UNITED STAT ES DIS TRICT COURT F OR THE D ISTRIC T OF CO LU M BIA

) TEVA P HARMAC EUTICALS US A, INC. , ) ) ) P laintif f, )

) v. ) Civil Action No. 09-1111 (RM C) ) KA THLE EN SEB ELIUS , Secre tary of Health and Human Servic es, et al ., ) ) ) Defendan ts. ) )

M EM OR

AN DU M OP IN ION Te va Pha rm a c e uti c a ls U SA, I nc . ( “ Te va ” ), a manu fa c tur e r of g e ne ri c dr ug s, se e ks a preliminary

injunction to invalidate a “De listi n g R u l e” insti tuted by the Food a

nd Drug Ad min istratio n ( “ F DA ” ). Th e F DAc on te nd s th a t the re is n o s uc h “ De lis tin g Rul e .” I ns te a d, in informal adjudications reg ardingother drug s, the FD A has held that a name br and manuf actur er’ s withdrawa l of a patent as a ba sis for its drug (s) ( i.e ., a re quest that the pate nt be “de listed”) trig g ers a forfeiture provision excising t he g ener ic company ’s elig ibilit y for a 180-day exclusive marketing period. Te va conte nds that by way of these de cisions the FDAhas cr eate d a “r ule” that is subject to c ha lle ng e . T he F DAmov e s to dis mis s, arguin g tha t it s d e c isi on s d o n ot c on sti tut e a fi na l r ule

su bje c t to c ha lle ng e and

tha t, b e c a us e the re ha s b e e n n o f

ina l a g e nc y

a c tio n o n T e va ’s ow n r e qu e st for g ener ic drugapprova l, the matter is n o t ri p e and Teva la cks standing . The Court held ora l argument on J uly

13, 2009, and now de cides that the F DA’s motion to dismi s s will be denied. Fur ther, the pr eliminary

injunction procee dings a

re c ombined with trial on the merits and judg mentTh e Hatc h- Waxma n A me ndme nts a me nd e d th e F oo d, Dr ug , & Cos me tic Ac t, 2 1 U .S. C. 1 § 301 et seq . -2- will be g rante d in favor of the FD A. The F DA’s statutory interpre tation is not arbitrary or

c a pr ic iou s. I. BA CK G RO UN D F AC TS

A. Statut or

y Sc he me The Dr ug and Price Competiti on and Patent Te rm Restoration Act of 1 9 8 3 (the “Hatch-Waxm an Amendme nts”), 21 U.S.C. § 355 & 35 U.S.C. §§ 156, 271, & 282, established a 1 streamlined procedur e for FDA approva l of g ener ic drug s. Mo v a Ph ar m. Cor p. v . S ha lal a , 140 F.3d 10 60 , 1 06 3 ( D. C. Cir

. 19 98 ). Th e or ig ina l a pp lic a nt f or a pp ro va l of

a dr ug(t he “ I nn ov a tor ” ) m

us t file a New Drug Application (“N DA”) , including data from studies showing the drug ’s safe ty and eff ectivene ss. Id .; s e e als o 21 U.S .C

. § 3 55 (a ) & (b ). Th e I nn ov a tor a lso is r e qu ir e d to su

bmi t information on any

patent tha t cl ai m s t h e d rug or a me thod of using the drug for whic h patent infring ement could be asse rted a g ainst an unauthorized par ty . 21 U.S.C. § 355(b)(1) & (c) (2). The F DAlis ts s uc h p a te nt i nf or ma tio n in a pu bli c a tio n c a lle d th e “ Ap pr ov e d D ru g Pr od uc ts w ith Thera peutic Eva luations,” commonly known as the “ Ora

ng e B ook.” Id .; 21 C.F.R. § 314.53(e). Subsequent applica

nts who want to manufa cture g ener ic versions of the Innovator’s drug may file an Abbreviated New DrugApplication ( “A ND A”)

. Mova , 140 F.3d at 1063; 21 U.S.C. § 355(j). The ANDA is not require d to include new sa fety and ef fec tiveness data, but instea d

m ay r e l y o nt h e s a f

e t y an d e f f e c t i v e n e s s d a t a

i nt h e o r i g i n a l f

i l i n g . 2 1 U

. S

. C

. § 3 5 5 (

j )

. In t h i s w a y, the Hatc h- Waxma

n A me ndme nts we re int e nd e d b oth to e nc oura g e inno vat iv e ne w d ru g s and to permit the m arke ting of

lower c ost ge neric drug s quickly

. Tri-Bio L abs., Inc. v . United States , 836Parag raph I and I Icer

tifications are not releva

nt to this case . 2 -3- F.2d 135, 139 ( 3d Cir. 1987).

An ANDAapplicant must ce rtify whether the g ener ic d ru g wo u ld infring e any

e x i s t i n g p a t e n t s r e l i e d

o nan d l i s t e d b y t h e In n o v a t o r . T h e a

p p l i c an tm ay c e rt i f

y: (I ) that the re quired patent has not bee n filed; (I I ) that the patent has expired; (I I I ) that the patent has not expired, but will ex pire on a particula r date ; or (I V) that the patent is invalid or will not be infringe d by the manu fa c tur e , use or sa le of the ne w dr ug fo r w hic h th e a

pp lic a tio n is submitt ed. 21 U.S.C. § 355(j)(2)(A )(vii). A para g raph I I Icer tification means that the A NDA a pplicant does 2 not intend to market the drug until after the pa

tent expires; approval of the ANDA ma y be made eff ective on the expiration date. Id . § 355(j)(5) (B )(ii). A para g raph I V cer tification contemplate s that the ANDAapplicant c halleng es the va lidity of t he patent or claims that the patent would not be infring ed by

the g ener ic produc t pr oposed in the AND A. An applica nt must provide notice of a p ar ag raph IV ce rtification to the Innovator. Id

. § 3 5 5 (j )( 2 )( B)

. T h e fi l i n g o f a pa ra g r a p h IV

cer tification constitutes an ac t of infring ement under patent law, 35 U.S.C. § 271(e )(2) (A), a nd the I nnovator, a s patent holder, ha s 45 day s to bring s u i t ag ainst the ANDAapplicant. Id

. § 355(j)(5) (B )(iii). I f the Innovator bring s such a suit, the F DA must delay ap p ro v ing the ANDA for 30 months. Id

. This provision, known as the 30-mont h stay , g ives the I nnovator time to asser t its patent rights before the g ener ic competitor is per mitted to enter the mar

ket. Mova , 140 F.3d at 1 0 6 4

. If t h e In n o v a t o r

d o e s n o tb r i n g s u i tw i t h i n 4 5 d a ys , t h e F D A m ay a p p r o v e a p ar a g r a p h IV ANDA, a nd the appr oval may

be ef fec tive immediately

despite the unexpired patent, provide d thatThe pa rties ag ree that the MMA applies to the AN DAs filed by T ev a, as t h ey

wer e filed 3 afte r the MMA wa s enac ted. -4- other c onditions have bee n met. Id .; 21 C.F.R. § 314.107(f)( 2).

Under cer tain circ umstances, th e s t atut e provide s a 180-da y exclusive marketing period vis-a -vis other AN DA applica nts to the first applicant who f iles an AND A with a par ag raph I V ce rtification. 21 U.S.C. § 355(j)(5) (B )(iv). That is, the first patent-c halleng ing g ener ic applica nt

may be awa rd e d a six- mon th pe ri od duri ng wh ic h tha t app lic ant is the on ly c omp any a llo we d to se ll

a g e ne ri c ve rs ion

of the name br and

dr ug . T hu s, the statut e may re wa rd th e fi rs t g e ne ri c manufa cture r that exposes itself to the risk of patent liti g ation. Te v a Pha rm . I nd us . Lt d. v . Crawf

or d , 41 0 F .3 d 5 1, 52 (D .C. Cir . 2 00 5) ; Mova , 140 F.3d at 1064.

