United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 12, 2006 Decided November 14, 2006
No. 06-5154
RANBAXY LABORATORIES LIMITED, ET AL.,
APPELLEES
v.
MICHAEL O. LEAVITT, SECRETARY OF HEALTH AND HUMAN
SERVICES, ET AL.,
APPELLANTS
Appeal from the United States District Court
for the District of Columbia
(No. 05cv01838)
Howard S. Scher, Attorney, U.S. Department of Justice,
argued the cause for appellants. With him on the briefs were
Peter D. Keisler, Assistant Attorney General, Kenneth L.
Wainstein, U.S. Attorney, Douglas N. Letter, Attorney, and Eric
M. Blumberg, Deputy Chief Counsel, U.S. Department of Health
and Human Services. Drake S. Cutini, Attorney, U.S.
Department of Justice, entered an appearance.
Simon E. Dance was on the brief for amicus curiae Blue
Cross & Blue Shield Association, Inc. in support of appellants.
Carmen M. Shepard argued the cause for appellees
2
Ranbaxy Laboratories Limited, et al. With her on the brief were
Kate C. Beardsley and William B. Schultz.
Jay P. Lefkowitz argued the cause for appellee Teva
Pharmaceuticals, USA, Inc. With him on the brief were John C.
O’Quinn and Michael D. Shumsky.
Theodore Case Whitehouse was on the brief for amicus
curiae Generic Pharmaceutical Association in support of
appellees.
Before: GINSBURG, Chief Judge, and GRIFFITH and
KAVANAUGH, Circuit Judges.
Opinion for the Court filed by Chief Judge GINSBURG.
GINSBURG, Chief Judge: The Hatch-Waxman Amendments
to the Food, Drug, & Cosmetic Act provide a period of
marketing exclusivity to the first drug manufacturer that either
successfully challenges a patent listed by the Food and Drug
Administration for an approved, branded drug and markets an
approved generic version of that drug or prevails in litigation
establishing that the patent is valid or not infringed. Ranbaxy
Laboratories Limited and Ivax Pharmaceuticals, Inc., the latter
since acquired by Teva Pharmaceuticals, USA, Inc., applied for
approval of drugs to compete with an approved drug
manufactured by Merck & Co. and challenged two patents
covering it. Thereafter, at Merck’s request, the FDA removed
the challenged patents from the “Orange Book,” its listing of
patents covering approved drugs, thereby depriving the generic
manufacturers of an opportunity to have a period of marketing
exclusivity.
Ranbaxy and Teva each filed a “citizen petition” asking the
FDA to relist the two patents. The FDA denied the petitions
3
because Merck had not sued Ranbaxy or Teva for patent
infringement. Ranbaxy and Teva then repaired to the district
court, which entered a summary judgment for the plaintiffs, and
the FDA appealed.
We hold the FDA’s requirement that a generic
manufacturer’s patent challenge give rise to litigation as a
condition of retaining exclusivity when a patent is delisted is
inconsistent with the Act, which provides that the first generic
manufacturer to file an approved application is entitled to
exclusivity when it either begins commercially to market its
generic drug or is successful in patent litigation. Accordingly,
we affirm the judgment of the district court.
I. Background
Before marketing a new “branded” drug, the manufacturer
must file with the FDA a New Drug Application (NDA),
including evidence the drug is safe and effective, and the
identifying number and expiration date of any patent or patents
covering the drug. 21 U.S.C. § 355(a)-(b)(1). When it approves
the NDA, the FDA must publish the patent information, id.
§ 355(b)(1), (c)(2), which it does in Approved Drug Products
with Therapeutic Equivalence Evaluations, better known as the
Orange Book.
Before marketing a “generic drug,” which is bioequivalent
to a branded drug previously approved pursuant to an NDA, the
manufacturer may submit an Abbreviated New Drug
Application (ANDA). Unlike an NDA, an ANDA need not
contain evidence of the drug’s safety or efficacy. See 21 U.S.C.
§ 355(j)(2). Each ANDA, however, must contain:
a certification ... with respect to each patent which
claims [a drug or a method of using a drug listed in the
4
Orange Book] for which the applicant is seeking
approval under this subsection and for which
information is required to be filed under subsection (b)
or (c) of this section—
(I) that such patent information has not been
filed,
(II) that such patent has expired,
(III) [that] such patent will expire [on a
specified date], or
(IV) 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[.]
