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Ferring Pharmaceuticals, Inc. v. Burwell

United States District Court, District of Columbia

September 9, 2016

FERRING PHARMACEUTICALS, INC., Plaintiff,
v.
SYLVIA M. BURWELL, et al., Defendants. Re Document Nos. 30, 35, 36, 37, 38, 39, 40, 41, 42, 48, 49, 53, 57

         MEMORANDUM OPINION GRANTING PLAINTIFF'S MOTION FOR RECONSIDERATION; DENYING AS MOOT PAR PHARMACEUTICAL, INC.'S MOTION TO INTERVENE; DENYING AS MOOT THE PARTIES' RENEWED MOTIONS FOR SUMMARY JUDGMENT; DENYING AS MOOT PAR PHARMACEUTICAL, INC.'S MOTION FOR SUMMARY JUDGMENT; GRANTING THE PARTIES' MOTIONS TO SEAL; AND DENYING PAR PHARMACEUTICAL, INC.'S MOTION FOR A PROTECTIVE ORDER

          RUDOLPH CONTRERAS United States District Judge.

         I. INTRODUCTION

         Plaintiff Ferring Pharmaceuticals, Inc. (“Ferring”) is the manufacturer of PREPOPIK, a fixed-dose combination drug product that contains three drug substances: sodium picosulfate, magnesium oxide, and anhydrous citric acid. When it submitted a New Drug Application (“NDA”) for PREPOPIK to the U.S. Food and Drug Administration (“the FDA”), Ferring sought a five-year period of marketing exclusivity because one of the drug substances, sodium picosulfate, had never previously been approved in a NDA. The Federal Food, Drug, and Cosmetics Act (“FDCA”) provides for a five-year period of marketing exclusivity when a drug application is approved “for a drug, no active ingredient (including any ester or salt of the active ingredient) of which has been approved in any other application.” 21 U.S.C. § 355(j)(5)(F)(ii). During that five-year period, “no application may be submitted . . . which refers to the drug for which the subsection (b) application was submitted.” Id. Because PREPOPIK's other two active ingredients had previously been approved for market, the FDA applied its then-existing interpretation of the FDCA and determined that PREPOPIK was not entitled to a five-year period of marketing exclusivity because the finished “drug product” included active ingredients that had previously been approved in other drug products. Ferring filed a Citizen Petition challenging the FDA's interpretation and, in response, the FDA-acknowledging the policy concerns Ferring and two other pharmaceutical companies raised regarding the agency's interpretation-concluded that the FDCA could reasonably be read to refer to “drug substances” (the individual active ingredients of the drug). The FDA announced that it would change its interpretation and permit five-year exclusivity for fixed-combination drug products that contained a novel drug substance, even if that drug product also contained other previously approved drug substances. But the FDA also concluded that it would apply its interpretation only prospectively, and declined to alter its exclusivity determination for PREPOPIK.

         Ferring challenged the FDA's prior interpretation as contrary to the plain language of the FDCA, or an unreasonable interpretation of statutory ambiguity, under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). In an earlier Memorandum Opinion, the Court held that the FDA's prior interpretation was a reasonable interpretation of the FDCA's ambiguous language under Chevron Step Two, and that the interpretation was not arbitrary and capricious. See Ferring Pharm., Inc. v. Burwell, ___ F.Supp.3d ___, No. 15-0802, 2016 WL 1060199, at *7-14 (D.D.C. Mar. 15, 2016). At that time, the Court declined to reach Ferring's claim that, even if the FDA's prior interpretation was permissible, the agency's refusal to apply its new interpretation retroactively was arbitrary and capricious. Id. at *14-15. The Court noted that, at the administrative level, the FDA's initial response to Ferring's Citizen Petition had cited the D.C. Circuit's decision in Retail, Wholesale & Department Store Union v. NLRB, 466 F.2d 380 (D.C. Cir. 1972) as support for its retroactivity conclusion. See Ferring, 2016 WL 1060199, at *14. The Court directed the parties to file renewed motions for summary judgment addressing that line of cases. See Id. at *15.

         The parties have now filed those renewed motions for summary judgment. In addition, Ferring has moved for reconsideration of one aspect of the Court's Memorandum Opinion. And, in the midst of briefing, Par Pharmaceutical, Inc., a company that has filed an Abbreviated New Drug Application (“ANDA”) for approval to market a generic version of PREPOPIK, filed a motion to intervene and a related motion for a protective order. As explained below, the Court will grant Ferring's motion for reconsideration, deny as moot Par's motion to intervene and the parties' renewed summary judgment motions, and deny Par's motion for a protective order.

         II. FACTUAL BACKGROUND

         The Court previously surveyed the relevant statutory and factual background in full, and assumes familiarity with its prior Memorandum Opinion.

