Eagle Pharmaceuticals, Inc. v. Alex Azar, II ( 2020 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 17, 2019 Decided March 13, 2020
No. 18-5207
EAGLE PHARMACEUTICALS, INC.,
APPELLEE
v.
ALEX MICHAEL AZAR, II, IN HIS OFFICIAL CAPACITY AS
SECRETARY OF HEALTH AND HUMAN SERVICES, ET AL.,
APPELLEES
APOTEX, INC.,
APPELLANT
FRESENIUS KABI USA, LLC,
APPELLEE
Consolidated with 18-5254, 18-5255, 18-5292
Appeals from the United States District Court
for the District of Columbia
(No. 1:16-cv-00790)
Melissa N. Patterson, Attorney, U.S. Department of
Justice, argued the cause for federal appellants. With her on
the briefs was Scott R. McIntosh.
2
Steven E. Feldman, Sherry L. Rollo, John K. Hsu, and
Jeffrey D. Skinner were on the briefs for intervenors-appellants
Apotex, Inc, et al.
Gregory G. Garre argued the cause for plaintiff-appellee.
With him on the brief were Phillip J. Perry, Andrew D. Prins,
and Benjamin W. Snyder.
Before: HENDERSON and RAO, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge HENDERSON.
Dissenting Opinion filed by Senior Circuit Judge
WILLIAMS.
KAREN LECRAFT HENDERSON, Circuit Judge: In 2014, the
United States Food and Drug Administration (FDA) designated
a drug developed by Eagle Pharmaceuticals, Inc. (Eagle) as an
“orphan drug” under the Orphan Drug Act (ODA), 21 U.S.C.
§§ 360aa–360ee. In 2015, the FDA approved Eagle’s drug for
marketing but denied Eagle’s request for a seven-year period
of marketing exclusivity under 21 U.S.C. § 360cc(a),
concluding that Eagle failed to prove its drug was clinically
superior to a previously designated and approved version of the
same drug. Eagle appealed, arguing that the ODA’s plain
language required the FDA to automatically grant Eagle
marketing exclusivity upon designating its drug as an orphan
drug and approving it for marketing. The district court agreed,
granting summary judgment in Eagle’s favor because the
Congress’s intent was clearly expressed in the unambiguous
language of § 360cc(a). The FDA appeals. Because the text of
§ 360cc(a) unambiguously entitles a manufacturer to marketing
exclusivity upon designation and approval, we affirm.
3
I. BACKGROUND
In 1983, the Congress enacted the ODA to address the
problem of “orphan drugs.” See Pub. L. No. 97-414, § 1, 96
Stat. 2049 (1983). An orphan drug is one that “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.” 1
Spectrum Pharm., Inc. v. Burwell, 824 F.3d 1062, 1064 (D.C.
Cir. 2016) (citing § 1(b)). The ODA’s goal is to “reduce the
costs of developing” and “provide financial incentives to
develop [orphan] drugs.” § 1(b).
To accomplish this goal, the ODA allows the FDA to
designate a drug, at its development stage, as an orphan drug.
21 U.S.C. § 360bb. 2 Designation as an “orphan drug” provides
benefits designed to promote orphan drug development such as
tax credits, assistance with investigations and the approval
process and monetary grants to defray the costs of developing
orphan drugs. See 26 U.S.C. § 45C; 21 U.S.C. §§ 360aa(a),
360ee. Before the sponsor of an orphan drug can sell its drug,
it must obtain marketing approval from the FDA. Generally,
1
The ODA defines a “rare disease or condition” as one “which
(A) affects less than 200,000 persons in the United States, or (B)
affects more than 200,000 in the United States and for which there is
no reasonable expectation that the cost of developing and making
available in the United States a drug for such disease or condition
will be recovered from sales in the United States of such drug.” 21
U.S.C. § 360bb(a)(2).
2
The ODA gives various responsibilities to the Secretary of the
United States Department of Health and Human Services (HHS) but
the Secretary carries out these responsibilities through the FDA
Commissioner. See 21 U.S.C. § 393(d)(2). We refer to the FDA,
rather than the Secretary, throughout this opinion.
4
before any drug can be sold or marketed in interstate
commerce, the FDA must “certify[ ] the drug’s safety and
efficacy.” Otsuka Pharm. Co. v. Price, 869 F.3d 987, 989
(D.C. Cir. 2017) (citing 21 U.S.C. § 355(a), (b)).
After a sponsor’s drug has been designated as an orphan
drug and approved for marketing, the FDA provides the
sponsor with a seven-year period of exclusive approval rights
during which time the FDA may not approve another “such
drug for such disease or condition” for marketing until the end
of the seven-year exclusivity period. 21 U.S.C. § 360cc(a)
(2012). 3 At the time of this case, § 360cc(a) provided that:
Except as provided in subsection (b) of this
section, if the Secretary-
(1) approves an application filed pursuant
to section 355 of this title,
...
for a drug designated under section 360bb
of this title for a rare disease or condition, the
Secretary may not approve another application
under section 355 of this title . . . for such drug
for such disease or condition for a person who
is not the holder of such approved
application . . . until the expiration of seven
3
Because this case involves § 360cc(a) as it was written before
the 2017 amendments to the ODA, see Pub. L. No. 115-52, § 607,
131 Stat. 1005, 1049 (2017), we cite to the version that was in force
at the time of Eagle’s approval and the FDA’s refusal to grant
exclusivity. See 21 U.S.C. § 360cc(a) (2012). Thus, citations
to § 360cc(a), unless otherwise noted, refer to § 360cc(a) (2012).
5
years from the date of the approval of the
approved application . . . .
Id. The Congress provided two exceptions to the seven-year
exclusivity period: the FDA “may” approve another
manufacturer’s drug if the holder of the exclusive approval
right (1) “cannot assure the availability of sufficient quantities
of the drug” or (2) consents to the approval of “other
applications . . . before the expiration of such seven-year
period.” Id. § 360cc(b).
The FDA has adopted regulations to implement the ODA
that further define the requirements necessary to be designated
and approved as an orphan drug. The ODA does not define
“such drug” for the purpose of the seven-year exclusivity
period—a key term because it defines the scope of the
exclusivity. See id. § 360cc(a) (“[I]f the Secretary . . . approves
an application . . . for a drug designated under section
360bb . . . the Secretary may not approve another
application . . . for such drug . . .” (emphasis added)). The
FDA has interpreted “such drug” to mean “same drug,” 21
C.F.R. § 316.31(a), and has determined that a drug is the
“same” as a previously approved drug if it shares the same
“active moiety”—the same active ingredient—and “is intended
for the same use,” 21 C.F.R. § 316.3(b)(14)(i). The FDA has
also determined, however, that, “if the subsequent drug can be
shown to be clinically superior to the first drug”—despite
having the same active moiety—“it will not be considered to
be the same drug.” Id. A drug is clinically superior if it “is
shown to provide a significant therapeutic advantage over and
above that provided by an approved drug (that is otherwise the
same drug) in one or more of the following ways: (i) [g]reater
effectiveness . . . (ii) [g]reater safety . . . or (iii) [i]n unusual
cases, . . . otherwise makes a major contribution to patient
care.” Id. § 316.3(b)(3).
 6
Putting this all together, then, the FDA considers a drug
the same as a previously-approved drug if it shares the same
active moiety and is not otherwise clinically superior; it
considers the drug to be different—and thus entitled to its own
seven-year exclusivity period upon designation and approval—
if it does not have the same active moiety or is clinically
superior. The FDA applies this scheme not only when
determining whether it can approve another drug for marketing
during an orphan drug’s seven-year exclusivity period but also
in deciding whether to grant a subsequent drug its own period
of exclusive approval after the seven years have expired. Put
differently, “the FDA will not grant the Act’s benefits to a drug
if it has previously approved that same drug for a particular rare
disease.” Eagle Pharm., Inc. v. Azar, No. CV 16-790 (TJK),
2018 WL 3838265, at *1 (D.D.C. June 8, 2018).
The FDA applies its clinical superiority scheme differently
at the two stages of the orphan drug process. At the designation
stage, the sponsor of a drug that is otherwise the same—that is,
with the same active moiety—as an already approved drug
“may seek and obtain orphan-drug designation for the
subsequent drug for the same rare disease or condition if it can
present a plausible hypothesis that its drug may be clinically
superior to the first drug.” 21 C.F.R. 316.20(a) (emphasis
added). Later, after the drug has been approved for marketing,
the FDA requires the manufacturer to “demonstrate . . . that the
drug is clinically superior to the previously approved drug” in
order to receive the seven-year exclusivity period. 21
C.F.R. § 316.34(c) (emphasis added).
The FDA imposed this heightened post-approval clinical
superiority requirement because, in its view, “sponsors could
otherwise: (1) [o]btain infinite, successive 7-year periods of
exclusivity for the same drug for the same use when the
previously approved drug had such exclusivity, known as
7
‘evergreening,’ 4 or (2) obtain an exclusivity period for a drug
without providing any meaningful benefit to patients over
previously approved therapies, when the previously approved
drug did not have orphan exclusivity”—two results which the
FDA views as being “at odds with the Orphan Drug Act.”
Orphan Drug Regulations, 78 Fed. Reg. 35,117, 35,127 (June
12, 2013). Thus, from the FDA’s perspective, implementing a
post-approval clinical-superiority requirement supports its
long-held view that the ODA “accord[s] orphan exclusive
approval only to the first drug approved for the disease or
condition” because it allows a drug to receive the seven-year
exclusivity period only if it is different (and thus an entirely
new drug) from a previously approved drug—i.e., it does not
have the same active moiety or can prove that it is clinically
superior. Id.
In 2012, a drug manufacturer alleged the FDA’s post-
approval clinical superiority requirement violated the ODA’s
plain language. Depomed, Inc. v. United States Dep’t of Health
& Human Servs., 66 F. Supp. 3d 217, 220 (D.D.C. 2014).
Depomed Inc. had developed a drug called Gralise to treat a
rare condition. Id. It sought and obtained designation for
Gralise as an orphan drug. Id. at 226. The FDA subsequently
approved Gralise for marketing but it denied Depomed a seven-
year exclusivity period, asserting that Depomed failed to prove
that Gralise was clinically superior to a previously approved
drug with the same active moiety. 5 Id. Depomed argued that
4
The FDA also uses the phrase “serial exclusivity” to refer to
potential subsequent periods of market exclusivity for the same drug.
See Appellant Brief at 2.
5
At the time of Depomed, the FDA had not yet codified
regulations for its clinical superiority requirement but it nevertheless
interpreted and applied its exclusivity determinations in that manner.
The FDA issued regulations codifying the requirement while
Depomed was pending. See 78 Fed. Reg. at 35,118.
8
it was automatically entitled to market exclusivity
under § 360cc(a) upon being designated and approved. Id. at
228. The FDA countered that under Chevron, U.S.A., Inc. v.
Natural Resources Defense Council, Inc., 467 U.S. 837 (1984),
the ODA was silent or ambiguous as to whether exclusivity
must be recognized when a drug is designated and approved
but is otherwise the same (same active moiety and not proven
to be clinically superior) as a previously approved drug for the
same disease or condition. Depomed, 66 F. Supp. 3d at 228–
29. Thus, in the FDA’s view, its clinical superiority
requirement was a reasonable interpretation of the ODA and
was entitled to deference. Id.
