Otsuka Pharmaceutical Co., Lt v. Thomas Price , 869 F.3d 987 ( 2017 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued December 12, 2016 Decided August 29, 2017
No. 16-5229
OTSUKA PHARMACEUTICAL CO., LTD., ET AL.,
APPELLANTS
v.
THOMAS PRICE, SECRETARY, U.S. DEPARTMENT OF HEALTH
AND HUMAN SERVICES, ET AL.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:15-cv-01688)
Thomas G. Saunders argued the cause for appellants.
With him on the briefs were Seth P. Waxman and Robbie
Manhas.
Henry C. Whitaker, Attorney, U.S. Department of Justice,
argued the cause for federal appellees. With him on the brief
were Benjamin C. Mizer, Principal Deputy Assistant Attorney
General, and Scott R. McIntosh, Attorney.
William M. Jay argued the cause for intervenors-
appellees Alkermes, Inc., et al. With him on the brief were
Brian T. Burgess, Andrew Kim, Sarah K. Frederick, and
Christopher T. Holding.
2
Before: BROWN and SRINIVASAN, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge SRINIVASAN.
SRINIVASAN, Circuit Judge: The Food, Drug, and
Cosmetic Act affords periods of “marketing exclusivity” to
pioneering drug products. When a drug earns a period of
exclusivity, the Food and Drug Administration must withhold
approval of certain competing drugs if various conditions are
satisfied. But how does the FDA determine if a new drug
bears a sufficiently close relationship to a pioneering drug to
fall within the latter’s zone of exclusivity? This case concerns
the FDA’s test for making that determination.
The two drugs at issue in this case are antipsychotics
primarily used to treat schizophrenia and bipolar disorder.
The first drug, manufactured by Otsuka Pharmaceutical, is
called Abilify Maintena. The second, made by Alkermes, is
named Aristada.
When Alkermes sought FDA approval for Aristada,
Otsuka opposed the application on the ground that Aristada’s
approval would violate an ongoing period of marketing
exclusivity enjoyed by Abilify Maintena. Otsuka emphasized
that both drugs ultimately metabolize in the body into the
same molecule, and that Alkermes’s application for Aristada
relied in part on studies showing the safety and efficacy of a
precursor product to Abilify Maintena. Otsuka argued that, in
light of the relationship between the two drugs, approving
Aristada would infringe on Abilify Maintena’s exclusivity.
The FDA rejected Otsuka’s arguments and granted
approval to Aristada. The agency relied on the fact that the
two products have different “active moieties”—roughly,
3
active ingredients. A drug’s active moiety has long played a
key role in determining its eligibility to receive marketing
exclusivity: to be entitled to exclusivity, a drug must either
contain a previously unapproved active moiety or use an
approved moiety in a new way. In approving Aristada, the
FDA staked out the position that a drug’s active moiety not
only determines its eligibility for marketing exclusivity, but
also defines the field of drugs subject to that exclusivity.
Otsuka sought judicial review, contending, among other
things, that the agency’s same-moiety limitation on the scope
of a drug’s marketing exclusivity conflicts with the FDCA.
The district court granted summary judgment in favor of the
FDA and Alkermes. The court concluded that the FDA’s
same-moiety test is a reasonable construction of the statute
and is consistent with the agency’s regulations. We agree
with the district court and affirm its decision.
I.
A.
Before a company can make a drug available for public
consumption, the FDA must approve a new drug application
certifying the drug’s safety and efficacy. 21 U.S.C. § 355(a),
(b). Until 1984, all such applications were standalone
applications: applications for which the drug’s proponent
either conducted, or secured a right to reference, all the
investigations used to demonstrate the drug’s safety and
efficacy. See id. § 355(b)(1). As a result, a company seeking
approval of a new drug would regularly need to reestablish
the safety and efficacy of chemical compounds used in
previously approved drugs.
4
In order to reduce the need to conduct duplicative studies,
the Drug Price Competition and Patent Term Restoration Act
of 1984—better known as the Hatch-Waxman
Amendments—amended the FDCA to establish two
streamlined pathways to FDA approval. See H.R. Rep. No.
98-857, pt. 1, at 16-17 (1984). The first abbreviated route,
known as an Abbreviated New Drug Application (ANDA),
permits approval of “bioequivalent” (e.g., generic) versions of
previously approved drugs without an independent showing
of their safety and efficacy. 21 U.S.C. § 355(j)(2)(A).
The second abbreviated route, directly at issue here,
enables new drug applications for non-generic drug products
to rely, in part or in whole, on studies that “were not
conducted by or for the applicant and for which the applicant
has not obtained a right of reference” to show the applied-for
drug’s safety and efficacy. Id. § 355(b)(2). That route,
known as a “(b)(2) application” due to the statutory
subsection establishing it, requires an applicant to show the
propriety of relying on the preexisting studies to demonstrate
the applied-for drug’s safety and efficacy. A (b)(2)
application must also certify that sales of the applied-for drug
would not infringe upon active, valid patents for any
previously approved drugs invoked in support of the
application. Id. § 355(b)(2)(A).
The Hatch-Waxman Amendments’ abbreviated pathways
in theory could enable competitors to “free ride” off of the
work of innovators without having to foot the substantial
expenses associated with safety-and-efficacy testing. As a
result, the Amendments also introduced a regime of
marketing exclusivity into the FDCA.
Under that system, the statute grants a first-in-time
innovator a period of exclusivity during which the FDA must
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deny approval of second-in-time abbreviated applications
(both ANDAs and (b)(2) applications) for drug products
meeting certain conditions. If an applicant seeking to use an
abbreviated pathway is blocked by a previously approved
drug’s exclusivity, the applicant can either wait for the
exclusivity period to expire, or instead submit a standalone,
non-abbreviated application that does not rely on any
previously approved drugs.
The FDCA confers marketing exclusivity under three
distinct provisions, the full text of which are set out in an
appendix to this opinion. We will adhere to the parties’
convention by referring to the three provisions as “romanette
ii,” “romanette iii,” and “romanette iv.” 21 U.S.C.
