Teva Pharmaceuticals, USA, Inc. v. Leavitt

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 12, 2008 Decided November 7, 2008

No. 08-5141

TEVA PHARMACEUTICALS, USA, INC.,

APPELLEE

v.

MICHAEL O. LEAVITT, IN HIS OFFICIAL CAPACITY AS

SECRETARY OF HEALTH AND HUMAN SERVICES, ET AL.,

APPELLANTS

Appeal from the United States District Court

for the District of Columbia

(No. 1:08cv00395)

Gerald F. Masoudi, Associate General Counsel, U.S.

Department of Health and Human Services, argued the cause for

appellants. With him on the briefs were Gregory G. Katsas,

Acting Assistant Attorney General, U.S. Department of Justice,

C. Frederick Beckner III, Deputy Assistant Attorney General,

Eugene M. Thirolf, Director, Drake Cutini, Attorney, and Eric

M. Blumberg, Deputy Chief Counsel, U.S. Department of

Health and Human Services.

2

Jay P. Lefkowitz argued the cause for appellee. With

him on the brief were Michael D. Shumsky and Gregory L.

Skidmore.

Before: BROWN and KAVANAUGH, Circuit Judges, and

WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge BROWN, in

which Circuit Judge KAVANAUGH joins.

Opinion concurring in the judgment filed by Senior Circuit

Judge WILLIAMS.

BROWN, Circuit Judge: The Hatch-Waxman Amendments

help to expedite the marketing of generic drugs. Drug Price

Competition and Patent Term Restoration Act of 1984, Pub. L.

No. 98-417, § 101, 98 Stat. 1585, 1585 (1984). Getting a new

“branded” drug to market is a time-consuming process. The

manufacturer must file a New Drug Application (NDA) with the

Food and Drug Administration (FDA), showing the new drug is

safe and effective and identifying the number and expiration

date of any patent or patents applicable to the drug. 21 U.S.C.

§§ 355(a), (b). FDA has to publish this information. Id.

§ 355(b)(1). It meets this obligation by publishing a directory of

Approved Drug Products with Therapeutic Equivalence

Evaluations (also known as the Orange Book), a printed

cumulative supplement to the Orange Book, and an electronic

version of the Orange Book.

A manufacturer preparing to market a generic bioequivalent

of a branded drug can take a short-cut: filing an Abbreviated

New Drug Application (ANDA) that piggybacks on the original

manufacturer’s evidence of safety and efficacy. Id. § 355(j). To

start the process, the ANDA applicant must certify—for each

patent claiming a drug for which the applicant is seeking

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approval—under one of four paragraphs that (I) patent

information has not been filed; (II) the patent has expired;

(III) the patent will expire on a specified date; or (IV) the patent

is invalid or will not be infringed by the manufacture, use, or

sale of the new drug for which the application is submitted. Id.

§ 355(j)(2)(A)(vii). The first drug manufacturer to file an

approved ANDA, containing a paragraph IV certification, is

rewarded with a 180-day period of marketing exclusivity for the

manufacturer’s generic version of the drug. Id.

§ 355(j)(5)(B)(iv). Marketing exclusivity is valuable, designed

to compensate manufacturers for research and development

costs as well as the risk of litigation from patent holders. See 35

U.S.C. § 271(e)(2)(A) (stating a generic drug company

certifying under paragraph IV commits an act of infringement

for which the brand-name drug’s patent holder can sue). In this

case, we referee an unusual dispute between FDA and an

ANDA applicant about the effect of a paragraph IV certification

submitted after the patent had been withdrawn by the NDA

holder but before FDA deleted the patent information from the

hardcopy version of the Orange Book.

FDA insists reality matters. The point of paragraph IV, the

Agency argues, is to reward risk when an applicant challenges a

patent that would otherwise preclude price competition. Teva

Pharmaceuticals counters that FDA’s obligations to keep the

industry reliably informed is enforced—at least in part—by

punishing the Agency’s inadvertence when the Orange Book

does not reflect the Agency’s most current information.

