Lilly submitted to the FDA a New Drug Application (NDA) for its r-hGH product, seeking permission to market the drug commercially.
On November 3, 1986, Genentech submitted a "citizen petition" to the FDA. In it, Genentech took the position that Lilly's drug was, for the purposes of the Orphan Drug Act, the same as Protropin and therefore ineligible for marketing approval until 1992. Genentech asked the FDA to implement procedures under which the manufacturer of an orphan drug with marketing exclusivity would receive notice of, and the opportunity to contest, another manufacturer's claim that its drug was "different" for the purposes of Orphan Drug Act protection. Genentech also requested an administrative stay of approval of any new r-hGH products until Genentech received the proposed procedural opportunities, as well as an opportunity to seek judicial relief.
When Genentech learned that the FDA was preparing to approve the NDA for Lilly's methionyl-free r-hGH product, known commercially as Humatrope, Genentech sought an emergency stay from the FDA. When that request was denied, Genentech filed suit in this Court on March 6, 1987, seeking temporary, preliminary, and permanent injunctive relief, in addition to a declaratory judgment that the FDA's application of the Orphan Drug Act violated Genentech's statutory and constitutional rights.
The Court denied the plaintiff's request for a temporary restraining order on March 6, 1987.
That same day, the FDA formally responded to Genentech's citizen petition, denying the requests for implementation of new procedures and for a stay. The FDA also informed Genentech and Serono by letters that their methionyl-free r-hGH products had been designated orphan drugs.
On March 8, the FDA approved Lilly's NDA for Humatrope, thereby authorizing Lilly to market the drug commercially and triggering the orphan drug exclusivity provision of 21 U.S.C. § 360cc.
Genentech and Nordisk have submitted NDAs for methionyl-free r-hGH products, but the FDA has not yet ruled on either NDA.
I. Issues of Procedure and Justiciability
In opposing the motions for partial summary judgment, Lilly raises several threshold arguments relating to procedure and justiciability, rather than the substantive merits of the underlying claims. The Court finds none of them dispositive.
A. Claims Within the Scope of the Litigation
Lilly argues that Genentech is not entitled to summary judgment because its motion is based on a claim not found in the complaint. While Lilly concedes that count V of Genentech's complaint challenges the validity of Humatrope's designation as an orphan drug, it points out that the rationale advanced by Genentech for this argument was that Humatrope and Protropin are the "same" drug for the purposes of the Orphan Drug Act, not that Humatrope and pituitary-derived hGH are the same drug. Consequently, Lilly argues that Genentech should now, as "a matter of basic fairness," be estopped from ever seeking to invalidate Humatrope's designation on the ground that Humatrope and pituitary-derived hGH are the same drug. The Court disagrees.
Genentech bases its motion on information acquired through discovery (i. e., review of the administrative record relating to approval of the Humatrope NDA). That the basis for Genentech's claims would continue to evolve as relevant information was unearthed in discovery is plainly envisioned by the Federal Rules of Civil Procedure. As the Supreme Court stated in Conley v. Gibson, 355 U.S. 41, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957):
The Federal Rules of Civil Procedure do not require a claimant to set out in detail the facts upon which he bases his claim. * * * Such simplified "notice pleading" is made possible by the liberal opportunity for discovery and the other pretrial procedures established by the Rules to disclose more precisely the basis of both claim and defense and to define more narrowly the disputed facts and issues. Following the simple guide of Rule 8(f) that "all pleadings shall be construed as to do substantial justice," we have no doubt that petitioners' complaint adequately set forth a claim and gave the respondents fair notice of its basis. The Federal Rules reject the approach that pleading is a game of skill in which one misstep by counsel may be decisive to the outcome and accept the principle that the purpose of pleading is to facilitate a proper decision on the merits.
Id. at 47-48 (footnote omitted). Lilly makes no argument that it has been prejudiced in its ability to respond to Genentech's revised rationale for its claim that Humatrope's orphan drug designation was improper. Lilly requested - and was given - an enlargement of time to file its opposition to Genentech's motion for partial summary judgment. Accordingly, the Court can find no basis for frustrating Genentech's efforts to have the Court decide this case according to the facts as they are revealed in the administrative record.
Lilly also argues that the FDA's designation of Humatrope as an orphan drug is not yet ripe for judicial review because neither Genentech, Serono, nor Nordisk has experienced a negative impact by virtue of the designation. The assertion that Lilly's entitlement to the pre-approval benefits available under the Act (such as a tax break for development expenses) presents no legally cognizable injury is not challenged. The parties disagree, however, on the implications of the FDA's approval of the Humatrope NDA and Lilly's consequent right to seven years of marketing exclusivity. Lilly argues that none of the moving parties will suffer a cognizable injury until the FDA rejects an NDA on the basis of Humatrope's orphan drug exclusivity (at this time, Genentech and Nordisk have NDAs for methionyl-free r-hGH pending before the FDA). Genentech, Nordisk, and Serono respond that the FDA's designation constitutes "final agency action" which has had significant financial effects on their day-to-day operations.
