Teva Pharmaceuticals v. Food & Drug Admin, 05-5401.

• Decision Date: 16 March 2006
• Docket Number: No. 05-5401.,No. 05-5460.,05-5401.,05-5460.
• Citation: 441 F.3d 1
• Parties: TEVA PHARMACEUTICALS USA, INC., Appellee v. FOOD & DRUG ADMINISTRATION, et al., Appellants Apotex Inc., Appellant.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1

441 F.3d 1

TEVA PHARMACEUTICALS USA, INC., Appellee v. FOOD & DRUG ADMINISTRATION, et al., Appellants Apotex Inc., Appellant.

No. 05-5401.

No. 05-5460.

United States Court of Appeals, District of Columbia Circuit.

Argued March 9, 2006.

Decided March 16, 2006.

Appeals from the United States District Court for the District of Columbia (No. 05cv01469).

Jeffrey S. Bucholtz, Deputy Assistant Attorney General, U.S. Department of Justice, argued the cause for federal appellants. With him on the briefs were Peter D. Keisler, Assistant Attorney General, Eugene M. Thirolf, Director, and Andrew E. Clark, Attorney.

William A. Rakoczy argued the cause for appellant Apotex Inc. With him on the briefs were Christine J. Siwik, Lara E. Monroe-Sampson, and Arthur Y. Tsien.

Jay P. Lefkowitz argued the cause for appellee. With him on the brief was Steven A. Engel, John C. O'Quinn, and Michael D. Shumsky.

Before: RANDOLPH and TATEL, Circuit Judges, and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge RANDOLPH.

RANDOLPH, Circuit Judge:

The Federal Food, Drug, and Cosmetic Act grants a 180-day exclusive marketing period to the first generic drug manufacturer to file an Abbreviated New Drug Application ("application") that contains a challenge to the patents protecting a brand name drug. This exclusivity period begins to run either upon "notice [to the FDA] of the first commercial marketing of the drug" or on "the date of a decision of a court ... holding the patent [to the branded drug] to be invalid or not infringed, whichever is earlier." 21 U.S.C. § 355(j)(5)(B)(iv) (2000).¹ The meaning of the court decision trigger is before this court for the fifth time.²

We will assume familiarity with the statutory scheme governing generic drug approval, which we have described in previous opinions. See Teva Pharms., USA, Inc. v. FDA, 182 F.3d 1003, 1004-05 (D.C.Cir.1999) ("Teva I"); Purepac Pharm. Co. v. Friedman, 162 F.3d 1201, 1202-04 (D.C.Cir.1998); Mova Pharm. Corp. v. Shalala, 140 F.3d 1060, 1063-65 (D.C.Cir.1998). As to the facts, Bristol-Myers Squibb Co. manufactures and sells pravastatin sodium tablets under the brand name "Pravachol." Pravachol is a cholesterol-reducing medication that had $2 billion in domestic sales in 2004. Bristol-Myers owns or holds licenses to four patents covering Pravachol. The patent on the molecule itself (the "product patent") expires on April 20, 2006.³ The remaining patents, which protect particular formulations of the drug and methods for its use, expire in several years.

On December 20, 2000, Teva Pharmaceuticals USA, Inc. filed the first application to market generic pravastatin sodium in 10, 20, and 40 mg tablets. Teva certified that it would not market its generic version of Pravachol until after the product patent expired. See 21 U.S.C. § 355(j)(2)(A)(vii)(III) (2000). Teva challenged the remaining patents by filing a certification that they are "invalid or will not be infringed" by the generic product. See id. § 355(j)(2)(A)(vii)(IV) (2000). Such "paragraph IV" certifications are acts of patent infringement, see 35 U.S.C. § 271(e)(2)(A), (5), and they trigger statutory notice requirements to allow the patentholder to bring suit. See 21 U.S.C. § 355(j)(2)(B), (5)(B)(iii) (2000). They also confer upon the first filer the 180 days of marketing exclusivity that are disputed in this case. Id. § 355(j)(5)(B)(iv) (2000).

Bristol-Myers did not sue Teva or any of the other seven generic drug manufacturers that filed applications containing the identical patent certifications.⁴ Intervenor Apotex Inc., one such generics manufacturer, nevertheless sued Bristol-Myers in the Southern District of New York in October 2003. Apotex sought a declaration that Bristol-Myers's three patents covering Pravachol's formulation and method of use were invalid or not infringed by Apotex's generic pravastatin sodium product. Bristol-Myers did not answer the complaint; it instead moved to dismiss the complaint for lack of subject matter jurisdiction. The district court ultimately did not rule on this motion. On July 23, 2004, the court entered a "stipulation and order" signed by the parties. The stipulation and order stated that because "[Bristol-Myers] repeatedly represented and assured Apotex that, notwithstanding any disagreement on the scope or interpretation [of the disputed patents], it had no intention to bring suit against Apotex for infringement," Apotex stipulated that its complaint be dismissed "for lack of subject matter jurisdiction." APOTEX INC. v. BRISTOL-MYERS SQUIBB CO., No. 04 CV 2922, at 3, 2004 WL 3717665 (S.D.N.Y. July 23, 2004) ("Apotex").

