Petition for Writ of Certiorari — Genendo Pharmaceutical v. United States (No. 07-477)

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supreme Court, US.

07-477 0CT 05 2007

No. \ _ OFFICE OF THE CLERK

In The

Supreme Court of the United States

GENENDO PHARMACEUTICAL, N.V.,

a Netherlands Antilles corporation,

Petitioner,

UNITED STATES OF AMERICA,

Respondent.

On Petition for Writ of Certiorari

to the United States Court of Appeals

for the Seventh Circuit

PETITION FOR WRIT OF CERTIORARI

Howarb M. HorFMANN

Counsel of Record

FREDERICK R. BALL

DUANE MORRIS LLP

227 WEST MONROE STREET

SuITE 3400

Cuicaco, ILLINOIS 60606

(312) 499-6700

(312) 499-6701 (facsimile)

Counsel for Petitioner

Becker Gallagher - Cincinnati, OH - Washington, D.C. - 800.890.5001

QUESTIONS PRESENTED FOR REVIEW

(1) Whether the Court of Appeals for the Seventh

Circuit (“Seventh Circuit”) erred when, in contrast to

a majority of other Courts of Appeal, it failed to

consider dispositive legislative history in the first

stage of its Chevron analysis and, therefore,

improperly deferred to the interpretation of the Food

and Drug Administration (“FDA”) that the term “any”

in 21 U.S.C. § 353(a) meant “some” rather than “all”.

(2) Whether the Seventh Circuit failed to apply this

Court’s holding in Massachusetts v. EPA, 549 U.S.

’

127 S. Ct. 1438 (2007), that the term “any” means

“all” in a comparable statutory context.

PARTIES TO THE PROCEEDING

The parties to this proceeding are:

GENENDO PHARMACEUTICAL, N.V.,

Netherlands Antilles corporation; and

UNITED STATES OF AMERICA

iil

CORPORATE DISCLOSURE STATEMENT

Pursuant to Rule 29.6, Petitioner states as follows:

Genendo Pharmaceutical, N.V. is a privately held

corporation. There are no publicly held companies

that own 10% or more of Geneindo Pharmaceutical,

N.V.

TABLE OF CONTENTS

QUESTIONS PRESENTED FOR REVIEW

PARTIES TO THE PROCEEDING .......

CORPORATE DISCLOSURE STATEMENT .... iii

$Apkds OF CONTENDS 2. cece cect

TABLE OF AUTHORITIES .............

RFU RIUEGMIEER PEAY ccd esse ctncrencens

Pa ETNIES ov Ski vin ko in ches bane Res

STATUTE AND REGULATION INVOLVED ....

STATEMENT OF THE CASE ...........

ee District Court Jurisdiction .........

II. Factual Background ..............

III. Lower Court Proceedings ..........

ae 1V

Oye vl

ae 2 6

REASONS FOR GRANTING THE PETITION ... 8

I. Pursuant to Sup. Ct. Rule 10(a), a Split of

Authority Exists Among the Circuits

Concerning Whether Legislative Hi

story

Should Be Used In Stage I or Stage II of a

Caner SN oss iW ea eee

anes 8

II. Pursuant to Sup. Ct. Rule 10(c), the Seventh

Circuit Decided an Important Federal

Question Which Conflicts With This Court’s

2007 Decision in Massachusetts v. EPA

Regarding the Meaning of the Adjective “any”

in Comparable Statutory Language. ..... 23

I Oc Sh i wig 6 cea ah ee ed 26

APPENDIX

APPENDIX A- = 7/10/07 Seventh Circuit

Court Order denying Petition for Rehearing . la

APPENDIX B- = 55/10/07 Seventh Circuit

ER Or ere ery rs a 3a

APPENDIX C-—- = 8/12/05 District Court

Memorandum and Order ..............-. 17a

TABLE OF AUTHORITIES

CASES

Babbit v. Sweet Home Chapter of Cmtys. for a Great

Or.,

Oe Gres ee COD 6 ov dv bee hw ee wine ow 16

Bankers Life & Cas. Co. v. United States,

142 F.30 973 (7th Civ. TOGG) . wc ce ee eee 12

Chevron U.S.A. Inc. v. NRDC,

GE Rr ee CRE ein Fb e kee ere y ees passim

City of Chicago v. Env. Def. Fund,

ER GP RD co bs eee ieee vewenes 16

Cohen v. Brown Univ.,

OT ee et ae BO gk ks i vik vee ees 11

Coke v. Long Island Care at Home, Ltd..,

376 F.3d 118 (2d Cir. 2004) ......... 12, 13, 14

Davis v. S. Energy Homes, Inc.,

306 F.3d 1268 (1ith Cir. 2002) ............ 12

Dunn v. Secretary of Agric.,

O21 Foe WOO Cie: F000)... ga civics 15

FDA v. Brown & Williamson Tobacco Corp.,

ee AP ee RE on op oe Ck Sse ee 13, 14

Fullenkamp v. Veneman,

383 F.3d 478 (Gth Cir. 2004) .............. 12

Vil

Hackwell . Jnited States,

491 F346 1220 (10th Cir. 2007)... 2. ce 12

Illinois EPA v. United States EPA,

GGT a FR 7 Cae TOD... vk occ ck. 12

In re Arnold Print Works, Inc.,

BibT Oe FOC CA TO on kv bce conweuns 17

INS v. Cardoza-Fonseca,

Me ee ee COE 3 ko 6c cas cacao 15

Japan Whaling Asso. v. Am. Cetacean Soc.,

SPO Fae Bee IE ok 60 55 ENED 13

K Mart Corp. v. Cartier, Inc.,

Oe i. oe Oe ks rh eee 13, 14, 16

Massachusetts v. EPA,

549 US. , 1275S. Ct. 1438 (2007) .... passim

Massachusetts v. Lyng,

ar Oe ee a” Ua, Fs civ gees 15

National R.R. Passenger Corp. v. Boston & Me. Corp..,

. SE GF CG shee eS 13, 14, 15

NLRB v. United Food & Commercial Workers Union,

SOG37.B. SAS CIO? kk oi kk oc See cae ee 16

Pauley v. BethEnergy Mines,

SOs 53.2: GER? 66 66 eed wy ew ees 13

Pension Benefit Guar. Corp. v. LTV Corp.,

SOG 1.3. GRACO) en nh ak ce eee ess 13

vill

Santiago v. GMAC Mortg. Group, Inc.,

et? £.o0 goes (od Cir. 2005) ............... 14

Senger v. City of Aberdeen,

S66 F.ca o7u (oun Cir. 2006) .............. 11

Shays v. FEC,

I ED ov occ eee e ween suvewes 12

Square D Co. v. Comm’r,

438 F.3d 739 (7th Cir. 2006) .............. 12

Strickland v. Comm’r, Me. Dep’t of Human Seruv.,

wre eee CaP. CGO) 2... ee passim

Stowell v. Secretary of HHS,

Se > 16

Sutton v. United Air Lines, Inc.,

re 13

United States v. Dierckman,

201 F.3d 915 (7th Cir. 2000) .............. 12

United States v. Genendo Pharm., N.V.,

485 F.3d 958 (7th Cir. 2007) ........... passim

Walton v. Rose Mobile Homes LLC,

298 F.3d 470 (5th Cir. 2002) ..........0... 12

Yi v. Fed. Bureau of Prisons,

412 F.3d 526 (4th Cir. 2005) .............. 12

STATUTES AND REGULATIONS

ER OE TS no 54h be ee Soke s he eee as 3

ee a scl ae woken aw bits eeu 3

ee a I as sda os sy oo he Se ee ee 3

Re ieee aaa are passim

oaks wow doe aw wees 6, 22

a ES «6k go 9 d'eo op kk woe oe 1

RS ot a cew eeu are ne 3

os cy vd’ wis oe ke oe oe eee 3

ee ee sb. a od bide eames 2, 3, 4, 26

RULES

I Us MO 3850s nw cons ale a oa ae ee eae 8

A ee NOD 65h ss wa i eens wees 8, 23

OTHER

Federal Food, Drug and Cosmetic Act, A Statement of

its Legislative Record, 74th Cong. 363 (1938 reprinted

EE sr 68095 ea ee ee 19, 20, 25

Stephen Breyer, On The Uses Of Legislative History

In Interpreting Statutes, 65 S. Cal. L. Rev. 855-56

FRED ay 2G cewek ek ee 17, 18, 19

http://www.accessdata.fda.gov/scrips/cder/drugsatfd

a/index. cfm?fuseaction =search.label_approve

NE oie aig ane POLS Ere eee 5

OPINIONS BELOW

The opinion of the United States Court of Appeals

for the Seventh Circuit is reported at 485 F.3d 958 and

is reprinted in the Appendix to the Petition (App. 3a-

16a). The District Court’s Opinion is reported at 384 F.

Supp. 2d 1205 and is reprinted in the Appendix to the

Petition (App. 17a-50a).

JURISDICTION

On May 10, 2007 the Seventh Circuit denied

Genendo Pharmaceutical, N.V.’s (“Genendo”) appeal of

the District Court’s decision. On July 10, 2007 the

Seventh Circuit denied Genendo’s petition for

rehearing in banc and rehearing by the panel.

Review in this court is appropriate pursuant to 28

U.S.C. § 1254(1) for the review of final decisions of the

United States Courts of Appeal pursuant to a petition

for writ of certiorari.

