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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 November 3, 1998 Decided December 29, 1998

No. 98-5334

Purepac Pharmaceutical Company,

Appellant

v.

Michael A. Friedman, M.D.,

Acting Commissioner of Food and Drugs,

Food and Drug Administration,

Appellee

---------

Consolidated with

Nos. 98-5335 & 98-5337

Appeals from the United States District Court

for the District of Columbia

(98cv01780)

Robert A. Dormer argued the cause for appellants. With

him on the joint briefs were James R. Phelps, Douglas B.

Farquhar, David M. Malone, John F. Cooney, John R.

Fleder, David F. Weeda and Arthur Y. Tsien. Brett T.

Schwemer entered an appearance.

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

argued the cause for the federal appellee. On the brief were

Frank W. Hunger, Assistant Attorney General, Wilma A.

Lewis, U.S. Attorney, Douglas N. Letter, Appellate Litigation

Counsel, U.S. Department of Justice, and Jeffrica Jenkins

Lee, Attorney.

James D. Miller argued the cause for intervenors-appellees

Torpharm, A Division of Apotex, Inc., et al. With him on the

joint brief were Eugene M. Pfeifer and Donald O. Beers.

USCA Case #98-5334 Document #405409 Filed: 12/29/1998 Page 1 of 10
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Before: Randolph, Rogers, and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Randolph.

Randolph, Circuit Judge: "The active ingredients in most

prescription drugs constitute less than 10% of the product;

inactive 'excipients' (such as coatings, binders, and capsules)

constitute the rest. The term 'generic drug' is used to

describe a product that contains the same active ingredients

but not necessarily the same excipients as a so-called 'pioneer

drug' that is marketed under a brand name." United States

v. Generix Drug Corp., 460 U.S. 453, 454-55 (1983). New

drugs, including new generic drugs, may not be marketed

without the Food and Drug Administration's approval. The

Drug Price Competition and Patent Term Restoration Act of

1984, Pub. L. No. 98-417, 98 Stat. 1585, revised the procedures for obtaining the FDA's approval. One of the provisions in the "Hatch-Waxman Amendments," as this Act is

known, conferred on the first generic drug applicant a 180-

day period during which it would be free of competition from

generic applicants who file later. The FDA implemented this

provision through a regulation. In Mova Pharmaceutical

Corp. v. Shalala, 140 F.3d 1060 (D.C. Cir. 1998), we sustained

a district court injunction against the FDA's enforcement of

one of the regulation's requirements, finding it inconsistent

with the statute. In response to Mova, the FDA revised its

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system for granting the 180-day exclusivity period. The

questions in this case concern the validity of the revision.

I

In July 1998, the FDA tentatively approved Purepac Pharmaceutical Company's application to market the generic drug

ticlopidine hydrochloride, marketed by other companies under

the brand-name "Ticlid."1 Although Purepac's application

has become ready for final approval, the FDA is withholding

action. Purepac must, the FDA insists, wait until the first

ticlopidine applicant--Torpharm, a division of Apotex, Inc.--

markets its product for 180 days. At the time of this writing,

it is not certain when these 180 days will start running. The

FDA has not yet finally approved Torpharm's application.

With matters thus at a standstill, Purepac decided to take

legal action. It sued for an injunction and a declaratory

judgment, challenging the validity of the FDA's post-Mova

revision and claiming that Torpharm was not entitled to the

180-day exclusivity period because it had not been sued for

patent infringement (a claim we will explain later in this

opinion). Other companies intervened on Purepac's side;

Torpharm and the companies who market the brand-name

drug intervened as defendants.2 The district court denied

Purepac's motion for a preliminary injunction and this appeal

followed.

II

Under the Hatch-Waxman Amendments, an applicant

seeking to market a new drug--that is, a "pioneer applicant"--must file a "New Drug Application." See 21 U.S.C.

s 355(a). Among other things, the application must include

full reports of investigations of the drug's safety and effec-

__________

1 Ticlid is widely prescribed for patients who have a high risk of

thrombotic strokes and who cannot tolerate aspirin.