§ 355(c)(3)(E)(ii)-(iv).
Romanette ii, the FDCA’s broadest grant of marketing
exclusivity, applies to what FDA regulations refer to as “New
Chemical Entities”: drugs for which “no active ingredient
(including any ester or salt of the active ingredient) . . . has
been approved in any other application.” 21 U.S.C.
§ 355(c)(3)(E)(ii); 21 C.F.R. § 314.108(a). The statutory
reference to a drug’s “active ingredient” captures the drug’s
active moiety, which the regulations define as “the molecule
or ion . . . responsible for the physiological or
pharmacological action of the drug substance.” 21 C.F.R.
§ 314.3(b).
Romanette ii confers an exclusivity period of five years,
during which “no [abbreviated] application which refers to the
[first-in-time] drug” may be approved. 21 U.S.C.
§ 355(c)(3)(E)(ii). FDA regulations interpret exclusivity
under romanette ii to block any abbreviated application for a
drug whose active moiety is the same as the New Chemical
Entity. 21 C.F.R. § 314.108(a).
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Romanettes iii and iv award marketing exclusivity to
innovations more modest than the introduction of a New
Chemical Entity. The exclusivity conferred by those
provisions correspondingly is more confined in scope and
duration than the five-year exclusivity afforded under
romanette ii.
Under romanette iii, an application “for a drug, which
includes an [active moiety] that has been approved in another
application,” is entitled to three years of exclusivity “if such
application contains reports of new clinical investigations . . .
essential to the approval of the application and conducted or
sponsored by the applicant.” 21 U.S.C. § 355(c)(3)(E)(iii). In
other words, romanette iii confers exclusivity when a
pharmaceutical company obtains approval to market a
previously approved active moiety in a new formulation or for
new purposes, and doing so requires it to furnish new clinical
investigations to the FDA. With regard to the scope of drugs
affected by the three-year exclusivity period, the FDA may
not approve an abbreviated application for the same
“conditions of approval of such drug in the [first-in-time]
application.” Id.
Romanette iv similarly grants a three-year exclusivity
period to applicants that “supplement” a previously approved
application if obtaining approval of the supplement requires
submitting additional reports and investigations to the agency.
Id. § 355(c)(3)(E)(iv). Romanette iv thus applies, for
instance, to companies seeking to indicate an existing drug
product for additional illnesses or otherwise alter the
product’s labeling. The scope of exclusivity encompasses
abbreviated applications “for a change approved in the
supplement” to the first-in-time drug’s application. Id. As
with the scope-delimiting phrase “conditions of approval of
such drug” in romanette iii, the FDCA does not define the
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precise meaning of the scope-delimiting phrase “for a change
approved in the supplement” in romanette iv.
B.
In 2002, Otsuka obtained FDA approval for Abilify
Tablets, an antipsychotic drug. In the ensuing fifteen years,
Otsuka has received FDA approval for a number of additional
drug products sharing Abilify Tablets’ active moiety:
aripiprazole. The formulation of aripiprazole at issue in this
case, Abilify Maintena, is taken on a monthly basis by
injection.
Abilify Tablets earned a five-year exclusivity period
under romanette ii for introducing aripiprazole as a New
Chemical Entity. Although the five-year period for Abilify
Tablets lapsed nearly a decade ago, Abilify Maintena
subsequently received two successive marketing-exclusivity
periods of three years each. The first three-year period, which
expired on February 28, 2016, came under romanette iii in
connection with Abilify Maintena’s initial approval. The
second three-year period remains ongoing—it expires on
December 5, 2017—and was awarded under romanette iv in
connection with a supplemental application filed by Otsuka.
That supplement involved a new study showing Abilify
Maintena’s efficacy in the treatment of adult schizophrenia
patients experiencing an acute relapse.
On August 22, 2014, Alkermes submitted an abbreviated
(b)(2) application for Aristada, another injectable
antipsychotic. The application for Aristada included a clinical
trial conducted by Alkermes to demonstrate the drug’s safety
and efficacy at intervals up to six weeks. The company also
sought to rely on prior studies conducted by Otsuka
demonstrating the safety and efficacy of Abilify Tablets.
8
Aristada shares certain chemical similarities with the Abilify
line of products: Aristada’s active moiety, N-hydroxymethyl
aripiprazole, is a “prodrug” of aripiprazole, meaning that it
ultimately metabolizes into aripiprazole in the body.
Nonetheless, under the FDA’s approach to determining a
drug’s active moiety, which this Court upheld in Actavis
Elizabeth LLC v. FDA, 625 F.3d 760, 765-66 (D.C. Cir.
2010), Aristada’s and Abilify Maintena’s active moieties are
distinct. The FDA “starts with the molecule that comprises
that active ingredient in the drug product, and excludes the
ester and salt-bonded portions of the molecule.” J.A. 426.
The remaining molecule or ion is the drug’s active moiety.
Id. N-hydroxymethyl aripiprazole (Aristada) differs from
aripiprazole (Abilify Maintena) in containing the “addition of
a hydroxymethyl group, connected by a [non-ester] covalent
C-N bond.” J.A. 435. That difference suffices under the
FDA’s standard to distinguish the two moieties.
Otsuka filed two citizen petitions requesting that the FDA
deny approval of Aristada, or, alternatively, defer its approval
until Abilify Maintena’s exclusivity periods lapsed. The FDA
denied both petitions. The agency determined that Alkermes
had properly invoked known information about aripiprazole
for the purpose of demonstrating Aristada’s safety and
efficacy. But the agency concluded that Abilify Maintena’s
marketing exclusivity did not foreclose Aristada’s approval
because the two drugs have different active moieties. In
reaching that conclusion, the FDA reasoned that the FDCA’s
marketing-exclusivity provisions block approval only of drug
products with the same active moiety as the drug benefitting
from exclusivity.
