U.S. v. Generix Drug Corp., s. 80-5652

• Decision Date: 04 September 1981
• Docket Number: Nos. 80-5652,80-5856 and 80-5857,s. 80-5652
• Citation: 654 F.2d 1114
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. GENERIX DRUG CORPORATION, a corporation, Lewis Michael Orlove, Gary R. Dubin, and Ofelia Perez, Individual, Defendants-Appellants. . Unit B
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1114

654 F.2d 1114

UNITED STATES of America, Plaintiff-Appellee, v. GENERIX DRUG CORPORATION, a corporation, Lewis Michael Orlove, Gary R. Dubin, and Ofelia Perez Individual, Defendants-Appellants.

Nos. 80-5652, 80-5856 and 80-5857.

United States Court of Appeals, Fifth Circuit.

Unit B

Sept. 4, 1981.

Greene & Cooper, Robyn Greene, Miami, Fla., for defendants-appellants.

Nancy C. Garrison, John J. Powers, III, Washington, D.C., for plaintiff-appellee.

Appeals from the United States District Court for the Southern District of Florida.

Before MARKEY ^*, Chief Judge, and HILL and THOMAS A. CLARK, Circuit Judges.

JAMES C. HILL, Circuit Judge:

Before a "new drug" may be introduced into interstate commerce it must be approved by the Food and Drug Administration's "new drug application" (NDA) process. 21 U.S.C. § 355(a). Only drugs that are "new drugs" under 21 U.S.C. § 321(p) require an NDA as a condition of marketing. The NDA process is often expensive and time consuming. In the district court 498 F.Supp. 288, the plaintiff-appellee, the United States, alleged that Generix was distributing "new drugs" without approved new drug applications. The United States sought to enjoin this distribution pursuant to 21 U.S.C. § 332. These appeals arise from an order granting in part and denying in part the United States' motion for a preliminary injunction and denying Generix's motion for rehearing and motion to amend order on preliminary injunction. 28 U.S.C. § 1292(a)(1).

The issue in these appeals is whether the definition of "new drug" in the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 321(p) (West 1972) applies to the entire drug product or whether it applies only to a drug's active ingredients. We hold that the language and intent of Congress limits the definition to a drug's active ingredients. Accordingly, we vacate the preliminary injunction issued by the district court. ¹

I.

Definitions are important in this case. Appellant Generix distributes generic drugs. A generic drug is a copy of the active ingredient of another manufacturer's drug product which as has been shown to be safe and effective. ² A drug product is composed of an active ingredient, or incipient, which represents up to 10% of the product, and excipients, such as binders, coating, and capsules, which account for the remainder. Because manufacturing techniques vary, generic drug products often combine an active ingredient that is generally recognized as safe and effective and excipients that are unique to the individual manufacturer.

The active ingredients of Generix's drug products were not generally in issue in the district court proceedings. Rather, the government's experts testified that the variances in excipients due to different manufacturing processes can directly affect the bioavailability of the active ingredient. Bioavailability is a measure of the time it takes for a given drug product to deliver the active ingredient to the particular organ or area. Additionally, the differences in excipients can affect bioequivalence, a measure based on the comparison of one drug to another. Drug products which are bioequivalent can be used interchangeably for the treatment of the same illness.

Both government experts stressed that the differences in bioavailability and bioequivalence between the product originally prepared using the proved safe and effective "pioneer drug" and the product later produced using the same drug with, perhaps, different binders, coatings, etc. may effect the safety and efficacy of the generic drug product. This is especially true where the drug product involved is a sustained release drug. Differing rates of solubility due to differences in excipients may cause "dumping" of the active ingredient into the bloodstream all at once. In drugs where there is high toxicity, this may lead to an overdose.

In essence, the government argues that any difference between excipients renders a drug product a "new drug" within the meaning intended by the statute. According to the government, whether the active ingredient is generally recognized as safe and effective is irrelevant to the discussion. Therefore, the government concludes, Generix's products are "new drugs" due to differing excipients. Generix argues that if the active ingredient is generally recognized as safe and effective, the new drug product is not a "new drug" despite differences in excipients.

After reviewing the statute and the case law the district court settled on the following legal standard:

... (t)he manufacturer of the questioned product is entitled to a declaration that its product is not a "new drug" within the meaning of 21 U.S.C. § 321(p), only if the evidence has shown no reasonable possibility that the differences between the excipients in the recognized and questioned products will make the questioned products less safe and effective than the recognized product.

