United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 9, 2006 Decided March 16, 2006
Nos. 05-5401 & 05-5460
TEVA PHARMACEUTICALS USA, INC.,
APPELLEE
v.
FOOD & DRUG ADMINISTRATION, ET AL.,
APPELLANTS
APOTEX INC.,
APPELLANT
Appeals from the United States District Court
for the District of Columbia
(No. 05cv01469)
Jeffrey S. Bucholtz, Deputy Assistant Attorney General,
U.S. Department of Justice, argued the cause for federal
appellants. With him on the briefs were Peter D. Keisler,
Assistant Attorney General, Eugene M. Thirolf, Director, and
Andrew E. Clark, Attorney.
William A. Rakoczy argued the cause for appellant
Apotex Inc. With him on the briefs were Christine J. Siwik,
Lara E. Monroe-Sampson, and Arthur Y. Tsien.
2
Jay P. Lefkowitz argued the cause for appellee. With
him on the brief was Steven A. Engel, John C. O’Quinn, and
Michael D. Shumsky.
Before: RANDOLPH and TATEL, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge RANDOLPH.
RANDOLPH, Circuit Judge: The Federal Food, Drug, and
Cosmetic Act grants a 180-day exclusive marketing period to
the first generic drug manufacturer to file an Abbreviated New
Drug Application (“application”) that contains a challenge to the
patents protecting a brand name drug. This exclusivity period
begins to run either upon “notice [to the FDA] of the first
commercial marketing of the drug” or on “the date of a decision
of a court . . . holding the patent [to the branded drug] to be
invalid or not infringed, whichever is earlier.” 21 U.S.C.
§ 355(j)(5)(B)(iv) (2000).1 The meaning of the court decision
trigger is before this court for the fifth time.2
We will assume familiarity with the statutory scheme
governing generic drug approval, which we have described in
previous opinions. See Teva Pharms., USA, Inc. v. FDA, 182
1
Congress eliminated the court decision trigger in 2003. See
Medicare Prescription Drug, Improvement, and Modernization Act of
2003, Pub. L. No. 108-173, § 1102(a), 117 Stat. 2066, 2457-60
(codified as amended at 21 U.S.C. § 355(j)(5)(B)(iv), (D)). This
amendment does not apply here because the application was filed
before the amendment entered into force. Id. § 1102(b).
2
See Mova Pharm. Corp. v. Shalala, 140 F.3d 1060 (D.C. Cir.
1998); Purepac Pharm. Co. v. Friedman, 162 F.3d 1201 (D.C. Cir.
1998); Teva Pharms., USA, Inc. v. FDA, 182 F.3d 1003 (D.C. Cir.
1999) (“Teva I”); Teva Pharms., USA, Inc. v. FDA, No. 99-5287, 2000
WL 1838303 (D.C. Cir. Nov. 15, 2000) (“Teva II”).
3
F.3d 1003, 1004-05 (D.C. Cir. 1999) (“Teva I”); Purepac
Pharm. Co. v. Friedman, 162 F.3d 1201, 1202-04 (D.C. Cir.
1998); Mova Pharm. Corp. v. Shalala, 140 F.3d 1060, 1063-65
(D.C. Cir. 1998). As to the facts, Bristol-Myers Squibb Co.
manufactures and sells pravastatin sodium tablets under the
brand name “Pravachol.” Pravachol is a cholesterol-reducing
medication that had $2 billion in domestic sales in 2004.
Bristol-Myers owns or holds licenses to four patents covering
Pravachol. The patent on the molecule itself (the “product
patent”) expires on April 20, 2006.3 The remaining patents,
which protect particular formulations of the drug and methods
for its use, expire in several years.
On December 20, 2000, Teva Pharmaceuticals USA, Inc.
filed the first application to market generic pravastatin sodium
in 10, 20, and 40 mg tablets. Teva certified that it would not
market its generic version of Pravachol until after the product
patent expired. See 21 U.S.C. § 355(j)(2)(A)(vii)(III) (2000).
