United States v. Murty Vepuri ( 2023 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 22-1562
_____________
UNITED STATES OF AMERICA,
Appellant
v.
MURTY VEPURI, ASHVIN PANCHAL, KVK-TECH, INC.
____________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Criminal No. 2:21-cr-00132)
District Judge: Honorable Harvey Bartle, III
____________
Argued: February 7, 2023
____________
Before: CHAGARES, Chief Judge, SCIRICA and
RENDELL, Circuit Judges
(Opinion filed: July 20, 2023)
____________
Daniel Tenny [ARGUED]
Civil Division
United States Department of Justice
950 Pennsylvania Avenue NW, Room 7215
Washington, D.C. 20530
Patrick J. Murray
Office of United States Attorney
615 Chestnut Street
Suite 1250
Philadelphia, PA 19106
Counsel for Appellant
Justin C. Danilewitz
Saul Ewing
1500 Market Street
Centre Square West, 38th Floor
Philadelphia, PA 19102
Brien T. O’Connor
800 Boylston Street
Prudential Tower
Boston, MA 02199
Beth P. Weinman
Ropes & Gray
2099 Pennsylvania Avenue NW
Washington, DC 20006
Counsel for Appellee Murty Vepuri
Patrick J. Egan
2
Saverio S. Romeo
Fox Rothschild
2000 Market Street
20th Floor
Philadelphia, PA 19103
Counsel for Appellee Ashvin Panchal
Jack W. Pirozzolo [ARGUED]
Sidley Austin
60 State Street
36th Floor
Boston, MA 02109
Jeffrey M. Senger
Sidley Austin
1501 K Street NW
Washington, D.C. 20005
Lisa A. Mathewson
123 South Broad Street, Suite 1320
Philadelphia, PA 19109
Counsel for Appellee KVK-Tech, Inc
_____________
OPINION OF THE COURT
_____________
CHAGARES, Chief Judge.
Murty Vepuri is the de facto director of KVK-Tech, Inc.
(“KVK-Tech”), a generic drug manufacturer. He employed
3
Ashvin Panchal as the director of quality assurance at the
company. KVK-Tech manufactured and sold Hydroxyzine, a
prescription generic drug used to treat anxiety and tension. The
Government alleges that Vepuri, Panchal, and KVK-Tech
sourced active ingredient for the Hydroxyzine from a facility
that was not included in the approvals that they obtained from
the Food and Drug Administration (“FDA”) and that they
misled the FDA about their practices. As a result of the alleged
conduct, the Government brought criminal charges against
them. The operative indictment charges all three defendants
with conspiracy to defraud and to commit offenses against the
United States, and it charges KVK-Tech with an additional
count of mail fraud. At issue in this appeal is the portion of the
conspiracy charge that alleges that the three defendants
conspired to violate provisions of the Food, Drug, and
Cosmetic Act (“FDCA”), which prohibits introducing a “new
drug” into interstate commerce unless an FDA approval “is
effective with respect to such drug.” 21 U.S.C. § 355(a). The
District Court dismissed that portion of the indictment, holding
that the allegations set forth in the indictment do not state the
offense. Because we agree, we will affirm the District Court’s
order and remand the case for continued proceedings on the
remaining charges.
I.
Vepuri, Panchal, and KVK-Tech manufactured and sold
generic drugs.1 Vepuri was the de facto director of KVK-Tech;
1
We recite the relevant facts based on the Government’s
allegations in the superseding indictment, which we accept as
true for this appeal. See United States v. Huet, 665 F.3d 588,
4
despite referring to himself as an adviser or consultant, he
made all key business decisions for the company and placed its
ownership in private trusts with his children as the named
beneficiaries. Vepuri recruited Panchal for the position of
director of quality assurance.
KVK-Tech manufactured Hydroxyzine, a generic
prescription drug. The FDCA requires drug manufacturers to
obtain approval from the FDA before certain drugs may be
manufactured and distributed. Applications for approvals of
non-generic drugs are called New Drug Applications
(“NDAs”), and applications for approvals of generic drugs are
called Abbreviated New Drug Applications (“ANDAs”). See
21 U.S.C. § 355(b) (NDAs); 21 U.S.C. § 355(j) (ANDAs).
Panchal filed and received approval of three ANDAs for
Hydroxyzine in 2006, with each ANDA corresponding to a
different dose of the drug. The ANDAs stated that the active
ingredient would be sourced from a UCB Pharma, S.A.