The district court, applying Chevron, held that the plain
language of § 360cc(a) unambiguously required the FDA to
grant marketing exclusivity when it had designated an orphan
drug and approved that drug for marketing. Id. at 229–30. The
district court concluded that the plain language of § 360cc(a)
“employ[ed] the familiar and readily diagrammable formula ‘if
x and y, then z’”—if designation and approval, then
exclusivity. Id. at 230. The district court held that there was
no “gap” in the statute for the FDA to fill and rejected the
FDA’s argument that applying the plain language would lead
to an absurd result. Id. at 231–35. The district court rejected
the FDA’s concern that interpreting the ODA in such a way
could result in “serial exclusivity”—allowing drug
manufactures to obtain successive periods of exclusivity by
“simply tweak[ing] their formulation for that drug and
resubmit[ting] applications for designation and approval” after
the initial seven-year period expires—holding that “this result
would only occur if the FDA permitted it to happen.” Id. at
235. The district court explained that the “‘serial exclusivity’
problem would not arise at all if the FDA fashioned regulations
to prevent such abuse in the context of the designation phase of
the exclusivity process”—such as requiring a showing of
9
clinical superiority before granting orphan drug designation.
Id.
The FDA initially appealed the Depomed decision but
ultimately withdrew its appeal, see Depomed Inc. v. U.S. Dep’t
of Health & Human Servs., No. 14-5271, 2014 WL 5838247,
at *1 (D.C. Cir. Nov. 7, 2014), opting instead to nonacquiesce
to the decision in future cases, see Policy on Orphan-Drug
Exclusivity; Clarification, 79 Fed. Reg. 76,888 (Dec. 23,
2014). In other words, the FDA continued to require drugs
with the same active moiety as a previously approved orphan
drug, despite having been designated and approved, to also
prove clinical superiority in order to receive market
exclusivity.
On the facts of the case before us, in 2007 and 2008, the
FDA designated a drug called Treanda as an orphan drug to
treat two forms of cancer—chronic lymphocytic leukemia
(CLL) and indolent B-cell non-Hodgkin lymphoma (B-cell
NHL). The FDA subsequently approved Treanda for
marketing and granted Teva Pharmaceutical Industries, Ltd.
(Teva)—the manufacturer of Treanda—seven years of
exclusivity for its drug. Treanda’s active ingredient is
bendamustine. Teva’s marketing exclusivity for Treanda
ended in 2015.
In 2014, Eagle asked the FDA to designate its drug,
Bendeka, as an orphan drug. Bendeka had the same active
moiety as Treanda but was a different formulation—among
other things, Treanda was a 500 mL solution and Bendeka was
50 mL. The FDA accepted Eagle’s hypothesis for Bendeka’s
clinical superiority to Treanda and designated Bendeka an
orphan drug in July 2014. In December 2015, the FDA
10
approved Bendeka for marketing. 6 Upon receiving approval
for Bendeka, Eagle requested a seven-year period of market
exclusivity, asserting that it was automatically entitled to
market exclusivity under the plain language of § 360cc(a) and
that, in the alternative, it had nevertheless proven that Bendeka
was clinically superior to Treanda. Applying its post-approval
clinical-superiority requirement, the FDA determined that
Eagle had failed to prove clinical superiority to Treanda and,
as a result, was not entitled to its own exclusivity period. The
FDA also rejected Eagle’s claim that it was automatically
entitled to exclusivity under the ODA, asserting that Depomed
was wrongly decided because it ignored the purposes and
structure of the ODA in its Chevron analysis and “did not
appreciate” the “absurd results” of its holding. Joint Appendix
at 61–68.
Eagle then began this action in district court challenging
the FDA’s denial of exclusivity for Bendeka under the APA, 5
U.S.C. § 706. 7 The parties filed cross-motions for summary
judgment. After the parties filed their respective cross-
motions, two other drug manufacturers with pending
applications for generic versions of Bendeka, Apotex, Inc.
6
In between Bendeka’s designation and approval, Teva sued
Eagle pursuant to the Food Drug and Cosmetic Act (FDCA)’s patent
infringement provisions. See 21 U.S.C. § 355(b)(2). The parties
settled and, as part of the settlement, Eagle permitted Teva to
commercially market Bendeka and Teva waived its remaining
orphan exclusivity with respect to Bendeka. The waiver allowed for
the approval of Bendeka before the expiration of Treanda’s
exclusivity.
7
Eagle sued the FDA along with HHS and the heads of both
the FDA and HHS. We refer to the appellant defendants collectively
as the FDA.
11
(Apotex) and Fresenius Kabi USA, LLC (Fresenius),
intervened as defendants. 8
The district court granted Eagle’s motion for summary
judgment and denied the FDA’s cross-motion. Eagle Pharm.,
2018 WL 3838265, at *1. Applying Chevron, the district court
concluded that the ODA “unambiguously require[d] the FDA
to afford Bendeka the benefit of orphan-drug exclusivity.” Id.
at *5. Like the court in Depomed, the district court began with
the text and held that the express language of § 360cc(a)
requires the FDA to give a drug seven years of market
exclusivity upon designating it as an orphan drug and
approving it, leaving “no room for the FDA’s imposition of the
clinical-superiority requirement.” Id. at *6. The district court
rejected the FDA’s attempts to show an ambiguity or silence in
the text of the provision or elsewhere in the statute. Id. at *6–
*7. It also rejected the FDA’s purpose and structure arguments,
concluding that the FDA’s “broad” purpose argument could not
override the text and that its points were essentially policy
arguments. Id. at *7–*9. Like the Depomed court, the district
court also recognized that the FDA could adjust the
requirements for showing clinical superiority at the designation
stage to avoid its concern about serial exclusivity. Id. at *7.
The district court also rejected the FDA’s reliance on
legislative history as insufficient to override clear statutory
text. 9 Id. at *9–*10.
8
The intervenors did not move for summary judgment.
9
In 2017, while this case was in district court, the Congress
amended the ODA to codify a clinical superiority requirement for
exclusivity and supersede Depomed’s holding. See FDA
Reauthorization Act of 2017, Pub. L. N. 115-52, § 607(a)(3), 131
Stat. 1005, 1049–50 (amending 21 U.S.C. § 360cc). The
amendments, however, are not retroactive. Id. § 607(b) (“Nothing in
the amendments made by subsection (a) shall affect any
12
The FDA and Intervenors now appeal the district court’s
summary judgment order. 10
II. ANALYSIS
“We review de novo the District Court’s rulings on
summary judgment.” Am. Bankers Ass’n v. Nat’l Credit Union
Admin., 934 F.3d 649, 662 (D.C. Cir. 2019). “We review the
administrative record and give ‘no particular deference’ to the
District Court’s views.” Id. (quoting Oceana, Inc. v. Ross, 920
F.3d 855, 860 (D.C. Cir. 2019)).
Here, the familiar Chevron doctrine—“a two-prong test
for determining whether an agency ‘has stayed within the
bounds of its statutory authority’ when issuing its action,” Am.
Bankers Ass’n, 934 F.3d at 662 (quoting City of Arlington v.
FCC, 569 U.S. 290, 297 (2013))—guides our review of the
FDA’s interpretation of the pertinent provisions of the ODA
and, in particular, § 360cc. Chevron step one requires us to
“determine ‘whether Congress has directly spoken to the
precise question at issue,’ and we ‘give effect’ to any
‘unambiguously expressed intent.’” Id. (quoting Chevron, 467
U.S. at 842–43 & n.9). If we think the statute is ambiguous,
“we turn to the second step and determine ‘whether the
agency’s answer’ to the question ‘is based on a permissible
determination under sections 526 and 527 of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 360bb, 360cc) made prior to the date
of enactment of the FDA Reauthorization Act of 2017.”).
10
Intervenors also state that they are appealing the district
court’s denial of the FDA’s motion to alter or amend the judgment
under Federal Rule of Civil Procedure 59(e), see Eagle Pharm., Inc.
v. Azar, No. CV 16-790 (TJK), 2018 WL 3838223, at *1 (D.D.C.
Aug. 1, 2018), but they make no argument regarding that motion.
13
construction of the statute.’” Id. (quoting Chevron, 467 U.S. at
843).
A. CHEVRON STEP ONE
This case presents one central question: using the
traditional tools of statutory interpretation under Chevron step
one, is the Congress’s intent in § 360cc(a) clear or is there an
ambiguity, silence or gap that the Congress left for the FDA to
fill? 11 Eagle agrees with the district court and Depomed that
the language of § 360cc(a) is unambiguous. The FDA
maintains that the Congress was silent on the issue of serial
exclusivity—i.e., whether subsequent drugs with the same
active moiety could obtain their own successive exclusivity
periods—and that § 360cc(a) must be read in light of the
broader structure and purpose of the ODA.
At Chevron step one, “[w]e first ask whether the agency-
administered statute is ambiguous on the ‘precise question at
issue.’” Guedes v. Bureau of Alcohol, Tobacco, Firearms &
Explosives, 920 F.3d 1, 28 (D.C. Cir. 2019) (quoting Chevron,
467 U.S. at 842–43). “If the statute’s meaning is unambiguous,
then we need go no further.” Id.; see also Zuni Pub. Sch. Dist.
No. 89 v. Dep’t of Educ., 550 U.S. 81, 93 (2007) (“[I]f the intent
of Congress is clear and unambiguously expressed by the
statutory language at issue, that would be the end of our
analysis.”). “[W]e examine the [statute’s] text, structure,
purpose, and legislative history to determine if the Congress
has expressed its intent unambiguously.” U.S. Sugar Corp. v.
EPA, 830 F.3d 579, 605 (D.C. Cir. 2016) (per curiam).
11
The district court did not reach the issue of Chevron step two
and Eagle does not challenge the FDA’s determination that Bendeka
is not clinically superior.
14
1. The Text
“In addressing a question of statutory interpretation, we
begin with the text.” City of Clarksville v. FERC, 888 F.3d
477, 482 (D.C. Cir. 2018). Of the tools of statutory
interpretation, “[t]he most traditional tool, of course, is to read
the text.” Engine Mfrs. Ass’n v. EPA, 88 F.3d 1075, 1088 (D.C.
Cir. 1996). Indeed, “[t]he preeminent canon of statutory
interpretation requires us to ‘presume that [the] legislature says
in a statute what it means and means in a statute what it says
there.’” Janko v. Gates, 741 F.3d 136, 139–40 (D.C. Cir. 2014)
(alteration in original) (quoting BedRoc Ltd. v. United States,
541 U.S. 176, 183 (2004) (plurality opinion of Rehnquist,
C.J.)).
The relevant text in this case is § 360cc(a), which provides:
[I]f the Secretary . . . approves an
application . . . for a drug designated under
section 360bb of this title for a rare disease or
condition, the Secretary may not approve
another application . . . for such drug for such
disease or condition for a person who is not the
holder of such approved application . . . until
the expiration of seven years from the date of
the approval of the approved application . . . .
