Genus Lifesciences, Inc. v. Azar ( 2020 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
GENUS LIFESCIENCES, INC.,
Plaintiff,
v.
ALEX M. AZAR II, et al., Case No. 1:20-cv-00211 (TNM)
Defendants,
LANNETT CO., INC.,
Intervenor-Defendant.
MEMORANDUM OPINION
In the pharmaceutical development arena, Congress created a “winner-take-all” prize.
Under the Federal Food, Drug, and Cosmetic Act (“FDCA”), the first developer of a “new
chemical entity” (“NCE”)—a drug approved for the first time in the United States—receives a
coveted period of exclusivity (“NCE exclusivity”). During that time, competing drugs generally
cannot can enter the market.
Three years ago, Genus Lifesciences, Inc., won five-year NCE exclusivity for its new
drug, Goprelto. But earlier this year, a competing drug sponsored by Lannett Co., Numbrino,
entered the market.
Genus now cries foul. It claims that the U.S. Food and Drug Administration (“FDA”)
infringed on its exclusivity period when it approved Numbrino. It believes that under the FDCA,
it is entitled to a five-year period of complete market exclusivity, barring all approval and
submission of applications for competing drugs. FDA and Lannett, on the other hand, claim that
everything is aboveboard. FDA explains that while Genus’s exclusivity period prohibits FDA
from accepting any new competing drug applications, it does not bar it from approving
applications, like Lannett’s, that were already in the approval process.
The Court agrees with FDA that Genus’s NCE exclusivity does not cover approvals. But
it disagrees with the agency’s reasoning. The FDCA prescribes timelines for approval of
applications like Lannett’s based on the type of patent certification in the application. FDA
admits that disregarded these timelines. Since the Court finds that FDA misinterpreted the
FDCA, the Court’s inquiry stops here for now.
I.
A.
Pharmaceutical companies may market new drugs only with FDA approval. See 21
U.S.C. § 355(a). Developing and seeking approval of a pioneer drug often involves much time
and money. A company’s new drug application (“NDA”) to FDA 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.” Id. § 355(b)(1). Most of those reports “rely in large
measure on clinical trials with human subjects” and “several phases of clinical testing,” often
spanning years. See Abigail All. for Better Access to Dev. Drugs v. Von Eschenbach, 495 F.3d
695, 697–98 (D.C. Cir. 2007).
To streamline the approval process for some drugs, Congress enacted the Hatch-Waxman
Amendments to the FDCA. See Pub. L. No. 98-417, 98 Stat. 1585 (1984). These amendments
created two abbreviated pathways to new drug approval.
First, a company seeking to market a generic drug can submit an abbreviated new drug
application (“ANDA”), which “piggy-back[s] on the brand’s NDA.” See Caraco Pharm. Labs.,
Ltd. v. Novo Nordisk A/S, 566 U.S. 399, 405 (2012) (citing 21 U.S.C. § 355(j)). “Rather than
2
providing independent evidence of safety and efficacy, the typical ANDA shows that the generic
drug has the same active ingredients as, and is biologically equivalent to, the brand-name drug.”
Id.A second streamlined application option, relevant here, is a 505(b)(2) application. See 21
U.S.C. § 355(b)(2) (codifying Section 505(b)(2) of the FDCA). A 505(b)(2) applicant must
show that its drug meets the “same safety and effectiveness standard[s] as a stand-alone NDA”
(i.e., a 505(b)(1) application). Defs.’ Mem. at 13, ECF No. 30-1. 1 Yet “unlike a stand-alone
NDA, which relies entirely on studies conducted by its applicant, a ‘505(b)(2) application’ may
rely on a combination of the applicant’s own studies and other sources, such as published reports
of studies and the Agency’s findings of safety and/or effectiveness for one or more previously
approved drugs, to meet the approval requirements.” Id. (citing 21 U.S.C. § 355(b)(2)).
FDA regulations outline the 505(b)(2) application process. Within 60 days of an
applicant submitting an NDA, FDA conducts a filing review to make “a threshold determination
that the NDA is sufficiently complete to permit a substantive review.” 21 C.F.R.
§ 314.101(a)(1). This review determines whether the application on its face includes all the
required information, is in the correct form, and whether some other drug’s exclusivity period
blocks approval or submission. Id. § 314.101(a)(1), (d)–(e). If FDA files the application, it
notifies the applicant and a 180-day review period begins to run. Id. § 314.101(a)(2). If,
however, it determines that the application is deficient, the applicant must amend and resubmit
the NDA before FDA will substantively review it. Id. § 314.101(a)(3).
1
All page citations refer to the pagination generated by the Court’s CM/ECF system. Citations to the Joint
Appendix, though, use the J.A. pagination assigned by the parties. The Court has cited only the redacted, public
versions of the parties’ filings. Nothing in this opinion is taken from redacted portions of the filings, although the
Court fully reviewed them in reaching its conclusions.
3
Once FDA files an NDA, it conducts a substantive review of the application to determine
whether it can approve the drug. If, during this review, it “determines that [it] will not approve
the application or abbreviated application in its present form,” it issues a “Complete Response
Letter” (“CRL”). Id. § 314.110(a). This letter describes the NDA’s deficiencies and
“recommend[s] actions that the applicant might take to place the application or abbreviated
application in condition for approval.” Id. An applicant receiving a CRL has three options: it
may (1) “[r]esubmit the application or abbreviated application, addressing all deficiencies
identified in the complete response letter” (which begins a new review cycle period); (2)
“[w]ithdraw the application”; or (3) “[r]equest opportunity for hearing.” Id. § 314.110(b)(1)–(3).
Once FDA determines that an application meets all statutory requirements, it will
approve the NDA and send the applicant an approval letter. Id. § 314.105. Approval of a 505(b)
application—whether an abbreviated or stand-alone NDA—gives the “first-in-time innovator” a
“period of exclusivity.” Otsuka Pharm. Co. v. Price, 869 F.3d 987, 990 (D.C. Cir. 2017) (citing
21 U.S.C. § 355(c)(3)(E)(ii)–(iv)).
The main issue here is the breadth of that exclusivity period.