Congr ess amende d 21 U.S.C. § 355(j) in 2003 to add the exclusivit y provision s r aised by Teva in this case. See 21 U.S.C. § 355(j)(5)(D ) (pa rt of the Me dicar e Modernization Act of 2003 (t he “ MMA ” ); see The Ac cess to Af forda ble P h ar m ac eu t icals provisions of the Medic are Pr e sc ri pti on

Dr ug , Impr ov e me nt, and

Mo de rn iza tio n A c t of

20 03 , Pu b. L . N o. 10 8-1 73 , 1 17 Stat. 2066 (De c. 8, 2003). The MMA contains cer tain “for feiture provisions” setting f orth the conditions 3

un de r w hic h a

n A ND A a pp lic ant m ay

los e e lig ibi lity

fo r t he 18 0- da y e xclu siv ity pe ri od . 2 1 U .S. C. § 35 5( j) (5 )( D) (i ) & (i i)

. Th e fo rf e iture pr ov isi on a t iss ue in thi s c a se is the on e that pr ov ide s that a first ANDAfiler will forf eit exclusivi ty

if it fails to market the dr ug by a ce rtain date : (I ) F ailure to Mar

ket. The first [ ANDA] applica nt fails to market the drug by the later of – (a a ) t he e arl ie r o f t

he date that is – (AA) 75 day s afte r the date on which the appr oval of the application of the first applicant is m ade e ffe ctive under subpa

rag raph ( b)(iii); or-5- (B B) 30 months after the date of submissi on o f the application of the first applica nt; or (bb) with re spect to the fir st applicant or a ny other a pplicant (whic h other a pplicant has rece ived tentative a pproval), the date that is 75 days after the date as of which , as to ea ch of the patents with respe ct to which the first a

pplicant submitted and l awfully maintained a c e rt if ic a tio n qu a lif

y ing the fi rs t a

pp lic ant fo r t

he 18 0- da y e xclu siv ity period unde r subpar ag raph ( B) (iv), at lea st 1 of the following has occur red: (AA) I n an infring ement ac tion broug ht ag ain s t that applicant with re spect to the patent or in a de clar atory judg me nt a c tion br oug ht by

that applicant with re spect to the patent, a c ourt enters a final de cision from wh ic h n o a

pp e a l ( oth e r tha

n a pe tit ion to t he Sup re me Court for a writ of ce rtiorar i) has bee n or ca n be take n that the patent is invalid or not infring ed. (B B) I n an in fr inge ment action or a decla ratory judgment action desc ribed in subitem (AA) , a cour t signs a settlement order or consent de cre e that ente rs final judg ment that includes a f inding that the patent is invalid or not infringe d. (CC) The patent information submit ted under subsection (

b) or ( c) is withdrawn by the holder of the ap pli c ati on ap

pr ov e d u nd

e r su bs e c tio n (

b) o f this section [i

. e . , th e I n n o v a to r ]. Id . § 35 5( j) (5 )( D) (i )( I ) ( e mph a sis a dd e d to hig hli g ht pr ov isi on a t iss ue he re ). F or fe iture oc c ur s o nly wh e n th e “ la te r” of

the e ve nts in ( a a ) o r ( bb ) o c c ur s. Th e F DAha s tw ic e a

pp lie d the subs e c tio n ( bb )( CC) fo rf e iture pr ov isi on

in p ub lic letter de cisions, after

providing notice and c omment. For example, w ith r eg ard to a n ANDA f

or the drug acr abose, the FDA applied the failure to market for feiture provision under (bb) (CC), finding that th is s ub se c tio n r e qu ir e s ma rk e tin g wi thi n 7 5 d ay s f ro m w he n th e pate nt in for mation i s wi thd ra wn by the I nn ov a tor . Co mpl . E x. 5, L e tte r f ro m G ary B ue hle r, Di re c tor , O ff ic e of Ge ne ri cThe F DA has deter mined that the 75 day period runs from the date that the F DA re ceive s 4 the pate nt h old e r’ s r e qu e st t o r e mov e the pate nt f rom th e Orang e B oo k, e ve n th ou g h th is d a te g ener ally does not be come public until the FDA publishes the reque st to de list i n the Ora ng e B ook. Acr abose D ecision at 7 n.13; Cosopt Decision at 7. -6- Drug s, at 7-9 (Ma

y 7 , 2 0 0 8 ), FD A Dkt. No. 2007-N -0445 (“ Acr abose D ecision”) . The F DA

announce d its int erpr etation of subsec tion (bb)(CC) in broadl y a pplicable ter

ms — “Ther efor e, F DA

r e a d s t h e p l a i nl an g u a g e o f 5 0 5 ( j ) ( 5 ) ( D ) ( i ) ( I) ( b b ) ( C C ) t o a p p l y whenev er a patent is withdrawn (or reque sted to be ‘delisted’) by the NDA holde r.” Id

. at 8 (e mphasis added) . L ikewise, with re g ard to a n A ND A f or g e ne ri c Cos op t, t

he F DAa g a in e xpla ine d it s in te rp re ta tio n o f s ub se c tio n ( bb )( CC) of the MMA — that this subsection applies “ whene ver” a pate nt is withdrawn by the I n n o v at o r. Compl. Ex . 9, L etter f

ro m Ga ry Bu eh l er, D irec tor, Off ice of Gene ric Dr

ug s, at 14 n.15 (Oc t. 28, 2008), F DA Dkt. No. 2008- N-0483 (“ Cosopt Decision”). 4

B . F a c ts o f T his Ca se Th e fa c ts o f t

his ca se are no t in

dis pu te . M e rc k & Co. , Inc . ( “ Me rc k” ) i s th e name br and manu fa c tur e r t

hat ho lds a

pp ro ve d N DANo

. 20 -3 86 fo r los art an p ota ssi um ( “ los art an” ) t a ble ts (sold under the name “ Coz aar ”) a nd NDA No. 20- 0387 for losar tan potassium hy drochlorothiazide (“losar tan HCTZ ”) ta

blets (sold under the name “Hy zaar” ). Coz aar and Hy

zaar a re pr imarily

used to t re a t hy pe rt e ns ion . D ur ingthe tw e lve mon th p e ri od that e nd e d M arc h 3 1, 20 09 , ph arm a c ist s in the United States filled over fiftee n mi l l i o n presc riptions for Cozaar and H y zaar, dispensing 848 mi ll io nta b le ts , w h ic h a mo u n ts to n e ar ly $ 1

. 5 b il li o n in s a le s . Pl

. ’ s M o t. f o r Pr e li m. I n

j. [D kt. # 5 ], Ex . A, Dec l. of David Mar shall (“Ma rshall Dec l.”) ¶ 4. Merc k provided patent information to the FD A for listing in the Ora ng e B ook: (1) U.S. Patent No

. 5 , 1 3 8 ,069 (“the ’069 pate nt”); (2) U.S. Patent No. 5,153,197 (“the ’197 pate nt”);Merc k also provided infor mation reg ardinganother patent re g ardingthe method of use of 5 Coz aar . This patent is not r eleva nt he re beca

use Teva does not se ek approva l f or this method of use

. -7- and (3) U.S. Patent No. 5,608,075 (“the ’075 pate nt”). 5

Teva filed an A

NDA to mar

ket g ener ic losartan on D ec em b er 18, 2003, and an A N D A f o r g e n e r i c l o s art anH C T Z o nM ay 2 4 , 2 0 0 4

. T h e A

N D A s c o n t a i n e d

p ar a g r a p h III

cer tifications to the ’069 pate nt and the ’1 9 7 p at en t and a pa rag raph IV ce rtification to the ’075 patent. Te va sent a

notice of its par ag raph I V certification to Merc k, but Merc k did not sue Teva f or infring ement within 45 day s. I nstead, on Mar ch 18, 2005, Mer ck withdrew its re liance on the ’075 p a te n t by r e qu e s ti n g th a t th e F D A r e mo v e it f r o m t h e O r an g e B o o k

. M e r c k

h o ld s ana d d it io n a l s ixmon t h p ed i atric e x clusivity on the’069 a

nd ’197 pate nts. See 21 U. S.C. § 3 55 a (b ) ( pe diatr ic exclusivi ty

prev ents the FD A from a pproving g ener ic applications for six months after the patent

e xpir e s) . Thu s, the ’0 69 pate nt expi re s on Augus t 11, 200 9, and Me rc k’ s ped ia tr ic e xclu siv ity wi th reg ard t o t h i s p at en t expires Febr uary 11, 2010; the ’197 pate nt expi res on Oc tober 6, 2009, a nd Merc k’s pediatric exclusivi ty expires April 6, 2010. Acc ording ly , the FDA i s barr ed fr om approving any ANDAs until April 6, 2010, the d at e t hat Merc k’s pediatr ic exclusivit y on the ’197 patent expires. Under

the FD A’s interpr etation of the la w, the time ca lculations under the f ailure- tomark e t f or fe iture pr ov isi on

qu ote d a bo ve are no t in dis pu te
. Un de r t hat pr ov isi on , a

n A ND A f ir stfiler loses its elig ibilit y

by failing to market its g ener ic drugby the later o f two date s. One of the dates is ca lcul at ed u n d er s u b s ection (aa) — the ear lier of the date that is 75 day s after the ANDA approva l (there is no such date he re, a s Teva’ s ANDA ha s not been approve d) or 30 months after the ANDA w as submitted (J une 19, 2006 for Teva ’s g ener ic version of Coz aar and Nove mber 25, 2006This is so even though Teva was barr ed from bring ing its drug s to market bec ause Me rck’ s 6 pe diatr ic e xclu siv ity

wi th r e g ard

to t he ’0 69 and ’19 7 pate nts ha s n ot e xpir e d. Te va ’s ri g ht t o exclusivi ty was based only on the ’075 patent; if Teva ha d challeng ed the’ 069 and ’197 patents, the withdrawa l of the ’075 patent would not have e ffe ctuated a forf eiture. -8- fo r T e va’s generi c versi on of Hy zaa r) . In o the r w or ds , th e “ e arl ie r” date un de r s ub se c tio n ( a a ) i s J une 19, 2006 for

