United States District Court, District of Columbia
BERYL A. HOWELL, District Judge.
A subsidiary of the plaintiffs, Ranbaxy Laboratories, Ltd. and Ranbaxy, Inc. (collectively, "Ranbaxy" or the "plaintiffs"), paid, in 2013, what was then the "largest drug safety settlement" in history, amounting to $500 million, in connection with criminal charges for falsifying data and manufacturing adulterated drugs at two of its facilities in India. U.S. Dep't of Justice, "Generic Drug Manufacturer Ranbaxy Pleads Guilty and Agrees to Pay $500 Million to Resolve False Claims Allegations, cGMP Violations and False Statements to the FDA, " May 13, 2013, available at http://www.justice.gov/opa/pr/generic-drug-manufacturer-ranbaxy-pleads-guilty-and-agrees-pay-500-million-resolve-false. During the course of the investigation into the plaintiffs' (now) admitted wrongdoing, the Federal defendants in this case-the Secretary of Health and Human Services, the Commissioner of the U.S. Food and Drug Administration ("FDA"), and the FDA-granted "tentative approval" to five Abbreviated New Drug Applications ("ANDAs") submitted by the plaintiffs for the manufacture of certain generic drugs at the same facilities involved in the plaintiffs' subsidiary's criminal case. See Defs.' Mem. Opp'n Pls.' Mot. Prelim. Inj. and Supp. Defs.' Mot. Summ. J. ("Defs.' Mem.") at 10-17, ECF No. 52.
Years after the grant of those ANDAs, when two of these tentative approvals were preventing other drug manufacturers from coming to market with generic versions of costly medications, the FDA reexamined and revoked two of those five tentative approvals, for esomeprazole and valganciclovir, stating the approvals had been granted "erroneously." Defs.' Mem. at 3; Compl. ¶ 38, ECF No. 1; Administrative Record ("AR") at 1 (Letter from FDA to plaintiffs regarding esomeprazole and valganciclovir ANDAs, Nov. 4, 2014 (the "Rescission Letter")). This agency action prompted the plaintiffs to file the instant suit, contending that the Federal defendants had no authority, statutory or otherwise, to correct their egregious error and rescind the tentative approvals. See generally Compl. Now pending before the Court is the plaintiffs' Motion for Preliminary Injunction (the "Pls.' Mot."), ECF No. 41; the Federal defendants' Motion for Summary Judgment (the "Defs.' Mot."), ECF No. 51; and the Motions for Summary Judgment from four other generic drug manufacturers, Dr. Reddy's Laboratories ("Dr. Reddy's"), Endo Pharmaceuticals, Inc. ("Endo"), Ivax Pharmaceuticals, Inc. ("Ivax"), and Teva Pharmaceuticals USA, Inc. ("Teva"),  which have each been granted leave to intervene in this matter as defendants, ECF Nos. 53 and 73. Although the FDA's practices, which apparently led to these errors, raise grave concerns, the Federal defendants' interpretation of the relevant portions of the Food, Drug, and Cosmetics Act (the "FDCA") as permitting the rescission of the erroneously issued tentative approvals is reasonable. Consequently, the Federal defendants' and defendant-intervenors' motions are granted and the plaintiffs' motion is denied.
The statutory regime under which generic drug applications, such as those at issue here, are approved, is complex. Thus, a brief summary of the regulations governing ANDAs and their approval is provided before turning to the history of the plaintiffs' applications, the concurrent investigations into the plaintiffs' manufacturing processes by the FDA, and the procedural background of the instant matter.
A. The Statutory Regime
All pharmaceutical manufacturers wishing to sell their products in interstate commerce must first seek approval from the FDA in compliance with 21 U.S.C. § 355. New drug applications ("NDAs") are subject to rigorous application protocols under which the applicant must prove the drug is safe and effective. See 21 U.S.C. § 355(b); Defs.' Opp'n Pls.' Mot. Temp. Restraining Order ("Defs.' TRO Opp'n") at 5, ECF No. 22-1. The applicant must also provide information about patents used in the drug, or for using the drug, "to which a claim of patent infringement could reasonably be asserted if a person not licensed by the owner engaged in the manufacture, use, or sale of the drug." 21 U.S.C. § 355(c)(2).