Teva challenged the remaining patents by filing a certification
that they are “invalid or will not be infringed” by the generic
product. See id. § 355(j)(2)(A)(vii)(IV) (2000). Such
“paragraph IV” certifications are acts of patent infringement, see
35 U.S.C. § 271(e)(2)(A), (5), and they trigger statutory notice
requirements to allow the patentholder to bring suit. See 21
U.S.C. § 355(j)(2)(B), (5)(B)(iii) (2000). They also confer upon
the first filer the 180 days of marketing exclusivity that are
disputed in this case. Id. § 355(j)(5)(B)(iv) (2000).
Bristol-Myers did not sue Teva or any of the other seven
generic drug manufacturers that filed applications containing the
3
The product patent itself expired on October 20, 2005. The
FDA granted Bristol-Myers an additional six months of exclusivity
because Pravachol was tested for pediatric indications. See 21 U.S.C.
§ 355a. Bristol-Myers’s exclusivity with respect to the pravastatin
sodium molecule therefore expires on April 20, 2006.
4
identical patent certifications.4 Intervenor Apotex Inc., one such
generics manufacturer, nevertheless sued Bristol-Myers in the
Southern District of New York in October 2003. Apotex sought
a declaration that Bristol-Myers’s three patents covering
Pravachol’s formulation and method of use were invalid or not
infringed by Apotex’s generic pravastatin sodium product.
Bristol-Myers did not answer the complaint; it instead moved to
dismiss the complaint for lack of subject matter jurisdiction.
The district court ultimately did not rule on this motion. On July
23, 2004, the court entered a “stipulation and order” signed by
the parties. The stipulation and order stated that because
“[Bristol-Myers] repeatedly represented and assured Apotex
that, notwithstanding any disagreement on the scope or
interpretation [of the disputed patents], it had no intention to
bring suit against Apotex for infringement,” Apotex stipulated
that its complaint be dismissed “for lack of subject matter
jurisdiction.” Apotex Inc. v. Bristol-Myers Squibb Co., No. 04
CV 2922, at 3 (S.D.N.Y. July 23, 2004) (“Apotex”).
With this stipulation in hand, Apotex asked the Food and
Drug Administration to rule that Apotex’s New York litigation
produced a “decision of a court” that triggered Teva’s
exclusivity period for generic pravastatin sodium. Cf. Minn.
Mining & Mfg. Co. v. Barr Labs., Inc., 289 F.3d 775, 780 (Fed.
Cir. 2002) (holding termination of second filer’s litigation can
trigger first filer’s exclusivity and citing Teva I, 182 F.3d at
1010). In a letter to Teva and the other generic pravastatin
sodium applicants, the FDA concluded that the Apotex
“stipulation and order” qualified as a “decision of a court” under
21 U.S.C. § 355(j)(5)(B)(iv)(II) (2000), and that Teva’s period
of exclusivity therefore began to run on the date the stipulation
4
The FDA tentatively approved Teva’s application, subject to
expiration of the product patent, on May 15, 2002. The agency took
the same action on intervenor Apotex’s application on September 30,
2003.
5
and order became final, August 22, 2004. See Letter from Gary
Buehler, Director, FDA Office of Generic Drugs, to Philip
Erickson, Teva Pharms. USA (June 28, 2005) (“Letter”),
reprinted in Joint Appendix (J.A.) 990. Under the FDA’s
decision, Teva’s period of exclusivity would run out before the
product patent expired, thereby allowing all manufacturers to
enter the market at the same time in April 2006.
Teva challenged the FDA’s decision in the instant case.