Teva ’s Cozaar AND A and Nove mber 25, 2006 for Teva ’s Hy

zaar AN DA. Th e se c on d d a te is c a lc ulate d und e r s ub se c tio n ( bb ). B e c a us e Me rc k d id n ot f

ile su it ag ainst Teva, the first two eve nts under subsec tions (bb) (AA) and (B B) which re late to litigation do not apply . Under

subsection (bb)( CC), Merck withdrew the patent information on the ’075 patent

on Janu ary 1, 20 09

. Ac c or din g to the F DA , be c a us e Te va did no t ma rk e t it s g e ne ri c dr

ug s w ith in 75 day s after

J anuar y 1, 2009, Teva

forf eit ed ex clusivity

. The F DA’s Ac rabose Dec ision and 6 Cos op t D e c isi on

make it c le ar t

hat th e F DAa

pp lie s th e fo rf

e iture pr ov isi on

se t f or th i n ( bb )( CC) thi s

w ay. Teva

broug ht this suit a sking the Court to set aside the FDA ’s new “ Delisting Rule,”

as re flec ted in the FD A’s Ac rabose and Cosopt Decisions. The FDA moves to dismiss for lack of jurisdiction and failure to state a c laim. Teva se eks a preliminary injunction and reque sts that the Court combine the hear ing on the prelimi nary injunction with trial on the m erits. See Fe d. R. Civ. P. 65(a ) ( 2 ) ( a c o u rt ma

y a d v an c e th e tr ia l o n th e me r it s a n d c o n s o li d a te it w it

h th e h e aring on preliminary

injunction). The F DA did not o b ject to a c ombined proce eding . Be cause the issue prese nted her e is purely

a matter of law, the pre liminary

injunction moti on and trial on the me rits are consolidated. II. LEGAL STANDARDS

The F DA moves to dismiss for failure t o state a c laim pursuant to Fe dera l Rule of-9-

Civil Procedur e 12(b) (6), a rg uing that T eva does not c halleng e a final ag ency action and that Teva did not exhaust its administrative reme dies. A Rule 12(b)(6) motion challeng es the a dequac y of a complaint on its face , testing w hether a plaintiff ha s proper ly

stated a c laim. A complaint must be

su ffi c ie nt “ to g ive a

de fe nd ant f

a ir no tic e of wh a t th e . . . c la im i s and the g ro un ds up on

wh ic h it rests.” Be ll A tl. Cor

p. v . Two mb ly , 5 5 0 U. S

. 5 4 4 , 5 5 5 (2 0 0 7 ) (i n t ern al ci t at i o n s o m i t t ed ). Al t h o u gh a complaint does not ne ed detailed fac tual alleg ations, a plainti ff’ s obligation to provide the g rounds for his entitlement to relief “re quires more than labels a nd conclusions, and a

formulaic r ecitation of the e lements of a c ause of action will not do.” Id. Fe dera l Rule of Civil Procedur e 8(a ), which require s that a complaint conta in a short and plain statement of t he claim showing that the pleade r is entitled to relief

, require s a “showing” and not just a blanket asse rtion of a r ight to re lief. Id. at n.3. A court must tre at the complaint’s fac tual alleg ations as true, “eve n if doubtful in fac t,” id . at 1965, and must draw a ll reasona ble infere nces in the pla intiff’s favor. Macharia v. U nited States , 334 F.3d 61, 64, 67 ( D.C. Cir. 2003).

Whil e the F DA does not e x plicitly move to d i s m i s s for lac k of jurisdiction under Fe dera l Rule of Civil Procedur e 12(b) (1), i t impliedly seeks a Rule 12(b)(1) dismiss al as we ll by arguing that Teva’ s claim is not ripe and that Teva lacks standing

. On a motion to dismi ss for lac k of subject matter jurisdiction pur suant to Rule 12(b)( 1), the plaintiff bear s the burden of establishing that the cour

t has subject matter

jurisdiction. M

c Nut t v . G e n. M

ot ors A cceptan c e Cor

p. , 2 9 8 U. S. 1 7 8 , 1 8 2 -8 3 (1 9 3 6 ); Evans v. B .F. P er ki n s Co. , 166 F.3d 642, 647 ( 4th Cir. 1999). To deter mine whether it has jurisdiction, a court may consider materials outside the plea dings. Herbe rt v. Nat’l Ac ad . o f Sc is. , 974 F.2d 192, 197 ( D.C. Cir. 1992).-10- III . A NA LY SIS A. F inal Agency Action Th e F DAc on te nd s that Te va ha s no t state d a c la im be c a us e Te va do e s n ot c omp la in of any fi na l a g e nc y

a c tio n. The F DAwi ll n ot r e nd e r a ny de c isi on re g ard ingTe va ’s AN DA s unti l April 2010, and the FDA “ intends to make a de cision reg arding180-day exclusivi ty

when a n ANDA for losar tan bec omes rea dy

for final approva l.” Def

.’s Mot. to Dismi ss [ Dkt. # 9] at 18. The FDA

rea sons that the Acr abose a nd Cosopt Decisions a

re FDAdecisions re g ardingwhether other AN DAs

wer e elig ible for t

h e 1 8 0

- d ay

exclusivi ty

and do not constitute any

decision re g ardingwhether Teva ’s ANDAs f or losarta n and losarta

n HCTZ are elig ible for the 180-day marke ting e x clusivity

period. The F D A a s s e rts th a t w h a t T e v a r e a ll y w an ts is a

d e te r mi n a ti o nn o w r e g ar d in g w h e th e r it w il l be entitled to e x clusivity if and when the FDAapprove s its ANDAs in the future . The F DA points out that when a

nother ge neric manufa cture r sought advanc e appr oval in Hi-Tech Pharm acal Co., Inc. v. FDA , 5 87 F . Su

pp . 2d 1 (D .D .C. 20 08 ), the c ourt he ld that the manu fa c tur e r wa s n ot e nti tle d to advanc e appr oval of mar

keting exclusivi ty . I n that case , a g ener ic manufa cture r (Hi- Tec h) broug ht suit ag ainst the FD A, see king a finding by

the FDA t hat Hi-Te ch wa s entitled to the 180-day marke tinge xc lu s iv it

y p e r io d an d s e e k in g anin

ju n c ti o nto p r e v e n t t

h e F D A f r o m g r an ti n g f

in al approva l to any other g ener ic drug produce r while Hi-Tec h enjoy ed its marketingexclusivi ty . The court he ld that the manufa cture r was not entitled to review until there was fina l ag ency action. 587 F. Supp. 2d at 8 . I n addition, the court in Hi-Tech de te rm ine d th a t th e F DAwa s n ot r e qu ir e d to approve Hi-Tec h’s re quest for exclusivi ty by a time ce rtain, and the FDA ’s fa ilure to ac t with respec t to the issue of exclusivity did not constitut e fina l ag ency action. Id . at 9-10. Be cause the FDA m isconstrues Teva’s claim, this case is not analog ous to Hi-Tech

.A final a g ency action “( 1) m ar k s t h e consummation of the ag ency ’s dec ision making 7 proce ss — it mus t not be of a mere ly tentative or interlocutory nature ; a nd (2) the a ction must be one by which rig hts or obligations have bee n deter mined or from which leg al conse quence s will flow.” Domestic Se cs., Inc . v. SEC , 333 F.3d. 239, 246 (D.C. Cir. 2003) (internal quotation marks omitted). -11- Teva does not seek a

n advanc e dete rmination on i t s reque st for exclusivity as Hi-Te ch did. Teva challeng es the FDA’s interpretation of the MMA a s arbitra ry , capr icious, and an a

buse of discr etion in violation of section 706 of the Administrative Procedur e Ac t (“APA” ), 5 U.S.C. §§ 701-706. See Co m p l . ¶ 68. The F DA has inter prete d the MMA forf

eiture pr ovision (bb)(CC) as apply ing

“ whenev er ” an I

nnovator withdra

ws a patent. See Acr abose D ecision at 8. I n the Cosopt Decision, the FD A felt bound by its Acr abose Decision and applied the same statutory construction. C osopt Dec ision at 14 n.15. The statutory interpretation was not reliant on a ny particula r fa ctual circ umstance pr esente d by those ca ses; it wa s entirely based on the lang uag e of the statute. The F DA interpre ted t h e M M A t o au t h o ri z e e x cl u s i v i t y -d i v es t i n g p at en td el i s t i n gs ef fe ct u at ed by

