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Depomed, Inc. v. United States Department of Health and Human Services

United States District Court, D. Columbia.

September 5, 2014

DEPOMED, INC., Plaintiff,
v.
UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, et al., Defendants

Page 218

For DEPOMED INC., Plaintiff: Jessica L. Ellsworth, LEAD ATTORNEY, Judith E. Coleman, HOGAN LOVELLS U.S. LLP, Washington, DC.

For U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, U.S. FOOD AND DRUG ADMINISTRATION, KATHLEEN SEBELIUS, in her official capacity as Secretary, Department of Health and Human Services, MARGARET A. HAMBURG, in her official capacity as Commissioner of Food and Drugs, United States Food and Drug Administration, SYLVIA M. BURWELL, in her official capacity as Secretary, Department of Health and Human Services, Defendants: Andrew E. Clark, LEAD ATTORNEY, U.S. DEPARTMENT OF JUSTICE, Consumer Protection Branch, Washington, DC.

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MEMORANDUM OPINION

KETANJI BROWN JACKSON, United States District Judge.

Plaintiff Depomed, Inc. (" Depomed" ) is a pharmaceutical company that, as relevant

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here, has developed a drug to treat a rare condition known as post-herpetic neuralgia (" PHN" ).[1] Depomed contends that its drug, which is called Gralise, was automatically entitled to a seven-year period of marketing exclusivity under the Orphan Drug Act (the " Act" ), 21 U.S.C. § § 360aa-360ee, once the drug satisfied two statutory requirements: (1) designation by the Food and Drug Administration (" FDA" ) as a so-called " orphan drug" for use in treating a rare disease or condition, and (2) receipt of FDA approval to be marketed to the public. Depomed brought the instant action against the FDA, the United States Department of Health and Human Services, and both agencies' respective directors (collectively " Defendants" ) after the FDA refused to recognize the exclusivity period for Gralise despite its having met the statutory criteria; the one-count complaint alleges that such refusal violated the Administrative Procedure Act (" APA" ), 5 U.S.C. § § 701-706. Defendants do not dispute that the FDA has designated Gralise an orphan drug and has approved it to be marketed for treatment of PHN. Nevertheless, Defendants maintain that the FDA was not required to grant Gralise orphan drug exclusivity in the instant case because the FDA has already granted marketing approval to a drug called Neurontin for treatment of PHN, and according to the FDA, Depomed has not proven that Gralise is " clinically superior" to Neurontin--a requirement that the FDA has imposed because Gralise and Neurontin have the same active ingredient (gabapentin).[2] Through the instant action, Depomed requests declaratory and injunctive relief that, in essence, would force the FDA to recognize that Gralise is entitled to the statutory exclusivity period.

Before this Court at present are two dispositive motions: Plaintiff's motion for summary judgment, and Defendants' motion to dismiss or, in the alternative, for summary judgment regarding the complaint's allegation of a violation of the APA. Because this Court finds that the plain language of the Orphan Drug Act unambiguously requires the FDA to recognize that any drug that has been both designated as an orphan drug for treatment of a qualifying disease or condition and also approved for marketing is entitled to an exclusivity period, the Court will GRANT Plaintiff Depomed's motion for summary judgment and will DENY Defendants' motion to dismiss or, in the alternative, for summary judgment. Accordingly, judgment will be entered in Depomed's favor in this action, and the Court will order the FDA to recognize orphan-drug marketing exclusivity for Gralise for a period of seven years from the date the FDA approved Gralise for marketing. A separate order consistent with this opinion will follow.