The district court granted Teva’s requests for a declaration that
the FDA’s conclusions were contrary to law and for injunctive
relief preventing the FDA from approving any other generic
pravastatin sodium application sooner than 180 days after Teva
begins marketing its product. Teva Pharms. USA, Inc. v. FDA,
398 F. Supp. 2d 176, 192-93 (D.D.C. 2005). The district court
concluded that the voluntary dismissal of Apotex’s declaratory
judgment action did not meet the statutory definition of a
“decision of a court.” Id. at 190-91.
The district court consolidated Teva’s motion for a
preliminary injunction with a final decision on the merits, FED.
R. CIV. P. 65(a)(2), and treated it as “akin [to a motion for]
summary judgment.” 398 F. Supp. 2d at 181 & n.1. We
therefore review the district court’s legal determination de novo.
See SEC v. Bilzerian, 29 F.3d 689, 695 (D.C. Cir. 1994). “[I]n
effect,” we “review directly the decision of the [Agency]” under
the familiar standards of the Administrative Procedure Act, 5
U.S.C. § 706(2). Lozowski v. Mineta, 292 F.3d 840, 845 (D.C.
Cir. 2002).
The FDA treated the Apotex dismissal as a “decision of
a court . . . holding the patent . . . invalid or not infringed,” 21
U.S.C. § 355(j)(5)(B)(iv)(II) (2000), solely because it thought
our decisions in Teva I and Teva Pharms., USA, Inc. v. FDA,
No. 99-5287, 2000 WL 1838303 (D.C. Cir. Nov. 15, 2000)
6
(“Teva II”), compelled that result. The FDA stated that “under
the rule of Teva, [the Apotex] dismissal qualifies as a court
decision.” It understood “the rule of Teva” to be “that a
dismissal of a declaratory judgment action . . . can qualify as a
‘decision of a court’ . . . if the dismissal estops a future action
against the [applicant] for infringement of the patent with
respect to that drug product.” Letter at 2.
Our decisions never announced such a rule. In Teva I,
we considered the FDA’s determination that a district court’s
dismissal of a patent declaratory judgment action for lack of
subject matter jurisdiction was not a “decision of a court.” We
found the FDA’s conclusion to be “arbitrary and capricious
inasmuch as the FDA [took] an inconsistent position in another
case and failed to explain adequately the inconsistency.” Teva
I, 182 F.3d at 1004. The Teva I court found the FDA’s
reasoning inadequate for three reasons. The court first held that
the terms “decision” and “holding” in 21 U.S.C.
§ 355(j)(5)(B)(iv)(II) (2000) were ambiguous. Id. at 1007-08.
Although the court stated that the statute could be interpreted to
include dismissals of declaratory judgment actions as triggering
events, id. at 1008-09, it left the final decision to the FDA: “The
. . . dismissal would appear to meet the requirements of a ‘court
decision’ under § 355(j)(5)(B)(iv)(II). On remand, of course,
the FDA will have the opportunity to explain why it fails to meet
them.” Id. at 1009 (emphasis added). Second, the court found
the terms “invalid” and “not infringed” to be ambiguous, and
faulted the FDA for failing to reconcile its decision in the case
with its own regulation. Id. at 1009-10. Third, the court found
that the FDA acted contrary to its own published “Guidance for
Industry” and prior decisions. Id. at 1010. We declined to
evaluate the reasonableness of the FDA’s statutory interpretation
because the agency provided no explanation why it thought
dismissals for lack of jurisdiction were or were not triggering
events. Id. at 1011-12. In sum, the court stated that its
7
“decision . . . rest[ed] on the FDA’s failure to explain adequately
its refusal to treat the . . . dismissal as a triggering ‘court
decision.’” Id. at 1012.
When the case returned to this court after remand, we
affirmed this understanding of Teva I: “In Teva I, we remanded
the case . . . to afford the agency the opportunity to address the
merits of Teva’s contention that the . . . dismissal satisfies the
court decision requirement.” Teva II, 2000 WL 1838303, at *1
(internal quotation marks and citations omitted); see also id. at
*3 (Edwards, C.J., concurring in part and dissenting in part)
(noting that the Teva I court “did not . . . purport to render a final
judgment on” the correct interpretation of the statute). “The
FDA did not meaningfully address [the] question on remand,”
however, and the court once again found that the FDA’s
decision “fail[ed] for want of reasoned decisionmaking.” Id. at
*1-2.
