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Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 12, 2006 Decided November 14, 2006

No. 06-5154

RANBAXY LABORATORIES LIMITED, ET AL.,

APPELLEES

v.

MICHAEL O. LEAVITT, SECRETARY OF HEALTH AND HUMAN

SERVICES, ET AL.,

APPELLANTS

Appeal from the United States District Court

for the District of Columbia

(No. 05cv01838)

Howard S. Scher, Attorney, U.S. Department of Justice,

argued the cause for appellants. With him on the briefs were

Peter D. Keisler, Assistant Attorney General, Kenneth L.

Wainstein, U.S. Attorney, Douglas N. Letter, Attorney, and Eric

M. Blumberg, Deputy Chief Counsel, U.S. Department of Health

and Human Services. Drake S. Cutini, Attorney, U.S.

Department of Justice, entered an appearance.

Simon E. Dance was on the brief for amicus curiae Blue

Cross & Blue Shield Association, Inc. in support of appellants.

Carmen M. Shepard argued the cause for appellees

USCA Case #06-5154 Document #1004281 Filed: 11/14/2006 Page 1 of 12
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Ranbaxy Laboratories Limited, et al. With her on the brief were

Kate C. Beardsley and William B. Schultz.

Jay P. Lefkowitz argued the cause for appellee Teva

Pharmaceuticals, USA, Inc. With him on the brief were John C.

O’Quinn and Michael D. Shumsky.

Theodore Case Whitehouse was on the brief for amicus

curiae Generic Pharmaceutical Association in support of

appellees.

Before: GINSBURG, Chief Judge, and GRIFFITH and

KAVANAUGH, Circuit Judges.

Opinion for the Court filed by Chief Judge GINSBURG.

GINSBURG, Chief Judge: The Hatch-Waxman Amendments

to the Food, Drug, & Cosmetic Act provide a period of

marketing exclusivity to the first drug manufacturer that either

successfully challenges a patent listed by the Food and Drug

Administration for an approved, branded drug and markets an

approved generic version of that drug or prevails in litigation

establishing that the patent is valid or not infringed. Ranbaxy

Laboratories Limited and Ivax Pharmaceuticals, Inc., the latter

since acquired by Teva Pharmaceuticals, USA, Inc., applied for

approval of drugs to compete with an approved drug

manufactured by Merck & Co. and challenged two patents

covering it. Thereafter, at Merck’s request, the FDA removed

the challenged patents from the “Orange Book,” its listing of

patents covering approved drugs, thereby depriving the generic

manufacturers of an opportunity to have a period of marketing

exclusivity.

Ranbaxy and Teva each filed a “citizen petition” asking the

FDA to relist the two patents. The FDA denied the petitions

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because Merck had not sued Ranbaxy or Teva for patent

infringement. Ranbaxy and Teva then repaired to the district

court, which entered a summary judgment for the plaintiffs, and

the FDA appealed.

We hold the FDA’s requirement that a generic

manufacturer’s patent challenge give rise to litigation as a

condition of retaining exclusivity when a patent is delisted is

inconsistent with the Act, which provides that the first generic

manufacturer to file an approved application is entitled to

exclusivity when it either begins commercially to market its

generic drug or is successful in patent litigation. Accordingly,

we affirm the judgment of the district court.

I. Background

Before marketing a new “branded” drug, the manufacturer

must file with the FDA a New Drug Application (NDA),

including evidence the drug is safe and effective, and the

identifying number and expiration date of any patent or patents

covering the drug. 21 U.S.C. § 355(a)-(b)(1). When it approves

the NDA, the FDA must publish the patent information, id.

§ 355(b)(1), (c)(2), which it does in Approved Drug Products

with Therapeutic Equivalence Evaluations, better known as the

Orange Book.

Before marketing a “generic drug,” which is bioequivalent

to a branded drug previously approved pursuant to an NDA, the

manufacturer may submit an Abbreviated New Drug

Application (ANDA). Unlike an NDA, an ANDA need not

contain evidence of the drug’s safety or efficacy. See 21 U.S.C.

§ 355(j)(2). Each ANDA, however, must contain:

a certification ... with respect to each patent which

claims [a drug or a method of using a drug listed in the

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*

 If the [ANDA] contains a certification described in

[paragraph] (IV) ... and is for a drug for which a previous

[ANDA] has been submitted under this subsection

[containing] such a certification, the [ANDA] shall be made

effective not earlier than one hundred and eighty days

after—

(I) the date the Secretary receives notice from the

applicant under the previous [ANDA] of the first

Orange Book] for which the applicant is seeking

approval under this subsection and for which

information is required to be filed under subsection (b)

or (c) of this section—

(I) that such patent information has not been

filed,

(II) that such patent has expired,

(III) [that] such patent will expire [on a

specified date], or

(IV) that such patent is invalid or will not be

infringed by the manufacture, use, or sale of

the new drug for which the application is

submitted[.]