a name brand

manu fa c tur e r’ s v olu

nta ry re qu e st. The APA provide s a ca

use of a ction to a “pe rson suffe ri n g l ega l wrongbeca use of ag ency action, or a dverse ly

aff ecte d or agg rieve d by ag ency action.” 5 U.S.C. § 702. Review unde r the APAis l imi te d to “ fi na l a g e nc y a c tio n” fo r w hic h th e re is n o o the r a de qu a te re me dy in a c ourt
. 7 Id . § 70 4; Hec kler v . Chaney , 470 U.S. 821, 828 (1985) ( a per son adver sely aff ecte d by final ag ency actio n is e n ti tl e d to ju d ic ia l r e v ie w s o lo n g a s n o s tatute p r e c lu d e s r e v ie w an d th e a c ti o n is not committed to ag ency

discretion by law). “Whether there has been ‘ag ency action’ or ‘final a g ency

a c tio n’ wi thi n the me anin g of the APA are thr e sh old qu e sti on s; if the se re qu ir e me nts are no t me t, the ac tion is not revie wable.” Fu nd for An im als , I

nc . v . B ur e au of L an d M

gm t. , 46 0 F. 3 d 1 3 , 18 (D.C. Cir. 2006).The F DA ar g ues that the Acr abose and Cosopt De cisions c onstitut ed informal adjudication, 8 not rulemaking . For

the purpose of

this decision, the distinction m akes no diff ere n ce . Bo t h final rules and final order s are revie wable. 5 U.S.C. § 706. Further , binding policy , whether cre ated by rulemakingor adjudication, is reviewable

. Brock, 783 F.2d at 248. -12- An “a g ency

action” is “ the whole or a part of an ag ency rule, orde r, license , sanction, relief , or the e quivalent or den i al there of.” 5 U .S.C. § 551(13). A “rule ” is “a n ag ency statement of g ener al or pa

rticular a pplicability

and future eff

ect de signe d to implement, interpret, or pre scribe law or policy .” Id . § 551(4). Thus, the te rm “f i n al age ncy

action” inc ludes an a g ency ’s interpre tation of a statute. UA W v. Brock , 783 F.2d 237, 248 ( D.C. Cir. 1986). “[W ]hen a leg al challeng e foc uses on an a nnounceme nt of a subs t an t i v e st atutory interpre tation, courts ar e emphatica lly

qualified to dec ide whethe r an a g ency has acte d outside the bounds of re ason.” Id. at 245. Fur ther, a n ag ency ’s statement of policy is reviewa

ble whether i t i s s et forth in a formal regulation or i s articulate d in another c ontext , such as a letter ruling

. Crowl ey Caribbean Transp., Inc. v. Pena , 3 7 F. 3 d 6 7 1 , 6 7 6 -7 7 (D

. C

. C i r. 1 9 9 4 ). An age n cy m ay es t ab l i s h b i n d i n g p o l i cy

t h ro u gh rulemaking proce dures or throug h adjudications which constitute binding prec edent. Brock, 783 F.2d at 248. An ag ency ’s interpre tation of its own gove rning statute is final ag ency action fit for 8 judicial revie w. Id . Acc ording ly , t h e FD A’ s i n terpre tation of the MMA in the conte x t of the Acr a b o s e an d Co s o p t D e c is io n s c o n s ti tute s a r u le o f d e c is io n ma d e thr o u g h a d ju d ic a ti o n , and the FDA ’s interpre tation of the MM A consti tutes “fina l ag ency action” that is subject to review unde r APA §§ 702 and 704. Thus, Te va has state d a cla im under the APA seeking to se t a side the FD A’s statutory interpre tation as arbitra

ry and ca pricious under

§ 706(2).-13- B. Exh austion Th e F DA a lso c on te nd s that thi s c a se sh ou ld be dis mis se d fo r f a ilure to s ta te a

c la im du e to fa ilure to e xha

us t a dmi nis tr a tiv e re me die s. F DAre g ulatio ns re qu ir e that, b e fo re fi lin g su it in court, a pa

rty reque sting that the F DA ta k e o r re fr ai n from taking an ac tion must first use the citizen petition proce ss set forth in 21 C.F.R. § 10.25. 21 C.F.R. § 10.45(b). Exhaustion required by ag ency regulation, however , is not jurisdi ctional. Ass’n of Flight Attendants v. Chao , 493 F.3d 155, 158-59 (D.C. Cir. 2007). Courts have the discretion to de cline to r equire exhaustion whe re a plaintiff would be irr epar ably harme d by delay , wher e the a g ency lacks the pow er to g rant e ffe ctive relief , or wher e exhaustion would be futile. McCarthy v . Madigan , 503 U.S. 140, 146-49 (1992). Ex haustion is f

utile when ther e is a c erta inty of an a dverse decision, Ra nd olp h- Sh e pp ar d V e nd or s v. W einberge r , 795 F.2d 90, 105 ( D.C. Cir. 1986), or whe n the ag ency “h as ev i d en ced a strong position on t he issue toge ther with a n unwillingness to re consider.” Jame s v. HHS , 824 F.2d 1132, 1137 (D.C. Cir. 1987).

Teva submitt ed co mments in the docket of the A cra bose De cision in which the prec ise forf

eiture issue it now s eeks to li tigate was r aised. The FDAconsidere d and re jected T eva’ s

argume nt: We h a ve c on sid e re d a nd re je c te d th e argume nt m a de in [T e va ’s ] c omment s to F DA ’s do c ke t th a t e lig ibi lity fo r 1 80 -d ay

e xclu siv ity fo llo wi ngthe ND A h old e r’ s v olu nta ry wi thd ra wa l of its pate nt s h o uld be g ov e rn e d n ot b y

the MMAfo rf

e iture pr ov isi on s, bu t by

the ru le established in Ra nb ax

yLab s. , Lt

d. v . Le av itt , 469 F.3d 120 ( D.C. Cir. 2006). . . . These comments argue that the f orfe iture eve nt describe d in section 505(j)(5) (D)( i)(I )(bb) (CC) of the Ac t applies o n l y if the withdrawa l of a patent is pursuant to t he proc ess desc ribed at section 505(j)(5) (C)(ii) of the Act. Section 505(j)( 5)(C) (i i) contemplate s that, as a r esult of a c ounterc lai m b y t h e AND A applica nt in patent infring ement litigation, a court may issue an orde r re quiring that-14- patent information be corr ecte d or dele ted. Only in that situation, t he argument g oes, would the withdra wal of patent information trig ger the statutory

forf eiture pr ovision. W e do not find t his arg ument p e r s u a s iv e [a n d ] F D A r e a d s th e p la in la n g uag e of 505(j)(5) (D)( i)(I )(bb) (CC) to apply whene ver a patent is withdraw n (or r equeste d to be “de listed”) by the NDA holde r. Acr abose D ecision at 8. The FDA evidenc ed its strong position and its unwil lingne ss to reconsider in t he Cos op t D e c isi on

by statin g , “ [w]e a lso have c on sid e re d an d r e je c te d in bo th t his c a se and

in the . . . Acr abose Decision, t he arg ument that elig ibilit y for 180-day exclusivi ty following the NDA holder’s volun t ar y withdrawa l of its patent should be g overne d not by the MMA forf

eiture provisions, but by the rule e stablished in Ranbaxy .” Cos op t D e c isi on a t 14 . T he F DAwe nt o n to

e xpla in, jus t a s it

ha d in the Ac ra bo se De c isi on , th a t it

re a ds su bs e c tio n ( bb )( CC) of

the MMAto broadly apply whene ver a

n I nnovator withdra

ws a patent and not only when a patent is withdrawn

as a r esult of counter claim litigation: [A] s noted in the Acr abose D ecision at p p . 8-9, we also have considere d the argume nt t

hat th e fo rf

e iture e ve nt de sc ri be d [in su bs e c tio n (b b) (C C) ] a

pp lie s on ly

if the withdraw al of a

patent is p u rsuant to t he proc ess desc ribed at section 505(j)(5) (C)(ii) of the Act .

