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Hi-Tech Pharmacal Co., Inc. v. United States Food and Drug Administration

December 10, 2008

HI-TECH PHARMACAL CO., INC., PLAINTIFF,
v.
UNITED STATES FOOD AND DRUG ADMINISTRATION, DEFENDANT, AND APOTEX, INC. INTERVENOR-DEFENDANT.



The opinion of the court was delivered by: John D. Bates United States District Judge

MEMORANDUM OPINION

On October 28, 2008, defendant Food and Drug Administration ("FDA") issued a final letter decision in which it determined that plaintiff Hi-Tech Pharmacal Co., Inc. ("Hi-Tech") had forfeited its 180-day period of marketing exclusivity under the Federal Food, Drug, and Cosmetic Act for the generic version of the branded drug COSOPT. Currently before the Court is Hi-Tech's motion for a preliminary injunction, permanent injunction, and declaratory judgment seeking to vacate FDA's decision under the Administrative Procedure Act ("APA") as arbitrary, capricious, and contrary to law. Hi-Tech seeks an injunction ordering FDA to withdraw or delay final marketing approval for generic COSOPT with respect to all other companies while Hi-Tech enjoys marketing exclusivity. In response, FDA opposes Hi-Tech's motion and intervenor-defendant Apotex, Inc. has also filed a motion for summary judgment seeking affirmance of FDA's October 28, 2008 decision. Upon careful consideration of the motions, the parties' several memoranda, the applicable law, and the entire record, the Court will deny Hi-Tech's motion, will grant Apotex's motion, and will also enter judgment in favor of FDA.*fn1

BACKGROUND

The statutory right to marketing exclusivity at issue here arises under 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 (known as the "Hatch-Waxman Act"), codified at 21 U.S.C. § 355 and 35 U.S.C. §§ 156, 271, 282, by the Best Pharmaceuticals for Children Act ("BPCA"), Pub. L. No. 107-109, § 10, 115 Stat. 1408 (2002), codified at 21 U.S.C. § 355a(m), and by the Medicare Modernization Act of 2003 ("MMA"), Pub. L. No. 108-173, §§ 1101-23, 117 Stat. 2066 (2003), codified at 21 U.S.C. § 355 and 35 U.S.C. § 271. The details of that statutory scheme and the marketing exclusivity incentive, as well as the factual and procedural background of this dispute prior to FDA's October 28, 2008 decision, were discussed fully in the Court's October 10, 2008 Memorandum Opinion -- a discussion the Court will not repeat here. See Hi-Tech Pharmacal Co., Inc. v. FDA, No. 08-1495, 2008 WL 4531774 (D.D.C. Oct. 10, 2008) ("Hi-Tech I").

In Hi-Tech I, this Court denied Hi-Tech's motion for a preliminary injunction largely because Hi-Tech was unable to demonstrate any likelihood of success on the merits of its APA claim due to the fact that FDA had not yet taken final agency action with respect to Hi-Tech's Abbreviated New Drug Application ("ANDA") or its claim of exclusivity. See 2008 WL 4531774 at *6-8. Moreover, FDA indicated that, at the earliest, it would take final action with respect to these issues on October 28, 2008 -- the first day that generic COSOPT could possibly be marketed. Generic marketing could not commence before this date due to a prior infringement suit brought by Merck against Hi-Tech on one of the COSOPT patents -- the '413 patent. After upholding the validity and enforceability of the '413 patent, the United States Court of Appeals for the Federal Circuit enjoined final approval of Hi-Tech's ANDA until October 28, 2008, when the '413 patent and its related period of pediatric exclusivity expired. See Merck & Co., Inc. v. Hi-Tech Pharmacal Co., Inc., 482 F.3d 1317 (Fed. Cir. 2007).*fn2 To preserve the rights of the parties with respect to an exclusivity determination, and any challenges thereto, the Court ordered that FDA provide advance notice of its intent to release an exclusivity decision. See Hi-Tech I, 2008 WL 4531774 at *11. By its status report filed on October 24, 2008, FDA gave notice of its intent to issue its exclusivity forfeiture decision and any appropriate ANDA approvals at a previously-scheduled status hearing with the Court on October 28, 2008. At the hearing, FDA issued a final exclusivity forfeiture decision in which it determined that no ANDA-applicant would be entitled to 180-day marketing exclusivity for generic COSOPT. See Pl.'s Ex. A at 2. In a sixteen-page letter decision,*fn3 FDA concluded that Hi-Tech, as a "first applicant,"*fn4 was eligible for marketing exclusivity under 21 U.S.C. § 355(j)(5)(B)(iv), but had forfeited its eligibility. See id. The decision stated that Hi-Tech had forfeited exclusivity because certain "forfeiture events" had occurred under the statute's "failure to market" provision, 21 U.S.C. § 355(j)(5)(D)(i)(I). See id. at 6-8.