21 U.S.C. § 360cc(a) (emphasis added). The district court in
Depomed said it well when it described this provision as
“employ[ing] the familiar and readily diagrammable formula,
‘if x and y, then z’”—if designation and approval, then
exclusivity. 66 F. Supp. 3d at 230. Under the plain language
of this provision, the FDA is barred from approving another
application for “such drug” for the same disease for seven years
once it approves an orphan drug for marketing. Based on this
15
language, the seven-year marketing exclusivity period applies
automatically—the text leaves no room for the FDA to place
additional requirements on a drug that has been designated and
approved before granting its manufacturer the right to
exclusivity.
Despite § 360cc(a)’s plain language, the FDA argues that
the provision is ambiguous because it is silent as to whether
one or multiple manufacturers can win a period of exclusive
approval for the same orphan drug for the same rare condition.
The FDA is correct that the Congress did not specify whether
the privilege of exclusive approval applies to one or multiple
manufacturers but that fact does not create an ambiguity. If the
text “clearly requires a particular outcome, then the mere fact
that it does so implicitly rather than expressly does not mean
that it is ‘silent’ in the Chevron sense.” Engine Mfrs. Ass’n, 88
F.3d at 1088. Here, the particular outcome required
by § 360cc(a) is that once a drug has been designated and
approved, the FDA may not approve another “such drug” for
seven years—regardless whether that drug is the first, second
or third drug to receive that benefit. The fact that the Congress
chose not to include an additional requirement, limitation or
exception for successive or subsequent exclusivity holders
does not make the provision ambiguous.
Attempting to find a textual hook, the FDA argues that the
word “expiration” in § 360cc(a) is ambiguous because it could
connote a permanent end, meaning that only the first drug to be
designated and approved receives exclusivity. 12 The ODA
12
Throughout its brief, Eagle asserts that several of the FDA’s
arguments about the interpretation of § 360cc(a) are barred by the
doctrine of SEC v. Chenery Corp., 318 U.S. 80, 87 (1943), because
the FDA either failed to raise the argument in district court or
changed its position. Although we note that it is not entirely clear
that Chenery even applies at Chevron step one, see Bank of Am., N.A.
16
does not define “expiration” so we must give it its “ordinary
meaning.” Petit v. U.S. Dep’t of Educ., 675 F.3d 769, 781
(D.C. Cir. 2012). “Expiration” means “[t]he ending of a fixed
period of time.” Expiration, Black’s Law Dictionary (11th ed.
2019). Read in context, “expiration” in § 360cc(a) is modified
by the preposition “of seven years,” which refers to the end of
the seven-year period of exclusive approval guaranteed to the
manufacturer of the drug that was designated and approved.
The FDA’s attempt to find ambiguity in this term stretches the
term beyond its ordinary meaning. The provision does not say
“expiration of the single seven-year period” or “expiration of
the only exclusivity period”; rather, it simply refers to the end
of the time period during which the FDA may not approve
another application. It says nothing about the possibility of
subsequent seven-year periods. 13
v. F.D.I.C., 244 F.3d 1309, 1320, 1322 (11th Cir. 2001) (“[I]t is
ultimately the function of the judiciary, not the administrative
agency, to decide whether Congress spoke directly to the issue in
question” and, therefore, “Chenery’s prohibition on litigation-
induced, post-hoc rationalizations does not apply” to Chevron step
one); see also Mozilla Corp. v. FCC, No. 18-1051, 2019 WL
4777860, at *78 (D.C. Cir. Oct. 1, 2019) (Williams, J., concurring in
part and dissenting in part) (Chenery “does not apply when the issue
turns on a purely legal question, such as, here, ‘our interpretation of
[a statute] and binding Supreme Court precedent’” (alteration in
original) (quoting Sierra Club v. FERC, 827 F.3d 36, 49 (D.C. Cir.
2016))), we need not decide this issue because even if we consider
the FDA’s arguments, we would nevertheless find § 360cc(a)
unambiguous.
13
The FDA makes one other textual appeal, arguing that we
should apply the canon favoring a narrow interpretation of a statutory
monopoly, presumably to construe § 360cc(a) to be limited to the
first exclusivity holder only. We note that this canon has been
invoked infrequently over the past century and its applicability to the
statutory scheme at issue is not apparent. See Louisville Bridge Co.
17
2. Structure and Purpose
Having no luck with the text of § 360cc(a), the FDA turns
to other provisions of § 360cc, other sections of the ODA and
the overarching FDCA—the larger statute that the ODA
amended—as well as the ODA’s overall purpose to argue that
§ 360cc(a) is ambiguous. Granted, “court[s] must . . . interpret
the statute ‘as a symmetrical and coherent regulatory scheme,’
and fit, ‘if possible, all parts into an harmonious whole,’” FDA
v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 133
(2000) (citation omitted) (first quoting Gustafson v. Alloyd Co.,
513 U.S. 561, 569 (1995); and then quoting FTC v. Mandel
Bros., Inc., 359 U.S. 385, 389 (1959)), but “[r]eliance on
context and structure in statutory interpretation is a ‘subtle
business, calling for great wariness lest what professes to be
mere rendering becomes creation and attempted interpretation
of legislation becomes legislation itself,’” King v. Burwell, 135
S. Ct. 2480, 2495 (2015) (quoting Palmer v. Massachusetts,
308 U.S. 79, 83 (1939)).
Indeed, although it does not couch its argument this way
on appeal, the FDA essentially argues that applying the district
court’s and Eagle’s literal interpretation of § 360cc(a)’s text
would lead to such odd results that we should look to other
evidence beyond the text itself to determine the Congress’s
intent. In explaining the limitations of such an argument, we
have held that “[t]he plain meaning of legislation should be
v. United States, 242 U.S. 409, 417 (1917); City of Paragould v. Ark.
Utils. Co., 70 F.2d 530, 533 (8th Cir. 1934). To the extent the canon
even applies here, however, it is only relevant to construing an
ambiguous statute—something we find missing in this case. See 37
C.J.S. Franchises § 21 (2019) (explaining that rules for interpreting
franchises conferred by the government “are to be applied only when
doubt arises, for, when the meaning is clear, there is not room for
construction”).
18
conclusive, except in the ‘rare cases [in which] the literal
application of a statute will produce a result demonstrably at
odds with the intentions of its drafters.’” Engine Mfrs. Ass’n,
88 F.3d at 1088 (alteration in original) (quoting United States
v. Ron Pair Enters., Inc., 489 U.S. 235, 242 (1989)). Although
“literal interpretation need not rise to the level of
‘absurdity’ . . ., there must be evidence that Congress meant
something other than what it literally said before a court can
depart from plain meaning.” Id. (quoting Pub. Citizen v. U.S.
Dep’t of Justice, 491 U.S. 440, 453 n.9 (1989)). Absent such
evidence, we “cannot ignore the text by assuming that if the
statute seems odd to us . . . it could be the product only of
oversight, imprecision, or drafting error.” Id. at 1088–89. It is
not our “role . . . to ‘correct’ the text so that it better serves the
statute’s purpose, for it is the function of the political branches
not only to define the goals but also to choose the means for
reaching them.” Id. at 1089 (quoting Consol. Rail Corp. v.
United States, 896 F.2d 574, 579 (D.C. Cir. 1990)). Thus, for
the FDA to avoid the literal interpretation of § 360cc(a) “at
Chevron step one, it must show either that, as a matter of
historical fact, Congress did not mean what it appears to have
said, or that, as a matter of logic and statutory structure, it
almost surely could not have meant it.” Id. at 1089. The FDA
fails to clear this high bar.
The FDA begins its structure argument by pointing to the
two exceptions to exclusive approval in § 360cc(b). The FDA
points out that the first exception—allowing the FDA to
approve other drugs to ensure a sufficient quantity—directs it
to consider only the exclusivity holder’s capability to ensure
sufficient quantities of the drug. The FDA argues that the
exception’s focus on the exclusivity holder’s capability makes
sense only in its single-exclusivity holder regime. Under the
serial exclusivity regime contemplated by Eagle and the district
court, the second drug manufacturer to receive exclusive
19
approval rights shares the market with the initial holder
(creating a duopoly), the third drug shares the market the first
and second holders (creating a triopoly) and so on. The FDA
argues that under this serial scheme, it makes little sense for the
Congress to focus solely on the exclusivity holder’s ability to
make sufficient quantities when other drug manufacturers
would also be in the market.
Although the first exception may make more sense when
applied to the initial exclusivity holder, it does not show
definitively that the Congress intended a period of exclusive
approval to apply only to the first manufacturer of a drug and
it does not show a result so odd that it justifies
overriding § 360cc(a)’s plain text. First, § 360cc(b) gives the
FDA discretion to apply the exception. See § 360cc(b) (“[T]he
Secretary may . . . approve another application . . . .” (emphasis
added)). Thus, if the FDA thought that a current exclusivity
holder could not meet demand but other manufacturers on the
market were otherwise making sufficient quantities, it has
discretion to find that there are sufficient quantities of the drug
to meet the needs of persons with the disease for which the drug
was designated. Moreover, if the FDA thought there was an
insufficient quantity of one version of a drug it believed to be
more beneficial (even if not clinically superior), it could at least
theoretically use the exception to increase supply of that
version of the drug: for example, if the FDA thought, despite
the availability of Treanda, the supply of the different dosage
version Bendeka (the current holder) was insufficient.
As for the second exception that allows the FDA to
approve another application with the exclusivity holder’s
consent, the FDA argues that a serial exclusivity regime would
allow the exception to be improperly manipulated. The FDA
argues that the initial exclusivity holder could undercut future
holders by consenting to numerous manufacturers or the initial
20
holder could agree with one manufacturer to effectively gain a
fourteen-year period of exclusivity, as Teva did by entering a
licensing agreement with Eagle to commercially market
Bendeka. See supra note 6. First, as with the first exception,
the FDA has discretion to approve or deny such a consent
waiver. Moreover, the fact that the Congress chose to give the
exclusivity holder, whether it be the first or a subsequent one,
the ability to completely waive its right to exclusive approval
does not speak to whether one or multiple drugs could enjoy
the privilege of exclusivity. Indeed, an initial holder could
waive its exclusivity period one month into its seven-year
period or could wait to consent to the approval of other
applications until the final month of its seven-year period.
Plainly, the benefits of § 360cc(a)’s exclusive approval right
decrease as more drugs are added to the market over time but
that the first holder or first few holders enjoy more benefits and
the ability to decide when to consent to other applications does
not mean that the Congress meant for § 360cc(a) to apply only
to the first holder against the provision’s express language.
Rather, the Congress specifically chose to leave this exception
in the hands of the exclusivity holder subject to the FDA’s
discretion.
Next, the FDA fashions a structure and purpose argument
based on the interplay between designation and exclusivity.