STATUTE AND REGULATION INVOLVED

21 U.S.C. § 353(a) which states in pertinent part:

Regulations for goods to be processed, labeled,

or repacked elsewhere.The Secretary is directed

to promulgate regulations exempting from any

labeling or packaging requirement of this

chapter drugs and devices which are, in

accordance with the practice of the trade, to be

processed, labeled, or repacked in substantial

quantities at establishments other than those

where originally processed or packed, on

condition that such drugs and devices are not

adulterated or misbranded under the provisions

of this chapter upon removal from such

processing, labeling, or repacking

establishment.

and 21 C.F.R. § 201.150 which states:

(a) Except as provided by paragraphs (b)

and (c) of this section, a shipment or other

delivery of a drug which is, in accordance with

the practice of the trade, to be processed,

labeled, or repacked in substantial quantity at

an establishment other than that where

originally processed or packed, shall be exempt,

during the time of introduction into and

movement in interstate commerce and the time

of holding in such establishment, from

compliance with the labeling and packaging

requirements of sections 501(b) and 502 (b), (d),

(e), (f), and (g) of the act if:

(1) The person who introduced such

shipment or delivery into interstate commerce

is the operator of the establishment where such

drug is to be processed, labeled, or repacked; or

(2) In case such person is not such

operator, such shipment or delivery is made to

such establishment under a written agreement,

signed by and containing the post-office

addresses of such person and such operator, and

containing such specifications for the

processing, labeling, or repacking, as the case

may be, of such drug in such establishment as

will insure, if such specifications are followed,

that such drug will not be adulterated or

misbranded within the meaning of the act upon

completion of such processing, labeling, or

repacking. Such person and such operator shall

each keep a copy of sch agreement until 2

years after the final shipment or delivery of

such drug from such establishment, and shall

make such copies available for inspection at any

reasonable hour to any officer or employee of

the Department who requests them.

STATEMENT OF THE CASE

I. District Court Jurisdiction

The United States District Court for the Northern

District of Illinois had jurisdiction pursuant to 28

U.S.C. §§ 1331 and 1345, and under sections 332 and

334 of the Federal Food, Drug and Cosmetic Act, 21

U.S.C. § 301 et seq. (the “FDCA” or “Act”).

II. Factual Background

The parties stipulated to the facts, including that

the government did not contend that the at issue drugs

were adulterated or counterfeit.

Genendo, as a regular part of its business, itself or

through affiliates, purchases, trades, and sells

pharmaceuticals manufactured overseas. (App. 24a,

q 17). 21 U.S.C. § 353(a) specifically permits and

contemplates the repackaging and labeling of drugs “at

establishments other than those where originally

processed or packed ....

”

At all relevant times, Phil & Kathy’s was an Illinois

FDA registered and inspected entity repacking and

labeling drug products under the Act and regulations.

(App. 35a, 79 106, 107). As required by 21 C.F.R.

§ 201.150, Genendo had a written agreement with Phil

& Kathy’s regarding the repackaging and labeling of

prescription drugs (“201.150 Agreement”). (App. 31a,

(4 75, 77).

In September and October 2003 letters, Genendo

advised the government that it intended to import

Lipitor into the United States. (App.25a, 77 29, 31).

In the October 24, 2003 letter, Genendo advised the

United States that it intended to import Lipitor

pursuant to a September 17, 2003 invoice to Phil &

Kathy’s to be repackaged and labeled before

distribution and dispensing to consumers and others.

(App. 25a, J 31). Genendo then imported the Lipitor.

(App. 25a, J 30). On or about December 16, 2003,

based on the information provided by Genendo, the

government seized the Lipitor (n/k/a the “Seized

Lipitor”) at customs. (App. 26a, { 32).

Pfizer, Inc. (“Pfizer”) manufactures Lipitor. (App.

26a, 135). Pfizer submitted a New Drug Application

(“NDA”) for Lipitor to the FDA. The FDA approved

the NDA for Lipitor. (App. 26a, 4 36-38). A Pfizer

facility in Loughbeg, Ireland, is identified in the FDA-

approved NDA as a manufacturing facility for Lipitor

intended for sale and distribution in the United States,

including 10 mg. and 20 mg. dosages. (App. 26a, J 39).

The FDA inspects the Pfizer Loughbeg, Ireland

facility. (App. 26a, J 40). The Seized Lipitor was

manufactured (1.e., formed into the solid oral dosage

a a EO ee

form) by Pfizer in the Loughbeg, Ireland facility listed

on the NDA. (App. 32a, 7 81).

The Seized Lipitor is packaged in blister packs.

(App. 32a, J 84). The FDA approved NDA for Lipitor

includes blister packs for the 10 mg. and 20 mg.

dosages. (App. 26a, J 39).

The expiration period in the FDA-approved NDA

for blister packed Lipitor is two years from date of

manufacture. (App. 27a, { 42). On December 16,

2003, the date of the seizure, the expiration period for

the Seized Lipitor had not run. (App. 29a, 7 57). The

two lots of the Seized Lipitor were manufactured on

January 16, 2003 and February 18, 2003. (App. 29a,

4 58). Therefore, when seized, 13 months remained on

one lot and 14 months on the other.

Genendo purchased the Seized Lipitor in Brazil

(App. 27a, I 43) and imported it into the United States

(App. 27a, | 44). The labeling on the Seized Lipitor is

in Portuguese; specifically, each blister sheet of ten

tablets and each 30-tablet box are labeled in

Portuguese. (App. 28a, 7 50). The labeling approved

at the time of seizure for the Seized Lipitor for sale in

the United States is publicly available on the FDA

website.’ The government does not claim the Seized

Lipitor is adulterated or counterfeit. (App. 33a, 4] 93).

See http:/\www.accessdata.fda.gov/scrips/cder/drugsatfda/index.

cfm?fuseaction =search.label_approvedhistory.

Ill. Lower Court Proceedings

On November 14, 2003, the Government filed an

Amended Verified Complaint for Injunctive Relief in

the United States District Court for the Northern

District of Illinois naming Genendo as a defendant.

On December 16, 2003, pursuant to a warrant issued

following the filing of the Amended Verified

Complaint, the government seized the Seized Lipitor.

The government alleged the Seized Lipitor was

misbranded and an unapproved new drug. After a one

day trial, the District Court decided, on the basis of the

stipulated facts, that the Seized Lipitor was an

unapproved new drug that violated 21 U.S.C. § 355.

Despite the fact that the government never

contended that the Seized Linitor was either

adulterated or counterfeit, the District Court

concluded the exemption contained in 21 U.S.C.

§ 353(a)

exempting from any labeling or packaging

requirement of [the FDCA] drugs and devices

which are, in accordance with the practice of the

trade, to be processed, labeled, or repacked in

substantial quantities at establishments other

than those where originally processed or

packed, on condition that such drugs and

devices are not adulterated or misbranded

under the provisions of this chapter upon

removal from such processing, labeling, or

repacking establishment

did not apply to the Seized Lipitor because the

“labeling and packaging requirements” referred to in

§ 353(a) applied only to general “labeling and

packaging” but not the requirements for packaging set

forth in the approved NDA, a part of the FDCA

referred to in § 353(a). The District Court granted the

government’s request for condemnation of the drugs

and injunctive relief.

The Seventh Circuit affirmed the decision of the

District Court using different reasoning. The Seventh

Circuit determined that the use of the term “any” in

§ 353(a) was ambiguous and, therefore, the Food and

Drug Administration’s (“FDA”) interpretation that the

term “any” meant some but not all of the labeling and

packaging requirements of the Act would be afforded

Chevron deference. Despite being presented the

legislative history of Section 353(a) in Genendo’s

opening brief, reply brief, and motion for rehearing in

banc, the Seventh Cireuit did not consider the

legislative history that demonstrated specific

Congressional intent that “any” in § 353(a) meant “all.”

Had it done so, Genendo would have prevailed because

the statements of the sponsor of the FDCA, made

during floor debate, make clear Congress’s intent that

“any” mean “all.”

Chevron deference refers to Chevron U.S.A. Inc. v. NRDC, 467

U.S. 837.

3 This court decided Massachusetts v. EPA, 549 U.S. __, 1275S.

Ct. 1438 (2007) after the Seventh Circuit heard oral argument on

Genendo’s appeal. Therefore, pursuant to Fed. R. App. Proc. 28(j),

Genendo provided the Seventh Circuit with a copy of

Massachusetts v. EPA. Genendo, 485 Fd at 963 n.3.

Genendo filed a motion for rehearing in banc which

the Seventh Circuit denied.

REASONS FOR GRANTING THE PETITION

This Court should grant the petition for writ of

certiorari because:

‘

Pursuant to Sup. Ct. Rule 10(a), a Split of

Authority Exists Among the Circuits

Concerning Whether Legislative History Should

Be Used In Stage I or Stage II of a Chevron

Analysis; and

Pursuant to Sup. Ct. Rule 10(c), the Seventh

Circuit Decided an Important Federal Question

Which Conflicts With This Court’s 2007

Decision in Massachusetts v. EPA Regarding the

Meaning of the Adjective “any” in Comparable

Statutory Language.

I. Pursuant to Sup. Ct. Rule 10(a), a Split of

Authority Exists Among the Circuits

Concerning Whether Legislative History

Should Be Used In Stage I or Stage II of a

Chevron Analysis.

The sole issue on appeal, as articulated by the

Seventh Circuit, was “whether the seized Lipitor is an

unapproved “new drug.” United States v. Genendo

Pharm., N.V., 485 F.3d 958, 962 (7th Cir. 2007). The

Seventh Circuit went on to state that the only relevant

question in making that determination was whether

21 U.S.C. § 353(a) exempted the Seized Lipitor from

the labeling and packaging requirements of the Act.

Genendo, 485 F.3d at 962.