I

Janssen Pharmaceuticals got FDA approval to market

Risperdal in 1993 and submitted information for two patents,

the ‘663 patent and the ‘952 patent. See Letter from Janet

Woodcock, M.D., Acting Director, CDER, FDA to D. Jaskot,

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M.S., R.A.C., Teva Pharmaceuticals USA, regarding Docket

No. 2007P-0316/CP1 and CR1 (February 26, 2008) (“FDA

Letter”) at 4. FDA listed both patents in the Orange Book. On

April 4, 2001, Janssen withdrew the ‘952 patent for several

different strengths of the drug, and on June 11, 2001 sent FDA a

clarification requesting the withdrawal of remaining strengths.

Id. FDA modified its patent listing database on June 11, 2001

and updated the electronic Orange Book to reflect the delisting

sometime between June 29, 2001 and July 20, 2001. Id. FDA

conceded in its brief that neither the printed Orange Book nor its

printed cumulative supplement reflected the delisting until 2002.

Meanwhile, on August 28, 2001, Teva submitted an ANDA

for a generic version of Risperdal, containing a paragraph IV

certification to the ‘952 patent. Id. at 5. FDA promptly

informed Teva that the ‘952 patent had been delisted and asked

Teva to submit a revised ANDA. Id. Teva acquiesced. Id.

Approximately six years later, Teva filed a citizen petition

contesting FDA’s actions. Id. at 1. Teva asked FDA to relist

the ‘952 patent and confirm Teva’s eligibility for the 180-day

marketing exclusivity based on their original ANDA. Id. FDA

refused. Id.

Teva challenged the decision in district court and sought an

expedited preliminary injunction. The district court

consolidated the motion for preliminary injunction with the

merits case and granted judgment in favor of Teva. On

September 12, 2008, we issued an expedited mandate reversing

the decision of the district court granting judgment in favor of

Teva, and vacating the district court’s injunction.

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II

At the outset, we reject Teva’s claim that FDA raises

arguments on appeal not presented to the district court. Teva’s

confusion is partially explained by its misreading of FDA’s

decision letter and its tendency to construe the statute’s

independent publication mandate as if it modified the

certification requirement. As explained more fully below, these

requirements remain separate. And that is the position

consistently asserted by FDA. FDA’s effort to refine and clarify

its analysis in light of the district court’s ruling cannot be

transmuted into a waiver of its arguments on appeal. See Yee v.

City of Escondido, 503 U.S. 519, 534 (1992) (“Once a federal

claim is properly presented, a party can make any argument in

support of that claim; parties are not limited to the precise

arguments they made below.”).

A

Turning to the merits, we review FDA’s interpretation of

the Act it administers under step one of the two-step analysis in

Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837, 842–43 (1984)

(“[T]he court, as well as the agency, must give effect to the

unambiguously expressed intent of Congress.”). The statute

provides that, in order to qualify for the 180-day marketing

exclusivity under paragraph IV, an ANDA must contain, inter

alia:

[A] certification . . . with respect to each patent which

claims the listed drug . . . or which claims a use for such

listed drug for which the applicant is seeking approval . . .

that such patent is invalid or will not be infringed by the

manufacture, use, or sale of the new drug for which the

application is submitted.

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21 U.S.C. § 355(j)(2)(A)(vii) (emphasis added). The same

requirement appears, with slight variation, in the FDA

regulation. See 21 C.F.R. § 314.94(a)(12). How a manufacturer

triggers the 180-day marketing exclusivity is clear under the text

of the statute: no ANDA applicant can obtain exclusivity

without a proper paragraph IV certification. 21 U.S.C.

§ 355(j)(5)(B)(iv). A successful paragraph IV certification must

identify a patent that “claims the listed drug” or that “claims a

use for such listed drug for which the applicant is seeking

approval.” Id. § 355(j)(2)(A)(vii). In the absence of such a

patent, there can be no paragraph IV exclusivity.

Teva’s ANDA did not meet the clear and unambiguous

requirements of the statute because it did not and could not

include a certification to a patent that claimed Risperdal.1

According to Black’s Law Dictionary, a patent claim is “[a]

formal statement describing the novel features of an invention

and defining the scope of the patent’s protection.” BLACK’S

LAW DICTIONARY 1160 (8th ed. 2004). The statute requires

NDA holders to ascertain if, under substantive patent law, any

patents claim the drugs for which the NDA holder submitted an

application and then provide FDA with patent information for

any drug which falls within the scope of a patent’s protection.