B.
Doctors have used cocaine hydrochloride (“HCI”) topical solutions in nasal and sinus
surgeries for decades, but FDA had never approved a drug that used it as an active ingredient.
J.A. at 245, ECF No. 52. Beginning in 2008, Lannett began to market an unapproved cocaine
HCI topical solution. Id. at 1075. The next year, Lannett discussed a proposal with FDA to
submit a 505(b)(2) application for its drug. Id. at 607. Meanwhile, in 2013, Genus met with
FDA to discuss developing a similar drug. Id. at 7–8.
4
In November 2016, Genus submitted an application to FDA for Goprelto, a cocaine HCI
topical solution. Id. at 93. FDA reviewed the application and found it “sufficiently complete to
permit a substantive review” and accepted it for filing. Id. at 122. It noted, though, that it had
some substantive concerns about Goprelto’s trials, labeling, and data, that Genus would need to
address before FDA could approve the drug. Id. at 122–30. Genus addressed these concerns and
FDA approved Goprelto on December 14, 2017. Id. at 577.
While FDA was conducting a substantive review of Genus’s application, Lannett
submitted its 505(b)(2) application for its cocaine HCI topical solution, Numbrino. On
November 29, 2017—15 days before approving Goprelto—FDA filed Lannett’s application. Id.
at 840, 847.
During FDA’s substantive review of Lannett’s application, FDA issued Lannett a CRL,
explaining that Lannett would need to submit additional data for it to approve Numbrino. Id. at
1182. As Lannett developed a response to this CRL, Genus filed two citizen petitions, urging
FDA to rescind its acceptance of Lannett’s application or to stop accepting additional
submissions from Lannett, given Genus’s NCE exclusivity. See id. at 1800, 1928. FDA denied
both petitions. See id. at 1982, 2027. It approved Numbrino in January 2020. Id. at 1323.
Genus now brings its arguments here. See Compl., ECF No. 1. It claims that FDA’s
decision to approve Numbrino violated the FDCA and its own regulations. Id. at 26–28. It also
argues that FDA applied inconsistent standards of review to Genus and Lannett’s NDAs. Id. at
25–26. Lannett intervened, see Min. Order (Feb. 18, 2020), and the parties cross-moved for
summary judgment, see Pl.’s Mot., ECF No. 24; Defs.’ Cross-Mot., ECF No. 30; Lannett’s
Cross-Mot., ECF No. 31.
5
After reviewing the parties’ motions, the Court requested supplemental briefing on the
proper interpretation of the relevant FDCA exclusivity provision, 21 U.S.C. § 355(c)(3)(E)(ii).
See Order, ECF No. 53. The parties submitted supplemental briefs, see Pl.’s Suppl., ECF No.
57; Defs.’ Suppl., ECF No. 56; Lannett’s Suppl., ECF No. 55, and this matter is now ripe. 2
II.
The Court reviews FDA’s decision to approve Numbrino under the Administration
Procedure Act’s (“APA”) standards of review. Normally, a court will grant summary judgment
when there “is no genuine dispute as to any material fact and the movant is entitled to judgment
as a matter of law.” Fed. R. Civ. P. 56(a). But Rule 56’s standards do not apply to a court’s
review of a final agency action under the APA. See Sierra Club v. Mainella, 459 F. Supp. 2d 76,
89 (D.D.C. 2006). In these cases, summary judgment “serves as the mechanism for deciding, as
a matter of law, whether the agency action is supported by the administrative record and
otherwise consistent with the APA standard of review.” Id. at 90 (citing Richards v. INS, 554
F.2d 1173, 1177 & n.28 (D.C. Cir. 1977)).
Under the APA, the Court will set aside FDA’s decision only if it is “arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with law.” Grant Med. Ctr. v.
Hargan, 875 F.3d 701, 705 (D.C. Cir. 2017) (quoting 5 U.S.C. § 706(2)(A)). Though a court’s
review of agency action under the arbitrary and capricious standard is “narrow,” it must
determine whether the agency “examine[d] the relevant data and articulate[d] a satisfactory
explanation for its action including a rational connection between the facts found and the choice
made.” Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)
2
The Court has jurisdiction over this case under 28 U.S.C. § 1331 because this action arises under federal law—
specifically the Administrative Procedure Act, 5 U.S.C. §§ 701 et seq., the Declaratory Judgment Act, 28 U.S.C. §§
2201-2202, and 28 U.S.C. § 1361.
6
(cleaned up). If the agency’s reasoning is deficient, the “court should not attempt itself to make
up for such deficiencies” or “supply a reasoned basis for the agency’s action that the agency
itself has not given.” Id. That is not the role of the courts.
The Court reviews FDA’s statutory interpretation under the Chevron two-step
framework. First, the Court considers “whether Congress has directly spoken to the precise
question at issue.” Chevron, U.S.A., Inc. v. NRDC, Inc., 467 U.S. 837, 842 (1984). If the statute
is unambiguous, that ends the analysis. See id. at 842–43. If the statute is “silent or ambiguous,”
the Court proceeds to step two and must uphold an agency’s interpretation if it “is based on a
permissible construction of the statute.” Id. at 843.
III.
A.
Genus claims that FDA should not have approved Numbrino once Goprelto received
exclusivity because the FDCA bars submission and approval of competing drugs during the
exclusivity period. Pl.’s Mem. at 35, ECF No. 25.
Genus undisputedly held “NCE exclusivity” under 21 U.S.C. § 355(c)(3)(E)(ii)
(“Romanette ii”) as of December 14, 2017. See Defs.’ Mem. at 10; Pl.’s Mem. at 7. But just
how broad is this exclusivity? The parties agree that the answer turns on the plain language of
Romanette ii—especially the second sentence of this clause (“Sentence 2”). As the language is
not exactly “plain,” the Court will diagram the statute for the benefit of the reader. Romanette ii
says:
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If an application submitted under subsection (b) for a drug, no active
ingredient (including any ester or salt of the active ingredient) of which has Conditional Clause
been approved in any other application under subsection (b), is approved
Sentence 1: Submission
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) and relied upon by the applicant for
approval of the application were not conducted by or for the applicant and for Main Clause
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) before the expiration of five years from the date of the approval of
the application under subsection (b), except that such an application may be
submitted under subsection (b) after the expiration of four years from the date of Exception Clause
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).