I. BACKGROUND

A. Statutory And Regulatory Framework

1. The Orphan Drug Act

This case turns on the parties' competing interpretations of the statutory text and implementing regulations of the Orphan Drug Act. Congress enacted the Orphan Drug Act in 1983 as an amendment to the Food, Drug, and Cosmetic Act (" FDCA" ). See Orphan Drug Act, Pub. L. No. 97-414, 96 Stat. 2049 (1983) (codified at

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21 U.S.C. § § 360aa-360ee (2012)). The Act's fundamental purpose is to provide drug manufacturers with incentives to research and develop so-called " orphan drugs[,]" see id. § § 1(b)(1)-(3), which are drugs that treat certain " rare disease[s] or condition[s][,]" 21 U.S.C. § 360bb(a)(1).[3] As explained in the relevant congressional findings, prior to the Act's passage, it was considered generally financially impractical for pharmaceutical companies to develop such drugs. See § 1(b)(4), 96 Stat. at 2049 (noting that " so few individuals are affected by any one rare disease or condition" that " a pharmaceutical company which develops an orphan drug may reasonably expect the drug to generate relatively small sales in comparison to the cost of developing the drug and consequently to incur a financial loss" ). Because Congress believed that it was " in the public interest" that orphan drugs be developed, it enacted the Act " to reduce the costs of developing such drugs and to provide financial incentives to develop such drugs[.]" Id. at § § 1(b)(5)-(6).

By all accounts, the Act's chief " financial incentive[ ][,]" id., is a seven-year period of marketing exclusivity granted to certain drugs pursuant to section 360cc of the Act. See 21 U.S.C. § 360cc(a).[4] The central issue in this case is the parties' disagreement over what conditions a drug must satisfy to qualify for this exclusivity. The statute's exclusivity provision provides in relevant part that

if the [FDA] approves an application filed pursuant to section 355 of this title . . . for a drug designated under section 360bb of this title for a rare disease or condition, the [FDA] may not approve another application under section 355 . . . for such drug for such disease or condition for a person who is not the holder of such approved application . . . until the expiration of seven years from the date of the approval of the approved application[.]

Id. In other words, the plain language of the statute sets forth two procedural prerequisites for marketing exclusivity: first, the FDA must have " designated" the drug as an orphan drug, upon request from the drug's sponsor, pursuant to 21 U.S.C. § 360bb and its accompanying regulations[5]; and second, the FDA must have " approved" the designated orphan drug for marketing to the public pursuant to 21 U.S.C. § 355, which is the section of the FDCA that provides the general procedure for marketing approval of all the pharmaceutical products that the FDA regulates. If both conditions are met, then the Act provides that the FDA " may not approve another" such drug for marketing to the public for " seven years from the date" of the designated drug's approval. 21 U.S.C. § 360cc(a).

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Congress also provided two exceptions to the statutorily-mandated exclusivity period. Under the statute, the FDA may approve the marketing of subsequent drugs without regard to an existing exclusivity period if:

(1) the [FDA] finds, after providing the [exclusivity] holder notice and opportunity for the submission of views, that in such period the holder of the approved application . . . cannot assure the availability of sufficient quantities of the drug to meet the needs of persons with the disease or condition for which the drug was designated; or
(2) such holder provides the [FDA] in writing the consent of such holder for the approval of other applications . . . before the expiration of such seven-year period.

See id. § 360cc(b).

2. Exclusivity Under The FDA's Implementing Regulations

While Congress did not direct the FDA to promulgate implementing regulations for the Act's exclusivity provision, see 21 U.S.C. § 360cc, the FDA did so nonetheless. The resulting regulations, which are entitled " Orphan-drug Exclusive Approval" and codified in Subpart D of Part 316 of Title 21 of the Code of Federal Regulations (" C.F.R." ), largely parallel the statutory design of section 360cc, with at least one notable exception. The regulation entitled " Scope of orphan-drug exclusive approval" provides that

[a]fter approval of a sponsor's marketing application for a designated orphan-drug product for treatment of the rare disease or condition concerning which orphan-drug designation was granted, FDA will not approve another sponsor's marketing application for the same drug before the expiration of 7 years from the date of such approval as stated in the approval letter from FDA[.]