21 U.S.C. § 355(b). The legislative purpose underlying

paragraph IV is to enhance competition by encouraging generic

drug manufacturers to challenge the patent information provided

by NDA holders in order to bring generic drugs to market

earlier. Thus, for paragraph IV purposes, a “claim” is simply a

description of the subject a patent purports to cover as

established by the NDA holder. See Engine Mfrs. Ass’n v. EPA,

1

Even if the meaning of “claims” were ambiguous, FDA adopted a

reasonable interpretation of the statute’s certification requirements

under Chevron step two. Therefore, employing either analysis, Teva

failed to meet the statutory prerequisites for marketing exclusivity.

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88 F.3d 1075, 1088 (D.C. Cir. 1996) (recognizing if a statute

“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”). All patent claim information is

provided by the NDA holder. Therefore, as a practical matter, a

patent claims a drug when the NDA holder says it does.

When it comes to the veracity of the patent information

supplied by NDA holders, FDA operates in a purely ministerial

role, relying on the NDA holders to provide the Agency with

accurate patent information. See Am. Bioscience, Inc. v.

Thompson, 269 F.3d 1077, 1080 (D.C. Cir. 2001). This

approach is consistent with the statute, which requires FDA to

publish submitted patent information, but does not require FDA

to review the merits of the patent information provided. 21

U.S.C. § 355(b)(1). Several courts have affirmed this common-

sense policy choice. See, e.g., Am. Bioscience, 269 F.3d at

1080; Apotex, Inc. v. Thompson, 347 F.3d 1335, 1348–49 (Fed.

Cir. 2003); aaiPharma Inc. v. Thompson, 296 F.3d 227, 242–43

(4th Cir. 2002). Consequently, in determining what drugs a

patent claims or covers for purposes of a paragraph IV

certification, the patent’s actual scope is irrelevant. See, e.g.,

Purepac Pharm. Co. v. TorPharm, Inc., 354 F.3d 877, 883

(D.C. Cir. 2004). Rather, FDA must base its decision on what

the NDA holder asserts a patent claims. Id.

Here, the facts are undisputed. On August 28, 2001, when

Teva submitted its ANDA for a generic version of Risperdal, no

patent claimed Risperdal because Janssen had withdrawn the

‘952 patent. Moreover, FDA had removed the listing from the

electronic version of the Orange Book. FDA informed Teva of

the discrepancy and Teva withdrew its paragraph IV

certification. When Teva filed its citizen petition on August 3,

2007, asking FDA to confirm its eligibility for 180-day

exclusivity, the Agency refused. Its decision letter rejecting

8

Teva’s citizen petition accurately reiterated the sequence of

events. The letter noted FDA’s staff, conducting routine filing

reviews, always checks to see if “patent certifications contained

in the ANDA correspond to the patents actually listed for the

reference listed drug, as assessed by the most current patent

information the Agency has received.” See FDA Letter at 8.

B

Teva nevertheless claims its ANDA certification was valid

because one version of the Orange Book still listed the patent.

Neither this Court nor FDA has ever confronted the peculiar

factual circumstances present in this case. We have, however,

considered the vexed question of marketing exclusivity in other

contexts and held that FDA may not delist a patent once a valid

paragraph IV certification has been submitted, Ranbaxy Labs.

Ltd. v. Leavitt, 469 F.3d 120, 126 (D.C. Cir. 2006)(holding

“unlawful the FDA’s policy requiring that the first filer of a

paragraph IV certification be sued in order to preserve its

statutory exclusivity when the NDA holder seeks to delist the

patent rather than to litigate”), and that 21 U.S.C. §

355(j)(5)(B)(iv) precludes FDA from conditioning marketing

exclusivity upon an ANDA applicant prevailing in patent

litigation, Mova Pharmaceutical Corp. v. Shalala, 140 F.3d

1060, 1069 (D.C. Cir. 1998); see also Purepac Pharm. Co. v.

Friedman, 162 F.3d 1201, 1204–05 (D.C. Cir. 1998).

