Hill Dermaceuticals, Inc. v. U.S. Food and Drug Administration

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
_______________________________________
)
HILL DERMACEUTICALS, INC., )
Plaintiff, )
)
v. ) Civil Action No. 11-1950 (RCL)
)
U.S. FOOD AND DRUG )
ADMINISTRATION, et al., )
Defendants, )
)
and )
)
AMNEAL PHARMACEUTICALS, LLC, )
Intervenor-Defendant. )
_______________________________________)
MEMORANDUM OPINION
Plaintiff Hill Dermaceuticals, Inc. (“Hill”) has brought this action against the U.S. Food
and Drug Administration (“FDA”), the U.S. Department of Health and Human Services
(“HHS”), Kathleen Sebelius, in her official capacity as Secretary of HHS, and Margaret
Hamburg, M.D., in her official capacity of Commissioner of FDA. Amneal Pharmaceuticals,
LLC (“Amneal”) has intervened as a defendant. Hill manufactures fluocinolone acetonide
topical oil products under the brand names Derma-Smoothe/FS (Body Oil and Scalp Oil) and
Derm-Otic Oil Ear Drops. On October 17, 2011, the FDA approved requests by Identi Pharms,
Inc. (“Identi”) to market purported generic versions of these fluocinolone acetonide products.
Hill seeks to enjoin the FDA to withdraw or suspend its approval of the three abbreviated new
drug applications (“ANDAs”) submitted by Identi on the basis that the approval contravenes the
sameness requirements, the misbranding restrictions, and the bioequivalence requirements of the
Food, Drug, and Cosmetic Act and its implementing regulations. 21 U.S.C. §§ 355(j)(2)(A)(v),
355(j)(2)(A)(iv), 352(a); 21 C.F.R. §§ 314.94(a)(8)(iv), 320.1, 320.22(b). Hill also claims that
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FDA’s approval of Identi’s three ANDAs constitutes arbitrary and capricious agency action in
violation of the Administrative Procedure Act. 5 U.S.C. § 706.
Before the Court is plaintiff’s Motion [3] for a preliminary injunction. Upon
consideration of plaintiff’s Motion, Federal defendants’ opposition [25], intervenor defendant’s
opposition [40], plaintiff’s reply [27], Federal defendants’ surreply [42], the arguments made in
open court on November 29, 2011, the entire record in this case, and the applicable law, the
Court will DENY plaintiff’s Motion [3] for a preliminary injunction. The Court will explain its
reasoning in the analysis that follows.
I. BACKGROUND
A. Statutory and Regulatory Framework
1. New Drug Applications and Abbreviated New Drug Applications
Under the Federal Food, Drug, and Cosmetic Act (“FDCA”), 21 U.S.C. § 301 et seq.,
pharmaceutical companies seeking to market “pioneer” or “innovator” drugs must first obtain
FDA approval by filing a new drug application (“NDA”). 21 U.S.C. § 335(a), (b). The NDA
must contain extensive scientific data and other information, including investigative reports
demonstrating the drug’s safety and effectiveness, a statement of the drug’s components, and
specimens of proposed labeling for the packaging of the drug. 21 U.S.C. § 335(b)(1).
The Drug Price Competition and Patent Term Restoration Act of 1984 (“Hatch-Waxman
Amendments”), codified at 21 U.S.C. § 355 and 35 U.S.C. §§ 156, 271, and 282, permits the
submission of abbreviated new drug applications (“ANDAs”) for approval of generic versions of
drug products with approved NDAs. 21 U.S.C. § 355(j). The Hatch-Waxman Amendments
were intended to balance encouraging innovation in drug development with accelerating the
availability of lower cost generic alternatives to innovator drugs. See H.R. Rep. No. 98-857 (Part
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I), 98th Cong., 2d Sess. at 14–15 (1984), reprinted in 1984 U.S.C.C.A.N. 2547–48; see also Tri-
Bio Labs., Inc. v. United States, 836 F.2d 135, 139 (3d Cir. 1987).