(“UCB”) facility in Belgium. Two years later, Panchal filed a
supplement with the FDA and obtained approval to source
active ingredient from a Cosma, S.p.A facility in Italy.
Vepuri authorized the purchase of active ingredient for
the Hydroxyzine from a Dr. Reddy’s Laboratories (“DRL”)
facility in Mexico in October 2010. That facility was not listed
in the ANDAs or otherwise approved by the FDA. Soon
thereafter, KVK-Tech received three shipments of active
ingredient from DRL. The shipments were logged at KVK-
Tech as having been manufactured in Belgium. Vepuri
authorized another purchase of active ingredient from DRL in
595–96 (3d Cir. 2012), abrogated on other grounds by United
States v. De Castro, 49 F.4th 836, 845 (3d Cir. 2022).
5
May 2013. On June 3, 2013, 19 drums of active ingredient en
route to KVK-Tech from DRL were refused import and were
detained at the airport in Philadelphia. The FDA detained the
drugs based on KVK-Tech’s lack of approval to import active
ingredient from DRL.
About two weeks after the FDA detained the shipment
of active ingredient, Panchal filed a Change Being Effected in
30 Days Notice form with the FDA stating that UCB had
changed its manufacturing site to Mexico. That form may be
used only to inform the FDA of prospective changes, and
Panchal did not disclose that KVK-Tech had been distributing
drugs manufactured with active ingredient sourced from DRL
since 2011. The FDA then inspected KVK-Tech’s
manufacturing facilities. Panchal misled the inspectors during
the inspection, including by telling them that KVK-Tech had
not received prior shipments of active ingredient from DRL.
After he was confronted with photographs of drums stamped
“Made in Mexico,” Panchal told the inspectors that he was
unaware that UCB had shipped active ingredient from Mexico.
Appendix (“App.”) 44. He then changed his story, telling
inspectors that KVK-Tech had disclosed in its annual report
that it was sourcing active ingredient from a new site in
Mexico. That claim contradicted Panchal’s prior statements
that he was unaware of shipments from Mexico, and it was
itself false because KVK-Tech had not mentioned the alleged
change in its annual report.
In correspondence following the inspection, Vepuri and
Panchal falsely blamed the use of active ingredient from DRL
on “an inappropriate regulatory evaluation” by a former
employee. Id. They reiterated their false claim that a former
employee was responsible for sourcing active ingredient from
DRL at a meeting with the FDA in June 2014. The FDA then
6
conducted a second inspection of KVK-Tech. In December
2014, Panchal sent the FDA a final report, detailing KVK-
Tech’s internal investigation and concluding that it was “not
clear” why UCB had shipped active ingredient from Mexico.
App. 45–46. The FDA released a report on its investigation
into KVK-Tech in March 2015; that report incorporated false
information from KVK-Tech’s internal investigation. Vepuri,
Panchal, and KVK-Tech did not notify the FDA that it had
included false information in its report. The Government
alleges that, as a result of its misconduct, KVK-Tech delivered
to its customers more than 368,000 bottles of Hydroxyzine
made with active ingredient sourced from the DRL facility.
Vepuri, Panchal, and KVK-Tech were charged in a two-
count superseding indictment on June 10, 2021. The
superseding indictment charges all the defendants with one
count of conspiracy to defraud and to commit offenses against
the United States under 18 U.S.C. § 371 and charges KVK-
Tech with one count of mail fraud under 18 U.S.C. § 1341.
The conspiracy charge involves three objects: (1) defrauding
the United States by impeding the lawful function of the FDA;
(2) with intent to defraud and mislead, introducing or
delivering for introduction “unapproved new drugs” in
violation of 21 U.S.C. §§ 331(d) and 355(a); and (3) making
false statements to the FDA in violation of 18 U.S.C. § 1001.
App. 38.