21 U.S.C. § 353(a) states:

The Secretary is directed to promulgate

regulations exempting from any labeling or

packaging requirement of this chapter drugs

and devices which are, in accordance with the

practice of the trade, to be processed, labeled, or

repacked in substantial quantities at

establishments other than those where

originally processed or packed, on condition that

such drugs and devices are not adulterated or

misbranded under the provisions of this chapter

upon removal from such processing, labeling, or

repacking establishment.

(emphasis added).

The Seventh Circuit’s determination whether the

Seized Lipitor was exempt from the labeling and

packaging requirements of the Act turned on whether

the word “any,” as used in § 353(a) meant “all,” as

Genendo contended, or “some,” as the government

contended. Genendo, 485 F.3d at 963. In order to

decide the meaning of “any,” the Seventh Circuit

decided that it must first determine “the level of

deference to be accorded to the FDA’s interpretation of

Section 353(a).” Genendo, 485 F.3d at 962. In so

doing, it engaged in a flawed, i.e., incomplete, Chevron

analysis by ignoring the legislative history.

Under Chevron, a court must first determine

whether “Congress has directly spoken to the precise

question at issue. If the intent of Congress is clear,

that is the end of the matter; for the court, as well as

the agency, must give effect to the unambiguously

expressed intent of Congress.” Chevron at 842-43. If

a court determines that the statute is “silent or

ambiguous” with respect to the specific issue, then the

reviewing court engages in the second step of a

Chevron analysis in determining whether the agency’s

“answer is based on a permissible construction of the

statute.” Id.‘

The determination of whether Congress has spoken

on the issue or whether the statute is ambiguous has

a profound impact on the outcome of cases involving an

agency's proposed interpretation of a statute.

[Because] it is only when a court cannot discern

an unmistakably clear expression of

congressional intent that the Chevron inquiry

moves into its second stage. Until then,

deference is not a consideration - but from that

point forward, deference looms large. The court

must examine the agency’s interpretation to

see how it relates to the statute. This

examination involves a high degree of respect

for the agency’s role. The agency need not write

a rule that serves the statute in the best or most

logical manner; it need only write a rule that

flows rationally from a permissible construction

* Genendo has always maintained the statute was clear on its

face. Genendo presented the District Court and the Seventh

Circuit with the legislative history of § 353(a) to establish that

point.

of the statute. See, e.g., Cohen v. Brown Univ.,

991 F.2d 888, 899 (1* Cir. 1993) (noting that it

is unimportant to the Chevron analysis whether

the court, if writing on a pristine page, would

prescribe a different version of the regulation).

Strickland v. Comm’r, Me. Dep’t of Human Serv., 48

F.3d 12, 17 -18 (1* Cir. 1995).

Thus, if a court determines that the statute is

unambiguous and the intent of Congress is clear, then

the agency receives no deference, or, in other words,

the statute is what it says. If a court determines that

the statute is ambiguous, then an agency receives

significant, but not absolute, deference in its

interpretation of the statute.

The Seventh Circuit’s mistaken determination that

Congressional intent was ambiguous had a profound

impact here. It resulted in Genendo’s loss despite the

fact that the floor debate remarks of the Senate

sponsor of the FDCA concerning this section —

demonstrates “any” means “all.”

There is a split among the circuits whether to use

legislative history when conducting step one of a

Chevron analysis. A majority of circuits have

determined that in step one, courts “look first to

whether the statute’s language and legislative history

clearly demonstrate what Congress intended.” Senger

v. City of Aberdeen, 466 F.3d 670, 672 (8th Cir. 2006).

“When they do, that intent controls and a court will

not defer to any regulation that interprets the statute

in a contrary manner.” Jd.”

In contrast, the Seventh Circuit has adopted the

view that legislative history should never be

considered in Stage I of a Chevron analysis. United

States v. Dierckman, 201 F.3d 915, 923 n. 12 (7th Cir.

2000); see also Square D Co. v. Comm’r, 438 F.3d 739,

745 n. 4 (7th Cir. 2006); Bankers Life & Cas. Co. v.

United States, 142 F.3d 973, 983 (7th Cir. 1998).

Consistent with this view, the Seventh Circuit

completely ignored Congress’s intent as revealed in the

legislative history.

The First, Second, and Third Circuits have

expressed their frustration over a lack of guidance

from this Court on the role of legislative history in a

Chevron analysis. Each of the First, Second, and

Third Circuits, have urged this Court to clarify this

issue.

® See Hackwell v. United States, 491 F.3d 1229, 1233 (10th Cir.

July 5, 2007); Yi v. Fed. Bureau of Prisons, 412 F.3d 526, 533 (4th

Cir. 2005); Shays v. FEC, 414 F.3d 76, 84-85 (D.C. Cir. 2005);

Fullenkamp v. Veneman, 383 F.3d 478, 484-85 (6th Cir. 2004);

Walton v. Rose Mobile Homes LLC, 298 F.3d 470, 478 (5th Cir.

2002); Davis v. S. Energy Homes, Inc., 305 F.3d 1268, 1278 (11th

Cir. 2002).

* Atone point, the Seventh Circuit did consider legislative history

in Phase I of the Chevron analysis. See, e.g., Illinois EPA v.

United States EPA, 947 F.2d 283, 289 (7th Cir. 1991).

The Second Circuit has stated that this Court “has

issued mixed messages as to whether a court may

consider legislative history at this stage of the analysis

(step one of Chevron).” Coke v. Long Island Care at

Home, Lid., 376 F.3d 118, 127 (2d Cir. 2004). The

Second Circuit catalogued examples in which this

Court differed in its use of legislative history in Phase

I or Phase II of a Chevron analysis.

Compare FDA v. Brown & Williamson Tobacco

Corp., 529 U.S. 120, 133, 137, 146 L. Ed. 2d 121,

120 S.Ct. 1291 (2000) (effectively considering

legislative history at step one of Chevron

analysis), Pauley v. BethEnergy Mines, Inc.,

501 U.S. 680, 697-99, 115 L. Ed. 2d 604, 111

S.Ct. 2524 (1991) (same), Pension Benefit Guar.

Corp. v. LTV Corp., 496 U.S. 633, 649-50, 110 L.

Ed. 2d 579, 110 S.Ct. 2668 (1990) (same), and

Japan Whaling Ass’n v. Am. Cetacean Soc’y, 478

U.S. 221, 233-41, 92 L. Ed. 2d 166, 106 S.Ct.

2860 (1986) (same), with K Mart Corp. v.

Cartier, Inc., 486 U.S. 281, 293 n.4, 100 L. Ed.

2d 313, 108 S.Ct. 1811 (1988) (opinion of

Kennedy, J.) (noting in the first step of a

Chevron inquiry that “any reference to

legislative history [| is in the first instance

irrelevant”), Sutton v. United Air Lines, Inc.,

527 U.S. 471, 482, 144 L. Ed. 2d 450, 119 S.Ct.

2139 (1999) (finding statutory text clear enough

to ignore any arguments from legislative

history), and Nat’? R.R. Passenger Corp. uv.

Boston & Me. Corp., 503 U.S. 407, 417, 118 L.

Ed. 2d 52, 112 S.Ct. 1394 (1992) (finding only

statutory text to be relevant for first-step

Chevron analysis).

Coke, 376 F.3d at 127 n.3 (2d Cir. 2004).

Similarly, the Third Circuit has stated:

It is not clear whether it is appropriate for us to

consider legislative history to determine

whether a statute is unambiguous at this point

in Chevron analysis. Compare FDA v. Brown &

Williamson Tobacco Corp., 529 U.S. 120, 133,

137, 120 S.Ct. 1291, 146 L. Ed. 2d 121 (2000)

(considering legislative history at step one of

Chevron analysis), with K Mart Corp. v. Cartier,

Inc., 486 U.S. 281, 293 n. 4, 108 S.Ct. 1811, 100

L. Ed. 2d 313 (1988) (stating that “any reference

to legislative history . . . is in the first instance

irrelevant” in step one of Chevron analysis) and

Nat'l R.R. Passenger Corp. v. Boston & Me.

Corp., 503 U.S. 407, 417, 112 S.Ct. 1394, 118 L.

Ed. 2d 52 (1992) (finding only statutory text is

relevant for step one of Chevron analysis).

Santiago v. GMAC Mortg. Group, Inc., 417 F.3d 384,

388 n.3 (3d Cir. 2005) (emphasis added).

The First Circuit has also recognized the different

views of this Court, among others, on the appropriate

use of legislative history.

In performing the first part of a Chevron

analysis, no deference is due. Instead, courts

must look primarily to the plain meaning of the

statute, drawing its essence from the “particular

statutory language at issue, as well as the

language and design of the statute as a whole.”

K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291,

108 S.Ct. 1811, 1818, 100 L.Ed.2d 313 (1988);

accord Dunn v. Secretary of Agric., 921 F.2d

365, 366-367 (1* Cir. 1990). Beyond this point,

it remains unclear whether, and if so, to what

extent, a court engaged in the first stage of a

Chevron inquiry may use other tools of

statutory construction, such as legislative

history, in searching for Congress’

unambiguously expressed intent on a particular

issue. See Dunn, 921 F.2d at 367 n.2 (citing

conflicting cases but not resolving the point).

Legislative history is subject to many and

varied criticisms, and the uncertainty about its

value in general parallels the uncertainty about

its value in relation to the Chevron doctrine.

Respectable authority indicates that it is

appropriate to employ all the “traditional tools

of statutory construction” in the first part of the

Chevron analysis when the statutory language

itself is not dispositive. See INS v. Cardoza-

Fonseca, 480 U.S. 421, 432-43, 446, 107 S.Ct.