Otsuka sought review in the district court. Otsuka argued
that the FDA’s same-moiety requirement: (i) conflicts with
9
the FDCA; (ii) diverges from the agency’s own regulations;
and (iii) came into existence in violation of the Administrative
Procedure Act because the agency effectively amended its
regulations without resort to notice-and-comment procedures.
Alkermes, seeking to preserve the agency’s approval of
Aristada, intervened in the dispute.
The district court granted summary judgment in favor of
the FDA and Alkermes. Otsuka Pharm. Co. v. Burwell, Civ.
No. 15-cv-1688, 2016 WL 4098740 (D.D.C. July 28, 2016).
The court held that “the FDCA does not unambiguously
prevent the FDA from determining that the FDCA’s three-
year exclusivity bar blocks only subsequent applications for
drugs with the same active moiety,” and that “it was not
unreasonable for the FDA to have employed that
interpretation.” Id. at *2. The court further concluded that,
because Abilify Maintena’s initial exclusivity period
conferred by romanette iii had expired in February 2016,
Otsuka’s claim under that period had become moot. Id. at *6
n.8. Finally, the court held that the FDA need not have
undertaken notice-and-comment procedures because the
same-moiety requirement was consistent with the agency’s
existing regulations. Id. at *21.
II.
The FDA understands a drug’s marketing exclusivity to
require withholding approval only of drug products that share
the same active moiety. Otsuka challenges the agency’s
same-moiety interpretation, arguing that the FDCA calls for a
broader understanding of the zone of marketing exclusivity
conferred by romanettes iii and iv. In Otsuka’s view, the
FDA’s interpretation cannot be squared with the statute and
conflicts with the agency’s own regulations. We reject
10
Otsuka’s arguments under both the statute and the regulations,
and we therefore sustain the FDA’s interpretation.
At the outset, we note that Abilify Maintena’s initial
three-year period of exclusivity, conferred under romanette
iii, has expired. As a result, we agree with the district court
that Otsuka’s claims with regard to that exclusivity period
have become moot. See Otsuka, 2016 WL 4098740, at *6
n.8. But we further agree with the district court that the
mootness of Otsuka’s challenge concerning romanette iii does
not materially affect our analysis. See id. Abilify Maintena’s
subsequent three-year exclusivity period, conferred under
romanette iv, remains ongoing. And Otsuka’s arguments
concerning the scope of exclusivity granted by romanette iv
depend on, and substantially overlap with, its arguments
concerning romanette iii. As a result, understanding and
addressing the former necessarily requires examining the
latter.
A.
Romanettes iii and iv, in conferring a three-year period of
marketing exclusivity, are ambiguous as to the relationship, if
any, a second-in-time drug must bear to a first-in-time drug in
order to be subject to the latter’s exclusivity. All parties agree
that the first- and second-in-time drugs must bear some
relationship to one another. But they disagree about the
nature of the necessary relationship. In the FDA’s view,
marketing exclusivity applies as between two drugs sharing
the same active moiety. Otsuka, by contrast, contends that
exclusivity more broadly covers any two drugs that are “legal
equivalents”—a term of Otsuka’s invention that draws an
equivalence between two drugs whenever one relies upon the
other to receive approval.
11
We must sustain the FDA’s interpretation of the scope of
exclusivity afforded by romanettes iii and iv as long as it is
consistent with the statutory terms and is reasonable. See
Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S.
837 (1984). The agency’s understanding comfortably meets
those standards.
1.
a. The FDA’s basic understanding is that the extent of
marketing exclusivity conferred by each of the statutory
romanettes is commensurate with the degree of innovation
required to earn exclusivity under it. With regard to
romanette ii, therefore, the first drug to receive FDA approval
for a given active moiety will block approval of all
abbreviated applications for a drug with that same active
moiety for five years. The scope of exclusivity under
romanettes iii and iv is more limited, but so is the innovation
giving rise to it.
Under romanette iii, an applicant who establishes the
safety and efficacy of a previously approved active moiety for
new “conditions of approval,” 21 U.S.C. § 355(c)(3)(E)(iii),
will thereby trigger a three-year period in which the agency
must withhold approval of drugs with the same conditions of
approval and the same active moiety. A parallel approach
governs romanette iv, which applies when the FDA approves
a “change . . . in the supplement” to a previously approved
application. Id. § 355(c)(3)(E)(iv). In that event, a drug
product seeking to make use of the “change approved in the
supplement,” id., cannot gain approval for a period of three
years if it has the same active moiety as the previously
approved drug.
12
The upshot is that, if a pharmaceutical company
innovates with respect to a given active moiety, the statutory
romanettes protect the full extent of the innovation, but only
against drugs with the same active moiety. A drug’s active
moiety thus determines its eligibility for exclusivity and
delimits the scope of drugs whose approval is potentially
foreclosed by that exclusivity.
b. Romanettes iii and iv do not specify what relationship,
if any, must exist between two drugs for marketing
exclusivity to come into play. But the statute contains a
textual grounding for the FDA’s same-moiety interpretation.
Romanette iii, in pertinent part, bars abbreviated
applications “for the conditions of approval of such drug in
the approved subsection (b) application.” 21 U.S.C.
§ 355(c)(3)(E)(iii). The phrase “drug in the approved
subsection (b) application” refers to “a drug, which includes
an [active moiety] that has been approved in another
application.” Id. All parties correctly understand that cross-
reference to refer to the first-in-time drug benefitting from
exclusivity.
The statutory language, however, does not specify
whether exclusivity applies whenever the second-in-time
application is for the “conditions of approval” of the first-in-
time drug, or whether the second-in-time application, to be
excluded, must also involve the same drug as the first-in-time
one. In other words, is it enough for a second-in-time
application to share “the conditions of approval of such drug
in the [first-in-time] application,” or must it also be for the
same “drug in the [first-in-time] application”? Id. (emphases
added).