The FDA argues that Eagle’s (and the district court’s) view will
undermine the purposes of the ODA because, without a post-
approval requirement of clinical superiority, it will be forced to
grant exclusivity to drug manufacturers that merely tweak a
drug’s design to meet the plausible hypothesis standard at the
designation stage—thus allowing drugs that may not end up
being clinically superior to earlier versions of the same drug to
obtain exclusivity. This result, the FDA argues, would lead to
the problem of evergreening or serial exclusivity in which
either the same manufacturers or multiple manufacturers can
21
obtain multiple periods of sequential exclusivity for the same
drug to treat the same disease. In rejecting this argument, the
district court explained that this result could occur only if the
FDA allowed it to happen. The district court reasoned that
because the FDA has “unchallenged statutory authority” to
impose requirements for designation, it could raise the clinical
superiority threshold at the designation stage. Eagle Pharm.,
2018 WL 3838265, at *7. The FDA asserts that the district
court’s view presents the FDA with a dilemma: either increase
the requirements for designation—stifling drug development
of clinically superior drugs—or leave the current requirements
in place—allowing manufacturers to enjoy serial exclusivity
for drugs that are only marginally different from earlier
versions. The FDA argues that its post-approval clinical
superiority requirement avoids these problems by harmonizing
the designation and exclusivity provisions of § 360bb
and § 360cc. 14
Granted, the Congress’s goal in enacting the ODA was to
reduce the cost of and incentivize orphan drug development but
the fact that following the text of a statute may conflict with the
statute’s larger purpose alone does not warrant departing from
the text. See Baker Botts L.L.P. v. ASARCO LLC, 135 S. Ct.
2158, 2169 (2015) (“Our job is to follow the text even if doing
so will supposedly undercut a basic objective of the statute.”
(internal quotation marks omitted)); Landstar Express Am.,
Inc. v. Fed. Mar. Comm’n, 569 F.3d 493, 498 (D.C. Cir. 2009)
(“[N]either courts nor federal agencies can rewrite a statute’s
plain text to correspond to its supposed purposes.”). It is not
14
Before diving into the FDA’s structural arguments, it is
important to note that, unlike § 360aa and § 360bb of the
ODA, § 360cc contains no express delegation from the Congress to
promulgate regulations under that section, further evidencing that it
did not intend the FDA to alter the plain text requirements
of § 360cc.
22
our job to say how the Congress should accomplish its goals;
rather, we will ignore what the Congress has written only if we
are so convinced by a conflict between the text and the purpose
that we think the Congress “almost surely could not have
meant” what it said. Engine Mfrs. Ass’n, 88 F.3d at 1089.
Here, we are not so convinced.
To begin, the FDA fails to appreciate the significance of
the plausible hypothesis requirement. It is not as if any drug
with any “minor tweak” to its formulation can be designated.
Rather, the drug’s manufacturer must be able to show a
plausible hypothesis of clinical superiority to be granted
designation—a threshold that has some teeth. The plausible
hypothesis requirement necessarily weeds out drugs that
cannot provide at least some evidentiary basis for their claim
of clinical superiority. See Def.’s Resp. to Mot. Summ. J. 11,
ECF No. 19, United Therapeutics Corp. v. HHS, No. 17-cv-
01577-ESH (D.D.C.) (Dec. 22, 2017) (noting FDA denied
manufacturer’s designation request for failure to show
plausible hypothesis because FDA found that “convincing
hypothesis of greater safety cannot be meaningfully entertained
until at least some clinically-relevant evidence of comparable
treatment effectiveness has been established”). 15
Moreover, the district court here (as well as the Depomed
district court) was correct in holding that the FDA could further
avoid its concern regarding serial exclusivity by changing its
clinical superiority requirement at the designation stage.
Indeed, the FDA can “by regulation promulgate procedures for
the implementation of” the ODA’s provisions regarding
15
United Therapeutics is currently stayed in district court
pending the outcome here. We do not weigh in on the merits of that
case. We merely cite its background facts as an example of how the
plausible hypothesis threshold is not an automatic greenlight to
designation.
23
designation. 21 U.S.C. § 360bb(d). In doing so, the FDA has
elected to require manufacturers to show a “plausible
hypothesis” of clinical superiority to existing orphan drugs
with the same active moiety before receiving designation. The
FDA argues that the lower threshold—compared to proving
clinical superiority—is necessary to allow drugs that are not yet
developed or are still being developed to obtain designation
and the benefits that come with that designation. But the fact
that the FDA must balance the goals of drug development
against the concern over serial exclusivity does not change the
fact that it has the ability to control the definition of “such
drug” and the evidentiary threshold of clinical superiority. For
example, the FDA could require a more stringent threshold that
requires a manufacturer to be further along in the development
process if it wishes to be designated for a clinically superior
drug. See 21 C.F.R. § 316.23(a) (“A sponsor may request
orphan-drug designation at any time in its drug development
process prior to the time that sponsor submits a marketing
application for the drug for the same rare disease or
condition.”).
The FDA contends that raising the evidentiary threshold
for designation would run counter to the purposes of the ODA
by requiring a manufacturer to spend more money on the front
end to develop a drug to the point of demonstrating clinical
superiority. But whether such upfront costs would in fact
discourage the development of orphan drugs is a question that
we are not well-positioned to resolve. Indeed, the Congress
could well have concluded that the guaranteed financial
benefits of market exclusivity following designation and
approval would outweigh concerns about upfront costs, as a
manufacturer could likely recoup those costs during its seven-
year period of exclusivity. In light of an unambiguous statutory
directive, it is not our place to second-guess how the Congress
24
chose to effectuate the policy goals underlying the statute as a
whole.
The FDA also points to a problem of “self-evergreening.”
It argues that a literal interpretation of § 360cc(a) will allow the
first manufacturer of an orphan drug to extend its own
exclusivity period indefinitely by continually seeking and
obtaining approval for different formulations of the same drug
while its current exclusivity period is in effect, as the provision
prohibits the FDA from approving applications from
“person[s]” who are “not the holder[s]” of the approved
application only. 21 U.S.C. § 360cc(a). According to the FDA,
the only way to combat the “infinite bar on approving others’
applications” that could result from this interpretation would
be to promulgate a regulation limiting the scope of a drug’s
exclusivity to the precise formulation approved—a result that
would render the benefits of the exclusivity period “virtually
meaningless” by permitting subsequent manufacturers to
obtain exclusivity for any slight variation on the exclusivity
holder’s formulation while that exclusivity period is in effect.
But this result assumes that the FDA’s regulations for
designation are correct and static.
Not so. The self-evergreening problem is within the
FDA’s power to manage and, if needed, alter. The ODA gave
the FDA authority to promulgate regulations defining orphan
drug designation. See 21 U.S.C. § 360bb(d). In doing so, it
appears that the FDA may have created the self-evergreening
problem itself. In practice, “[o]rphan drug designation is
generally conferred to the active moiety rather than the product
formulation; therefore, changes to the product formulation
should not generally affect orphan drug designation status.”
FDA, Frequently Asked Questions (FAQ) About Designating
an Orphan Product, https://www.fda.gov/industry/designating
-orphan-product-drugs-and-biological-products/frequently-
25
asked-questions-faq-about-designating-orphan-product (last
visited November 19, 2019). This means that a manufacturer
can automatically receive designation for any later formulation
of the same drug regardless whether the manufacturer presents
a plausible hypothesis of clinical superiority, so long as the
later drug contains the same active moiety as a previously
approved one. Based on this definition where designation
follows the active moiety, a manufacturer of a drug could
potentially develop a new and only slightly different
formulation of a previously designated and approved drug
while its exclusivity period remains in effect—and rely on the
same designation for its original drug to obtain infinite
exclusivity periods upon approval of each formulation of the
same drug.
But it was the FDA’s decision to permit designation to be
linked to an active moiety rather than a particular formulation.
Were the FDA to change its regulations for designation to take
into account both the active moiety and the formulation, for
example, that would prevent a manufacturer from obtaining
successive, automatic exclusivity periods for various
formulations of the same drug simply by relying on its original
designation.
Moreover, the FDA can use its plausible hypothesis of
clinical superiority requirement to weed out incremental
changes by requiring a manufacturer to show a plausible
hypothesis of clinical superiority for every formulation of a
drug, regardless whether the active moiety has previously been
designated. And if the FDA is worried that the plausible
hypothesis standard is too low, it is free to raise the standard.
In summary, the serial exclusivity and self-evergreening
concerns do not result purely from a literal reading of the
statutory text of § 360cc(a) but from the way the FDA has
26
decided to regulate its definitions for designation and the scope
of exclusivity. That the FDA’s current regulatory scheme for
designation could result in some of these problems does not
change its obligation to follow the plain text of § 360cc(a). 16
Ultimately, the FDA’s concerns do not come close to
showing that the Congress could not have meant what it said
when it wrote § 360cc(a). That the FDA’s use of the post-
approval clinical superiority requirement may be a more
reasonable approach that, in its view, “harmonizes” the
sections of the ODA does not mean that interpreting the text as
written contravenes the statute’s purpose. Although the FDA
may believe that the addition of a post-approval clinical
superiority requirement better accomplishes the ODA’s goals,
“under Chevron,” an agency cannot “avoid the Congressional
intent clearly expressed in the text simply by asserting that its
preferred approach would be better policy.” Engine Mfrs.
Ass’n, 88 F.3d at 1089. Indeed, inherent in any sort of
exclusivity period is a tradeoff between incentivizing research
and development and promoting competition. In making that
trade-off in the ODA, the Congress chose to authorize
exclusive approval rights upon designation and approval
without any qualification for the number of manufacturers that
could enjoy that privilege or any other requirement. “Where a
statute’s language carries a plain meaning, the duty of an
administrative agency is to follow its commands as written, not
to supplant those commands with others it may prefer.” See
SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348, 1355 (2018).
16
Our dissenting colleague tags us with “reconstructive
rulemaking.” Dissent at 15. We do no such thing. Instead, we
discuss various interpretations of the FDA’s regulations to
emphasize that its concerns stem from its regulations, not the statute.
Its concerns, however, do not authorize it to depart from the statute’s
plain text.
27
Looking beyond the ODA, the FDA next turns to other
provisions of the FDCA to argue that the Congress could not
have meant for § 360cc(a) to apply to multiple manufacturers
of the same drug. First, the FDA notes that the ODA’s seven-
year exclusivity period is one of the longest exclusivity periods
in the FDCA, which it says indicates that the Congress could
not have intended such a long period to continue by “mere
tweaking” of a previously approved drug. We have already
rejected the “mere tweaking” argument and, beyond that, the
fact that § 360cc(a)’s period of exclusive approval is longer
than other similar periods does not affect whether that
exclusivity period is limited to one or multiple manufacturers
under the provision’s plain text.
Second, the FDA argues that other FDCA provisions that
extend already existing exclusionary periods, see 21
U.S.C. §§ 355a(b), (c), § 355f, show that, if the Congress
intended to allow multiple exclusivity periods, it would have
said so. This argument fails because, in those provisions, the
Congress lengthens already existing exclusionary periods; they
have no bearing on the issue of other exclusionary periods after
an earlier exclusivity period has ended. 17
Third, the FDA looks to the Hatch-Waxman Act that
amended the FDCA, see Pub. L. No. 98-417, 98 Stat. 1585
(1984), arguing that the Congress uses “unmistakable
language” when it wishes to create a duopoly. The Act
provides that a generic drug manufacturer has a 180-day
exclusivity period during which time “no other generic can
compete with the brand-name drug.” FTC v. Actavis, Inc., 570
U.S. 136, 143–44 (2013) (citing 21 U.S.C. § 355(j)). It is
unclear how this amendment supports the FDA’s argument
17
It also matters not that § 355f refers to the extension of an
“exclusivity period” as this phrase could refer to the first or to a
subsequent exclusivity holder.