Teva I’s approach was consistent with longstanding
practice in this circuit. In a suit challenging agency action, “it
is not for the court ‘to choose between competing meanings’” of
an ambiguous statute when the agency charged with its
administration has not weighed in first. PDK Labs., Inc. v. DEA,
362 F.3d 786, 798 (D.C. Cir. 2004) (quoting Alarm Indus.
Commc’ns Comm. v. FCC, 131 F.3d 1066, 1072 (D.C. Cir.
1997)). When a statute is ambiguous, Congress has left a gap
for the agency to fill. See Chevron USA Inc. v. Natural Res.
Def. Council, 467 U.S 837, 843-44 (1984). A court’s
interpretation prevails only if it “follows from the unambiguous
terms of the statute and thus leaves no room for agency
discretion.” Nat’l Cable & Telecomms. Ass’n v. Brand X
Internet Servs., 125 S. Ct. 2688, 2700 (2005). We therefore
generally remand for an agency to make the first interpretation
of an ambiguous statutory term when it has failed to do so
previously. PDK Labs., 362 F.3d at 797-98; see also Arizona v.
8
Thompson, 281 F.3d 248, 253-54 (D.C. Cir. 2002); Transitional
Hosps. Corp. of La., Inc. v. Shalala, 222 F.3d 1019, 1028-29
(D.C. Cir. 2000); Prill v. NLRB, 755 F.2d 941, 956-57 (D.C. Cir.
1985). Teva I found the court decision trigger to be ambiguous,
but the FDA provided no interpretation of its own. Teva I, 182
F.3d at 1007. There is no indication that the Teva I court
intended to depart from this norm and establish its own binding
interpretation.
We follow the same practice in this case. The FDA
mistakenly thought itself bound by our decisions in Teva I and
Teva II. This error renders its decision arbitrary and capricious.
See Astroline Commc’ns Co. L.P. v. FCC, 857 F.2d 1556, 1573
(D.C. Cir. 1988). “[A]n order may not stand if the agency has
misconceived the law.” SEC v. Chenery Corp., 318 U.S. 80, 94
(1943). The FDA’s “stated rationale for its decision is
erroneous” and “we cannot sustain its action on some other basis
[it] did not mention.” PDK Labs., 362 F.3d at 798. While the
statute may preclude treating voluntary dismissals (or, for that
matter, dismissals under FED. R. CIV. P. 12(b)(1), see Teva I,
182 F.3d at 1008) as triggering events, we express no opinion on
the matter. See id. at 1007-08. It is up to the agency to “bring
its experience and expertise to bear in light of competing
interests at stake” and make a reasonable policy choice. PDK
Labs., 362 F.3d at 797-98. The FDA has not yet done so.5
Although the district court did not consider whether Teva
5
The FDA states that in the absence of any perceived Teva I
constraint, it would employ a “textual” approach to interpreting the
statute, and would take the position that dismissals of declaratory
judgment actions are not court decisions holding a patent to be invalid
or not infringed. Br. for the Fed. Appellants 26-27. The agency took
a similar position in Teva I but failed to provide adequate explanation.
In this litigation the FDA still has not answered the questions put to it
by the Teva I court.
9
I established a binding interpretation of the statute, that issue
was fully briefed below. See EEOC v. Aramark Corp., Inc.v,
208 F.3d 266, 268 (D.C. Cir. 2000). We therefore vacate the
district court’s judgment and remand with instructions to vacate
the FDA’s decision and remand to the agency for further
proceedings. The mandate shall issue forthwith.
So ordered.