 13
The former understanding would cast an exclusivity-
bearing drug’s “conditions of approval” as the sole gatekeeper
of exclusivity under romanette iii, giving the scope of
exclusivity a capacious reach. For instance, imagine that a
company originally received approval to market a drug with a
given active moiety as a means of treating depression. Then,
suppose the company conducts studies showing that the
drug’s active moiety also addresses insomnia, and obtains
approval to market a new drug product with that active moiety
as an anti-insomnia medication. The new drug product would
benefit from a three-year exclusivity period for that new
“condition of approval” (i.e., as a treatment for insomnia). If
an exclusivity-bearing drug’s conditions of approval were the
sole gatekeeper of exclusivity, the FDA, for three years,
would be required to withhold approval of any drug seeking
abbreviated approval to treat insomnia, regardless of whether
the applied-for drug bore any chemical association with the
first-in-time drug.
Unsurprisingly, the FDA rejects that interpretation. The
agency instead takes the position that, in order to be subject to
a first-in-time drug’s exclusivity, a second-in-time application
must also be for the same drug in the first-in-time application.
So in the example just referenced, the first-in-time drug’s
exclusivity would not block all anti-insomnia treatments,
regardless of chemical makeup. Rather, in keeping with the
scope of the innovation giving rise to the three-year period of
exclusivity, it would block only those anti-insomnia
treatments involving the same drug.
That conclusion then raises a second ambiguity: when
should a second-in-time drug be considered the same as the
drug in the first-in-time application? The agency rejects a
narrow understanding under which “exclusivity covers only
specific drug products and therefore protects from generic
14
competition only the first approved version of a drug, or
change in a drug.” Abbreviated New Drug Application
Regulations, 54 Fed. Reg. 28,872-01, at 28,897 (July 10,
1989). Construing the statute in that way would provide little
protection to innovators. For instance, a second-in-time (b)(2)
applicant could easily move itself outside a previously
approved drug product’s zone of exclusivity merely by
altering one of that product’s inactive ingredients.
The FDA instead concludes that a first-in-time drug’s
marketing exclusivity attaches, not to the specific drug
product receiving approval, but to a particular feature of the
drug: its active moiety. The agency derives that
understanding from the fact that all three romanettes condition
a drug’s eligibility for exclusivity on whether its “active
ingredient (including any ester or salt of the active
ingredient)”—i.e., its active moiety—has been approved in a
previous application. 21 U.S.C. § 355(c)(3)(E)(ii)-(iv).
Noting that romanette iii’s language, “such drug in the [first-
in-time] application,” refers to “a drug, which includes an
[active moiety] that has been approved in another
application,” the FDA concludes that any second-in-time drug
that includes an exclusivity-benefitted drug’s active moiety is
likewise subject to its exclusivity. Having long considered a
drug’s active moiety to be its distinguishing feature for
purposes of determining its eligibility for marketing
exclusivity, see Abbreviated New Drug Application
Regulations; Patent and Exclusivity Provisions, 59 Fed. Reg.
50338-01, at 50357-58 (Oct. 3, 1994), the FDA here
correspondingly concludes that marketing exclusivity under
romanette iii does not apply to a second-in-time drug with
“conditions of approval” that may overlap with those of the
first-in-time drug, but with a different active moiety.
15
The FDA interprets romanette iv in parallel fashion.
Under that provision, an abbreviated application will be
barred during a first-in-time drug’s three-year exclusivity
period if it is “for a change approved in the supplement” to
the previously approved application. 21 U.S.C.
§ 355(c)(3)(E)(iv). The statutory language, again, does not
specify whether, to be excluded, it is enough for a second-in-
time abbreviated application to be “for a change approved in
the supplement” to the first-in-time application, or whether it
must also be for the drug in the supplemented application.
Mirroring its treatment of romanette iii, the FDA opted
for the latter interpretation. The agency begins by noting that
a pharmaceutical company cannot alter the active moiety of a
drug product when supplementing the drug’s application. See
Guidance for Industry: Submitting Separate Marketing
Applications and Clinical Data for Purposes of Assessing
User Fees, FOOD & DRUG ADMIN. 3 (Dec. 2004). As a result,
“a change approved in the supplement” to an application must
be a change in the conditions of approval for that specific
drug—for instance, an alteration in its labeling or indications,
as with Abilify Maintena’s supplemented labeling indicating
its efficacy in treating adult schizophrenia patients
experiencing an acute relapse.
The FDA correspondingly reads romanette iv to provide
that, to infringe a previously approved drug’s three-year
exclusivity under that provision, a second-in-time application
must not only be for the “change approved in the supplement”
to the previously approved drug’s application, but also must
be for the same drug (i.e., a drug containing the same active
moiety). Marketing exclusivity therefore would not apply, for
instance, to an abbreviated application for a drug with a
different active moiety, the label for which happened to
16
overlap in some way with the first-in-time drug’s
supplemented labeling.
2.
Otsuka contends that the FDA’s same-moiety limitation
on the scope of exclusivity conferred by romanettes iii and iv
is inconsistent with the statute. Because none of Otsuka’s
arguments “unambiguously foreclose[s] the agency’s
construction of the statute,” we defer to the FDA’s reasonable
interpretation. Cablevision Sys. Corp. v. FCC, 649 F.3d 695,
704 (D.C. Cir. 2011); accord Actavis, 625 F.3d at 765.
a. Otsuka’s central submission is that a principle it terms
“legal equivalence” must be read into the FDCA’s marketing-
exclusivity provisions. Legal equivalence, as Otsuka
conceives it, is broader than (but apparently inclusive of)
equivalence in active moieties. And if two drugs are legally
equivalent, Otsuka posits, approval of the second-in-time drug
should be subject to the first-in-time drug’s exclusivity,
regardless of whether the two drugs share the same active
moiety.
