UNITED STATES OF AMERICA, PETITIONER V. GENERIX DRUG CORPORATION,
ET AL.

   No. 81-1222

   In the Supreme Court of the United States

   October Term, 1981

   The Solicitor General, on behalf of the United States, petitions
for a writ of certiorari to review the judgment of the United States
Court of Appeals for the Eleventh Circuit in this case.  /1/

   Petition for a Writ of Certiorari to the United States Court of
Appeals for the Eleventh Circuit

            TABLE OF CONTENTS
   Opinions below
   Jurisdiction
   Statutes involved
   Statement
   Reasons for granting the petition
   Conclusion
   Appendix A
   Appendix B
   Appendix C
   Appendix D
   Appendix E

                            OPINIONS BELOW

   The opinion of the court of appeals (App. A, infra, 1a-15a) is
reported at 654 F.2d 1114.  The decision of the district court (App.
C, infra, 18a-31a) is reported at 498 F. Supp. 288.

                             JURISDICTION

   The judgment of the court of appeals (App. B, infra, 16a-17a) was
entered on September 4, 1981.  On November 24, 1981, Justice White
extended the time within which to file a petition for a writ of
certiorari to and including January 2, 1982.  The jurisdiction of this
Court is invoked under 28 U.S.C. 1254(1).

                           STATUTES INVOLVED

   The relevant statutory provisions are set forth in App. E, infra,
33a-44a.

                          QUESTION PRESENTED

   Whether a prescription drug product -- even though potentially
unsafe or ineffective -- is exempt from the requirement of
premarketing approval by FDA merely because it contains the same
active ingredient as another drug that has received FDA approval or
that is generally recognized as safe and effective.  /*/

                               STATEMENT

   1. Section 505(a) of the Federal Food, Drug, and Cosmetic Act ("the
Act"), 21 U.S.C. 355(a), prohibits any person from introducing into
interstate commerce any "new drug" that has not been approved by the
Food and Drug Administration (FDA).  /2/ The term "new drug" is
defined in Section 201(p) of the Act, 21 U.S.C. 321(p), to mean any
drug that is not "generally recognized, among experts qualified by
scientific training and experience to evaluate the safety and
effectiveness of drugs, as safe and effective for use under the
conditions prescribed, recommended, or suggested in the labeling
thereof," or has not been used to a material extent or for a material
time under other than experimental conditions.  21 U.S.C. 321(p).  /3/

   Generix Drug Corporation (Generix) sells generic prescription drugs
in interstate commerce -- i.e., drugs that purport to be copies of
brand name or "pioneer" drugs manufactured by other companies.  While
the "active" ingredients of these generic drugs purport to be
identical to those contained in the pioneer drugs, the "inactive"
ingredients (e.g., coatings, binders) known as excipients, differ.
Many of the generic drugs distributed by Generix had not been approved
by the FDA, and in the government's view were "new drugs" within the
meaning of the Act.  Accordingly, on November 29, 1979, the United
States filed an action in the United States District Court for the
Southern District of Florida against Generix and several of its
officers and employees.  The complaint requested both preliminary and
permanent injunctive relief.  /4/

   Generix did not deny that the particular drug products referred to
in the complaint have not been approved by FDA.  /5/ The hearing on
the government's motion for a preliminary injunction focused,
therefore, on the question whether the generic drugs distributed by
Generix were "new drugs" within the meaning of 21 U.S.C. 321(p).  In
arguing that they were not, Generix relied on the fact that FDA had
approved other drug products containing the same active ingredients as
its drugs.  Such prior FDA approval, Generix argued, was evidence that
the active ingredients were generally recognized as safe and
effective.  From this premise, Generix contended that its products
were not "new drugs" even if their inactive ingredients and methods of
compounding were not identical to those used in the products
previously approved by the FDA.  /6/ Generix presented no evidence
that its drugs had been used to a material extent or for a material
time.

   The government contended that FDA's prior approval of drugs
containing the same active ingredients as the drugs marketed by
Generix was irrelevant because the Act requires FDA preclearance of
every drug product, unless that product is generally recognized as
safe and effective and has been used to a material extent or for a
material time.  The government's evidence established that Generix's
unapproved drug products were not generally recognized by qualified
experts as safe and effective (Tr. 49-52, 93-94, 96-97).

   In addition, the government presented evidence showing why
distribution of unapproved generic drugs poses a danger to the public
health.  As expert witnesses explained, prescription drugs generally
contain one or more active ingredients, usually comprising only about
10% of the total compound.  They also contain other ingredients, known
as excipients, whose purposes are to coat or bind the active
ingredients into a convenient form and to control their solubility
(Tr. 83-84).  Because of differences in these inactive ingredients or
in methods of compounding, drugs containing the same active
ingredients can differ from each other in the amounts of the active
ingredients that enter the bloodstream and the rate at which this
occurs.  /7/ Since the quantity and delivery speed of active
ingredients are critical factors that determine the effect of a drug
on the patient, it cannot be assumed that a copy of an approved drug
will achieve the same therapeutic effect as the pioneer product (Tr.
39-40, 46-47).  Often it does not.