         A. Statutory Background

         The FDCA requires that all new prescription drugs be approved by the FDA before they can be marketed. See 21 U.S.C. § 355(a). Generally, when a pharmaceutical manufacturer submits an NDA for approval, it must support that application with full reports of clinical studies that demonstrate that the product is safe and effective. See Id. § 355(b). In 1984, Congress enacted the Hatch-Waxman Amendments, which “created a new system for protecting both the interests of drug manufacturers who produce new drugs and the interests of generic drug manufacturers and their consumers.” Abbott Labs. v. Young, 920 F.2d 984, 985 (D.C. Cir. 1990); see Drug Price Competition and Patent Term Restoration Act, Pub. L. No. 98-417, 98 Stat. 1585 (1984). The amendments simplified the approval process of generic versions of a previously approved drug by providing for the submission of two new types of drug applications. In one, called an Abbreviated New Drug Application (“ANDA”), a pharmaceutical manufacturer may rely on the FDA's finding that a previously approved drug-referred to as the “listed drug”-is safe and effective, so long as the applicant can demonstrate that the proposed generic drug is the “same as” the reference listed drug in several essential respects. See generally 21 U.S.C. § 355(j)(2)(A). In the other, called a “505(b)(2) application, ” a pharmaceutical manufacturer may rely on investigations that “were not conducted by or for the applicant and for which the applicant has not obtained a right of reference or use from the person by or for whom the investigations were conducted” to show that the drug is safe and effective. Id. § 355(b)(2).

         Notwithstanding the availability of these less onerous approval avenues, Congress also put in place incentives to promote the development of new drugs. As relevant to this case, the Hatch-Waxman Amendments established a five-year marketing exclusivity period for certain types of drugs, protecting a manufacturer from the submission of an ANDA or 505(b)(2) application and, thus, from generic competition. As amended, the FDCA provides that:

If an application submitted under subsection (b) of this section [21 U.S.C. § 355(b)] for a drug, no active ingredient (including any ester or salt of the active ingredient) of which has been approved in any other application under subsection (b) of this section, is approved after September 24, 1984, no application may be submitted under this subsection [concerning ANDAs] which refers to the drug for which the subsection (b) application was submitted before the expiration of five years from the date of the approval of the application under subsection (b) of this section . . . .

Id. § 355(j)(5)(F)(ii); see Id. § 355(c)(3)(E)(ii) (parallel provision providing the same five-year exclusivity period to prevent the filing of a 505(b)(2) application).

         Even if a drug is not eligible for a five-year period of marketing exclusivity, the Hatch-Waxman Amendments provide for a shorter, three-year period of exclusivity for certain changes to previously approved drugs. If an applicant submits one or more new clinical studies in support of a change in the conditions of an approved drug's use, the FDCA confers a three-year period of marketing exclusivity, so long as the FDA considers those studies to have been essential to the agency's approval of the change. 21 U.S.C. § 355(j)(5)(F)(iii); see also Id. § 355(c)(3)(E)(iii). Unlike the five-year exclusivity provision, which prohibits the FDA from even accepting an application during the exclusivity period, the three-year exclusivity provision only precludes the FDA from making a new ANDA or 505(b)(2) application effective before the end of the three-year period. Compare Id. § 355(j)(5)(F)(ii), with Id. § 355(j)(5)(F)(iii).

         The two clauses of the five-year exclusivity provision relevant to this case are what the parties refer to as the “eligibility” and the “bar” clauses. See A.R. at 203, ECF No. 26-4; Pl.'s Mem. Supp. Summ. J. at 13 (“Pl.'s Mem. Supp.”), ECF No. 20-1. The “eligibility clause” describes whether a drug is eligible for five-year exclusivity. To be eligible, a drug must be “a drug, no active ingredient (including any ester or salt of the active ingredient) of which has been approved in any other application under subsection (b) of [§ 355].” 21 U.S.C. § 355(j)(5)(F)(ii). If a drug meets that requirement, it will bar the types of ANDAs or 505(b)(2) applications identified in the “bar clause.” Specifically, “no application may be submitted . . . which refers to the drug for which the subsection (b) application was submitted before the expiration of five years from the date of the approval of the application.” Id. (emphasis added).