Sentence 2: Approval
The approval of such an application shall be made effective in accordance with Main Clause
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 Exception Clause
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.
21 U.S.C. § 355(c)(3)(E)(ii).
This passage of the FDCA is admittedly difficult to decipher. But that does not
necessarily equate to ambiguity. 3 Cf. Kisor v. Wilkie, 139 S. Ct. 2400, 2415 (2019) (“[A] court
cannot wave the ambiguity flag just because it found the regulation impenetrable on first read.”).
So what does it mean? In short, Romanette ii means that once FDA approves an NCE, no one
can submit a subsequent 505(b)(2) application to FDA for a competing drug for five years, or
four years if the subsequent 505(b)(2) application contains a certification that no patents would
be infringed or violated by approval of the new drug. And FDA can approve subsequent
505(b)(2) applications as it does for all other 505(b)(2) applications—by referring to the
3
Recall that the Court defers to the agency’s interpretation of statute only if it is ambiguous. Chevron, 467 U.S. at
842–43.
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application’s patent certification and applying the prescribed timeline tied to each type of patent
certification.
Here, Romanette ii means that FDA’s approval of Goprelto provided Genus with a five-
year submission bar. But FDA could approve Lannett’s already-submitted application for
Numbrino on the normal timeline prescribed for 505(b)(2) applications.
How does the Court reach this conclusion? First, note that Romanette ii on its face never
says that a “505(b)(2) application may not be approved before the expiration of five years.” It
bars submissions. 21 U.S.C. § 355(c)(3)(E)(ii) (“[N]o application . . . may be submitted under
subsection (b)[.]” (emphasis added)). The only mention of approval is that the “approval of such
an application shall be made effective in accordance with this paragraph.” Id. As FDA and
Lannett note, this is significant. See Defs.’ Mem. at 27; Lannett’s Mem. at 19, ECF No. 31-1.
Congress showed in the surrounding exclusivity provisions that it “could have easily
expressly barred approvals . . . but it chose not to” in Romanette ii. Lannett’s Reply at 12, ECF
No. 44; see, e.g., 21 U.S.C. § 355(c)(3)(E)(iii) (“[T]he Secretary may not make the approval of
an application submitted under subsection (b) . . . effective before the expiration of three years
from the date of the approval of the application under subsection (b)[.]”); id. § 355(c)(3)(E)(iv)
(same). “Where Congress includes particular language in one section of a statute but omits it in
another section of the same Act, it is generally presumed that Congress acts intentionally and
purposely in the disparate inclusion or exclusion.” Russello v. United States, 464 U.S. 16, 23
(1983) (cleaned up).
Nor has the D.C. Circuit held, as Genus suggests, see Pl.’s Mem. at 35, that Romanette ii
imposes a five-year bar on approvals. In Otsuka Pharmaceutical Co., the D.C. Circuit noted in
the statutory background section of its opinion that “Romanette ii confers an exclusivity period
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of five years, during which ‘no [abbreviated] application which refers to the [first-in-time] drug’
may be approved.” 869 F.3d at 990 (alterations in original). But that case was not about how to
interpret Romanette ii—it involved determining the scope of two other exclusivity provisions in
the FDCA. As FDA argues, see Defs.’ Mem. at 30, this statement is dictum—meant only to
provide context for the other two exclusivity provisions. See In re Grand Jury Investigation, 916
F.3d 1047, 1053 (D.C. Cir. 2019) (“[A] statement not necessary to a court’s holding is dictum.”).
And this dictum does not provide the Court a basis to ignore the statute’s unambiguous text. 4
So what is the scope of Romanette ii? A closer look at the statute’s text and
structure is in order.
B.
Romanette ii begins with a conditional clause: “If an application submitted under
subsection (b) for a drug, no active ingredient . . . of which has been approved in any other
application under subsection (b), is approved after September 24, 1984[.]” 21 U.S.C.
§ 355(c)(3)(E)(ii). All parties agree that Goprelto was such an application, since it was (1) for a
drug using cocaine HCI, which FDA had not approved in any other 505(b) application, and (2)
approved by FDA in 2017. See Defs.’ Mem. at 10; Pl.’s Mem. at 7.
The main clause follows. In sum, it says that no one may submit a subsequent
abbreviated application—a 505(b)(2) NDA—to FDA within five years of FDA’s approval of the
first-in-time drug (i.e., the approved “application under subsection (b)”). See 21 U.S.C.
§ 355(c)(3)(E)(ii). An exception clause follows this main clause: certain applications may be
4
Genus also relies on a parenthetical in the Otsuka district court opinion, which describes 21 U.S.C.
§ 355(c)(3)(E)(ii) as “directing that . . . no subsequent application . . . may be submitted (or approved) for five
years.” Otsuka Pharm. Co. v. Burwell, 302 F. Supp. 3d 375, 384–85 (D.D.C. 2016); see Pl.’s Mem. at 11, 35, 38.
But as with the Otsuka D.C. Circuit opinion, the district court opinion was about the scope of two other exclusivity
provisions—21 U.S.C. § 355(c)(3)(E)(iii) and 355(c)(3)(E)(iv). See Otsuka Pharm Co., 302 F. Supp. 3d at 391.
The opinion’s reference to Romanette ii was in passing, in the background section, not necessary to—or even part
of—the analysis, and therefore is dictum. See id. at 384–85.
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submitted after only four years—505(b)(2) applications that “contain[] a certification of patent
invalidity or noninfringement described in clause (iv) of subsection (b)(2)(A).” Id.
