Can a CRL Be Final Agency Action: One Step Closer to Finding Out

FDA has long taken the position that a Complete Response Letter (“CRL”)—a letter sent when FDA has determined that it “cannot approve” a New Drug Application (“NDA”) or an Abbreviated New Drug Application (“ANDA”) “in its present form”—is not a final agency action and thereby not subject to challenge in Court.  Instead, the Agency argues, sponsors can either resolve the requested deficiencies and resubmit the application, withdraw the application, or request a hearing on the CRL pursuant to 21 C.F.R. § 314.110(c).  This position leaves sponsors with very few options for timely resolution of a CRL dispute: The sponsor can file a Request for Reconsideration or a Formal Dispute Resolution Request, to which FDA has no obligation to respond in a timely fashion (only a goal of 30 days), or that sponsor can request a hearing to ask FDA to hold an optional hearing that would take FDA at least another 120 days to grant or deny, making the sponsor potentially to await both the hearing and/or a decision published in the Federal Register.  The legitimacy of that position was undercut in a recent decision of the D.C. Circuit Court of Appeals.

FDA’s position that sponsors must request an administrative hearing prior to challenging in court a CRL as a final agency action adds about six months until the sponsor can even commence a judicial challenge to any CRL deficiencies.  And while the Agency evaluates the Request for a Hearing on the CRL deficiencies, the one-year time period to respond to the CRL deficiencies ticks away; and at the end of that period, FDA can deem the application withdrawn (or, at its discretion, award a six-month extension, which, in turn, would extend the Agency’s review goal date).  21 C.F.R. § 314.110(c).  Essentially, FDA’s position postponing the reviewability of CRLs can push an applicant into regulatory purgatory so that it may take years to see any recourse from courts.  In other words, by postponing the ripeness of a CRL, FDA effectively may render the CRL too stale to challenge.

Though challenging CRL deficiencies in Court is often fruitless given that courts almost always defer to FDA on matters of scientific judgment under Chevron, potentially rendering this policy inconsequential, there are a few circumstances in which a Court may actually look at the merits of a CRL.   Under FDCA § 505(j)(3)(C), for example, “any agreement regarding the parameters of design and size of bioavailability and bioequivalence studies” reduced to writing cannot be changed after testing begins without the sponsor’s agreement unless FDA identifies “a substantial scientific issue essential to determining the safety of effectiveness of the drug . . . .”  If FDA violates this provision (or any similar provision) by forcing sponsors to perform studies after agreeing to their proposed studies based on scientific information long available to the Agency, it makes sense that the sponsor would want to challenge the decision both as soon as possible and prior to determining its next steps.  And in an effort to provide sponsor access to judicial review, the FDCA permits, under FDCA § 505(h), appeal “by the applicant from an order of the Secretary refusing or withdrawing approval of an application under” FDCA § 505.  But FDA’s position is that a CRL is not an “order” and is therefore not eligible for judicial review unless and until the sponsor requests a hearing, FDA makes a determination on that hearing, potentially holds a hearing, then issues a Federal Register notice denying approval.

In a recent case that Hyman, Phelps & McNamara, P.C. and Upadhye Tang LLP filed against FDA in the D.C. Circuit, their client Nostrum Laboratories sought judicial review after FDA agreed to allow a certain type of study to establish bioequivalence for generic theophylline, Nostrum conducted those studies, and then FDA issued a CRL asking for new, time-consuming, expensive studies of a different sort.  The CRL was issued on July 21, 2020 on Nostrum’s Prior Approval Supplement ANDA seeking approval to move its manufacturing facilities.  In support of the PAS, at FDA’s instruction and pursuant to a Product Specific Guidance, Nostrum performed what is referred to two-way crossover bioequivalence studies, only for FDA to issue a CRL asking for four-way crossover studies, a totally different study design.  After repeated outreach to various officials at the Agency and several Requests for Reconsideration, the latest of which remained pending five months after submission, Nostrum filed suit under FDCA § 505(h) challenging the CRL as an “order” refusing approval of its ANDA.

The Government swiftly moved to dismiss, arguing that the CRL is not an order but an interlocutory action “that does not constitute a final decision by the agency” about whether an application will be approved or disapproved.   The Government further refused to produce the Administrative Record, preventing Nostrum from determining whether there are documents that are not in Nostrum’s possession that could bolster its arguments.  FDA raised other arguments about the pending Requests for Reconsideration that challenged whether judicial review was premature.

In response, Nostrum argued that a CRL is final agency action under both the plain language of the FDCA and FDA’s implementing regulations.  Because Nostrum refused to make the changes required by the CRL, Nostrum argued, the Agency inherently has refused to approve that application.  Nostrum noted that FDA regulations define a CRL as a determination that FDA “will not approve the application or abbreviated application in its present form.”  Nostrum argued that, if the sponsor will not make the changes FDA demands to approve the application, and because the CRL states that the application cannot be approved in “its present form,” the CRL constituted an Order of FDA subject to review by the D.C. Circuit Court.  Nostrum further argued that the Request for Hearing is optional because the FDCA states only that the applicant can “elect[] to accept the opportunity for hearing. . . ” upon receipt of a CRL.

After a series of a briefings, the D.C. Circuit motions panel declined to grant the FDA Motion to Dismiss.  Instead, the decision will allow FDA to raise the argument again before a merits panel of the same court, allowing Nostrum’s standing argument to live to see another day.  While the Court has not decided whether a CRL is final agency action, the decision suggests that appealing a CRL will not automatically lead to dismissal without any evaluation of the merits of the case.  Importantly, in this case, where FDA refused to provide the Administrative Record which would reflect any underlying determinations by the Agency with respect to the Nostrum PAS and the necessary bioequivalence testing, Nostrum now gets to review that Administrative Record in order to establish that the underlying CRL decision is final agency action, and was unlawful.

Admittedly, this decision does not determine that the CRL is a final agency action, but it does give litigants a fighting chance to challenge a CRL without jumping through all the bureaucratic hoops that the Agency insists upon and that can delay judicial review of a CRL indefinitely.  It also provides access to the Administrative Record, even over FDA’s delay, so that the litigant can more effectively make its case.  Maybe, just maybe, a CRL can be final agency action, but it’s going to take another round of briefings, and a decision of the D.C. Circuit Court, to find out.