1207, 1221, 94 L.Ed.2d 434 (1987) (examining

legislative history to confirm the validity of an

interpretation suggested by the _ statute’s

language) (dictum); Massachusetts v. Lyng, 893

F.2d 424, 429 (1* Cir. 1990). But there is also

respectable support for the proposition that the

Chevron analysis, in its initial phase, does not

look beyond the statutory text. See, e.g.,

National R.R. Passenger Corp. v. Boston & Me.

Corp., 503 U.S. 407, 416-17, 112 S.Ct. 1394,

1401, 118 L.Ed.2d 52 (1992) (stating that

deference is due so long as “the agency

interpretation is not in conflict with the plain

language of the statute”); K Mart Corp., 486

U.S. at 292, 108 S.Ct. at 1818 (“If the agency

regulation is not in conflict with the plain

language of the statute, a reviewing court must

give deference to the agency’s interpretation of

the statute.”)} NLRB v. United Food &

Commercial Workers Union, 484 U.S. 112, 133-

34, 108 S.Ct. 413, 426-27, 98 L.Ed.2d 429 (1987)

(Scalia, J., concurring) (criticizing dictum in

Cardoza-Fonseca); Stowell v. Secretary of HHS,

3 F.3d 539, 543 (1* Cir. 1993) (approving

deference where “statute is silent with respect

to a specific question”).

Strickland, 48 F.3d at 16-17 (footnote omitted)

(emphasis added).

This Court has engaged in an ongoing debate about

the use of legislative history in statutory construction

cases. See, e.g., Babbit v. Sweet Home Chapter of

Cmtys. for a Great Or., 515 U.S. 687, 704-05 (relying

on legislative history) and Sweet Home, 515 U.S. at

726-27 (1995) (Scalia dissenting); City of Chicago v.

Env. Def. Fund, 511 U.S. 328, 337 (1994) (refusing to

use legislative history to help interpret statute), and

City of Chicago, 511 US. at 345 n.7 (Stevens

dissenting) (relying on legislative history).

Whether a court should use legislative history in

conducting its Phase I Chevron analysis is important.

If the goal of Chevron analysis Phase I is to determine

the intent of Congress, then reference to legislative

history is vital. If a court does not use legislative

history in Phase I, the court runs the risk, as

happened here, of ignoring Congress’s directive and

bestowing unwarranted deference on an agency.

In a law review article published while Chief Judge

of the First Circuit, Justice Breyer argued in favor of

the importance of legislative history in interpreting

statutes. In discussing the use of legislative history to

help determine the appropriate interpretation of

changes to the Bankruptcy Code in Jn re Arnold Print

Works, Inc., 815 F.2d 165 (1* Cir. 1987), Justice Breyer

stated:

Without the legislative history, without the

floor statements, we might have reached a

different result. After all, state-law contract

claims, whether pre- or post-petition, look very

much alike, and both sorts of claims are only

peripherally related to bankruptcy itself. But

the result suggested by any such "purpose-free"

analogy would be pointless and wrong, for it

would not comport with the legislators’ basic

statutory objectives.

More importantly, the incompatibility

between the result we could have reached (but

did not) and those congressional objectives, seen

from a general institutional or governmental

perspective, would be _ undesirable. The

undesirability consists, not simply of the fact

that Representatives Kastenmeier and

Kindness were democratically elected, but also

of the fact that the statute's general objectives

(and the detailed provisions needed to

implement the objectives) reflect far more than

the work of the two Representatives themselves.

The objectives, and the detailed provisions,

reflect the work of all the representatives of the

bankruptcy community involved in_ the

legislative process that produced the

bankruptcy bill, namely bankruptcy judges,

practitioners, teachers, and many others who

worked on the details of the law. Their

knowledge and experience, likely communicated

through staff, with or without compromises, is

embodied both in particular statutory phrases

and in reports and floor statement language. To

take from the courts the power to refer to

legislative history in a case such as this one is

to cut an essential channel for communications

with these informed communities of groups and

individuals, a channel that runs from those

affected by a law's implementation, through

courts and legislators, to those involved in the

law's creation. To reach a result inconsistent

with their work denies the public a significant

part of the benefit of their expertise -- an

important matter in so technical an area where

the knowledge of informed groups is likely to

produce a more workable, legally "better"

statute. More significantly, reaching such an

inconsistent result defeats the reasonable

expectations of the many individuals and groups

involved in the legislative process. As long as

we believe that one important goal of a legal

system is to maintain rules of law consistent

with the reasonable expectations of those who

live within it, this result is undesirable.

Stephen Breyer, On The Uses of Legislative History in

Interpreting Statutes, 65 S. Cal. L. Rev. 855-56 (1991).

Much like the Bankruptcy Code, the FDCA was the

result of compromise among interested parties. The

very section at issue here was debated on the floor of

the Senate, and Congress reached a satisfactory

compromise. To disregard that history is to thwart the

express will of Congress and the compromise Congress

painstakingly reached.

Congress’s careful weighing of the respective

interests at issue, i.e., assuring that it did not harm

the “practice of the trade” of repackaging and labeling

drugs while assuring drugs that enter consumer

directed commerce are neither adulterated nor

misbranded, can be seen in § 353(a). Section 353(a)

never exempts adulterated drugs and only exempts

drugs while en route to or held by a registered

repackager/labeler. By refusing to consider the

legislative history of § 353(a), the Seventh Circuit

replaced Congress’s careful assessment of the proper

balance of those interests with the opinion of the FDA.

In § 353(a), Congress expressly contemplated that

drugs not compliant with the NDA could travel to an

FDA registered and inspected repackaging and

labeling establishment. Moreover, the Congressional

Record clearly demonstrated Congress’s intent. In

discussing Section 353(a), the Senate sponsor of the

bill unequivocally stated the intent of Congress with

regard to Section 353(a):

Mr. COPELAND. Mr. President, if I did not feel

that we have fully covered the suggestion made

by the senior Senator from New Jersey, so far I

could do so, I would at once accept the

amendment. The Senator has already

mentioned subdivision (1), on page 22, and

perhaps the Senator did not know that on line

3 we have stricken out the word “authorized”

and have provided that the Secretary shall be

directed. The Secretary is directed to

promulgate regulations exempting from labeling

such articles as those which the Senator has

referred.

I am satisfied that with this change, which was

suggested by the Senator from Michigan [Mr.

Vandenberg], directing the Secretary to take

such action, we are not leaving the matter to

anybody. The Secretary must do what the

Senator seeks to have done when the substances

covered by the provision are shipped in large

quantities are not sold to the consumer. They

need not be labeled, and so forth, until after they

are ready actually to be sent to another to the

ultimate consumer. So I feel that under

subsection (1) the industry in which the Senator

is interested is fully protected, in view of the

fact that we have not given the Secretary any

option in the matter, but he must perform this

prescribed duty.

Federal Food, Drug and Cosmetic Act, A Statement of

its Legislative Record (hereinafter, “FDCA Leg. Rec.”),

74th Cong. 363 (1938 reprinted 1987) (emphasis

added).

The Seventh Circuit never considered this

compelling legislative history in its Chevron analysis,

let alone in Phase One. In so doing, the Seventh

Circuit ignored the legislative history of the FDCA and

ignored Congress’s clearly expressed intent that drugs

that meet the requirements of § 353(a) be exempt from

all of the labeling and packaging requirements of the

Act.

The Seventh Circuit also gave the FDA authority

that Congress specifically denied it. That is, the

Seventh Circuit granted the Secretary “options.” Had

Genendo shipped the Seized Lipitor to Washington,

D.C. (D.C. Circuit), Baltimore (Fourth Circuit), New

Orleans (Fifth Circuit), Cincinnati (Sixth Circuit),

Denver (Tenth Circuit), or Atlanta (Eleventh Circuit)

rather than Chicago (Seventh Circuit), the outcome in

this case would have been different because all of these

circuits would have considered the legislative history

demonstrating Congress’s intent that “any” means

“all.”

The Seventh Circuit’s decision cannot be reconciled

with Senator Copeland’s instruction that the drugs

“need not be labeled and so forth until after they are

ready actually to be sent to the ultimate consumer.”

The decision eviscerated § 353(a) directing that the

FDA exempt drugs that met the enumerated

requirements of § 353(a) from all the labeling and

packaging requirements of the Act.’ If the drugs had

’ The Exemption is exceedingly narrow, applying only to

packaging and labeling. The FDA argued that to give effect to the

congressional directive contained in Section 353(a) to exempt

to comply with the NDA prior to processing, there

would have been no reason for the exemption. It is,

after all, an exemption, and if not from the labeling

and packaging requirements of the NDA, then what?

Further proof is found in the fact that the section

requires no label at all, and of course, any drug that is

not labeled does not comply with the NDA, which

speaks to the fact that Congress precisely envisioned

all labeling and packaging (including any listed on the

NDA) were not required until the drug was removed

from the “processing, labeling, or repacking

establishment.” The Seventh Circuit’s decision makes

no sense given the legislative history. Had the

Seventh Circuit considered the legislative history of

the Act in Phase One of its Chevron analysis, there

could not be any doubt or ambiguity regarding the

definition of “any” in § 353(a) even without this Court’s

decision in Massachusetts v. EPA, 549 U.S. __, 1275S.

drugs that meet the requirements of Section 353(a) from any of

the labeling and packaging requirements of the Act would

eviscerate the new drug approval process. Nothing could be

further from the truth. The requirements of the new drug

approval process are extensive and are not limited to labeling and

packaging. They include manufacturing processes, formulation,

clinical trials, and substantial other requirements for a drug to be

an “approved” new drug. See 21 U.S.C. § 355(b)(1). Thus, it is a

complete distortion to claim that giving effect to Section 353(a)

would eviscerate the new drug approval process. It would simply

give effect to the plain statutory language as promulgated by

Congress that drugs that meet the requirements of Section 353(a)

are exempt from the “labeling and packaging” requirements of the

Act and then only while en route to and held by the repackager.