So what is this “certification of patent invalidity or noninfringement”? This is what FDA
calls a “Paragraph IV certification.” See 21 C.F.R. § 314.50(i)(1)(i)(A)(4). Recall that
abbreviated 505(b)(2) applications rely on previously conducted investigations and studies
assessing the safety and effectiveness of one or more previously approved drugs to meet FDA’s
approval requirements. 21 U.S.C. § 355(b)(2). Sometimes, drugs for which those studies were
conducted already have patents associated with them. To ensure that no 505(b)(2) application is
infringing on a patent, the FDCA mandates that every 505(b)(2) application “shall”—along with
all the information required for a stand-alone NDA—“also include a certification . . . with
respect to each patent which claims the drug for which” the 505(b)(2) applicant submitted studies
and reports. Id. The certification must state one of four things: (i) “that such patent information
has not been filed”; (ii) “that such patent has expired”; (iii) “the date on which such patent will
expire,” or (iv) “that such patent is invalid or will not be infringed by the manufacture, use, or
sale of the new drug for which the application is submitted.” Id. § 355(b)(2)(A)(i)–(iv). A
Paragraph IV certification refers to this last option. 21 C.F.R. § 314.50(i)(1)(i)(A)(4).
So Sentence 1’s exception clause means this: if a later application for a competing drug
includes a certification that any patents covering drugs referred to in the studies and reports
submitted by the applicant are invalid or will not be infringed by the new drug, then FDA can
accept the 505(b)(2) application of a competing drug after four years.
Sentence 2 is where the parties most vehemently disagree. It starts with the phrase: “The
approval of such an application[.]” 21 U.S.C. § 355(c)(3)(E)(ii). What does “such an
application” refer to?
11
Genus contends that this phrase refers to the subject of Sentence 1—all subsequent
505(b)(2) applications. Pl.’s Mem. at 37. FDA and Lannett, on the other hand, construe this
phrase as part of a larger “patent clause,” governing only later applications that have a Paragraph
IV certification. Defs.’ Mem. at 30; Lannett’s Mem. at 10–11. Since Lannett’s application for a
competing drug did not have a Paragraph IV certification, they argue Sentence 2 does not apply
here at all. See Lannett’s Reply at 10.
The Court agrees, on this point, with Genus. “The term ‘such,’ when used as an
adjective, . . . nearly always operates as a reference back to something previously discussed.”
Takeda Pharms., U.S.A., Inc. v. Burwell, 78 F. Supp. 3d 65, 99 (D.D.C. 2015). That, of course,
is of limited help since Sentence 1 refers to three applications: the first-in-time application with
exclusivity, the subsequent 505(b)(2) application, and a subset of subsequent applications with
Paragraph IV certifications.
But rules of statutory interpretation clear up this confusion. Under the “Last-Antecedent
Canon,” a “pronoun, relative pronoun, or demonstrative adjective generally refers to the nearest
reasonable antecedent.” See Antonin Scalia & Bryan A. Garner, Reading Law 144 (2012). This
rule would generally support FDA’s reading. The nearest antecedent to “such an application” is
the application referred to in Sentence 1’s exception clause.
But there is an exception to this rule: a pronoun or demonstrative adjective “that is the
subject of a sentence and does not have an antecedent in that sentence ordinarily refers to the
subject of the preceding sentence. And it almost always does so when it is the word that begins
the sentence.” Id. at 146 (emphasis added); see, e.g., Loftus v. United States, 46 F.2d 841, 847
(7th Cir. 1931) (“The phrase ‘such offender’ . . . refers to the subject of that sentence which
immediately precedes that phrase, which is ‘any person violating this act.’”).
12
This exception applies here. Since Sentence 2 begins with the phrase “approval of such
an application,” there is no antecedent in that sentence for “such” to reference. Instead, “such an
application” refers to the preceding sentence and, more specifically, the subject of the preceding
sentence. The subject of the preceding sentence is in the main clause: an “application which
refers to the drug for which the subsection (b) application was submitted and for which the
investigations . . . were not conducted by or for the applicant.” 21 U.S.C. § 355(c)(3)(E)(ii). In
other words, any later competing 505(b)(2) application. For the Court to read “such an
application” the way FDA and Lannett do, it would have to locate the subject of Sentence 1 in
the exception clause. That defies the rules of grammar.
A second rule of statutory interpretation supports this reading. Under the Presumption of
Consistent Usage canon, “[a] word or phrase is presumed to bear the same meaning throughout a
text.” See Scalia & Garner, supra, at 170. Though “such an application” may not share the same
meaning throughout the FDCA (given that the adjective “such” refers to different antecedents
depending on the context), identical phrases in close proximity are, in particular, presumed to
share the same meaning. Brown v. Gardner, 513 U.S. 115, 118 (1994) (explaining that the
presumption of consistent usage is “surely at its most vigorous when a term is repeated within a
given sentence”).
The phrase “such an application” appears not only in Romanette ii, Sentence 2, but also
in Sentence 1’s exception clause. See 21 U.S.C. § 355(c)(3)(E)(ii). Sentence 1 creates a five-
year submission bar for 505(b)(2) applications, “except that such an application may be
submitted under subsection (b) after the expiration of four years” if it includes a Paragraph IV
certification. Id. (emphasis added). There, the phrase “such an application” cannot reasonably
be read to refer to anything besides any subsequent 505(b)(2) application—the subject of
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Sentence 1. That Congress chose to use the same phrase again in the next sentence, without
further clarification, suggests that it meant to refer to the same type of application in both
instances.
The structure of Romanette ii confirms this reading. The two sentences in Romanette ii
follow the same pattern. Sentence 1, addressing submission of any subsequent 505(b)(2)
application, says that no subsequent 505(b)(2) application can be submitted within five years of
the first-in-time application. Id. It then provides a timing exception for applications with
Paragraph IV certifications. Id. Sentence 2 explains that approval of subsequent 505(b)(2)
applications will be made effective “in accordance with this paragraph.” Id. It then provides
another timing exception for applications with Paragraph IV certifications: “except that, if an
action for patent infringement is commenced . . . the thirty-month period referred to in
subparagraph (C)”—which refers to Paragraph IV certifications—“shall be extended.” Id.The parallel structure of these two provisions confirms that Congress did not narrow the
sweep of “such an application” in Sentence 2 to mean only Paragraph IV certification
applications. Sentence 1 applies to submissions and Sentence 2 applies to approvals—with both
sentences providing timing exceptions for applications with Paragraph IV certifications.
