Spectrum Pharmaceuticals, Inc v. Sylvia Burwell , 824 F.3d 1062 ( 2016 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 22, 2015 Decided June 3, 2016
No. 15-5166
SPECTRUM PHARMACEUTICALS, INC.,
APPELLANT
v.
SYLVIA MATHEWS BURWELL, IN HER OFFICIAL CAPACITY AS
SECRETARY, U.S. DEPARTMENT OF HEALTH AND HUMAN
SERVICES, ET AL.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:15-cv-00631)
Jessica L. Ellsworth argued the cause for appellant. With
her on the briefs were Susan M. Cook, Eugene A. Sokoloff,
and Elizabeth Austin Bonner.
Jonathan M. Ettinger was on the brief for amicus curiae
National Organization for Rare Disorders in support of
appellant.
Christopher M. O’Connell, Trial Attorney, U.S.
Department of Justice, argued the cause for federal appellees.
2
With him on the brief were Benjamin C. Mizer, Principal
Deputy Assistant Attorney General, William B. Schultz,
General Counsel, Food and Drug Administration, and
Annamarie Kempic, Deputy Chief Counsel, Litigation.
Douglas B. Farquhar argued the cause for intervenor-
appellee Sandoz Inc. With him on the brief were James P.
Ellison and Jennifer M. Thomas.
Before: GRIFFITH, KAVANAUGH, and WILKINS, Circuit
Judges.
Opinion for the Court filed by Circuit Judge GRIFFITH.
GRIFFITH, Circuit Judge: In this case, Spectrum
Pharmaceuticals claimed that the Food and Drug
Administration’s approval of a cancer drug violated
Spectrum’s exclusive marketing rights. The district court
granted summary judgment against Spectrum, and we affirm.
I
Levoleucovorin is better known by the brand-name
Fusilev, which Spectrum has sold since 2008 for the purpose
of counteracting liver damage during a type of chemotherapy
known as methotrexate therapy (the “Methotrexate
Indications”). Fusilev is an “orphan drug,” so called because
it is designed to treat a rare disease or condition that
historically received little attention from pharmaceutical
companies, and hence became “orphaned” because the
comparatively small demand for treatment left little motive
for research and development. Pub. L. No. 97-414, § 1(b), 96
Stat. 2049 (1983). Under the Orphan Drug Act amendments
to the Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 360aa-ee,
intended to increase incentives for companies to develop new
3
orphan drugs, Spectrum received exclusive marketing rights
to the Methotrexate Indications for seven years. In other
words, because Spectrum was the first to develop
levoleucovorin as an orphan drug for methotrexate therapy,
no other company could sell a generic version of the drug for
that purpose until 2015.
In 2011, Spectrum received approval from FDA to
market Fusilev for an altogether new use: helping patients
with advanced colorectal cancer to manage their pain (the
“Colorectal Indication”). Spectrum has exclusive marketing
rights for the Colorectal Indication until 2018.
On March 7, 2015, Spectrum’s exclusivity period expired
for the Methotrexate Indications. Two days later, Sandoz Inc.
received FDA approval to market a generic version of
levoleucovorin for the Methotrexate Indications, having had
its application expedited in 2012 to address a drug shortage.
Unlike Fusilev, which is sold in a freeze-dried powder that
must be mixed with another chemical before it can be used,
Sandoz sells its generic drug in a ready-to-use form. Pursuant
to FDA regulations, Sandoz’s label contains only the
Methotrexate Indications and makes no mention of the
Colorectal Indication. Shortly after Sandoz launched its
product, Spectrum filed suit to enjoin FDA’s approval of
Sandoz’s drug.
Spectrum argued to the district court that Sandoz’s sole
intended use of the generic was to treat patients with
colorectal cancer, even though the label provided for use only
in patients undergoing methotrexate therapy. Spectrum urged
that FDA was willfully blind to the fact that the generic drug
would not be used for counteracting liver damage, but for
managing pain, which is Spectrum’s exclusive domain. This
intended use made the agency’s approval of the generic
4
unlawful, argued Spectrum, because it violated Spectrum’s
exclusive marketing rights for the Colorectal Indication.
