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Otsuka Pharmaceutical Co., Ltd. v. Price

United States Court of Appeals, District of Columbia Circuit

August 29, 2017

Otsuka Pharmaceutical Co., Ltd., et al., Appellants
Thomas Price, Secretary, U.S. Department of Health and Human Services, et al., Appellees

          Argued December 12, 2016

         Appeal from the United States District Court for the District of Columbia (No. 1:15-cv-01688)

          Thomas G. Saunders argued the cause for appellants. With him on the briefs were Seth P. Waxman and Robbie Manhas.

          Henry C. Whitaker, Attorney, U.S. Department of Justice, argued the cause for federal appellees. With him on the brief were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, and Scott R. McIntosh, Attorney.

          William M. Jay argued the cause for intervenors-appellees Alkermes, Inc., et al. With him on the brief were Brian T. Burgess, Andrew Kim, Sarah K. Frederick, and Christopher T. Holding.

          Before: Brown and Srinivasan, Circuit Judges, and Williams, Senior Circuit Judge.



         The Food, Drug, and Cosmetic Act affords periods of "marketing exclusivity" to pioneering drug products. When a drug earns a period of exclusivity, the Food and Drug Administration must withhold approval of certain competing drugs if various conditions are satisfied. But how does the FDA determine if a new drug bears a sufficiently close relationship to a pioneering drug to fall within the latter's zone of exclusivity? This case concerns the FDA's test for making that determination.

         The two drugs at issue in this case are antipsychotics primarily used to treat schizophrenia and bipolar disorder. The first drug, manufactured by Otsuka Pharmaceutical, is called Abilify Maintena. The second, made by Alkermes, is named Aristada.

         When Alkermes sought FDA approval for Aristada, Otsuka opposed the application on the ground that Aristada's approval would violate an ongoing period of marketing exclusivity enjoyed by Abilify Maintena. Otsuka emphasized that both drugs ultimately metabolize in the body into the same molecule, and that Alkermes's application for Aristada relied in part on studies showing the safety and efficacy of a precursor product to Abilify Maintena. Otsuka argued that, in light of the relationship between the two drugs, approving Aristada would infringe on Abilify Maintena's exclusivity.

         The FDA rejected Otsuka's arguments and granted approval to Aristada. The agency relied on the fact that the two products have different "active moieties"-roughly, active ingredients. A drug's active moiety has long played a key role in determining its eligibility to receive marketing exclusivity: to be entitled to exclusivity, a drug must either contain a previously unapproved active moiety or use an approved moiety in a new way. In approving Aristada, the FDA staked out the position that a drug's active moiety not only determines its eligibility for marketing exclusivity, but also defines the field of drugs subject to that exclusivity.

         Otsuka sought judicial review, contending, among other things, that the agency's same-moiety limitation on the scope of a drug's marketing exclusivity conflicts with the FDCA. The district court granted summary judgment in favor of the FDA and Alkermes. The court concluded that the FDA's same-moiety test is a reasonable construction of the statute and is consistent with the agency's regulations. We agree with the district court and affirm its decision.



         Before a company can make a drug available for public consumption, the FDA must approve a new drug application certifying the drug's safety and efficacy. 21 U.S.C. § 355(a), (b). Until 1984, all such applications were standalone applications: applications for which the drug's proponent either conducted, or secured a right to reference, all the investigations used to demonstrate the drug's safety and efficacy. See id. § 355(b)(1). As a result, a company seeking approval of a new drug would regularly need to reestablish the safety and efficacy of chemical compounds used in previously approved drugs.

         In order to reduce the need to conduct duplicative studies, the Drug Price Competition and Patent Term Restoration Act of 1984-better known as the Hatch-Waxman Amendments-amended the FDCA to establish two streamlined pathways to FDA approval. See H.R. Rep. No. 98-857, pt. 1, at 16-17 (1984). The first abbreviated route, known as an Abbreviated New Drug Application (ANDA), permits approval of "bioequivalent" (e.g., generic) versions of previously approved drugs without an independent showing of their safety and efficacy. 21 U.S.C. § 355(j)(2)(A).

         The second abbreviated route, directly at issue here, enables new drug applications for non-generic drug products to rely, in part or in whole, on studies that "were not conducted by or for the applicant and for which the applicant has not obtained a right of reference" to show the applied-for drug's safety and efficacy. Id. § 355(b)(2). That route, known as a "(b)(2) application" due to the statutory subsection establishing it, requires an applicant to show the propriety of relying on the preexisting studies to demonstrate the applied-for drug's safety and efficacy. A (b)(2) application must also certify that sales of the applied-for drug would not infringe upon active, valid patents for any previously approved drugs invoked in support of the application. Id. § 355(b)(2)(A).