Otsuka appears to believe that two drugs should be
considered legal equivalents in at least the following
scenarios: (i) the two drugs share the same active moiety; (ii)
one drug relies on the other drug to receive FDA approval; or
(iii) one drug relies on a drug that is itself legally equivalent
to (i.e., satisfies one of the first two conditions with respect
to) the other drug. On that understanding, Aristada and
Abilify Maintena are legally equivalent: Aristada relied in its
application on Abilify Tablets, which in turn is legally
equivalent to Abilify Maintena because the two drugs share
the same active moiety (aripiprazole), and also because
Abilify Maintena itself relied on Abilify Tablets for approval.
17
Consequently, as Otsuka sees it, the FDA erred by permitting
Aristada to rely on aripiprazole (Abilify Tablets) for approval,
but treating Aristada as distinct from aripiprazole (Abilify
Maintena) for purposes of defining the latter product’s zone
of exclusivity.
Congress perhaps could have written a statute under
which, if one drug relies on the safety or efficacy of a
previously approved drug to obtain approval, the two drugs
must be considered “legally equivalent” for purposes of
defining the previously approved drug’s zone of exclusivity.
But the statutory romanettes nowhere expressly set out any
concept of legal equivalence in describing the scope of
marketing exclusivity. Instead, Otsuka claims to find a
footing for its theory in the FDCA’s provisions governing
new drug applications, which in turn, the company contends,
informs the proper interpretation of the romanettes.
Otsuka’s complex, multi-layered theory begins with the
FDCA’s condition that a new drug application must contain
“full reports of investigations which have been made to show
whether or not such drug is safe for use and whether such
drug is effective in use.” 21 U.S.C. § 355(b)(1) (emphasis
added). Otsuka notes that an abbreviated (b)(2) application,
which must also satisfy that condition, can do so by relying on
studies showing the safety and efficacy of an already
approved drug. As a result, Otsuka reasons, at least some of
the investigations submitted in connection with a (b)(2)
application would “have been made to show,” not that the
applied-for drug is safe and effective, but that the relied-upon
drug is safe and effective.
With that premise in mind, Otsuka returns to
§ 355(b)(1)’s statement that a new drug application (including
a (b)(2) application) must contain “full reports of
18
investigations which have been made to show whether or not
such drug” is safe and effective. Id. (emphasis added).
Because at least some of the investigations invoked in support
of a (b)(2) application will concern the relied-upon drug,
Otsuka reasons, the phrase “such drug” in § 355(b)(1) must
encompass, not just the drug for which approval is sought, but
also any drug on which the application relies. In that way,
Otsuka submits, the phrase “such drug” necessarily embraces
a concept of legally equivalent drugs—i.e., drugs treated as
the same drug under the statute because one relied on the
other to secure approval.
Otsuka’s theory cannot stop there, because the company
still needs to export the concept of legal equivalence from
§ 355(b)(1), which pertains to new drug applications, into the
statutory romanettes, which pertain to marketing exclusivity.
For that next step, Otsuka invokes the general assumption that
“identical words used in different parts of the same act are
intended to have the same meaning.” Comm’r v. Lundy, 516
U.S. 235, 250 (1996) (quoting Sullivan v. Stroop, 496 U.S.
478, 484 (1990)). That assumption means, to Otsuka, that the
phrase “such drug” must embrace a drug and its legal
equivalents, not just in § 355(b)(1), but anywhere that phrase
appears in the pertinent provisions of the FDCA.
One such provision is romanette iii. In relevant part,
romanette iii blocks approval of second-in-time (b)(2)
applications “for the conditions of approval of such drug” in
the first-in-time application. 21 U.S.C. § 355(c)(3)(E)(iii)
(emphasis added). Otsuka reasons that, because “such drug”
in § 355(b)(1) refers to a drug and its legal equivalents, “such
drug” in romanette iii likewise should embrace a drug’s legal
equivalents. As a result, Otsuka concludes, the marketing
exclusivity afforded by romanette iii requires withholding
19
approval of any drugs that are legally equivalent to the first-
in-time drug and share its conditions of approval.
Finally, although romanette iv (as opposed to romanette
iii) does not contain the words “such drug,” Otsuka suggests
that the concept of legal equivalence should be read into
romanette iv, as well, in order to maintain symmetry across
the romanettes with regard to the scope of marketing
exclusivity. The endpoint of Otsuka’s multi-step
interpretation thus is that a second-in-time drug is subject to
the marketing exclusivity of any drug it relies upon (and that
drug’s legal equivalents), regardless of whether the drugs
share the same active moiety.
b. For Otsuka’s theory to prevail, it would need to show
not only that its interpretation is permissible, but that the
agency’s alternative understanding is not. See, e.g., Actavis,
625 F.3d at 765. Otsuka falls far short of making that
showing.
To start with the initial premise of Otsuka’s theory, the
FDA’s competing reading of § 355(b)(1)’s “made to show”/
“such drug” language is entirely reasonable. Otsuka’s
interpretation, as explained, construes the phrase “such drug”
to refer simultaneously to the applied-for drug (e.g., Aristada)
and any drug on which the application relies (e.g., Abilify
Tablets)—which, to Otsuka, means that “such drug”
embodies a concept of legal equivalence between the applied-
for drug and any relied-upon drug. The agency, by contrast,
interprets “such drug” to refer solely to the applied-for drug.
The agency’s interpretation draws significant support
from the statutory history. For nearly a half century, “such
drug” could have referred only to the applied-for drug. Those
words were part of the original FDCA in 1938, in the
20
precursor provision to § 355(b). See Food, Drug, and
Cosmetic Act, Pub. L. No. 75-717, § 505(b), 52 Stat. 1040,
1052 (1938). And it was not until the Hatch-Waxman
Amendments in 1984 that the statute even provided for
abbreviated pathways through which an applicant could rely
on investigations concerning a previously approved drug.
Until then, consequently, the “investigations which have been
made to show whether or not such drug” is safe and effective
necessarily referred to investigations showing the safety and
efficacy of the applied-for drug, not any previously approved
drug.
To the extent those same words could have taken on a
new meaning following introduction of the abbreviated
pathways in 1984, the agency’s interpretation of “such drug”
to mean (only) the applied-for drug remains entirely sound.