Spectrum’s argument focused largely on Sandoz’s vial
sizes. The record shows the standard dose of levoleucovorin
for the Methotrexate Indications is 7.5 mg, although some
patients need a 75 mg or 85 to 90 mg dose in certain rare
situations. In contrast, the Colorectal Indication regularly
requires a much larger dose of 150 mg. Spectrum sells Fusilev
in 50 mg vials, but Sandoz sells its generic in 175 mg and 250
mg vials, sizes that Spectrum argues are intended to treat the
Colorectal Indication despite being labeled for only the
Methotrexate Indications.1
Spectrum also challenged FDA’s approval on two
additional grounds: Spectrum urged that the approval was
arbitrary and capricious, in violation of the Administrative
Procedure Act, because FDA changed its position on the
safety and efficacy of large vials of levoleucovorin without
explanation. Finally, Spectrum contended that it was entitled
to notice before FDA expedited review of Sandoz’s generic
drug.
The district court granted summary judgment against
Spectrum, holding that FDA’s approval of Sandoz’s generic
drug was lawful. The district court reasoned that the Orphan
Drug Act allows FDA to approve Sandoz’s drug so long as
the generic’s label omits the Colorectal Indication. The
district court rejected Spectrum’s remaining arguments as
well, holding that the agency did not improperly change
1
In 2011, Spectrum received two additional FDA approvals to
market Fusilev in larger vials of 175 mg and 250 mg, first for the
Methotrexate Indications alone, and second for the Colorectal
Indication. Spectrum later decided not to sell the larger vials at all.
5
positions without explanation, and any error in expediting the
agency’s review of the generic was harmless.
Spectrum appeals the judgment of the district court. We
have jurisdiction under 28 U.S.C. § 1291.
II
Our review is de novo. Purepac Pharm. Co. v.
Thompson, 354 F.3d 877, 883 (D.C. Cir. 2004) (reviewing the
district court’s grant of summary judgment); Serono Labs.,
Inc. v. Shalala, 158 F.3d 1313, 1319 (D.C. Cir. 1998)
(reviewing the district court’s statutory and regulatory
interpretations). Because Spectrum challenges the decision of
an administrative agency, de novo review means that we will
“review directly the decision of the [agency].” Purepac, 354
F.3d at 883 (quoting Lozowski v. Mineta, 292 F.3d 840, 845
(D.C. Cir. 2002)). Accordingly, we will uphold FDA’s
approval of Sandoz’s generic drug under the Administrative
Procedure Act unless that decision was “‘arbitrary, capricious,
an abuse of discretion, or otherwise not in accordance with
law.’” Id. (quoting 5 U.S.C. § 706(2)(A)).
A
Spectrum’s primary argument on appeal is that FDA
violated Spectrum’s exclusive marketing rights by ignoring
that doctors and patients would use Sandoz’s generic for the
Colorectal Indication.
i
The Food, Drug, and Cosmetic Act governs FDA’s
approval of a pharmaceutical drug. AstraZeneca Pharm. LP v.
FDA, 713 F.3d 1134, 1136 (D.C. Cir. 2013). To secure FDA
approval to market a new drug, a company files a new drug
6
application (NDA) that triggers a process through which FDA
approves new drugs shown to be safe and effective. 21 U.S.C.
§ 355(a)-(j). In its application, the company specifies what the
drug will be used for and the volume in which it will be sold.
Id. § 355(b). FDA’s approval of an NDA allows the company
to sell the drug at the proposed volume and with a label
indicating the proposed purpose. Id. § 355(a). The first drug
to be approved for a particular use through the NDA process
is called a “pioneer.”
Recognizing that this process can be lengthy and
expensive, due in part to the clinical trials required to
determine a drug’s safety and effectiveness, Congress crafted
a statutory scheme that balances two interests: innovation and
affordability. Teva Pharm. Indus. Ltd. v. Crawford, 410 F.3d
51, 54 (D.C. Cir. 2005). To promote innovation, Congress
gave producers of pioneer drugs different periods of market
exclusivity, depending in part on the type of drug they
develop. 21 U.S.C. § 355(a)-(j). In 1983, Congress passed the
Orphan Drug Act to lengthen the exclusive marketing period
to seven years for drugs that treat rare diseases. Id. § 360cc(a).