   The unapproved drugs distributed by Generix include drugs
prescribed for the treatment of serious and potentially
life-threatening conditions, such as high blood pressure (Tr. 47-48).
The government's experts demonstrated that differences in formulation
could affect the safety or effectiveness of such drugs (Tr. 94-98).
Because the labeling of these generic products is virtually identical
to the labeling of the brand name products they copy and because
Generix markets these unapproved drugs in a way that leads physicians
to believe that they are interchangeable with approved drugs (Tr.
45-47), they may create serious dangers to patients.  /8/

   Finally, the evidence showed that doctors and pharmacologists
generally regard premarketing testing and approval as necessary to
insure the safety and effectiveness of drugs.  Because of the serious
dangers that may be created by differences in bioavailability,
physicians would not knowingly prescribe an unapproved generic drug
(Tr. 55-57).  Their willingness to prescribe generic drugs at all is
based on their assumption that generic drugs have received FDA
approval.  /9/

   2. On June 12, 1980, the district court issued an order granting in
part and denying in part the government's motion for a preliminary
injunction (App. C, infra, 18a-31a).  Rejecting both the government's
and Generix's interpretation of the Act, it held that the government
had the burden of showing a potential hazard associated with Generix's
drugs.  /10/ The court found that the government had presented
evidence that differences in bioavailability could affect the safety
and effectiveness of drugs containing any one of six active
ingredients or combinations of ingredients /11/ and enjoined
distribution of those drugs.  Because such specific evidence was not
presented as to Generix's other unapproved generic drugs, /12/
however, the court denied the government's motion for preliminary
injunction against distribution of those products (id. at 31a).  /13/
The preliminary injunction was stayed pending Generix's appeal (App.
D, infra, 32a).  /14/

   3. The court of appeals reversed that portion of the district
court's order granting a preliminary injunction.  The court expressly
declined to follow the recent decision in Premo Pharmaceutical
Laboratories, Inc. v. United States, 629 F.2d 795 (2d Cir. 1980), in
which the Second Circuit held that the Act's "new drug" definition
applies to drug products, not only to active ingredients, and that FDA
approval of a brand name drug does not exempt other new drugs that
contain the same active ingredient from the requirement of
premarketing approval.  Rather, the Fifth Circuit (now the Eleventh
Circuit) concluded that in no event is prior FDA approval required for
a drug containing the same active ingredient as a previously approved
new drug.  Thus, it vacated the preliminary injunction -- even as to
those drugs for which there was specific evidence that lack of
bioequivalence could be dangerous to patients.

   The court of appeals acknowledged that there may be differences in
therapeutic effect between a pioneer drug product that has been
approved by the FDA, and unapproved generic drugs with the same active
ingredient but different inactive ingredients (App. A, infra, 3a).  It
also noted the evidence that these differences "may effect (sic) the
safety and efficacy of the generic drug product," (ibid.).  But the
court of appeals construed the Act not to protect the public from
these dangers.  The court concluded:  "the term 'new drug' as used in
(21 U.S.C.) Section 321(p) applies only to the active ingredient of a
drug product" (id. at 15a).  The bases for this conclusion were the
court's assumptions that "the drugs listed in the sources described in
subsection (A) of (21 U.S.C.) Section 321(g)(1) are 'drug substances,'
not drug products" and that "(i)f 'new drug' refers to the drug
product as opposed to the active ingredient, a drug could never
'muster the requisite scientifically reliable evidence of
effectiveness' in order to 'drop out of active regulation by ceasing
to be a 'new drug' " as is contemplated by the Act (id. at 5a, 7a).
/15/

   The court of appeals considered the new drug approval procedures of
21 U.S.C. 355 to be unnecessary in the case of generic drugs because,
in the court's view, the Act gave the FDA other means to regulate
bioavailability and bioequivalence.  The court, in addition, concluded
that premarketing review of a generic drug by FDA would be contrary to
congressional intent "to encourage generic-name prescribing and
thereby lower prices" (id. at 10a).

   The court remanded the case to the district court with instructions
to dismiss the complaint.

                   REASONS FOR GRANTING THE PETITION

   This case presents an important question concerning the authority
and responsibility of the Food and Drug Administration to review the
safety and effectiveness of generic drugs before those drugs are
marketed.  The decision below permits the marketing of unapproved
drugs which are potentially unsafe or ineffective, and therefore
dangerous to the health of the users.  This is contrary to the
language and legislative history of the Federal Food, Drug, and
Cosmetic Act, and is at odds with numerous decisions of this Court
giving that statute the broadest coverage possible and construing
claimed exemptions narrowly to protect the public health.  The
judgment in the present case is, moreover, in direct conflict with the
recent decision of the Second Circuit in Premo Pharmaceutical
Laboratories, Inc. v. United States, supra.  Review by this Court is
necessary in order to allow the FDA to fulfill its statutory mandate
of ensuring the safety and effectiveness of drugs on a uniform,
nationwide basis.

   1. The statute expressly defines the term "drug" to include drug
products.  In holding that "drug" refers only to active ingredients,
which constitute only 10% of a drug product, the court of appeals
ignored the plain language of 21 U.S.C. 321(g)(1)(B).  Even the
subsection on which the court relied (21 U.S.C. 321(g)(1)(A)) does not
support its conclusion.

   a. The statutory definition of the term "drug" has four overlapping
parts.  It includes (21 U.S.C. 321(g)):

         (A) articles recognized in the official United States
      Pharmacopoeia, official Homoeopathic Pharmacopoeia of the United
      States, or official National Formularly, or any supplement to
      any of them;  and (B) articles intended for use in the
      diagnosis, cure, mitigation, treatment, or prevention of disease
      in man or other animals;  and (C) articles (other than food)
      intended to affect the structure or any function of the body of
      man or other animals;  and (D) articles intended for use as a
      component of any article specified in clauses (A), (B), or (C)
      of this paragraph;  but does not include devices or their
      components, parts, or accessories.