Id. § 355(j)(2)(A)(vii). The Act rewards the first manufacturer

to file an approved ANDA containing the certification in

paragraph IV by giving it a 180-day period of marketing

exclusivity, which begins with the earlier of the applicant’s first

commercial marketing of the generic drug or when the applicant

prevails in a suit over infringement or the validity of the patents

covering the branded drug. Id. § 355(j)(5)(B)(iii)-(iv).*

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commercial marketing of the drug under the

previous [ANDA], or 

(II) the date of a decision of a court in an action ...

holding the patent which is the subject of the

certification to be invalid or not infringed,

whichever is earlier.

Id. § 355(j)(5)(B)(iv).

This provision was amended by the Medicare Prescription Drug,

Improvement, and Modernization Act of 2003 (MMA), Pub. L. No.

108-173, tit. XI, § 1102(a)(2)(D)(i)(I)(bb)(CC), (a)(2)(D)(ii), 117 Stat.

2066, 2457-59 (Dec. 8, 2003) (codified at 21 U.S.C.

§ 355(j)(5)(D)(i)(I)(bb)(CC), (j)(5)(D)(ii) (2003)). The decisions of

the FDA and of the district court were made pursuant to the Act as it

stood before the MMA and, because the MMA was not made

retroactive, § 1102(b)(1), 117 Stat. at 2460, this decision is also geared

to the Act pre-MMA.

* If a patent is removed from the [Orange Book], any

applicant ... who has made a certification with respect to

such patent shall amend its certification. The applicant shall

certify ... that no patents [required to be listed in the Orange

Book] claim the drug or, if other relevant patents claim the

drug, shall amend the certification to refer only to those

relevant patents .... Once an amendment ... has been

submitted, the application will no longer be considered to be

one containing a [paragraph IV certification].

When a patent is removed from the Orange Book (or, in the

parlance of the agency is “delisted”), the FDA by regulation

requires the sponsor of the corresponding ANDA to delete its

paragraph IV certification with respect to the delisted patent. 21

C.F.R. § 314.94(a)(12)(viii)(B).* If no patent covering the

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21 C.F.R. § 314.94(a)(12)(viii)(B).

branded drug remains listed, then the generic applicant must file

a paragraph I certification, and the FDA treats the ANDA as

though it had never contained a paragraph IV certification. As

a result, the generic applicant that was first to file an approved

application does not get the 180-day period of exclusivity. See

id.

Merck, which marketed simvastatin under the brand name

Zocor®, submitted to the FDA information with respect to three

patents covering the drug: U.S. Patent Nos. 4,444,784 (the 784

Patent), RE 36,481 (the 481 Patent), and RE 36,520 (the 520

Patent). Teva and Ranbaxy each filed an ANDA to market

generic simvastatin. The two ANDAs — both of which were

eligible for a 180-day period of marketing exclusivity because

they involved different dosages — each contained a paragraph

IV certification with respect to the 481 and 520 Patents. With

respect to the 784 Patent, Ranbaxy and Teva each filed a

paragraph III certification that it would expire in December

2005.

Merck, however, did not sue Ranbaxy or Teva for patent

infringement based upon their paragraph IV certifications.

Instead, before their ANDAs were approved, Merck asked the

FDA to delist the 481 and 520 Patents from the Orange Book,

which the agency did in 2004. Consequently, under 21 C.F.R.

§ 314.94(a)(12)(viii)(B), Ranbaxy and Teva were required to

delete the paragraph IV certifications from their ANDAs and

thereby lost their eligibility for a period of marketing

exclusivity. Ranbaxy and Teva accordingly petitioned the FDA

to relist the 481 and 520 Patents in the Orange Book, restore

their period of exclusivity, and refrain from approving any other

manufacturer’s ANDA for generic simvastatin until their period

of exclusivity expired.

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In a letter ruling denying the petitions, the FDA said it had

considered three possible methods of handling the request of a

manufacturer with an approved NDA to delist a patent. First,

the FDA could always delist the patent, but that could unfairly

deny a period of marketing exclusivity to the generic

manufacturer that would later be the first to file an approved

ANDA by depriving it of the opportunity to prevail in patent

litigation. Second, it could refuse to delist the patent only if a

generic manufacturer had filed an ANDA containing a

paragraph IV certification with respect to the patent, but the

agency rejected that possibility on the ground that “eligibility for

exclusivity does not vest with a patent challenge,” that is, upon

the filing of a paragraph IV certification. Finally, the FDA

could delist a patent only if a generic manufacturer had filed an

ANDA containing a paragraph IV certification with respect to

the patent and the NDA holder had not filed a lawsuit to contest

the certification. The FDA chose the last option on the ground

that it best balanced, on the one hand, the pro-competitive effect

of the incentive for a generic drug manufacturer to be the first to

challenge a patent listed in the Orange Book and thereby

introduce generic competition to a branded drug and, on the

other, the loss of competition among generic manufacturers

caused by the 180-day period of marketing exclusivity for the

first to file an approved ANDA containing a paragraph IV

certification.

