United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 9, 2005 Decided June 3, 2005
No. 05-5004
TEVA PHARMACEUTICAL INDUSTRIES LTD . AND
TEVA PHARMACEUTICALS, USA, INC.,
APPELLANTS
v.
LESTER M. CRAWFORD, JR., ACTING COMMISSIONER OF FOOD
AND DRUGS, ET AL.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 04cv01416)
William H. Rooney argued the cause for appellants.
With him on the briefs were Theodore C. Whitehouse and James
N. Czaban.
William A. Rakoczy, Christine J. Siwik, Amy D. Brody,
and Lara E. Monroe-Sampson were on the brief for amicus
curiae Mylan Pharmaceuticals, Inc. in support of appellants.
Jeffrey S. Bucholtz, Deputy Assistant Attorney General,
U.S. Department of Justice, argued the cause for federal
appellees. With him on the brief were Peter D. Keisler,
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Assistant Attorney General, Eugene M. Thirolf, Director,
Andrew E. Clark, Attorney, Alex M. Azar, II, General Counsel,
Food & Drug Administration, and Eric M. Blumberg, Deputy
Chief Counsel.
Bert W. Rein argued the cause for appellees Pfizer Inc.,
et al. With him on the brief were Karyn K. Ablin and Jeffrey B.
Chasnow.
Before: GINSBURG , Chief Judge, and SENTELLE and
ROGERS, Circuit Judges.
Opinion for the Court filed by Chief Judge GINSBURG.
GINSBURG, Chief Judge: Teva Pharmaceutical Industries
has sued to overturn the Food and Drug Administration’s denial
of its “citizen petition” requesting that the agency prohibit
Pfizer, Inc., the holder of the approved New Drug Application
(NDA) for gabapentin, from marketing that drug in “generic”
form during the 180-day exclusivity period provided by the
Drug Price Competition and Patent Term Restoration Act, also
known as the “Hatch-Waxman Amendments” to the Food, Drug,
& Cosmetic Act. Because the exclusivity provision does not
apply to the holder of an approved NDA, the district court
entered a summary judgment for the FDA, which we now
affirm.
I. Background
Section 355(j) of 21 U.S.C. provides that a drug
manufacturer may submit an “Abbreviated New Drug
Application” (ANDA) for approval to market a so-called
“generic” drug, which is the bioequivalent to a “branded” drug
previously approved pursuant to a NDA filed under 21 U.S.C.
3
§ 355(b). Unlike a NDA, an ANDA need not contain clinical
evidence of the safety or efficacy of the drug.
The ANDA must certify either that the approved product
is not protected by a patent or “that such patent is invalid or will
not be infringed by the manufacture, use, or sale of the new drug
for which the application is submitted.” 21 U.S.C. §
355(j)(2)(A)(vii)(para. IV). The statute rewards the first generic
applicant successfully to challenge the patent on an approved
drug with a 180-day exclusivity period during which no other
ANDA for the same drug may be approved. Id. at §
355(j)(5)(B)(iv).*
*
Prior to December 2003, § 355(j)(5)(B)(iv) provided:
If the [ANDA] contains a certification described in
subclause (IV) ... and is for a drug for which a previous
[ANDA] has been submitted under this subsection
[containing] such a certification, the [ANDA] shall be made
effective not earlier than one hundred and eighty days after --
(I) the date the Secretary receives notice from the
applicant under the previous [ANDA] of the first
commercial marketing of the drug under the previous
[ANDA], or
(II) the date of a decision of a court in an action ...
holding the patent which is the subject of the
certification to be invalid or not infringed,
whichever is earlier.
The Medicare Prescription Drug, Improvement, and Modernization
Act of 2003 (MMA), Pub. L. No. 108-173, 117 Stat. 2066 (Dec. 8,
2003), amended this provision, but it did not substantively alter the
statutory provisions at issue in this case. Because the decisions of the
FDA and of the district court refer to the pre-MMA text, we do so as
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Teva entered into an agreement by which Purepac
Pharmaceutical Co., the first ANDA filer to challenge the patent
for gabapentin, agreed to share its exclusivity period with Teva
in exchange for a portion of Teva’s revenues. During that
period, which ends on June 6, 2005, Pfizer has marketed its own
“generic” version of gabapentin, which it has priced
substantially below its name-brand equivalent (Neurontin),
packaged in “generic” trade dress, and distributed through many
of the same channels Teva uses for its generic product. Pfizer’s
so- called “brand-generic” or “authorized-generic” gabapentin
qualifies for “generic substitution” under state laws and third-
party purchasing plans, such as HMO formularies, and thus has
competed directly with Teva’s product during its period of
exclusivity.
