Second Circuit Overturns Win for Nonprofit Groups in Litigation with FDA Over Subtherapeutic Uses of Penicillin and Tetracyclines in Animal Feed

By Kurt R. Karst –      

In a 2-1 decision handed down last week, a panel of judges from the U.S. Court of Appeals for the Second Circuit reversed both a March 2012 decision and a June 2012 decision from the U.S. District Court for the Southern District of New York (Magistrate Judges Theodore H. Katz and James C. Francis IV) granting Motions for Summary Judgment to the National Resources Defense Council (“NRDC”) and other nonprofit advocacy organizations relating to Notices of an Opportunity for Hearing (“NOOH”) FDA issued in 1977 on proposals to withdraw approval of all subtherapeutic uses of penicillin in animal feed and nearly all subtherapeutic uses of tetracyclines (oxytetracycline and chlortetracycline) in animal feed, as well as to two Citizen Petitions requesting that FDA withdraw approval of subtherapeutic uses of penicillin and tetracyclines in animal feed because of a threat to human health.  The reversal was immediately criticized as a blow to the public health.

Both district court decisions stem from a lawsuit the NRDC, et al. filed in 2011 (see our previous post here).  The groups allege in their Complaint that FDA, in violation of the Administrative Procedure Act (“APA”), failed to comply with the Agency’s statutory duty to withdraw approvals of subtherapeutic uses of penicillin and tetracyclines in animal feed as required by FDC Act § 512(e)(1) (21 U.S.C. § 360b(e)(1)) and as proposed in 1977.  That statutory provision, which addresses FDA’s authority power to withdraw approval for new animal drugs, states:

(1) [FDA] shall, after due notice and opportunity for hearing to the applicant, issue an order withdrawing approval of an application filed pursuant to subsection (b) of this section with respect to any new animal drug if the Secretary finds . . .

(B) that new evidence not contained in such application or not available to the Secretary until after such application was approved, or tests by new methods, or tests by methods not deemed reasonably applicable when such application was approved, evaluated together with the evidence available to the Secretary when the application was approved, shows that such drug is not shown to be safe for use under the conditions of use upon the basis of which the application was approved . . . ;

The Plaintiffs further contend that FDA’s failure to timely respond with final decisions to Citizen Petitions submitted to the Agency in 1999 (Docket No. FDA-1999-P-1286) and 2005 (Docket No. FDA-2005-P-0007) on the same topic is an unreasonable delay in violation of the APA.  FDA denied both petitons in November 2011, saying that an alternative strategy to withdrawal of approval would be more efficient (i.e., less costly and lengthy), and then withdrew the 1977 NOOHs in December 2011.  The Plaintiffs then amended their Complaint alleging that FDA’s petition denials was arbitrary and capricious. 

In its March decision, the District Court ordered FDA to institute withdrawal proceedings as discussed in the 1977 NOOHs and then withdraw drug approvals.  In its June 2012 decision, the District Court agreed with Plaintiffs that FDA’s denial of the 1999 and 2005 petitions was arbitrary and capricious.  According to the District Court, FDA failed to offer a reasoned explanation, grounded in the statute, for its refusal to initiate withdrawal proceedings.  See our previous posts here and here for a more detailed discussion of the decisions.  

On appeal to the Second Circuit, the Court framed the “required hearing claims” – i.e., the circumstances under which the “shall . . . issue an order withdrawing approval” language at FDC Act § 512(e)(1) comes into play – as follows:

The principal question presented by this appeal is whether 21 U.S.C. § 360b(e)(1) requires the FDA to proceed with withdrawal hearings for certain previously approved subtherapeutic uses of antibiotics in animal feed because the FDA has made a finding that those uses are not shown to be safe for humans.  The text of § 360b(e)(1) clearly requires withdrawal of approval once such a finding has been made; it does not equally clearly specify when the agency makes such a finding, and in particular whether the type of finding that mandates withdrawal of approval is a conclusion based on internal agency deliberations that precedes (and then requires) the holding of a hearing, or a finding that represents the conclusion reached as the result of such a hearing.