2. ANDA Approval Requirements
To obtain approval, ANDA applicants are not required to submit clinical evidence to
establish the safety and effectiveness of the generic drug product. Rather, an ANDA references
an approved drug—the reference listed drug (“RLD”)—and relies on FDA’s previous finding
that the RLD is safe and effective. Additionally, an ANDA applicant must provide sufficient
information to show that the generic drug product has the same active ingredient or ingredients,
dosage form, route of administration, and strength as the RLD. 21 U.S.C. § 355(j)(2)(A)(ii),
(iii). An ANDA application must also demonstrate that its product is bioequivalent to the RLD
and has the same labeling as the RLD. 21 U.S.C. §§ 355(j)(2)(A)(iv), (v). The agency must
approve an ANDA unless it finds, among other things, that the ANDA has not provided
sufficient evidence of the foregoing. 21 U.S.C. § 355(j)(4).
The FDCA requires that an ANDA contain “information to show that the labeling
proposed for the new [generic] drug is the same as the labeling approved for the listed drug . . .
except for changes required because of differences approved under a petition filed under [21
U.S.C. § 355(j)(2)(C)] or because the new drug and the listed drug are produced or distributed by
different manufacturers.” 21 U.S.C. § 355(j)(2)(A)(v). Permissible labeling differences include
“differences in expiration date, formulation, bioavailability, . . . [or] labeling revisions made to
comply with current FDA labeling guidelines or other guidance.” 21 C.F.R. § 314.94(a)(8)(iv).
The FDCA also requires an ANDA to include information showing that the generic drug
product is bioequivalent to the pioneer drug product. 21 U.S.C. §§ 355(j)(2)(A)(iv), (j)(4)(F); 21
C.F.R. §§ 314.127(a)(6)(i), 314.94(a)(7). A drug is considered to be bioequivalent if “the rate
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and extent of absorption of the drug do not show a significant difference from the rate and extent
of absorption of the listed drug.” 21 U.S.C. § 355(j)(8)(B)(i). FDA regulations further define
bioequivalence as “the absence of a significant difference in the rate and extent to which the
active ingredient or active moiety in pharmaceutical equivalents or pharmaceutical alternatives
becomes available at the site of drug action when administered at the same molar dose under
similar conditions in an appropriately designed study.” 21 C.F.R. § 320.1(e). The FDA will
grant a bioequivalence waiver—that is, the FDA will not require the submission of evidence
obtained in vivo measuring bioequivalence of the two products—if the generic drug product: (1)
“is a solution for application to the skin, an oral solution, elixir, syrup, tincture, a solution for
aerosolization or nebulization, a nasal solution, or similar other solubilized form”; (2) “contains
an active drug ingredient in the same concentration and dosage form as a drug product that is the
subject of an approved full new drug application or abbreviated new drug application”; and (3)
“contains no inactive ingredient or other change in formulation from the drug product . . . that
may significantly affect absorption of the active drug ingredient.” 21 C.F.R. § 320.22(b)(3)(i)–
(iii).
Furthermore, each ANDA must include “the specifications necessary to ensure the
identity, strength, quality, and purity of the drug substance . . . including, for example, tests [and]
analytical procedures.” 21 C.F.R. § 314.50(d)(1); 21 C.F.R. § 314.94(a)(9)(i). An applicant
must submit copies of analytical procedures and related descriptive information “that are
necessary for FDA’s laboratories to perform all necessary tests on the samples and to validate the
applicant’s analytical procedures,” including “a detailed description of the methods of analysis
[and] supporting data for accuracy, specificity, precision and ruggedness.” 21 C.F.R. §
314.50(e)(2)(i). FDA’s regulations include provisions to ensure the accuracy, reliability,
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suitability, and reproducibility of an applicant’s test methods. See 21 C.F.R. §§ 211.165(e),
211.194(a)(2).
B. Factual Background
1. Hill’s Fluocinolone Acetonoide Products
FDA first approved Hill’s NDA for Derma-Smoothe (fluocinolone acetonide 0.01%
topical oil) on February 3, 1988. Hill’s NDA includes Body Oil, Scalp Oil, and Oil Ear Drops,
even though they are separate products. Derma-Smoothe Body Oil is indicated to topically treat
atopic dermatitis for adult patients and some pediatric patients with moderate to severe atopic
dermatitis. Derma-Smoothe Scalp Oil is indicated to treat scalp psoriasis on adult patients.
DermOtic Oil Ear Drops are indicated to treat chronic eczematous external otitis in adults and
pediatric patients two years of age and older. These products are intended for local, topical use
and are not intended to be systemically absorbed. FDA has designated Derma-Smoothe as the
RLDs for generic fluocinolone acetonide topical oil products.