The defendants moved to dismiss the indictment on a
variety of grounds. The District Court granted the motions in
part, dismissing the portion of the indictment that the
defendants conspired to violate 21 U.S.C. §§ 331(d) and
7
355(a).2 The Government timely appealed the District Court’s
partial dismissal of the superseding indictment.
II.
The District Court had jurisdiction under 18 U.S.C. §
3231, and we have appellate jurisdiction under 18 U.S.C. §
3731. When reviewing a district court’s decision on a motion
to dismiss an indictment, we exercise plenary review over a
district court’s legal conclusions and review its factual findings
for clear error. United States v. Stock, 728 F.3d 287, 291 (3d
Cir. 2013).
III.
The District Court dismissed the portion of the
conspiracy charge that alleged that Vepuri, Panchal, and KVK-
Tech conspired to:
[C]ommit an offense against the United States, by
. . . with the intent to defraud and mislead,
introducing or delivering for introduction, and
causing the introduction or delivery for
introduction, into interstate commerce of
2
The defendants did not appeal the District Court’s decision
denying their motions to dismiss (1) the conspiracy charge
against all three defendants to defraud the United States by
impeding the lawful function of the FDA and to commit an
offense against the United States by making false statements to
the FDA and (2) the mail fraud charge against KVK-Tech.
This appeal accordingly has no effect on those remaining
charges.
8
unapproved new drugs in violation of Title 21
United States Code, Sections 331(d) and 355(a)[.]
App. 38. Section 331(d) prohibits, among other things, the
introduction or delivery for introduction into interstate
commerce of any article that does not comply with the
requirements of 21 U.S.C. § 355. See 21 U.S.C. § 331(d).3
Section 355(a) provides:
No person shall introduce or deliver for
introduction into interstate commerce any new
drug, unless an approval of an application filed
pursuant to subsection (b) or (j) is effective with
respect to such drug.
21 U.S.C. § 355(a). Section 355(b), in turn, sets forth the
procedure by which the FDA evaluates and approves NDAs for
non-generic drugs, and § 355(j) sets forth the procedure by
3
Section 331(d) prohibits the introduction into interstate
commerce of any article in violation of 21 U.S.C. §§ 344, 350d,
355, or 360bbb-3. See 21 U.S.C. § 331(d). Notably absent
from that list is 21 U.S.C. § 356a. Section 356a outlines what
holders of NDAs and ANDAs must do in the event of
manufacturing changes, such as those at issue here. Despite its
apparent relevancy, § 356a is not referenced in the superseding
indictment, and at oral argument, the Government clarified that
although the provision supports its position, it was not relying
upon § 356a to establish that the defendants conspired to
violate § 355(a). We accordingly decline to discuss § 356a
further.
9
which the FDA evaluates and approves ANDAs for generic
drugs.
The term “new drug,” as employed in § 355(a), is
defined in the FDCA by what it is not: it is any drug that is not
(1) “generally recognized, among experts . . . as safe and
effective” or (2) grandfathered in, meaning that as of 1938, it
was subject to the 1906 Food and Drugs Act. See 21 U.S.C. §
321(p). The parties agree that Hydroxyzine, the drug at issue
here, is a “new drug” under the statute.
The dismissed portion of the superseding indictment
charges Vepuri, Panchal, and KVK-Tech with conspiracy to
violate the FDCA’s prohibition on the introduction or delivery
into interstate commerce of any “new drug,” unless an
approval of an NDA or ANDA is effective with respect to such
drug. The Government repeatedly states in the superseding
indictment and throughout its briefs that the defendants
violated this prohibition by distributing the Hydroxyzine at
issue because it was an “unapproved” new drug. For example,
in outlining the objects of the conspiracy charge, the
superseding indictment refers to “unapproved new drugs.” See
App. 38 (alleging that the defendants conspired to “commit an
offense against the United States, by . . . with the intent to
defraud and mislead, introducing or delivering for
introduction, and causing the introduction or delivery for
introduction, into interstate commerce of unapproved new
drugs in violation of Title 21 United States Code, Sections
331(d) and 355(a).” (emphasis added)); see also Reply Br. 3
(“The only question is . . . whether ‘an approval of an
application . . . [was] effective with respect to’ the hydroxyzine
that the defendants marketed. The answer to that question is
no, the hydroxyzine was an unapproved new drug.” (quoting
10
21 U.S.C. § 355(a) (emphasis added))); id. at 9 (describing “the
dispute in this case” as “whether a particular ‘new drug’ is
approved or unapproved for distribution” (emphases added)).