Teva petitioned the FDA first simply to “prohibit the
marketing and distribution of ‘authorized generic’ versions of
brand name products until after the expiration of any ‘180-day
exclusivity period’ applicable to an [ANDA] for the drug
product.” Teva argued in the alternative that the FDA should
“require Pfizer to submit a pre-approval supplemental new drug
application (sNDA) [under 21 U.S.C. § 356a(d)] before
marketing or distributing any version of [a name-brand drug]
changed in any way such that the product purports to be,
resembles, or could be confused with, a generic (unbranded)
version of [the drug].”
By letter of July 2, 2004 the FDA denied Teva’s petition,
concluding § 355(j)(5)(B)(iv) “does not contemplate or
countenance delaying the marketing of authorized generics.”
The Agency further held “there is no statutory basis for
imposing categorical approval requirements for the marketing of
authorized generics, as a means to prevent their marketing
well.
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during a 180-day exclusivity period applicable to the drug under
an ANDA.”
Teva then brought this action in the district court, which,
like the Agency, concluded that “[n]othing in the statute
provides any support for the argument that the FDA can prohibit
NDA holders from entering the market with [an authorized]
generic drug during the exclusivity period.” Teva Pharm. Indus.
v. FDA, 355 F. Supp. 2d 111, 117 (D.D.C. 2004). The court
granted summary judgment for the FDA and Intervenor-
defendant Pfizer, from which Teva now appeals.
II. Analysis
Teva urges this court to adopt what it calls a “functional”
interpretation of § 355(j)(5)(B)(iv), arguing that “literal
interpretation cannot defeat statutory purpose”; the Congress’s
purpose, according to Teva, was to grant the first ANDA filer
complete exclusivity in the generic market for 180 days. The
FDA and Pfizer argue the words the Congress chose simply
cannot bear the result Teva seeks.
We review the FDA’s interpretation of the Act it
administers under the two-step framework of Chevron, U.S.A.,
Inc. v. NRDC, 467 U.S. 837 (1984); see Mylan Labs., Inc. v.
Thompson, 389 F.3d 1272, 1279 (D.C. Cir. 2004) (reviewing
FDA letter ruling on generic exclusivity under Chevron). We do
not reach step two, however, if the court, “employing traditional
tools of statutory construction, ascertains that Congress had an
intention on the precise question at issue[;] that intention is the
law and must be given effect.” Chevron, 467 U.S. at 843 n.9.
Of the traditional tools of statutory construction, the “cardinal
canon” is the first: We “must presume that a legislature says in
a statute what it means and means in a statute what it says ....
When the words of a statute are unambiguous ... this first canon
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is also the last: judicial inquiry is complete.” Conn. Nat’l Bank
v. Germain, 503 U.S. 249, 253-54 (1992).
Section 355(j)(5)(B)(iv) says nothing about how the
holder of an approved NDA may market its drug; rather, that
provision grants “exclusivity” to the first to file an ANDA
containing a paragraph IV certification by delaying the effective
date upon which the FDA may approve any subsequent ANDA
containing a paragraph IV certification with respect to the same
drug. Further, as the FDA explained in its decision letter, other
provisions of the Act “establish[] numerous express grounds for
refusal to approve [a NDA], and ... grounds for compelling the
withdrawal of previously approved products .... [but none]
addresses marketing arrangements in any manner.” See 21
U.S.C. § 355(d) & (e). Indeed, as Teva’s counsel conceded at
oral argument, prior to the Hatch-Waxman Amendments,
nothing in the Act prohibited the holder of an approved NDA
from marketing a “brand-generic” version of its drug; thus Teva
asks the court to declare that a previously lawful practice
became unlawful when the Congress passed a statute that said
nothing about that practice.