Hill’s Derma-Smoothe products include peanut oil that has been refined in accordance
with the United States Pharmacopeia-National Formulary (“USP-NF”) standard. When Hill
submitted a supplement to its NDA in 1998, FDA requested that Hill improve its testing of the
Derma-Smoothe product because the then-current USP-NF monograph for peanut oil did not
include enough information to ensure that the peanut oil would be sufficiently free of peanut
protein. Hill therefore changed its testing to a non-proprietary, commercially available
“sandwich” enzyme-linked immunosorbent assay (S-ELISA) method to detect residual peanut
proteins. FDA subsequently approved Hill’s NDA supplement, including product labeling
stating that the peanut oil used in the Derma-Smoothe product was routinely tested for peanut
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proteins using the S-ELISA test and representing that this test could detect peanut proteins to as
low as 2.5 parts per million (ppm).
In 2007, Hill submitted another supplement to its NDA in which it proposed to use an
amino acid analysis instead of the S-ELISA test, claiming that the amino acid analysis was even
more sensitive than the S-ELISA test. This change was not mandated by the FDA, but the FDA
approved Hill’s supplement. As a result, the current product labeling on Derma-Smoothe
includes the following statement: “The peanut oil used in Derma-Smoothe/FS is tested for peanut
proteins through amino acid analysis which can detect the quantity of amino acids to below 0.5
parts per million.”
In March 2008, FDA decided to review Hill’s amino acid analysis and asked Hill to
provide method validation packages for Hill’s S-ELISA and amino acid tests, plus support for
Hill’s assertion that the amino acid test “provides for increased safety for the peanut oil
component and the drug product.” Upon review of the materials submitted by Hill, FDA
determined that neither the S-ELISA test nor the amino acid test had been appropriately
validated to reliably quantify residual proteins in peanut oil.
2. Hill’s Citizen Petition
In September 2004, Hill submitted a citizen petition to FDA requesting that FDA
withhold approval of any ANDA for generic versions of Derma-Smoothe products unless it
required an ANDA applicant to conduct clinical tests. Hill also requested that FDA require
ANDA applicants to meet a 0.5 ppm upper limit for peanut protein in the refined peanut oil
vehicle, to be demonstrated by using a test that is validated and capable of quantifying very low
levels of peanut protein. See Compl. Ex. G (“Citizen Petition Response”), at 1–2.
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In its response to Hill’s citizen petition, issued in March 2009, the FDA denied Hill’s
request that FDA automatically reject any ANDA unless the labeling is identical to the RLD
concerning the amount of peanut protein in the excipient and the test to identify that amount. See
Citizen Petition Response, at 12. FDA based its decision on portions of the FDCA and FDA
regulations providing that a labeling difference between the generic drug product and the RLD
may permissibly reflect a difference in manufacturers. See id. (citing 21 U.S.C. §§
355(j)(2)(A)(v), 355(j)(2)(G); 21 C.F.R. § 314.94(a)(8)(iv)).
FDA also rejected Hill’s request that FDA: (1) require ANDA applicants to demonstrate
that their formulations do not cause an allergic reaction in peanut-sensitive patients and conduct
studies on peanut-sensitive patients to establish the safety of their products, (2) set an upper limit
for the amount of residual peanut protein, and (3) require ANDA applicants to demonstrate that
their peanut oil meets this specification using a test that is “validated and capable of quantifying
very low levels of peanut protein.” See id. at 24. FDA stated that it would be sufficient for an
applicant to establish that its topical product is made from peanut oil that has been fully refined
in accordance with the updated USP-NF standard, because that standard adequately ensures the
safety of the peanut oil for the indications in question. See id. at 24–25. FDA cited a number of
recently published studies supporting its conclusion that the USP-NF refining process—which
had been updated since the agency had approved Hill’s NDA supplement regarding peanut
protein in 1999—would reduce peanut protein to an acceptable level for the indications at issue.
See id. at 27–28. FDA thus concluded that a manufacturer of fluocinolone acetonide topical oil
must merely ensure that the peanut oil used is fully refined and meets the USP-NF standard,
declining to require an additional test to quantify protein in refined peanut oil because it would
not improve the safety of products formulated with this excipient. See id. at 30.
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FDA also denied Hill’s request that the agency require ANDA applicants to conduct
clinical safety studies on peanut-sensitive patients to establish the safety of the peanut oil used in
their products, concluding that the process controls included in the USP-NF specification were a
more reliable means to ensure the safety of each batch. See id. at 31.
