No. 95-28

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1995

SCHERING CORPORATION, PETITIONER

v\.

FOOD AND DRUG ADMINISTRATION

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

DREW S. DAYS, III

Solicitor General

FRANK W. HUNGER

Assistant Attorney General

DOUGLAS N. LETTER

Attorney

Department of Justice

Washington, D.C. 20530

(202)514-2217

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QUESTION PRESENTED

Under the Federal Food, Drug, and Cosmetic Act,

21 U.S.C. 301 et seq. (FDCA), a drug manufacturer

can receive approval from respondent Food and Drug

Administration (FDA) for a new generic drug

through an abbreviated application procedure (21

U.S.C. 355(j)), if the manufacturer establishes that

the generic drug is bioequivalent to a drug previously

approved by the FDA. The question presented is:

Whether the FDA\'s regulation, 21 C.F.R. 320.1(e),

implementing one of the statutory bioequivalence pro-

visions constitutes a reasonable interpretation of the

FDCA.

\(I\)

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TABLE OF CONTENTS

Page

Opinions below . . . . 1

Jurisdiction . . . . 1

Statement . . . . 2

Argument . . . . 9

Conclusion . . . . 12

TABLE OF AUTHORITIES

Chevron U.S.A. Inc. v. Natural Resources Defense

Council, Inc., 467 U. S. 837 (1984) . . . . 5, 6, 7, 11

Schering Corp. v. Shalala, 995 F.2d 1103 (D.C. Cir.

1993\) . . . . 5

Schering Corp. v. Sullivan, 782 F. Supp. 645(D.D.C.

1992), vacated as moot, 995 F.2d 1103 (D. C. Cir. 1993) . . . . 4-5

Tri-Bio Laboratories, Inc, V. United States, 836 F.2d

135 (3d Cir. 1987), cert. denied, 488 U. S. 818 (1988) . . . . 8

Weinberger v. Hynson, Wescott & Dunning, Inc., 412

U.S. 609 (1973) . . . . 8

Statutes and regulations:

Federal Food, Drug, and Cosmetic Act, 21 U. S. C. 301

et seq. . . . . 2,9

21 U.S.C. 355(b) . . . . 2, 3

21 U.S.C. 355(j)(2)(A)(iv) . . . . 2

21 U.S.C. 355(j)(6)(A)( i)(III) . . . . 10

21 U.S.C. 355(j)(7)(A) . . . . 6, 10

21 U.S.C. 355 (j)(7)(B) . . . . 2-3, 5, 6, 7, 8, 9, 10

21 U.S.C. 355(j)(7)(B)(i) . . . . 2,4

21 U.S.C. 355(j)(7)(B)(ii) . . . . 3,4

Drug Amendments of 1962, Pub. L. No. 87-781, 76 Stat.

780 . . . . 8

21 C.F.R.:

Section 320.1(e) . . . . 3, 4, 6, 9

Sections 320.1-320.62 (1977) . . . . 7

Section 320.22 (1977) . . . . 7

\(III\)

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IV

Regulations-Continued:

Section 320.24 (1977) . . . . 7

Section 320.53 (1977) . . . . 7

Section 320.57 (1977 . . . . 7

Miscellaneous

H.R. Rep. No. 857, 98th Cong., 2d Sess. Pt. I (1984) . . . . 7

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In the Supreme Court of the United States

OCTOBER TERM. 1995

No. 95-28

SCHERING CORPORATION, PETITIONER

v\.

FOOD AND DRUG ADMINISTRATION

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1a-

21a) is reported at 51 F. 3d 390. The opinion of the

district court (Pet. App. 22a-31a) is reported at 866 F.

Supp. 821.

JURISDICTION

The judgment of the court of appeals was entered on

April 3, 1995. The petition for a writ of certiorari was

filed on July 3, 1995. The jurisdiction of this Court is

invoked under 28 U.S.C. 1254(1).

\(1\)

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STATEMENT

1\. The Federal Food, Drug, and Cosmetic Act, 21

U.S.C. 301 et seq. (FDCA), provides that manu-

facturers of new generic drugs can obtain approval for

their products from respondent, the Food and Drug

Administration (FDA), through an abbreviated appli-

cation procedure, without the clinical testing that is

necessary as part of a new drug application procedure.