Ranbaxy and Teva then brought this action in the district

court, which held the FDA’s delisting policy was inconsistent

with the Act because, by requiring the first generic manufacturer

that filed a paragraph IV certification to remove that

certification before its ANDA could be approved, it deprived the

generic applicant of the opportunity to obtain a period of

exclusivity pursuant to 21 U.S.C. § 355(j)(5)(B)(iv)(I) by

commercially marketing its drug. The court entered judgment

for Ranbaxy and Teva and the FDA appealed.

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II. Analysis

We review the FDA’s interpretation of the Act it

administers under the two-step analysis in Chevron, U.S.A. Inc.

v. NRDC, 467 U.S. 837 (1984). See Teva Pharm. Indus. Ltd. v.

Crawford, 410 F.3d 51, 53 (D.C. Cir. 2005) (reviewing

under Chevron FDA ruling on citizen petition). First, we ask

whether the “Congress has directly spoken to the precise

question at issue.” Chevron, 467 U.S. at 842. “If the intent of

Congress is clear, that is the end of the matter; for the court, as

well as the agency, must give effect to the unambiguously

expressed intent of Congress.” Id. at 842-43. If, however, “the

statute is silent or ambiguous with respect to the specific issue,

the question ... is whether the agency’s answer is based on a

permissible construction of the statute.” Id. at 843.

Ranbaxy and Teva claim this case can be resolved at

Chevron step one. Ranbaxy argues that 21 U.S.C.

§ 355(j)(5)(B)(iv) on its face entitles the company to a period of

marketing exclusivity, and Teva contends the FDA’s distinction

between filers of paragraph IV certifications that are sued and

those that are not has no basis in the Act.

Under the rubric of Chevron step two, Ranbaxy and Teva

argue the FDA’s policy of delisting a patent in the absence of

litigation is unreasonable for a variety of reasons. Upon

examination, however, we believe their arguments are better

considered at Chevron step one. More specifically, Teva

contends the requirement of litigation is inconsistent with the

text and structure of the statute and with its purpose, as

elucidated in circuit precedent. Here it refers in particular to

Mova Pharmaceutical Corp. v. Shalala, 140 F.3d 1060, 1069

(D.C. Cir. 1998), in which we held 21 U.S.C. § 355(j)(5)(B)(iv)

precludes the FDA from conditioning marketing exclusivity

upon the first to file an ANDA prevailing in patent litigation,

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and to Purepac Pharmaceutical Co. v. Friedman, 162 F.3d

1201, 1204-05 (D.C. Cir. 1998), in which we held the FDA

reasonably gave a period of marketing exclusivity to the first

generic drug manufacturer to file a paragraph IV certification

even though it never litigated the infringement or validity of the

patent. Based upon these cases, Teva argues that the Act

precludes the FDA from predicating exclusivity upon a patent

infringement suit being brought by the NDA holder. Ranbaxy

suggests the FDA’s policy is inconsistent with the Act for two

other reasons: first, the policy diminishes the incentive the

Congress provided for a generic manufacturer to challenge a

patent by reducing the certainty of its getting a period of

marketing exclusivity; and second, by balancing anew the costs

and benefits of the exclusivity provided by the Congress, the

policy exceeds the authority of the agency.

In response, the FDA argues that its regulation requiring the

filer of an ANDA to amend its certification when a patent is

delisted, 21 C.F.R. § 314.94(a)(12)(viii)(B), is not inconsistent

with the Act because 21 U.S.C. § 355(j)(5) is silent with regard

to the withdrawal of patent information previously submitted for

listing in the Orange Book. The FDA points out that a generic

applicant’s exclusivity does not vest upon the filing of a

paragraph IV certification; otherwise, it asserts, the filer’s

eligibility for exclusivity would not be lost when, for example,

the patent subject to the paragraph IV certification expires, see

Dr. Reddy’s Labs., Inc. v. Thompson, 302 F. Supp. 2d 340, 354-

55 (D.N.J. 2003) (holding FDA reasonably interpreted 21 U.S.C.

§ 355(j)(5)(B)(iv) not to extend exclusivity to ANDA approved

after patent had expired), or the generic applicant loses in patent

litigation, see Mylan Labs., Inc. v. Thompson, 389 F.3d 1272,

1282-84, 1283 n.10 (D.C. Cir. 2004).