Oe ee ees 2

Ct. 1438 (2007). Senator Copeland’s statement clearly

announces the intent of Congress that the Secretary

was to promulgate regulations that exempted drugs

that met the other requirements of § 353(a) from all of

the labeling and packaging requirements of the Act.

This Court should grant the petition for writ of

certiorari because it gives the Court the opportunity to

clarify at what stage of the Chevron analysis it is

appropriate to use legislative history; gives this Court

an opportunity to end the circuit split and confusion on

this issue; and gives this Court the opportunity to

assure that courts will not inappropriately defer to

agency positions without considering the intent of

Congress as expressed in the legislative history and

the statute. In this case, the Seventh Circuit

recognized that Genendo’s interpretation of 353(a) was

entirely reasonable. Genendo, 485 F.3d at 963-964.

However, because the Seventh Circuit did not consider

the clear legislative history, it impermissably deferred

to the interpretation of the FDA.

II. Pursuant to Sup. Ct. Rule 10(c), the Seventh

Circuit Decided an Important Federal

Question Which Conflicts With This Court’s

2007 Decision in Massachusetts v. EPA

Regarding the Meaning of the Adjective “any”

in Comparable Statutory Language.

As in Massachusetts v. EPA,549 U.S. _—_—s, 1127S.

Ct. 1438 (2007), here too, “any” can only mean “all.” In

Massachusetts, this Court interpreted § 202(a){1) of

the Clean Air Act which provides that EPA “shall by

regulation prescribe . . . standards applicable to the

emission of any air pollutant of any class or classes of

new motor vehicles or new motor vehicle engines

which in [the Administrator’s] judgment cause, or

contribute to, air pollution which may reasonably be

anticipated to endanger public health or welfare.”

Massachusetts, 549 U.S. at , 127 S. Ct. 1459-1460

(emphasis added) (internal citation omitted). The EPA

refused, claiming it was not required to regulate

substances that contribute to climate change because

carbon dioxide is not an “air pollutant” within the

meaning of the provisions. 549 U.S. at ___, 1275S. Ct.

at 1459. However, this Court found “the definition

embraces all airborne compounds of whatever stripe,

and underscores that intent through the repeated use

of the word ‘any.” Massachusetts, 549 U.S. at__, 127

S. Ct. at 1460 (emphasis added). The Court held the

statute unambiguous and, therefore, the EPA’s

interpretation was not entitled to Chevron deference.

The particular meaning of “any” and the effect it

has on a phrase are always clear and unambiguous,

irrespective of context or function. “Any” can act as an

adverb, a pronoun, or an adjective. As an adverb, it

always precedes an adjective or adverb and has the

meaning “to any degree or extent” or “at all.” “Any” as

an adverb will be found in the following sentence:

“Had this brief been any longer, I would not have filed

it.” As a pronoun, “any” denotes one or more not

specifically defined people or things, as in: “All the

presidential candidates said they would debate one

another in Arlington, VA, but I doubt if any will

actually show up.”

“Any” can also serve as an adjective, its most

common use. Depending on context, “any” when used

as an adjective can mean “one,” “some,” “every,” or

“all.” The “any” that appears in § 353(a) functions as

an adjective and when “any” functions as an adjective,

it always precedes a noun (or noun phrase), “any

money” or “any labeling or packaging requirement of

this chapter....”

Grammatically, “any” in the context “exempting

from any labeling or packaging requirement of this

chapter” cannot mean one, some, or more, as the

district court and the Seventh Circuit ruled. The

“regulation” referenced in the section covers every and

all labeling and packaging requirement(s) of the

FDCA. The phrase cannot imply one, a limited

number, or no labeling and packaging requirements.

Under the Seventh Circuit’s decision, it could,

theoretically, mean “none,” which would have gutted

the explicit congressional direction contained in the

section. As written, the statute exempts both every

labeling and packaging requirement and all labeling

and packaging requirements in the Act. If Congress

had intended to limit the number of labeling and

packaging requirements to not mean all requirements,

but only one or several, Congress would have used the

following hypothetical language or some variation

thereof:

The Secretary is given the authority to

promulgate regulations that, at the discretion of

the Secretary, may exempt from certain labeling

or packaging requirements of this chapter drugs

and devices which are....

This language is actually close to the language that

Congress specifically amended away. 74 Cong. 363

(1938 reprinted 1987). Further unassailable support

is that the section’s inclusion of “directed”, coupled

with “from any”, eliminates any FDA discretion or

grammatical confusion. If Congress had intended to

confer discretion upon FDA, then Congress would have

used “may” or not stricken the word “authorized.” Jd.

Indeed, when FDA promulgated 21 C.F.R. § 201.150,

it clearly knew what Congress directed by itself then

incorporating “shall” into its regulation. It would be

senseless for Congress to mandate an exemption and

then allow the agency to promulgate regulations to not

exempt. Of course Congress did not do that. As

Senator Copeland stated “we have not given the

Secretary any option in the matter, but he must

perform this prescribed duty.” FDCA Leg. Rec. at 363.

CONCLUSION

This Court should grant the Petition for Writ of

Certiorari because:

1. The Seventh Circuit erred when it failed to

consider legislative history directly on point in Phase

One of its Chevron analysis; and

2. It is impossible, after this Court’s decision in

Massachusetts v. EPA, for “any”, as determined by the

Seventh Circuit, to be “ambiguous.”

Respectfully submitted,

GENENDO PHARMACEUTICAL N.V.

By:

Howard M. Hoffmann

Counsel of Record

Frederick R. Ball

DUANE MORRIS LLP

227 West Monroe Street

Suite 3400

Chicago, Illinois 60606

Telephone: (312) 499-6700

Facsimile: (312) 499-6701

Counsel for Petitioner

APPENDIX

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

No. 05-4608

[Filed July 10, 2007]

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

GENENDO PHARMACEUTICAL N.V.,

a Netherlands Antilles Corporation,

)

Defendant-Appellant. )

)

Appeal! from the United States District Court

for the Northern District of Illinois,

Eastern Division. No. 03 C 6495.

James F. Holderman, Chief Judge.

Before Honorable ILANA DIAMOND ROVNER,

Circuit Judge, Honorable TERENCE T. EVANS,

Circuit Judge, Honorable DIANE S. SYKES, Circuit

Judge.

ORDER

On consideration of the Petition for Rehearing en

Banc and Rehearing by the Panel filed by Defendant-

Appellant on June 25, 2007, no judge of the court

having called for a vote and all of the judges on the

original panel having voted to deny the Petition for

Rehearing,

IT IS HEREBY ORDERED that the Petition for

Rehearing en Banc and Rehearing by the Panel is

DENIED.

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

No. 05-4608

[Filed May 10, 2007]

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

GENENDO PHARMACEUTICAL, N.V.,

Defendant-Appellant.

i a

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 03 C 6495--James F. Holderman, Chief Judge.

Before ROVNER, EVANS, and SYKES, Circuit

Judges.

OPINION

ROVNER, Circuit Judge. This case involves

Genendo Pharmaceutical’s attempt to import

prescription drugs intended for sale in other countries

into the United States for repackaging and

distribution. Genendo maintains that the importation

is authorized pursuant to certain statutory exemptions

for drugs being repackaged within the United States.

The district court disagreed, and granted the United

States’ motion for seizure and condemnation of the

drugs, as well as a permanent injunction barring

further importation.

Genendo, located in Curacao, Netherlands Antilles,

purchases, trades, and sells pharmaceuticals. One

portion of its business includes obtaining prescription

drugs overseas and importing them into the United

States for resale. Some of the drugs it imports were

originally intended for sale outside of the United

States. As relevant here, in September 2003, Genendo

imported 60 boxes of prescription Lipitor containing 10

milligram tablets of Lipitor, and 48 boxes containing

20 milligram tablets of Lipitor.’ Lipitor is

manufactured by Pfizer, Incorporated and is used to

treat high cholesterol. Genendo purchased the Lipitor

in Brazil in order to import it into the United States.

Before importing the Lipitor, Genendo filed an

action for a declaratory judgment that its importation

of Lipitor was permissible under the Federal Food,

Drug, and Cosmetic Act (“the FDCA”). 21 U.S.C.

§§ 301-399. The United States successfully moved to

dismiss the action on the grounds that there was not

yet an agency action ripe for review. Several months

' The action initially also involved 24,990 tablets of 40 milligram

Zocor (another cholesterol-lowering drug).

later, Genendo imported, and the government seized,

the Lipitor.

At issue is whether the seized Lipitor is an

“unapproved new drug,” see 21 U.S.C. § 355(a),

because it does not comply in certain respects with the

existing FDA-approved New Drug Application for

Lipitor. The new drug approval process is one piece of

the FDCA’s comprehensive scheme regulating the

manufacture, sale, and importation of prescription

drugs. Before a drug is introduced into interstate

commerce, a drug manufacturer must obtain FDA

approval (specific to each drug and each manufacturer)

of the manufacturing process, labeling, and packaging

of the drug. 21 U.S.C. § 355(b)(1). The approval process

addresses the drug’s safety and effectiveness, id.

§ 355(b)(1)(A), its chemical composition, id.

§ 355(b)(1)(B), and how it is distributed--i.e., “the

methods used in, and the facilities and controls used

for, the manufacture, processing, and packing” and the

proposed labeling for the drug, id. §§ 355(b)(1)(D) &

(F). Thus, before gaining FDA approval for Lipitor as

a “new drug” under the FDCA, see 21 U.S.C. § 321(p),

Pfizer submitted a New Drug Application (“NDA”)

which contains, among other things, detailed

specifications regarding the drug’s manufacture and

packaging. See 21 U.S.C. § 355(a) (stating necessity of

an approved new drug application).

