[s]" generic versions of already-approved (or "branded") pharmaceuticals in the United States. Compl. at 3-4 ¶ 7. On December 20, 2000, Teva filed an abbreviated new drug application ("ANDA") with FDA, seeking permission to market the generic equivalent of the drug pravastatin sodium ("pravastatin") in 10 mg, 20 mg, and 40 mg doses. See Administrative Record ("Admin.Rec.") Exhs. 1, 2. Bristol-Myers Squibb Company ("BMS") holds four patents associated with Pravachol®, the branded version of pravastatin. See Admin. Rec. Exh. 2; see also Admin. Rec. Exhs. 3, 4. Pravachol ® is a drug that is prescribed to treat high cholesterol and cardiovascular disease. See Admin. Rec. Exh. 2. The BMS patents are on file with FDA as numbers 4,346,227 ("'227 patent"); 5,030,447 (" '447 patent"); 5,180,589 ("'589 patent"); and 5,622,985 (" '985 patent"). See Admin. Rec. Exh. 8 at 1. The '227 patent, expiring on April 20, 2006, claims the pravastatin compound itself, see Pl.'s Mem. in Support of Appl. for Prelim. Inj. at 7-8 ("Pl.'s Mem. in Supp."); the '447 and '589 patents claim specific formulations of the drug, see Pl.'s Mem. in Supp. at 7-8; and the '985 patent claims a particular method of use, see Admin. Rec. Exh. 7 at 5.

As required by the Hatch-Waxman Act, Teva filed certifications for each of the four BMS patents when it filed its ANDA. See Admin. Rec. Exhs. 7, 8 at 1-2; see also Admin. Rec. Exh. 3. Teva filed a paragraph III certification with respect to the '227 patent, stating that it did not intend to challenge the compound patent or to market generic pravastatin before the patent expires in April 2006. See Admin. Rec. Exh. 8 at 1-2; see also Admin. Rec. Exh. 3. For each of the remaining three patents, Teva filed a paragraph IV certification, asserting that the generic product would not infringe any of those patents and/or that those patents were invalid. See Admin. Rec. Exh. 8 at 1-2; see also Admin. Rec. Exh. 3. Following Teva's filing, at least seven competing generic pharmaceutical companies, including intervenor Apotex Inc. ("Apotex"), filed similar applications that also consisted of paragraph III certifications for the '227 patent and paragraph IV certifications for the remaining three patents. See BMS's Mem. of Law in Support of Def.'s Mot. to Dismiss Pl.'s Compl. in Apotex Inc. v. Bristol-Myers Squibb Co., No. 1:04-CV-2922 (S.D.N.Y.) at 7 ("BMS-Apotex Litig. Mem. Supp."). The filing of a paragraph IV certification is itself considered an act of infringement, entitling — but not requiring — the patent holder to bring suit against the filer, or any subsequent filer, immediately. See 35 U.S.C. § 271(e); Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661, 678, 110 S.Ct. 2683, 110 L.Ed.2d 605 (1990). BMS did not sue Teva or any of the subsequent filers. See BMS-Apotex Litig. Mem. Supp. at 9; see also Admin. Rec. Exh. 5 at 1.

As the first to file a paragraph IV certification, Teva was entitled to a 180-day period of marketing exclusivity, during which no other entity may market generic pravastatin. See 21 U.S.C. § 355(j)(5)(B)(iv)(II). This 180-day clock begins to run from the earlier of either the date on which the first filer commercially markets the generic drug, or the "date of a decision of a court in an action ... holding the patent which is the subject of the certification to be invalid or not infringed." Id. Teva estimates that this 180-day exclusivity period will push its total sales receipts two to three times higher during the first year that it markets generic pravastatin, with net revenues reaching hundreds of millions of dollars. Pl.'s Mem. in Supp. at 30. FDA tentatively approved Teva's application on May 20, 2002. Admin. Rec. Exh. 8. Teva never began marketing generic pravastatin. See Admin. Rec. Exh. 11.