Not surprisingly, FDA and the NRDC interpret this provision differently.  On the one hand, FDA

reads the statute as requiring the sequence: hearing, finding, order. In effect, it reads the provision to say, “If, after notice and a hearing, the secretary finds that a drug is not shown to be safe for use,” she is required to withdraw approval of the drug.  In this interpretation, the withdrawal process begins with a notice from the FDA to a drug sponsor of its concerns about an drug, and offering the opportunity for a hearing regarding the safety of the animal drug.  If, at the conclusion of the hearing, upon consideration of the evidence presented, the secretary finds that the drug is indeed not shown to be safe for use, she must then issue an order withdrawing approval of the drug.  That order of events depends upon the conclusion that a finding that an animal drug is not shown to be safe can be made only after the drug’s sponsor’s due process rights – notice and an opportunity to be heard – have been respected.  Therefore, the mandatory “shall” applies only to the action – withdrawal of approval – that the Secretary must take if the hearing results in a finding adverse to the drug.  On the government’s reading, the mandatory “shall” does not apply to the holding of the hearing itself, which the government argues is a discretionary action that the agency may undertake, or not, in its discretion, based on its judgment about whether the scientific evidence and sound public policy warrant instituting proceedings to withdraw approval.

On the other hand, the NRDC read the statute as requiring the sequence: finding, hearing, finding, order.  In effect, wrote the Second Circuit, Plaintiffs

read the statute to say, “If the secretary finds a drug is not shown to be safe for use, she shall provide notice to the applicant, hold a hearing, issue a second finding, and then withdraw approval.”  In their interpretation, the initial finding that the drug is not shown to be safe is based on the agency’s internal investigations of the scientific evidence, and comes before any hearing is held.  On plaintiffs’ reading, once the agency reaches the conclusion that the drug is not shown to be safe, the mandatory language of the statute becomes applicable – the agency must issue an order of withdrawal, though it must hold a hearing first.  The mandatory “shall” thus in effect governs not only the remedy that must follow a formal conclusion after a hearing, but also the process itself; after reaching its initial conclusion that the drug is not shown to be safe, the agency is required to institute proceedings and effectuate them through a hearing, after which (if the evidence present at the hearing sustains the finding) she must issue an order of withdrawal.

Circuit Judge Lynch and District Judge Forrest (sitting by designation) ultimately agreed with FDA, stating:

Our survey of the text, the context, the regulations, and the background legal principles leave us firmly persuaded that Congress has not required the FDA to hold hearings whenever FDA officials have scientific concerns about the safety of animal drug usage, that the FDA retains the discretion to institute or terminate proceedings to withdraw approval of animal drugs by issuing or withdrawing NOOHs, and that the statutory mandate contained in § 360b(e)(1) applies to limit the FDA’s remedial discretion by requiring withdrawal of approval of animal drugs or particular uses of such drugs only when the FDA has made a final determination, after notice and hearing, that the drug could pose a threat to human health and safety.

. . .  Although the text is not unambiguously clear, we believe that the FDA put forth the more natural reading.  The statute requires the FDA to withdraw approval of an animal drug only “after due notice and opportunity for hearing” has been afforded, and then only “if the Secretary finds” that the drug is not shown to be safe.  21 U.S.C. § 360B(e)(1). That language most naturally refers to a finding that is issued as a result of the hearing. That interpretation, moreover, avoids injecting a second, unexpressed “finding” into the sequence of events mentioned in the statute.

Circuit Judge Lynch and District Judge Forrest also rejected Plaintiffs’ alternative argument that FDA’s Citizen petition denials and withdrawal of the 1977 NOOHs violated the APA as arbitrary and capricious.  According to the Court, “the decision whether to institute or terminate a hearing process that may lead to a finding requiring withdrawal of approval for an animal drug is a discretionary determination left to the prudent choice of the FDA.”

But FDA did not get off scot-free.  In a 48-page dissent (out of a 113-page decision), Chief Judge Katzmann vehemently opposed the majority opinion:

I cannot agree with the majority’s conclusions.  In light of the statutory structure and its purposes, I am convinced that 21 U.S.C. § 360b(e)(1) requires the FDA to continue the proposed withdrawal proceedings . . . .  I am likewise convinced that the agency’s decision to deny the citizen petitions was arbitrary and capricious . . . because it failed to address the statutory question of whether the animal drug uses at issue were shown to be safe.

Today’s decision allows the FDA to openly declare that a particular animal drug is unsafe, but then refuse to withdraw approval of that drug.  It also gives the agency discretion to effectively ignore a public petition asking it to withdraw approval from an unsafe drug.  I do not believe the statutory scheme can be read to permit those results. . . .

Given Chief Judge Katzmann’s strong dissent, Plaintiffs will probably appeal the panel decision and seek an en banc rehearing.  But as Second Circuit Courts Committee recently noted, the Second Circuit has proceeded to a full hearing en banc only in rare and exceptional circumstances.  Given the odds, the panel decision reversing the District Court’s decisions, remanding the case to the District Court with instructions to deny the Plaintiffs’ Motion for Summary Judgment, granting FDA’s Motion for Summary Judgment, and dismissing the action seem likely to stand.