. . . Only in that situation, the argument g oes, would the withdrawa l of patent information trig g er the statutory forf eiture pr ovision. . . . [ T]he scope of the patent delisting for feiture provision is much broader . . . . FDArea ds the plain lang uag e of 505(

j)(5)( D)(i) (I )(bb) (CC) to apply whene ve r a p a te nt i s w ithdrawn (or r equeste d to be “de listed”) by the NDA holde r. Id . at 14 n. 15 . T e va

ha s e xha us te d it s r e me die s b y

pa rt ic ipatin g un su c c e ssf

ully in the Ac ra

bo se litigation and pur suit of administrative reme dies would be fu tile. I n these c ircumstance s, the law does not requir e fur

ther a dminist rative e x haustion. C. Ri pe ne ss J urisdiction require s that a cla im be ripe for decision. Under the Constit ution, feder al courts ar e l i m i t ed t o d eciding“ac tual, ong oing c ontroversie s.” Honig v. Doe , 484 U.S. 305, 317-15-

(1988). A c laim is not ripe for adjudication if it rests upon “‘conting ent future events that may not

occur as anticipated, or indee d may not occur

at all.’” Texas v. Un i t ed S t ates , 523 U.S. 296, 300 (1 9 9 8 ) ( qu o t i n g Tho ma s v. Un i on Carbide Agric. Prods. Co. , 4 73 U.S . 5 68 , 5 80 -81 (19 85 )). By

re qu ir ingtha

t c la ims be ri pe b efor e ad jud ic a tin g the m, c ourt s p ro mot e jud ic ia l e c on omy , avo id becomingentang led in abstrac t d i s putes, and e nsure a rec ord ade quate to support an inf ormed decision whe n a ca se is hear d. Abbott Labs. v. Gardner , 387 U.S. 136, 149 (1967)

.

To show that a claim is ripe, a plaintiff must demonstrate (1) the fitness of the issues for judicial de cision, and (2) the har dship to the parties cause d by withholding court c onsideration. Nat ’l Tre as ur yEm plo yees Uni on v. Che rto

ff , 4 5 2 F. 3 d

8 3 9 , 8 5 4 (D

. C

. C i r. 2 0 0 6 ) ( ci t i n g Ab bo tt Lab s. , 387 U.S. at 149). To dete rmine the fitness of an is sue for judicial revie w, a court must look to s e e “ wh e the r t

he iss ue is pu rel y lega l, w he the r c on sid e ratio n o f t he iss ue wo uld

be ne fi t f ro m a

more c oncre te setting , and whe ther the a g ency ’s ac tion is sufficiently final.” Gen. Ele c. Co. v. EPA , 290 F.3d 377, 380 (D.C. Cir. 2002) (q u o t i n g C l ea n Air Impleme ntation Project v. EPA , 150 F.3d 1200, 1204 (D.C. C ir. 1998)). A petit ion for review that presents a “ purely leg al question” satisfies the “f itness” prongof the test for ripene ss. Edison Elec. Institute v. EP A , 996 F.2d 326, 333-34 (D .C. Cir . 1 99 3) ; see also CropLi fe Am. v. EPA , 3 29 F .3 d 8 76 , 8 84 (D .C. Cir . 2 00 3) (p re ss r e le a se announcingthat EPA would not consider third party human studies in regulatory decision-making

was a statement of a

blanket ag ency

policy that prese nted a pur ely

leg al question, ripe f

or re view); IB EW v . I CC , 862 F.2d 330, 335 ( D.C. Cir. 1988) (a matter i s fit for review when ag ency ’s dec ision is “ c ry sta lli zed ” ); Nat ’l Au tom ati c Lau nd ry & Cle an ing Cou nc il v . S hu ltz , 443 F .2 d 6 89 , 6 95 (D .C. Cir. 1971) (an issue is fit for judicial resolution wher e there is no need to identify or re fine the f

acts). The “ hardshi p ” prongof the ripe ness test requir es a c ourt to avoid interfe ring with an ag ency ’s-16-

decision unless and un t i l t h e d ec ision invol ves “e ffe cts felt in a c oncre te way by the cha lleng ing party .” Nat ’l

Au tom ati c Lau nd

ry , 443 F.2d at 696. Th e iss ue ra ise d b y

Te va — wh e t h e r t he F DA ’s int e rp re ta tio n o f s ub se c tio n ( bb )( CC) of the MMA is arbitra

ry and ca pricious under

the APA — is purely

a leg al question fit for judicial

re vie w. I t is a

c ha lle ng e to t

he F DA ’s int e rp re ta tio n of the statut e on its fa c e and no t as a pp lie d to a par ticular set of fac ts. There is no need for further fac tual development a s there is no mate rial fa ct missing from the r ecor d that could alter the FD A’s interpr etation of the MMA. Fur ther, t h e dec ision affe cts Teva in a conc rete way . To explain how it i s aff ecte d by the ri g ht t o e xclu siv e mark e tin g and the los s of that ri g ht, Te va su bmi tte d th e de c laratio n o f D a vid Marsha ll, T e v a ’ s V ic e Pr e s id e n t o f N e w Pr o d

u c ts Po rtf o li o Str a te g y . M r . M ar s h a ll e xp la in s th at when a g ener ic manufa cture r such a s Teva f iles a par ag raph IV ce rtification, it takes on the risk of costly and protra cted patent litigation. Marshall Dec l. ¶ 10. Howe ver, by being the first to take on such risk, Teva

beca me elig ible fo r t h e 1 8 0-day exclusive marketing period. Id . ¶ 11. The exclusivi ty

period provide s a strong incentive be cause it provides a perma nent adva ntag e — “that of fi c ia lly sanc tio ne d ‘ he a d s tart ’ p e rm its fi rs t e ntr ants to se c ur e dis tr ibutio n c ha nn e ls a nd a c c e ss t o customers; ente r into long- term sales ag ree ments; inc rea se sales acr oss a ll of its product lines; and reta in gr eate r marke t share in the long -run.” Id . Under the FDA’s interpr etation of the MMA a s set forth in the Ac rabose and Cosopt Decisions, Teva alre ady has lost its rig ht to the 180-day exclusive marke ting period; Teva will se ll 50- 60% few er losartan tablets during its first y ear in the marke t and will ex perie nce a

loss of hundreds of millions of dollars in net re venue. Id . ¶ 16. Teva ’s cur

rent da y -to-day oper at ions are c oncre tely aff ecte d by the FD A’s interpre tation of forf

eiture unde r the MMA. Tev a m u s t o b t ain mater ials to beg in manufac turingMr

. Mars ha ll fu rt he r e xpla ins , “ Com me rc ia l un c e rt a int y wi ll i mpo se an a

rr ay of ir re pa ra ble 9 harms on Te va.” Ma

rshall Dec l. ¶ 25. I f Teva

manufa cture s losartan produc ts assuming that it does not have e x clusivity

and later it is awarde d exclusivi ty , it will not have ma nufac tur ed sufficie nt quantity of produc ts to meet the marke t demand, resulting in reduc ed sales and los s of customer g ood will. Id

. ¶ 26. I f Teva

manufa cture s g ener ic losartan pr oducts assuming that it has exclusivi ty and then in April 2010 the FDAdecide s that it is not entitled to such exclusivit y , Teva will have wa sted resour ces ma

nufac turing tons of tablets it cannot and ma y never sell, forc ing T eva to dispose of excess product or liquidate it at a loss. Id . ¶ 27.

-17- g ener ic losartan pr oducts in the immediate future, and it must obtain more materials if it is preparing for exclusive ma

rketing than if it is prepar ing f or non-e x clusive marke ting. Id . ¶ 22. I f it enjoy ed an exclusive product launc h, Teva would need to plac e an or der immediate ly — for de livery

no later t h an Au gu st 2009 — for the manuf actur e of the active pha

rmac eutical ing redie nt used to make losartan pr oducts as we ll as non-ac tive ingr edients and pa ckag ing materials. Id . ¶ 22-23. Also, Teva would need to dedicate pl ant capacity and human resour ces earlier for a n exclusive product launch as opposed to a non- exclusive launch. Id . ¶ 24. 9

The F DA arg ues that this case is not ripe for r eview, r elying on Pf ize r I nc . v . S ha lal a , 182 F.3d 975, 980 ( D.C. Cir. 1999). I n that case , Pfiz er sought to preve nt the FDAfrom appr oving the AN DAof

a c omp e tit or , M y lan. Pf

ize r c la ime d th at it s dr

ugpr od uc t ha d a un iqu e re le a se

mec han ism and

tha t th e F DAc ou ld n ot a

pp ro ve an A

ND A w ith ou t th e same re le a se me c ha nis m b ec au s e AND As ar e r eq u i re d b y s t a t u t e t o h av e t h e s am e “ d o s age fo rm ” a s t h e n am e b ra n d dru g. See 21 U.S.C. § 355(j)(2)(A )(i)- (iii). Prior to f iling suit, Pfizer had filed a c itiz en petition. The F DA ha d d e nie d th e pe tit ion , f

ind ingtha t ano the r r e le a se me c ha

nis m c ou ld pr ov ide the same do sa g e fo rm . 182 F.3d at 978. Pfiz er f

iled suit in district court, and the court gr anted summary judgme nt to the FDA

. Id . Pf

ize r t he n a pp e a le d, and

the D. C. C ir c uit

he ld t hat Pf ize r d id n ot p re se nt a

ri pe c la im. Whil e the FDAha d “ re fu se d to a ff ir m th e ne g a tiv e pr op os iti on tha t no oth e r e xten de d r e le a se-18-

mecha nism could ever be deeme d under the statute to constitute the same dosag e for m as Pfizer’s,” the FDA had not y et applied this finding to any particula r set of fa cts. Id . at 979. The c ourt held that Pf ize r’ s c ha lle ng e ra ise d an a bs tr a c t dis a g re e me nt ov e r a g e nc y po lic y and was no t s uff ic ie ntl y cry stalliz ed to constitute an a ctual ca se or c ontroversy
. Id