28
because a provision involving a generic drug automatically
involves a duopoly—the generic and the name brand.
Moreover, the amendment in fact supports Eagle’s argument in
that § 355(j)(5)(D) specifically states that, if the 180-day
exclusivity period for a generic drug is forfeited by the first
applicant to file, then no other generic can obtain it, showing
that the Congress knows how to limit an exclusivity period to
one manufacturer. In contrast, the Congress chose not to do so
in § 360cc(a) and the FDA has given us no basis in the FDCA
for overriding that choice.
Finally, the FDA argues that Eagle’s categorical
interpretation of § 360cc(a) would require the FDA to give and
maintain drug exclusivity to sponsors even if the FDA
discovered fraud or mistake within the designation process.
Reading § 360cc(a) based on its plain language to prevent the
FDA from approving other applications upon a drug’s
designation and approval, however, does not prevent the FDA
from later revoking any designation or approval procured by
fraud. The FDA’s own regulations provide for this possibility.
See 21 C.F.R. § 316.29. The FDA’s ability to revoke
designation or approval (and thus exclusivity) because of fraud
or mistake does not run afoul of the language of § 360cc(a) in
the same way that including an additional post-approval hurdle
a manufacturer must clear before obtaining its right to
exclusive approval would.
3. Legislative History
Finding no support in the text, structure or purpose, the
FDA at last turns to legislative history. There is a reason that
neither we nor the FDA begins our analysis with legislative
history. As the Supreme Court has recognized, “[e]xtrinsic
materials” such as legislative history, “have a role in statutory
interpretation only to the extent they shed a reliable light on the
29
enacting Legislature’s understanding of otherwise ambiguous
terms.” Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S.
546, 568 (2005). Moreover, “legislative history in particular is
vulnerable to two serious criticisms”: it “is itself often murky,
ambiguous, and contradictory[,]” having the “tendency to
become . . . an exercise in ‘looking over a crowd and picking
out your friends’” and “judicial reliance on legislative materials
like committee reports, which are not themselves subject to the
requirements of Article I, may give unrepresentative committee
members—or, worse yet, unelected staffers and lobbyists—
both the power and the incentive to attempt strategic
manipulations of legislative history to secure results they were
unable to achieve through the statutory text.” Id. (quoting
Wald, Some Observations on the Use of Legislative History in
the 1981 Supreme Court Term, 68 Iowa L. Rev. 195, 214
(1983)).
Although our precedent has instructed that we “exhaust the
traditional tools of statutory construction, including examining
the statute’s legislative history to shed new light on
congressional intent, notwithstanding statutory language that
appears superficially clear[,]” Sierra Club v. E.P.A., 551 F.3d
1019, 1027 (D.C. Cir. 2008) (quoting Am. Bankers Ass’n v.
Nat’l Credit Union Admin., 271 F.3d 262, 267 (D.C. Cir.
2001)), it has also held that if, after analyzing the text, structure
and context, we conclude that the language is unambiguous, we
need not resort to legislative history to decipher what the
Congress intended. See Nat’l Shooting Sports Found., Inc. v.
Jones, 716 F.3d 200, 212 (D.C. Cir. 2013). In other words, “we
do not resort to legislative history to cloud a statutory text that
is clear.” Id. (quoting Ratzlaf v. United States, 510 U.S. 135,
147–48 (1994)). Here, what § 360cc(a) provides is clear: once
a drug is designated and approved, it is entitled to a period of
exclusive approval with no limits or qualifications other than
the two express exceptions in § 360cc(b).
30
Even were we to consult legislative history in this case, the
legislative history relied upon by the FDA would be
particularly unhelpful for interpreting the statutory text. All of
it was created after § 360cc(a) was originally drafted, see
Bruesewitz v. Wyeth LLC, 562 U.S. 223, 242 (2011) (“Post-
enactment legislative history (a contradiction in terms) is not a
legitimate tool of statutory interpretation.”), including several
floor statements of individual legislators, see N.L.R.B. v. SW
Gen., Inc., 137 S. Ct. 929, 943 (2017) (“[F]loor statements by
individual legislators rank among the least illuminating forms
of legislative history.”).
Although it is true that “[s]ubsequent legislation declaring
the intent of an earlier statute is entitled to great weight in
statutory construction,” Consumer Prod. Safety Comm’n v.
GTE Sylvania, Inc., 447 U.S. 102, 118 n.13 (1980) (emphasis
added), that is not what the FDA cites here. Rather, the FDA
cites a report for a provision that was left out of the 1988
amendments to the ODA, a statement by the President
explaining his pocket veto of a 1990 amendment to the ODA
and a handful of comments by individual legislators during the
debate and drafting of the 1990 bill. None of these sources is
“legislation.” Instead, they are less persuasive pieces of
subsequent legislative history. See id. (“A mere statement in a
conference report of such legislation as to what the Committee
believes an earlier statute meant is obviously less weighty.”).
Finally, much like the other provisions of the ODA and the
FDCA that the FDA points to, the legislative history on which
it relies does not pass on the issue of subsequent or successive
exclusivity periods after the initial seven-year period ends. For
these reasons, the FDA’s last-ditch reliance on legislative
history fails to carry the day.
31
* * *
Our dissenting colleague thinks the text, structure and
purpose of § 360cc(a) show that the Congress intended the
exclusivity period afforded by that provision to be limited to
the first manufacturer to secure designation and approval of its
orphan drug. In his view, then, the FDA’s additional clinical
superiority requirement merely flows from the statute. Dissent
at 6.
The problem with this interpretation is that it reads a
limitation into the text that is not there. Nor is any such
limitation required by the statute’s structure or purpose. In the
absence thereof, we cannot do the Congress’s job for it by
adding one. “To supply omissions transcends the judicial
function.” Iselin v. United States, 270 U.S. 245, 250–251
(1926).
Like our colleague, we could imagine a better statutory
framework than what the Congress provided in § 360cc(a). But
that is not our role. “Our role is to interpret the language of the
statute enacted by Congress,” Barnhart v. Sigmon Coal Co.,
534 U.S. 438, 461 (2002), “not to improve upon it.” Pavelic &
LeFlore v. Marvel Entm’t Grp., 493 U.S. 120, 126 (1989). As
the Supreme Court has “stated time and again[,] . . . courts must
presume that a legislature says in a statute what it means and
means in a statute what it says there. When the words of a
statute are unambiguous, then, this first canon is also the last:
‘judicial inquiry is complete.’” Barnhart, 534 U.S. at 461–62
(quoting Connecticut Nat. Bank v. Germain, 503 U.S. 249,
253–254 (1992)).
The dissent claims that our approach reduces the role of
judges to that of a computer that does nothing more than
execute the Congress’s script unguided by contextual common
sense. To the extent our colleague implies that we
32
read § 360cc(a) in a vacuum, he is incorrect. We have
considered the context of that provision within its larger
statutory structure and in light of its purpose and we have found
nothing in that context to convince us that the plain text
of § 360cc(a) cannot mean what it says. To the extent he
suggests that we follow the Congress’s script without inputting
our own policy preferences, we wholeheartedly agree. 18
We conclude that the text of § 360cc(a) is unambiguous: if
the FDA approves a previously-designated orphan drug, it
cannot approve another such drug for the same condition for
seven years. This language leaves no room for the FDA to add
an after-the-fact requirement that a designated and approved
drug prove clinical superiority before receiving that exclusive
approval benefit. Nothing in the statute’s text, structure or
purpose limits this benefit to only one drug manufacturer.
The FDA has failed to show that this interpretation would
lead to results that are so unreasonable or so bizarre that the
Congress could not have meant what it said. See Cent. Bank of
Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S.
164, 188 (1994)); Engine Mfrs. Ass’n, 88 F.3d at 1089.
Permitting successive exclusivity periods may produce results
that we find odd or not the most effective way to achieve the
goals of the ODA but our role is not to correct the text to better
serve the statute’s purpose. See Engine Mfrs. Ass’n, 88 F.3d at
1088–89. That responsibility is left to the Congress, who
ultimately did amend § 360cc in 2017. Our task is to discern
18
Speaking of policy preferences, the dissent, relying on an
eleventh-hour letter filed by the FDA pursuant to Federal Rule of
Appellate Procedure 28(j), decries the “long arm” of our decision.
Dissent at 18. Its speculation regarding our holding’s potential
consequences is misplaced. Our task is to interpret the statute and
decide the case on the facts before us, not surmise what parties may
attempt to do in the future or opine on matters not before us.
33
whether the Congress clearly expressed its intent in § 360cc(a)
at the time the FDA denied exclusivity to Eagle. We hold that
it did. Therefore, the district court correctly determined at
Chevron step one that the FDA’s post-approval clinical
superiority requirement was forbidden and that Eagle was
automatically entitled to a seven-year period of exclusive
approval when it approved Bendeka for marketing.
B. INTERVENORS’ ARGUMENTS
We turn briefly to Intervenor Appellants Apotex’s and
Fresenius’s arguments on appeal. As an initial matter, although
Intervenor Appellants state in their brief that they are appealing
the district court’s denial of the FDA’s motion to alter or amend
the judgment, they make no argument as to the denial of that
motion whatsoever. Thus, any challenge to that denial is
waived. See United States ex rel. Totten v. Bombardier Corp.,
380 F.3d 488, 497 (D.C. Cir. 2004) (“Ordinarily, arguments
that parties do not make on appeal are deemed to have been
waived.”).
Their main argument is that the district court’s summary
judgment grant to Eagle required the FDA to make a new
determination by granting Eagle an exclusivity period and,
therefore, that determination is controlled by the new 2017
amendment to § 360cc(a), which requires Eagle to prove
clinical superiority in order to receive an exclusivity period.
Their argument is based on section 607(b) of the 2017
amendments, which states that “[n]othing in the amendments
made by subsection (a) shall affect any determination under
sections 526 and 527 of the [FDCA] (21 U.S.C. 360bb, 360cc)
made prior to the date of enactment of the FDA
Reauthorization Act of 2017.” § 607(b), 131 Stat. at 1050. In
Intervenor Appellants’ view, the FDA’s previous denial of
exclusivity was a determination under the unamended version
34
of the statute and implementing the district court’s order is a
new determination subject to the 2017 amendments.
Because they raise this argument for the first time on
appeal, it is waived. Salazar ex rel. Salazar v. D.C., 602 F.3d
431, 437 (D.C. Cir. 2010) (“[A]n argument not made in the trial
court is forfeited and will not be considered absent ‘exceptional
circumstances.’” (quoting Nemariam v. Federal Democratic
Republic of Ethiopia, 491 F.3d 470, 483 (D.C. Cir. 2007))).
Intervenor Appellants make two arguments attempting to
excuse their failure to raise this argument below. First, they
argue that the FDA raised it for them. This is incorrect. The
FDA never made this argument; rather, in discussing the 2017
amendments, the FDA asserted that they should be interpreted
as ratifying the FDA’s view of the earlier version of the statute.