As the Second Circuit held in Premo, supra, generic drug products are
"articles intended for use in the diagnosis, cure, mitigation,
treatment, or prevention of disease in man or other animals." 21
U.S.C. 321(g)(1)(B).  Thus, they are "drugs" under at least one of the
four subsections of the Act's broad definition.  21 U.S.C. 321(g)(1).

   In holding that drug products are not drugs, the court below failed
to mention 21 U.S.C. 321(g)(1)(B) or to explain why a generic drug
product would not fit within this definition.  Instead, the court
based its holding on the assumption that active ingredients fall
within subsection (A) of 321 (g)(1), but that drug products do not.
The court stated that the "record shows that the drugs listed in the
courses described in subsection (A) * * * are 'drug substances,' not
drug products" (App. A, infra, 5a).  But there is nothing in the
record to support that conclusion.  On the contrary, the pharmacopeiae
mentioned in 21 U.S.C. 321(g)(1)(A) in fact contain monographs for
drugs products as well as active ingredients.  /16/

   More importantly, however, an article need fall within only one of
the subsections of 21 U.S.C. 321(g)(1) in order to be a "drug." /17/
Regardless of the coverage of subsection (A), generic drug products
are drugs as defined in subsection (B).  /18/

   b. Since a generic drug product is a drug, the statutory language
also compels the conclusion that a determination of whether a generic
drug product is a "new drug" must depend on whether that product
itself can meet the general recognition standard.  The Act defines a
"new drug" as "(a)ny drug * * * the composition of which is such that
such drug is not generally recognized, among experts * * * as safe and
effective for use under the conditions prescribed, recommended, or
suggested in the labeling thereof." 21 U.S.C. 321(p)(1).

   The construction of the term "new drug" to include drug products is
necessary to avoid creating an exemption from the new drug approval
requirement for drugs that could not be approved by FDA if they were
subject to 21 U.S.C. 355.  As this Court held in Weinberger v. Hynson,
Westcott & Dunning, Inc., 412 U.S. 609, 631 (1973):

         (W)e cannot construe Section 201(p) (21 U.S.C. 321(p) -- the
      definition of "new drug") to deprive FDA of jurisdiction over a
      drug which, if subject to FDA regulation, could not be marketed
      because it had not passed the "substantial evidence" test.  To
      do so "would be to impute to Congress a purpose to paralyze with
      one hand what it sought to promote with the other." Clark v.
      Uebersee Finanz-Korp, 332 U.S. 480, 489 ((1947)).

   If a drug is a new drug, it cannot legally be marketed "unless an
approval of an application filed pursuant to (21 U.S.C. 355(b)) is
effective with respect to such drug." 21 U.S.C. 355(a).  /19/ This
Court has recognized that an NDA (see note 19, supra) is applicable to
a specific drug product.  USV Pharmaceutical Corp. v. Weinberger, 412
U.S. 655, 664 (1973).  Thus, approval of the pioneer drug, even if
that drug has the same active ingredient as the generic drug, is not
tantamount to approval of a generic copy which may, because of its
different inactive ingredients or different methods of manufacture,
have a significantly dissimilar effect on the human body.

   The statutory specifications of the contents of new drug
applications also show that an NDA applies to a particular drug
product -- not only to its active ingredients.  Thus, 21 U.S.C. 355(b)
requires the submission of detailed information about components,
methods of manufacturing, and labeling of the new drug.  /20/ This
information will be different for each drug product, even if it has
the same active ingredient as a previously approved product.  On the
basis of the information included in the application, the FDA must
determine whether the applicant has shown that the drug is safe and
that there is substantial evidence /21/ that it is effective for its
intended uses.  If the FDA approves the NDA, the subject drug may then
be marketed.  /22/ On the other hand, if the drug is not shown to be
safe, or if substantial evidence of its effectiveness is lacking, the
FDA will not approve it.  /23/

   Because expert general recognition requires at least the evidence
that would be required to secure new drug approval, general expert
recognition of a drug's safety and effectiveness, therefore, must be
based on tests to show safety and effectiveness of the drug in
question.  Weinberger v. Hynson, Westcott & Dunning, Inc., supra, 412
U.S. at 628-632;  Weinberger v. Bentex Pharmaceuticals, Inc., 412
U.S.C. 645, 653 (1973).  In addition, the general recognition standard
requires that the relevant tests be available in the scientific
literature to experts generally (i.d. at 652), and that experts
generally agree that the testing shows the drug to be safe and
effective (Hynson, Westcott & Dunning, Inc., supra, 412 U.S. at 632).
Even if a drug satisfies the general recognition criterion, it remains
a "new drug" -- requiring FDA approval -- unless it has been used to a
material extent and for a material time under other than experimental
conditions.  21 U.S.C. 321(p)(2).