During that period, FDA may not, subject to certain
exceptions not applicable here,2 approve another company’s
application “for such drug for such disease or condition.” Id.
Although market exclusivity promotes development of
new drugs, it also risks increasing their price by eliminating
competition. In an effort to hold down drug prices, Congress
created a streamlined approval process for generic drugs in
1984. See Drug Price Competition and Patent Term
Restoration Act (Hatch-Waxman Amendments), 21 U.S.C.
2
FDA can cut short an exclusivity period if there is a drug
shortage, provided the producer of the pioneer cannot supply the
drug in sufficient quantities, or if the producer of the pioneer
consents. 21 U.S.C. § 360cc(b).
7
§ 355(j); Mead Johnson Pharm. Grp., Mead Johnson & Co. v.
Bowen, 838 F.2d 1332, 1333 (D.C. Cir. 1988). Under that
process, a company can file what is known as an abbreviated
new drug application (ANDA) that relies on clinical research
data for the pioneer rather than new studies for the generic. To
secure FDA approval, an ANDA need show only that the
generic drug is equivalent in all material respects to the
pioneer drug. 21 U.S.C. § 355(j)(2)(A); Mead Johnson, 838
F.2d at 1333. FDA will not approve the generic until the
exclusive marketing period for the pioneer expires.
A complication arises when a pioneer drug can be used
for multiple purposes, and the exclusive marketing period for
one use of the drug expires, while it continues for another. In
this situation, FDA permits what is called a labeling “carve-
out” that allows producers to sell a generic if they exclude
from its label any indication that is still protected by exclusive
marketing rights. 21 C.F.R. § 314.94(a)(8)(iv). Labeling
carve-outs are so named because any exclusive use is carved
out, i.e., omitted, from the list of approved uses on the
generic’s label. FDA allows labeling carve-outs under the
Orphan Drug Act just as it does for generics generally under
the Food, Drug, and Cosmetic Act. No matter what use for the
drug is described on the label, however, FDA does not
prevent a doctor from prescribing a drug for some other use,
called an “off-label” use. See Bristol-Myers Squibb Co. v.
Shalala, 91 F.3d 1493, 1496 (D.C. Cir. 1996) (“[T]he new
drug provisions apply only at the moment of shipment in
interstate commerce and not to action taken subsequent[ly].”
(quoting Legal Status of Approved Labeling for Prescription
Drugs; Prescribing for Uses Unapproved by the Food and
Drug Administration, 37 Fed. Reg. 16,503 (1972))). We have
approved FDA’s general approach to labeling carve-outs as an
acceptable interpretation of the Food, Drug, and Cosmetic
Act. Id. at 1499-1501.
8
ii
Against this regulatory background, FDA approved
Sandoz’s generic drug with a label that says nothing about the
Colorectal Indication. Spectrum argues that this labeling
carve-out violates the Orphan Drug Act because of how
Sandoz intends its generic to be used. According to Spectrum,
FDA cannot approve an ANDA when the agency knows that
the generic will be used for the carved-out purpose. Spectrum
asserts that FDA’s own files show that Sandoz intended
doctors and patients to use the generic for the Colorectal
Indication, citing statements by FDA officials associating
large vials of levoleucovorin with the Colorectal Indication
and small vials with the Methotrexate Indications. For
example, Spectrum rests heavily on a statement by an FDA
official made during a meeting about Fusilev in 2009 that the
Methotrexate Indications do “not require single use vials
larger than 50 mg.” This statement, Spectrum suggests, shows
that FDA knew that Sandoz’s large vials of 175 mg and 250
mg are suitable for the Colorectal Indication and go well
beyond the average dose of 7.5 mg needed for the
Methotrexate Indications. FDA responds that it need look no
further than the use indicated in Sandoz’s ANDA to make
certain the generic drug will not trench on the prior grant of
exclusivity to Spectrum. We agree with FDA and find its
interpretation of the Orphan Drug Act reasonable.