It made no argument about the effect of the 2017 amendments
on the district’s court’s ruling.
Second, they argue the district court raised it for them. It
is true that the general rule barring raising arguments for the
first time on appeal does not apply if a district court
nevertheless “addressed” or “passed upon” the issue. See
Blackmon-Malloy v. U.S. Capitol Police Bd., 575 F.3d 699, 707
(D.C. Cir. 2009). Here, however, the district court did not pass
on the argument Intervenor Appellants now raise. It merely
considered the 2017 amendments’ effect on or relevance to the
earlier version of the statute. It ultimately determined that the
2017 version of § 360cc(a) “by its own terms” was “irrelevant
to the outcome here” and “[b]y the same token” its “opinion”
had “no bearing on determinations made under the version of
the statute currently in force.” 19 Eagle Pharmaceuticals, 2018
WL 3838265, at *10. The district court did not pass on whether
the 2017 amendments prevented it from ordering the FDA to
19
We agree with the district court on this point and, as noted,
we do not discuss the 2017 amendments in our analysis of § 360cc(a).
35
grant Eagle exclusivity because it would involve a “new
determination.” Thus, Intervenors Appellants’ argument is not
properly before us. 20
For the foregoing reasons, the judgment of the district
court is affirmed.
So ordered.
20
Even if it were, the proposition that the district court’s order
somehow conflicts with, or requires the FDA to use, the 2017
amended version of § 360cc(a) is dubious at best. Based on its order,
which we uphold, Eagle was automatically entitled to a period of
exclusivity upon being approved. Thus, the district court order
requires that the FDA give Eagle what Eagle was entitled to at the
time its application for Bendeka was approved—prior to the
enactment of the 2017 amendments.
WILLIAMS, Senior Circuit Judge, dissenting:
Four decades ago, Congress established a regulatory
regime to incentivize medical research into rare diseases that
might otherwise not attract much investment. The basic
bargain: in exchange for conducting research into drugs for
such diseases, pharmaceutical and biotech firms obtain
“designation” for a drug, thereby triggering certain tax
incentives; if the research leads the FDA to approve the drug
for patients, firms also receive the added benefit of marketing
exclusivity—in common parlance, a monopoly—for a period
of seven years.
This bargain strikes a delicate balance, all with the goal of
benefting patients. The scheme grants innovators enough of a
monopoly to encourage them to research otherwise
unprofitable orphan drugs—without enabling firms to extract
more from the patients than Congress thought necessary to spur
innovation benefitting those patients.
The question, as I see it, is whether Congress’s intent, as
codified in the Orphan Drug Act of 1983 (the “Act”) and later
amendments, was to give the seven-year exclusivity reward
only to the first manufacturer to achieve both designation and
approval for any given orphan drug, i.e., a manufacturer whose
ingenuity and innovation yielded special benefits for patients;
or, as the majority concludes, did Congress mean that multiple,
successive manufacturers of the same drug should receive
serial grants of exclusivity, indefinitely stretching out the era of
higher drug prices—with no corresponding benefit to patients?
Because the majority’s interpretation of the statute runs
counter to the best reading of the congressional language, and
because it fundamentally upsets the basic economic bargain
that Congress so carefully struck, I respectfully dissent.
2
Before I begin, a warning: The interpretation that plaintiff
proposes and the majority accepts contemplates successive
holders of exclusivity on the same drug, but it understands the
statute to allow all prior lawfully approved makers of the same
drug to continue selling; they aren’t elbowed out. So the
market at any moment would consist of the reigning exclusivity
holder and all prior holders. Such a use of the word
“exclusivity” seems oxymoronic. Thus many sentences in this
opinion and the majority’s may make the reader squint. Given
plaintiff’s claim, that comes with the territory. Please bear with
me.
* * *
The statutory scheme works as follows: In the first step, a
manufacturer seeks designation for its proposed drug.
According to the Act, FDA “shall” designate a drug whenever
it determines that the proposed drug is “being or will be
investigated for a rare disease or condition.” 21 U.S.C.
§ 360bb(a)(1) (2012). The Act defines “rare disease or
condition” to mean a disease or condition affecting fewer than
200,000 persons in the United States, or more than 200,000
persons if “there is no reasonable expectation that the cost of
developing and making available” such a drug could be
recovered from domestic sales. Id. § 360bb(a)(2). In short,
FDA must “designate” a drug only if its anticipated market is
so small that there would be, in Congress’s view, a need for
special incentives.
As directed by the Act, FDA promulgated regulations
setting forth how firms apply for designation. Firms must
provide FDA with a description of the drug, authorities
establishing the prevalence of the disease or condition to be
treated, and “the scientific rationale to establish a medically
3
plausible basis for the use of the drug for the rare disease or
condition, including all relevant data.” 21 C.F.R.
§ 316.20(b)(4). Essentially, FDA believed that before
designating an as yet undeveloped drug, it would need reason
to believe that the drug might work as intended to treat an
orphan disease.
Moreover, if and only if another drug with “the same active
moiety” and intended use has already been approved by FDA,
a firm must also give FDA “an explanation of why [its]
proposed variation may be clinically superior to the first drug”
in order to receive designation. Id. § 316.20(b)(5). Put
differently, if there’s already another approved drug using the
same active ingredient(s) to treat the same condition as the
proposed drug, FDA needs reason to believe that the future
drug could be significantly better before it will designate that
future drug and thereby entitle its manufacturer to the statutory
tax benefits that help defray the costs of the necessary clinical
trials. Id.
In short, FDA has created a two-tiered system for
designation: if no other approved drug uses the same active
moiety, then a firm need only show a prospect that its drug will
treat an orphan disease; but if there is already an approved drug
using the same active moiety to treat a particular disease, then
a firm must additionally demonstrate the prospect of its new
drug working significantly better than the existing drug.
Once a firm has conducted clinical trials, it may then apply
for approval, and if available, exclusivity. Approval of course
is necessary to bring a drug to market. The statute grants the
manufacturer “exclusivity” by barring FDA from approving
another application for the same drug by a different
manufacturer. Here’s the relevant language:
4
[I]f the Secretary [approves an application] for a drug
designated under section 360bb of this title for a rare
disease or condition, the Secretary may not approve
another [drug application] for such drug for such
disease or condition for a person who is not the holder
of such approved [drug application] until the
expiration of seven years from the date of the approval
of the approved [drug application].
21 U.S.C. § 360cc(a) (2012).
What about a situation in which multiple firms compete to
bring the same drug to market? If another drug using the same
activity moiety to treat the same disease has already won
approval, then a firm seeking its own exclusivity period must
present data showing that its later-in-time drug is in fact
clinically superior to the already-approved drug. According to
FDA regulations, the later-approved drug using the same active
moiety may qualify for its own exclusivity period if its maker
can show the drug’s clinical superiority; in that event the drug
should not be considered “such drug,” 21 U.S.C. § 360cc(a)
(2012), i.e., the same as the earlier-approved drug. See 21
C.F.R. § 316.3(b)(3); 316.34(c).
Consider an example with some well-known medications
(albeit not ones used to treat rare diseases): It is readily
understandable that Advil (ibuprofen) and Tylenol
(acetaminophen) are different drugs because they have
different active moieties. But under the Orphan Drug Act
regulations, FDA would not treat ibuprofen in pill form as “the
same drug” as ibuprofen delivered intravenously, if the
different mode of delivery deserved to be regarded as clinically
superior to the one which came earlier. In this way, current
5
FDA regulations incentivize firms to continue innovating for
the benefit of patients even after a particular active moiety has
been approved for use in an orphan drug.
Thus, putting this all together, just as the prior-approval
and grant of exclusivity to ibuprofen does not block the
approval of acetaminophen because they have different active
moieties and are therefore not the same drug, the prior-approval
and grant of exclusivity to ibuprofen in pill form would not
block the approval and grant of exclusivity to ibuprofen in
intravenous form, if the intravenous route of administration
were “clinically superior” in some way, meaning that it
provided “a significant therapeutic advantage.” Id.
§ 316.3(b)(3). For real examples, see FDA, Clinical
Superiority Findings, https://www.fda.gov/industry/desig
nating-orphan-product-drugs-and-biological-products/clinical-
superiority-findings. See also FDA, Clinical Superiority
Findings, Neurelis Pharmaceuticals, Inc. for Valtoco,
www.fda.gov/industry/designating-orphan-product-drugs-and-
biological-products/clinical-superiority-findings (finding nasal
spray drug product clinically superior to rectally administered
gel due to its easier route of administration).
* * *
In the majority’s view, this whole scheme, as relevant here,
is lawful, except that FDA may not deny exclusivity to a drug
that has been designated and approved, even if it is no better
than an already approved version of the same drug.
For example, if FDA were to designate ibuprofen for the
treatment of an orphan disease and Firm A was developing
ibuprofen in pill form using 100 mg tablets while Firm B was
developing ibuprofen in pill form using 200 mg tablets, only
6
the first of these two firms to win approval would, under FDA’s
long-standing approach, receive the prize of exclusivity
(assuming a tablet of one strength is not “clinically superior” to
a tablet of the other strength). But whereas in FDA’s practice
the approval of Firm A’s 100 mg tablet would block new
market entrants for seven years, with no additional exclusivity
in the absence of clinical superiority, under the majority’s
analysis the subsequent approval of Firm B’s 200 mg tablet
would block new market entrants for an additional seven years,
for a total of fourteen years. And if Firm C had been
simultaneously developing a 300 mg tablet, upon approval it
too would be entitled to seven years exclusivity, for a total of
twenty-one years. And so on—and on and on and on.
The majority believes this outcome to be compelled by
what they see as the Act’s formula: “if [designation] and
[approval], then [exclusivity],” Maj. Op. 14 (quoting Depomed,
Inc. v. U.S. Dep’t of Health & Human Servs., 66 F. Supp. 3d
217, 230 (D.D.C. 2014)). In particular, the majority believes
that 21 U.S.C. § 360cc(a) precludes FDA from enforcing its
requirement, stated at 21 C.F.R. § 316.34(c), that later-
approved drugs secure exclusivity only on a showing of clinical
superiority.
The upshot of the majority’s view is that firms can
successively receive designation and approval for an identical
drug—for example, a drug with not only the same active moiety
but also the exact same formulation (e.g., 100 mg tablet)—and
yet can each be entitled to its own seven-year exclusivity
(subject as noted above to any prior exclusivity holder’s right
to continue selling). I deal below with regulatory changes
suggested by the majority for FDA to mitigate that result,
changes that fall well short of solving the problem and that
generate perverse results.
7
In my view, FDA’s decision to condition exclusivity on a
showing of clinical superiority over already-approved drugs
using the same active moiety flows from the Act’s plain
language and basic structure. As discussed in the next section,
Congress clearly did not intend the same drug to enjoy multiple
seven-year periods of exclusivity, so the FDA had to come up
with a way to distinguish between drugs that are the “same”
and ones that are different. In exercising its authority to draw
that line, the FDA reasonably chose to define drugs that have
different active moieties and/or are not intended for the same
use as not the “same drug,” and to define ones that have the
same “active moiety” and are “intended for the same use” as a
previously approved drug as being the “same drug,” 21 C.F.R.