In pertinent part, the FDCA provides that a "failure to market" occurs by the later of--(aa) the earlier of the date that is-- (AA) 75 days after the date on which the approval of the application of the first applicant is made effective under subparagraph (B)(iii); or (BB) 30 months after the date of submission of the application of the first applicant; or (bb) with respect to the first applicant or any other applicant (which other applicant has received tentative approval), the date that is 75 days after the date as of which, as to each of the patents with respect to which the first applicant submitted and lawfully maintained a [paragraph IV] certification qualifying the first applicant for the 180-day exclusivity period [ ], at least 1 of the following has occurred:

. . . (CC) The patent information submitted under subsection (b) or (c) of this section is withdrawn by the [holder of the New Drug Application ("NDA")].

21 U.S.C. § 355(j)(5)(D)(i)(I). In its decision, FDA found that an (aa)(BB) forfeiture event occurred on April 11, 2008 because Hi-Tech failed to market its product within 30 months of the submission date of its ANDA -- October 11, 2005. See id. at 6-7. The agency also concluded that a (bb)(CC) forfeiture event was triggered by Merck's April 26, 2006 request to delist the '735 and '443 patents from the Orange Book.*fn5 Hence, FDA found that a (bb)(CC) forfeiture event occurred on July 10, 2006, 75 days after the date that the relevant patent information was "withdrawn" by the NDA-holder, Merck. See id. at 7. Because April 11, 2008 was the later of the two "failure to market" forfeiture events, FDA concluded that Hi-Tech forfeited its eligibility for 180-day exclusivity on that date. See id. at 7-8.

As a result of FDA's October 28, 2008 exclusivity forfeiture decision, the agency was free to approve any generic COSOPT ANDA otherwise ready for final approval. See id. at 2. On that same day, FDA approved the ANDAs of both Hi-Tech and Apotex. See Mem. in Supp. of FDA Opp'n to Pl.'s Mot. ("FDA Opp'n") at 1. At the conclusion of the hearing, Hi-Tech expressed its strong disagreement with FDA's decision, but elected not to seek further relief. Instead, Hi-Tech opted to begin generic marketing immediately, in competition with Apotex, Merck's "authorized generic,"*fn6 and any other ANDA-applicants that subsequently received final FDA approval.*fn7 On November 7, 2008, ten days after it began non-exclusive marketing of its generic COSOPT product, Hi-Tech filed its First Amended Complaint ("Amended Complaint") and the instant motion for a preliminary injunction, permanent injunction, and declaratory judgment. The Amended Complaint challenges FDA's October 28, 2008 decision under section 706(2)(A) of the APA as "arbitrary, capricious, . . . or otherwise not in accordance with law." See Am. Compl. ¶¶ 4, 22. In addition to a judgment declaring that FDA's decision was arbitrary and capricious, Hi-Tech also seeks an injunction ordering FDA to withdraw or delay final marketing approval for generic COSOPT with respect to all other companies while Hi-Tech enjoys a 180-day exclusivity period. See id. at 6. Although Hi-Tech's accompanying motion seeks relief in several forms, it is primarily a motion for a permanent injunction because there are no facts in dispute, the sole controversy relates to a matter of statutory construction, and Hi-Tech is "seeking a final determination of actual success on the merits." Pl.'s Reply Mem. in Supp. of Mot. ("Pl.'s Reply") at 2. In response to Hi-Tech's motion, both FDA and Apotex opposed the relief requested by Hi-Tech, and Apotex also filed a motion for summary judgment seeking affirmance of FDA's October 28, 2008 decision.