To obtain FDA approval for a generic drug under the

abbreviated procedures, the manufacturer must estab-

lish, inter alia, that its generic drug is bioequivalent

to a drug that previously was approved by the FDA.

See 21 U.S.C. 355(b); 21 U.S.C. 355(j)(2)( A)(iv). Bio-

equivalence occurs \"when two drugs possess the

same efficacy.\" Pet. App. 5a.

The FDCA describes two circumstances in which a

drug \"shall be considered to be bioequivalent\" to

another drug. Section 355(j)(7)(B), which was added in

1984 as part of the expansion of the abbreviated appli-

cation procedure, provides:

A drug shall be considered to be bioequivalent to a

listed drug if-

\(i\) the rate and extent of absorption\[1\] of the

drug do not show a significant difference from the

rate and extent of absorption of the listed drug

when administered at the same molar dose of the

therapeutic ingredient under similar experimental

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(footnotes)

1\. Absorption describes the process by which an active drug

ingredient enters the body\'s physical system. Systemic absorp-

tion is the process by which a drug is introduced into the

bloodstream, as occurs when a pill is taken orally or a drug is in-

jected directly into the bloodstream.

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3

conditions in either a single dose or multiple doses:

or

\(ii\) the extent of the absorption of the drug

does not show a significant difference from the

extent of absorption of the listed drug when

administered at the same molar dose of the

therapeutic ingredient under similar experimental

conditions in either a single dose or multiple doses

and the difference from the listed drug in the rate

of absorption of the drug is intentional, is reflected

in its proposed labeling, is not essential to the

attainment of effective body drug concentrations

on chronic use, and is considered medically

insignificant for the drug.

21 U.S.C. 355(j)(7)(B).

In 1992, the FDA promulgated regulations imple-

menting the bioequivalence requirements for generic

drugs approved under the 1984 abbreviated application

procedure. The regulation implementing subpart (i)

of Section 335(j)(7)(B) defines bioequivalence as \"the

absence of a significant difference in the rate and

extent to which the active ingredient or active moiety

in pharmaceutical equivalents or pharmaceutical al-

ternatives becomes available at the site of drug action

when administered at the same molar dose and under

similar conditions in an appropriately designed

study.\" 21 C.F.R. 320.1(e).

2\. Petitioner, a manufacturer of certain pioneer 2

drug products previously approved by the FDA, filed

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(footnotes)

2\. A pioneer drug is the first drug product, defined by its

particular active ingredient, to receive FDA approval for a

specified use. Pet. App. 2a

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suit in the United States District Court for the

District of New Jersey claiming that the FDA\'s reg-

uation defining bioequivalence, 21 C.F.R. 320.1(e), is

invalid. Petitioner argued that the statutory pro-

visions regarding bioequivalence, 21 U.S.C. 355(j)-

(7)(B)(i) and (ii), constitute the only permissible def-

initions of bioequivalence and that these definitions

call for an assessment of the actual absorption of drug

products by the body. Petitioner contended that the

FDA\'s regulation impermissible broadens that statu-

tory definition by replacing the statutorily prescribed

measurement of drug absorption with a measurement

that assesses when the drug becomes available at the

site of actions. 3.

The district court denied petitioner\'s motion for

summary judgment and entered summary judgment

for the FDA. Pet. App. 22a-32a.4 The court adopted

the reasoning of an earlier issued opinion of the

United States District Court for the District of

Columbia. Schering Corp. v. Sullivan, 782 F. Supp.

645 (1992), vacated as moot, 995 F.2d 1103 (D.C. Cir.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(footnotes)

3\. Petitioner argued that the bioequivalent standard based on

absorption set forth in the FDCA could not be met for certain of

its pioneer products that are non-systemically effective drugs,

i.e. medications effective through topical application, such as

ointments and mist inhalers. Therefore, under petitioner\'s

interpretation and absent the FDA regulation defining bio-

equivalence to focus on availability, generic drugs claiming to be

copies of petitioner\'s non-systemically effective drugs could not

be approved through the abbreviated procedure because the

abbreviated procedure requires the absorption bioequivalent

determination. See Pet. App. 4a-5a.