But the relevant statutory provisions do not prohibit the
introduction of “unapproved” new drugs. They instead
prohibit the introduction of any “new drug, unless an approval
of an [NDA or ANDA] is effective with respect to such drug.”
21 U.S.C. § 355(a). We have held that the provision “requires
only that a new drug approval be in effect before a new drug is
marketed,” see United States v. Kaybel, Inc., 430 F.2d 1346,
1347 (3d Cir. 1970) (emphasis added); our jurisprudence does
not recognize the Government’s premise that distributing
“unapproved” drugs violates § 355(a).4 Thus, alleging that the
4
We observe that the Courts of Appeals for the Seventh and
Eighth Circuits have suggested that § 355(a) has been violated
when drugs are “unapproved.” In United States v. Genendo
Pharm., N.V., 485 F.3d 958 (7th Cir. 2007), the defendant
admitted that it had violated the NDA for the drug at issue. The
defendant argued that it was not liable under an exemption to
the FDCA, and most of the court’s decision addressed that
argument. Id. at 961. After holding that the exemption was
inapplicable, the court stated that given the admitted violations
of the NDA, the drug at issue was “unapproved,” which
constituted a violation of § 355(a). Id. at 962, 965. Neither
party contested the assumption that § 355(a) is violated when
an NDA is not followed, and the court did not reference the
language of the statute looking to whether the approval of an
NDA or ANDA is “effective with respect to such drug.” 21
U.S.C. § 355(a). See also In re Canadian Imp. Antitrust Litig.,
470 F.3d 785, 789 (8th Cir. 2006) (noting in an antitrust case
that the importation of drugs from Canada violates federal law
11
drugs are “unapproved” — without demonstrating how that
violates § 355(a) — is therefore not enough on its own to state
the offense of conspiracy to violate § 355(a).
We analyze the Government’s arguments in terms of the
text of the relevant statute, 21 U.S.C. § 355(a). See Sebelius v.
Cloer, 569 U.S. 369, 376 (2013) (“As in any statutory
construction case, ‘[w]e start, of course, with the statutory text’
. . . .” (quoting BP Am. Production Co. v. Burton, 549 U.S. 84,
91 (2006))). The defendants were charged with conspiracy to
violate § 355(a), which prohibits delivering “any new drug”
into interstate commerce “unless an approval of an [NDA or
ANDA] is effective with respect to such drug.” 21 U.S.C. §
355(a). By claiming the drug is “unapproved,” the
Government appears to be relying upon either (1) the “with
respect to such drug” portion of the provision or (2) the “is
effective” portion of the provision. Under the first framing —
focusing on the “with respect to such drug” language — the
Government’s theory of liability is that, given that the new
drug’s active ingredient was sourced from a facility not listed
in the ANDAs, the Hydroxyzine KVK-Tech distributed was
not the same “new drug” as the one with an effective approval.
And because KVK-Tech had not procured approval for the
Hydroxyzine manufactured with active ingredient from DRL,
the argument goes, introduction of that new drug violated the
because violations of labeling requirements make the drugs
“unapproved,” which violates 21 U.S.C. § 355). Because those
two courts accepted the Government’s premise and did not
discuss the text of the statute, we follow our precedent in
Kaybel and decline to adopt the apparent assumption that
deviations from an NDA or ANDA make the drug
“unapproved,” which in turn violates § 355(a).
12
provision. Put into the language of the statute, the Government
is arguing that the use of a manufacturing facility not listed in
the ANDAs for KVK-Tech’s Hydroxyzine means that the
existing approval of the ANDAs is not effective “with respect
to such drug,” because the distributed “new drug” is not the
“such drug” that has an effective approval. And under the
second framing — focusing on the “is effective” language —
the Government’s theory of liability suggests that because the
Hydroxyzine’s active ingredient was manufactured at a facility
not included in the ANDAs, the approval of the ANDAs for
KVK-Tech’s Hydroxyzine stopped being “effective” with
respect to that drug.