. at 979-80. The F DA’s r eliance on Pfizer ste ms f ro m it s mi sc ha

ra c te ri zat ion

of Te va ’s c la im. Un lik e Pf ize r, Te va do e s not as k the Court to prec lude the F DA fr om approving a compe titor’s ANDA. Mor eover , Pfizer is dis tin g uis ha ble beca use there the FD A had not y et applied its policy to a par ticular set of

fact s . He re, Te va

c ha lle ng e s th e F DA ’s int e rp re ta tio n o f t he MMAon

pure ly le g a l g ro un ds

. The FDA also relies on Biovail Corp. v. FDA , 448 F. Supp. 2d 157 (D.D .C. 2006). There , Biova il sought to requir e the F DA to rule on its citizen petitio n befor e appr oving a ny competing ANDA. Biova il a lleg ed in its citizen pe tition t hat a c ompetitor’s proposed g ener ic drug posed an unr easona

ble risk of seizures be cause it was not bioequivalent to the name brand dr ug . 448 F. Supp. 2d at 161. The court found that the FDA was not require d to rule on the c itiz en petition by any particula r date and that the c ourt would not assume that the F DA would appr ove an unsa fe dr ug if it did not i mmediately

rule on the c itiz en petition. Id

. at 162. I n contra st, Teva is not asking the FDAto rule on the issue pre sented by a par ticular date; the FD A alreadyhas interpr eted subsec tion (b b) (C C) of

the MMA . T o r e so lve thi s is su e , th e Court is n ot re qu ir e d to pre su me that th e F DAwi ll take a ny particula r ac tion in the future. Te va’s challeng e to t he F DA’s statutory interpre tation is ripe for r eview. D. St andi ng

T h e F DA fu rt h er

s u gges t s t h at T ev a’ s s u i t s h o u l d b e d i s m i s s edfo r l ac k o f s t an d i n g. L ack of standing is a def

ect in subjec t matter jurisdiction. See H aase v. Se ssions , 835 F.2d 902, 906-19-

(D.C. Cir. 1987). To have Article I I Istanding , a plaintiff must establish: “(1) it has suffer ed an ‘injury in fac t’ that is (a) c oncre te and pa rticularized and (b) a ctual or imminent, not conjec tural or hy po the tic a l; ( 2) the inj ur

y is f a ir ly tr a c e a

ble to the c ha lle ng e d ac tio n of the de fe nd ant; and (3 ) i t is likely , as opposed to mer ely speculative, that the injury will be redr essed by a fa vorable decision.” Fr ie nd s o f the E ar th, In c . v . La idl

aw E nv tl. Se rv s. , 528 U.S. 167, 180-81 (2000) ( citing Lujan v. Def end ers o f W ild lif e , 504 U.S. 555, 560-61 (1992)) . “This triad of injury in fac t, causation, and

re dr e ssa bil ity c on sti tut e s th e c or e of A rtic le I I I ’s c a se -o r- c on tr ov e rs y re qu ir e me nt, and

the pa rt y invoking feder al j urisdiction bear s the burden of establishing its ex istence.” Steel Co. v . Citi zens for a Better Env ’t , 523 U.S. 83, 103-04 (1998). A court may “interve ne in the administration of the law s

on ly wh e n, and

to t he e xten t th a t, a

sp e c if ic ‘f ina l a g e nc y act ion’ ha s an a c tua l or imm e diate ly threatened e ffe ct.” Lujan , 504 U.S. at 894.

The F DA conte nds that Teva la cks standing , in that it can show no injury beca use the FDAhas not made a

decision re g ardingTeva ’s ANDA s. Yet as de scribed a bove, T ev a has be en injured by the FD A’s statutory

interpre tation. The FDA ’s interpre tation imminently will cause Te va to l os e its ri g ht t o e xclu siv e mark e tin g, and Te va a lr e a dy ha s a lte re d it s o pe ratio ns du e to t his imminent los s. Teva’ s curr ent operat i o ns are aff ecte d beca

use it has not order ed the a dditional

ma te ri a ls an d de dic a te d the pla nt ca pa c ity and human re so ur c e s it wo uld ne e d if it wer e pla nn ingto marke t its gene ric losartan products in a n exclusive ma

rket. Marsha ll De cl. ¶¶ 22-24. The loss of the 180-da

y exclusive marketing period imminently will cause Teva to lose the abili ty to: secure distribution channels and a cce ss customers, ente r into l o ng -term sa les ag ree ments, increa se sales

acr oss all of its product li nes, and reta in g reater mar ket share in the long- run. Id . ¶ 11 . A lso , th e los s of exclusivity

imminently

will cause Te va to sell few er losar tan tablets during its first y ear in the-20-

marke t, re s u lting in a loss of hundre ds of millions of dollars in net re venue. Id . ¶ 16. Teva has d em o n s t ra t eds t an d i n g.

E. AP A Challenge to the F DA’s Inter pretat ion of the MM A Te va c ha lle ng e s the F DA ’s int e rp re ta tio n of the MMAfo rf e iture pr ov isi on

se t f or th at 21 U.S.C. § 355(j)(5)( D)(i) (I )(bb) (CC). The APA re quires a r eviewingcourt t o s et aside a n ag ency action that is “a

rbitrar y , capr icious, an abuse of discre tion, or ot h er wi se not in acc ordanc e wi th l aw. ” 5 U .S. C. § 70 6( 2) (A ); Tourus Records, Inc. v. DEA , 259 F.3d 731, 736 ( D.C. Cir. 2001). I n making this inqui ry , the re view i n g co u rt “must consider w hether the [ag ency ’s] decision was based on a

consideration of the rele vant fa ctors and w h et h er t here has bee n a cle ar e rror of judgme nt.” Ma rsh v . O re go n Na tural R es. Cou nc il , 490 U.S. 360, 378 (1989) (internal quotation marks omitted). At a minimum, the ag ency must have considere d rele vant data a nd articulated an explanation establishing a “ rational c onnection betwe en the f acts found a

nd th e ch o i ce ma de.” Bowen v. Am . Hosp. Ass’n , 476 U.S

. 6 1 0 , 6 2 6 (1 9 86). An a g ency action may

be ar bitrary or capr icious if: the a g e nc y ha s r e lie d o n f

a c tor s w hic h Co ng res s has n ot i nte nd e d it to consider, e ntirely

fai l ed t o consider a

n important aspec t of the pr ob le m, o ff

e re d a n e xplanatio n f

or its de c isi on

that r un s c ounte r t o the evidenc e before the ag ency , or i s so implausible that it could not be asc ribed to a differ ence in view or the product of a g ency expertise. Motor Vehicle Mfrs. Ass’n v. State Farm M ut. Auto. Ins. Co. , 463 U.S. 29, 43 (1983). “ [T] he scope of re vie w un de r the ‘a

rb itr ary and c a pr ic iou s’ sta

nd ard is n arr owand

a c ourt is n ot t o s ub sti tut e its judgme nt for that of the ag ency .” Id . Rather, the a g ency action under

revie w is “entitled to a presumption of re g ularity .” Citi zens to Pres. Ov erton Park, Inc . v. Volpe , 401 U.S. 402, 415 (1971), ab ro ga te d o n o the r g

ro un ds by Cal ifa no v . S

an de rs , 430 U.S. 99 (1977).-21- When review ing a

n ag ency ’s interpre tation of a statute, a court must unde rtake a twostep ana ly sis as set forth in Chevron U.S.A. Inc. v. Natural Resourc es Defens e C o u n ci l , Inc ., 467 U. S. 837 (1 98 4)

. F ir st, a c ourt mus t de te rm ine wh e the r “ Con g re ss h a s d ir e c tly sp ok e n to the pr e c ise question at issue” a

nd if so the cour

t must “give eff

ect to the u n am biguously expressed intent of Congr ess.” 467 U.S. at 842-43. To decide whether Congr ess has addre ssed t he precise que stion at i s s u e, a co u rt must analy ze the text , purpose, a

nd structure of the statute. Ranbaxy Labs. L td. v. Le av itt , 469 F.3d 120, 124 ( D.C. Cir. 2006).