3. Derma-Smoothe Labeling
At the time FDA responded to Hill’s citizen petition, Hill had two supplemental NDAs
pending before the agency related to the labeling format, the statement regarding the amino acid
test for peanut protein, and Hill’s effort to validate the amino acid test. Based on its conclusions
in the Citizen Petition Response, in March 2009 FDA declined to approve one supplement
because Hill’s amino acid test remained unvalidated. See Fed. Defs.’ Opp. Ex. 6. FDA
subsequently requested that Hill revise its labeling to remove references to the testing method
and the amount of peanut protein in the product. In September 2009, FDA determined that the
second supplement was not approvable because Hill declined to make FDA’s requested changes
to Hill’s product labeling. See Fed. Defs.’ Opp. Ex. 7.
Instead of making the labeling changes that FDA requested in 2009, Hill has requested—
and FDA has granted—multiple extensions in order to respond to FDA’s September 2009
response letter, claiming that it needs more time to validate its amino acid test method. See Fed.
Defs.’ Opp. Ex. 8. Hill’s deadline to respond to the FDA is now September 30, 2012.
4. Identi’s ANDA Applications and Generic Products
On October 17, 2011, FDA approved three ANDAs submitted by Identi, each
corresponding to one of Hill’s Derma-Smoothe products. Derma-Smoothe is the RLD for each
of the Identi ANDAs. Identi has given intervenor-defendant Amneal the exclusive license to
manufacture and market the generic products, which were launched in mid-November 2011.
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Although the generic product labels include precautions for use by peanut-sensitive individuals,
they do not include the following statement that appears on the labeling for Hill’s products: “The
peanut oil used in [product] is tested for peanut proteins through amino acid analysis which can
detect the quantity of amino acids to below 0.5 parts per million.”
II. LEGAL STANDARD
A preliminary injunction is an extraordinary remedy that may only be awarded upon a
clear showing that the plaintiff is entitled to such relief. Winter v. NRDC, 555 U.S. 7 (2008). To
obtain a preliminary injunction, a party must establish that: (1) it is likely to succeed on the
merits; (2) it is likely to suffer an irreparable harm in the absence of preliminary relief; (3) the
balance of equities tips in its favor; and (4) an injunction is in the public interest. See, e.g., Mills
v. District of Columbia, 571 F.3d 1304, 1308 (D.C. Cir. 2009); Cobell v. Norton, 391 F.3d 251,
258 (D.C. Cir. 2004); Nat’l Treasury Emp. Union v. United States, 927 F.2d 1253, 1254 (D.C.
Cir. 1991). The D.C. Circuit has read the Supreme Court’s decision in Winter to “suggest if not
to hold ‘that a likelihood of success is an independent, free-standing requirement for a
preliminary injunction,’” regardless of whether a “sliding-scale analysis” is used to weigh the
four factors. Sherley v. Sebelius, 644 F.3d 388, 393 (D.C. Cir. 2011) (quoting Davis v. Pension
Benefit Guaranty Corp., 571 F.3d 1288, 1296 (D.C. Cir. 2009)).
III. ANALYSIS
A. Likelihood of Success on the Merits
Hill’s assertion that it is likely to succeed on the merits of its claims rests on three bases:
(1) FDA’s approval of generic forms of Hill’s Derma-Smoothe products violates the FDCA’s
“same labeling” requirement; (2) FDA’s decision not to require generic manufacturers to
undertake the same safety testing that it required Hill to perform is arbitrary and capricious; and
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(3) FDA’s approval of generic versions of Hill’s products violates the FDCA’s bioequivalence
requirements.
1. Labeling
Hill first argues that FDA’s approval of the generic versions of the Derma-Smoothe
products violates the FDCA’s “same labeling” requirement because the generic versions do not
contain the statement that appears on the Derma-Smoothe product stating that the peanut oil used
in the product “is tested for peanut proteins through amino acid analysis which can detect the
quantity of amino acids to below 0.5 parts per million.”