STANDARD OF REVIEW

The standard for granting a permanent injunction is much like the standard for a preliminary injunction, and requires consideration of the following factors: (1) success on the merits; (2) whether the movant will suffer irreparable injury absent an injunction; (3) whether, balancing the hardships, there is harm to the respondent or other interested parties; and (4) whether the public interest supports granting the requested injunction. See Nichols v. Truscott, 424 F. Supp. 2d 124, 143 (D.D.C. 2006). Actual success on the merits is required to obtain permanent injunctive relief. Id. If the movant has no likelihood of success on the merits, inquiry into the remaining factors is unnecessary, for the injunctive relief must be denied on that ground alone. See Trudeau v. Federal Trade Comm'n, 456 F.3d 178, 182 n.2 (D.C. Cir. 2006).

Whether plaintiff can succeed on the merits is, under the circumstances of this case, informed by the deferential standard of review under the APA. Pursuant to the relevant provision of the APA, a court may vacate FDA's decision if it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). Agency actions are entitled to much deference, and the standard of review is narrow. See Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971). The reviewing court is not permitted to substitute its judgment for that of the agency. See id. That is, it is not enough for the agency decision to be incorrect -- as long as the agency decision has some rational basis, the court is bound to uphold it. See id. The court may only review the agency action to determine "whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment." Id.

Because FDA's exclusivity forfeiture decision turned upon the agency's interpretation of a statute, the familiar framework of Chevron USA, Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984), applies here. The first step is determining whether Congress has spoken directly to the "precise question at issue," for if it has, "the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Id. at 842-43; State of New Jersey v. EPA, 517 F.3d 574, 581 (D.C. Cir. 2008). When determining "whether Congress has spoken to the precise question at issue," courts "must first exhaust the 'traditional tools of statutory construction.'" Natural Resources Defense Council v. Browner, 57 F.3d 1122, 1125 (D.C. Cir. 1995) (quoting Chevron, 467 U.S. at 843 n.9). This typically includes an analysis of the text, structure, and purpose of the statute. See Ranbaxy Labs. Ltd. v. Leavitt, 469 F.3d 120, 124 (D.C. Cir. 2006). If, however, the statute is silent or ambiguous on the specific issue, in the second step of the inquiry "the question for the court is whether the agency's answer is based on a permissible construction of the statute." Chevron, 467 U.S. at 843. When the agency's construction of a statute is challenged at Chevron step two, its "interpretation need not be the best or most natural one by grammatical or other standards . . . . Rather [it] need be only reasonable to warrant deference." Pauley v. BethEnergy Mines, Inc., 501 U.S. 680, 702 (1991) (citations omitted).

Under Fed. R. Civ. P. 56(c), summary judgment is appropriate when the pleadings and the evidence demonstrate that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." In a case involving review of a final agency action under the APA, 5 U.S.C. § 706, however, the standard set forth in Rule 56(c) does not apply because of the limited role of a court in reviewing the administrative record. See North Carolina Fisheries Ass'n v. Gutierrez, 518 F. Supp. 2d 62, 79 (D.D.C. 2007). Under the APA, it is the role of the agency to resolve factual issues to arrive at a decision that is supported by the administrative record, whereas "the function of the district court is to determine whether or not as a matter of law the evidence in the administrative record permitted the agency to make the decision it did." See Occidental Eng'g Co. v. INS, 753 F.2d 766, 769-70 (9th Cir. 1985). Summary judgment thus serves as the mechanism for deciding, as a matter of law, whether the agency action ...


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