Under that interpretation, an application can satisfy
§ 355(b)(1)’s condition—that it include “full reports of
investigations which have been made to show whether or not
such drug is safe and effective for use”—as long as the
investigations show the applied-for drug’s safety and
effectiveness. To be sure, in a (b)(2) application, the
investigations relied upon can include ones that originally
involved testing of a previously approved drug. But those
investigations still could serve to show—and thus could
qualify as now being “made to show”—the applied-for drug’s
safety and effectiveness, provided the drug’s proponent
established a scientific basis for reaching that conclusion.
In that light, the agency’s reading of “made to
show”/“such drug” in § 355(b)(1) is fully reasonable, and
considerably more straightforward than Otsuka’s. And
because the agency understands “such drug” to refer solely to
the applied-for drug, its reading, unlike Otsuka’s, does not
21
involve any concept of legal equivalence between an applied-
for drug and other drugs on which it may rely.
Even if we assume Otsuka’s reading of “such drug” in
§ 355(b)(1) is controlling, Otsuka again falls short in its effort
to transport its preferred understanding of “such drug” from
§ 355(b)(1) into the statutory romanettes. Because Otsuka
cannot make that essential showing, its statutory argument,
independent of any other shortcomings, must fail.
Otsuka asserts that we should treat the words “such
drug,” which appear nearly fifty times in Section 505 of the
FDCA alone, as a statutory term of art. Doing so would be
the reductio ad absurdum of the “normal rule of statutory
construction that identical words used in different parts of the
same act are intended to have the same meaning.” Lundy, 516
U.S. at 250 (citation omitted). By nature, the object of the
word “such” entirely depends on context. See Such,
MERRIAM-WEBSTER’S COLLEGIATE DICTIONARY (11th ed.
2003) (defining “such” as “of the character, quality, or extent
previously indicated or implied”). Consequently, the words
“such drug” might readily refer to one drug in one instance
and another drug in another.
So even if it were true—which it is not—that the words
“such drug” in § 355(b)(1) can only be read to refer
simultaneously to the applied-for and the relied-upon drug, it
would not necessarily follow that those words in romanette iii
should carry the same meaning. Whereas § 355(b)(1) pertains
to new drug applications, romanette iii is a distinct provision
dealing with the distinct subject of marketing exclusivity. As
a result, even if § 355(b)(1)’s reference to “such drug”
encompasses drugs that rely on one another for purposes of
meeting the criteria for a new drug application, that still
would not establish that the same, legal-equivalence
22
understanding must inform a separate provision dealing with a
separate subject.
Once again, the agency’s competing interpretation of the
relevant statutory language is entirely reasonable. The agency
reads the language of romanette iii to indicate that “such
drug,” in context, refers only to the first-in-time drug
benefitting from exclusivity. The provision precludes the
FDA from approving an ANDA or (b)(2) application “for the
conditions of approval of such drug in the approved
subsection (b) application,” which in turn refers to the drug
that “includes an [active moiety] that has been approved in
another application.” 21 U.S.C. § 355(c)(E)(iii) (emphasis
added). “Such drug,” then, is a specific “approved” drug:
namely, the drug (i.e., active moiety) entitled to the three-year
period of exclusivity conferred by romanette iii. Nothing in
the statute requires concluding that the reference to “such
drug” automatically embraces so-called legal equivalents to it.
(And that is to say nothing of the fact that romanette iv, unlike
romanette iii, does not contain the words “such drug” at all.)
The implications of Otsuka’s conception of legal
equivalence further counsel against concluding that Congress
intended to incorporate it into the statutory romanettes. Under
Otsuka’s interpretation, if one drug relies on another to obtain
abbreviated approval for the same conditions of approval, the
relied-upon drug’s zone of exclusivity necessarily
encompasses the applied-for drug. That theory would apply
regardless of the reason that the abbreviated application relied
on the previously approved drug.
But a (b)(2) application can rely on any scientific
investigations, including general academic literature, that help
to establish the applied-for drug’s safety and efficacy. See id.
§ 355(b)(1). So, for instance, a (b)(2) application could
23
rely—and in at least one instance has relied, Intervenor Br.
30-31 & n.10—on a prior study to show the safety of an
inactive ingredient in the applied-for drug. Otsuka’s reading
thus would treat two drug products as legally equivalent, such
that one’s exclusivity would preclude approval of the other,
even though the only intersection between the two products
involved an inactive ingredient. There is no reason to
suppose Congress intended the scope of a drug’s marketing
exclusivity to sweep so far.
Otsuka’s notion of legal equivalence also stands in
considerable tension with our decision in Actavis Elizabeth
LLC v. FDA, 625 F.3d 760 (D.C. Cir. 2010). That case
involved prodrugs (which, as noted, are drugs that eventually
metabolize into a different chemical compound in the body).
We upheld the FDA’s understanding that a prodrug of a
previously approved drug, if it has a different active moiety,
can qualify as a “major innovation[]” entitled to “‘[N]ew
[C]hemical [E]ntity’ status and the resulting five-year
exclusivity” afforded under romanette ii. Id. at 765. We said
we would be “hard pressed to second guess” the FDA’s
considered view that such a drug is sufficiently “distinct” so
as to be “uniquely deserving” of New Chemical Entity status.
Id. at 765-66.
If we accepted Otsuka’s assertion that the scope of
marketing exclusivity under the FDCA is governed by a
principle of legal equivalence, that principle would apply no
less to the five-year exclusivity period granted by romanette ii
than to the three-year periods granted by romanettes iii and iv.
According to Otsuka’s reading, consequently, the FDA would
be required to treat a New Chemical Entity entitled to a five-
year exclusivity period under Actavis—i.e., a “major
innovation” containing no active moiety that “has been
approved in any other application,” 21 U.S.C.
24
§ 355(c)(3)(E)(ii)—as equivalent to any previously approved
drug on which it relied for approval. Otsuka fails to persuade
us that the FDCA unambiguously contains a principle of legal
equivalence under which even a drug earning the status of a
New Chemical Entity is equivalent to a previously approved
drug.
c. Otsuka does not advance its cause by relying on the
patent-certification measures pertaining to (b)(2) applications.