With this stipulation in hand, Apotex asked the Food and Drug Administration to rule that Apotex's New York litigation produced a "decision of a court" that triggered Teva's exclusivity period for generic pravastatin sodium. Cf. Minn. Mining & Mfg. Co. v. Barr Labs., Inc., 289 F.3d 775, 780 (Fed.Cir.2002) (holding termination of second filer's litigation can trigger first filer's exclusivity and citing Teva I, 182 F.3d at 1010). In a letter to Teva and the other generic pravastatin sodium applicants, the FDA concluded that the Apotex "stipulation and order" qualified as a "decision of a court" under 21 U.S.C. § 355(j)(5)(B)(iv)(II) (2000), and that Teva's period of exclusivity therefore began to run on the date the stipulation and order became final, August 22, 2004. See Letter from Gary Buehler, Director, FDA Office of Generic Drugs, to Philip Erickson, Teva Pharms. USA (June 28, 2005) ("Letter"), reprinted in Joint Appendix (J.A.) 990. Under the FDA's decision, Teva's period of exclusivity would run out before the product patent expired, thereby allowing all manufacturers to enter the market at the same time in April 2006.

Teva challenged the FDA's decision in the instant case. The district court granted Teva's requests for a declaration that the FDA's conclusions were contrary to law and for injunctive relief preventing the FDA from approving any other generic pravastatin sodium application sooner than 180 days after Teva begins marketing its product. Teva Pharms. USA, Inc. v. FDA, 398 F.Supp.2d 176, 192-93 (D.D.C. 2005). The district court concluded that the voluntary dismissal of Apotex's declaratory judgment action did not meet the statutory definition of a "decision of a court." Id. at 190-91.

The district court consolidated Teva's motion for a preliminary injunction with a final decision on the merits, FED. R. CIV. P. 65(a)(2), and treated it as "akin [to a motion for] summary judgment." 398 F.Supp.2d at 181 & n. 1. We therefore review the district court's legal determination de novo. See SEC v. Bilzerian, 29 F.3d 689, 695 (D.C.Cir.1994). "[I]n effect," we "review directly the decision of the [Agency]" under the familiar standards of the Administrative Procedure Act, 5 U.S.C. § 706(2). Lozowski v. Mineta, 292 F.3d 840, 845 (D.C.Cir.2002).

The FDA treated the Apotex dismissal as a "decision of a court ... holding the patent ... invalid or not infringed," 21 U.S.C. § 355(j)(5)(B)(iv)(II) (2000), solely because it thought our decisions in Teva I and Teva Pharms., USA, Inc. v. FDA, No. 99-5287, 2000 WL 1838303 (D.C.Cir. Nov.15, 2000) ("Teva II"), compelled that result. The FDA stated that "under the rule of Teva, [the Apotex] dismissal qualifies as a court decision." It understood "the rule of Teva" to be "that a dismissal of a declaratory judgment action ... can qualify as a `decision of a court' . . . if the dismissal estops a future action against the [applicant] for infringement of the patent with respect to that drug product." Letter at 2.

Our decisions never announced such a rule. In Teva I, we considered the FDA's determination that a district court's dismissal of a patent declaratory judgment action for lack of subject matter jurisdiction was not a "decision of a court." We found the FDA's conclusion to be "arbitrary and capricious inasmuch as the FDA [took] an inconsistent position in another case and failed to explain adequately the inconsistency." Teva I, 182 F.3d at 1004. The Teva I court found the FDA's reasoning inadequate for three reasons. The court first held that the terms "decision" and "holding" in 21 U.S.C. § 355(j)(5)(B)(iv)(II) (2000) were ambiguous. Id. at 1007-08. Although the court stated that the statute could be interpreted to include dismissals of declaratory judgment actions as triggering events, id. at 1008-09, it left the final decision to the FDA: "The ... dismissal would appear to meet the requirements of a `court decision' under § 355(j)(5)(B)(iv)(II). On remand, of course, the FDA will have the opportunity to explain why it fails to meet them." Id. at 1009 (emphasis added). Second, the court found the terms "invalid" and "not infringed" to be ambiguous, and faulted the FDA for failing to reconcile its decision in the case with its own regulation. Id. at 1009-10. Third, the court found that the FDA acted contrary to its own published "Guidance for Industry" and prior decisions. Id. at 1010. We declined to evaluate the reasonableness of the FDA's statutory interpretation because the agency provided no explanation why it thought dismissals for lack of jurisdiction were or were not triggering events. Id. at 1011-12. In sum, the court stated that its "decision... rest[ed] on the FDA's failure to explain adequately its refusal to treat the... dismissal as a triggering `court decision.'" Id. at 1012.

When the case returned to this court after remand, we affirmed this understanding of Teva I: "In Teva I, we remanded the case ... to afford the agency the opportunity to address the merits of Teva's contention that the ... dismissal satisfies the court decision requirement." Teva II, 2000 WL 1838303, at *1 (internal quotation marks and citations omitted); see also id. at *3 (Edwards, C.J., concurring in part and dissenting in part) (noting that the Teva I court "did not... purport...