"The law of ripeness, once a tangle of special rules and legalistic distinctions, is now very much a matter of practical common sense." Continental Air Lines, Inc. v. CAB, 173 U.S. App. D.C. 1, 522 F.2d 107, 124 (D.C. Cir. 1974); see also, e.g., Ciba-Geigy Corp. v. United States Environmental Protection Agency, 255 U.S. App. D.C. 216, 801 F.2d 430, 434 (D.C. Cir. 1986) (determination turns on "pragmatic balancing" of interests, rather than "nice legal distinctions"). When, as here, the Court is asked to review an administrative decision, the analytical framework is provided by Abbott Laboratories v. Gardner, 387 U.S. 136, 18 L. Ed. 2d 681, 87 S. Ct. 1507 (1967). In Abbott Laboratories, the Supreme Court prescribed two levels of inquiry: "the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration." 387 U.S. at 149; see also, e.g., Office of Communication of the United Church of Christ v. FCC, 826 F.2d 101, slip op. at 6 (D.C. Cir. 1987). Application of both the "fitness" standard and the "hardship" standard to the circumstances of this case indicates that movants' challenges to the Humatrope designation are indeed ripe for review.
The "fitness" determination calls on the Court to determine "whether the agency's position is merely tentative or, on the other hand, whether the agency views its deliberative process as sufficiently final to demand compliance with its announced position." Ciba-Geigy, 801 F.2d at 436. There is no question that the administrative decision at issue here - the FDA's designation of Humatrope as an orphan drug -- is final and no longer a subject of review at the agency. In notifying Serono of the orphan drug designation of Serono's methionyl-free r-hGH product (known as Saizen), the FDA informed Serono that if an NDA for another natural sequence hGH drug was approved before an NDA for Saizen (as Humatrope subsequently was), Serono could overcome the exclusivity of that first-approved drug only by providing sufficient data to demonstrate the clinical superiority of Saizen.
Thus, Serono, in preparing an NDA for Saizen, must now comply with additional requirements imposed as a result of the Humatrope designation. Moreover, the FDA insists that the designation is proper and does not indicate that any additional review will occur at the agency level. "Where, as here, the agency has stated that the action in question governs and will continue to govern its decisions, such action must be viewed as final in our analysis of ripeness." Better Government Ass'n v. Department of State, 250 U.S. App. D.C. 424, 780 F.2d 86, 93 (D.C. Cir. 1986) (emphasis in original) (footnotes omitted).
Another element of the "fitness" inquiry is a consideration of whether the issue in dispute is to be resolved as a matter of law, or whether the Court will be called on to resolve factual disputes properly left to the agency. Abbott Laboratories, 387 U.S. at 149; Alascom, Inc. v. FCC, 234 U.S. App. D.C. 113, 727 F.2d 1212, 1217 (D.C. Cir. 1984). The claims at issue here do not involve factual disputes, but rather require the Court to construe the meaning of statutory language and published FDA policy. Accordingly, the Court finds the movants' challenge to Humatrope's orphan drug designation to be fit for judicial review.
In approaching the "hardship" inquiry, the Court must ask whether the agency's position has a "'direct and immediate . . . effect on the day-to-day business' of the complaining parties." F.T.C. v. Standard Oil Co., 449 U.S. 232, 239, 66 L. Ed. 2d 416, 101 S. Ct. 488 (1980) (quoting Abbott Laboratories, 387 U.S. at 152); see also United States v. Storer Broadcasting Co., 351 U.S. 192, 199-200, 100 L. Ed. 1081, 76 S. Ct. 763 (1956); Ciba-Geigy, 801 F.2d at 436; Better Government Ass'n, 780 F.2d at 92. Movants present compelling evidence that the FDA's designation of Humatrope, coupled with the subsequent NDA approval, will have a significant impact on their day-to-day research and development efforts. It is undisputed that the costs of developing and gaining marketing approval for the sort of drugs involved here run into the tens of millions of dollars. If Humatrope's orphan drug designation and approval stand, 21 U.S.C. § 360cc(a) will bar for seven years approval of drugs being developed by movants. Accordingly, they find themselves locked in a dilemma: either continue to pour funding into drugs which, regardless of their safety and efficacy, may be barred from the marketplace, or accept the FDA's designation of Humatrope, cut their losses, and forego what could be a successful legal challenge. Such dilemmas are indicative of ripe disputes. See, e.g., Abbott Laboratories, 387 U.S. at 152; National Latino Media Coalition v. FCC, 259 U.S. App. D.C. 481, 816 F.2d 785, 790 (D.C. Cir. 1987).