We will accordingly consider whether the superseding
indictment states a conspiracy offense under either theory of
liability.
A.
To state an offense for conspiracy to violate § 355(a)
under the “effective with respect to such drug” theory of
liability, an unapproved change in manufacturing facility must
mean that the drug introduced into interstate commerce is no
longer the “such drug” with an effective approval.5 The statute
5
At oral argument, the Government primarily advanced this
theory. See, e.g., Oral Argument at 02:55 – 03:20 (“The
question ultimately is whether an approval is effective with
respect to the particular product that was being introduced into
interstate commerce and that product was a tablet or a group of
tablets of Hydroxyzine that were manufactured at a particular
facility. And as to that drug product, there is no effective
approval because the only thing that was approved was
13
prohibits the introduction of “any new drug” into interstate
commerce, unless an approval of an ANDA or NDA is
effective “with respect to such drug.” 21 U.S.C. § 355(a).
Under a plain reading of the provision, the “such drug” in the
second clause of the statute is referring to the “new drug” in
the first clause of the statute. As discussed above, “new drug”
is defined in 21 U.S.C. § 321(p) by what it is not: it is “any
drug . . . the composition of which is such that such drug is not”
either (1) generally recognized among experts as safe and
effective for the use “suggested in the labeling thereof” or (2)
grandfathered in, meaning that as of 1938, it was subject to the
1906 Food and Drugs Act, and at such time its “labeling
contained the same representations[.]” 21 U.S.C. § 321(p)(1)
(emphases added); see also 21 U.S.C. § 321(p)(2) (defining
“new drug” as “any drug . . . the composition of which is such
that such drug” is not the ones listed in § 321(p)(1) (emphasis
added)). The text of § 321(p), therefore, defines a “new drug”
in terms of its composition and labeling. Put another way, for
a “new drug” to no longer be the “such drug” with the effective
approval of an NDA or ANDA, it must have a different
composition or labeling than the “new drug” with the effective
approval.
The superseding indictment in this case does not include
any allegations that the KVK-Tech Hydroxyzine manufactured
with active ingredient from DRL had a different composition
or labeling than the KVK-Tech Hydroxyzine with the effective
approval. In the language of the statute, the “new drugs” at
manufacturing Hydroxyzine at other facilities.”). The
Government also framed its theory in this manner in the
superseding indictment and in its briefing before the District
Court. See App. 36, 142.
14
issue here are the “such drugs” that have an effective approval.
The Government, therefore, cannot state an offense under this
theory of liability.
As the defendants highlight, this interpretation of the
statute keeps the FDCA statutory scheme coherent.6 See Food
6
This is not the defendants’ main argument. They principally
argue that we have rejected the Government’s theory in United
States v. Kaybel, Inc., 430 F.2d 1346 (3d Cir. 1970), a decision
the parties discuss at length. In Kaybel, the defendant, Kaybel,
Inc., re-packaged a drug that Searle & Co. manufactured in
compliance with its NDA. Id. at 1347. There, the Government
argued that “the defendants violated § 355(a) by repackaging
those tablets without securing a separate new drug approval in
their own name.” Id. We held that the provision “requires only
that a new drug approval be in effect before a new drug is
marketed,” and that “[i]t would require an unwarranted
distortion of the normally understood meaning of this rather
simple language . . . to characterize the product marketed by
the appellants as a drug different from the ‘new drug’ for which
approval already had been obtained . . . .” Id. We concluded,
therefore, that the defendants were entitled to acquittal as a
matter of law. In other words, we rejected the Government’s
theory as to re-packagers distributing a “new drug” that fully
complied with the manufacturer’s NDA or ANDA.