   Thus, contrary to the court of appeals' conclusion, no drug product
can escape new drug status unless that drug itself is recognized by
experts as safe and effective and has been used for a material time.
Premo Pharmaceutical Laboratories, Inc. v. United States, supra, 629
F.2d at 804-805.  There is nothing in the statutory language to
suggest that general recognition of a drug's active ingredient or
component would take the product out of the "new drug" category.  /24/

   2. The legislative history of the new drug provisions of the 1938
Act, and of the Act's 1962 amendments, confirms that each drug product
that has not itself achieved general recognition among experts must be
approved by the FDA before it is marketed.

   a. The direct stimulus for Congress' enactment of the premarketing
approval requirement was the numerous deaths caused by the drug Elixir
Sulfanilamide.  That drug was itself an untested combination of a
widely used active ingredient and a new inactive ingredient;  the
inactive ingredient was responsible for the deaths caused by the drug.
 /25/ To avoid such tragedies in the future, Congress enacted a system
of premarketing approval "to prevent the premature marketing of new
drugs not properly tested for safety." H.R. Rep. No. 2139, 75th Cong.,
3d Sess. 9 (1938).  It would be contrary to the clear congressional
intent for courts to eliminate the requirement of premarketing safety
review simply because another drug containing the same active
ingredient has been proved safe and effective.  A statute with such an
exemption would not have prevented the Elixir Sulfanilamide tragedy
that prompted Congress to mandate premarketing review.

   b. The 1962 amendments to the Act were intended to strengthen the
protection afforded the public by prohibiting the marketing of drugs
whose effectiveness has not been established.  /26/ Thus Congress
added to the requirement of testing for safety the further requirement
that substantial evidence of effectiveness be demonstrated before the
FDA can approve a new drug application.  A corresponding change was
made in the definition of "new drug" so that henceforth drugs could
not escape "new drug" status unless their effectiveness as well as
their safety was recognized by qualified experts.

   There is nothing in the language or the legislative history of
these amendments that suggests Congress meant to weaken the new drug
provisions by exempting generic drugs from the premarketing approval
requirements of 21 U.S.C. 355.  To be sure, as the court of appeals
noted, there was a congressional concern with promoting competition in
the drug industry.  But promoting price competition is not
inconsistent with insuring the safety and effectiveness of all
products on the market.  While Congress sought to encourage
competition and the use of less expensive generic drugs, /27/ it
assumed that no drug would reach the market unless its safety and
effectiveness were established through general recognition or an
approved NDA.  It did not intend to sacrifice safety or effectiveness
for lower prices.  /28/

   Indeed, the increased competition and reduction in drug prices that
Congress sought to foster through generic labeling would be less
likely to occur if generic drugs could be marketed without FDA
approval.  If generic drugs are not subject to premarketing approval,
a physician or pharmacist will have no assurance that generic products
would be equally as safe and effective as the brand name drugs for
which they purport to be substitutes.  Therefore, as the government's
experts testified in this case, careful doctors and pharmacists would
be deterred from administering generic drugs regardless of the cost
savings that might be obtained (Tr. 55-57).  /29/

   c. The FDA has sought to minimize the burden of filing and
obtaining approval of generic drug NDAs to the extent consistent with
insuring that unsafe or ineffective prescription drugs do not reach
the public.  For many generic drugs, FDA has determined that complete
safety and effectiveness studies need not be submitted by each
manufacturer.  Instead, manufacturers of certain generic drugs may
obtain FDA approval by submitting an abbreviated new drug application
("ANDA").  See 21 C.F.R. 314.1(a) and (f).  /30/ Under this procedure,
the manufacturer may establish that the generic drug is safe and
effective by showing that it contains the same active ingredient as an
approved new drug, and also that the two products have equivalent
effects on patients.  In effect, therefore, the FDA relies on the body
of knowledge developed for the pioneer drug product in evaluating the
ANDA.  The generic drug is deemed safe and effective and the ANDA is
approved if the manufacturer of the generic drug shows that there are
no differences between the approved drug and the "me-too" drug that
will result in differences in their safety or effectiveness.

   3. The court of appeals' decision is contrary to numerous decisions
of this Court and is in direct conflict with a recent decision of the
United States Court of Appeals for the Second Circuit.

   a. This Court has long held that the Act must be interpreted to
effectuate its purpose -- protection of the public health.  United
States v. Dotterweich, 320 U.S. 277, 280 (1943).  For this reason, the
Court consistently has given a broad meaning to the term "drug"
(United States v. An Article of Drug . . . Bacto-Unidisk, 394 U.S.
784, 798 (1969)):

         The historical expansion of the definition of drug, and the
      creation of a parallel concept of devices, clearly show, we
      think, that Congress fully intended that the Act's coverage be
      as broad as its literal language indicates -- and equally
      clearly, broader than any strict medical definition might
      otherwise allow.

Similarly, the Court has narrowly construed the exceptions to the new
drug approval requirements.  Hynson, Westcott & Dunning, Inc., supra,
412 U.S. at 629-631.