So the first phrase of Sentence 2 means “approval of subsequent competing 505(b)
applications.” Then what? The parties agree on the meaning of the next phrase, “shall be made
effective.” See Lannett’s Suppl. at 3; Pl.’s Suppl. at 5. Congress used this phrase throughout
Section 355 and generally had it precede a statement about a specific timeframe. For instance,
directly after Romanette ii, in 21 U.S.C. § 355(c)(3)(E)(iii) and (iv), the statute provides that the
Secretary “may not make the approval of” a different type of application “effective before the
expiration of three years” after the approval of the first-in-time drug. Or consider 21 U.S.C.
14
§ 355(c)(3)(C), which says that another application’s “approval shall be made effective
immediately.” See also, e.g., 21 U.S.C. § 355(c)(3)(C)(ii)(II) (“[T]he approval shall be made
effective on the date specified by the district court in a court order[.]”); id. § 355(j)(5)(B)(iii)
(“[T]he approval shall be made effective upon the expiration of the thirty-month period[.]”).
So when Romanette ii says that “such an application shall be made effective,” the reader
expects the next phrase to state a timeframe. It does not—at least at first blush. Instead, it says
“in accordance with this paragraph.” Id. § 355(c)(3)(E)(ii). So what does “this paragraph”
mean?
“Congress often drafts statutes with hierarchical schemes—section, subsection,
paragraph, and on down the line.” NLRB v. SW Gen., Inc., 137 S. Ct. 929, 938–39 (2017).
Throughout the FDCA and, particularly in Section 355, “Congress used that structure . . . and
relied on it to make precise cross-references. When Congress wanted to refer only to a
particular subsection or paragraph, it said so.” Id. at 939 (describing the Federal Vacancies
Reform Act); see, e.g., 21 U.S.C. § 355(a) (referring to applications filed under “subsection (b)
or (j)”); id. § 355(b)(2) (referring to applications submitted “under paragraph (1)”).
The word “paragraph,” then, is a legislative term of art, meaning the third level of a
statute—i.e., a “subdivision of a subsection.” See M. Douglass Bellis, Statutory Structure and
Legislative Drafting Conventions 8 (Fed. Jud. Ctr. 2008), https://www.fjc.gov/sites
/default/files/2012/DraftCon.pdf. In Section 355, “paragraphs” are marked by Arabic numbers.
See, e.g., 21 U.S.C. § 355(b)(2) (referring to applications submitted “under paragraph (1)”).
Subparagraphs and clauses—the next two levels of the statute—are noted by capitalized letters
and romanettes, respectively.
15
The sentence at issue appears in Section 355, subsection (c), paragraph (3), subparagraph
(E), clause (ii). So when Romanette ii says “in accordance with this paragraph,” it refers the
reader back to 21 U.S.C. § 355(c)(3). That paragraph, in turn, provides timelines for approval of
applications filed under Section 355(b)(2), depending on the type of patent certification included.
More specifically, Romanette ii instructs FDA to refer to the timelines prescribed in 21
U.S.C. 355(c)(3)(A)–(C). Section 355(c)(3) begins with this instruction:
The approval of an application filed under subsection (b) which contains a
certification required by paragraph (2) of such subsection shall be made effective
on the last applicable date determined by applying the following to each
certification made under subsection (b)(2)(A)[.]
Immediately following this instruction, Subparagraphs (A), (B), and (C) provide three
timelines—all tied to an application’s “certification made under subsection (b)(2)(A).” If the
applicant certified that “such patent information has not been filed” or that “such patent has
expired,” (i.e. “a certification described in clause (i) or (ii) of subsection (b)(2)(A)”), then
“approval may be made effective immediately.” Id. § 355(c)(3)(A). A Paragraph III
certification—providing “the date on which such patent will expire,” id. § 355(b)(2)(A)(iii)—
may not be approved until “the date certified” that the patent will expire. Id. § 355(c)(3)(B).
Finally, an application with a Paragraph IV certification “shall be made effective immediately
unless . . . an action is brought for infringement of the patent that is the subject of the
certification.” Id. § 355(c)(3)(C). Then approval is not effective until “the expiration of the
thirty-month period beginning on the date of the receipt of the notice provided under subsection
(b)(3) or such shorter or longer period as the court may order.” Id.
So Romanette ii’s instruction that “approval” be “made effective in accordance with this
paragraph” means that FDA should refer to the subsequent 505(b)(2) application’s patent
certification to determine the timeline for approval of that application.
16
This makes sense. But even clearer language in the parallel provision of Section 355
bolsters this reading. As Genus and FDA recognize, the FDCA contains a substantially identical
provision to Romanette ii that applies to ANDAs. See Pl.’s Reply at 34 n.8, ECF No. 38; Defs.’
Mem. at 30 n.12; 21 U.S.C. § 355(j)(5)(F)(ii) (“ANDA Clause”). This clause, though, has a
slight variation in its language. Rather than say that approval “shall be made effective in
accordance with this paragraph,” 21 U.S.C. § 355(c)(3)(E)(ii) (emphasis added), it says approval
“shall be made effective in accordance with subparagraph (B),” id. § 355(j)(5)(F)(ii) (emphasis
added).
Section 355(j)(5)(B) (i.e., “Subparagraph (B)”), in turn, directly mirrors the language of
Section 355(c)(3). Compare id. § 355(j)(5)(B), with id. § 355(c)(3). It directs FDA to reference
the patent certification contained in the application to find the timeline for approval. It then
provides three clauses—21 U.S.C. § 355(j)(5)(B)(i)–(iii)—that provide the same timeframes as
21 U.S.C. § 355(c)(3)(A)–(C). The ANDA clause—by referencing Subparagraph (B)—certainly
was directing the reader to a different portion of the statute to find the timeline for approval. So
why should the Court read the reference to “this paragraph” in 21 U.S.C. § 355(c)(3)(E)(ii) any
differently?