Id. § 355(j)(2)(A)(vii). The Act rewards the first manufacturer
to file an approved ANDA containing the certification in
paragraph IV by giving it a 180-day period of marketing
exclusivity, which begins with the earlier of the applicant’s first
commercial marketing of the generic drug or when the applicant
prevails in a suit over infringement or the validity of the patents
covering the branded drug. Id. § 355(j)(5)(B)(iii)-(iv).*
*
If the [ANDA] contains a certification described in
[paragraph] (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
5
When a patent is removed from the Orange Book (or, in the
parlance of the agency is “delisted”), the FDA by regulation
requires the sponsor of the corresponding ANDA to delete its
paragraph IV certification with respect to the delisted patent. 21
C.F.R. § 314.94(a)(12)(viii)(B).* If no patent covering the
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.
Id. § 355(j)(5)(B)(iv).
This provision was amended by the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA), Pub. L. No.
108-173, tit. XI, § 1102(a)(2)(D)(i)(I)(bb)(CC), (a)(2)(D)(ii), 117 Stat.
2066, 2457-59 (Dec. 8, 2003) (codified at 21 U.S.C.
§ 355(j)(5)(D)(i)(I)(bb)(CC), (j)(5)(D)(ii) (2003)). The decisions of
the FDA and of the district court were made pursuant to the Act as it
stood before the MMA and, because the MMA was not made
retroactive, § 1102(b)(1), 117 Stat. at 2460, this decision is also geared
to the Act pre-MMA.
*
If a patent is removed from the [Orange Book], any
applicant ... who has made a certification with respect to
such patent shall amend its certification. The applicant shall
certify ... that no patents [required to be listed in the Orange
Book] claim the drug or, if other relevant patents claim the
drug, shall amend the certification to refer only to those
relevant patents .... Once an amendment ... has been
submitted, the application will no longer be considered to be
one containing a [paragraph IV certification].
6
branded drug remains listed, then the generic applicant must file
a paragraph I certification, and the FDA treats the ANDA as
though it had never contained a paragraph IV certification. As
a result, the generic applicant that was first to file an approved
application does not get the 180-day period of exclusivity. See
id.
Merck, which marketed simvastatin under the brand name
Zocor®, submitted to the FDA information with respect to three
patents covering the drug: U.S. Patent Nos. 4,444,784 (the 784
Patent), RE 36,481 (the 481 Patent), and RE 36,520 (the 520
Patent). Teva and Ranbaxy each filed an ANDA to market
generic simvastatin. The two ANDAs — both of which were
eligible for a 180-day period of marketing exclusivity because
they involved different dosages — each contained a paragraph
IV certification with respect to the 481 and 520 Patents. With
respect to the 784 Patent, Ranbaxy and Teva each filed a
paragraph III certification that it would expire in December
2005.
Merck, however, did not sue Ranbaxy or Teva for patent
infringement based upon their paragraph IV certifications.
Instead, before their ANDAs were approved, Merck asked the
FDA to delist the 481 and 520 Patents from the Orange Book,
which the agency did in 2004. Consequently, under 21 C.F.R.
§ 314.94(a)(12)(viii)(B), Ranbaxy and Teva were required to
delete the paragraph IV certifications from their ANDAs and
thereby lost their eligibility for a period of marketing
exclusivity. Ranbaxy and Teva accordingly petitioned the FDA
to relist the 481 and 520 Patents in the Orange Book, restore
their period of exclusivity, and refrain from approving any other
manufacturer’s ANDA for generic simvastatin until their period
of exclusivity expired.
21 C.F.R. § 314.94(a)(12)(viii)(B).
7
In a letter ruling denying the petitions, the FDA said it had
considered three possible methods of handling the request of a
manufacturer with an approved NDA to delist a patent. First,
the FDA could always delist the patent, but that could unfairly
deny a period of marketing exclusivity to the generic
manufacturer that would later be the first to file an approved
ANDA by depriving it of the opportunity to prevail in patent
litigation. Second, it could refuse to delist the patent only if a
generic manufacturer had filed an ANDA containing a
paragraph IV certification with respect to the patent, but the
agency rejected that possibility on the ground that “eligibility for
exclusivity does not vest with a patent challenge,” that is, upon
the filing of a paragraph IV certification. Finally, the FDA
could delist a patent only if a generic manufacturer had filed an
ANDA containing a paragraph IV certification with respect to
the patent and the NDA holder had not filed a lawsuit to contest
the certification. The FDA chose the last option on the ground
that it best balanced, on the one hand, the pro-competitive effect
of the incentive for a generic drug manufacturer to be the first to
challenge a patent listed in the Orange Book and thereby
introduce generic competition to a branded drug and, on the
other, the loss of competition among generic manufacturers
caused by the 180-day period of marketing exclusivity for the
first to file an approved ANDA containing a paragraph IV
certification.