As relevant here, the NDA for Lipitor specifies the

following relating to its manufacture and packaging

for sale in the United States: (1) the Lipitor must be

manufactured at a Pfizer facility in Loughbeg, Ireland;

(2) it must be packaged in either Frieburg, Germany or

Vega Baja, Puerto Rico; (3) it must be packed in 100-

tablet boxes containing ten blister cards of ten tablets

each; and (4) it must be labeled in English.

Additionally, the NDA provides for a two-year

expiration period for Lipitor distributed in the United

States.

At the time the United States seized the Lipitor

imported by Genendo, it deviated from the FDA-

approved NDA in several important respects. First,

although it was manufactured in the listed Pfizer

facility in Ireland, it was packaged at a facility in Sao

Paulo, Brazil, instead of one of the NDA-approved

facilities in Frieburg, Germany or Vega Baja, Puerto

Rico. Secondly, it was packaged in boxes containing

thirty tablets, housed on three blister sheets of ten

tablets each, and labeled, not in English, but in

Portuguese. Lastly, the seized lots of Lipitor were

manufactured in January 2003 and February 2003,

and bore expiration dates of January 2006 and

February 2006, respectively--three years after the

manufacture date, as opposed to the two-year period

required by the NDA.

Genendo believes these deviations from the

requirements in the FDA-approved NDA are excused

by 21 U.S.C. § 353(a) and its implementing regulation,

21 C.F.R. § 201.150. Genendo claims § 353(a)

establishes an exemption from all] labeling and

packaging requirements in the FDCA, including the

NDA requirements, so long as a drug is en route to or

being held at an authorized drug repackager. Section

353(a), titled in part “Exemptions and consideration

for certain drugs,” provides as follows:

(a) Regulations for goods to be processed,

labeled, or repacked elsewhere

The Secretary is directed to promulgate

regulations exempting from any labeling or

packaging requirement of this chapter drugs

and devices which are, in accordance with the

practice of the trade, to be processed, labeled, or

repacked in substantial quantities at

establishments other than those where

originally processed or packed, on condition that

such drugs and devices are not adulterated or

misbranded under the provisions of this chapter

upon removal from such processing, labeling, or

repacking establishment.

21 U.S.C. § 353(a).

The regulation promulgated is 21 C.F.R. § 201.150,

which provides in pertinent part that a drug that will

be repackaged “shall be exempt, during the time of

introduction into and movement in _ interstate

commerce and the time of holding in such

establishment, from compliance with the labeling and

packaging requirements of sections 501(b) and 502(b),

(d), (e), (f), and (g) of the act” if, among other things,

there exists a written agreement--known as a

§ 201.150 agreement--that ensures the ultimate drugs

will not be adulterated or misbranded. See 21 C.F.R.

§ 201.150(a)(2).

At the time it was seized, the imported Lipitor was

destined for the Illinois corporation Phil & Kathy’s, an

FDA-registered repacker and labeler. Genendo had a

written § 201.150 agreement with Phil & Kathy’s for

the repacking and labeling of drugs for sale in the

United States. Before trial, the government filed a

seizure action for certain drugs held at Phil & Kathy’s,

and Phil & Kathy’s entered into a consent decree

resolving the government’s claims against it. Although

the government also contended in the district court

that Genendo’s § 201.150 agreement with Phil and

Kathy’s was inadequate, the court did not reach that

issue.

Instead, the district court held a one-day trial, and

ultimately ruled on the basis of the uncontested facts

that by importing the Lipitor, Genendo had

introduced unapproved new drugs into interstate

commerce in violation of 21 U.S.C. § 355(a). The court

concluded that reading the exemption in § 353(a) as

Genendo proposed would eviscerate the protections

afforded by the new drug approval process. It thus

attempted to harmonize the requirements of the new

drug approval process and the § 353(a) exemption by

reading the “labeling and packaging requirements”

referred to in § 353(a) to apply to general “labeling and

packaging, “but not the detailed requirements for

packaging set forth in the NDA, which the court

concluded were not affected by the exemption in

§ 353(a). The court also granted the government’s

request for condemnation of the drugs and injunctive

relief.

* The district court also concluded that the seized Zocor was an

unauthorized new drug, but Genendo does not appeal that

conclusion.

II.

The sole issue on appeal is whether the seized

Lipitor is an unapproved “new drug.” See 21 U.S.C.

§ 355(a). Since Genendo admits that the seized Lipitor

was not completely compliant with the NDA at the

time it was seized, the only relevant question is

whether, as Genendo maintains, § 353(a) exempts it

from compliance with the NDA. This is a question of

statutory interpretation subject to de novo review. See

Disability Rights Wis., Inc. v. Wis. Dep't of Pub.

Instruction, 463 F.3d 719, 724 (7th Cir. 2006). The

FDA argues that the labeling and packaging

requirements contained in the NDA are a critical piece

of the new drug approval process and must be adhered

to at all stages of the drug’s production and

distribution, and that § 353(a) does not change that.

Genendo, however, contends that because the Lipitor

was en route to an authorized repackager at the time

it was seized, it is exempt from all labeling and

packaging requirements, including all of those

contained in the NDA.

As athreshold matter, we must determine the level

of deference to be accorded the FDA’s interpretation of

§ 353(a). As the agency that administers the statute,

the FDA claims that its interpretation is entitled to

Chevron deference. See Chevron U.S.A., Inc. v. Natural

Res. Def. Counsel, Inc., 467 U.S. 837, 104 S. Ct. 2778,

81 L. Ed. 2d 694 (1984) (explaining deference due

agency's interpretation of statute it administers).

Genendo, however, claims that the unambiguous

language of § 353(a)--directing the Secretary to

promulgate regulations exempting certain drugs from

“any labeling or packaging requirement of this

10a

chapter”--compels the conclusion that the Lipitor is

exempt from all labeling and packaging requirements--

including those contained in the NDA. According to

Genendo, any other interpretation flies in the face of

the plain statutory language and is thus undeserving

of our deference. In determining what level of

deference to afford the FDA’s interpretation, we ask

first whether Congress has spoken to the precise

question at issue. Chevron, 467 U.S. at 842-43.

Genendo claims that it has done so in the form of

§ 353(a), and that the phrase “any labeling and

packaging requirement” necessarily ends the matter.

But § 353(a) simply directs “the Secretary” to

promulgate regulations exempting drugs en route toa

repackager from labeling and packaging requirements;

it does not itself provide for a complete exemption. See

Arner Co. v. United States, 142 F.2d 730, 736 (1st Cir.

1944) (“Had Congress intended an outright exemption

of bulk shipments from the labeling requirement

without restrictive terms of any sort, there would have

been no need for it to provide for regulations

formulating the exemption; the law would have simply

stated the exemption.”). The problem with Genendo’s

argument is that it largely ignores the fact that the

promulgated regulation, § 201.150, sets forth specific

labeling and packaging requirements from which

drugs being repackaged are exempt. The particular

sections of the FDCA referenced in § 201.150 relate to

the requirement that the package contain the name

and address of the manufacturer or distributor, a

statement of the quantity of the contents, the

established name of the drug, active and inactive

ingredients, and adequate warnings and directions for

use. See 21 U.S.C. §§ 351(b), 352(b), (d), (e), (f), and (g).

lla

Section 201.150 thus does not exempt drugs in transit

to or at a repackager from all labeling and packaging

requirements in the Act, as Genendo suggests--simply

those listed.

Thus the statute is not so crystal clear as Genendo

insists. Genendo’s argument flows from an unstated

belief that the word “any” in § 353(a) necessarily

means “all.” But that is not so. On the contrary, the

first definition given for the word any is “one, a, an, or

some.” Webster’s Unabridged Dictionary of the English

Language 96 (2d ed. 2001). Although the statute could

be read as if any meant all (the fourth possible

definition given for the word “any”), it could also be

read to give effect to the aforementioned definition of

“any’--as directing the Secretary to promulgate

regulations exempting drugs in transit to a repackager

from some labeling and packaging requirements

contained in the FDCA. See First Bank & Trust v.

Firstar Info. Servs., Corp., 276 F.3d 317, 325-26 (7th

Cir. 2001) (rejecting argument that phrase “any

services” in contract necessarily meant “all services”

and concluding that phrase was ambiguous). Given

that § 201.150 exempts drugs in transit only from

specified labeling and packaging requirements, the

Secretary apparently understood it to mean the latter.*

* After argument, Genendo filed a letter of supplemental authority

pursuant to Federal Rule of Appellate Procedure 28(j), calling the

panel’s attention to the recently decided Supreme Court case

Massachusetts v. E.P.A., 1127S. Ct. 1438, 167 L. Ed. 2d 248 (2007).

In Massachusetts, the Court interpreted the phrase “any air

pollutant” in the Clean Air Act to include carbon dioxide,

reasoning in part that the use of the word “any” suggested that

12a

Reading the statute in isolation, Genendo’s

interpretation may be a plausible one, but so too is the

FDA’s, particularly in light of the “well-accepted

principle that remedial legislation such as the Food,

Drug, and Cosmetic Act is to be given a liberal

construction consistent with the Act’s overriding

purpose to protect the public health.” United States v.

Baxter Healthcare Corp., 901 F.2d 1401, 1408 (1990)

(quoting United States v. Article of Drug . . . Bacto-

Unidisk. . ., 394 U.S. 784, 798, 89 S. Ct. 1410, 22 L.