The Orphan Drug Act provides that once FDA approves a
pioneer drug “designated . . . for a rare disease or condition,”
it may not approve another application “for such drug for such
disease or condition” by another company for seven years. 21
U.S.C. § 360cc(a). Spectrum would have us read the phrase
“for such disease or condition” to require the agency to
consider the intended use of a drug, even if the drug is not
“designated,” or labeled, for that purpose. In Spectrum’s
9
view, a drug is “for” a disease or condition if the producer
intends it to be used for that disease or condition. FDA
responds that “for such disease or condition” refers only to the
uses included on a drug’s label.
The statute does not unambiguously foreclose FDA’s
interpretation. Because Congress has not “directly spoken to
the precise question at issue,”3 we must determine whether the
agency’s interpretation is “a permissible construction” of the
Orphan Drug Act. Chevron U.S.A. Inc. v. Nat. Res. Def.
Council, Inc., 467 U.S. 837, 842-43 (1984); see also Teva
Pharm. USA, Inc. v. Sebelius, 595 F.3d 1303, 1315 (D.C. Cir.
2010) (applying Chevron). We conclude that it is.
First, FDA’s reading of the statute closely hews to the
text. See Abbott Labs. v. Young, 920 F.2d 984, 988 (D.C. Cir.
1990) (recognizing that the reasonableness of an agency’s
interpretation turns in part on “the construction’s ‘fit’ with the
statutory language”). As the Fourth Circuit reasoned in
Sigma-Tau Pharmaceuticals, Inc. v. Schwetz, 288 F.3d 141(4th Cir. 2002), the words “for such disease or condition”
suggest Congress intended to make section 360cc “disease-
specific, not drug-specific,” and the rest of the statutory
language focuses on protecting approved indications, not
intended off-label uses. See id. at 145 (reasoning that the
statutory language is “directed at FDA approved-use, not
generic competitor intended-use”). The statute creates limits
on the approval of an “application,” which by implication
3
We need not resolve whether the Orphan Drug Act answers the
flipside of that question: whether the statute unambiguously
requires FDA’s interpretation. FDA has not pressed that argument
before us and it is unnecessary to the resolution of this case. We
therefore leave for another day the question whether FDA could
permissibly adopt an alternative interpretation.
10
directs FDA to evaluate what is written on the application. 21
U.S.C. § 360cc. An application will necessarily include only
stated indications, not intended off-label uses. Id. § 355(b).
Second, FDA’s interpretation conforms to the statutory
purposes of the Orphan Drug Act. See Abbott Labs., 920 F.2d
at 988 (recognizing that an interpretation’s “conformity to
statutory purposes” affects its reasonableness). Spectrum
raises a number of policy arguments, urging primarily that the
agency’s approach would undermine the Orphan Drug Act’s
incentives for drug innovation. But, as described above,
innovation was not Congress’s only concern when it created
the drug approval process. Congress also sought to promote
affordable drugs. Teva, 410 F.3d at 54; see also Abbott Labs.,
920 F.2d at 985. FDA’s interpretation accommodates both
interests by allowing generic producers to enter the market for
certain purposes while, at the same time, protecting a
company’s right to market its pioneer drugs for exclusive
uses. See Orphan Drug Regulations, Final Rule, 57 Fed. Reg.
62,076, 62,077 (Dec. 29, 1992) (“FDA believes the final rule
achieves the best balance possible between protecting
exclusive marketing rights and fostering competition.”).