Ranbaxy and Teva then brought this action in the district
court, which held the FDA’s delisting policy was inconsistent
with the Act because, by requiring the first generic manufacturer
that filed a paragraph IV certification to remove that
certification before its ANDA could be approved, it deprived the
generic applicant of the opportunity to obtain a period of
exclusivity pursuant to 21 U.S.C. § 355(j)(5)(B)(iv)(I) by
commercially marketing its drug. The court entered judgment
for Ranbaxy and Teva and the FDA appealed.
8
II. Analysis
We review the FDA’s interpretation of the Act it
administers under the two-step analysis in Chevron, U.S.A. Inc.
v. NRDC, 467 U.S. 837 (1984). See Teva Pharm. Indus. Ltd. v.
Crawford, 410 F.3d 51, 53 (D.C. Cir. 2005) (reviewing
under Chevron FDA ruling on citizen petition). First, we ask
whether the “Congress has directly spoken to the precise
question at issue.” Chevron, 467 U.S. at 842. “If the intent of
Congress is clear, that is the end of the matter; for the court, as
well as the agency, must give effect to the unambiguously
expressed intent of Congress.” Id. at 842-43. If, however, “the
statute is silent or ambiguous with respect to the specific issue,
the question ... is whether the agency’s answer is based on a
permissible construction of the statute.” Id. at 843.
Ranbaxy and Teva claim this case can be resolved at
Chevron step one. Ranbaxy argues that 21 U.S.C.
§ 355(j)(5)(B)(iv) on its face entitles the company to a period of
marketing exclusivity, and Teva contends the FDA’s distinction
between filers of paragraph IV certifications that are sued and
those that are not has no basis in the Act.
Under the rubric of Chevron step two, Ranbaxy and Teva
argue the FDA’s policy of delisting a patent in the absence of
litigation is unreasonable for a variety of reasons. Upon
examination, however, we believe their arguments are better
considered at Chevron step one. More specifically, Teva
contends the requirement of litigation is inconsistent with the
text and structure of the statute and with its purpose, as
elucidated in circuit precedent. Here it refers in particular to
Mova Pharmaceutical Corp. v. Shalala, 140 F.3d 1060, 1069
(D.C. Cir. 1998), in which we held 21 U.S.C. § 355(j)(5)(B)(iv)
precludes the FDA from conditioning marketing exclusivity
upon the first to file an ANDA prevailing in patent litigation,
9
and to Purepac Pharmaceutical Co. v. Friedman, 162 F.3d
1201, 1204-05 (D.C. Cir. 1998), in which we held the FDA
reasonably gave a period of marketing exclusivity to the first
generic drug manufacturer to file a paragraph IV certification
even though it never litigated the infringement or validity of the
patent. Based upon these cases, Teva argues that the Act
precludes the FDA from predicating exclusivity upon a patent
infringement suit being brought by the NDA holder. Ranbaxy
suggests the FDA’s policy is inconsistent with the Act for two
other reasons: first, the policy diminishes the incentive the
Congress provided for a generic manufacturer to challenge a
patent by reducing the certainty of its getting a period of
marketing exclusivity; and second, by balancing anew the costs
and benefits of the exclusivity provided by the Congress, the
policy exceeds the authority of the agency.
In response, the FDA argues that its regulation requiring the
filer of an ANDA to amend its certification when a patent is
delisted, 21 C.F.R. § 314.94(a)(12)(viii)(B), is not inconsistent
with the Act because 21 U.S.C. § 355(j)(5) is silent with regard
to the withdrawal of patent information previously submitted for
listing in the Orange Book. The FDA points out that a generic
applicant’s exclusivity does not vest upon the filing of a
paragraph IV certification; otherwise, it asserts, the filer’s
eligibility for exclusivity would not be lost when, for example,
the patent subject to the paragraph IV certification expires, see
Dr. Reddy’s Labs., Inc. v. Thompson, 302 F. Supp. 2d 340, 354-
55 (D.N.J. 2003) (holding FDA reasonably interpreted 21 U.S.C.
§ 355(j)(5)(B)(iv) not to extend exclusivity to ANDA approved
after patent had expired), or the generic applicant loses in patent
litigation, see Mylan Labs., Inc. v. Thompson, 389 F.3d 1272,
1282-84, 1283 n.10 (D.C. Cir. 2004).