21 C.F.R. § 316.31(a) (2012) (emphasis added). Elsewhere, the regulations define the term " same drug" --a term that the regulations use in place of the statutory term " such drug" that appears in 21 U.S.C. § 360cc--to mean, in relevant part, " a drug that contains the same active moiety as a previously approved drug and is intended for the same use as the previously approved drug," with the exception " that if the subsequent drug can be shown to be clinically superior to the first drug, it will not be considered to be the same drug." 21 C.F.R. § 316.3(b)(13)(i).

The insertion of the " same drug" concept into the exclusivity regulations effectively limits the scope of exclusivity protection because under the regulations, only if a new drug uses the same active ingredient (" active moiety" ) to treat the same disease or condition as a drug that already has orphan-drug exclusivity and the new drug is also not found to be " clinically superior" to the existing orphan drug will the FDA consider the new drug to be the " same" as the drug with exclusivity and thereby forbid its marketing within the exclusivity period. Id.; id. § 316.31(a). Put another way, if the new drug is " clinically superior" to the drug with orphan-drug exclusivity-- i.e., the new drug has a " significant therapeutic advantage over and above" an " approved orphan drug[,]" 21 C.F.R. § 316.3(b)(3)--then the drugs are not considered to be the " same," and the FDA may approve the new drug notwithstanding the exclusivity period.

In short, the FDA's regulations permit the FDA to ignore a previously-approved drug's orphan-drug exclusivity in order to approve a new, clinically superior drug with the same active ingredient that will

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be marketed for treatment of the same disease or condition.[6]

3. Clinical Superiority Under The FDA's Implementing Regulations

Under the Act's implementing regulations, a finding of clinical superiority is also relevant at the designation stage of the orphan-drug exclusivity process. As explained above, in order to receive the seven-year period of orphan-drug exclusivity under the Act, the drug must first be " designated under section 360bb of this title for a rare disease or condition." 21 U.S.C. § 360cc(a). Congress authorized the FDA to promulgate regulations governing the section 360bb designation process, which the agency has done, see 21 C.F.R. § § 316.20-316.30, and those regulations require, among other things, an analysis of the potential clinical superiority of a drug that is being considered for orphan-drug designation under certain specified circumstances.

For example, at all times relevant to the resolution of this case, section 316.20 of Title 21 of the C.F.R., which governs the " [c]ontent and format of a request for orphan-drug designation[,]" provided in relevant part that a sponsor may seek designation " of a drug that is otherwise the same drug as an already approved orphan drug . . . for the same rare disease or condition if [the sponsor] can present a plausible hypothesis that its drug may be clinically superior to the first drug." Id. § 316.20(a). Under that iteration of this regulatory requirement, when a sponsor seeks orphan-drug designation for the " same drug as an already-approved orphan drug . . . for the same rare disease or condition," the sponsor must include in its designation request " an explanation of why the proposed variation may be clinically superior to the first drug." Id. § 316.20(b)(5). Indeed, the regulation specifically states that the " FDA will refuse to grant a request for orphan-drug designation if" a sponsor seeking designation of a " same drug as one that already has orphan-drug exclusive approval for the same rare disease or condition . . . has not submitted a medically plausible hypothesis for the possible clinical superiority of the subsequent drug." Id. § 316.25(a)(3).

B. Factual And Procedural History

There are no material disputes regarding the facts of the instant case, which begin with the FDA's approval of Neurontin for treatment of seizures in 1993 and for treatment of PHN in 2002, and continue through the procedural history of the instant case to the motions at issue in this Opinion.

1. The FDA's Approval Of Neurontin

The FDA first approved a drug with the active ingredient gabapentin in 1993, under the brand name Neurontin, for use in treating seizures. (Sealed Admin. R. (" SAR" ), ECF No. 18-1, at 19.)[7] Neurontin was subsequently approved for the treatment of PHN on May 24, 2002. (Admin. R. (" AR" ), ECF No. 17-6, at 27.) Although PHN qualifies as a " rare disease or condition" under ...


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