1. The Hatch-Waxman Amendments
Between 1962 and 1984, companies wishing to manufacture generic versions of drugs already approved for use had to follow the same rigorous steps as in a new drug application before the drug could be approved and sold, even though the generic equivalent was effectively identical to a brand name drug. H.R Rep. No. 98-857, pt. 1, (Report of the House Committee on Energy and Commerce on Drug Price Competition and Patent Term Restoration Act) at 14-15 (1984). In 1984, Congress passed the Drug Price Competition and Patent Term Restoration Act, codified in 21 U.S.C. § 355. Colloquially known as the "Hatch-Waxman Amendments, " the amendments created a process by which generic drugs could be approved on the basis of an "abbreviated" new drug application, an ANDA, by "piggy-back[ing]" on the studies already completed by the pioneer drug manufacturer. FTC v. Actavis, Inc. ( Actavis ), 133 S.Ct. 2223, 2228 (2013); see Mylan Labs, Inc. v. Thompson, 389 F.3d 1272, 1274-75 (D.C. Cir. 2004).
This statutory change removed a major expense for generic drug manufacturers, since "[u]nlike an NDA, an ANDA need not contain clinical evidence of the safety or efficacy of the drug." See Teva Pharm. Indus. Ltd. v. Crawford, 410 F.3d 51, 52 (D.C. Cir. 2005). Its purpose is "to speed the introduction of low-cost generic drugs to market, " Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S ( Caraco ), 132 S.Ct. 1670, 1676 (2012), thus increasing competition and, theoretically, lowering prices, Teva Pharms. USA, Inc. v. Sebelius, 595 F.3d 1303, 1305 (D.C. Cir. 2010). To further this goal, the Hatch-Waxman Amendments included the "so-called paragraph IV certification." Caraco, 132 S.Ct. at 1677. Since "the FDA cannot authorize a generic drug that would infringe a patent, " id. at 1676, Congress required ANDA applicants, in 21 U.S.C. § 355(j)(2)(A)(vii), to certify that the generic drug would not infringe upon any valid patents.
2. Paragraph IV Certification
Relevant to the instant matter, one of the bases on which an ANDA applicant may certify that its product will not infringe any valid patents is by certifying that some or all of the patents used in the making of the pioneer drug are invalid. 21 U.S.C. § 355(j)(2)(A)(vii)(IV). Known as a paragraph IV certification, this course of action entails significant risk since it will almost inevitably "provok[e] litigation" and, indeed, the mere filing of a paragraph IV certification is deemed to be "an act of infringement, which gives the [pioneer drug manufacturer] an immediate right to sue." Caraco, 132 S.Ct. at 1677; see 35 U.S.C. § 271(e)(2)(A). Assuming the pioneer drug manufacturer timely files suit, the FDA may not approve the ANDA, "usually for a 30-month period, " while the patent dispute is litigated. Actavis, 133 S.Ct. at 2228.
To incentivize manufacturers to take advantage of paragraph IV certifications, despite the considerable expense and difficulties, the Hatch-Waxman Amendments included a provision allowing the first generic manufacturer to file an ANDA predicated on this certification to "enjoy a period of 180 days exclusivity (from the first commercial marketing of its drug)." Id. at 2228-29 (citing 21 U.S.C. § 355(j)(5)(B)(iv)); Teva Pharms. USA, Inc., 595 F.3d at 1305 (noting exclusivity provision designed to "compensate [generic] manufacturers for research and development costs as well as the risk of litigation from patent holders" (internal quotation marks and citation omitted; alteration in original)). This exclusivity functions as a mini-generic monopoly for the generic drug manufacturer, providing a 180-day period in which only the first generic manufacturer may compete with the pioneer drug. Actavis, 133 S.Ct. at 2229. This incentive can be worth "several hundred million dollars, " but it can "belong only to the first generic to file." Id. (citations omitted).