4\. The district court rejected the FDA\'s challenge to peti-

tioner\'s standing to maintain the action, as did the court of ap-

peals. Pet. App. 26a-30a; id. at 13a.

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5

1993\) (set forth at Pet. App. 33a-49a). That\' opinion

arose out of an action petitioner had commenced in

1989, seeking a declaration from the FDA that, inter

alia, the bioequivalence requirement in the 1984

abbreviated application procedure could be met only

by satisfying one of the two circumstances set forth

in 21 U.S.C. 355(j)(7)(B). The district court in the

earlier case had rejected petitioner\'s claim and en-

tered summary judgment for the FDA. 5. Consistent

with that ruling, the district court below granted

summary judgment to the FDA, concluding that

\"Congress had not set forth an exclusive definition of

\`bioequivalent.\'\" Pet. App. 31a.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(footnotes)

5\. Petitioner had petitioned the FDA in 1989 to deny all

abbreviated applications for approval of non-systemically effec-

tive drugs. The FDA denied the petition and petitioner sought

judicial review. The district court granted the FDA summary

judgment. Pet. App. 33a-49a. The district court rejected peti-

tioner\'s claim that 21 U.S.C. 355(j)(7)(B) provided the exclusive

means for determining the bioequivalence required in the abbre-

viated application procedure. Pet. App. 43a. The court applied

the two-step analysis in Chevron U.S.A. Inc. v. Natural

Resources Defense Council, Inc., 467 U.S. 837 (1984). and con-

cluded that the congressional intent behind Section 355(j)(7)(B)

is clear and that \"Congress permitted the FDA to retain its

historically wide discretion in defining showings of \`bioequiv-

alence.\' \" Pet. App. 38a. The court also held, alternatively, that

even if the FDCA is ambiguous or silent on the issue, the FDA\'s

interpretation is valid because it is a reasonable interpretation in

light of the absence of any evidence that Congress intended to

override the FDA\'s practice of accepting alternative showings

of bioequivalence. Id. at 38a, 43a-44a. The case ultimately was

dismissed as moot on appeal, and the district court opinion

vacated, in light of the intervening promulgation of the

regulation, defining bioequivalence, which is at issue in this case.

Schering Corp. v. Shalala, 995 F.2d 1103 (D.C. Cir. 1993).

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3\. The court of appeals affirmed. Pet. App. 1a-21a.

Applying the two-step analysis in Chevron U.S.A.

Inc. v. Natural Resources Defense Council, Inc., 467

U.S. 837 (1984), the court held that the language of

Section 355(j)(7)(B) is ambiguous, and that the FDA\'s

regulation, 21 C.F.R. 320.1(e), is a permissible con-

struction of the statute. Pet. App. 3a, 16a-19a.

With regard to the first step of the Chevron analy-

sis-whether the statute is ambiguous-the court of

appeals disagreed with the district court\'s conclusion

that Section 355(j)(7)(B) unambiguously does not con-

stitute an exclusive definition of \"bioequivalent.\" The

court of appeals also disagreed, however, with peti-

tioner\'s argument that Section 355(j)(7)(B) is un-

ambiguously exclusive. Instead, the court of appeals

concluded that Section 355(j)(7)(B) is ambiguous.

The court acknowledged that Section 355(j)(7)(B) is

couched in terms different from the immediately pre-

ceding Section, which unambiguously constitutes an

exclusive definition of another term. See 21 U.S.C.

335(j)(7)(A).6 Nonetheless, the court of appeals de-

clined to find that the difference in language meant.

that Section 335(j)(7)(B) was unambiguously intended

not to be an exclusive definition. The court found

instead that the difference in language renders

Section 255(j)(7)(B) ambiguous and that that deter-

mination is reinforced by other provisions of the

FDCA that indicate that Congress envisioned the use

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(footnotes)

6 That Section provides:

\(A\) The term \"bioavailability\" means the rate and

extent to which the active ingredient or therapeutic! in-

gredient is absorbed from a drug and becomes available at

the site of drug action.

21 U.S.C. 335(j)(7)(A).

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7

of more than the one method of determining bio-

equivalence. Pet. App. 15a-17a. The court found that

the legislative history of the 1984 Amendments that

added Section 355(j)(7)(B) to the FDCA does not alter

that conclusion.

