Ranbaxy Labs., Ltd. v. Burwell

Case Name: Ranbaxy Labs., Ltd. v. Burwell, 14-cv-1923 BAH, 2015 U.S. Dist. LEXIS 29459 (D.D.C. Mar. 11, 2015) (Howell, J.) 

Drug Products and Patents-in-Suit: Nexium® (esomeprazole) and Valcyte® (valganciclovir); N/A

Nature of the Case and Issues Presented: Ranbaxy’s manufacturing facility in India was under investigation by the FDA for not complying with Current Good Manufacturing Practice (“cGMP”) guidelines. After its initial 2006 investigation, the FDA sent Ranbaxy a warning letter, placing a compliance hold on Ranbaxy and indicating that it would not recommend approval of any additional applications originating from that facility. A secondary investigation in 2008 confirmed these findings, and the compliance hold remained in place. During this time, despite the compliance hold, Ranbaxy submitted a number of ANDAs, including the two at issue in this case. Due in part to fraudulent reporting, and in part to FDA error, the FDA tentatively approved Ranbaxy’s ANDAs.

In 2013, Ranbaxy’s US subsidiary pled guilty to criminal charges of fraud and introducing adulterated drugs into interstate commerce. After the criminal case resolved, the FDA performed an additional review of Ranbaxy’s ANDAs, and revoked their prior tentative approval. Ranbaxy then brought this suit, alleging that the revocation was improper for four reasons: (i) the FDA was not authorized to decline tentative approval because the drug manufacturing facility was out of compliance with cGMP; (ii) the FDA improperly changed its policy by revoking the tentatively approved ANDAs; (iii) the FDA did not have the authority to revoke a tentative approval; and (iv) the FDA’s interpretation of the forfeiture trigger is contrary to the plain meaning of the statute. The district court rejected each of Ranbaxy’s arguments and granted summary judgment in favor of the FDA.

Why the FDA Prevailed: First, the court found that the FDA had the authority to condition the tentative approval of an ANDA on compliance with cGMP. In so doing, the court determined that the relevant statute, 21 U.S.C. § 355(j), was ambiguous because the provision was silent on the matter of cGMP compliance. Further, the FDA’s interpretation of the statute was reasonable. It argued that tentative and final approval have the same requirements except tentative approval does not require a showing that the ANDA will not infringe a patent. Accordingly, a reason for denying final approval, such as failure to comply with cGMP, is also a reason to deny tentative approval. Thus, the court ruled that, under a Chevron analysis, the FDA was within its rights to deny tentative approval based on cGMP compliance.

Second, the FDA did not change its policy by revoking its tentative approval of Ranbaxy’s ANDAs. Rather, the FDA was following its normal policy. The tentative approval of the applications was based on misinformation provided by Ranbaxy and mistakes by FDA personnel. In fact, during the application process, FDA employees had to seek approval for varying from policy in granting the applications. Although these variances were mistakenly granted, it did not amount to a change in FDA policy. Further, no other generic drug manufacturers obtained tentative approval without cGMP compliance during the relevant time period. Ranbaxy failed to provide any evidence of a FDA policy change, and thus its argument was denied.

Third, Ranbaxy argued that while the FDA had explicit statutory authority to revoke a final approval, there was no similar provision for revoking tentative approval. Thus, Ranbaxy contended that the FDA did not have authority to revoke a tentative ANDA approval. The court acknowledged that the statute was silent on the ability to revoke tentative approvals. But silence simply meant that the statute was ambiguous—and did not necessarily imply a lack of authority. Further, the court determined that it was reasonable, and consistent with precedent, to allow the FDA to revoke tentative approvals. In Ivy Sports Medicine, LLC v. Burwell, 767 F.3d 81 (D.C. Cir. 2014), the D.C. Circuit held that administrative agencies have the inherent authority to revisit prior decisions, if done timely. Here, the court found that the multi-year delay, while unusual, was justified. The delay was caused, in part, by Ranbaxy’s fraudulent reporting. Thus, this case was an unusual situation, and the court refused to let Ranbaxy benefit from its own malfeasance.

Finally, Ranbaxy challenged the FDA’s interpretation of the forfeiture trigger for 180 day exclusivity eligibility, arguing that a tentative approval is an “historical fact…established for all time” which cannot be rescinded. As with Ranbaxy’s other statutory challenges, the provision describing the forfeiture triggers is silent on its retroactive effect. Thus, again, the court determined that the statute was ambiguous. Further, the FDA’s interpretation—that forfeiture is only prevented when a tentative approval is valid—was reasonable, and furthered the Hatch-Waxman goal of streamlining the approval of safe generic drugs. To allow otherwise, and treat tentative approval as an unchangeable historical fact, would incentivize companies to conceal deficiencies until after they have received a tentative approval, and then attempt to fix those deficiencies prior to final approval.