Bam! Bam! Two Plaintiffs Fall in Two District Court Decisions Concerning Orphan Drug Exclusivity Carve-Outs

By Kurt R. Karst –  

Like rapid gunfire (judicial style), two courts – the U.S. District Court for the District of Maryland and the U.S. District Court for the District of Columbia – issued decisions on May 27, 2015 within hours of one another denying challenges to FDA’s decisions to approve generic versions of Otsuka Pharmaceutical Co.’s (“Otsuka’s”) ABILIFY (aripiprazole) and Spectrum Pharmaceuticals, Inc.’s (“Spectrum’s”) FUSILEV (levoleucovorin) for Injection with labeling omitting uses protected by separate periods of 7-year orphan drug exclusivity.  Labeling carve-outs, which we track on our Generic Drug Labeling Carve-Out Scorecard, seem to be all the rage these days (as well as controversies involving orphan drug exclusivity).  And, as Bob Pollock recently intimated on the Lachman Consultants Blog, labeling carve-out issues and controversies will likely continue to arise in the forseeable future as brand-name companies take aim at would-be generic competitors.

As we previously reported,  on December 12, 2014, FDA approved Supplemental NDAs for ABILIFY for the treatment of pediatric Tourette’s Disorder and later granted Otsuka a period of orphan drug exclusivity expiring on December 12, 2021.  Otsuka ultimately contended that as a result of this period of exclusivity, the company is entitled to a 7-year period of total market exclusivity such that FDA is precluded from approving any generic version of ABILIFY for any of its FDA-approved uses (absent a license from Otsuka) until December 12, 2021.  

Otsuka’s contention primarily relies on FDC Act § 505A(o), titled “Prompt approval of drugs under section 355(j) when pediatric information is added to labeling,” and also known as the “Anti-Glucophage  Provision” (or Section 11 of the Best Pharmaceuticals for Children Act).  That provision states:

(1) General rule – A drug for which an application has been submitted or approved under section 355(j) of this title shall not be considered ineligible for approval under that section or misbranded under section 352 of this title on the basis that the labeling of the drug omits a pediatric indication or any other aspect of labeling pertaining to pediatric use when the omitted indication or other aspect is protected by patent or by exclusivity under clause (iii) or (iv) of section 355(j)(5)(F) of this title.

(2) Labeling – Notwithstanding clauses (iii) and (iv) of section 355(j)(5)(F) of this title [(concerning 3-year new clinical investigation exclusivity)], the Secretary may require that the labeling of a drug approved under section 355(j) of this title that omits a pediatric indication or other aspect of labeling as described in paragraph (1) include—

(A) a statement that, because of marketing exclusivity for a manufacturer—

(i) the drug is not labeled for pediatric use; or

(ii) in the case of a drug for which there is an additional pediatric use not referred to in paragraph (1), the drug is not labeled for the pediatric use under paragraph (1); and

(B) a statement of any appropriate pediatric contraindications, warnings, or precautions that the Secretary considers necessary.

It is against this backdrop that Otsuka, on March 24, 2015, initially filed a Complaint and Motion for Summary Judgment against FDA in the U.S. District Court for the District of Maryland challenging certain FDA determinations with respect to the Supplemental NDA approval for pediatric Tourette’s Disorder.  That litigation later transformed into a Motion for a Temporary Restraining Order and/or Preliminary Injunction against FDA to stay the approval of ANDAs for generic versions of ABILIFY (and to prevent any further approvals), which occurred on April 28, 2015 at around the time FDA issued a Letter Decision  addressing the exclusivity issues raised in the case.  On April 29, 2015, Judge George J. Hazel denied Otsuka’s Motion for Temporary Restraining Order and/or Preliminary Injunction.  The case then moved into the summary judgment phase, with Cross-Motions for Summary Judgment from FDA (here), Otsuka (here), and several Intervenor-Defendants (here). 