Unfortunately for Teva, an ANDA applicant’s right to a

period of marketing exclusivity does not vest merely because a

paragraph IV certification is filed. Only compliance with

paragraph IV triggers exclusivity, and compliance presupposes

the existence of a claiming patent. The claim is a prerequisite;

without it, there can be no valid certification. Inadvertent

failure by the agency to meet its separate publication

requirement cannot defeat facts. Indeed, for this Court to accept

9

Teva’s position, we would have to accept the proposition that

even partial inadvertence is sufficient. The electronic version of

the Orange Book reflected the withdrawal of the ‘952 patent at

least a month before Teva submitted its certification. Teva’s

argument goes beyond punishing Agency inadvertence; it would

reward willful blindness on the part of manufacturers—a

position clearly at odds with Hatch-Waxman’s focus on

fostering competition and lowering drug prices.

Teva argues the instructions prefacing the Orange Book and

its Cumulative Supplement constitute binding directives that

restrict both applicants and FDA from considering other sources

regarding listed patents. FDA counters that statements in the

Orange Book are not the law and cannot change the law

regarding whether a patent “claims” a drug. FDA is correct;

both the statute and the Agency’s policies compel FDA to rely

on the actual status of a patent (as indicated by the NDA holder)

and not on the varying contents of a published reference guide.

As FDA’s counsel conceded at oral argument, the Agency’s

failure to list a patent after the NDA holder provided the

information would not deprive the branded drug manufacturer

of its rights under paragraph IV. Furthermore, the Agency has

consistently required ANDA applicants to certify to patents

recently submitted to FDA, even if FDA had not yet published

the patent in any version of the Orange Book. FDA Letter at 8

n.14. In the end, none of Teva’s arguments can overcome one

critical lacuna: the lack of any patent claiming the drug.

III

The NDA holder asked FDA to remove the ‘952 patent

from the Orange Book listing in April and June of 2001—

months before Teva attempted to submit a paragraph IV

certification. Under the statutory and regulatory structure

governing marketing exclusivity, the company’s notification

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was sufficient for FDA to consider the patent withdrawn.

Accordingly, under step one of Chevron, Teva did not submit a

valid paragraph IV certification and neither the Orange Book

nor any of its instructions—however faulty—trump the clear

requirements of the statute.

Therefore, in conformity with our mandate issued on

September 12, 2008, we reverse the decision of the district court

granting judgment in favor of Teva, vacate the district court’s

injunction, and direct the entry of judgment for FDA.

So ordered.

WILLIAMS, Senior Circuit Judge, concurring: I write

separately to clarify an ambiguity in the majority opinion.

The Hatch-Waxman Amendments refer in a number of places

to the obligation of a firm filing a “New Drug Application”

(“NDA”) to include certain information with regard to “any

patent which claims the drug” in question. 21 U.S.C.

§§ 355(b)(1), 355(c)(2) (emphasis added); see

§ 355(j)(2)(A)(vii). This case relates to the obligations of the

FDA in relation to that filing, and the opinion seems to me

ambiguous in its reading of the statute. The panel opinion

says on the one hand that “a ‘claim’ is simply a description of

the subject a patent purports to cover as established by the

NDA holder.” Maj. Op. at 6 (emphasis added). This seems to

imply that the statute requires the FDA to accept the NDA

holder’s listing and delisting decisions, imposing on it the

ministerial role that it has chosen for itself. On the other

hand, the majority opinion describes the FDA’s choice to

adopt a ministerial role as a “common-sense policy choice”

that is merely “consistent with the statute.” Id. at 7. I have

seen no reasoning either in this opinion or in those of other

courts that would support the idea that the statute mandates a

ministerial role; for this case, all that is needed is a conclusion

that the FDA’s adoption of that role is reasonable.

A Fourth Circuit decision, aaiPharma Inc. v. Thompson,

296 F.3d 227 (4th Cir. 2002), discusses the matter quite

comprehensively. There an NDA holder had refused to

include the plaintiff’s patent in the list of patents claiming the

drug. The plaintiff patent holder wanted the FDA to order the

NDA holder to list the patent. At stake was the plaintiff’s

right under Hatch-Waxman to delay FDA approval of an

“Abbreviated New Drug Application” (“ANDA”) by up to 30

months, by suing the ANDA applicant for patent

infringement. Id. at 236, 242; see 21 U.S.C.