Lilly's contention that no hardship will attach to Humatrope's designation until another NDA is formally denied on that basis is without merit. As discussed above, the designation is presently having, and will continue to have, a concrete effect on movants' day-to-day structuring of their businesses. The case law plainly indicates that such agency decisions may be reviewable even though not yet officially enforced. See Alascom, 727 F.2d at 1217; Continental Air Lines, 522 F.2d at 124-25. Although Lilly makes much of the fact that Serono has not yet submitted an NDA for Saizen, it is undisputed that the FDA has notified Serono that a Saizen NDA must be accompanied by data demonstrating clinical superiority over Humatrope, a costly and possibly unsustainable burden that is directly attributable to the challenged Humatrope designation. This imposition of additional responsibilities amply demonstrates the tangible impact of FDA's decision on Serono. See Ciba-Geigy, 801 F.2d at 436. Accordingly, the Court finds that both prongs of the Abbott Laboratories ripeness standard are satisfied with respect to the Humatrope orphan drug designation.
The Court reaches a different conclusion with respect to Serono's challenge to the orphan drug designation of Genentech's methionyl r-hGH Protropin. Although the Court's "fitness" discussion with respect to the Humatrope designation is equally applicable to the Protropin designation, no party has demonstrated any harm flowing from the Protropin designation. Unlike the Humatrope designation, which negatively affects the efforts of Genentech, Serono, and Nordisk to gain marketing approval for their methionyl-free r-hGH drugs, the Protropin designation (construed by the FDA to bar approval only of other methionyl r-hGH drugs) is not affecting the development efforts of any of the parties because Serono, Nordisk, and Lilly are not seeking to market methionyl r-hGH.
Accordingly, the Court finds that the "hardship" prong of the Abbott Laboratories test is not satisfied with respect to the Protropin designation.
Of course, the situation would be different if the FDA were to adopt, either on its own volition or as a result of this litigation, Genentech's position that Protropin's orphan drug exclusivity extends to methionyl-free r-hGH products.
C. Subject Matter Jurisdiction
In an extension of its argument that movants may only challenge the Humatrope designation if, and when, their NDAs are denied by the FDA, Lilly argues that this Court lacks subject matter jurisdiction over movants' challenges. Lilly relies on 21 U.S.C. § 355(h), which vests the federal courts of appeals with jurisdiction over appeals "from an order of the Secretary refusing or withdrawing approval of [a new drug] application under this section." However, as explained above, the Court finds that movants have standing to challenge the Humatrope designation prior to a ruling on their NDAs. The Supreme Court has recognized that manufacturers without NDAs pending may be sufficiently affected by FDA decisions regarding the "new drug" status of a product to support a district court action under the Administrative Procedure Act, though not an appeal to the court of appeals. See Weinberger v. Hynson, Westcott & Dunning, 412 U.S. 609, 627, 37 L. Ed. 2d 207, 93 S. Ct. 2469 (1973).
Moreover, it is unlikely that a court of appeals would have jurisdiction under 21 U.S.C. § 355(h) to review the validity of the Humatrope designation. Subsection (d) of 21 U.S.C. § 355 enumerates seven grounds for denying a new drug application, and subsection (h) limits the courts of appeals' direct review jurisdiction to denials "under this subsection." A denial based on Humatrope's orphan drug exclusivity would be based on 21 U.S.C. § 360cc(a) (which is silent on the matter of judicial review), not on a ground enumerated in 21 U.S.C. § 355(d). Given the courts' narrow construction of jurisdiction under 21 U.S.C. § 355(h), see Weinberger v. Bentex Pharmaceuticals, Inc., 412 U.S. 645, 651, 37 L. Ed. 2d 235, 93 S. Ct. 2488 (1973); Cutler v. Hayes, 260 U.S. App. D.C. 230, 818 F.2d 879, 887 n.61 (D.C. Cir. 1987), it is likely that movants would be rebuffed if they attempted to challenge the Humatrope designation in a court of appeals. "Agency action taken under sections [of the Food, Drug, and Cosmetic Act] silent [on judicial review] are directly reviewable in a district court under some appropriate head of its jurisdiction, for courts of appeals have only such jurisdiction as Congress has chosen to confer upon them." Cutler, 818 F.2d at 887 n.61. Accordingly, the Court holds that it has jurisdiction to entertain movants' challenge to the Humatrope designation.
II. Validity of the Humatrope Designation
Movants contend that Humatrope's orphan drug designation violated both the Orphan Drug Act and the FDA's binding regulations implementing the Act. Their argument is based on the contention that Humatrope and pituitary-derived hGH are the same drug. In light of the peculiar facts of this case, the Court cannot accept movants' contention, and therefore must uphold the Humatrope designation.
The dispute presented here involves the proper application of 21 U.S.C. § 360bb(a), the section of the Act governing orphan drug designations, which provides, in relevant part:
(1) The manufacturer or the sponsor of a drug may request the Secretary to designate the drug as a drug for a rare disease or condition. If the Secretary finds that a drug for which a request is submitted under this subsection is being or will be investigated for a rare disease or condition and --
(A) if an application for such drug is approved under section 355 of this title,