A (b)(2) applicant must certify that sale of the applied-for
drug would not infringe upon a valid patent with respect to
any relied-upon drug. See 21 U.S.C. § 355(b)(2)(A). The
provision states that the applicant must include a certification
“with respect to each patent which claims the drug for which
such investigations were conducted or which claims a use for
such drug for which the applicant is seeking approval.” Id.
(emphasis added). Otsuka’s argument with regard to that
language parallels its earlier argument under § 355(b)(1).
Otsuka again asserts that “such drug” in the patent-
certification provision refers both to the relied-upon and the
applied-for drug, and that the words thus embody a principle
of legal equivalence. Otsuka accordingly claims that the FDA
“effectively conced[ed]” that Aristada and Abilify Maintena
are legally equivalent when it required Alkermes’ new drug
application for Aristada to certify to method-of-use patents for
aripiprazole. Appellants’ Br. 28.
Otsuka gets no further with this legal-equivalence
argument than it did with the earlier one. Here, too, Otsuka’s
reading of “such drug” is hardly compelled. Those words
refer back to “the drug for which [the relied-upon]
investigations were conducted.” 21 U.S.C. § 355(b)(2)(A).
That drug is the relied-upon drug, not the applied-for drug.
And although the words “such drug” appear in a phrase
referring to a patent “which claims a use for such drug for
25
which the applicant is seeking approval,” id. (emphasis
added), the emphasized language is most naturally read to
modify “use,” not “such drug”—i.e., the “use . . . for which
the applicant is seeking approval,” not the “drug for which the
applicant is seeking approval.” So understood, “such drug”
refers solely to the relied-upon drug, not to both the relied-
upon and applied-for drugs.
In any event, even if we assume Otsuka’s understanding
of “such drug” in the patent-certification provision is
controlling, Otsuka once again runs aground in assuming that
its preferred interpretation of “such drug” in that provision
would necessarily carry over to “such drug” in romanette iii.
The patent-certification provision is a prophylactic measure to
notify a patent holder of possible infringement by a new drug
application that relies on one of its drugs. In that light, the
fact that Alkermes was required to certify to Otsuka’s
method-of-use patents for aripiprazole in no way constitutes a
concession that the two drugs are “equivalent” for purposes of
the FDCA’s marketing-exclusivity provisions. As the agency
has explained, marketing exclusivity under the romanettes is a
distinct form of protection from that afforded by the patent
system. See generally Frequently Asked Questions on Patents
and Exclusivity, FOOD & DRUG ADMIN.,
https://www.fda.gov/Drugs/DevelopmentApprovalProcess/uc
m079031.htm (last updated Dec. 5, 2016). We see no reason
to conclude that the patent-certification provision does
anything more than guard against patent infringement,
without speaking to—much less defining—the zone of a
drug’s marketing exclusivity.
d. In a final attempt to persuade the Court, Otsuka warns
of the practical implications of upholding the FDA’s same-
moiety requirement. According to Otsuka, unless the scope
of marketing exclusivity extends to legally equivalent drugs,
26
competitors will be able to rely on an innovator’s drug while
readily evading its exclusivity. In particular, Otsuka explains
that “[p]ioneer drug companies will be reluctant to develop
new, innovative drugs if their marketing exclusivity can be
easily circumvented by a follow-on company that creates a
prodrug of the pioneer product’s active moiety.” Appellants’
Br. 18.
Otsuka’s argument in that respect boils down to an
attempt to re-litigate this Court’s decision in Actavis, 625 F.3d
760. There, as explained, we upheld the FDA’s position that
a prodrug of a previously approved drug, if it contains a
different active moiety, is entitled to the five-year exclusivity
period granted to a New Chemical Entity. Otsuka’s argument
that the statute should be read to bar competitors from
receiving approval for such prodrugs thus “represent[s] little
more than question-begging”: “In the FDA’s view,” prodrugs
with previously unapproved active moieties “are ‘major
innovations’ deserving five-year exclusivity,” even if they
ultimately metabolize into a previously approved active
moiety. Id. at 765-66. We have no occasion to revisit our
decision in Actavis, or to question the FDA’s expert judgment
that “even minor covalent structural changes are capable of
producing . . . major changes in the activity of a drug.” Id.
* * *
For those reasons, Otsuka fails to show that the language
of the FDCA unambiguously compels its “legal-equivalence”
interpretation of the scope of marketing exclusivity under the
romanettes. Rather, the agency’s same-moiety interpretation
is reasonable and warrants our deference.
27
B.
As a fallback to its statutory arguments, Otsuka claims
that the FDA’s same-moiety interpretation should be rejected
as irreconcilable with the agency’s own regulations and past
statements. “An agency’s interpretation of its own
regulations is entitled to judicial deference,” and is controlling
unless “plainly erroneous or inconsistent with the
regulation[s].” Actavis, 625 F.3d at 763 (internal quotation
marks omitted). We see no reason to reject the FDA’s same-
moiety interpretation as incompatible with the agency’s
regulations implementing the statutory romanettes. Those
regulations largely parrot the language of the romanettes,
which, as we have found, comfortably accommodate the
agency’s same-moiety rule. The same is true of the
regulations.
Otsuka observes that the regulation implementing
romanette ii explicitly imposes a “same active moiety”
limitation on the scope of the five-year exclusivity period
conferred by that provision. 21 C.F.R. § 314.108(b)(2). By
contrast, Otsuka notes, the regulations pertaining to
romanettes iii and iv contain no such language expressly
establishing a same-moiety requirement. See id.
§§ 314.108(b)(4), (b)(5). As a result, Otsuka reasons, the
latter regulations should be understood implicitly to reject a
same-moiety limitation. We disagree.
