FDA, Sandoz Prevail at D.C. Circuit on Generic FUSILEV Approval

By Kurt R. Karst & Douglas B. Farquhar –

On June 3, 2016, a three-judge panel (Judges Thomas B. Griffith, Brett M. Kavanaugh, and  Robert L. Wilkins) of the U.S. Court of Appeals for the District of Columbia Circuit ruled for FDA and Intervenor-Appellee Sandoz, Inc. (“Sandoz”) (represented by Hyman, Phelps & McNamara, P.C.) and upheld FDA’s approval of Sandoz’s generic levoleucovorin drug product. The Court issued an Opinion and Order affirming a May 27, 2015 summary judgment Decision from Judge Royce C. Lamberth of the U.S. District Court for the District of Columbia. The rulings came in a lawsuit lodged by Spectrum Pharmaceuticals, Inc. (“Spectrum”) challenging FDA’s February 24, 2015 denial of a related Citizen Petition (Docket No. FDA-2014-P-1649) and March 9, 2015 approval of Sandoz’s ANDA 203563 for a generic version of Spectrum’s FUSILEV (levoleucovorin) for Injection with a labeling “carve-out” (Sandoz’s label omits certain information about an indication protected by orphan drug exclusivity).  The win for FDA (and Sandoz) further extends the Agency’s winning streak on generic drug labeling carve-out challenges.

As we previously reported (here and here), 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 was unlawful. Spectrum claimed that Sandoz’s approval for the unprotected methotrexate use and with labeling omitting the orphan drug exclusivity-protected colorectal cancer use violated the company’s orphan drug exclusivity.  Spectrum’s Motion for Temporary Restraining Order was denied in an April 29, 2015 Minute Order, 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. 

In his May 27, 2015 Memorandum Opinion, Judge Lamberth granted FDA’s and Sandoz’s Motions for Summary Judgment and denied Spectrum’s Motions for Preliminary Injunction and Summary Judgment, holding that FDA’s approval of Sandoz ANDA 203563 was valid.  In doing so, Judge Lamberth held that: (1) FDA’s Approval of Sandoz ANDA 203563 did not violate the Orphan Drug Act or Spectrum’s orphan drug exclusivity because physicians may prescribe Sandoz’s generic version of FUSILEV for the protected colorectal cancer use; (2) FDA’s approval of ANDA 203563 in a large vial size for the methotrexate indication was not arbitrary and capricious even though Spectrum argued it was inconsistent with an earlier FDA position on the permissible uses of larger vial sizes; and (3) FDA’s approval of Sandoz ANDA 203563 with labeling omitting information on FUSILEV’s protected colorectal cancer use was a permissible labeling carve-out, despite Spectrum’s argument that it resulted in a generic drug that is less safe than FUSILEV for the remaining conditions of use.  Judge Lamberth ruled that FDA, under the FDC Act and FDA regulations, should not have granted expedited review to Sandoz’s ANDA without notifying Spectrum in advance, but held that the lack of notice had no effect because Spectrum’s arguments had already been fully considered by the Agency.

On appeal, and reviewing the case de novo, the D.C. Circuit panel affirmed Judge Lamberth’s decision.  With respect to Spectrum’s primary argument – i.e., that FDA violated Spectrum’s orphan drug exclusivity for colorectal cancer when the Agency approved Sandoz ANDA 203563 in a large vial size for FUSILEV’s methotrexate indication, because Sandoz’s product could nevertheless be used in colorectal cancer patients – the Court found permissible FDA’s interpretation of the statute – i.e., that orphan drug exclusivity protects only a labeled use and that a generic drug that is not labeled with that use cannot violate another company’s orphan drug exclusivity.  According to the panel:

First, FDA’s reading of the statute closely hews to the text.  As the Fourth Circuit reasoned in Sigma-Tau Pharmaceuticals, Inc. v. Schwetz, 288 F.3d 141 (4th Cir. 2002), the words “for such disease or condition” suggest Congress intended to make section 360cc “disease-specific, not drug-specific,” and the rest of the statutory language focuses on protecting approved indications, not intended off-label uses.  The statute creates limits on the approval of an “application,” which by implication directs FDA to evaluate what is written on the application.  An application will necessarily include only stated indications, not intended off-label uses. 

