FDA Rejects Requests to Initiate Rulemaking for 505(b)(2) NDA Therapeutic Equivalence Rating Decisions

By Kurt R. Karst –      

In a rather lengthy (33-page) response to two citizen petitions submitted to FDA by AbbVie Inc. (Docket No. FDA-2011-P-0610) and Auxilium Pharmaceuticals, Inc. (Docket No. FDA-2013-P-0371) concerning their testosterone gel 1% drug products – AbbVie’s ANDROGEL (NDA No. 021015) and Auxilium’s TESTIM (NDA No. 021454) – FDA refused to conduct a rulemaking under the Administrative Procedure Act (“APA”) before deciding on whether or not to grant a Therapeutic Equivalence (“TE”) rating to “generic” versions of both drug products submitted and approved pursuant to Section 505(b)(2) of the FDC Act.  At the same time, FDA granted an “AB” rating to Perrigo Israel Pharmaceuticals Ltd.’s testosterone gel 1% drug product (NDA No. 203098), and a “BX” rating to Teva Pharmaceuticals USA’s testosterone gel 1% drug product (NDA No. 202763) – both of which are follow-on versions of ANDROGEL.  FDA has not yet decided on what TE rating to assign to Upsher-Smith Laboratories, Inc.’s follow-on version of Auxilium’s TESTIM approved in June 2014 (VOGELXO; NDA No. 204399).  All three 505(b)(2) NDAs were submitted to FDA because of a change in formulation (i.e., penetration enhancer) vis-à-vis the reference drug that FDA previously determined (here and here) could not be the subject of an ANDA because of the need for clinical safety studies.

As we previously reported, in August 2011, a Citizen Petition was submitted to FDA on behalf of AbbVie (then Abbott Laboratories) calling into question the Agency’s authority for granting TE ratings to drug products approved pursuant to FDC Act § 505(b)(2).  Specifically, AbbVie requested that FDA refrain from granting a TE rating to any 505(b)(2) application approved version of ANDROGEL until FDA has conducted a rulemaking under the APA “to modify the procedures that apply to such ratings.”  That rulemaking, said AbbVie, “should establish procedures for (1) FDA’s assignment of TE ratings to drugs that are the subject of [505(b)(2) drugs] and (2) FDA’s public listing of such ratings in [the Orange Book].”  At a minimum, FDA’s new regulations should “characterize FDA’s assignment and listing of TE ratings for § 505(b)(2) drugs as either orders or substantive rules for purposes of the APA, describe what legal process is available to interested parties for commenting on or challenging a proposed listing, and establish a coherent set of standards governing such a listing.” 

According to AbbVie, a rulemanking is necessary because TE ratings are far more than advisory:

They have been expressly incorporated into state pharmacy practice statutes that control which drug products pharmacists may dispense and, therefore, which drug products patients receive when filling prescriptions at the pharmacy.  TE listings also directly affect federal, state, and private insurance reimbursement schemes, and are expressly relied upon in Medicare Part B, among other federal laws.  These listings materially impact the economic rights of competing drug sponsors.  Thus, TE listings have automatic and significant binding legal consequences under state and federal law.

In addition to FDA’s 1979 (proposed) and 1980 (final) rulemaking establishing the Orange Book and TE ratings, AbbVie relied on Tozzi v. U.S. Dep’t of Health & Human Servs., 271 F.3d 301 (D.C. Cir. 2001), for the proposition that there is precedent establishing that TE listings have a binding legal effect.  In that case, concerning a HHS decision to change in a report the carcinogenic status of dioxin, the Court explained that “[r]eviewability under the APA hinges upon whether the listing has ‘legal effect, which in turn is a function of the agency’s intention to bind either itself or regulated parties.’” 

In March 2013, Auxilium’s submitted its own Citizen Petition to FDA incorporating by reference many of the arguments raised by AbbVie.  Meanwhile, in March 2014, Perrigo launched a lawsuit against FDA alleging that the Agency shirked a statutory duty by failing to timely act to update the Orange Book to add a TE rating for the company’s follow-on version of ANDROGEL that FDA approved in late January 2013 (see our previous post here).  That litigation was put on hold with FDA’s promise to address the TE rating issue by the end of July 2014.  The case was voluntarily dismissed last week with the announcement of FDA’s petition decision. 

FDA, in the Agency’s July 23, 2014 petition decision, said that the statutory authority FDA relied on in the 1979-1980 rulemaking for making TE decisions – before the 505(b)(2) process was created in September 1984 by the Hatch-Waxman Amendments – “continues to be sound as it relates to products approved pursuant to 505(b)(2) NDAs.”  And as to whether TE ratings continue to be advisory in nature and AbbVie’s (and Auxilium’s) arguments to the contrary?  They are still advisory, concluded FDA:

The Agency’s reasoning in the 1979-1980 notice-and-comment rulemaking, that TE ratings are advisory and the listing is not binding, still stands.  As in 1979-1980, the listing today neither determines the legal rights of any drug manufacturer or distributor, nor imposes any requirement or restriction upon any person. . . .  [I]ncorporation of FDA’s advisory TE ratings into other laws and reimbursement schemes, which are not administered by FDA, does not make TE ratings binding for purposes of determining whether any additional process, such as notice-and-comment rulemaking, is required under the APA.  The case law you rely on for your argument that TE ratings create a binding legal effect [(i.e., Tozzi)] is not directly relevant to the question of whether the process available in a given context is sufficient.

Instead, FDA cites to another, more recent case, Nat’l Ass’n of Home Builders v. Norton, 415 F.3d 8 (D.C. Cir. 2005), where the D.C. Circuit held “that materials promulgated by a Federal agency did not create a binding effect, even though the materials were adopted by local governments as part of a permitting process.”

The bulk of FDA’s petition decision is dedicated to explaining why the Agency decided to grant an AB rating to Perrigo’s testosterone gel drug product and a BX rating to Teva’s drug product.  You can read the details of FDA’s decisons in the petition response, but the conclusions are right there on pages 29 and 32:

FDA has determined that the Perrigo topical testosterone gel product is therapeutically equivalent to AndroGel 1%.  The Perrigo topical testosterone gel product is: (1) approved as safe and effective; (2) pharmaceutically equivalent to AndroGel 1% in that the products (a) contain identical amounts of the same active ingredient in the same dosage form and route of administration, and (b) meet applicable standards of strength, quality, purity, and identity; (3) bioequivalent to AndroGel 1%; (4) adequately labeled; and (5) manufactured in compliance with CGMP regulations. . . .

[T]he Teva topical testosterone gel product has not been demonstrated to be bioequivalent to AndroGel 1% because the study results fall outside the range for demonstrating bioequivalence.  Thus, FDA has assigned a TE rating of “BX” to the Teva topical testosterone gel product because the data that have been reviewed by the Agency are insufficient to determine TE to AndroGel 1%.

Whether there will be a showdown in court over FDA’s legal determination that there is no need to conduct a rulemaking under the APA before deciding on whether or not to grant a TE rating to a drug product approved pursuant to FDC Act § 505(b)(2) remains to be seen.  We’re keeping a close eye on the court docket.