2 Invamed, Inc. and Teva Pharmaceuticals U.S.A., Inc. intervened as plaintiffs; Hoffman-LaRoche Inc. and Syntex (U.S.A.)

Inc, in addition to Torpharm, intervened as defendants.

tiveness. See 21 U.S.C. s 355(b)(1). An applicant seeking to

market a generic drug may submit an "Abbreviated New

Drug Application." As the name suggests, an abbreviated

application is less demanding than a pioneer application; it

may, for instance, rely on the safety and effectiveness studies

submitted by the pioneer applicant. See 21 U.S.C.

s 355(j)(2)(A)(i)-(v); Mead Johnson Pharm. Group v. Bowen,

838 F.2d 1332, 1333 (D.C. Cir. 1988). An abbreviated application also must include a certification that, for each of the

patents applicable to the pioneer drug, the proposed generic

drug would not infringe the patent because (I) the patent

information has not been filed; (II) the patent has expired;

(III) the patent will expire on a stated date; or (IV) the

patent is invalid or will not be infringed by the manufacture,

use or sale of the drug for which the abbreviated application

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applicant seeks approval. See 21 U.S.C. s 355(j)(2)(A)(vii)(I)-

(IV).

Our concern is with IV, the method Torpharm and then

Purepac used. In a paragraph IV certification, the generic

applicant must give notice to the owner of the patent, and to

the holder of the approved application for the drug covered

by the patent. See 21 U.S.C. s 355(j)(2)(B)(i). FDA approval of the abbreviated application may be made "effective

immediately," unless a patent infringement suit is brought

against the applicant within forty-five days from the date the

patent owner or application holder receives notice of the

paragraph IV certification. See 21 U.S.C. s 355(j)(5)(B)(iii).

No one brought a patent infringement suit against Torpharm (or Purepac) and it is therefore unnecessary to describe

the provisions dealing with the various contingencies of such a

lawsuit. The section directly in dispute--the section conferring the 180-day period of exclusivity--reads as follows:

If the application contains a certification described in

subclause (IV) of paragraph (2)(A)(vii) and is for a drug

for which a previous application has been submitted

under this subsection continuing3 such a certification, the

__________

3 This should probably read "containing." See Mova Pharm.

Corp., 140 F.3d at 1064 n.3.

application 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 application of the first

commercial marketing of the drug under the previous

application, or

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

described in clause (iii) holding the patent which is the

subject of the certification to be invalid or not infringed,

whichever is earlier.

21 U.S.C. s 355(j)(5)(B)(iv), as amended by Pub. L. No.

105-115, 111 Stat. 2296 (1997).

The FDA's original regulation implementing this section,

promulgated in 1994, provided:

If an abbreviated new drug application contains a certification that a relevant patent is invalid, unenforceable or

will not be infringed and the application is for a generic

copy of the same listed drug for which one or more

substantially complete abbreviated new drug applications

were previously submitted containing a certification that

the same patent was invalid, unenforceable or would not

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cation has successfully defended against a suit for patent infringement brought within 45 days of the patent

owner's receipt of notice submitted under s 314.95, approval of the subsequent abbreviated new drug application will be made effective no sooner than 180 days from

whichever of the following dates is earlier:

(i) The date the applicant submitting the first application

first commences commercial marketing of its drug product; or

(ii) The date of a decision of the court holding the

relevant patent invalid, unenforceable, or not infringed.

59 Fed. Reg. 50,338, 50,367 (1994) (emphasis added). The

italicized language embodied what the parties and our Mova

opinion call the "successful defense" requirement: the first

generic applicant was entitled to the 180-day exclusivity

period only after it had successfully defended a patent infringement suit.

Mova held that this portion of the regulation was "inconsistent with the statutory text and structure." 140 F.3d at

1076.4 As the court read the statute, it provided that a later

generic applicant could not start marketing its product for

180 days after either commercial marketing by the first

applicant, or a court decision declaring the patent invalid or

not infringed. Id. at 1069. The FDA's successful defense

requirement read the commercial marketing "trigger" out of

the statute. As a result, first applicants who were not sued

could never receive the benefit of the exclusivity period. Id.