To the extent FDA has discretion in choosing how best to
implement the Orphan Drug Act, it is up to the agency to
strike the balance between the congressional policy goals of
drug affordability and innovation. We will not impose a
choice on FDA that Congress did not require. Cf. Bristol-
Myers, 91 F.3d at 1500 (concluding that Congress was
indifferent as to whether the label for a generic drug lists
every approved use of a brand-name drug). As the Supreme
Court said in Chevron, an agency’s “reasonable
accommodation of conflicting policies that were committed to
the agency’s care by the statute” should control unless
Congress would not have approved of its choice. 467 U.S. at
11
845 (quoting United States v. Shimer, 367 U.S. 374, 383
(1961)). Spectrum’s policy concerns cannot supplant FDA’s
reasonable resolution of these issues, especially because we
already rejected similar arguments that allowing labeling
carve-outs at all under the Food, Drug, and Cosmetic Act
undermines the exclusivity rights of producers of pioneer
drugs. See Bristol-Myers, 91 F.3d at 1499-1501. There is
nothing in the Orphan Drug Act that changes our view.
We also note that many of Spectrum’s arguments simply
do not apply here. Spectrum suggests the record
unequivocally and objectively shows FDA knew that
Sandoz’s generic was intended for only the Colorectal
Indication. But this is simply not the case. We can think of at
least two reasons why a user could prefer Sandoz’s generic to
Fusilev for the Methotrexate Indications. First, Spectrum’s 50
mg vial, unlike Sandoz’s 175 mg and 250 mg vials, is
insufficient to provide an entire dose for some patients who
require 85 to 90 mg for the Methotrexate Indications. Second,
Sandoz’s drug is in a ready-to-use form, while Spectrum’s
must be mixed with another chemical before it can be used.
Accordingly, we need not address whether our conclusion
would differ were the record to show that a generic’s off-label
use is its only intended use.
iii
Spectrum argues that even if the Orphan Drug Act does
not require FDA to consider a generic’s intended off-label
uses, the agency’s own regulation does. This regulation bars
FDA from approving a generic that is “intended” for the same
use as the pioneer during its seven-year exclusivity period. 21
C.F.R. § 316.3(b)(12), (14). Spectrum urges that the
regulation’s use of the word “intended” required FDA to
consider how Sandoz subjectively intended doctors and
12
patients to use its drug when FDA evaluated its ANDA. FDA
responds that even if it must consider a generic’s intended
use, the agency can properly determine that purpose by
looking solely to the labeled uses proposed in the application.
We agree with FDA and conclude that during the
approval process, the agency can look solely to Sandoz’s
labeling claims to determine the intended use of its drug.
FDA’s approach here is consistent with how the agency has
interpreted “intended use” outside of the ANDA approval
context to mean “the objective intent of the persons legally
responsible for the labeling of drugs.” 21 C.F.R. § 201.128.
Under that regulation, intent “is determined by such persons’
expressions” or “may be shown by the circumstances
surrounding the distribution” of the drugs. Id. (emphasis
added). For example, intent may be shown by “labeling
claims” or other statements by drug manufacturers. Id. To be
sure, FDA recognizes that there may be situations in which it
will look beyond just the manufacturer’s statements, but
nothing in its regulations requires FDA to do so. FDA’s
decision to look to Sandoz’s labeling claims as an objective
measure of Sandoz’s intent is reasonable and consistent with
FDA’s regulations.
Spectrum resists this conclusion by urging that FDA
cannot escape the overarching goal of drug regulation: to
ensure that drugs are labeled accurately, with instructions that
offer adequate guidance to the intended user. See United
States v. Regenerative Scis., LLC, 741 F.3d 1314, 1323-24
(D.C. Cir. 2014) (recognizing that to satisfy the statutory
requirement that a drug’s label provide “‘adequate directions
for use,’ a drug’s label must provide ‘directions under which
the layman can use a drug safely and for the purposes for
which it is intended’” (quoting 21 C.F.R. § 201.5)). We agree
to a point. Nothing in our holding allows FDA to permit
13
Sandoz to promote misbranded drugs. But the ANDA
approval stage is not the point in time at which FDA must
evaluate a generic’s purpose beyond that which is set forth in
the ANDA itself. If Sandoz improperly deviates from that
stated purpose by marketing its drug for the Colorectal
Indication, FDA can pursue a later enforcement action to
ensure the generic is labeled accurately. See Wash. Legal
Found. v. Henney, 202 F.3d 331, 333 (D.C. Cir. 2000)
(recognizing that a manufacturer’s “direct advertising or
explicit promotion of a product’s off-label uses is likely to
provoke an FDA misbranding or ‘intended use’ enforcement
action”).