Although the Hatch-Waxman Amendments require that the labeling for a generic drug be
“the same” as the labeling approved for the RLD, 21 U.S.C. § 355(j)(2)(A)(v), FDA’s
regulations authorize differences in labeling if “the [generic] drug product and the reference
listed drug are produced or distributed by different manufacturers.” 21 C.F.R. §
314.94(a)(8)(iv). FDA says that its decision to approve the ANDAs without the same labeling as
Hill’s products falls into this exception, because such “differences between the applicant’s
proposed labeling and labeling approved for the reference listed drug may include . . . labeling
revisions made to comply with current FDA labeling guidelines or other guidance.” Id. The
preamble to the proposed rule 21 C.F.R. § 314.94(a)(8)(iv) demonstrates that the regulation was
intended to allow differences in RLD and generic labeling in circumstances where “the reference
listed drug labeling does not reflect current agency labeling standards; for example, the agency
may require a change in the labeling of a drug to make available important new information
about the safe use of a drug product, but the reference listed drug’s labeling has not yet been
updated to reflect this change.” 54 Fed. Reg. 28872, 28884 (proposed July 10, 1989).
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In its response to Hill’s citizen petition, FDA determined that adherence to the current
USP-NF industry standard is sufficient to ensure that residual peanut protein remains at safe
levels, eliminating the need for ANDA sponsors to conduct batch testing such as Hill had
conducted. As a result, the FDA declined to require ANDA labeling to reference such a test.
See Citizen Petition Response, at 27–30. The Court finds that FDA’s response to Hill’s citizen
petition is “other guidance” establishing new safety standards that should be reflected on the
product labeling, which properly supports the FDA’s decision to approve ANDAs with different
labeling than the RLD Derma-Smoothe under the exception spelled out in 21 C.F.R. §
314.94(a)(8)(iv). The exception provided for by the statutory language plainly supports FDA’s
approval of the ANDAs at issue, and Hill has failed to demonstrate through other arguments how
it is likely to succeed on the merits under its theory that FDA’s approval of the generic versions
of the Derma-Smoothe products somehow violates the FDCA’s “same labeling” requirement
because it is not subject to this exception.
2. Testing
Hill also claims that FDA’s decision not to require generic manufacturers to undertake
the same safety testing that it required Hill to perform is arbitrary and capricious. According to
Hill, FDA has violated the principle of reasoned decision making that an administrative agency
must treat like cases alike and may not impose arbitrary and unequal regulatory burdens on
similarly situated parties. See Westar Energy, Inc. v. FERC, 473 F.3d 1239, 1241 (D.C. Cir.
2007). Specifically, Hill argues that FDA compelled Hill to invest millions of dollars to develop
and perform its amino acid test, yet has not required generic manufacturers to satisfy the same
testing requirements. As a result, says Hill, the FDA has improperly approved a generic product
that has a different risk/benefit profile than the approved drug on which the ANDA is based,
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because Hill’s product has a known and tested quantity of residual peanut protein of less than 0.5
parts per million, while the generic has an unknown quantity of residual peanut protein. Hill
argues that the generic poses a greater risk to healthcare providers and peanut-sensitive
individuals because it has not undergone the same testing as the RLD.
However, in its response to Hill’s citizen petition, FDA determined that “at this time,
there does not appear to be any test that has been validated for the purpose of reliably
quantifying residual protein in peanut oil,” including Hill’s amino acid analysis that is referenced
on the Derma-Smoothe labeling. Citizen Petition Response, at 26. Accordingly, the generic
product and Derma-Smoothe do in fact have the same risk/benefit profile, because neither
product is tested in a manner that reliably proves the quantity of residual peanut protein
contained in the product. It would be nonsensical for FDA to require the generic products to
undergo Hill’s amino acid analysis—a test that FDA has not validated—merely so that the
generic products would be tested in the same manner as the RLD. FDA therefore did not act in
an arbitrary and capricious manner when it approved the fluocinolone acetonide ANDAs.
Notably, when FDA responded to Hill’s citizen petition and stated that Hill’s amino acid
analysis was not validated, Hill had two supplemental NDAs pending before the agency related
to the labeling format, the statement regarding the amino acid test for peanut protein, and Hill’s
effort to validate the amino acid test. Based on its conclusions in its Citizen Petition Response,
in March 2009 FDA declined to approve one supplement because Hill’s amino acid test
remained unvalidated. See Fed. Defs.’ Opp. Ex. 6. FDA subsequently requested that Hill revise
its labeling to remove references to the testing method and the amount of peanut protein in the
product. In September 2009, FDA determined that the second supplement was not approvable
because Hill declined to make FDA’s requested changes to Hill’s product labeling. See Fed.