3. Forfeiture Triggers
While the 180-day exclusivity period holds out the promise of substantial monetary compensation for first-to-file generic manufacturers, it is not guaranteed. The exclusivity is forfeited if any statutorily defined "forfeiture event" occurs. 21 U.S.C. § 355(j)(5)(D)(i). An applicant forfeits any 180-day exclusivity by (1) failing timely to market the drug after certain specified events have occurred, id. § 355(j)(5)(D)(i)(I); (2) withdrawing the ANDA, either itself or constructively by the agency, "as a result of a determination by the Secretary that the application does not meet the requirements for approval under [21 U.S.C. § 355(j)(4)], " id. § 355(j)(5)(D)(i)(II); (3) amending or withdrawing the applicant's paragraph IV certifications, id. § 355(j)(5)(D)(i)(III); (4) failing to obtain tentative approval "within 30 months after the date on which the application is filed, unless the failure is caused by a change in or a review of the requirements for approval of the application imposed after the date on which the application is filed, " id. § 355(j)(5)(D)(i)(IV); (5) entering into an agreement "with another applicant, the listed drug application holder, or a patent owner" found to be in violation of antitrust laws, id. § 355(j)(5)(D)(i)(V); or (6) expiration of the valid patents that would otherwise be infringed if the ANDA applicant marketed its drug, id. § 355(j)(5)(D)(i)(VI).
The forfeiture triggers were added to § 355(j) as an amendment to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (the "MMA"). 108 Pub. L. 173, 117 Stat. 2066, 2448-64. One of the amendment's primary sponsors noted during the final floor debate that the forfeiture triggers' purpose was to "ensure that the 180-day exclusivity period enjoyed by the first generic to challenge a patent cannot be used as a bottleneck to prevent additional generic competition." 149 Cong. Rec. S15746 (daily ed. Nov. 24, 2003) (statement of Sen. Schumer). The amendment was prompted by some "brand and generic companies... abusing this [180-day] exclusivity period-both through collusive agreements and use of other tactics" that prevented the timely appearance of generic drugs in the marketplace. Id. The amendments were intended to "end this abuse because the generic company forfeits its exclusivity if it doesn't go to market in a timely manner." Id. In short, the amendments were viewed as "important, pro-consumer cost containment provisions." Id.; see also id. at 15761 (statement of Sen. Frist) ("The [amendments] also take additional steps to reduce or eliminate the delays in the movement of generic drugs to the marketplace.").
Although Congress' stated goal with the 1984 and 2003 amendments to the FDCA was to bring generic drug products to market faster, the Act still requires ANDA applicants to fulfill myriad statutory requirements before receiving approval to market a generic version of a pioneer drug. This approval process is discussed below, since the transition from one stage to the next, and whether those transitions are irrevocable, are the key questions at issue in the instant matter.
B. The ANDA Approval Process
The Federal defendants describe three significant "milestones" in the ANDA process: (1) when the ANDA may be "received" by the FDA because it is "substantially complete" such that the agency may conduct a "substantive review, " Defs.' Mem. at 5; (2) when an ANDA receives "tentative approval, " id. at 6; and (3) when an ANDA receives final, or "effective, " approval, id. Each milestone is described in further detail below.
1. Substantially Complete
An ANDA does not require the submission of the results of human clinical trials, as is required for NDAs, but the application materials are substantial and governed by statute. See 21 U.S.C. § 355(j)(2)(A). An ANDA must contain, inter alia, "information to show" the bioequivalence of the proposed generic drug to the pioneer drug, id. § 355(j)(2)(A)(ii), id. § 355(j)(2)(A)(iv); a certification regarding any potential patent infringement, including, if applicable, the aforementioned paragraph IV certification, id. § 355(j)(2)(A)(vii); and "the items specified in clauses (B) through (F) of" 21 U.S.C. § 355(b)(1), which is the section of the FDCA governing the contents of NDAs, 21 U.S.C. § 355(j)(2)(A)(vi). By cross-referencing and incorporating certain clauses of § 355(b)(1), Congress required ANDAs to contain
(B) a full list of the articles used as components of such drug; (C) a full statement of the composition of such drug; (D) a full description of the methods used in, and the facilities and controls used for, the manufacture, processing, and packing of such drug; (E) such samples of such drug and of the articles used as components thereof as the Secretary may require; (F) specimens of the labeling proposed to be used for such drug.