§ 316.3(14), unless the new drug is “clinically superior,” i.e., it
provides “a significant therapeutic advantage,” see id.; see also
id. § 316.3(b)(3).
The majority and I agree on one crucial fact: The Orphan
Drug Act does not explicitly address the issue of serial
repeatability at all. See Maj. Op. 15 (“Congress did not specify
whether the privilege of exclusive approval applies to one or
multiple manufacturers.”) And this acknowledgment is clearly
sound, because, again, here’s all the key section of the statute
says:
[I]f the Secretary [approves an application] for a drug
designated under section 360bb of this title for a rare
disease or condition, the Secretary may not approve
another [drug application] for such drug for such
disease or condition for a person who is not the holder
of such approved [drug application] until the
expiration of seven years from the date of the approval
of the approved [drug application].
8
21 U.S.C. § 360cc(a) (2012).
My view is that Congress meant to imply that this if-then
statement—if designation and approval, then exclusivity—
would cease to apply to that “same drug” at “the expiration of
seven years.” This is a natural reading of an if-then statement,
no different from myriad other everyday uses. “If you paint my
house, I will pay you $1,000” would in the usual context imply
an offer for a single painting and a single reward of $1,000—
not as many house paintings and as many thousands of dollars
as an industrious painter might want to exchange. And who
among us, upon reading “rinse, lather, repeat” on a shampoo
bottle, would fail to grasp that the verb “repeat” operates only
once, i.e., the instructions direct approximately two
applications, not an infinite cycle? Indeed, the shampoo
example is “an endless source of amusement for computer
programmers,” Jeffrey Elkner, 4.7 The While Statement,
Beginning Python Programming for Aspiring Web Developers
(March 2018), http://www.openbookproject.net/books/bpp4
awd/ch04.html, among whom forgetting to expressly state a
terminating condition is “a classic problem . . . , a small mistake
[which] can lead to implementing a program that simply will
not stop.” David Grossman et al., 5.5 Infinite Loops, Computer
Science Programing Basics in Ruby (April 2013),
https://www.oreilly.com/library/
view/computer-scienceprogramming/9781449356835/five
dot5_infinite_loops.html. Judges, of course, can escape from
infinite loops by simply assessing language in its context.
Because the drafters of § 360cc(a) failed to expressly close
the infinite loop, we should look at how the statute might look
if they had done so. In that case the statute might read
something like:
9
[I]f the Secretary [approves an application] for a drug
designated under section 360bb of this title for a rare
disease or condition, the Secretary may not approve
another [drug application] for such drug for such
disease or condition for a person who is not the holder
of such approved [drug application] until the
expiration of seven years from the date of the approval
of the approved [drug application], after which seven-
year period such drug for such disease or condition
shall no longer be eligible for orphan drug
exclusivity.
To give the statute the more unusual meaning that the majority
believes is implied—infinite episodes of an if-then series—
Congress might have said:
“[I]f the Secretary [approves an application] for a drug
designated under section 360bb of this title for a rare
disease or condition, the Secretary may not approve
another [drug application] for the same drug for the
same disease or condition for a person who is not the
holder of such approved [drug application] until the
expiration of seven years from the date of the approval
of the approved [drug application], regardless of
whether such drug for such disease or condition has
previously been granted orphan drug exclusivity.
Congress didn’t spell it out either way. This would seem
to invite us to choose the interpretation most in line with
Congress’s apparent purpose, namely, that any given drug is
entitled to a single seven-year period of exclusivity, not infinite
periods. The majority would reduce our role as judges to
nothing more than executing Congress’s script like a computer
10
loaded with software having the classic infinite-loop mistake,
unguided by contextual common sense.
And at bottom, the majority’s only support for its
interpretation is what it believes the statute implies but fails to
state explicitly. Of course a statute can “clearly require[] a
particular outcome . . . implicitly rather than expressly,” Maj.
Op. 15 (quoting Engine Mfrs. Ass’n, 88 F.3d at 1088)—but
that’s simply not what’s happening here, at least not in the way
the majority proposes. Given this acknowledged lack of
explicit provision for endless periods of exclusivity, it makes
sense to evaluate the probative value of other text in the statute
before deciding what Congress meant to say by implication.
Indeed, the very next subsection of our statute, 21 U.S.C.
§ 360cc(b)(1), grants the Secretary the authority to cut short a
drug’s exclusivity period upon finding that the exclusivity-
enjoying manufacturer “cannot ensure the availability of
sufficient quantities of the drug to meet the needs of persons
with the disease or condition for which the drug was
designated.” As the majority recognizes, if the formula the
majority draws from § 360cc(a) were endlessly repeatable,
there would at times be other manufacturers supplying the same
drug—the most recent entrant together with any and all
previous holders of “exclusivity.” But if Congress truly meant
for the relevant market to consist simultaneously of both an
“exclusive” drug and a string of predecessor exclusive drugs,
then it would make little sense for Congress to direct the
Secretary to make the necessary finding only as to the current
“exclusivity” holder’s production-capacity. The majority
acknowledges the obvious discordance between its
interpretation of § 360cc(a) and the directive in § 360cc(b)(1)
but dismisses it as not “so odd” as to “definitively” show that
Congress intended only one exclusivity period. Maj. Op. 19.
11
Nor, evidently, is the discordance enough to shake the
majority’s belief that the statute as a whole unambiguously
requires FDA to grant successive producers of the same drug
serial exclusivities. But giving some weight to the meaning of
the § 360cc(b)(1) exception is not “overriding § 360cc(a)’s
plain text,” Maj. Op. 19; rather, it is the very task of statutory
interpretation: calculating the probable meaning of the
congressional language based on the information before us.
And for us to assign some probative weight to the inconsistency
between one reading of a statutory subsection and the obvious
operation of an adjacent subsection does not require us to find
complete incompatibility between the two sections, as the
majority seems to require. Assessing these probative signs is
what it means to read statutes as a “harmonious whole.” FDA
v. Brown & Williamson, 529 U.S. 120, 133 (2000) (quoting
FTC v. Mandel Brothers, Inc., 359 U.S. 385, 389 (1959)).
The most likely explanation, in my view, for why Congress
did not specify in § 360cc(a) whether a drug’s “exclusivity
period” would or would not be repeatable (and shared with past
market entrants), is that such a notion would have been so far
afield from what Congress was contemplating at the time that
it would not have occurred to any member of Congress as
something in need of clarification. The word “exclusive”
means “not shared by others,” Merriam-Webster’s Dictionary
of Law (2d ed. 2011), and Congress chose that word to describe
this regime. See Pub. L. 112-144, 126 Stat. 993, 1077 (July 9,
2012) (amending 21 U.S.C. 355f) (referring to orphan drug
act’s “exclusivity period”). Moreover, of the many exclusivity
periods established in the Food, Drug, and Cosmetic Act
(“FDCA”), to which the Orphan Drug Act is an amendment,
not one provides for repeatability. See Transcript 10:3-17; 21
U.S.C. § 355(j)(5)(F)(ii) (providing for a new chemical entity
exclusivity period of five years); id. § 355(c)(3)(E)(iii)
 12
(providing for a new clinical investigations exclusivity period
of three years); id. § 355(j)(5)(B)(iv) (providing for a first
generic drug exclusivity period of 180 days); id.
§ 355(j)(5)(B)(v) (providing for a competitive generic therapy
exclusivity period of 180 days); id. § 355a (providing for
pediatric drug exclusivity of six months); id. § 355f (providing
for infectious disease exclusivity of five years); 42 U.S.C.
§ 262(k)(7)(A), (B) (providing for biologic product marketing
exclusivity of twelve years and data exclusivity of four years,
respectively).
Consider too that the idea of serial exclusivities—
cumulating past holders into a steadily expanding oligopoly—
which on the majority’s view would be central to how the entire
scheme operates, was neither raised directly nor even
mentioned indirectly in the public comments to the agency’s
first rulemaking under the statute, in 1992. See generally
Orphan Drug Regulations, 57 Fed Reg. 62,076 (Dec. 29, 1992);
id. at 62,076 (noting receipt of 40 comments and fact of
agency’s responding to all, a discussion barren of any hint of
serial exclusivity); see also Notice of Proposed Rulemaking, 56
Fed. Reg. 3330 (proposed Jan. 29, 1991). This case is a story
of how creative lawyering can unseat settled, useful
understandings, not how a court came to properly understand
the true intent of Congress.
Thus, based on § 360cc(a)’s silence as to repeatability of
exclusivity, the inconsistency between any such repeatability
and the operation of § 360cc(b)(1), and the plain meaning of
“exclusivity” both generally and in the FDCA specifically, this
is not one of those “rare cases” in which we must set aside the
“plain language” of the statute in order to avoid an “odd
result”—as the majority suggests FDA moves us to do. Maj.
Op. 18 (quoting Engine Mfrs. Ass’n v. EPA, 88 F.3d 1075, 1088
13
(D.C. Cir. 1996)). Congress may have expressed its provision
for a unique exclusivity period per drug imperfectly, but it
nonetheless did so unambiguously. If one were to move one
step toward the majority’s view, one might view the Orphan
Drug Act as ambiguous on the point, so that if the other
requirements of Chevron were met, namely, that Congress
intended to “commit[] to the agency’s care” the “reasonable
accommodation of [these] conflicting policies,” Chevron, USA,
Inc. v. Natural Resources Defense Council, 467 U.S. 837, 845
(1984) (quoting United States v. Shimer, 367 U.S. 374, 382
(1961)), we would be obliged to accept FDA’s interpretation.
Least plausible, to me, is the majority’s belief that the statute
unambiguously compels a regime of serial exclusivity. At any
rate, as both the majority and I think the statute clearly requires
our differing interpretations, we need not address the
applicability of Chevron.
I also note, however, that to industry specialists such as
practitioners and Congressional committee members, in
apparent contrast to some judges and other laypersons,
describing today’s decision as merely an “odd result” would
likely be putting it charitably. Drug “exclusivity” has had a
fixed meaning for nearly forty years; implicit in that meaning
has always been that exclusivity is a one-time affair—to wit,
“exclusive.” Indeed, the Hatch-Waxman Act of 1984, which
created the apparatus of regulatory exclusivity for new drugs
(to supplement patent protection) upon which this industry
rests, “[e]xpand[ed] upon [the] concept” of exclusivity first
enacted in the Orphan Drug Act less than two years earlier. See
Congressional Research Service, The Hatch-Waxman Act: A
Primer at 9 (2016). The exclusivity provisions of both statutes
operate similarly, by barring the FDA from approving other
applications for a fixed number of years, after which any further
14
approvals of the same drug are non-exclusive.1 Compare 21
U.S.C. § 355(j)(5)(F)(i)–(ii) with 21 U.S.C. § 360cc(a). It
should set off alarms that the majority cannot point to anything
suggesting that “serial exclusivity” was even an idea in the air
at the time of these landmark statutes’ enactment.