         The meaning of the word “drug” as used in the five-year exclusivity provision (or the other exclusivity provisions, for that matter) is not defined in section 355. Until recently, the FDA read the term “drug” in the “eligibility clause” to refer to a finished “drug product”-that is, “a finished dosage form, for example, tablet, capsule, or solution, that contains a drug substance, generally, but not necessarily, in association with one or more other ingredients.” 21 C.F.R. § 314.3(b). The FDA codified its interpretation of the five-year exclusivity provision in 21 C.F.R. § 314.108, proposed in 1989 and finalized in 1994.[1] See Abbreviated New Drug Application Regulations, 54 Fed. Reg. 28, 872 (July 10, 1989) [hereinafter “Proposed Rule”]; see also Abbreviated New Drug Application Regulations; Patent and Exclusivity Provisions, 59 Fed. Reg. 50, 338 (Oct. 3, 1994) [hereinafter “Final Rule”].

         At the time it promulgated the regulation, however, the FDA acknowledged that the statute posed a potential problem for the exclusivity holder, and that the Act “is ambiguous as to which ANDA[s] ¶ 505(b)(2) applications are affected by an innovator's exclusivity.” Proposed Rule, 54 Fed. Reg. at 28, 897. Specifically, under a narrow interpretation of the “bar clause, ” in which the “protection offered by exclusivity is that exclusivity covers only specific drug products . . ., an innovator's exclusivity could lose its value as soon as FDA approved a second full new drug application for a version of the drug.” Id. That is because “an ANDA could be approved by reference to the second approved version of the drug”-a separate drug product-“which would not be covered by exclusivity.” Id. (emphasis added). Thus, “[d]epending upon the meaning of the phrase ‘refer to' and the word ‘drug, '” the FDA was concerned that the five-year exclusivity provision and the other exclusivity provisions in the Hatch-Waxman Amendments “could be interpreted to allow ANDA[s] and 505(b)(2) applicants, once FDA approved subsequent new drug applications for different versions of the same drug, to circumvent the innovator's exclusivity by ‘referring to' the subsequent versions of the innovator's drug.” Id.

         By contrast, FDA noted that a possible “broader interpretation” of the bar clause “is that it covers the active moieties in new chemical entities . . . rather than covering only specific drug products, ” which “would protect the new active moiety of a new chemical entity . . . from generic competition even after FDA had approved subsequent full new drug applications for subsequent versions of the drug.”[2] Id. Because the FDA did not “believe that Congress intended the exclusivity provisions to discourage innovators from making improvements in their drug products nor from authorizing the marketing of competitive products, ” the FDA concluded that the “broader interpretation of the scope of exclusivity should be applied.” Id. The FDA has coined this interpretation its “umbrella policy, ” which it describes as providing that “5-year NCE [new chemical entity] exclusivity does not attach only to the first approved drug product that was eligible for 5-year NCE exclusivity, but also to the line of products containing the same active moiety.” A.R. at 206. And, although it is not quite spelled out in the proposed rule's preamble, the FDA now acknowledges that its umbrella policy resulted from the agency's interpretation of “drug” in the bar clause to mean “drug substance.” Id. at 225. A “[d]rug substance” is defined in relevant part as “an active ingredient that is intended to furnish pharmacological activity or other direct effect in the diagnosis, cure, mitigation, treatment, or prevention of disease or to affect the structure or any function of the human body.” 21 C.F.R. § 314.3(b).

         Taken together, then, prior to 2014, the FDA interpreted the five-year exclusivity provision to provide that only drug products containing no previously approved drug substances were eligible for exclusivity. Once eligible, however, the FDA interpreted the bar clause to bar all ANDAs and 505(b)(2) applications referencing that drug product or any later-approved products containing the product's drug substances, in order to preserve the innovator's exclusivity to the greatest extent possible.

         B. Factual & Procedural History

         Ferring's drug product PREPOPIK is intended for use in cleansing the colon in preparation for colonoscopy in adults. Compl. ¶ 32, ECF No. 2. PREPOPIK is a fixed-dose combination drug product. Id. Fixed-dose combination drug products “generally include two or more drug substances (active ingredients) in a fixed ratio, synthetically combined in a single dosage form.” A.R. at 200. PREPOPIK in fact contains three different active ingredients: sodium picosulfate, magnesium oxide, and anhydrous citric acid. Id. at 201; Compl. ¶ 32. Two of these ingredients, magnesium oxide and anhydrous citric acid, had previously been approved in an NDA. By contrast, sodium picosulfate, a stimulant laxative, had never previously been approved in any NDA. A.R. at 201. Because sodium picosulfate constituted a new drug substance, Ferring sought five-year exclusivity for PREPOPIK when it submitted its NDA. See Pl.'s Mot. Summ. J. Ex. 3 at 2, ECF No. 20-6. Ferring alleges that it was unable to seek a NDA for sodium picosulfate as a single-ingredient drug product because picosulfate's therapeutic benefit is realized only in combination with the other active ingredients. A.R. at 70, ECF No. 26-2. Ferring points out that the FDA did not require factorial studies-which are employed to ...


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