Ed. 2d 726 (1969)). In short, there is enough ambiguity

in the statute that we ask only whether the FDA’s

interpretation is based on a permissible construction

the statute was intended to require regulation of all air

pollutants. Genendo argues that Massachusetts stands for the

proposition generally that the use of the word “any” in a statute

necessarily means “all.” Massachusetts, however, is not so broad.

First, the Court’s interpretation of the phrase “any air pollutant”

was guided by the Clean Air Act’s “sweeping definition of ‘air

pollutant,” a definition that embraced “all airborne compounds of

whatever stripe .. . through the repeated use of the word ‘any.” Jd.

at 1460 (emphasis added). The exemption in § 353(a) has no such

“sweeping” language, nor doesit contain anything else to convince

us that the word “any” necessarily means “all.” Nor does

Massachusetts itself stand for such a proposition. Indeed, the

Court cited with approval Dep’t of Hous. & Urban Dev. v. Rucker,

535 U.S. 125, 122 S. Ct. 1230, 152 L. Ed. 2d 258 (2002), where it

observed that the word “any” “has an expansive meaning, that is,

one or some, indiscriminately of whatever kind.” (emphasis

added). Massachusetts interpreted a particular statute in an

entirely different context, and concluded that in that case, “any”

meant “all.” The Court’s holding does not in any way imply that

in every case “any” means “all.”

13a

of the statute. Chevron, 467 U.S. at 843. Section

201.150's provision exempting drugs in transit from

only certain labeling and packaging requirements is a

permissible exercise of the authority delegated by the

statute, and is consistent with the public health

concerns animating the new drug approval process and

the FDCA as a whole. See id. at 843, 866 (agency’s

interpretation comporting with purposes of underlying

Clean Air Act Amendments is permissible given

ambiguity in statute). Thus, unless the regulation (and

the FDA’s interpretation of it) is “arbitrary, capricious,

or manifestly contrary to the statute,” we will defer to

it. Id. at 843-44.

We cannot say that the FDA’s interpretation of the

regulation and statute is “arbitrary, capricious, or

manifestly contrary to the statute.” Jd. at 843. Indeed,

the FDA’s interpretation makes good sense given that

§ 201.150 enumerates particular labeling and

packaging requirements from which drugs in transit

are exempt, and the NDA requirements are not among

those enumerated. This understanding of the statute

and regulation together is in keeping with our

observation in Baxter that the new drug approval

process “illustrates a congressional view that the way

in which drugs are mixed and packaged is no less

important than the chemical makeup of the drugs at

issue,” 901 F.2d at 1411. As the FDA points out, this

precise packaging operation is subject to compromise

if Genendo is given carte blanche to disregard the

specifications in the NDA. Genendo maintains that the

requirement in both § 353(a) and § 201.150 that the

ultimate repackaged drugs cannot be adulterated or

misbranded protects the consumer from any deviations

from the NDA that occur before the drugs are

l4a

repackaged. But even assuming a flawless repackaging

process at Phil & Kathy’s pursuant to a satisfactory

§ 201.150 agreement (an assumption the government

contests), certain deviations from the NDA’s

requirements are never rectified despite the

repackaging. Notably, the fact that the Lipitor was

packaged at an unapproved facility in Brazil can never

be brought into compliance with the NDA (unlike the

other deviations from the NDA such as the Portuguese

labeling, improper expiration dates, and numbers of

tablets in blister packs, which could theoretically be

later rectified). It would be odd indeed for the FDA to

go to such lengths to set up the process whereby

facilities are approved for packaging new drugs, and

yet allow drugs that will be repackaged to be packaged

in an unapproved facility. If such a result were

intended, we believe that the statute and

accompanying regulation would say so explicitly.

Genendo’s reliance on a Third Circuit case, United

States v. Kaybel, 430 F.2d 1346 (3d Cir. 1970), does not

convince us otherwise. In Kaybel the court overturned

a wholesale drug distributor’s conviction for

introducing an unapproved new drug into interstate

commerce. The court in Kaybel rejected the

government’s claim that the distributor needed to

obtain approval of an additional new drug application

before repacking a drug that complied in all respects

with an already approved NDA from 500-unit bottles

into 100-unit bottles. Id. at 1347. Not only does Kaybel

not deal with the exemption provision in § 353(a), its

application to Genendo’s situation is further limited by

the fact that the distributor in Kaybel was repackaging

a drug that was compliant in all respects with the

NDA, not attempting to remedy noncompliance

15a

through re-packaging. In short, we think Kaybel is far

less applicable than Genendo believes. Moreover, the

primary rationale in Kaybel--that other mechanisms

exist to prevent contamination of drugs by

repackagers--does not extend to the situation where

drugs are first packaged at an unapproved facility that

lacks the FDA oversight of the packaging facilities

listed in the NDA. See In re Canadian Imp. Antitrust

Litig., 470 F.3d 785, 789-90 (8th Cir. 2006) (explaining

importance of FDA oversight and FDCA labeling

requirements in excluding “noncompliant and

potentially unsafe pharmaceuticals”).

The FDA’s interpretation of § 353(a) and § 201.150

is entitled to deference, and it is neither arbitrary nor

capricious. Although § 353(a) may have been

interpreted as Genendo suggests, it is also open to the

construction provided by the FDA, and _ that

construction is entitled to deference under Chevron

and is consistent with the language of § 201.150. It

also comports with the underlying purposes of the

FDCA, which exists to protect aspects of “the lives and

health of people which, in the circumstances of modern

industrialism, are largely beyond self-protection.”

Arner, 142 F.2d at 736; see also Canadian Import, 470

F.3d at 790 (labeling requirements are “manifestation

of a congressional pian to create a ‘closed system’

designed to guarantee safe and effective drugs for

consumers in the United States”). In sum, the

exemption in § 353(a), as implemented by § 201.150,

does not excuse compliance with an FDA-approved

NDA, and thus the seized Lipitor, which Genendo

concedes is noncompliant, is an unapproved new drug.

See 21 U.S.C. § 355(a).

16a

III.

For the foregoing reasons, we affirm the judgment

of the district court.

17a

APPENDIX C

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF

ILLINOIS, EASTERN DIVISION

No. 03 C 6495

[Filed August 12, 2005]

UNITED STATES OF AMERICA,

Plaintiff,

¥.

1500 90-TABLET BOTTLES, more or less,

of an article of drug . . . and all articles

of drugs imported by Local Repack from

Genendo Pharmaceutical N.V.,...

Defendants-in-rem,

and

GENENDO PHARMACEUTICAL N.V.,

a Netherlands Antilles Corporation,

Defendant.

ee a ee a a a ee ae

MEMORANDUM OPINION AND ORDER

JAMES F. HOLDERMAN, District Judge:

18a

This is an action by the government for the seizure

and condemnation of certain prescription drugs and for

a permanent inunction. This court has jurisdiction

under 28 U.S.C. §§ 1331 and 1345, and under sections

332 and 334 of the Federal Food, Drug and Cosmetic

Act, 21 U.S.C. §§ 301 et seq (the “Act”). Defendant

Genendo Pharmaceutical N.V. (“Genendo”) has

asserted certain affirmative defenses that the

prescription drugs, which are the subject of this action,

are exempt from seizure and condemnation pursuant

to 21 U.S.C. § 353(a) and 21 C.F.R. § 201.150 and that

the government’s requested injunction therefore

should not issue.

Genendo is a corporation headquartered in

Curacao, Netherlands, Antilles. As a regular part of its

business, Genendo purchases, trades and sells

pharmaceuticals, including purchasing prescription

drugs worldwide and importing them to the United

States with the intention that they will be repackaged,

relabeled and then distributed to consumers in the

United States. Some of the drugs Genendo imports

were originally intended for distribution outside of the

United States. The prescription drugs that Genendo

introduced or caused to be introduced into interstate

commerce which are the subject of this action are:

Lipitor (“Seized Lipitor”), which Genendo purchased in

Brazil; and Zocor (“Imported Zocor”), which Genendo

purchased in Argentina. Upon its entry into interstate

commerce in the United States, the Imported Zocor,

after FDA inspecting and photographing, was

delivered to Phil & Kathy’s, Inc., of Richton Park,

Illinois (“Phil & Kathy’s) pursuant to an agreement

19a

between that company and Genendo.' Genendo had a

written agreement with Phil & Kathy’s regarding the

repackaging and labeling of prescription drugs for

human consumption ordered and paid for by Phil &

Kathy’s. The Seized Lipitor was seized by the

government upon its entry into interstate commerce,

and was held by the government. It was not delivered

to Phil & Kathy’s.

The government now seeks condemnation of the

Seized Lipitor and a permanent injunction against

Genendo. The government does not dispute that the

Seized Lipitor and Imported Zocor each have the same

chemical composition, as well as other similarities to

the respective drugs Lipitor and Zocor, that are sold

legally in the United States. The similarities to the

other respective drugs sold as Lipitor and Zocor in the

United States notwithstanding, the government

argues that the Seized Lipitor and Imported Zocor are

subject to condemnation as unapproved new drugs in

violation of 21 U.S.C. § 355(a), and misbranded drugs

in violation of 21 U.S.C. § 352. Genendo disagrees, and

relies upon an exemption embodied in 21 U.S.C.

' The Imported Zocor was seized by the government along with

other drugs after reaching Phil & Kathy’s. This action was

originally commenced by the government only against Phil &

Kathy’s for seizure of certain articles of drugs. The government’s

complaint was later amended to include Genendo, and Genendo

filed its Statement of Interest as to the Seized Lipitor (Dkt. No.

40). The government and certain principals of Phil & Kathy’s

entered into a consent decree resolving the claims of the

government as to Phil & Kathy’s. That consent decree was entered

by this court on April 9, 2004. (Dkt. No. 53.)