Indeed, FDA’s own regulations support this reading. Under the heading “Submission of
and timing of approval of a 505(b)(2) application or ANDA,” FDA’s regulations explain the
following about Romanette ii’s submission bar:
If a drug product that contains a new chemical entity was approved after
September 24, 1984, in an NDA submitted under section 505(b) of the Federal
Food, Drug, and Cosmetic Act, no person may submit a 505(b)(2) application or
ANDA under section 505(j) of the Federal Food, Drug, and Cosmetic Act for a
drug product that contains the same active moiety as in the new chemical entity
for a period of 5 years from the date of approval of the first approved NDA,
except that the 505(b)(2) application or ANDA may be submitted after 4 years if
17
it contains a certification of patent invalidity or noninfringement described in
§ 314.50(i)(1)(i)(A)(4) or § 314.94(a)(12)(i)(A)(4).
21 C.F.R. § 314.108(b)(2). The very next paragraph describes Romanette ii’s instruction for
approval of 505(b)(2) applications:
The approval of a 505(b)(2) application or ANDA described in paragraph
(b)(2) of this section [i.e., 21 C.F.R. § 314.108(b)(2)] will occur as provided in §
314.107(b)(1) or (2), unless the owner of a patent that claims the drug, the patent
owner’s representative, or exclusive licensee brings suit for patent infringement
against the applicant during the 1-year period beginning 48 months after the date
of approval of the NDA for the new chemical entity and within 45 days after
receipt of the notice described at § 314.52 or § 314.95, in which case, approval of
the 505(b)(2) application or ANDA will occur as provided in § 314.107(b)(3).
Id. § 314.108(b)(3) (emphasis added). Note, first, that FDA’s regulation itself interprets
Romanette ii’s reference to “such an application” as “approval of a 505(b)(2) application
. . . described in paragraph (b)(2) of this section.” Id. In other words, any subsequent 505(b)(2)
application. The regulation does not limit its approval instruction to 505(b)(2) applications that
have Paragraph IV certifications.
Second, the regulation points FDA to a different regulation to determine the timeline for
approval of these subsequent 505(b)(2) applications: 21 C.F.R. § 314.107(b)(1) or (2). Section
314.107(b) says that:
As described in paragraphs (b)(1) and (2) of this section, the status of patents listed
for the listed drug(s) relied upon or reference listed drug, as applicable, must be
considered in determining the first possible date on which a 505(b)(2) application
or ANDA can be approved.
Section 314.107(b)(1)(i) then explains that a “505(b)(2) application or ANDA may be approved
. . . [i]mmediately, if the applicant certifies . . . that:
(A) The applicant is aware of a relevant patent but the patent information required
under section 505(b) or (c) of the Federal Food, Drug, and Cosmetic Act has not
been submitted to FDA; or
(B) The relevant patent has expired; or
(C) The relevant patent is invalid, unenforceable, or will not be infringed, except
as provided in paragraphs (b)(3) and (c) of this section, and the 45–day period
18
provided for in section 505(c)(3)(C) and (j)(5)(B)(iii) of the Federal Food, Drug,
and Cosmetic Act has expired; or
(D) There are no relevant patents.
Clauses (ii) and (iii) provide the timelines for 505(b)(2) applications with Paragraph III
and Paragraph IV certifications. See id. § 314.107(b)(1)(ii)–(iii).
See the parallels? FDA’s regulations explain that subsequent competing 505(b)(2)
applications are barred from submission for five (or four) years and that those same applications
are approved according to the type of patent certification in the application.
So even if the Court were to proceed to “Chevron step two” and defer to FDA’s
reasonable interpretation of Romanette ii, the result would be the same. The Court does not
defer to the litigation position in the agency’s briefs, but only to an “agency interpretation” that
“was promulgated in the exercise of [delegated] authority”—i.e., rules and regulations. Miller v.
Clinton, 687 F.3d 1332, 1341 (D.C. Cir. 2012). Here, the FDA’s promulgated regulations
support the Court’s interpretation of Romanette ii, even if FDA’s litigation position does not.
C.
The parties agree with this analysis—to a point. In supplemental briefing, all admit that
“this paragraph” indeed means 21 U.S.C. § 355(c)(3), not specifically 21
U.S.C. § 355(c)(3)(E)(ii). See Pl.’s Suppl. at 5; Lannett’s Suppl. at 3; Defs.’ Suppl. at 7
(accepting, but not explicitly affirming the Court’s interpretation).
But that is where the agreement ends. Despite the Court’s interpretation and FDA’s own
regulations, the parties do not think that the Court should use the timelines prescribed in
Subparagraphs (A), (B), and (C) to determine when FDA should have approved Numbrino.
Here’s why.
19
FDA and Lannett suggest Subparagraphs (A), (B), and (C) cannot apply to Numbrino
because Lannett did not submit a patent certification with its 505(b)(2) application. Defs.’
Suppl. at 7; Lannett’s Suppl. at 2. FDA, specifically, notes that Paragraph 3’s directives apply
only to “an application filed under subsection (b) which contains a certification required by
paragraph (2) of such subsection.” Defs.’ Suppl. at 7 (emphasis in original). So since “Lannett’s
application does not contain a patent certification, none of the approval timelines in
subparagraphs (A)–(C) of Paragraph 3 is applicable.” Id.This is perplexing, since FDA implies that a patent certification is an optional part of a
505(b)(2) application. It is not. The FDCA explains that a 505(b)(2) application “shall also
include . . . a certification” that the “patent information has not been filed,” that the patent “has
expired,” that the patent “will expire” on a specific date, or that the patent “is invalid or will not
be infringed.” 21 U.S.C. § 355(b)(2)(A)(i)–(iv); see Pl.’s Suppl. at 6 (“Every drug sponsor
submitting a 505(b)(2) application . . . includes as part of its application patent certifications
under Paragraph (b)(2) and applicable regulations.”).