I f the s t at ute is silent or ambig uous on the question, the cour t must proceed to the second step of

the Chevron analy sis and deter mine whether

the ag ency ’s interpre tation is based on a per missibl e construc tion o f the statute. Chevron , 467 U.S. at 843. When an ag ency ’s int e rp re ta tio n o f a

statut e is ch a lle ng e d at ste p two , its “in te rp re ta tio n ne e d not be the be st or mos t natura l one by

g rammatica l or other standa rds .

. . . Rather [ it] need be only rea sonable to wa

rra nt defe renc e.” Pauley v . BethEnergy Mi n es , Inc. , 501 U.S. 680, 702 (1991). “T he cour t need not

c on c lud e that th e a g e nc y ’s c on str uc tio n w a s th e on ly

on e it p e rm iss ibl y

c ou ld have a do pte d to up ho ld the construc tion, or even the rea ding the court would have rea ched if the question initi ally had ar isen in a judicial proce eding .” Chevron , 467 U. S. at 844 n. 11 . I f t he a g e nc y ’s statut or

y c on str uc tio n is permissible, then the c ourt must defer to the ag ency ’s interpre tation. Id. At C h ev r on s te p o n e , th is Co u rt mu s t g iv e e f f e c t to th e c le ar in te n t o f Co n g r ess as ref le c te d in th e s tatute b e c a u s e s u b s e c ti o n ( b b ) ( CC ) is n o t a mb igu o u s o n it s f a c e . Section 355(j)(5) (D)( i)(I ) provides that an ANDA filer will forfe it ex clusivity if it fails to market the dr ug by the later of two date s, and under subsection (bb)( CC), one of those dates is 75 day s after “[t] he patent information submi tted under subse ction (b) or (c) is withdrawn by

the holder of

theFur ther, it is not that the FDA ma de an inc orre ct judg ment about whethe r the ’075 patent 10 should be listed or delisted. The F DA does not a djudge the proprie ty o f p at en t listi ng s. I t is not re qu ir ed to de te rm ine the c or re c tne ss o f l ist ing s in

the Or ang e B oo k b e c a

us e it l a c ks e xpe rt ise in patent law. Apotex v . Thompson , 347 F.3d 1335, 1349-50 (Fed. Cir. 2003). “ When it comes to the vera city of pate nt information supplied by NDA holders, FDA opera tes in a purely minist eria l role, relying on the NDA holders to pr ovide the Ag ency with a ccur ate patent information.” Teva Pharms., US A, In c . v . Le av itt , 548 F.3d 103, 106 ( D.C. Cir. 2008). -22- application appr oved under subsection (b) [the Innovator].” 21 U.S.C. § 355(j)(5)(D )(i)( I )(bb) (CC). Teva asser ts that the statute is ambiguous if r ead a s a whole. F irst, Teva a rg ues that the MMA g overns only

the ef fec t of the withdraw al of a patent by an Innovator, but that it does not addre ss the circ umstance s i n which a patent may be delisted. Te va is corr ect that the statute does not addre ss when an I

nnovator may

withdraw a

patent, but what is important is that the statute does not limi t the I nnovator’s r ight to withdra w patent information. The Court cannot take on the role of the le g isl a tur e by

c re a tin g su c h li mit a tio ns wh e n th e y we re omi tte d b y

Con g re ss. 10 Second, Te va ar g ues that subsection (bb)( CC) should only apply when a court ha s order ed the Innovator t o wi t hdrawthe patent pur suant to a counte rcla im suit filed by an AND A applicant. The MMA includes a “counte rcla im pr ovision” that permits an ANDA a pplicant sued for infring ement to file a

counter claim to forc e an I nnovator to withd ra w p at ent information. See 21 U. S.C. § 3 55 (j )( 5) (C )( ii) (I ). Te va c la ims tha

t su bs e c tio n ( bb )( CC) is l ink e d to the c ounte rc la im provision and that (bb)( CC) only applies when a court ha s order ed an I nnovator to withdraw

patent inf or ma tio n p ur su ant t o a

c ounte rc la im. Th e pr ob le m w iththi s in te rp re ta tio n is that the MMA

c on ta ins no langua g e lin kin g the fo rf e iture pr ov isi on and the c ounte rc la im p ro vis ion a s T e va wo uld pref er. The provisions simpl y do not refe r to one a

nother. Mo re ov e r, e ve n if

su bs e c tio n ( bb )(C C) we re c on str ue d in the c on te xt of

the wh ole statute to be ambig uous, the Court w ould be require d to de fer to the FDA ’s interpre t at i o n u nderTe va a lso argue s th a t th e F DA ’s int e rp re ta tio n of the MMA fo rf e iture pr ov isi on

pe rm its 11 a name brand

manu fa c tur e r t o ma

nip ulate the mark e t by

c a us inga fi rs t f ili ngAN DAa

pp lic a nt t o forf eit its right to exclusivit y . This presumes that Mer ck wa s motivated to withdraw the ’ 075 patent based solely

on marke t conce rns, when the re is no evide nce in the record re g ardingwhy Merc k withdrew the patent. I t could be that the patent was e rrone ously listed, Me rck’ s interest in it lapsed, or Mer ck wa s require d to withdraw the patent based on ne w FDA re g ulations. See Op p’ n to Mo t. for Pre lim. I nj. filed by proposed intervenor Apotex , I nc. (“Apotex’s Opp’n”) [Dkt. # 11-6] at 19. The Court per

mits t he filing of this brief on a n amicus basis. Se e inf

ra , section I I I .F. of this Opinion. I n 2003, the FD A promulg ated 21 C.F .R. § 314.53(b) whic h established new require ments reg arding poly morph patents and the circ umstances unde r which such patents can be said to c laim a drug . The ’0 75 pate nt is a poly

mor ph pate nt. Te va ’s Mo t. f

or Pr e lim . Inj. [Dk

t. # 5] a t 27 (t

he ’0 75 pate nt i s titled “Poly

morphs of losarta

n and the pr ocess fo r t h e p repa ration of f

orm I Iof losarta

n”). A lso, Teva itself is partly

responsible for

the forf eiture. Te va’s r ight to exclusivity was ba sed only

on the ’075 pate nt beca

use Teva filed a pa

rag raph IV ce rtification as to only that p at en t
. I f Teva

had challeng ed the’069 or ’197 patents, the withdrawa l of the ’075 patent would not have eff ectuated a forf eiture. -23- Chevron ste p tw o. I t is no t arb itrar y or c a pr ic iou s f or the F DAto i nte rp re t ( bb )( CC) a s b ro a dly ap p l y i n g whenev er

an Innovator withdra

ws patent infor

mation beca

use the statute pr ovides no limit ations on withdrawa l of patent information and subsection (bb)( CC) makes no ref ere nce to the counter claim provision. The F DA’s inter pretation of the statute is rea sonable. 11 Te va fu rt he r a rgue s th a t Ra nb ax

y Lab orato rie

s Ltd

. v. L e av itt , 4 69 F .3 d 1 20 (D .C. Cir. 2006), applies. In Ranbaxy , the FDA had deter mined that an ANDA applicant’s elig ibilit y for the 180-da

y exclusive marketing period would be lost if the I nnovator withdrew its patent on whic h the ex clu si vi ty was ba se d a nd did no t su e the AN DAa

pp lic ant f or inf ri ng e me nt. Th e F DAa lso found that t he ANDA applica nt would not lose the rig ht to ex clusivity if the Innovator ha d sued the ANDA a pplicant. Ranbaxy

and Te va broug ht suit aga inst the FDA, arguing that the FD A could not

c on dit ion e lig i bil ity

fo r t he e xclu siv e mark e tin g pe ri od on wh e the r o r n ot t

he I nn ov a tor

ha d f ile d s uit

. The Circuit ag ree d: “ [T] he FDA ’s require ment that a g ener ic manufa cture r’s patent challeng e g ive ri se to liti g a tio n as a co nd iti on of re ta ini ng e xclu siv ity wh e n a pat e nt is de lis te d is in c on sis te nt w ith-24-

the Act, whic h provides that the first g ener ic manufa cture r to f ile an appr oved application is entit led to exclusi vity

when it either

beg ins commercia lly

to market it s g ener ic drugor is succe ssful in patent litigation.” Id . at 121.

Te va re a ds Ranbaxy

broadly , construing the ca se as ove rturning the FD A’s interpre tation of the statute bec ause it under mined th e Ha t ch-Waxman incentive structure . Teva

re a so ns that th is C ourt

sim ila rl y sh ou ld o ve rt

ur n the F DA ’s ru le of

de c isi on se t f or th i n th e Ac ra

bo se and C osopt Dec isions for the same reason — beca use the F DA’s inter

pretation of MMA subsection (bb)( CC) as applying “ whene ver” an NDA holder withdraws its patent also undermines the H atchWax man incentive struc ture.