21 U.S.C. § 355(b)(1). Thus, ANDAs must contain all the elements required for NDAs under § 355(b)(1) except for "full reports and investigations which have been made to show whether or not such drug is safe for use and whether such drug is effective for use" and "assessments required under [21 U.S.C. § 355c]." Id. The agency "may not require that an abbreviated application contain information in addition to that required by" the statute. Id. § 355(j)(2)(A). The Federal defendants summarize that § 355(j)(2)(A) requires, in essence, that the ANDA applicant "demonstrate that its proposed generic drug product is the same as the previously approved-innovator drug in several respects and that the ANDA sponsor can reliably manufacture the drug product." Defs.' Mem. at 4.
FDA regulations mandate that "within 60 days after FDA receives an application, the agency will determine whether the application may be filed." 21 C.F.R. § 314.101(a)(1). In reviewing the application, the FDA determines if the ANDA complies with the terms of § 355(j)(2)(A) and any applicable agency regulations so that the "application is sufficiently complete to permit a substantive review." Id. § 314.101(b)(1). The same regulation lists the acceptable reasons for the agency to refuse to "receive" an ANDA and the procedure to perfect the application. Id. § 314.101(d), (e). Once this "threshold determination" has been made, the ANDA proceeds to the next phase of its review.
2. Tentative Approval
The substantive review of an ANDA "involves reviews by many disciplines of various aspects of an application, including bioequivalence, chemistry, labeling, and manufacturing, " and, according to the Federal defendants, "often requires multiple review cycles' before an application is ready for approval." Defs.' Mem. at 5; see Admin. Rec. ("AR") at 312-14 (routing slip for tentative approval of generic ANDA, showing review by at least twelve FDA employees). The purpose of this review is to determine whether an ANDA meets the statutory requirements for approval such that the drug can be sold in interstate commerce. See 21 U.S.C. § 355(j). Since an ANDA is, by definition, based on a drug that has already been approved for marketing and, consequently, has been found to be safe and effective, an ANDA "shall" be approved by the FDA unless the ANDA fails to meet certain conditions, including if "the methods used in, or the facilities and controls used for, the manufacture, processing, and packing of the drug are inadequate to assure and preserve its identity, strength, quality, and purity." Id. § 355(j)(4)(A).
As the Federal defendants point out, however, "[t]he timing for ANDA approval depends, in part, on statutory patent protections afforded to the innovator drug." Defs.' Mem. at 6. In other words, an ANDA may meet all the requirements for approval, but the FDA may be barred by statute from approving the application until such time as certain patents for elements of the pioneer drug expire; in such cases, the agency may grant the ANDA "tentative approval." 21 U.S.C. § 355(j)(5)(B)(iv)(II)(dd)(AA). "Tentative approval, " according to the statute, "means notification to an applicant by the Secretary that an application under this subsection meets the requirements of paragraph (2)(A), but cannot receive effective approval because the application does not meet the requirements of this subparagraph...." Id.
Tentative approval is often an intermediate step between the submission of a substantially complete application and "effective approval" allowing the marketing of a generic drug, but the practical importance of tentative approval is limited. "A drug that is granted tentative approval... is not an approved drug and shall not have an effective approval until the Secretary issues an approval after any necessary additional review of the application." 21 U.S.C. § 355(j)(5)(B)(iv)(II)(dd)(BB); 21 C.F.R. § 314.107(b)(3)(v) ("Tentative approval of an application does not constitute approval' of an application and cannot, absent a final approval letter from the agency, result in an effective approval...."). Nevertheless, tentative approval does affect the eligibility of an ANDA applicant for the 180-day exclusivity period provided in 21 U.S.C. § 355(j)(5)(B)(iv).
As previously noted, the first ANDA applicant to file an ANDA with a paragraph IV certification is eligible for the 180-day exclusivity period, so long as none of the forfeiture triggers added to the law in 2003 apply. Supra Part I.A.3. One of those six forfeiture triggers, described as "forfeiture events" in the statute, is the failure of the ANDA applicant "to obtain tentative approval of the application within 30 months after the date on which the application is filed...." 21 U.S.C. § 355(j)(5)(D)(i)(IV). Thus, while tentative approval, standing alone, does not provide any tangible benefit to the ANDA applicant, if an ANDA applicant becomes eligible for the 180-day generic marketing exclusivity, the securing of tentative approval is necessary within a set time period in order to avoid forfeiting that exclusivity. Id. 
Importantly for the present dispute, the FDA maintains that its "policy... has always been, and remains, that an ANDA is not eligible for tentative approval absent a satisfactory showing of CGMP compliance." Defs.' Mem. at 29.