On October 27, 2003, Apotex, one of the subsequent filers, sent a letter to BMS, in which it asked BMS to "agree in writing that Apotex's proposed generic pravastatin sodium product `does not and will not infringe the '447, '589, and '985 patents.'" See BMS-Apotex Litig. Mem. Supp. at 8. Although BMS never made such a guarantee of non-infringement, it did state in three separate letters, dated November 10, 2003, February 13, 2004 and February 20, 2004, that it did not intend to sue Apotex for infringement. See BMS-Apotex Litig. Mem. Supp. at 2. For example, the February 20, 2004 letter stated that BMS "has no intention, now or in the future, of suing [Apotex] for infringement of any of the three BMS patents so long as [Apotex's] previous representations about its proposed generic products remain accurate." Id. Apotex nonetheless filed suit against BMS on April 15, 2004 in the United States District Court for the Southern District of New York, pursuing a declaration of non-infringement, invalidity, and/or unenforceability. See Compl. in Apotex Inc. v. Bristol-Myers Squibb Co., No. 1:04-CV-2922, at 34 (S.D.N.Y.) (filed Apr. 15, 2004) ("BMS-Apotex Litig. Compl.").

BMS moved to dismiss on the grounds that no case or controversy existed because BMS had repeatedly assured Apotex that it had no intention of suing for infringement; therefore, Apotex could not reasonably fear suit by BMS. See BMS-Apotex Litig. Mem. Supp. at 2, 8, 12-13. Rather than litigating the motion, Apotex then withdrew its lawsuit by procuring a joint stipulation of dismissal, which stated that the action was to be dismissed for lack of subject matter jurisdiction. See Stipulation and Order in Apotex Inc. v. Bristol-Myers Squibb Co., No. 1:04-cv-2922, at 34 (S.D.N.Y.) at 3 ("BMS-Apotex Litig. Stip."). This document was a voluntary, consensual stipulation that was agreed to by Apotex and BMS without court involvement, signed by both Apotex and BMS without court involvement, and then submitted to the district court for its signature. The stipulation was procured before any arguments or hearings had taken place; in fact, BMS had not yet filed an answer to the complaint. Motions Hearing Tr. at 8 ("Tr."). In every way, the stipulation was wholly uncontested.

On July 23, 2004, the district court entered the stipulated dismissal order as submitted by the parties. Id. The dismissal order did not mention whether the dismissal was made with prejudice, see id., but it expressly based the dismissal on the fact that

prior to Apotex's filing of the Complaint herein, BMS repeatedly represented and assured Apotex that, notwithstanding any disagreement on the scope or interpretation of the claims of the '447, '985, and '589 patents, it had no intention to bring suit against Apotex for infringement of the '447, '985, and '589 patents with respect to Apotex's generic pravastatin sodium products that are the subject of ANDA No. 76-341.

BMS-Apotex Litig. Stip. at 3.

Nearly a year later, on June 28, 2005, FDA informed Teva by letter that Teva's 180-day exclusivity clock had been triggered by the dismissal of the BMS-Apotex lawsuit. See Admin. Rec. Exh. 11 at 1. Accordingly, FDA deemed the exclusivity period to have expired on February 18, 2005. Id. FDA considered the BMS-Apotex dismissal to be a "decision of a court with respect to any ANDA, in which the court holds the relevant patent is invalid, unenforceable or not infringed" under 21 U.S.C. § 355(j)(5)(B)(iv)(II). See id. at 4-5. This finding was based on FDA's interpretation of two prior cases decided by the D.C. Circuit: Teva Pharms., USA, Inc. v. FDA, 182 F.3d 1003 (D.C.Cir.1999) ("Teva I"), and Teva Pharms., USA, Inc. v. FDA, 2000 WL 1838303 (D.C.Cir.2000) (unpublished disposition) ("Teva II"). Id. at 3. FDA has interpreted these cases to establish that a "dismissal of a...