Eagle Pharmaceuticals, Inc. v. Alex Azar, II

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.