Turning to the second step of the Chevron analy-

sis-whether the agency\'s interpretation of the am-

biguous statute is reasonable-the court of appeals

agreed with the district court that the FDA\'s inter-

pretation is a permissible construction of the FDCA.

The court of appeals reasoned that the 1984 Amend-

ments to the FDCA were intended to be a means for

extending the abbreviated approval process, and there

was no evidence that Congress intended to restrict

the FDA\'s discretion in determining the bio-

equivalence of drugs for purposes of that process.

Pet. App. 18a, citing H.R. Rep. No. 857, 98th Cong., 2d

Sess. Pt. I (1984). The court emphasized the fact that,

in enacting Section 355(j)(7)(B) in 1984, Congress

relied on the FDA\'s 1977 regulations which indicated

that different means could be used to determine

bioequivalence. 7. The court recognized that Congress

intended through the 1984 Amendments to extend

that approach to generic drugs copying drugs first ap-

proved after 1962. Pet App. 19a.8 The court found that

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(footnotes)

7\. The FDA\'s 1977 bioequivalence regulations, 21 C.F.R.

320.1-320.62, applied both to drugs intended for systemic absorp-

tion and to non-systemically effective drugs, and provided for

bioequivalence to be established by means other than actual

measurement of rate and extent of absorption for non-system-

ically effective drugs. See 21 C.F.R. 320.22, 320,24, 320.53,

320.57 (1977).

8\. Before the addition of Section 355(j)(7)(B) as part of the

broadening of the abbreviated application procedure in 1984, the

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8

the FDA\'s preferred method \"was to determine bio-

equivalence on a case-by-case basis depending on the

drug under consideration for approval pursuant to an

\* \* \* abbreviated application.\" Ibid. It concluded

that \"\[t\]he FDA is the agency charged with

implementing the Food, Drug and Cosmetic Act as

amended. Its judgments as to what is required to

ascertain the safety and efficacy of drugs fall

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(footnotes)

procedures for FDA approval of a generic drug depended on\'

whether the drug being copied had been previously approved by

the FDA before 1962. Before 1962, the FDA had approved a

new drug if it was safe for its intended use. The Drug Amend-

ments of 1962, Pub. L. No. 87-781, 76 Stat. 780, however,

required manufacturers of new drug products to demonstrate

that their products were not only safe but also effective for their

intended uses in order to obtain FDA approval. After the 1962

Amendments, the FDA conducted its own examination, through

the Drug Efficacy Study Implementation program (DESI), to

determine whether the drugs it had approved as safe before

1962 were effective. See Weinberger v. Hynson, Westcott &

Dunning, Inc., 412 U.S. 609, 613-615 (1973). In light of these

determinations of efficacy, the FDA decided to accept abbrevi-

ated new drug applications for generic copies of drugs it had

found to be effective under the DESI program. The FDA

required the abbreviated applications to contain information

demonstrating that the product was bioequivalent to the pre-

viously approved drug, Full new drug applications were still

required for generic versions of drugs first approved after 1962,

however, because they had not been subject to DESI review.

See Tri-Bio Laboratories, Inc. v. United States, 836 F.2d 135,

138 (3d Cir. 1987), cert. denied, 488 U.S. 818 (1988). Thus, the

1984 Amendments were intended to extend the abbreviated

approval process for generic drugs to generic drugs that copied

drugs approved after 1962.

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9

squarely within the ambit of the FDA\'s expertise and

merit deference from us.\" Id. at 19a.9

ARGUMENT

Petitioner contends (Pet. 16-23) that the court of

appeals\' opinion is contrary to the language, struc-

ture and history of the Federal Food, Drug, and

Cosmetic Act, 21 U.S.C. 301 et seq., and that 21 U.S.C.

355(j)(7)(B) unambiguously establishes an exclusive

definition of bioequivalence. Pet. 17-18. Petitioner

contends (Pet. 23-27) that the court of appeals erred in

upholding the FDA\'s regulation, 21 C.F.R. 320.1(e), as

a permissible interpretation of the FDCA because the

court \"fundamentally misunderstood\" the congres-

sional purpose behind the addition of Section

355(j)(7)(B) to the FDCA in 1984, Pet. 25.