Second, FDA’s interpretation conforms to the statutory purposes of the Orphan Drug Act. Spectrum raises a number of policy arguments, urging primarily that the agency’s approach would undermine the Orphan Drug Act’s incentives for drug innovation.  But . . . innovation was not Congress’s only concern when it created the drug approval process.  Congress also sought to promote affordable drugs.  FDA’s interpretation accommodates both interests by allowing generic producers to enter the market for certain purposes while, at the same time, protecting a company’s right to market its pioneer drugs for exclusive uses. . . . 

To the extent FDA has discretion in choosing how best to implement the Orphan Drug Act, it is up to the agency to strike the balance between the congressional policy goals of drug affordability and innovation.  We will not impose a choice on FDA that Congress did not require.   Spectrum’s policy concerns cannot supplant FDA’s reasonable resolution of these issues, especially because we already rejected similar arguments that allowing labeling carve-outs at all under the Food, Drug, and Cosmetic Act undermines the exclusivity rights of producers of pioneer drugs.  See Bristol-Myers, 91 F.3d at 1499-1501.  There is nothing in the Orphan Drug Act that changes our view.  [(Some internal citations omitted; emphasis in original.)]

Spectrum further argued that even if the Orphan Drug Act doesn’t require FDA to take into account the intended off-label use of a generic drug, FDA’s orphan drug regulations do.  For example, FDA’s regulation at 21 C.F.R. § 314.3(b)(14) defines the term “same drug” to mean, in part, “a drug that contains the same active moiety as a previously approved drug and is intended for the same use as the previously approved drug” (emphasis added).  This argument also missed the mark, found the Court:

We agree with FDA and conclude that during the approval process, the agency can look solely to Sandoz’s labeling claims to determine the intended use of its drug.  FDA’s approach here is consistent with how the agency has interpreted “intended use” outside of the ANDA approval context to mean “the objective intent of the persons legally responsible for the labeling of drugs.”  21 C.F.R. § 201.128.  Under that regulation, intent “is determined by such persons’ expressions” or “may be shown by the circumstances surrounding the distribution” of the drugs. Id. (emphasis added).  For example, intent may be shown by “labeling claims” or other statements by drug manufacturers.  Id.  To be sure, FDA recognizes that there may be situations in which it will look beyond just the manufacturer’s statements, but nothing in its regulations requires FDA to do so.  FDA’s decision to look to Sandoz’s labeling claims as an objective measure of Sandoz’s intent is reasonable and consistent with FDA’s regulations.

The Court was also unpersuaded by Spectrum’s remaining two arguments. 

With respect to Spectrum’s argument that FDA’s approval of Sandoz ANDA 203563 in a large vial size entailed an unjustified policy change in light of an earlier general draft guidance document on allowable excess volume and labeled vial size in injectable drug products, the Court found that “there was no departure that would demand explanation here.”  “The guidance document at issue,” said the Court, “offers a general approach for pharmaceutical drugs, and such broad guidance must give way to more specific risk analysis by the agency.” 

Finally, Spectrum’s argument that FDA was required to give the company notice and an opportunity to be heard before expediting review of Sandoz ANDA 203563 in response to a drug shortage also fell flat with the Court, disagreeing with Judge Lamberth on this issue.  The Orphan Drug Act (FDC Act § 527(b)(1)) provides that FDA can approve another application for a drug protected by orphan drug exclusivity if FDA finds, “after providing the holder notice an opportunity for the submission of views,” that the company with orphan drug exclusivity “cannot assure the availability of sufficient quantities of the drug to meet the needs [of patients] with the disease or condition for which the drug was designated.”  FDA’s regulation at 21 C.F.R. § 316.36 implements this provision and largely tracks the statute.  But as the Court correctly states, these provisions don’t apply in the case where an ANDA is to be approved for a use not protected by orphan drug exclusivity:

The Orphan Drug Act creates a notice obligation only when FDA abrogates a pioneer drug’s period of market exclusivity. . . .  The clear purpose of the notice obligation is to protect the rights of producers of pioneer drugs in the event FDA decides a drug shortage requires it to eliminate those rights.  In contrast, the statute says nothing at all about notice requirements when FDA expedites its review of an ANDA or simply evaluates a drug shortage without more. . . .  Because FDA did not cut short Spectrum’s period of market exclusivity, Spectrum was not entitled to notice and an opportunity to be heard before the agency approved Sandoz’s ANDA.

Hopefully the Circuit Court’s panel decision marks the end of the matter, though we’ll be waiting intently to see if a petition for rehearing/rehearing en banc is filed in the coming weeks.