Under Otsuka’s reading, the three-year exclusivity
periods under romanettes iii and iv would be broader in
scope—because they would be unencumbered by a same-
moiety limitation—than the five-year period conferred by
romanette ii. That result would make little sense. Romanette
ii confers exclusivity in connection with a more significant
innovation, and hence awards a longer exclusivity period,
28
than romanettess iii and iv. If anything, then, one would
expect romanette ii to grant a broader scope of exclusivity. In
that light, the agency can permissibly understand the express
inclusion of a same-moiety limitation in the romanette-ii
regulation to make especially clear that such a limitation
constrains the broader exclusivity conferred by that
regulation, rather than to imply that the same limitation does
not govern the narrower exclusivity conferred by the
romanette-iii and -iv regulations.
Otsuka next points to the language of the regulation
corresponding to romanette iii. That regulation, Otsuka
emphasizes, provides that three-year marketing exclusivity
under romanette iii bars second-in-time applications “for the
conditions of approval of the original application” rather than
“for the conditions of approval of such drug.” Id.
§ 314.108(b)(4). Otsuka argues that the absence of the “such
drug” language undermines the agency’s position that the
regulation accommodates a same-moiety limitation. But it is
Otsuka, not the FDA, that attaches dispositive significance to
the words “such drug.” The FDA, for its part, persuasively
contends that the phrase “the conditions of approval of the
original application” can just as easily accommodate a same-
moiety limitation as the phrase “the conditions of approval of
such drug.”
Otsuka also identifies past FDA statements that it reads to
be incompatible with the agency’s present espousal of a same-
moiety limitation. But the only instance in which the agency
appears to have squarely expressed a contrary view was in a
2010 opinion letter concerning the glaucoma medicine
Lumigan. In that letter, the FDA stated that Lumigan “could
not [have] receive[d] approval for 3 years” following another
drug’s (Xalatan’s) receipt of a three-year exclusivity period
under romanette iii, even though the two drugs have different
29
active moieties. J.A. 121. The FDA’s position in that letter
plainly assumed that romanette iii does not include a same-
moiety limitation.
Agencies, however, can change their interpretations
provided that they acknowledge and explain the change and
the new position is otherwise permissible. See FCC v. Fox
Television Stations, Inc., 556 U.S. 502, 516 (2009). That is
what the FDA did in this case. In its letter denying Otsuka’s
petitions, the FDA explicitly acknowledged its comments in
the Lumigan letter. The denial letter then explained the
agency’s various reasons for adopting its present position now
that the issue was “squarely before the Agency.” J.A. 441
n.87. Those reasons mirror the ones discussed throughout this
opinion. In those circumstances, there is no reason to deny
deference to the agency’s present interpretation.
Finally, we are unpersuaded by Otsuka’s contention that
the agency was required to adopt the same-moiety limitation
through notice-and-comment rulemaking. Because the same-
moiety requirement is not “a new position inconsistent with
an existing regulation” and does not work “a substantive
change in [any] regulation,” there was no need for the FDA to
have undertaken notice and comment procedures before
adopting it. U.S. Telecomm. Ass’n v. FCC, 400 F.3d 29, 35
(D.C. Cir. 2005) (emphasis and internal parenthesis removed).
* * * * *
For the foregoing reasons, we affirm the district court’s
grant of summary judgment.
So ordered.
Appendix
21 U.S.C. § 355(c)(3)(E)
(ii) If an application submitted under subsection (b) of this
section for a drug, no active ingredient (including any ester or
salt of the active ingredient) of which has been approved in
any other application under subsection (b) of this section, is
approved after September 24, 1984, no application which
refers to the drug for which the subsection (b) application was
submitted and for which the investigations described in clause
(A) of subsection (b)(1) of this section and relied upon by the
applicant for approval of the application were not conducted
by or for the applicant and for which the applicant has not
obtained a right of reference or use from the person by or for
whom the investigations were conducted may be submitted
under subsection (b) of this section before the expiration of
five years from the date of the approval of the application
under subsection (b) of this section, except that such an
application may be submitted under subsection (b) of this
section after the expiration of four years from the date of the
approval of the subsection (b) application if it contains a
certification of patent invalidity or noninfringement described
in clause (iv) of subsection (b)(2)(A) of this section. The
approval of such an application shall be made effective in
accordance with this paragraph except that, if an action for
patent infringement is commenced during the one-year period
beginning forty-eight months after the date of the approval of
the subsection (b) application, the thirty-month period
referred to in subparagraph (C) shall be extended by such
amount of time (if any) which is required for seven and one-
half years to have elapsed from the date of approval of the
subsection (b) application.
(iii) If an application submitted under subsection (b) of this
section for a drug, which includes an active ingredient
(including any ester or salt of the active ingredient) that has
been approved in another application approved under
subsection (b) of this section, is approved after September 24,
1984, and if such application contains reports of new clinical
investigations (other than bioavailability studies) essential to
the approval of the application and conducted or sponsored by
the applicant, the Secretary may not make the approval of an
application submitted under subsection (b) of this section for
the conditions of approval of such drug in the approved
subsection (b) application effective before the expiration of
three years from the date of the approval of the application
under subsection (b) of this section if the investigations
described in clause (A) of subsection (b)(1) of this section and
relied upon by the applicant for approval of the application
were not conducted by or for the applicant and if the applicant
has not obtained a right of reference or use from the person by
or for whom the investigations were conducted.
(iv) If a supplement to an application approved under
subsection (b) of this section is approved after September 24,
1984, and the supplement contains reports of new clinical
investigations (other than bioavailability studies) essential to
the approval of the supplement and conducted or sponsored
by the person submitting the supplement, the Secretary may
not make the approval of an application submitted under
subsection (b) of this section for a change approved in the
supplement effective before the expiration of three years from
the date of the approval of the supplement under subsection
(b) of this section if the investigations described in clause (A)
of subsection (b)(1) of this section and relied upon by the
applicant for approval of the application were not conducted
by or for the applicant and if the applicant has not obtained a
right of reference or use from the person by or for whom the
investigations were conducted.