On May 27, 2015, Judge Hazel denied Otsuka’s Motion for Summary Judgment and granted FDA’s and Intervenor-Defendants’ Motion for Summary Judgment.  After concluding that the appropriate level of deference afforded to FDA in the case is that provided by framework laid out by the U.S. Supreme Court in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842 (1984), Judge Hazel delved into the two-step analysis required under Chevron.  Under Chevron Step One, the District Court concluded that FDC Act § 505A(o) does not speak directly to the issue in the case:

[W]hen the Court considers the text of section 355a(o), as well as its legislative history, the Court cannot conclude that section 355a(o) clearly proscribes FDA’s ability to omit from a generic’s label information pertaining to pediatric orphan drug exclusivity.  Thus, if the Court’s role here was simply to “interpret and apply the statute to resolve a claim,” the Court would, without further analysis, side with the interpretation of FDA and Defendant-Intervenors. . . .  However, given 355a(o)’s silence on orphan drug exclusivity, the Court cannot find that Congress’s intent in enacting 355a(o), as it relates to its impact on orphan drugs, if any, is so clear as to completely foreclose Otsuka’s interpretation.  The Court must therefore proceed to Chevron step two.

Moving on to Chevron Step One, the District Court ruled that FDA’s interpretation of FDC Act § 505A(o) is reasonable:

The Court therefore finds that the FDCA, its legislative history, the case law, and FDA’s regulations all support the FDA’s construction of the statute that allows it to carve out an indication or other information from ANDA labeling when that indication or information is protected by orphan drug exclusivity as long as the ANDA with that carved out label remains safe and effective for the remaining non-protected conditions of use.  To be sure, Otsuka’s reading of section 355a(o) would nullify the limitation expressly written into section 360cc – that the exclusivity is given to a drug “for [the orphan] disease or condition” – and instead treat the orphan drug exclusivity as extending to the drug for any and all diseases and conditions, directly contradicting that provision’s text and the Fourth Circuit’s holding in Sigma-Tau.  If that was Congress’s intent, it is certainly left unclear by the statute and FDA’s interpretation is reasonable.

It’s unclear at this juncture whether or not Otsuka will appeal Judge Hazel’s decision to the U.S. Court of Appeals for the Fourth Circuit.

The second decision handed down on May 27, 2015 was from the U.S. District Court for the District of Columbia in a challenge from Spectrum to FDA’s February 24, 2015 denial of a Citizen Petition (Docket No. FDA-2014-P-1649) and March 9, 2015 approval of Sandoz Inc.’s (“Sandoz’s”) ANDA 203563 for a generic version of FUSILEV with labeling that omits certain information protected by orphan drug exclusivity. 

FUSILEV is approved to treat three conditions, two of which relate to counteracting the effects of the drug methotrexate, and one of which involves palliative treatment of patients with advanced metastatic colorectal cancer that is protected by orphan drug exclusivity until April 29, 2018.  Spectrum initially filed a Complaint and a Motion for Temporary Restraining Order and/or Preliminary Injunction alleging that FDA’s approval of ANDA 203563 in certain vial sizes for the unprotected methotrexate uses and with labeling omitting the orphan drug exclusivity-protected colorectal cancer use violated the law and the company’s orphan drug exclusivity.  (Sandoz, represented by Hyman, Phelps & McNamara, P.C., entered the case as an Intervenor-Defendant.) 

Spectrum’s Motion for Temporary Restraining Order was denied in an April 29, 2015 Minute Order from Judge Royce C. Lamberth, and a Hearing on Spectrum’s Motion for Preliminary Injunction was set for May 18, 2015.  The parties subsequently filed Cross-Motions for Summary Judgment.  According to Spectrum:

This case presents the question of whether FDA can lawfully approve a generic drug in a strength that is appropriate only for an indication that has been “carved out” based on the reference listed drug’s Orphan Drug Act exclusivity.  FDA has argued that it can do so.  But in order to justify its conduct here, FDA turned a blind eye to the requirements of the Orphan Drug Act, violated clear procedural mandates in the [FDCA] relating to drug shortages, and engaged in an abrupt departure from two of its own longstanding positions.  In violation of the FDCA and its own regulations, FDA has also taken affirmative steps to expedite the approval of a generic drug for the express purpose of facilitating the use of that drug in an unapproved “off-label” indication.  FDA’s conduct effectuates an unlawful labeling carve-out and therefore is arbitrary, capricious, and unlawful under the Administrative Procedure Act (“APA”). 

In a May 27, 2015 Memorandum Opinion (currently under seal) and Order, Judge Lamberth granted FDA’s and Sandoz’s Motions for Summary Judgment and denied Spectrum’s Motions for Preliminary Injunction and Summary Judgment.