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Defs.’ Opp. Ex. 7. But instead of making the labeling changes that FDA requested in 2009, Hill
has requested—and FDA has granted—multiple extensions in order to respond to FDA’s
September 2009 response letter, claiming that it needs more time to validate its amino acid test
method. See Fed. Defs.’ Opp. Ex. 8. Hill’s deadline to respond to the FDA is now September
30, 2012, and the reference to the amino acid analysis remains on the Derma-Smoothe product
labeling.
While FDA’s decision to approve the fluocinolone acetonide ANDAs was not arbitrary
and capricious, its subsequent actions allowing references to an unvalidated test to remain on the
Derma-Smoothe product labeling may very well have been. This does not weigh in Hill’s favor;
rather, it demonstrates that Hill continues to misrepresent the efficacy of a testing method on its
labeling that the FDA has declined to validate. Nonetheless, the fact that FDA may have acted
improperly by extending its approval of Hill’s current labeling is immaterial here because the
FDA did not act in an arbitrary and capricious manner by not requiring generic manufacturers to
undertake unvalidated amino acid testing, and Hill has failed to demonstrate a likelihood of
success on the merits of its argument otherwise.
3. Bioequivalence
Under its third theory, Hill asserts that the FDA’s approval of the generic products
violates the statutory bioequivalence requirements. The FDA will grant a bioequivalence waiver
(“biowaiver”) for an ANDA—that is, the FDA will not require the submission of evidence
obtained in vivo measuring bioequivalence of the two products—if the generic drug product: (1)
“is a solution for application to the skin, an oral solution, elixir, syrup, tincture, a solution for
aerosolization or nebulization, a nasal solution, or similar other solubilized form”; (2) “contains
an active drug ingredient in the same concentration and dosage form as a drug product that is the
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subject of an approved full new drug application or abbreviated new drug application”; and (3)
“contains no inactive ingredient or other change in formulation from the drug product . . . that
may significantly affect absorption of the active drug ingredient.” 21 C.F.R. § 320.22(b)(3)(i)–
(iii).
All parties agree that the second and third requirements for a biowaiver are satisfied.
Thus, the question of whether FDA properly granted a biowaiver turns on whether the Derma-
Smoothe products are solutions. The parties have made conflicting submissions regarding the
definition and makeup of a “solution.” Hill argues that its products are not solutions, and thus
the requirements for a grant of a biowaiver are not met. FDA counters that the Court should
defer to the agency’s expertise and uphold its decision to grant a biowaiver to the generic
products. The Court declines to blindly uphold the FDA’s purported scientific decisions before
reviewing the complete administrative record and examining the bases for FDA’s decision to
grant the biowaiver. Yet FDA’s failure to provide the Court with the full administrative record
at this point also means that the Court does not have enough information at this time to
determine whether Hill is likely to succeed on the merits of its claim that its products are not
solutions, rendering FDA’s grant of a biowaiver improper. Without the complete administrative
record before the Court, the plaintiff has not made a showing that it is likely to succeed on the
merits of its claim under the theory that Derma-Smoothe is not a solution and thus FDA’s grant
of a biowaiver was improper.
B. Likelihood of Irreparable Harm
Although Hill has failed to demonstrate a substantial likelihood of success on the merits,
it makes a strong showing that it is likely to suffer irreparable harm in the absence of a
preliminary injunction. Irreparable harm exists “where the movant has made a strong showing
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that the economic loss would significantly damage its business above and beyond a simple
diminution in profits.” Mylan Pharms., Inc. v. Shalala, 81 F. Supp. 2d 30, 43 (D.D.C. 2000).
“To shoehorn potential economic loss into a showing of irreparable harm, a plaintiff must
establish that the economic harm is so severe as to ‘cause extreme hardship to the business’ or
threaten its very existence.” Hi-Tech Pharmacal Co. v. FDA, 587 F. Supp. 2d 1, 11 (D.D.C.
2008) (citing Gulf Oil Corp. v. Dep’t of Energy, 514 F. Supp. 1019, 1025 (D.D.C. 1981)).
Hill argues that, absent injunctive relief, it will suffer significant damage to its business.