3. Final Approval
The eleven reasons allowed by statute for declining to provide final approval to an ANDA are set forth in 21 U.S.C. § 355(j)(4). Among these multiple reasons for the FDA to deny approval of an ANDA are that (1) the agency finds a drug's manufacturing process to be "inadequate to assure and preserve [a drug's] identity, strength, quality, and purity, " id. § 355(j)(4)(A); (2) the generic drug is not shown to be sufficiently similar to the pioneer drug, id. § 355(j)(4)(C); id. § 355(j)(4)(F); (3) the drug's inactive ingredients "are unsafe for use under the conditions prescribed, " id. § 355(j)(4)(H); (4) the approval of the pioneer drug has been revoked, id. § 355(j)(4)(I); (5) "the application does not meet any other requirement of paragraph (2)(A), " id. § 355(j)(4)(J); and (6) "the application contains an untrue statement of material fact, " id. § 355(j)(4)(K).
Final approval does not follow by operation of law from a tentative approval letter. See Ranbaxy Labs Ltd. v. FDA, 30 F.Supp.2d 15, 21 (D.D.C. 2004) (noting tentative approval does not convert to final approval "automatically" upon the cessation of patent litigation and expiration of a patent that previously prevented final approval). Rather, as expressly contemplated in § 355(j)(5)(B)(iv)(II)(dd)(BB), final approval accrues only after "any necessary additional review of the application" by the FDA after the impediments to final approval that necessitated a grant of tentative approval have been removed. Once final approval is requested, the agency once again reviews the ANDA and determines whether final approval should issue. See Abbreviated New Drug Application Regulations; Patent and Exclusivity Provisions, 59 Fed. Reg. 50, 338, 50, 352 (Oct. 3, 1994) (stating the "agency will examine the application to determine whether there have been any changes in the conditions under which the application was tentatively approved" before sending notice of final approval).
Once an ANDA has been granted final approval, the manufacturer may begin selling the drug in interstate commerce. See 21 U.S.C. § 355(a). Even after a drug has been marketed, however, the agency retains the ability to revoke that final approval. Id. § 355(e). The agency "shall, after due notice and opportunity for hearing to the applicant, withdraw approval of an application with respect to any drug under this section, " when it makes one or more of five findings: (1) that "such drug is unsafe for use under the conditions of use upon the basis of which the application was approved;" (2) that "new evidence of clinical experience, " indicates the drug is no longer safe for use; (3) that new evidence indicates the drug is not effective; (4) that appropriate patent information was not filed in a timely manner; or (5) "that the application contains any untrue statement of a material fact." Id. If the Secretary determines that "there is an imminent hazard to the public health, " the application may be suspended "immediately, " with an expedited hearing to be held after such suspension. Id.
The agency "may also, after due notice and opportunity for hearing to the applicant, withdraw the approval of an application" if the Secretary finds that (1) "the applicant has failed to establish a system for maintaining required records, or has repeatedly or deliberately failed to maintain such records...;" (2) that new information "evaluated together with the evidence before him when the application was approved, [shows that] the methods used in, or the facilities and controls used for, the manufacture, processing, and packing of such drug are inadequate to assure and preserve its identity, strength, quality, and purity;" or (3) that new information combined with knowledge previously available to the Secretary shows that "the labeling of such a drug... is false or misleading." Id.
* * *
To sum up, an ANDA typically passes through three distinct phases of FDA review on the generic drug's way to the marketplace. A generic drug manufacturer must first perfect an application before that application is reviewed on the merits. If the ANDA could be approved, except for the presence of blocking patents or other periods of exclusivity, the ANDA may be tentatively approved, which approval does not allow the marketing of the drug but may serve to preserve eligibility for a 180-day generic marketing exclusivity period by eliminating a potential forfeiture event. After any patent impediments are removed, the ANDA may be granted final approval, at which point the drug may be marketed in interstate commerce. Post-final approval, an ANDA's approval must be revoked, after due notice and hearing, pursuant to certain statutory requirements, and may be revoked in certain other circumstances. As context for the treatment of the ANDAs at issue in this litigation, the Court turns next to a review of the recent history of enforcement actions against the plaintiffs as a result of rampant compliance problems at the plaintiffs' production facilities in India where the generic drugs at issue were to be manufactured.