The FDA then argues its policy is reasonable because it

allows an NDA holder to eliminate the patent as a barrier to

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approval of an ANDA when that patent does not cover the drug

or method of use for which it was listed in the Orange Book. At

the same time the policy preserves the ministerial nature of the

FDA’s role in maintaining the patent listings in the Orange Book

because, when an NDA holder asks it to delist a patent, the

agency need not determine whether the NDA holder is acting

strategically to deny the generic applicant a period of marketing

exclusivity or the patent actually does not cover the drug for

which it was submitted — the interpretation of patent listings

being outside the agency’s expertise.

The “precise question at issue” at Chevron step one is, in

our view, whether the FDA may delist a patent upon the request

of the NDA holder after a generic manufacturer has filed an

ANDA containing a paragraph IV certification so that the effect

of delisting is to deprive the applicant of a period of marketing

exclusivity. The Congress unquestionably provided two ways

in which a generic drug manufacturer may begin a 180-day

period of exclusivity: (1) by marketing its drug commercially,

or (2) by convincing a court that the patent subject to its

paragraph IV certification is either invalid or not infringed. 21

U.S.C. § 355(j)(5)(B)(iv). When the NDA holder asks the FDA

to delist the patent, however, the FDA’s policy of acquiescence

prevents the generic manufacturer that has filed an ANDA

containing a paragraph IV certification from beginning its period

of exclusivity.

We have previously rejected at Chevron step one the FDA’s

attempt to add to the statutory requirements for exclusivity by

making it contingent upon success in litigation. In Mova we

held the “successful defense” rule, which afforded exclusivity

only to the generic applicant that both filed the first approved

ANDA with a paragraph IV certification and successfully

defended an infringement suit, was inconsistent with the text and

structure of the Act because it permitted the FDA to approve a

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*

 We need not address the question of patent expiration in this

case. We note, however, as Ranbaxy and Teva acknowledged

at oral argument, the text and structure of the statute suggest a

distinction between expiration and delisting such that the first

generic applicant may no longer retain exclusivity when the

patent has expired. See 21 U.S.C. § 355(j)(5)(B)(i); see also

Dr. Reddy’s Labs., 302 F. Supp. 2d at 354-55.

later ANDA before either the first to file began to market its

drug commercially or a court held the subject patent invalid or

not infringed; the rule thereby “[wrote] the commercialmarketing trigger out of the statute.” 140 F.3d at 1069-70.

Later we upheld as reasonable at Chevron step two the FDA’s

decision to grant a generic applicant a period of marketing

exclusivity even though its paragraph IV certification did not

result in litigation precisely because the FDA’s approach

“basically duplicat[ed] the statute.” Purepac, 162 F.3d at 1204-

05.

Not only does the statute not require litigation to preserve

a generic applicant’s eligibility for exclusivity, as those

precedents make clear; such a requirement is inconsistent with

the structure of the statute because, if the patent is delisted

before a pending ANDA is approved, then the generic

manufacturer may not initiate a period of marketing exclusivity.

The FDA’s observation that the generic applicant’s right to a

period of marketing exclusivity does not vest upon its filing a

paragraph IV certification is beside the point, which is that the

Act makes the generic applicant eligible for exclusivity while

the FDA’s policy makes it ineligible for exclusivity.*

In addition, the FDA’s policy allows an NDA holder, by

delisting its patent, to deprive the generic applicant of a period

of marketing exclusivity. By thus reducing the certainty of

receiving a period of marketing exclusivity, the FDA’s delisting

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policy diminishes the incentive for a manufacturer of generic

drugs to challenge a patent listed in the Orange Book in the hope

of bringing to market a generic competitor for an approved drug

without waiting for the patent to expire. The FDA may not,

however, change the incentive structure adopted by the

Congress, for the agency is bound “not only by the ultimate

purposes Congress has selected, but by the means it has deemed

appropriate, and prescribed, for the pursuit of those purposes.”

MCI Telecomms. Corp. v. AT & T Co., 512 U.S. 218, 231 n.4

(1994). Therefore, we hold unlawful the FDA’s policy requiring

that the first filer of a paragraph IV certification be sued in order

to preserve its statutory exclusivity when the NDA holder seeks

to delist the patent rather than to litigate.

III. Conclusion

In sum, the FDA’s policy conditioning a generic applicant’s

period of marketing exclusivity upon the generic applicant being

sued for patent infringement by the NDA holder is inconsistent

with the text and structure of the Act and, because it diminishes

the incentive the Congress gave manufacturers of generic drugs,

is inconsistent with the purpose of the Act. Therefore, we

conclude the FDA improperly denied Ranbaxy and Teva a

period of marketing exclusivity by delisting Merck’s patents.

For the foregoing reasons, the judgment of the district court is

Affirmed.

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