FDA Sued Over Enforcement Action on Marketed Unapproved Morphine Sulfate Oral Solution

By Kurt R. Karst –   

Earlier this week, Cody Laboratories, Inc. and Lannett Co., Inc. (collectively “Cody/Lannett”) filed a Complaint and a Motion for Temporary Restraining Order and Preliminary Injunction in the U.S. District Court for the District of Wyoming requesting that the court enjoin FDA from taking any enforcement action with respect to their marketed unapproved Morphine Sulfate Solution Immediate-Release 20mg/mL products.  The lawsuit is (to our knowledge) the first challenge arising from FDA’s Unapproved Drugs Initiative, which was kicked off in June 2006 with the publication of the Agency’s Compliance Policy Guide (“CPG”).  FDA’s CPG articulates the Agency’s risk-based enforcement approach to taking enforcement action with respect to the manufacture and distribution of marketed unapproved drugs.  Under that policy, FDA gives higher priority to enforcement action against unapproved drugs in certain categories, including drugs that present direct challenges to the “new drug” approval and over-the-counter drug monograph systems (e.g., when a drug is approved under an NDA and other companies market the same product without approval). (An article we authored that appeared in RAPS Focus a couple of years ago discussing the world of marketed unapproved drugs is available here.)

The Cody/Lannett lawsuit stems from FDA’s March 2009 decision to issue Warning Letters to nine companies, including Cody and Lannett, to stop manufacturing fourteen unapproved narcotic drugs, such as high concentrate morphine sulfate oral solutions, morphine sulfate immediate release tablets, hydromorphone, and oxycodone (see our previous post here).  At that time, FDA concluded that marketed unapproved morphine sulfate products are “new drugs [under the FDCA] and not grandfathered and that manufacturing and marketing of these products without an approved application constituted a violation of the Act.”

Shortly thereafter, in April 2009, FDA announced that the Agency would reverse course to allow the continued marketing and distribution of one of the drug products – Morphine Sulfate Solution Immediate-Release 20mg/mL – on an interim basis due to concerns over a drug shortage, and sent letters to the affected parties, including Cody and Lannett.  (see our previous post here)  Specifically, FDA stated that the Agency would exercise discretion not to take enforcement action “until 180 days after any firm receives approval for a morphine sulfate oral solution 20 mg/ml product.” 

FDA approved an NDA for Morphine Sulfate Solution Immediate-Release 20mg/mL on January 25, 2010.  In follow-up letters sent to Cody and Lannett (here and here) in March 2010, FDA stated that consistent with the Agency’s previous communications, FDA would exercise enforcement discretion with regard to the shipment and distribution of Cody’s/Lannett’s unapproved Morphine Sulfate Solution Immediate-Release 20mg/mL until July 24, 2010.  Meanwhile, Lannett submitted its own NDA to FDA in late February 2010.  Cody/Lannett have continued to market their unapproved morphine sulfate products, but have reportedly encountered problems in obtaining quota from the Drug Enforcement Administration for additional raw material to manufacture new product – apparently as a result of FDA’s position on this unapproved drug.

Enter the lawyers . . . .

Cody/Lannett argue in their lawsuit that FDA should be enjoined from taking enforcement action after July 24, 2010 if such enforcement action is based on FDA’s contention that Morphine Sulfate Solution Immediate-Release 20mg/mL is an unapproved “new drug,” and that the court should issue a declaratory judgment that FDA violated the Administrative Procedure Act (“APA”) in determining that the product is a “new drug.”  Specifically, Cody/Lannett argue that:

The FDA failed to develop an adequate record to support its determination that the Product is a “new drug” that does not fall within the grandfathering provisions of the FDCA. . . .  By failing to develop an adequate record for its determination that the Product is a “new drug” for purposes of the FDCA, the FDA acted arbitrarily, capriciously, contrary to law, and abused its discretion in violation of the APA in reaching such a determination.

The 1938 and 1962 grandfather clauses in the FDC Act have been construed very narrowly by FDA and the courts.  FDA believes that there are few, if any, marketed drugs that are actually entitled to grandfather status, because the drugs currently on the market likely differ from the previous versions in some respect, such as formulation, dosage form, strength, method of manufacture, route of administration, indications or intended patient population.  If a company claims that its product is grandfathered, FDA considers it the firm’s burden to prove that assertion.  FDA stated in the Agency’s 2006 CPG that it believes “it is not likely that any currently marketed prescription drug product is grandfathered or is otherwise not a new drug,” but recognizes that “it is at least theoretically possible” that such a product exists.

Cody/Lannett take aim at FDA’s 2006 CPG in their lawsuit, stating that the CPG “operated effectively to render the grandfather provisions of the FDCA inoperative,” and that the CPG “is contrary to the express terms of the statutory grandfather provisions of the FDCA, through which Congress expressed an unequivocal intent that the FDCA apply only prospectively to ‘new drugs’ and not retroactively to drugs on the market at the time of its passage.”

Cody/Lannett also allege that FDA violated the APA by not treating Cody/Lannett fairly in the NDA process.  Specifically, that FDA provided another company “greater assistance in moving through the NDA process” and by creating “substantial delays in scheduling meetings with Cody/Lannett and denying Cody/Lannett’s request for expedited treatment of its NDA.”