         The Hatch-Waxman Amendments' abbreviated pathways in theory could enable competitors to "free ride" off of the work of innovators without having to foot the substantial expenses associated with safety-and-efficacy testing. As a result, the Amendments also introduced a regime of marketing exclusivity into the FDCA.

         Under that system, the statute grants a first-in-time innovator a period of exclusivity during which the FDA must deny approval of second-in-time abbreviated applications (both ANDAs and (b)(2) applications) for drug products meeting certain conditions. If an applicant seeking to use an abbreviated pathway is blocked by a previously approved drug's exclusivity, the applicant can either wait for the exclusivity period to expire, or instead submit a standalone, non-abbreviated application that does not rely on any previously approved drugs.

         The FDCA confers marketing exclusivity under three distinct provisions, the full text of which are set out in an appendix to this opinion. We will adhere to the parties' convention by referring to the three provisions as "romanette ii, " "romanette iii, " and "romanette iv." 21 U.S.C. § 355(c)(3)(E)(ii)-(iv).

         Romanette ii, the FDCA's broadest grant of marketing exclusivity, applies to what FDA regulations refer to as "New Chemical Entities": drugs for which "no active ingredient (including any ester or salt of the active ingredient) . . . has been approved in any other application." 21 U.S.C. § 355(c)(3)(E)(ii); 21 C.F.R. § 314.108(a). The statutory reference to a drug's "active ingredient" captures the drug's active moiety, which the regulations define as "the molecule or ion . . . responsible for the physiological or pharmacological action of the drug substance." 21 C.F.R. § 314.3(b).

         Romanette ii confers an exclusivity period of five years, during which "no [abbreviated] application which refers to the [first-in-time] drug" may be approved. 21 U.S.C. § 355(c)(3)(E)(ii). FDA regulations interpret exclusivity under romanette ii to block any abbreviated application for a drug whose active moiety is the same as the New Chemical Entity. 21 C.F.R. § 314.108(a).

         Romanettes iii and iv award marketing exclusivity to innovations more modest than the introduction of a New Chemical Entity. The exclusivity conferred by those provisions correspondingly is more confined in scope and duration than the five-year exclusivity afforded under romanette ii.

         Under romanette iii, an application "for a drug, which includes an [active moiety] that has been approved in another application, " is entitled to three years of exclusivity "if such application contains reports of new clinical investigations . . . essential to the approval of the application and conducted or sponsored by the applicant." 21 U.S.C. § 355(c)(3)(E)(iii). In other words, romanette iii confers exclusivity when a pharmaceutical company obtains approval to market a previously approved active moiety in a new formulation or for new purposes, and doing so requires it to furnish new clinical investigations to the FDA. With regard to the scope of drugs affected by the three-year exclusivity period, the FDA may not approve an abbreviated application for the same "conditions of approval of such drug in the [first-in-time] application." Id.

         Romanette iv similarly grants a three-year exclusivity period to applicants that "supplement" a previously approved application if obtaining approval of the supplement requires submitting additional reports and investigations to the agency. Id. § 355(c)(3)(E)(iv). Romanette iv thus applies, for instance, to companies seeking to indicate an existing drug product for additional illnesses or otherwise alter the product's labeling. The scope of exclusivity encompasses abbreviated applications "for a change approved in the supplement" to the first-in-time drug's application. Id. As with the scope-delimiting phrase "conditions of approval of such drug" in romanette iii, the FDCA does not define the precise meaning of the scope-delimiting phrase "for a change approved in the supplement" in romanette iv.


         In 2002, Otsuka obtained FDA approval for Abilify Tablets, an antipsychotic drug. In the ensuing fifteen years, Otsuka has received FDA approval for a number of additional drug products sharing Abilify Tablets' active moiety: aripiprazole. The formulation of aripiprazole at issue in this case, Abilify Maintena, is taken on a monthly basis by injection.

         Abilify Tablets earned a five-year exclusivity period under romanette ii for introducing aripiprazole as a New Chemical Entity. Although the five-year period for Abilify Tablets lapsed nearly a decade ago, Abilify Maintena subsequently received two successive marketing-exclusivity periods of three years each. The first three-year period, which expired on February 28, 2016, came under romanette iii in connection with Abilify Maintena's initial approval. The second three-year period remains ongoing-it expires on December 5, 2017-and was awarded under romanette iv in connection with a supplemental application filed by ...

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