Because FDA’s interpretation of the Orphan Drug Act is
reasonable, it is lawful. See Glob. Crossing Telecomms., Inc.
v. Metrophones Telecomms., Inc., 550 U.S. 45, 47-48 (2007).
B
Spectrum next seeks to overturn FDA’s approval of
Sandoz’s generic drug on the ground that the approval
entailed a policy change that the agency never justified.
Spectrum argues that when FDA approved Sandoz’s ANDA,
the agency found that large vials of levoleucovorin are
appropriate for the Methotrexate Indications, yet the agency
had previously reached the opposite conclusion. To overcome
an arbitrary and capricious challenge, an agency “must
‘provide reasoned explanation for its action’” when it changes
course, “which ‘would ordinarily demand that it display
awareness that it is changing position.’” Nat’l Ass’n of Home
Builders v. EPA, 682 F.3d 1032, 1038 (D.C. Cir. 2012)
(quoting FCC v. Fox Television Stations, Inc., 556 U.S. 502,
515 (2009)). We reject Spectrum’s argument because FDA
never changed its position at all.
14
The record shows that FDA has always treated larger-
than-necessary vials of levoleucovorin as appropriate for the
Methotrexate Indications, meaning safe and effective. FDA’s
approval of a drug application shows that the agency
concluded that the drug in its anticipated form is safe and
effective for the indication sought. 21 U.S.C. § 355(d). Even
though the average dose needed for the Methotrexate
Indications is 7.5 mg, Spectrum has long sold an FDA-
approved vial of 50 mg for these indications. And FDA
approved Spectrum’s own application to market 175 mg and
250 mg vials of levoleucovorin exclusively for those
purposes, even though Spectrum ultimately chose not to sell
the drug in those vial sizes.
Spectrum makes two efforts to identify an instance in
which FDA concluded that large vials of levoleucovorin are
not appropriate for the Methotrexate Indications, but both fall
short. First, Spectrum points to an earlier FDA draft guidance
document that cautioned against using vials containing excess
volumes of pharmaceutical drugs because of safety risks from
misuse. The agency warned that vial sizes “should be
appropriate for the labeled use and dosing of the product.”4
Spectrum argues that FDA did not explain why it deviated
from this guidance when it allowed Sandoz to market 175 mg
and 250 mg vials of levoleucovorin despite the typical user
requiring far less.
4
FDA, DRAFT GUIDANCE FOR INDUSTRY: ALLOWABLE EXCESS
VOLUME AND LABELED VIAL FILL SIZE IN INJECTABLE DRUG AND
BIOLOGICAL PRODUCTS 4 (2014), available at http://www.fdanews.
com/ext/resources/files/03/03-13-14-Guidance.pdf (last visited May
19, 2016).
15
Assuming FDA must explain a departure from this
guidance document,5 there was no departure that would
demand explanation here. The guidance document at issue
offers a general approach for pharmaceutical drugs, and such
broad guidance must give way to more specific risk analysis
by the agency. Cf. Union of Concerned Scientists v. Nuclear
Regulatory Comm’n, 711 F.2d 370, 381 & n.26 (D.C. Cir.
1983) (discussing the “fundamental maxim” that “the terms of
a more specific statute take precedence over those of a more
general statute where both statutes speak to the same
concerns”). Here, FDA considered and rejected the risks
associated with excess quantities of this drug before
approving Sandoz’s ANDA. In 2014, Spectrum submitted a
citizen petition requesting that FDA not approve any
levoleucovorin ANDAs with 175 mg or 250 mg vials, with or
without a labeling carve-out for the Colorectal Indication.
Among other things, Spectrum argued that larger vials pose
safety risks to patients from overdose or contamination when
used for the Methotrexate Indications. FDA denied the
petition, reasoning that the larger vials were safe and
effective, and concluding that proper labeling would address
safety risks.6 Different drugs have different risks of overdose
or misuse, and FDA carefully evaluated Spectrum’s safety
arguments in light of the minimal problems that have
occurred with levoleucovorin.