The FDA then argues its policy is reasonable because it
allows an NDA holder to eliminate the patent as a barrier to
10
approval of an ANDA when that patent does not cover the drug
or method of use for which it was listed in the Orange Book. At
the same time the policy preserves the ministerial nature of the
FDA’s role in maintaining the patent listings in the Orange Book
because, when an NDA holder asks it to delist a patent, the
agency need not determine whether the NDA holder is acting
strategically to deny the generic applicant a period of marketing
exclusivity or the patent actually does not cover the drug for
which it was submitted — the interpretation of patent listings
being outside the agency’s expertise.
The “precise question at issue” at Chevron step one is, in
our view, whether the FDA may delist a patent upon the request
of the NDA holder after a generic manufacturer has filed an
ANDA containing a paragraph IV certification so that the effect
of delisting is to deprive the applicant of a period of marketing
exclusivity. The Congress unquestionably provided two ways
in which a generic drug manufacturer may begin a 180-day
period of exclusivity: (1) by marketing its drug commercially,
or (2) by convincing a court that the patent subject to its
paragraph IV certification is either invalid or not infringed. 21
U.S.C. § 355(j)(5)(B)(iv). When the NDA holder asks the FDA
to delist the patent, however, the FDA’s policy of acquiescence
prevents the generic manufacturer that has filed an ANDA
containing a paragraph IV certification from beginning its period
of exclusivity.
We have previously rejected at Chevron step one the FDA’s
attempt to add to the statutory requirements for exclusivity by
making it contingent upon success in litigation. In Mova we
held the “successful defense” rule, which afforded exclusivity
only to the generic applicant that both filed the first approved
ANDA with a paragraph IV certification and successfully
defended an infringement suit, was inconsistent with the text and
structure of the Act because it permitted the FDA to approve a
11
later ANDA before either the first to file began to market its
drug commercially or a court held the subject patent invalid or
not infringed; the rule thereby “[wrote] the commercial-
marketing trigger out of the statute.” 140 F.3d at 1069-70.
Later we upheld as reasonable at Chevron step two the FDA’s
decision to grant a generic applicant a period of marketing
exclusivity even though its paragraph IV certification did not
result in litigation precisely because the FDA’s approach
“basically duplicat[ed] the statute.” Purepac, 162 F.3d at 1204-
05.
Not only does the statute not require litigation to preserve
a generic applicant’s eligibility for exclusivity, as those
precedents make clear; such a requirement is inconsistent with
the structure of the statute because, if the patent is delisted
before a pending ANDA is approved, then the generic
manufacturer may not initiate a period of marketing exclusivity.
The FDA’s observation that the generic applicant’s right to a
period of marketing exclusivity does not vest upon its filing a
paragraph IV certification is beside the point, which is that the
Act makes the generic applicant eligible for exclusivity while
the FDA’s policy makes it ineligible for exclusivity.*
In addition, the FDA’s policy allows an NDA holder, by
delisting its patent, to deprive the generic applicant of a period
of marketing exclusivity. By thus reducing the certainty of
receiving a period of marketing exclusivity, the FDA’s delisting
*
We need not address the question of patent expiration in this
case. We note, however, as Ranbaxy and Teva acknowledged
at oral argument, the text and structure of the statute suggest a
distinction between expiration and delisting such that the first
generic applicant may no longer retain exclusivity when the
patent has expired. See 21 U.S.C. § 355(j)(5)(B)(i); see also
Dr. Reddy’s Labs., 302 F. Supp. 2d at 354-55.
12
policy diminishes the incentive for a manufacturer of generic
drugs to challenge a patent listed in the Orange Book in the hope
of bringing to market a generic competitor for an approved drug
without waiting for the patent to expire. The FDA may not,
however, change the incentive structure adopted by the
Congress, for the agency is 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.”
MCI Telecomms. Corp. v. AT & T Co., 512 U.S. 218, 231 n.4
(1994). Therefore, we hold unlawful the FDA’s policy requiring
that the first filer of a paragraph IV certification be sued in order
to preserve its statutory exclusivity when the NDA holder seeks
to delist the patent rather than to litigate.
III. Conclusion
In sum, the FDA’s policy conditioning a generic applicant’s
period of marketing exclusivity upon the generic applicant being
sued for patent infringement by the NDA holder is inconsistent
with the text and structure of the Act and, because it diminishes
the incentive the Congress gave manufacturers of generic drugs,
is inconsistent with the purpose of the Act. Therefore, we
conclude the FDA improperly denied Ranbaxy and Teva a
period of marketing exclusivity by delisting Merck’s patents.
For the foregoing reasons, the judgment of the district court is
Affirmed.