Hill is a small, family-owned company with 150 full-time employees that depends upon its
Derma-Smoothe products for the company’s livelihood, as the products make up 90% of Hill’s
revenues and sales. See Compl. Ex. D, ¶¶ 6, 17–21. Historical evidence demonstrates that
generic drugs have achieved up to 90% market saturation within several months of entering the
market. See id. ¶ 20. As the Supreme Court recently observed, “[n]inety percent of drugs for
which a generic version is available are now filled with generics” and “[i]n many cases, once
generic versions of a drug enter the market, the brand-name manufacturer stops selling the
brand-name drug altogether.” PLIVA, Inc. v. Mensing, 131 S. Ct. 2567, 2584 (2011). Because
pharmacists will substitute the generic product for the brand-name drug—and are often required
to substitute generic products under state law—a generic drug company will automatically
capture a sizeable portion of the sales of the drug, even if the generic is only marginally less
costly and not as safe as the branded drug. See Pl.’s Reply Ex. 3, ¶ 9.
This evidence demonstrates that new competition from a generic in the marketplace will
almost certainly cause Hill severe market loss and economic injury, which, given the primary
role that the Derma-Smoothe products play in Hill’s business, could be completely devastating to
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the company’s vitality. Hill thus makes a strong showing that it is likely suffer irreparable harm
in the absence of a preliminary injunction.
C. Balance of Equities and the Public Interest
Amneal has demonstrated that it would suffer substantial harm were the Court to enter a
preliminary injunction. Amneal has already incurred considerable expenses to launch its generic
products, including the costs of research and development, regulatory matters, manufacturing,
labeling, and marketing. Mot. to Intervene Ex. 1, ¶ 5. Additionally, Amneal has secured at least
ten contracts with customers for the sale of the generic products. Id. A preliminary injunction
would require Amneal to discontinue the marketing and distribution of its products, which would
result in lost profits on current sales, wasted investment in product and labels already
manufactured, and uncertainty about future attempts to market and sell the products. Id. ¶ 6.
Furthermore, if—as the Court has found—Hill is not likely to establish that the
fluocinolone acetonide ANDAs were wrongly approved, then public interest considerations
weigh against a preliminary injunction. See, e.g., Serono Labs., Inc. v. Shalala, 158 F.3d 1313,
1326 (D.C. Cir. 1998). The purpose of the Hatch-Waxman Amendments is to provide the public
with the benefits of generic competition to branded drugs. See id. at 1326–27. Congress
expected that competition “to make available more low cost generic drugs.” H.R. Rep. No. 98-
857, pt. 1, at 14 (1984), reprinted in 1984 U.S.C.C.A.N. 2647, 2647. Even in this case, where
the generic product is only marginally cheaper than Derma-Smoothe and the savings to
consumers will not be significant, Congress’s purpose in passing the Hatch-Waxman
Amendments is directly implicated. FDA is mandated by the FDCA to make lower-cost generic
drugs available to the public where, as here, those drugs are found to meet the requirements for
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approval. It is therefore not in the public interest for the Court to grant a preliminary injunction
preventing these generic drugs from being sold on the market.
Despite Hill’s strong argument that it is likely to suffer harm to its business in the
absence of a preliminary injunction, the risk that Hill will lose its market share is outweighed by
the strong public interest in the availability of lower-cost generic drugs in the market.
Furthermore, Hill has failed to demonstrate that it has suffered any loss at all since Amneal’s
product launch in mid-November—rather, Hill’s claimed harm will manifest itself at some
uncertain point in the future. Conversely, were the Court to enter a preliminary injunction,
Amneal would undoubtedly suffer immediate harm because it would be forced to remove its
generic products from the market and thus would be unable to perform on its contracts related to
the generic products. Moreover, entering a preliminary injunction would not preserve the status
quo, as Amneal’s generic products have already launched. The balance of equities therefore
weighs in favor of Amneal and the public interest and against Hill.
IV. CONCLUSION
Although Hill has made a strong showing that it will likely suffer irreparable harm in the
absence of a preliminary injunction, this showing is outweighed by Hill’s inability to
demonstrate any likelihood of success on the merits of its claims against FDA. Indeed,
“[w]ithout any probability of prevailing on the merits, [a plaintiff’s] purported injuries, no matter
how compelling, do not justify preliminary injunctive relief.” Am. Bankers Ass’n v. Nat’l Credit
Union Admin., 38 F. Supp. 2d 114, 140 (D.D.C. 1999). Additionally, the balance of equities
weighs in favor of Amneal and the public interest and away from granting a preliminary
injunction to Hill. For the foregoing reasons, Hill’s Motion for a preliminary injunction is
hereby DENIED.
17
Signed by Royce C. Lamberth, Chief Judge, on December 2, 2011.
18