The FDA’s regulations agree:
A 505(b)(2) application must contain the following: . . . .
If, in the opinion of the applicant and to the best of its knowledge, there are no
patents described in paragraph (i)(1)(i) of this section, a certification in the
following form:
In the opinion and to the best knowledge of (name of applicant), there are no
patents that claim the drug or drugs on which investigations that are relied upon in
this 505(b)(2) application were conducted or that claim a use of such drug or
drugs.
21 C.F.R. § 314.50(i)(1)(ii). Applications with this certification are viewed as Paragraph I
certifications (i.e., a certification “that such patent information has not been filed”) and are
approved immediately in accordance with 21 U.S.C. § 355(c)(3)(A) and 21 C.F.R.
20
§ 314.107(b)(1)(i)(D). See Pl.’s Suppl. at 7 n.3. It is unclear why here in litigation, FDA takes a
position so clearly in opposition to its regulations. See Nat’l Envtl. Dev. Ass’ns Clean Air
Project v. EPA, 752 F.3d 999, 1009 (D.C. Cir. 2014) (“It is axiomatic . . . that an agency is
bound by its own regulations.” (cleaned up)).
Indeed, even in its supplemental brief, FDA fails to emphasize the critical language of
Section 355(c)(3). Paragraph 3 applies to “an application filed under subsection (b) which
contains a certification required by paragraph (2) of such subsection.” 21 U.S.C. § 355(c)(3)
(emphasis in FDA’s brief, underlining added). True, not every application filed under
“subsection (b)” requires a certification. For instance, stand-alone applications filed under
505(b)(1) would have no need to include a patent certification since they do not rely on anyone
else’s studies or reports. But “paragraph (2)”—that is, 505(b)(2)—applications require that
certification. See id. § 355(b)(2)(A).
As FDA and Lannett acknowledge, Lannett did not submit a patent certification. Instead,
FDA’s assessment form for Lannett’s Numbrino application checks a box under “Patent
Certification/Statements” that says, “No patent certifications are required (e.g., because
application is based solely on published literature that does not cite a specific innovator
product).” J.A. at 1788. Strangely, though every other option for “Patent
Certification/Statements” on the form provides a statutory or regulatory basis for that option, this
one option cites no regulatory or statutory basis. Id. 5 It is thus unclear on what basis FDA could
justify accepting a 505(b)(2) application without a certification. If, as Lannett and FDA claim,
there were no patents covering the studies relied on for Numbrino, Lannett should have, at least,
filed a certification saying there were “[n]o relevant patents.” See 21 C.F.R. § 314.50(i)(1)(ii).
5
It is also unclear what the distinction is between this option and the seventh option on the form: “21 CFR
314.50(i)(1)(ii): No relevant patents.” J.A. at 1788.
21
Nor does the Court agree with Lannett’s alternative interpretation of the phrase “shall be
made effective in accordance with this paragraph.” According to Lannett, Congress did not
really mean to refer the reader to Paragraph 3. Lannett’s Suppl. at 3. It says that “this
paragraph” refers only to Section 355(c)(3)(C). Id. Indeed, it needs to argue this because of how
it defines “such an application” at the beginning of Sentence 2. If “such an application” means,
as Lannett says, a “505(b)(2) application with a Paragraph IV certification,” then it would make
little sense for Congress to broadly direct the reader back to all of Section 355(c)(3), which
includes timelines for applications with all types of certifications.
Lannett’s argument faces another problem, though. If Congress wanted to refer to
Subparagraph (C), it would have done so. In Romanette ii, Sentence 2 itself, Congress homes in
on Subparagraph (C), citing it in the exception clause. See 21 U.S.C. § 355(c)(3)(E)(ii). It
would be odd for Congress to refer to this subparagraph as “this paragraph” at the beginning of
the sentence, only to refer to it again as “subparagraph (C)” a few words later.
Genus disagrees with the Court for a different reason. While it affirms that “this
paragraph” refers to Paragraph 3, it notes that Paragraph 3 contains more than just
Subparagraphs (A)–(C). Pl.’s Suppl. at 7. FDA must also consider Subparagraphs (D)–(E), it
argues, when trying to determine Numbrino’s approval timeline, since Paragraph 3 states that
“[t]he approval . . . shall be made effective on the last applicable date.” Id. at 7–9 (citing 21
U.S.C. § 355(c)(3)). Romanette ii (in Subparagraph E), it argues, “also contains an ‘applicable
date’ for approvals: Five years.” Id. at 8.
Under this reading, Genus argues Romanette ii would block Numbrino’s approval for
five years. But three clues suggest this clause lacks the applicable timeline for approval. First, if
Congress wanted FDA to apply the five- or four-year submission bar timeline to approvals of
22
subsequent 505(b)(2) applications, there is no reason for it to refer to Paragraph 3. It would have
just said “approvals shall be made effective in accordance with this clause” or “clause (ii).”
Genus provides no reasoned explanation for why it would refer to the timeline in Romanette ii
through such a round-about way as Genus proposes.
Second, reading the prefacing text of Paragraph 3 as applying only to Subparagraphs (A)–
(C) matches the parallel provisions in the ANDA section of the statute. Recall that the
equivalent ANDA provision of Romanette ii refers the reader to the timelines “in accordance
with subparagraph (B).” 21 U.S.C. § 355(j)(5)(F)(ii). Subparagraph (B) and the next three
clauses (i)–(iii) provide the approval timeline for an ANDA, depending on the type of patent
certification in the application. Id. § 355(j)(5)(B). Notably, the ANDA exclusion clauses do not
appear under Subparagraph (B). They appear in their own subparagraph—Subparagraph (F).
See id. § 355(j)(5)(F). In other words, the parallel ANDA provisions show that Congress did not
mean to sweep Subparagraph (E) exclusions into the timelines provided under 21 U.S.C.
§ 355(c)(3).