Teva’s argument proceeds from the following premises:
(1) the purpose of the 180-day exclusivity period was “to
encourage generic companies to file Paragraph IV challenges to
brand-drug patents”; (2) the marketing of a brand-generic
competitor during that period will reduce the revenues going to
the first to file an ANDA; and (3) such “brand-generic intrusion
[into the exclusivity period] developed only recently as a routine
brand-company business strategy.” Neither the FDA nor Pfizer
disputes any of these propositions. The parties part company,
however, when Teva goes on to argue that because the Congress
could not have anticipated brand-generic competition during the
exclusivity period, adhering to the “literal” terms of the statute
would lead to an absurd result, namely, that § 355(j)(5)(B)(iv)
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grants only a “meaningless” exclusivity against subsequent
ANDA filers rather than a “commercially effective” exclusivity
that runs against the NDA holder as well.
It does not follow, however, from the Congress having
intended to create an incentive to challenge brand-drug patents
-- as it clearly did -- that the incentive it created is without
limitation. Rather, as even the formal name of the Hatch-
Waxman Amendments (the Drug Price Competition and Patent
Term Restoration Act) reflects, the Congress sought to strike a
balance between incentives, on the one hand, for innovation, and
on the other, for quickly getting lower-cost generic drugs to
market. Because the balance struck between these competing
goals is quintessentially a matter for legislative judgment, the
court must attend closely to the terms in which the Congress
expressed that judgment. As Teva itself points out, without any
apparent sense of irony, the FDA may not
revise the specific statutory incentive that Congress
enacted or ... alter the means chosen by Congress to
implement its purpose by offering a different incentive.
See MCI Telecommunications Corp. v. AT&T, 512 U.S.
218, 231 n.4 (1994) (stating that agencies “are bound,
not only by the ultimate purposes Congress has selected,
but by the means it has deemed appropriate, and
prescribed for the pursuit of those purposes”).
The means the Congress “deemed appropriate, and
prescribed” to give generic drug makers an incentive to
challenge brand-drug patents is unambiguous: The FDA may
not approve a second or later ANDA containing a paragraph
(IV) certification until 180 days after the first filer with such a
certification begins commercially marketing the drug or wins a
court decision against the patent holder. There is simply no way
to read that limitation upon what the FDA may do in such a way
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as to prevent the holder of an approved NDA, which does not
need to file an ANDA and certainly would not challenge its own
patent, from marketing a brand-generic product. Nor, contra
Teva, is the result of reading the Act as it is written to render
“meaningless” the “specific statutory incentive that Congress
enacted.” For 180 days the generic market is the exclusive
preserve of two firms; absent an agreement of the sort by which
Teva itself entered the market for generic gabapentin, no other
firm may enter and take any part of either company’s market
share.
Finally, nothing in § 356a(d) -- which allows the FDA to
require the holder of an approved NDA to submit a
supplemental application for “manufacturing changes that are
not major” -- permits the agency to create a de facto type of
exclusivity against the NDA holder’s brand-generic drug. As
the FDA points out, the purpose of requiring a sNDA is to
“validate[] the effects of the change [in manufacturing] on the
identity, strength, quality, purity, and potency of the drug as
[they] may relate to the safety or effectiveness of the drug,” 21
U.S.C. § 356a(b). The FDA may not, as it says, “require sNDAs
... for reasons wholly unrelated to the safety or efficacy of the
brand company’s product.” Nor may the FDA use this general
authority to expand the specific but more limited grant of
exclusivity in § 355(j)(5)(B)(iv). Cf. Am. Petroleum Inst. v.
EPA, 52 F.3d 1113, 1119 (D.C. Cir. 1995) (“general grant of
rulemaking power ... cannot trump specific portions of the
[statute]”).
III. Conclusion
We hold § 355(j)(5)(B)(iv) of the Act clearly does not
prohibit the holder of an approved NDA from marketing, during
the 180-day exclusivity period, its own “brand-generic” version
of its drug. We therefore do not reach Teva’s argument that the
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FDA previously interpreted that section in a manner inconsistent
with its ruling in this case. For the foregoing reasons, the
judgment of the district court is
Affirmed.