   The court of appeals, however, did just the opposite -- it narrowed
the definition of the term "drug" and broadened the general
recognition exemption from the "new drug" provisions.  In so doing, it
disregarded the statutory language and legislative history, both of
which support the fundamental principle -- protecting the public
health -- that has guided the courts in interpreting the Act.  /31/

   b.  The court of appeals' decision conflicts with the Second
Circuit's decision in Premo Pharmaceutical Laboratories, Inc. v.
United States, supra.  The court held in Premo that the term "drug" as
used in 21 U.S.C. 321(p) and 355 refers to drug products and not only
to their active ingredients.  Therefore, a drug product, even if it
contains the same active ingredient as an approved new drug, cannot be
marketed within FDA approval unless it meets the "general recognition"
standard prescribed by 21 U.S.C. 321(p).  The Second Circuit also held
that "general recognition" of the safety and effectiveness of a
generic drug does not arise from approval of a pioneer drug having the
same active ingredient;  it requires an expert consensus founded on
substantial published evidence as to the generic product's own safety
and effectiveness.  /32/

   Other courts also have espoused the interpretation of the Act
adopted by the Second Circuit.  For example, in Pharmadyne
Laboratories, Inc. v. Kennedy, supra, the court rejected dicta in an
earlier Third Circuit decision, United States v. Articles of Drug . .
. Lannett, 585 F.2d 575 (1978) -- which had suggested that some or all
generic copies of FDA-approved drugs need not themselves undergo FDA
premarketing clearance -- and agreed with the FDA that the term "new
drug" applies to specific drug products.  In two other actions, the
FDA has obtained injunctive relief against major manufacturers of
unapproved new drugs.  United States v. Pharmadyne Laboratories, Inc.,
No. 80-1312 (D.N.J., filed May 8, 1980);  /33/ United States v. Premo
Pharmaceutical Laboratories, Inc., supra.  /34/ The fact that there
have been several cases dealing with the "new drug" status of generic
drugs establishes that the issue is a recurring one that should be
resolved by this Court.  /35/

   4. The court of appeals' decision will have serious adverse
consequences for the public health.

   a. The FDA is now confronted with conflicting court of appeals
interpretations of the critical new drug provisions of the Act.  The
confusion and uncertainty that will result from a generic drug
marketing rule that differs from one part of the country to another
are obvious:  under the decision below, the FDA presumably has no
authority for preclearance of generic prescription drugs marketed in
the Fifth and Eleventh Circuits, while such procedures are required in
the Second Circuit.

   Unless the decision below is reversed, the FDA will be unable to
prevent the marketing of potentially unsafe and ineffective generic
drugs.  Once these drugs reach the public, the measures available to
remove the drugs from the market after they have caused harm simply do
not provide the protection Congress intended.  See, e.g., United
States v. Premo Pharmaceutical Laboratories, Inc., supra, 511 F. Supp.
at 988-989.  For example, postmarketing measures would not prevent a
dangerous drug such as Elixir Sulfanilamide, which killed numerous
persons prior to the enactment of the Act, /36/ from reaching the
public.  Indeed, if the FDA were forced to prove that a new drug were
unsafe or ineffective -- rather than merely to show that it had not
been approved -- the burden of proving safety and effectiveness placed
on the manufacturer by Congress would be reversed, and the removal of
unsafe or ineffective products from the market would be delayed.

   b. The marketing of unapproved generic drugs will lead to one of
two unacceptable outcomes.  First, if doctors, pharmacists, and the
public are not informed of the absence of premarketing review to
determine safety and effectiveness, patients who use generic drugs
will unknowingly be subjected to the risk that the generic drugs will
be unsafe or ineffective.  The adverse consequences that may result
include the possible death of patients who use such drugs.

   On the other hand, if the medical profession and the public do
become aware of the risk posed by generic drugs that have not been
shown to be bioequivalent to approved pioneer drugs, use of generics
will predictably decline.  The government could not encourage use of
drugs whose safety and effectiveness had not been demonstrated, and
indeed might have a duty to warn the public not to permit generic
substitutions.

   Since current law prohibits any drug to be labeled with a notice
that it has or has not been approved by the FDA, 21 U.S.C. 331(l), the
decision below will have a negative impact on sales of generics which
have been shown to be safe and effective and have been approved.  The
only way to be assured that a drug product is safe and effective would
be for doctors to specify, and pharmacists to dispense, only the
pioneer.  Such a result would be contrary to the very congressional
policy of increased competition upon which the court of appeals sought
to premise its decision.  Moreover, it would hamper efforts by the
FDA, other federal government agencies, and state governments to
foster the use of safe and effective generic substitutes for more
costly products.  /37/

                              CONCLUSION

   The petition for a writ of certiorari should be granted.

   Respectfully submitted.

   REX E. LEE

      Solicitor General

   WILLIAM F. BAXTER

      Assistant Attorney General

   JERROLD J. GANZFRIED

      Assistant to the Solicitor General

   JOHN J. POWERS, III

   NANCY C. GARRISON

      Attorneys

   JEFFREY B. SPRINGER

      Deputy Chief Counsel

   DONALD O. BEERS

      Associate Chief Counsel for Enforcement

   JACQUELINE H. EAGLE

      Assistant Chief Counsel for Enforcement Food and Drug
      Administration

   DECEMBER 1981

   /*/In addition to respondent Generix Drug Corporation, the
defendants in the district court were Lewis Michael Orlove, Gary R.
Dubin, and Ofelia Perez, all of whom were officers or employees of
Generix.

   /1/ This case was decided by Unit B of the Fifth Circuit which, on
October 1, 1981, became the Eleventh Circuit.