Genus argues that this difference in structure was intentional. Pl.’s Suppl. at 12. It
submits that, since ANDAs can never be submitted before approval of a drug with NCE
exclusivity (there would be no pre-existing drug to copy), “the ANDA [NCE exclusivity]
provision’s bar on submissions functions automatically to bar approvals for five years.” Id. So
there was no need for Congress to “generally subject ANDA approvals to the limits of the
ANDA NCEE provision[;] . . . the 5-year submission bar already provided a 5-year approval
bar.” Id. at 13 (emphasis in original).
Perhaps so. But this explanation still does not grapple with the statutory language in
Paragraph 3—which is the third reason Subparagraph (E) does not provide the applicable
23
timeline. Paragraph 3—before reaching Subparagraphs (A)–(C)—says that “approval . . . shall
be made effective on the last applicable date determined by applying the following to each
certification made under subsection (b)(2)(A).” 21 U.S.C. § 355(c)(3) (emphasis added).
Subparagraphs (A)–(C) then provide three timelines for approval based on each application’s
patent certification. Id. § 355(c)(3)(A)–(C). Subparagraphs (D) and (E)—though they appear at
the same “subparagraph” level—clearly address different aspects of 505(b) applications, “[c]ivil
action[s] to obtain patent certainty” and exclusivity periods. Id. § 355(c)(3)(D)–(E).
Finally, even if Genus were correct that Subparagraph (E) should be considered as part of
“this paragraph,” it still would not provide the result Genus wants. Nothing in Romanette ii bars
approvals for five- or four-year periods. So even if FDA considered Subparagraph (E) in its
search for the applicable timeline under “this paragraph,” Romanette ii of Subparagraph (E)
would not provide a later “applicable date.”
D.
Along with its statutory construction arguments, Genus raises a policy reason for why
Romanette ii should be read to block approval during the exclusivity period. Congress created
exclusivity periods to incentivize innovation and to reward “drug makers who develop drugs
containing an active ingredient that is not a component of an existing FDA-approved drug.”
Pl.’s Mem. at 10. And Congress, it claims, intended Romanette ii to be the “‘FDCA’s broadest
grant of marketing exclusivity . . . commensurate with the degree of innovation required to’
[obtain it].” Id. (citing Otsuka Pharm. Co., 869 F.3d at 990, 993).
But, it reasons, how could Romanette ii be “FDCA’s broadest grant of marketing
exclusivity,” if it does not bar approvals? Other surrounding provisions in the FDCA
unequivocally prohibit approval of competing applications. See, e.g., 21 U.S.C.
24
§ 355(c)(3)(E)(iii). If the Court interprets those provisions to “reach more broadly than”
Romanette ii, the Court would “undermine Congress’s intent.” Pl.’s Mem. at 39 (emphasis
omitted).
But in most cases, Romanette ii does provide NCE exclusivity holders with a broader
grant of exclusivity than other provisions. As Genus itself recognizes, “a bar on ‘submission’ is
even broader than a bar on FDA ‘approvals’—it means the second-in-time applicant cannot even
begin the lengthy FDA review process, and so cannot be ready for approval on the day after the
exclusivity period ends, as frequently occurs under other forms of exclusivity.” Id. at 12.
This case is a rare exception—likely one that Congress did not even contemplate. 6
Indeed, “FDA is not aware of another set of ‘dueling’ 505(b)(2) applications since 1984.” J.A. at
1925. That is because, generally, NCE exclusivity protects development of “novel, heretofore
unknown molecule[s].” Defs.’ Mem. at 32. It would be a strange coincidence for two
companies at the same time to develop the same NCE and apply to FDA.
Here, Genus and Lannett both submitted applications for a drug using cocaine which “has
been known and used for various purposes as a drug for well over a century.” Id. Their dueling
applications set an unexpected stumbling block for Genus—since Lannett submitted its
application before Genus’s approval date, Romanette ii’s broad exclusivity provision did not
apply.
Perhaps this is a loophole. But it is not the Court’s loophole to close. A court’s role is
“to interpret the language of the statute enacted by Congress, not to improve upon it.” Eagle
Pharms., Inc. v. Azar, 952 F.3d 323, 340 (D.C. Cir. 2020) (cleaned up).
6
As Genus points out in supplemental briefing, there are contextual clues that Congress may have assumed that
approval would always follow the five-year submission bar. Pl.’s Suppl. at 9–10. Even so, the Court cannot ignore
what Congress actually said: Romanette ii’s exclusivity period extends only to submission, not approval, of
competing drug applications.
25
***
So what does all this mean for this case?
First, it means that Genus is mistaken that its NCE exclusivity bars submission and
approval of subsequent 505(b)(2) applications. Romanette ii bars submission of competing
505(b)(2) applications but does not bar their approval.
More, it means that FDA also misapplied Romanette ii. Despite the language of the
statute, FDA claims that “Romanette ii does not require FDA to approve Lannett’s application
within the timelines prescribed in Paragraph 3.” Defs.’ Suppl. at 4. The Court disagrees. The
plain language of Romanette ii and Paragraph 3 makes approval of a subsequent 505(b)(2)
application effective based on that subsequent application’s patent certification. Based on
FDA’s own representations, it did not consider the timelines prescribed in Paragraph (3) when it
approved Numbrino.
IV.
“Under settled principles of administrative law, when a court reviewing agency action
determines that an agency made an error of law, the court’s inquiry is at an end[.]” PPG Indus.
v. United States, 52 F.3d 363, 365 (D.C. Cir. 1995). FDA correctly determined that Genus’s
exclusivity period did not bar it from approving Numbrino. But by misinterpreting the approval
clause of Romanette ii, it failed to provide a reasoned explanation to this Court for when
Lannett’s application could properly be approved under the FDCA. The Court will thus deny
summary judgment for FDA and Lannett and grant it, in part, to Genus on Count III. A separate
Order will issue.
2020.09.15
16:14:49 -04'00'
Dated: September 15, 2020 TREVOR N. McFADDEN, U.S.D.J.
26