After Mova, the FDA issued a "Guidance to Industry"

announcing its intention to "formally" remove the successful

defense requirement from the regulation and to conduct a

rulemaking proceeding to issue new regulations under

s 355(j)(5)(B)(iv). In the meantime, the FDA said it would

follow the statute as Mova interpreted it. That is, the agency

would inform "the first applicant to submit a substantially

complete" abbreviated application, "with a paragraph IV certification," that the applicant was eligible for 180 days of

market exclusivity even though it had not been sued for

patent infringement. The FDA added that it expected first

applicants to begin marketing their product "promptly upon

approval."

In November 1998, while this case was pending, the FDA

published an interim rule in the Federal Register amending

its regulation to eliminate the successful defense requirement.

The interim rule accomplished this by deleting from the

regulation the following language, italicized above (21 C.F.R.

s 314.107(c)(1)): "and the applicant submitting the first application has successfully defended against a suit for patent

infringement brought within 45 days of the patent owner's

__________

4 The Fourth Circuit, in an unpublished decision, reached the

same result, Granutec, Inc. v. Shalala, 1998 U.S.App. LEXIS 6685,

at * 19 (4th Cir. Apr. 3, 1998).

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receipt of notice submitted under s 314.95."5 See 63 Fed.

Reg. 59,710, 59,712 (1998).

III

We come at last to Purepac's legal arguments. In essence,

Purepac maintains that the regulation containing the successful defense requirement did not entitle Torpharm to the 180-

day exclusivity period because Torpharm had not been sued

for patent infringement. As Purepac sees it, even after Mova

the FDA still had to require, as a condition for exclusivity,

that the first generic applicant be sued for patent infringement, although the FDA could no longer insist that the

applicant defend the suit successfully.

The FDA's Guidance for Industry embraced a different

interpretation of Mova and of the severability of the regulation: under the Guidance, a first applicant like Torpharm did

not have to be sued in order to be entitled to the exclusivity

period. Purepac opposed the Guidance on a procedural

ground, claiming that the FDA had gone beyond the mandate

of Mova, and thereby effectively amended the regulation,

something agencies may do only through notice and comment

rulemaking, or through an interim rule. The FDA's promulgation of an interim rule duplicating the Guidance puts an end

to Purepac's arguments in this regard.

In apparent anticipation of the FDA's issuing an interim

rule (as the Guidance suggested it would), Purepac's brief

also contended that the agency could not validly use this

procedure because it would be unable to show "good cause"

under 5 U.S.C. s 553(b)(B), a necessary condition for dispensing with pre-promulgation notice and comment. See MidTex Elec. Co-op., Inc. v. FERC, 822 F.2d 1123, 1131-33 (D.C.

Cir. 1987). The basis for this contention is basically the same

__________

5 The interim rule also amended 21 C.F.R. s 314.107(c)(4) by

deleting the phrase "if sued for patent infringement." See 63 Fed.

Reg. at 59,712. The original regulation had provided that the first

applicant should notify the FDA of the date that it commenced

commercial marketing, "if sued for patent infringement." See 59

Fed. Reg. at 50,368.

as Purepac's procedural challenge to the Guidance: Mova did

not strike down the regulation's requirement that the first

applicant must defend a lawsuit before being eligible for the

180-day exclusivity period; the only portion of the regulation

Mova rendered unenforceable was the requirement that the

applicant "successfully" defend the lawsuit; and because this

so-called "lawsuit" requirement remained untouched by

Mova, the FDA would have no grounds for claiming that it

faced some pressing need, some good cause, to dispense with

notice and comment before promulgating an amendment to

the regulation. Purepac also advanced the same line of

reasoning to support its position that the FDA's response to

Mova was irrational and inconsistent with s 355(j)(5)(B)(iv).

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We see the FDA's revised system for granting exclusivity

as consistent with the statute and with our Mova decision.

