On Second Thought: DC District Court Does a 180 on PREPOPIK NCE Exclusivity; Remands to FDA

By Kurt R. Karst –

What a difference a few precedents can make! In a rather surprising turn of events, Judge Rudolph Contreras of the U.S. District Court for the District of Columbia issued a Memorandum Opinion last Friday granting a Motion for Reconsideration filed by Ferring Pharmaceuticals Inc. (“Ferring”) requesting reconsideration of the DC District Court’s March 15, 2016 ruling that FDA’s pre-October 10, 2014 interpretation of the FDC Act’s five-year New Chemical Entity (“NCE”) exclusivity provisions as applied to a newly approved Fixed-Dose Combination (“FDC”) drug product containing an NCE and a previously approved drug – and specifically, to Ferring’s PREPOPIK (sodium picosulfate, magnesium oxide, and citric acid) for Oral Solution (NDA 202535; approved on July 16, 2012) – was not arbitrary and capricious.  Judge Contreras also denied as moot Renewed Motions for Summary Judgment filed by Ferring and FDA (here and here) and a Motion to Intervene and Motion for Summary Judgment filed by proposed intervenor (and ANDA applicant) Par Pharmaceutical, Inc. (“Par”).

As we previously reported (here and here), a lot of events led up to FDA’s denial of NCE exclusivity for PREPOPIK, and to Ferring’s June 2015 lawsuit against FDA. In fact, like a lot of recent controversies involving NCE exclusivity (see, e.g., here), the seeds for Ferring’s lawsuit were sown in the early years after the enactment of the Hatch-Waxman Amendments in the Agency’s proposed and final regulations and in cases like Abbott Labs. v. Young, 920 F.2d 984 (D.C. Cir. 1990) (here). 

If a drug product contains any previously approved active moiety (i.e., if it is not composed of all NCEs), then FDA historically denied NCE exclusivity and granted 3-year exclusivity, provided the statutory requirements were met.  Up until October 2014, this meant that order counted, and that to obtain NCE exclusivity for a FDC drug product containing new and old actives, the NCE component must have been approved first, followed by the combination drug.  In that case, NCE exclusivity granted with respect to the single entity approval applied to the combination drug under FDA’s so-called “umbrella policy,” as FDA articulated in the preamble to the Agency 1989 proposed rule implementing the Hatch-Waxman Amendments.  See 54 Fed. Reg. 28,872, 28,898-99 (July 10, 1989) (“[T]he agency interprets [5-year NCE exclusivity] to cover any subsequent approval of an application or supplemental application for a different ester, salt, or other noncovalent derivative, or a different dosage form, strength, route of administration, or new use of a drug with the same active moiety. Any modification to the product will be protected for the period of exclusivity remaining on the original application, unless the change occurs after or toward the end of the initial 5 years of exclusivity and independently qualifies for exclusivity under another exclusivity provision.”).

On October 10, 2014, after the Agency had received several citizen petitions challenging the Agency’s interpretation of the FDC Act’s NCE exclusivity provisions with respect to certain FDCs (including PREPOPIK), FDA released on the Agency’s website a final guidance document (see our previous post here) reinterpreting the statutory NCE exclusivity provisions to award NCE exclusivity for a newly approved FDC drug product containing an NCE and a previously approved drug.  As summarized by Judge Contreras in his March 2016 Memorandum Opinion:

[P]rior to 2014, the FDA interpreted the five-year exclusivity provision to provide that only drug products containing no previously approved drug substances were eligible for exclusivity.  Once eligible, however, the FDA interpreted the bar clause to bar all ANDAs and 505(b)(2) applications referencing that drug product or any later-approved products containing the product’s drug substances, in order to preserve the innovator’s exclusivity to the greatest extent possible. [(Emphasis in original)]

But, as emphasized above, and as explained in FDA’s guidance document and in various Citizen Petition Responses (see, e.g., here), FDA refused to apply the Agency’s new interpretation to NDAs for FDCs approved prior to October 2014.  Sponsors of NDAs for pre-October 2014 FDC drug products were out of luck – or so it seemed – and would be subject to the “old rules” on NCE exclusivity eligibility, according to FDA.

Enter Ferring’s June 2015 lawsuit against FDA, in which Ferring alleged that FDA’s actions violated the Administrative Procedure Act (“APA”), the FDC Act, and the Agency’s regulations. Specifically:

First, Ferring contends that the FDA’s prior interpretation, under which PREPOPIK was denied five-year exclusivity, contravened the plain language of the FDCA. Second, Ferring argues that, even if the language of the FDCA is ambiguous, the FDA’s interpretive choice to read “drug” in the eligibility clause to mean “drug product” was an unreasonable reading of the statute or was arbitrary and capricious because it treated similarly situated parties differently. Finally, Ferring claims that, even if the FDA’s prior interpretation was permissible, its decision not to apply the new interpretation retroactively was arbitrary and capricious.