The court of appeals correctly rejected petitioner\'s

arguments, as did the two district courts that have

addressed them. The court of appeals\' opinion reflects

a straightforward-and correct-application of t his

Court\'s precedents on statutory construction. Peti-

tioner acknowledges that there is no relevant circuit

conflict. Pet. 15-16.

Section 355(j)(7)(B) cannot reasonably be read as an

unambiguous statement of an exclusive definition.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(footnotes)

9\. Petitioner also had sought injunctive relief to prohibit the

FDA from releasing certain safety and efficacy data regarding

its products. See Pet. App. 7a n.4. That request for relief was

dependent on a favorable finding on the merits and was

therefore denied by the district court and the court of appeals.

Id. at 7a n.4, 20a. The court of appeals also rejected petitioner\'s

challenge to the district court\'s treatment of the FDA\'s motion

for judgment on the pleadings as a motion for summary judg-

ment. Id. at 20a-21a. Petitioner does not raise these issues in

this Court.

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See Pet. App. 13a-17a. Section 355(j)(7)(B) sets forth

two circumstances in which a drug \"shall be

considered\" to be bioequivalent to another drug. The

Section\'s plain language does not state that the

. meaning of \"bioequivalent\" is limited to those two

circumstances. In contrast, the immediately pre-

ceding Section of the statute contains limiting

language and is couched in terms of what that term

\"means.\" See 21 U.S.C. 355(j)(7)(A). Moreover, as the

court of appeals recognized, other Sections of the

FDCA implicitly acknowledge that other means of

determining bioequivalence are permitted. Those

Sections reinforce the conclusion that Section

355(j)(7)(B) is not an unambiguous, exclusive defin-

ition of bioequivalence. See Pet. App. 16a-17a, citing

21 U.S.C. 355(j)(6)(A)(i)(III).

Thus, the language and structure of the FDCA are

consistent with the FDA\'s interpretation that Sec-

tion 355(j)(7)(B) functions as a safe harbor. The

Section establishes two circumstances in which the

FDA is required to find that a drug is a bioequivalent,

but the statute permits the FDA to determine

bioequivalence using additional methods.

The history of the 1984 Amendments to the FDCA

also supports the FDA\'s interpretation. By adding

the broader abbreviated application procedure in 1984,

Congress intended to make available a greater num-

ber of safe and effective low-cost generic drugs.

Congress sought to achieve this goal by extending

the abbreviated application procedure and requiring a

finding of bioequivalence as a part of the procedure,

but it did not dictate the exclusive means by which

the bioequivalence finding must be made. Pet. App.

18a. Most significantly, \"\[although the \[1984 Amend-

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11

ments\] mandated a showing of bioequivalence for

approval, there is no evidence that Congress intended

to limit the discretion of the FDA in determining

when drugs were bioequivalent for purposes of \[the

abbreviated\] approval. To the contrary, the expressed

desire of Congress was to extend the then-current

FDA abbreviated application practices to drugs first

approved post-1962.\" Pet. App. 18a-19a.

The FDA\'s method for determining bioequivalence

relies on a case-by-case approach that depends on the

characteristics of the drug under consideration. Ab-

sent an expressed contrary congressional intent, that

judgment of the agency charged with implementing

the FDCA merits deference. Pet. App. 19a. The

court of appeals properly recognized the \"con-

siderable weight \[that\] should be accorded to an exec-

utive department\'s construction of a statutory

scheme it is entrusted to administer, and \[that\] the

principle of deference to administrative interpre-

tations \`has been consistently followed by this Court

whenever decision as to the meaning or reach of a

statute has involved reconciling conflicting policies\'.\"

Chevron, 467 U.S. at 844 (footnote omitted). The

FDA\'s \"judgments as to what is required to ascertain

the safety and efficacy of drugs fall squarely within

the ambit of the FDA\'s expertise and merit

de ference.\" Pet. App. 19a.

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CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted.

DREW S. DAYS, III

Solicitor General

FRANK W. HUNGER

Assistant Attorney General

DOUGLAS N. LETTER

Attorney

SEPTEMBER 1995