C. The Plaintiffs' Repeated Compliance Failures
The history of the plaintiffs' compliance-or lack thereof-with Current Good Manufacturing Practice (CGMP) at their facilities in India, where the plaintiffs planned to manufacture the generic drugs at issue in this litigation, is extensive. These compliance problems were apparently ongoing before, during, and even after the Federal defendants gave tentative approval to the ANDAs at issue. The Federal defendants now admit that granting tentative approval to these ANDAs was egregious error, which the FDA rectified, in November 2014, by rescinding the tentative approvals. These are the agency actions challenged by the plaintiffs in this lawsuit.
1. The 2006 Inspection
The plaintiffs' manufacturing facility in Simour District, Himanchal Pradesh, India ("Paonta Sahib"), was inspected by the FDA between February 20 and 25, 2006 in connection with certain of the plaintiffs' pending NDAs and ANDAs, including for antiretroviral drugs on the list of PEPFAR approved medications that were manufactured at the facility. AR at 1488 (Establishment Inspection Report, Ranbaxy Laboratories, Ltd. Simour District, India facility for inspection beginning Feb. 20, 2006 and ending Feb. 25, 2006 (the "2006 Inspection Report")). At the time of the 2006 Inspection Report, the plaintiffs [REDACTED\] Id. at 1491.
As reported in the 2006 Inspection Report, [REDACTED\],  id. at 1498-1506;[REDACTED\] id. at 1507; [REDACTED\] id. ; [REDACTED\] id. ; [REDACTED\], id. [REDACTED\]. id. at 1507-08; [REDACTED\] id. at 1508-09; [REDACTED\] id. at 1509; and [REDACTED\], id.
The plaintiffs discounted these observations in three letters filed with the FDA. AR at 1478-83 (Letter from plaintiffs to FDA, Mar. 20, 2006); id. at 1475-77 (Letter from plaintiffs to FDA, Apr. 20, 2006); id. at 1469-74 (Letter from plaintiffs to FDA, May 25, 2006). In each letter, the plaintiffs addressed one or more of the FDA's observations, either offering an explanation for the observation, see, e.g., id. at 1481 (noting [REDACTED\]), or noting that the plaintiffs had adopted new practices in response to the observations, see, e.g., id. at 1477 (noting new [REDACTED\]).
2. The 2006 Warning Letter
Despite these explanations and implemented changes, the FDA issued a "Warning Letter" to the plaintiff on June 15, 2006, noting that the inspection of the Paonta Sahib facility "revealed significant deviations from U.S. Current Good Manufacturing Practice (CGMP) Regulations... in the manufacture of drug products." Id. at 1462 (Letter from FDA to plaintiff, June 15, 2006 (the "2006 Warning Letter")). The 2006 Warning Letter acknowledged the plaintiffs' "actions to restructure the stability group and institute a Management Review Committee to oversee the stability program, " but noted that the agency "still [had] concerns regarding the observations." Id. Even with the changes, the FDA stated that "[t]here is no assurance that the stability sample test intervals for each attribute examined have been met to assure valid estimates of stability." Id. at 1463.
Perhaps foreshadowing later problems that would develop with the plaintiffs' reports to the FDA, the agency noted that the plaintiffs had averred that "a hard copy handwritten master list... identifies all the samples placed in each of the stability chambers" at the facility. Id. at 1464. The FDA investigators, however, did not see any such master list, "nor was it mentioned or provided to the investigative team when they initially requested the sample logbook or throughout the inspection." Id. The 2006 Warning Letter required the plaintiffs to submit a print-out of another log pertaining to stability sampling that the FDA investigators also failed to observe on their inspection, and further noted that certain of the plaintiffs' explanations were self-contradictory. See id. (noting "samples cannot be for both investigational purposes' only and impurity profile trending/deviations' because impurity testing is part of the drug product stability program"); id. at 1466 ("the purpose of these stand-by' samples remains unclear.... [p]lease clarify if these samples are for investigational' purposes, impurity profile' trending, or for regulatory global filings' and explain the rationale for storage of these samples at [REDACTED\] for up to [REDACTED\] months.").