Section 355(j)(5)(B)(iv) does not, on its face, require the first

applicant to be sued in order to benefit from market exclusivity. It provides, as we said in Mova, that the 180-day

exclusivity period for the first applicant begins running upon

the occurrence of one of two events, whichever is earlier--

commercial marketing by the first applicant, or a court

decision in favor of the applicant. 140 F.3d at 1069. The

second condition obviously presupposes a lawsuit. The first

does not. The words of the statute provide no reason to

think, as Purepac must, that the only "commercial marketing"

contemplated in s 355(j)(5)(B)(iv) is marketing that takes

place while the first applicant is defending a lawsuit or after

the lawsuit has concluded. The regulation, as it now stands,

is fully consistent with the statute. By removing the language embodying the successful defense requirement, the

FDA eliminated a significant difference between its regulation and s 355(j)(5)(B)(iv).

Agencies occasionally promulgate a regulation merely duplicating the underlying statute. As matters stand after the

FDA's revisions, its regulation is of that type. There is

nothing irrational in the FDA's giving first applicants the

180-day exclusivity period even if they have not been sued.

On its face, the statute does the same. Seen in this light,

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Purepac's real objection is to the words Congress used, not

the FDA's revision of its regulation.

Purepac points out that in the preamble to the final rule

containing the successful defense requirement, the FDA stated that the statute--s 355(j)(5)(B)(iv)--"can be applied

straightforwardly only when the applicant who seeks the 180-

day period of exclusive marketing has been involved in a

patent infringement lawsuit." 59 Fed. Reg. at 50,353.

Whether this and other remarks in the preamble were intended to convey the idea that the statute should be read to

require a lawsuit against the first applicant, although not a

successful defense of the lawsuit, is uncertain and, in any

event, beside the point. The FDA's current position is that,

as a temporary measure pending a rulemaking proceeding, it

will not infer requirements for exclusivity that are not in the

statutory text. Its explanation for this position is more than

adequate: the decision in Mova forced it to go back to the

drawing board.

Purepac also offers a policy reason for reading a lawsuit

requirement into s 355(j)(5)(B)(iv). If a first applicant is

never sued for patent infringement, it is possible that neither

of two "triggers" for the running of the 180 days of market

exclusivity--commercial marketing or a judicial decision--

would ever occur. Without a lawsuit there would be no

judicial decision. If the applicant never begins marketing its

product, the 180 days would never run and all later generic

applicants would be barred from bringing their products to

market. Purepac's point is hardly new. Mova discussed it at

some length, 140 F.3d at 1067, said in dictum that a lawsuit

requirement "would have corrected the problem," id. at 1071,6

__________

6 It is not clear that the "problem" would be entirely solved.

Suppose, as Purepac proposes, only the word "successfully" were

eliminated from the regulation, thus retaining as a condition to

receiving exclusivity that the first applicant "has successfully defended against a suit for patent infringement brought within 45

days of the patent owner's receipt of notice." Suppose further that

a first applicant is sued but that the suit does not result in a judicial

decision finding the patent not infringed or invalid, so that the

and then cautioned that "Congress may have intended to

reward the first ... applicant for his enterprise whether or

not he is later sued," thus suggesting that a lawsuit requirement might be inconsistent with congressional intent. See id.

at 1071 n.11. For this reason, Mova described a narrower

answer to the problem: for first applicants who are not sued,

they must bring their products to market within a prescribed

period in order to benefit from exclusivity. See id. There is

some indication that the FDA will consider this alternative in

the rulemaking promised in its Guidance, or in response to

comments on its interim rule.7 That is the proper time and

setting for Purepac to repeat its point and to offer its

solution. In the meantime, the FDA has implemented an

interim measure, basically duplicating the statute. The

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proval of Purepac's generic application pending Torpharm's

commercial marketing, is not irrational, it is not inconsistent

with s 355(j)(5)(B)(iv) and it is not contrary to the mandate in

Mova.

The district court's judgment denying the motion for a

preliminary injunction is therefore affirmed.

So ordered.

__________

judicial decision trigger in s 355(j)(5)(B)(iv) is not activated. This

could happen if, for instance, the suit is dropped or settled. In

those events, only commercial marketing could trigger the running

of the 180-day period. And the same problem Purepac identifies

would exist if the first applicant fails to market its product.

7 The Guidance stated that first applicants who are not sued will

receive a letter from the FDA telling them that they will nevertheless receive the benefit of exclusivity, but warning that the agency

"expects that you will begin commercial marketing of your product

promptly upon approval."

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