In Kaybel, we did reject the Government’s overall theory that
alleging a drug is “unapproved” states an offense under the
statute. Id. But we said nothing about whether § 355(a) is
violated when manufacturers themselves deviate from their
own approved NDA or ANDA, despite that the drugs at issue
maintained the same composition and labeling as that listed in
15
& Drug Admin. v. Brown & Williamson Tobacco Corp., 529
U.S. 120, 133 (2000) (“It is a fundamental canon of statutory
construction that the words of a statute must be read in their
context and with a view to their place in the overall statutory
scheme. A court must therefore interpret the statute as a
symmetrical and coherent regulatory scheme, and fit, if
possible, all parts into an harmonious whole.” (quotation marks
and citations omitted)). Another provision of the FDCA, 21
U.S.C. § 355(k), also refers to drugs for which an approval of
an NDA or ANDA is in effect. That section provides in
relevant part:
In the case of any drug for which an approval of
an application filed under subsection (b) or (j) is
in effect, the applicant shall . . . make such
reports to the Secretary, . . . as the Secretary may
by general regulation, . . . prescribe on the basis
of a finding that such records and reports are
necessary in order to enable the Secretary to
determine . . . whether there is or may be ground
for invoking subsection (e).
21 U.S.C. § 355(k)(1). In other words, § 355(k) requires
applicants with “any drug” for which an approval of an NDA
or ANDA is “in effect” to make reports to the FDA as required
by FDA regulations, so that the FDA can determine whether it
the approval. We need not decide whether Kaybel treated the
re-packagers as manufacturers or whether our holding in
Kaybel is limited to cases in which the drugs at issue have the
same composition and labeling as the drugs with the effective
approval. We instead reject the Government’s theory under
well-settled principles of statutory interpretation.
16
should withdraw or suspend the approval of the NDA or
ANDA under 21 U.S.C. § 355(e).
The defendants point out — and the Government does
not dispute — that the superseding indictment alleges that the
defendants violated one such FDA regulation, 21 C.F.R. §
314.18, when Vepuri and Panchal “failed to make the required
notification to the FDA that defendant KVK-TECH had
distributed Hydroxyzine containing the [active ingredient,]
which the FDA considered adulterated.” App. 41. For that
provision to apply to the defendants, the drug at issue must
have had an approval of an ANDA “in effect.” Under the
Government’s theory, the Hydroxyzine manufactured with
active ingredient sourced from DRL is not the same drug that
had an approved ANDA in effect for purposes of § 355(a), but
it is the same drug for purposes of § 355(k). Both cannot
simultaneously be true. The better reading of the statute is that
in the event of manufacturing changes, the FDCA may require
reporting without necessarily triggering criminal liability.
The Government also argues that the definition of “new
drug” in 21 U.S.C § 321(p) should not be imputed into 21
U.S.C. § 355(a) because “the two sections serve entirely
different purposes,” with § 355(a) “intended to protect the
public from the risks associated with unapproved new drugs.”
Gov. Br. 38. We disagree. When defining a statute’s terms,
we are required to look first to the definitions in the statute
itself. See Burton, 549 U.S. at 91. And while we recognize the
important Government interest in protecting public health by
keeping drugs that deviate from their approvals off the market,
the Government cannot rely upon a textually implausible legal
theory to pursue that goal in this case. The Government
discusses § 355(a) as if it exists in isolation and is the only
17
means to avoid adverse public health outcomes. But the FDCA
includes several civil enforcement provisions that could have
been invoked to address the conduct alleged in the superseding
indictment. For example, the FDA could have withdrawn or
suspended the approval of the defendants’ ANDA under 21
U.S.C. § 355(e) or imposed civil penalties under 21 U.S.C. §
335b. And, as was done here, the Government can criminally
prosecute the defendants under 18 U.S.C. § 1001 for their
alleged misrepresentations to the FDA about their use of an
unauthorized manufacturing facility.7 Accordingly, relying
upon the composition and labeling of a “new drug” — as the
term is defined in 21 U.S.C. § 321(p) — to interpret the
meaning of 21 U.S.C. § 355(a) is textually appropriate and
does not threaten the Government’s ability to protect the public
by enforcing the FDCA.