* * *
The majority then adds insult to injury when it suggests
that FDA’s own regulatory decisions are to blame for any
excessive grants of “exclusivity” that may flow from our
judgment. More important, the majority’s proposals for
possible FDA regulatory shifts to prevent serial exclusivities
and other abuses are at best limited solutions for addressing this
judge-created problem.
The majority first suggests that FDA could have defined
“such drug” in § 360cc(a) “to take into account both the active
moiety and the formulation,” such that when FDA designates a
drug, it is making a designation for only the specific
combination of moiety and formulation. Maj. Op. 25. (As used
here, formulation means the specific characteristics about a
drug other than its active moiety, such as its dosage and
strength, and its route of administration—characteristics that
may change without necessarily offering any clinical
superiority.) But this approach would make the resulting
exclusivity absurdly narrow in scope—applying to only one
formulation of a drug. A competitor would need only to make
1
Under the Hatch-Waxman Act of 1984, however, the generic
version of a drug may later qualify for exclusivity within the market
for generics. See Pub. L. No. 98-417, § 101, 98 Stat. 1585, 1589–
90 (1984).
15
a clinically insignificant change to its formulation, using the
same active moiety, and presto—it would have circumvented
exclusivity. The proposal would patently defeat Congress’s
intention to seriously reward only the first firm to develop a
genuinely new solution.
Aware of this problem, the majority proposes a puzzling
supplement to its solution. Each formulation could be subject
to its own separate clinical superiority requirement at the
designation stage. Under this regime, a competitor’s
formulation would have to be more than merely different in
order to be designated, it would have to be at least plausibly
superior to other formulations. Maj. Op. 23–25. But this
additional requirement, as I understand the majority’s proposal,
would have the effect of barring approval (and thus patient
access) to equivalent alternative formulations of drugs—
proposed to FDA for approval effective on conclusion of the
pioneer’s exclusivity—that don’t rise to the level of being
plausibly clinically superior but which patients might otherwise
prefer. Thus the majority’s creative engineering would inflict
a pointless injury on patient choice. (One example of just such
a choice: Patients might prefer 50 mg dosages of a drug
otherwise available only in 100 mg pills so that patients only
taking 50 mg would not need to cut the 100 mg pill into two.)
Further, FDA points out that the majority’s proposed
beefing up of the criteria for designation flies in the face of the
Act’s strong implication that “[e]arly-stage designation is []
critical to the statute’s function.” Appellant’s Br. 26.
Designation “triggers subsidies for the clinical testing
necessary to get a new drug approved,” id. (citing 21 U.S.C.
§ 360ee(a), (b)(1)(B) (2012)) and “creates a clinical-testing tax
credit,” id. (citing 26 U.S.C. § 45C(b)(2) (Supp. III 2016)).
Plus, the Act speaks clearly of FDA’s obligation, at least in
16
some circumstances, to designate a drug even before a sponsor
has begun investigating it. FDA is to designate a drug that “is
being or will be investigated for a rare disease or condition.”
21 U.S.C. § 360bb(a)(1) (2012) (emphasis added). So while
FDA undoubtedly has the authority to specify the particulars of
how the designation process works, see 21 U.S.C. § 360bb(d),
it’s not as if FDA can raise the standard for designation
unboundedly, as the majority seems to suggest, Maj. Op. 22,
without thwarting the role that Congress intended designation
to play in facilitating the early stages of drug development.
Worse still, this rigmarole is at best a partial solution to the
problem the majority creates. Before an active moiety has been
approved for any given indication (i.e., a medical condition it
can treat), a firm seeking designation of the active moiety for
that indication need not show any form of clinical superiority
(neither merely plausible nor actual). See Letter from Dr.
Gayatri R. Rao, Director, Office of Orphan Products
Development, FDA, to John R. Manthei, Latham & Watkins
LLP at 5 (Mar. 24, 2016) (“If there is no such previously
approved orphan drug at the time a sponsor seeks designation,
the sponsor is not required to provide a plausible hypothesis of
clinical superiority.”). This is not really an FDA choice but
simple common sense: until an active moiety has been shown
to be effective for an indication, there’s no benchmark for
assessing whether a manufacturer’s proposal represents an
improvement. Accordingly, when there’s no drug yet approved
for an indication, manufacturers need only “establish a
medically plausible basis for the use of the drug for the rare
disease or condition.” 21 C.F.R. § 316.20(b)(4). If one
manufacturer can satisfy this, others can too. So even with the
regulatory fix the majority envisions, whenever multiple
manufacturers concurrently research a designated but not yet
approved drug—all the manufacturers to complete the race
17
towards approval, not just the winner of that race, would be
guaranteed their exclusivity periods, to take effect, apparently,
in the sequence in which they receive approval. For this reason,
FDA’s “changing its clinical superiority requirement at the
designation stage” would not, notwithstanding the majority’s
assertion, “avoid its concern regarding serial exclusivity.” Maj.
Op. 22. The majority thus falls short in its effort at
reconstructive rulemaking.
And the majority’s reading creates yet another problem:
self-evergreening, i.e., the ability of an exclusivity holder to
pile successive exclusivity periods on top of its original period,
multiplying Congress’s award for innovation. This results from
today’s decision because the statute only prohibits FDA from
approving an application for the “same drug” by a “person who
is not the holder of” the approved application. 21 U.S.C.
§ 360cc(a). The majority’s decision invites abuse, enabling a
manufacturer with an exclusive drug to make a minor change
to that drug—a different strength or route of administration, for
example—and despite the result’s being the “same drug” (as
FDA has hitherto defined the concept), the FDA would be
obligated, under the majority’s reading, to award that newly-
tweaked drug a new exclusivity period of its own (remember:
“if designation and approval, then exclusivity”).
The majority’s proposal for circumventing this ploy by the
initial approval holder is a rulemaking adjustment we’ve
already discussed: FDA could redefine “same drug” to
encompass both the active moiety and the formulation. Maj.
Op. 25. But, as we’ve also seen, this “solution” dilutes the
statutorily provided exclusivity to a triviality, subjecting the
first approved manufacturer to competition in the period of its
supposed “exclusivity.”
18
Under the FDA’s long-standing implementation of the
statute, self-evergreening has not been an issue because when a
manufacturer makes a minor change to an exclusive drug, there
were no additional periods of exclusivity to be awarded in the
first place—exclusivity for any given drug was a one-time
opportunity.
* * *
Congress, likely spurred by an earlier district court
decision, Depomed, Inc. v. U.S. Dep’t of Health & Human
Servs., 66 F. Supp. 3d 217 (D.D.C. 2014), discussed above,
tried to limit the damage needlessly inflicted on the industry
and patients by enacting an amendment in 2017 codifying the
very regulatory scheme that the majority strikes down. As a
result, only drugs designated and approved before the August
18, 2017 effective date of the amendment suffer the majority’s
transformation of single exclusivities into parades. See FDA
Reauthorization Act of 2017, Pub. L. No. 115-52, sec. 607(a),
§ 527(c)–(d), 131 Stat. 1005, 1049–50 (amending 21 U.S.C.
§ 360cc). At oral argument FDA counsel reported that as of the
2017 amendment’s effective date “at least 11 drugs” were
designated and approved, but ultimately denied exclusivity
(under the law preceding today’s decision) for failure to
demonstrate clinical superiority to an already approved drug.
See Transcript 11:1–6. Counsel also referred to an “untold
number” of generic drugs; today’s creation of new exclusivities
for brand name drugs will entitle the exclusivity holders to call
on FDA to revoke the competing generics’ approvals. See
Transcript 11:6–9.
Just days ago FDA filed a letter indicating that the count
of “at least 11 drugs” may have radically understated the impact
of today’s decision. See Letter dated March 2, 2020 under
19
FRAP Rule 28(j) (“FDA Letter”). That figure counted only
those drugs which FDA actually determined were not clinically
superior and therefore not entitled to exclusivity; it did not
count drugs for which the sponsor never claimed clinical
superiority. The FDA Letter informs us that a drug sponsor is
now “asserting an automatic entitlement to an orphan-
exclusivity period” because its once-designated drug recently
received approval of a mere supplemental drug application,
meaning the drug had already been approved for marketing but
the sponsor sought and received the necessary approval to make
minor changes in how its drugs is manufactured, labelled, and
the like. The Orphan Drug Act does not on its face distinguish
between the approval of new drug applications and the approval
of supplemental drug applications; 21 U.S.C. § 360cc refers to
approval “under section 355,” which includes both new and
supplemental applications. On the view taken by the majority,
namely that “designation plus approval” automatically entails
exclusivity, Maj. Op. 15, the sponsor of any designated drug
receiving such a supplemental approval prior to the effective
date of Congress’s curative statute, August 18, 2017, would
seemingly also be entitled to exclusivity (though perhaps only
after waiting its turn after previously granted approvals that
today’s decision tranforms into exclusives).
The retroactive creation of exclusivity generated by
today’s decision sweeps with a long arm. The FDA Letter
points out that if it truly mandates exclusivities based on
designations followed by supplemental approvals, FDA will be
forced to revoke approvals for drugs approved in the (hitherto)
normal course and in conflict with these artificial exclusivities.
Similar revocations will be in order for generics that FDA had
approved with no apparent difficulty because no
exclusivities—under the nearly 40-years’ understanding of the
law—were there to block its granting them.
20
As the FDA letter says, the resulting burst of new
exclusivities “would lead to the market withdrawal of many
currently marketed drugs, including many generics, which
could significantly increase costs for patients with rare diseases
due to only minor changes to approved drugs.” FDA Letter at
2.
Eagle’s counsel has responded to FDA with its own letter
under Rule 28(j) dated March 4, 2020. The letter points out
that FDA relies on only one party claiming exclusivity on the
basis of its supplementary approval, and that FDA itself says it
will oppose the claim. True enough. But the Eagle letter
contains a conspicuous gap. Although Eagle’s counsel framed
precisely the statutory interpretation that the court embraces
today, it offers not a hint as to how a court bound to follow that
interpretation could reject the claim for exclusivity by holders
of a supplemental approval issued before the effective date of
Congress’s 2017 remedial statute. Although the Eagle letter
bemoans the supplemental approval holder’s delay in raising
the issue with FDA, it is hard to see why that is of any moment,
given Eagle’s and the court’s view that designation plus
approval automatically spell exclusivity. In sum, FDA’s letter,
updating figures presented at oral argument, shows how
Eagle’s interpretation of the Orphan Drug Act will likely result
in outcomes even more bizarre than the parties originally
depicted. Neither Eagle’s response—nor the majority’s, see
Maj. Op. 32 n.18—does anything to dispel that likelihood.
* * *
Today’s decision is quite extraordinary. The majority first
ascribes to Congress a meaning of the statute that the full
context precludes and that Congress surely did not intend. It
21
then supposes that FDA can undo the readily foreseeable harm
by means of proposed regulatory fixes—all untested by
experienced judgment or input from affected parties. The
resulting disruption of the longstanding and relied-on
application of the Orphan Drug Act will likely inflict needlessly
higher costs on patients and their insurers, bringing benefit only
to some drug companies that will receive exclusivity without
having earned it, and to the lawyers litigating these senseless
repercussions. I respectfully dissent.