District Court Opinion at 292, quoting Premo Pharmaceutical Laboratories, Inc. v. United States, 475 F.Supp. 52, 55 (S.D.N.Y. 1979), reversed 629 F.2d 795 (2d Cir. 1980). The district court then concluded that the government's experts had raised a reasonable possibility that the safety and effectiveness of certain Generix drug products were suspect because of their excipients. The court further concluded that Generix had not refuted the government's proof. Accordingly, the district court enjoined Generix from distributing their products which contained allopurinal, spironolactone, furosemide, chlorothiazide with reserpine, amitriptyline, and diethylpropion hydrochloride. District Court Order at 294. The district court refused to enjoin the distribution of Generix products containing prochloreperazine meleate and chlorthalidone. Id.

II.

In determining whether or not the term "new drug" refers only to the active ingredient of a drug product, as distinguished from excipients, we turn first to the relevant statutes.

Title 21 U.S.C. § 321(g)(1) defines a "drug" as follows:

(g)(1) The term 'drug' means (A) articles recognized in the official United States Pharmacopoeia, official Homoeopathic Pharmacopoeia of the United States, or official National Formulary, or any supplement to any of them; and (B) articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals; and (C) articles (other than food) intended to affect the structure of any function of the body of man or other animals; and (D) articles intended for use as a component of any article specified in clauses (A), (B), or (C) of this paragraph; but does not include devices or their components, parts, or accessories.

21 U.S.C. § 321(g)(1). The record shows that the drugs listed in the sources described in subsection (A) of § 321(g)(1) are "drug substances." not drug products.

More importantly, Title 21 U.S.C. § 321(p) defines "new drug" as follows:

(1) Any drug ... the composition of which is such that such drug is not generally recognized, among experts qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, as safe and effective for use under the conditions prescribed, recommended, or suggested in the labeling thereof ...; or

(2) Any drug ... the composition of which is such that such drug, as a result of investigations to determine its safety and effectiveness for use under such conditions, has become so recognized, but which has not, otherwise than in such investigations, been used to a material extent or for a material time under such conditions.

21 U.S.C. § 321(p).

Under subsection (2), after a period of time has elapsed and marketing experience has been acquired, a "new drug" substance will no longer be considered a "new drug" requiring an approved NDA to be marketed. As the Supreme Court has noted:

Under subsection (2) (21 U.S.C. § 321(p)(2), a drug cannot transcend "new drug" status until it has been used "to a material extent or for a material time." Yet, a drug cannot be marketed lawfully before an NDA has been approved by the Commissioner on the basis of "substantial evidence." As the Solicitor General argues, "the Act is designed so that drugs on the market, unless exempt, will have mustered the requisite scientifically reliable evidence of effectiveness long before they are in a position to drop out of active regulation by ceasing to be a 'new drug.'

Weinberger v. Hynson, Westcott & Dunning, Inc., 412 U.S. 609, 631, 93 S.Ct. 2469, 2484, 37 L.Ed.2d 207 (1973).

If "new drug" refers to the drug product as opposed to the active ingredient, a drug could never "muster the requisite scientifically reliable evidence of effectiveness" in order to "drop out of active regulation by ceasing to be a 'new drug.' " This is so because the factors that bear on the safety and effectiveness of a specific product manufacturing techniques, quality control, and the precise manner of formulating the finished dosage are not part of the information made known to the medical community.

Indeed, as we are informed by counsel, a significant part of such information is a closely guarded trade secret that may not be revealed by the F.D.A. See 21 U.S.C. § 331(j). Specifically, FDA regulations prohibit public disclosure of certain information in a new drug application, including manufacturing methods and processes, quality control procedures and quantitative and semiquantitative formulas. 21 C.F.R. § 314.14(g). In addition, only the identity of inactive ingredients previously disclosed may be released. See 21 C.F.R. § 321(p)(2). Accordingly, the "general recognition" test called for by § 321(p) must apply to a drug product's active ingredient. Otherwise, each new drug product would be considered a "new drug" and § 321(p)(2) would be superfluous. ³

III.

In effect, the FDA's interpretation of the Act would create a product-by-product licensing system. ⁴ In addition to rendering the statutory language useless, such an interpretation...