7
Regulating the place of manufacture undoubtedly is a critical
function of the FDA. The FDA has the power to inspect and
approve manufacturing facilities, see 21 U.S.C. § 374, and it
can bring criminal charges against those responsible for
adulterated or misbranded drugs, see 21 U.S.C. §§ 331(a), 351,
352. And when “new drugs” are distributed without an
approved NDA or ANDA that is effective — because one was
never obtained at all, because the existing approval was
withdrawn or suspended, or because the “new drugs” that were
distributed differed in composition or labeling than the ones
with the effective approval — the Government may rely upon
§ 355(a). Moreover, to the extent that our decision has
identified a gap in the FDA’s ability to regulate the drugs that
are introduced into interstate commerce, Congress has the tools
necessary to fill it.
18
Because the Hydroxyzine at issue has the same
composition8 and labeling as the Hydroxyzine for which an
approval of an ANDA is effective, the Government cannot rely
in this case upon the premise that the two drugs are different.
The Government’s first theory of liability — that the
Hydroxyzine that was introduced into interstate commerce is
not the same Hydroxyzine with an effective approval —
accordingly does not state the offense of conspiracy to violate
§ 355(a).
B.
The Government’s second theory of liability is that the
superseding indictment states an offense of conspiracy to
violate § 355(a) because the fact that the “new drug” was
manufactured at a facility not included in the approved ANDA
means that the approved ANDA stopped being “effective” with
respect to that drug. But that very theory has been rejected by
the Supreme Court, and we are bound by that decision. See
8
The FDCA does not define the word “composition.” But the
FDA has long interpreted the term to refer only to a drug’s
chemical makeup — the “name and amount of each active and
inactive ingredient.” FDA, Guideline for the Format and
Content of the Summary for New Drug and Antibiotic
Applications 7 (Feb. 1987),
https://www.fda.gov/media/71139/download. And a drug’s
“composition” does not include the location or identity of the
manufacturer of those ingredients. See 21 U.S.C. §
355(b)(1)(A) (distinguishing between the “composition of
such drug” and the methods, facilities, and controls used to
make the drug).
19
Weinberger v. Hynson, Westcott & Dunning, Inc., 412 U.S.
609, 633 (1973).
In Weinberger, the Supreme Court considered the 1962
amendments to the FDCA, which required that “new drugs”
receive affirmative FDA approval. The drug manufacturer
argued that its drug, Lutrexin, qualified for an exemption to
this requirement. Qualification for the exemption “turn[ed]
solely on whether Lutrexin was ‘covered’ by an effective NDA
immediately prior to the adoption of the 1962 amendments.”
Id. at 632 (citing section 107(c)(4) of the 1962 amendments).
The manufacturer argued that when Lutrexin became generally
recognized as safe, it was no longer a “new drug” under 21
U.S.C. § 321(p), and so its NDA stopped being effective. Id.The Supreme Court rejected that argument, holding:
That argument draws no statutory support. The
1938 Act [referring to the FDCA] did not
provide any mechanism other than the
Commissioner’s suspension authority under [21
U.S.C. § 355(e)9], whereby an NDA once
effective could cease to be effective. Indeed, [§
355(e)] leads to the conclusion that an NDA
remains effective unless it is suspended. That
section empowers FDA to withdraw approval of
an NDA whenever new evidence comes to light
suggesting that the drug has become unsafe,
whether or not the drug was generally recognized
as safe in the interim.
9
While the original text cites section 505 of the 1962
Amendments, that section was codified at 21 U.S.C. § 355(e).
20
Id. at 633. Under that holding, an NDA or ANDA only stops
being effective when the procedures for suspension or
withdrawal in § 355(e) are followed.
The parties in this case agree that the existing approval
of the ANDAs for KVK-Tech’s Hydroxyzine were not
suspended or withdrawn under § 355(e). The approval of the
ANDAs accordingly remains effective, so this theory of
liability fails, and the Government has not stated the offense of
conspiracy to violate § 355(a).
In sum, the second theory of criminal liability — that a
deviation from the approved NDA or ANDA means that the
approval is no longer effective — fails because the approval of
an NDA or ANDA ceases being effective only when it has been
withdrawn or suspended. Because the existing ANDAs here
are still effective, the Government cannot rely upon this theory
to state the offense of conspiracy to violate § 355(a).
IV.
For the foregoing reasons, we will affirm the order of
the District Court and remand the case for proceedings on the
remaining charges.
21