Ranbaxy was de cided unde r the Hatch-Waxm an Amendme nts as they exis ted prior t o t h e en ac t m en t o f th e MM A. T h e H at ch -W ax m an Am en d m en t s we re i n t en d edb o t h t o en co u ra ge innovative new dr

ug s and to permit th e mar keting of lower

cost g ener ic drug s quickly

. Tri-Bi o L ab s. , 8 3 6 F

. 2 d

a t 1 3 9

. H o w e v e r , p r io r

to th e M M A , th e r e w a s n o p r o v is io nf o r f o r f e it u r e o f the 180-day exclusivi ty period. The MMA now provides that the first g ener ic manufa cture r is entitled t o e x c l u s i v i t y if it has not forf eited that exclusivity

. See 21 U. S.C. § 3 55 (j )( 5) (D ). Thus , Co ng re ss modified the ince ntive structure

. When e nacting the MMA, Congr ess soug ht to “ensur e that the 180- da y e xclu siv ity

pe ri od e njo y e d b y

the fi rs t g e ne ri c to chall e ng e a pate nt c ann ot b e us e d a s a bottleneck to pre vent additional g ener ic competition.” Hi-Tech , 587 F. Supp. at 4 ( q u o t i n g 149 Cong. Rec . S15746 (daily ed. Nov. 24, 2003) (Statement of Sen. Schumer )). “ Be cause the balanc e struck betwe en these competing g oals is quintessentially a matter for leg islative judgme nt, the court must attend closely

to the terms in which Cong ress e x presse d that judgme nt.” Teva Pharm. Indus., Ltd . v . Crawf

or d , 4 10 F.3 d 51 , 54 (D.C. C ir . 2 00 5) . T he F DA ’s int e rp re ta tio n o f t he MMAis a-25-

re a so na ble int e rp re ta tio n o f t

he ba lanc e Con g re ss s tr

uc k b e tw e e n th e se c omp e tin g g oa ls. F . M ot ion to Int e r ve ne As a D e fend ant Apotex, I nc. (“Apotex”) fil ed a motion to intervene as a defenda nt. See Dkt. # 11. Apotex filed ANDAs see k i n g FDAapprova l to market its own g ener ic ver sions of losartan a nd los art an H CTZ pr od

uc ts. Ap ote x ho pes and ex pe c ts t hat it wi ll r e c e ive a

pp ro va l in

tim e to b e g in

mark e tin g its pr od

uc ts i n A pr il 2 01 0. I f T e va

ob ta ins the 18 0- da

y e xclu siv e mark e tin g ri g ht t hat it seeks in this suit, Apotex will have to sit on the sidelines for six months while Teva e njoy s exclusive

m ar k et i n g. An applica nt may intervene as of rig ht w hen the applica nt (1) make s a timely

motion; (2 ) h a s an in te re st r e la tin g to t he pr op e rt

y or tr ans a c tio n w hic h is the su bje c t of the a c tio n; (3 ) i s so situated that the disposition of the action may as a pr actica l matter impair or impede the applica nt’s ability to protect that intere st; and (4) where the applicant’s interests are not adequately repr esente d by the e xistin g pa

rt ie s. F e d. R. C iv. P. 2 4( a )( 2) ; se e als o Sie rra Clu b v . V an An twe rp , 523 F. Supp. 2d 5, 6 (D.D.C. 2007). A rticle I I Istanding is requ i re d for inter vention under Rule 24( a)( 2). S. C h r i stian L eadership Conferenc e v. Ke lley , 7 4 7 F

. 2 d 7 7 7 , 7 7 9 ( D

. C

. C i r . 1 9 8 4 )

. T o d e m on str a te standing , a pa r t y mus t e s t a bl i s h: “( 1) i t ha s s uf f e r e d a n ‘ i nj ur y i n f

a c t ’ t ha t i s ( a ) c onc r e t e a nd p arti cu lari zed an d ( b ) actu al or im m ine n t, n o t con jectu ral o r h y p o the ti c a l; (2) the inju ry is f airl y tr ace ab le t o the ch allen ged action o f the d ef en d an t; an d ( 3 ) it is l ike ly , a s o p p o sed to m erely specu l at i ve, t hat t he inj ury w i l l be r edressed by a f avo r able deci si on . ” F rien d s o f t h e E a rth , 52 8 U. S.

a t 18 0- 81 ( c i t i ng Lu

j an , 5 0 4 U

. S

. at 56 0 -61 ). Apotex asserts that its ANDAs are under review by the FDA and it expects to rece ive final appr oval to beg in marketing on April 6, 2010. Apotex’s ex pectation of final appr oval depe ndsThe Hatch-Waxm an Amendme nts p ro v i d e that the FD A may g rant a tentative appr oval 12 notify ing an applicant that the ANDA meets scientific standards but c annot re ceive final appr oval until som e pate nt barrie r or other regulatory barr ier (such as the e x clusivity period) is ove rcome . 21 U. S.C. § 3 55 (j )( 5) (B )( iv) (I I )( dd )( AA ); id . § 355(j)(2) (a) ; 21 C

. F.R. § 314.105(d). Final a pproval may be g rante d when a

n applicant has met the scientific sta ndards f or appr oval and the patent and re g ulator y ba rr ie rs no lon g e r a

pp ly

. 21 U. S.C. § 3 55 (j )( 5) (B )( iv) (I I )( dd )( AA ); id . § 355(j)(2) (a) ; 21 C.F .R. § 3 14 .1 05 (d ). Th e F DAha s g ra nte d te ntat iv e a

pp ro va l to Te va ’s AN DA s b ut n ot t o th os e s u b mi tt e d b y A p o te x. There is uncerta inty

under D. C

. C i rc u i t law whe ther standingis require d for pe rmissive 13 intervention. In re Vitamins Antitrust C lass Actions , 215 F.3d at 31-32. -26- on t h e F D A ’ s c o mp l e t i o n o f s c i e n t i f i c r e v i e w o f A p o t e x’ s A

N D A s an d f

i n d i n g n o d e f

i c i e nc ie s in the AN DA s. Th e int e re st that Apo te x all e g e s in thi s su it —

its de sir e to m ark e t g e ne ri c los art a n in the futur e — p re su me s f

ina l a pp ro va l of its AN DA s and is sp e c ulativ e . Thus , Ap ote x’s mot ion to 12 intervene as of r ight will be de nied.

A c ourt may g ra nt pe rm iss ive int e rv e nti on wh e re the a pp lic ant: (1 ) m a ke s a

tim e ly motio n ; (2 ) has a c laim or defe nse; and (3) that claim or de fense share s with the main action a

common question of law or fac t. Fe d. R. Civ. P. 24( b). The require ment s fo r permissive intervention ar e construe d liberally i n fa vor of inter vention in special c ases. Equal Employme nt Opportunity Comm’n v. N a t ’l C h ildren’s Ctr., Inc. , 146 F.3d 1042, 1046 ( D.C. Cir. 1998). The decision whe ther to g rant pe rmissive intervention is d i s cre tionary

. In re Vi tam ins An tit ru st C las s Actions , 2 15 F .3 d 2 6, 32 (D .C. Cir . 2 00 0)

. Ap ote x’s inte re st in this su it is a spe c ulativ e bu sin e ss 13 interest, i.e ., a desire to enter the g ener ic losartan ma rket e arlier

rathe r than late r. Apotex presumes that th e F DA wi ll a

pp ro ve its AN DA s at so me po int . U nd e r t he se c ir c ums tanc e s, Ap ote x’s i nte re st does not war

rant int erve ntion, and the Court will deny Apotex’s reque st to intervene . Howeve r, the Court will permit Apotex to file, as amicus curia e, it s opposition to preliminary injunction, which the Court has consider ed. See Firestone T ire & Rubber Co. v. PBGC , 6 95 F . Su pp . 4 3, 44 (D .D .C.-27-

1988) (the de cision to appoint an amicus re sts within t he broa d discretion of the district court). IV . C ON CL USI ON For the re asons stated a

bove, the F DA’s moti on to dismiss [Dkt. # 9] wil l be denied. Teva ’s motion for prelimi nary injunction [Dkt. # 5] i s consolidated with trial on the mer its pursuant to Fede ral Rule of Civil Procedure 65(a) (2), a nd judgme nt will be entere d in fa vor of the F DA. Fur ther, the motion to intervene as a de fenda nt filed by Apotex [ Dkt. # 11] wil l be denied, but the Court wi ll p e rm it Apo te x to fi le , as am ic us c ur ia e , the op po sit ion to p re lim ina

ry inj un c tio n s e t f

or th

a s E xhibi t 5 to Ap ote x’s mot ion to int e rv e ne [Dk t. # 11 -6 ]. A me mor ia lizin gor de r a c c omp anie s th is Memorandum Opinion.

Date : July

31 , 2 00 9 /s/ ROSEMARY M. COL L YER Un i t edS t at es Di s t ri ct J u d ge