5
At the time FDA approved Sandoz’s ANDA, this guidance
document was in preliminary draft form. We express no view
whether FDA would have been required to acknowledge a change
in position had the agency departed from its draft guidance
document.
6
Letter from Janet Woodcock, Director, Center for Drug
Evaluation and Research, to Robert Church and David Fox, Hogan
Lovells (Feb. 24, 2015) (denying FDA-2014-P-1649, Spectrum’s
citizen petition submitted to FDA).
16
Spectrum also argues that the record shows FDA
consistently associated large vials of levoleucovorin with the
Colorectal Indication and small vials with the Methotrexate
Indications. Spectrum rests heavily on a statement by an FDA
official made during a meeting about Fusilev in 2009 that the
Methotrexate Indications do “not require single use vials
larger than 50 mg.” But this does not show that FDA’s
approval of Sandoz’s ANDA constituted a change in position.
FDA’s concern when evaluating an ANDA is whether the
generic is as safe and effective as the pioneer for the
indication requested, not whether the proposed drug is
packaged in the best possible form. See 21 U.S.C. § 355(j); 21
C.F.R. § 314.127(a)(7). Accordingly, whether large vials are
necessary for the Methotrexate Indications is beside the point:
FDA’s statement to that effect says nothing about whether
large vials are safe and effective for the Methotrexate
Indications, which is the question FDA answered when it
approved Sandoz’s ANDA.
C
Spectrum’s final contention is that FDA was required to
give Spectrum notice and an opportunity to be heard before
expediting Sandoz’s ANDA in response to a drug shortage.
Although the Orphan Drug Act allows FDA to abrogate
market exclusivity in the case of a drug shortage, FDA must
first give the producer of the pioneer an opportunity to show
that it can meet market demand. 21 U.S.C. § 360cc(b)(1).
Spectrum argues that it was not given that opportunity before
FDA expedited consideration of Sandoz’s ANDA in February
2012, even though at that point in time Spectrum had
exclusive marketing rights for both the Methotrexate and
Colorectal Indications. In other words, Spectrum reads the
Orphan Drug Act to create a notice obligation even in
17
situations where FDA does not cut short a market exclusivity
period. This argument has no basis in the statute.
The Orphan Drug Act creates a notice obligation only
when FDA abrogates a pioneer drug’s period of market
exclusivity. Section 360cc(b) is titled “Exceptions” because it
creates a process that FDA must follow when it makes
exceptions to market exclusivity. The clear purpose of the
notice obligation is to protect the rights of producers of
pioneer drugs in the event FDA decides a drug shortage
requires it to eliminate those rights. In contrast, the statute
says nothing at all about notice requirements when FDA
expedites its review of an ANDA or simply evaluates a drug
shortage without more.
Spectrum argues that FDA’s implementing regulation
creates a notice obligation even if the Orphan Drug Act does
not. See 21 C.F.R. § 316.36 (detailing process requirements to
withdraw orphan-drug exclusivity). But the regulation does
not change our conclusion. The regulation simply tracks the
statute to create a notice obligation only in cases where FDA
is “withdrawing the drug product’s exclusive approval.” Id.§ 316.36(b); see also id. § 316.36(a) (discussing the notice
obligations that apply “[u]nder section 527 of the act,” i.e., 21
U.S.C. § 360cc). The regulation speaks repeatedly in terms of
the ultimate withdrawal decision. 21 C.F.R. § 316.36(b)
(“Once withdrawn under this section, exclusive approval may
not be reinstated for that drug.”); id. (“An order withdrawing
the sponsor’s exclusive marketing rights may issue whether or
not there are other sponsors that can assure the availability of
alternative sources of supply.”). The regulation, read as part
of the overall statutory framework, does no more than
elaborate on the procedural protections that FDA guarantees
when making an exception to exclusivity. Because FDA did
not cut short Spectrum’s period of market exclusivity,
18
Spectrum was not entitled to notice and an opportunity to be
heard before the agency approved Sandoz’s ANDA.
III
We affirm the order of the district court granting
summary judgment against Spectrum.