   /2/ The authority to approve new drugs, granted by statute to the
Secretary of Health and Human Services, has been delegated to the
Commissioner of Food and Drugs, 21 C.F.R. 5.10(a)(1);  see 46 Fed.
Reg. 26052 (1981).  The introduction or delivery for introduction into
interstate commerce of an unapproved new drug in contravention of 21
U.S.C. 355 is made a "prohibited act" by 21 U.S.C. 331(d).  Violations
of 21 U.S.C. 331 may be enjoined under 21 U.S.C. 332.  Persons who
violate 21 U.S.C. 331 also are subject to criminal penalties (21
U.S.C. 333) and drugs that fail to comply with 21 U.S.C. 355 may be
seized and condemned (21 U.S.C. 334).  See Weinberger v. Hynson,
Westcott & Dunning, Inc., 412 U.S. 609, 612-613 (1973);  Ciba Corp. v.
Weinberger, 412 U.S. 640, 644 (1973).

   /3/ A drug may be excluded from 21 U.S.C. 321(p) if it comes within
one of the grandfather provisions of that section, not relevant here.

   /4/ The unapproved new drugs distributed by respondents included
"Goldline" products containing the following active ingredients:
allopurinol, Spironolactone, spironolactone with hydrochlorothiazide,
furosemide, chlorothiazide with reserpine, amitriptyline with
perphenazine, diethylpropion hydrochloride, prochlorperazine maleate,
and chlorthalidone (R. 28 n.3).  The request for injunctive relief to
prevent distribution of unapproved new drugs were not, however,
limited to those particular drugs (ibid.).

   The complaint alleged also that defendants were violating the Act
by holding for sale and distributing in interstate commerce drugs that
were adulterated within the meaning of 21 U.S.C. 351(a)(2)(B) because
of failure to conform to current good manufacturing practices as set
forth in 21 C.F.R. Part 211.  This petition raises no issue concerning
the good manufacturing practices allegations.

   "R." refers to the district court record as transmitted to the
court of appeals.  "Tr." refers to the transcript of the hearing in
the district court on the government's motion for a preliminary
injunction.

   /5/ R. 79-81;  see also R. 28 n.3.

   /6/ R. 106-149, 197-207, 212-224;  Tr. 26-27, 250-253.

   /7/ The quantity and delivery speed of active ingredients to the
bloodstream is referred to as "bioavailability" (Tr. 39-42).  Drugs
with similar "bioavailability" are considered to be "bioequivalent."
Because differences in bioavailability are caused by variations in
both active and inactive ingredients, and in methods of manufacture,
drugs containing the same active ingredients may not be bioequivalent.

   /8/ For example, if the products used to treat high blood pressure
do not perform properly, the patient is in grave danger either from
recurrence of high blood pressure if absorption of the drug is
inadequate, or from toxicity if the drug is overabsorbed (Tr. 47-49).

   /9/ See United States v. Premo Pharmaceutical Laboratories, Inc.,
511 F. Supp. 958, 963 (D.N.J. 1981);  Pharmadyne Laboratories, Inc. v.
Kennedy, 466 F. Supp. 100, 106 (D.N.J.), aff'd on other grounds, 596
F.2d 568 (3d Cir. 1979).

   /10/ In so doing, it relied primarily on the district court
decision in Premo Pharmaceutical Laboratories, Inc. v. United States,
475 F. Supp. 52 (S.D.N.Y. 1979), rev'd, 629 F.2d 795 (2d Cir. 1980).

   /11/ Allopurinol, spironolactone, furosemide, chlorothiazide with
reserpine, amitriptyline, and diethylpropion hydrochloride (App. C,
infra, 20a).

   /12/ Prochlorperazine maleate and chlorthalidone (App. C, infra,
20a).

   /13/ The government's request for an injunction with respect to the
manufacturing practice violations was held in abeyance pursuant to
agreement of the parties (Tr. 186-187).

   /14/ On August 27, 1980, the United States moved for
reconsideration of the stay order and of the denial of preliminary
injunctive relief with respect to certain of the drugs distributed by
respondents.  These motions were denied by the district court on
October 7, 1980.

   /15/ The court also thought that the requirement of Section 502(e)
of the Act, 21 U.S.C. 352(e), that drugs be identified by generic name
in addition to brand name would be inconsistent with the inclusion of
the entire drug product rather than just the active ingredient in the
definition of "drug."

   /16/ For example, the most recent edition of the combined United
States Pharmacopeia-National Formulary has monographs not only for
furosemide as an active ingredient but also for "furosemide injection"
and "furosemide tablets," see The Pharmacopeia of the United States of
America, Twentieth Revision/The National Formulary, Fifteenth Edition
344-345 (1980).  A monograph may exist both for an "official
substance," defined as "an active drug entity or a pharmaceutical
ingredient * * *," and for a "dosage form," defined as the "finished *
* * preparation or product of one or more official substances
formulated for use on or for the patient," id. at 2.

   /17/ No inconsistency is created by the fact that active
ingredients themselves are also "drugs." Indeed, 21 U.S.C.
321(g)(1)(D) expressly includes within the "drug" definition "articles
intended for use as a component of any article (referred to in the
preceding) clauses." The term "component" refers to active as well as
inactive ingredients of a drug (cf. 21 U.S.C. 355(b)(2)).  Therefore,
a reading of 21 U.S.C. 321(g)(1) as a whole shows that the term "drug"
must refer to drug products as well as to their active ingredients.