Additionally, the 2006 Warning Letter contained details of the FDA's own studies finding that certain drugs from the Paonta Sahib facility "show much lower potencies in these batches within approximately three to six months of release, and well before their expiration dates, " as well as findings of "several abnormalities" among antiretroviral drugs shipped by the plaintiff to African nations under the PEPFAR program. See id. at 1467. As a result, the 2006 Warning Letter advised the plaintiffs that "[u]ntil FDA has confirmed correction of the deficiencies observed during the most recent inspection and compliance with CGMPs, this office will recommend withholding approval of any new applications listing your Paonta Sahib facility as the manufacturer of finished pharmaceutical drug products." Id.
In late August 2006, the plaintiffs responded to the 2006 Warning Letter by reaffirming their intention "to improve our quality programs and to enhance [their] operational performance at the Paonta Sahib facility." Id. at 1436 (Letter from plaintiffs to FDA, Aug. 29, 2006). As part of that commitment, the plaintiffs advised that they had retained a consulting firm "to verify that [their] stability laboratory program improvements are effective and systemic, and to verify the effectiveness of [their] commitments made in response to the Warning Letter." Id. This consulting team's assessment began in early July 2006 and was still ongoing as of August 29. Id. The plaintiffs also included a detailed response to the 2006 Warning Letter, identifying changes made to their policies and procedures in response to the FDA's observations, including some additional documentation. See id. at 1438-59. A month later, and of particular importance for the instant ANDAs, the agency requested [REDACTED\] [REDACTED\] Id. at 1434 (Letter from FDA to plaintiffs, Sept. 27, 2006).
The promised audit results proved to be a sticking point between the agency and the plaintiffs. In response to the FDA's request, the plaintiffs noted that "it was our and PAREXEL's understanding that it is FDA's policy not to review or copy any reports or records that result from such audits" and, consequently, the plaintiffs believed that turning over the report would "affect the candor with which personnel would approach future audits, and make them a far less valuable tool for senior management and for the company as a whole." Id. at 1431 (Letter from plaintiffs to FDA, Oct. 13, 2006). The plaintiffs offered to work with the agency to provide "other relevant materials" while stopping short of producing the audit report. Id.
On November 29, 2006, a team from the plaintiffs, including the plaintiffs' CEO, President, counsel, and a Vice-President from the plaintiffs' consulting firm, met with twelve FDA staff regarding the 2006 Warning Letter. Id. at 1424 (FDA's Meeting Minutes, Nov. 29, 2006). The agency expressed concern at the meeting "that there appeared to be a lack of global corrective actions" in response to the 2006 Warning Letter and peppered the plaintiffs' representatives with questions. See id. at 1425-28. In response to at least one of the concerns, the plaintiffs' consultant noted that certain "information was not provided" to the consultant "when requested" and believed that certain discrepancies between the plaintiffs' recollection of certain events and the inspectors' memories was "due mainly to communication barriers." Id. at 1427.
The PAREXEL audit report was a specific topic of discussion. "The Agency clarified that FDA's policy of not requesting company audits does not apply to third party audits, " such as that conducted by the plaintiffs' consultant. See id. at 1428. The plaintiffs' consultant averred that "disclosing results of audits to the Agency would be destructive to the company's audit program and be destructive to [the plaintiffs'] quality improvement goals for fear of disclosure of audits to the FDA." Id. The agency dismissed those concerns, noting that "audits are routinely received and reviewed by [the agency], and requested to see any information that could be provided by Parexel." Id. The plaintiffs agreed to "consider the request." Id. As to the scope of the audit, the plaintiffs' consultant stated that the consultant was "doing a retrospective verification of stability samples" and that a review of the accuracy of "all current and future ANDA filings" and that the results for the pending ANDAs "will be completed... and provided to the Agency in December, 2006." Id.
Finally, the FDA reiterated to the plaintiffs that the "hold on Ranbaxy's application[s]" instituted as part of the 2006 Warning Letter "would not be removed until the facility is re-inspected to ensure that updated procedures have been implemented and global issues have been addressed." Id. Although the plaintiffs appeared to push for a re-inspection as soon as possible, the agency noted that it "would be difficult to schedule a re-inspection in January, 2007, as this does not allow for sufficient preparation time." Id. Nevertheless, the FDA agreed to "work to schedule the ...