§ 355(j)(5)(B)(iii).

2

The FDA’s position was that its role in the process was

purely ministerial, while the plaintiff insisted that in case of a

dispute the FDA had to make its own determination about a

patent’s eligibility for listing. Id. at 237. Both parties argued

that their view was clearly mandated by the statute. Id. at 238.

After a careful analysis, the court concluded that Congress

had “failed to express clearly its intent about the FDA’s role,”

id., but that the FDA’s construction of the statute was

“permissible.” Id. at 241.

Yet in reaching that conclusion the court noted specific

provisions and elements of the statutory scheme favoring the

plaintiff’s position. For example, it noted that §§ 355(d)(6)

and (e)(4) specifically authorize FDA disapproval, or

withdrawal of approval, of an NDA application if the NDA

applicant failed to fulfill its patent-listing obligations. Id. at

238. Moreover, it generally found “plausible” the plaintiff’s

argument that there must be a mechanism for enforcing those

obligations, so as to protect the third-party patent holder’s

Hatch-Waxman rights. Id. at 242. It found “some force,”

furthermore, in the plaintiff’s conclusion that since private

enforcement was unavailable, the FDA had to fill the

enforcement gap. Id. at 243. Against these elements, among

other things, were the FDA’s claim of severe resource

constraints and indications that in practice patent holders had

not been much jeopardized.

Two propositions flow from aaiPharma. First, the FDA’s

ministerial role in the Orange Book listing process is not

mandated by the statute. Second, third-party patent holders

have rights under Hatch-Waxman which are currently at the

mercy of the NDA holder and which the FDA could vindicate

by taking a more active role in the listing process. It seems

quite likely, then, that had the FDA adopted the plaintiff’s

position and sought to protect third-party patent holders, the

3

aaiPharma court would have viewed that construction of the

statute as reasonable too.

These considerations apply at least as strongly to the

present case, which concerns a dispute over a delisting rather

than a dispute over a failure to list. The statute has even less

to say about it; as the FDA has pointed out, the statute is

“silent with regard to the withdrawal of patent information

previously submitted for listing in the Orange Book.”

Ranbaxy Labs. Ltd. v. Leavitt, 469 F.3d 120, 124 (D.C. Cir.

2006). And the policy of protecting third-party patent holders

applies just as strongly.

The Federal Circuit adopted the aaiPharma approach in

Apotex, Inc. v. Thompson, 347 F.3d 1335 (Fed. Cir. 2003).

There, the plaintiff wanted the FDA to delist certain patents

which it contended did not claim the relevant drug. Id. at

1347. Citing aaiPharma, the court held that “[w]e agree with

the Fourth Circuit that the statute does not speak clearly to this

issue.” Id. at 1348. Ultimately, as in aaiPharma, the court

concluded that the FDA’s approach was reasonable. Id. at

1349.

This circuit’s cases are consistent with aaiPharma and

Apotex. They take the FDA’s choice of a ministerial approach

as a given, without implying that the choice was mandated by

the statute. Purepac Pharm. Co. v. Thompson, 354 F.3d 877,

883 (D.C. Cir. 2004) (noting that the FDA “leaves to the

courts” the issue of what patents actually cover); Am.

Bioscience, Inc. v. Thompson, 269 F.3d 1077, 1080 (D.C. Cir.

2001) (explaining that “[t]he FDA, pursuant to longstanding

practice and its own regulations, and based on its

acknowledged lack of expertise and resources, has refused to

become involved in patent listing disputes, accepting at face

value the accuracy of NDA holders’ patent declarations and

following their listing instructions”).

4

Thus, to read the majority opinion as implying that the

statute locks the FDA into a ministerial role would be

inappropriate. Such a reading would prevent the FDA from

taking a more active role in the listing process, thereby better

protecting third parties’ rights, and finds no support in the

cases cited by the majority opinion, Maj. Op. at 7. The statute

and the cases do, however, support the panel opinion’s view

that the FDA’s decision to adopt a ministerial role in the

listing process represents simply a permissible “common-

sense policy choice.” Id.