   /18/ The definition of "drug" in the Food and Drug Act of 1906 --
the predecessor of the Federal Food, Drug, and Cosmetic Act of 1938 --
also encompassed both drug substances and drug products.  Thus, the
1906 definition of "drug" included, "all medicines and preparations
recognized in the United States Pharmacopoeia or National Formulary
for internal or external use, and any substance or mixture of
substances intended to be used for the cure, mitigation, or prevention
of disease of either man or other animals," ch. 3915, Section 6, 34
Stat. 769.

   This definition was changed to the language contained in 21 U.S.C.
321(g) when Congress enacted the 1938 Act.  The purpose of that change
was to expand and not to restrict the definition of the term "drug."
See S. Rep. No. 646, 76th Cong., 1st Sess. 1 (1935) ("This expansion
of the definition of the term 'drug' and the inclusion of devices are
essential if the consumer is to be protected against a multiplicity of
abuses not subject to the present law").

   /19/ The FDA approves new drug applications (NDAs), which are filed
pursuant to 21 U.S.C. 355(b).

   /20/ 21 U.S.C. 355(b) requires that an NDA contain:

      (1) full reports of investigations which have been made to show
      whether or not such drug is safe for use and whether such drug
      is effective in use;  (2) a full list of the articles used as
      components of such drug;  (3) a full statement of the
      composition of such drug;  (4) a full description of the methods
      used in, and the facilities and controls used for, the
      manufacture, processing, and packing of such drug;  (5) such
      samples of such drug and of the articles used as components
      thereof as the Secretary may require;  and (6) specimens of the
      labeling proposed to be used for such drug.

   /21/ 21 U.S.C. 355(d) defines "substantial evidence" as:

      evidence consisting of adequate and well-controlled
      investigations, including clinical investigations, by experts
      qualified by scientific training and experience to evaluate the
      effectiveness of the drug involved, on the basis of which it
      could fairly and responsibly be concluded by such experts that
      the drug will have the effect it purports or is represented to
      have under the conditions of use prescribed, recommended, or
      suggested in the labeling or proposed labeling thereof.

   /22/ If the manufacturer wishes to make any change in the
composition or labeling of the approved new drug, it must first submit
a supplement to the NDA.  See 21 C.F.R. 314.8.  If another
manufacturer is licensed to produce the same drug, it too must obtain
an NDA.  If evidence subsequently shows that an approved new drug is
unsafe or ineffective or that the applicant has failed to maintain
required records or to correct misleading labeling, the FDA, after
opportunity for hearing, may revoke approval of the NDA.  21 U.S.C.
355(e).

   /23/ If the FDA denies approval, judicial review on the
administrative record is available to the applicant.  21 U.S.C.
355(h).  See Weinberger v. Hynson, Westcott & Dunning, Inc., supra;
Premo Pharmaceutical Laboratories, Inc. v. United States, supra, 629
F.2d at 802.

   /24/ The court of appeals reasoned that if general recognition
attached to products rather than active ingredients, no drug product
could ever achieve "not new" status and the statutory distinction
between a "new drug" and other drugs would be "superfluous." App. A,
infra, 7a.  To the contrary, as this Court clearly contemplated in
Hynson, a drug product could achieve expert general recognition and
pass out of "new drug" status at some point after being marketed for a
period of time in accordance with an NDA.  412 U.S. at 631.  General
recognition of that product does not, as the Generix court assumed,
require general expert knowledge about the ingredients and
manufacturing processes of the product.  Rather, it is based on expert
knowledge of the testing of the particular product.  Compare Generix,
App. A, infra, 7a, with pages 13-14, notes 20 & 21, supra.

   /25/ See United States v. An Article of Drug . . . Bacto-Unidisk,
394 U.S. 784, 797-798 (1969);  AMP, Inc. v. Gardner, 389 F.2d 825,
829-830 (2d Cir.), cert. denied, 393 U.S. 825 (1968);  S. Doc. No.
124, 75th Cong., 2d Sess. (1937);  C. Dunn, Federal Food, Drug, and
Cosmetic Act, A Statement of its Legislative History 1316-1327 (G.E.
Stechert & Co. 1938).

   /26/ See H.R. Rep. No. 2464, 87th Cong., 2d Sess. 1 (1962);  S.
Rep. No. 1744, 87th Cong., 2d Sess. 8 (1962).

   /27/Much of the discussion in the legislative history of the need
to improve competition related to proposals -- never enacted -- that
would have limited terms of drug patents.  Proponents of those
proposals recognized that, as reported, the (1962) amendment "will
have only a very limited effect on prices * * *.  Its major result
will be to improve the quality of drugs." S. Rep. No. 1744, 87th
Cong., 2d Sess. 33 (1962).

   /28/ The generic name labeling provisions of 21 U.S.C. 352(e) cited
by the court do not mean that safety and effectiveness determinations
are to be made on a generic basis.  Rather, the purpose of these
provisions is to encourage use of generic drugs by assisting doctors
and pharmacists in identifying generic equivalents and "ascertain(ing)
the qualities and specifications of the product, and the competing
products." S. Rep. No. 1744, 87th Cong., 2d Sess. 18 (1962).  Thus,
labeling a drug with the generic name as well as the trade name would
aid physicians in deciding "whether to prescribe by the trade name
upon which they have come to rely or to prescribe the so-called
generic equivalent by using the official name or by authorizing the
pharmacist to select a product bearing the official name" (ibid.).