Reviewing the case under the familiar Chevron analysis, Judge Contreras considered the term “drug” in the FDC Act’s NCE exclusivity provisions to be ambiguous, thus requiring an evaluation of FDA’s pre-October 2014 interpretation of the statute under Step Two of the Chevron inquiry.  The bottom line, said Judge Contreras in his March 2016 Memorandum Opinion, is that FDA’s interpretation is reasonable:

As a result of the statute’s ambiguity, the FDA was left to determine at what level of specificity to define “drug”: at the “drug product” level, and in reference to all of the product’s “drug substances,” or at the “drug substance” level. Although scientific and policy considerations may have now persuaded the FDA to modify its interpretation, given the statutory ambiguity and the considerations discussed above, it was neither unreasonable nor arbitrary and capricious for the FDA to define “drug,” in the “eligibility clause” as “drug product,” and to thereafter ensure the greatest benefit for pharmaceutical manufacturers who are provided with exclusivity by interpreting “drug” in the “bar clause” as “drug substance.” Therefore, Ferring’s Chevron Step Two argument fails.

That decision left remaining Ferring’s argument that FDA acted arbitrarily and capriciously when the Agency decided not to apply the Agency’s October 2014 reinterpretation retroactively, and only prospectively, thereby denying NCE exclusivity for PREPOPIK. On that issue, Judge Contreras said that he needed more from the parties, and directed FDA and Ferring to file renewed Motions for Summary Judgment “that more fully address the retroactivity issue. . . .” Meanwhile, Par, which submitted an ANDA to FDA on May 21, 2014 containing a Paragraph IV certification to a patent listed in the Orange Book for PREPOPIK, sought to intervene in the case. 

Ferring, in the company’s Motion for Reconsideration, latched on to one “out” offered up by Judge Contreras in his March 2016 ruling. Judge Contreras conceded that “[i]f there were, in fact, situations in which a drug was eligible for five-year [NCE] exclusivity under the FDA’s prevailing interpretation but failed to receive it because of the order in which it was approved, those circumstances might render the FDA’s policy arbitrary and capricious.”  According to Ferring, “there were indeed drug products that were denied NCE exclusivity precisely because of the order in which they were approved” . . . . and some those drug products, like PREPOPIK, were also the subject of Citizen Petitions submitted to and ruled on by FDA.   In addition to PREPOPIK, Ferring points to STRIBILD (elvitegravir, cobicistat, emtricitabine, tenofovir disoproxil fumarate) Tablets (Docket No. FDA-2013-P-0058), NATAZIA (estradiol valerate and estradiol valerate/dienogest) Tablets (Docket No. FDA-2013-P-0471) (see our previous posts here and here), ANORO ELLIPTA (umeclidinium bromide; vilanterol trifenatate), and NUVARING (ethinyl estradiol; etonogestrel) as examples that “demonstrate that a single-entity drug substance’s ability to receive five-year exclusivity can turn arbitrarily on the order in which NDAs including that drug substance are approved.”  STRIBILD in particular, says Ferring, “exemplifies the arbitrariness of FDA’s NCE exclusivity policy.”

With these precedents in hand, Judge Contreras now had the ammunition necessary to find FDA’s pre-October 2014 interpretation of NCE exclusivity, as applied to PREPOPIK, to be arbitrary and capricious and in violation of the APA.

In its prior Memorandum Opinion, the Court believed that the sequence Ferring identified was simply a necessary outgrowth of the FDA’s umbrella policy: that is, manufacturers generally developed a new, novel drug substance, obtained approval of that drug substance in a single-entity version, and then sought protection under the umbrella policy for any later drug products which incorporated that novel drug substance with other, previously approved drug substances. . . . it appeared to the Court that the FDA was not treating similarly situated drug substances differently and that there did not exist examples in which the temporal sequence of drug product approvals was outcome determinative. . . .

In its motion for reconsideration, however, Ferring now provides three examples that lead the Court to doubt the factual basis for its prior conclusion. In each instance, a drug substance that had never been previously approved was included as part of a fixed-combination drug product (a fixed-combination drug product that did not receive five-year exclusivity because it contained other, previously approved drug substances).  And, in each case, a single-entity version of the drug substance was later approved, but did not receive the benefit of a five-year exclusivity period, because the drug substance had been previously approved as part of the fixed-combination product. . . .

These newly highlighted examples now show that, even if the FDA’s prior interpretation is reasonable under Chevron Step Two from a conceptual standpoint, that interpretation produces circumstances that fail to treat “similar cases in a similar manner.” [(Internal citations omitted)]

Thus, ruled Judge Contreras, “FDA’s prior interpretation was arbitrary and capricious,” and Ferring’s initial Motion for Summary Judgment should have been granted. Accordingly, Judge Contreras remanded the action to FDA for further proceedings consistent with his Memorandum Opinion. 

Where do we go from here?  We’ll see . . .  eventually.  After surveying the landscape of affected drugs (as well as ANDA submissions), FDA (or Par) could appeal the decision to the U.S. Court of Appeals for the District of Columbia Circuit, or render a new decision on remand denying NCE exclusivity but that somehow still adheres to Judge Contreras’s decision.   Alternatively, FDA could accept the District Court’s decision, grant NCE exclusivity to PREPOPIK and similarly situated NDA sponsors, and deal with the ANDA fallout.