   /29/ See Pharmadyne Laboratories, Inc. v. Kennedy, supra, 466 F.
Supp. at 106.

   /30/ The ANDA process applies to copies of pre-1962 drug products
for which the FDA has published a notice known as a Drug Efficacy
Study Implementation ("DESI") Notice.  Most, but not all, of the
unapproved drugs Generix was distributing purported to be generic
copies of drugs subject to such notices, and the manufacturer
therefore could have sought approval under this simplified procedure.

   In addition, the FDA has announced a so-called "paper NDA" policy
for post-1962 generic drugs.  45 Fed. Reg. 82052 (1980).  Under that
policy, applicants may rely on the scientific literature, if it
provides adequate data, to establish the safety and effectiveness of
the pioneer drug.  Safety and effectiveness of a generic drug is then
established by such literature plus the applicant's showing that its
generic drug is bioequivalent to the pioneer.  21 C.F.R. 320.22.

   /31/ The lower courts also have applied this basic principle in
construing the Act.  See, e.g., Upjohn Co. v. Finch, 422 F.2d 944, 947
(6th Cir. 1970);  Carter-Wallace, Inc. v. Gardner, 417 F.2d 1086,
1094-1095 (4th Cir. 1969);  United States v. Vitasafe Corp., 345 F.2d
864, 870 (3d Cir. 1965).

   /32/ The district court decision in that case had rejected the
manufacturer's argument that the "new drug" definition applied solely
to active ingredients.  The district court, however, erred in holding
that the government had some burden -- not met there -- to show that a
generic copy presented a hazard before premarketing clearance could be
required, Premo Pharmaceutical Laboratories, Inc. v. United States,
supra.

   /33/ In Pharmadyne, the defendant consented to a decree of
permanent injunction without contesting the government's claim that
such relief was appropriate.

   /34/ The New Jersey district court's comprehensive opinion in Premo
was based on a lengthy record.  The Director of FDA's Bureau of Drugs,
as well as the FDA's top biopharmaceutics expert and a number of
distinguished experts in the field, testified to the factual basis for
the requested relief.  The court made detailed findings and rejected
the Lannett dicta.  It specifically found that drugs having the same
active ingredient can differ in safety and effectiveness because of
variations in inactive ingredients, 511 F. Supp. at 963-964, 981,
because of subtle differences in chemical structure of the active
ingredients, id. at 963-964, 981-982, and because of differences in
manufacturing processes, id. at 963-965, 982-984.  It found that
differences between two drugs having the same active ingredient can
lead to severe adverse health consequences, including death, id. at
992-993, 996.  It concluded, on the basis of the evidence before it,
that the adulteration provisions of the Act could not be utilized
effectively to protect the public from the dangers posed by the
marketing of unapproved generic products, id. at 976-977, 988-989.
Following this decision, Premo consented to a permanent injunction.

   /35/ The issue of the status of generic drug products has also been
raised in another injunction suit against a manufacturer marketing an
unapproved generic drug.  United States v. Superpharm Corp., No.
CV-81-0087 (E.D.N.Y., filed Jan. 9, 1981).  The defendants consented
to an indefinite extension of a temporary restraining order while the
question of the court's authority to order recall of the drugs was
litigated.

   The issue has, in addition, arisen in cases considering the
parallel "new animal drug" provisions.  See 21 U.S.C. 321(w).  In one
case, now on appeal to the Eighth Circuit, the district court
concluded that differences in inactive ingredients and in
manufacturing processes can affect the safety and effectiveness of a
drug.  See United States v. Undetermined Quantities . . . Equidantin
Nitrofurantoin Suspension, (1981) Food Drug Cos. L. Rep. (CCH) Section
38,120 (E.D. Mo. May 19, 1981), appeal docketed, No. 81-1793 (8th Cir.
July 30, 1981).  In another animal drug case, the court concluded that
the "new animal drug" provision applies to products rather than to
active ingredients, but decided that where the pioneer product has
been approved by the FDA any generic copy that contains exactly the
same ingredients (including both active and inactive ingredients) does
not require FDA premarketing approval, United States v. Articles of
Drug . . . OXY 500 Scour Tablets, (1981) Food Drug Cos. L. Rep. (CCH)
Section 38,132 (D. Minn. Aug. 6, 1981).

   /36/ See page 16, supra.

   /37/ Generally, drug substitution programs, both in the states and
in the federal system, allow a physician to veto substitution.  For
example, under the federal "maximum allowable cost" regulations
implementing the Medicare and Medicaid reimbursement statutes, a
physician may, by so stating on his prescription, veto substitution,
45 C.F.R. 19.3(a)(3).  Physicians may be expected to veto substitution
where they cannot be assured that all generic copies of the products
they are prescribing have been approved by FDA.  For a discussion of
state substitution programs and the effect of the generic "new drug"
issue on those programs, see Pharmadyne Laboratories, Inc. v. Kennedy,
supra, 466 F. Supp. at 106.

   Appendix Omitted