20a

§ 353(a) and 21 C.F.R. § 201.150 to argue that

condemnation should not occur. Genendo waived its

jury demand. A multi-day trial was set to begin on

May 2, 2005, but due to the fine efforts and

professionalism of counsel, the vast majority of the

facts were agreed to and the remaining facts were

presented to this court on the single day of May 2,

2005. For the following reasons, this court rules that

Genendo by importing the Seized Lipitor and the

Imported Zocor into the United States, introduced into

interstate commerce unapproved new drugs in

violation of 21 U.S.C. § 355(a). This court also grants

the government’s requested condemnation and

injunctive relief as to Genendo’s violations of 21 U.S.C.

§ 355.

COURT’S FINDINGS OF FACT’

B This action arises under the Constitution,

laws, or treaties of the United States of America.

2. Plaintiff is the United States of America.

? These facts are the uncontested facts as set forth in Attachment

(a) of the Amended Pretrial Order. (Dkt. No. 155.) This court

adopts these facts as its own. While evidence was presented to

this court on May 2, 2005, none of that evidence is necessary to

the disposition of this case. Accordingly, though a large part of Ms.

Deborah Autor’s testimony on May 2, 2005 was volunteered and

impermissible opinion, this court rules as moot Genendo’s pending

Motion in Limine to Exclude the Trial Testimony of Deborah

Autor.

2la

3. This action is one for injunctive relief and

seizure and condemnation under the Federal Food,

Drug, and Cosmetic Act, 21 U.S.C. §§ 301 et seq.

(“Act”).

4. The in rem defendants are articles of drugs

specifically, 60 boxes of Lipitor containing 10 mg

tablets of Lipitor (lot 304-37521) in blister packs of ten

tablets per blister sheet, 30 tablets per box, and 48

boxes containing 20 mg tablets of Lipitor (lot 304-

37528) in blister packs often tablets per blister sheet,

30 per box, located in the northern judicial district of

Illinois.

5. A substantial part of the events or omissions

giving rise to the claim occurred, or a substantial part

of property that is the subject of this action is situated

in the northern judicial district of Illinois.

Statutory and Legal Background

6. The United States Food and Drug

Administration (“FDA”) is authorized to implement,

administer, and enforce the Act. 21 U.S.C. § 393(d){2);

21 U.S.C. § 371(a).

2 Defendant Genendo admits that a drug held

for sale in interstate commerce that fails to meet the

requirements of 21 U.S.C. § 352(c) and 21 C.F.R.

§ 201.15(c)(1) is deemed to be misbranded as a matter

of law unless exempt by the Act.

8. Genendo admits that the packaging of a drug

can be critical to its safety and effectiveness.

22a

9. Genendo admits that 21 U.S.C. § 331(a)

prohibits the “introduction or delivery for introduction

into interstate commerce of any. . . drug. . . that is

adulterated or misbranded.”

10. Genendo admits that the Act prohibits

distribution in interstate commerce of unapproved new

drugs and that the definition of a “new drug” includes

any drug, “the composition of which is such that such

drug is not generally recognized among experts

qualified by scientific training and experience to

evaluate the safety and effectiveness of drugs, as safe

and effective for use under the conditions prescribed,

recommended, or suggested in the labeling thereof,

... 21 U.S.C. § 321(p)(1).

11. Genendo admits that pursuant to the Act, a

manufacturer must obtain FDA approval of a new

drug application (“NDA”) or an abbreviated new drug

application (“ANDA”) for each new drug before it may

legally be introduced into interstate commerce

pursuant to 21 U.S.C. § 355.

12. Genendo admits that an NDA must contain,

among other things, information regarding the

manufacturer and specification of the drug substance

including the name and address of the facility at which

it will be manufactured, the process and controls used

during manufacturing and packaging, the strength

and dosage form of the drug, the specifications related

to the drugs’ containers and closure systems, and the

labeling for the product.

13. Genendo admits that the Act requires that

the methods used in, and the facilities and controls

23a

used for, the manufacture, processing, packaging, and

holding of drugs conform to and be operated and

administered in conformity with, current good

manufacturing practice (“CGMP”).

14. Genendoadmits that 21 U.S.C. § 351(a)2\B)

provides that a drug shall be deemed adulterated “if it

is a drug and the methods used in, or the facilities or

controls used for, its manufacture, processing, packing,

or holding do not conform or are not operated or

administered in conformity with current good

manufacturing practice to assure that such drug meets

the requirements of [the Act] as to safety and has the

identity and strength, and meets the quality and

purity characteristics, which it purports or is

represented to possess.” Genendo further admits that

the failure to comply with CGMP adulterates a drug as

a matter of law.

15. 210U.S.C. § 353(a) states, in pertinent part:

The Secretary is directed to promulgate

regulations exempting from any labeling or

packaging requirement of this chapter drugs

and devices which are, in accordance with the

practice of the trade, to be processed, labeled, or

repackaged in substantial quantities at

establishments other than those where

originally processed or packed, on condition that

such drugs and devices are not adulterated or

misbranded under the provisions of this chapter

upon removal from such processing, labeling, or

repacking establishment.

24a

16. The FDA has issued Compliance Policy

Guides (“CPG”) and other guidance documents relating

to, among other things, repacking and labeling of

drugs.

Genendo’s Activities

17. Genendo is a corporation headquartered in

Curacao, Netherlands, Antilles. Genendo, as a regular

part of its business either individually or through

affiliates, purchases, trades and sells pharmaceuticals.

18. Genendois not licensed as a drug wholesaler

in any state in the United States.

19. Genendo’s importation of drugs into the

United States has occurred in interstate commerce.

20. Genendo admits that it caused tobe

imported pharmaceuticals to Phil & Kathy’s, on two

occasions not related to the in rem action involving the

Seized Lipitor.

21. Genendo admits that at least some of the

prescription drugs that Genendo imported into the

United States in 2003 were originally intended for

foreign distribution.

22. Genendo admits that some of the drugs that

it caused to be imported to Phil & Kathy’s Inc., were

not labeled in English.

23. Genendo introduced or caused tobe

introduced the Seized Lipitor in interstate commerce

intending to repackage and relabel it.

25a

24. Genendo’s prescription drug importation

activities are subject to the Act and any exemptions

that may be available under the Act and its

implementing regulations.

25. The Seized Lipitor bears foreign-language

labeling (i.e., Portuguese labeling).

The Seized Lipitor

26. On August 20,2003, Genendo filed an action

for Declaratory Judgment that imports such as the

Seized Lipitor were permitted under the Act.

27. The United States moved to dismiss the

declaratory judgment action on jurisdictional grounds;

specifically, there was no case or controversy because

there was no agency action ripe for review.

28. On December 23, 2003, Judge Andersen

granted the United States’s motion to dismiss.

29. In September, 2003, Genendo advised the

United States that it intended to import a shipment of

Lipitor.

30. |Genendo imported the Lipitor pursuant to an

invoice dated September 17, 2003.

31. In an October 24, 2003 letter to the United

States Attorney’s Office, Genendo advised the United

States that it intended to ship the Lipitor imported

pursuant to the September 17, 2003, invoice, to be

repackaged and labeled and then distributed and

dispensed.

26a

32. On or about December 16, 2003, the United

States seized the Lipitor that Genendo had imported

pursuant to the September 17, 2003, invoice.

33. The Seized Lipitor falls within the meaning

of 21 U.S.C. § 321(g), (i.e., articles of drugs).

34. Lipitor is a “new drug” under 21 U.S.C.

§ 321(p) of the Act.

35. Pfizer, Inc. (“Pfizer”) manufactures Lipitor.

36. Pfizer submitted an NDA for Lipitor to the

FDA for approval.

37. FDA assigned the number 20-702 to the

Lipitor NDA.

38. FDA approved the NDA for Lipitor

submitted by Pfizer.

39. APfizer facility located in Loughbeg, Ireland,

is identified in the FDA-approved NDA for Lipitor as

a manufacturing facility for Lipitor intended for sale

and distribution in the United States, including 10 mg

and Lipitor 20 mg dosage strengths.

40. FDA has conducted inspections of the Pfizer

Loughbeg, Ireland facility that is identified in the

approved NDA for Lipitor.

41. In the absence of an exemption, the only

labeling that FDA has approved for Lipitor intended

for sale in distribution in the United States is English-

language labeling.

27a

42. The expiration period in the FDA-approved

NDA for Lipitor in blister packages intended for sale

or distribution in the United States is two years from

the date of manufacture.

43. Genendo purchased the Seized Lipitor in

Brazil.

44. Genendoimported the Seized Lipitor into the

United States.

45. Lot numbers are used to identify and track

a specific batch of a drug.

46. The Lot numbers associated with the Seized

Lipitor are:

1. Lot 304-37521 (10 mg); and

2. Lot 304-37528 (20 mg).

47. The Lot numbers are printed on the boxes in

which the Seized Lipitor are packaged.

48. The manufacture dates for each lot of the

Seized Lipitor are:

1. Lot 304.37521 - January 16, 2003; and

2. Lot 304-37528 - February 18, 2003.

49. Pfizer shipped the tablets that became the

Seized Lipitor from Ireland in bulk containers.

28a

50. The labeling on the Seizer Lipitor is in

Portuguese; specifically, each “blister” sheet of 10

tablets and each 30 tablet box bears Portuguese

labeling.

51. The package inserts in the boxes of Seized

Lipitor are in Portuguese.

52. TheSeized Lipitor, which Genendo imported

on or about September 30, 2003 bears expiration dates

of January 2006 (10 mg, lot 304-37521) and February

2006 (20 mg, lot 304-37528).

53. The Seized Lipitor bears expiration dates

more than two years after the date of manufacture.

54. Plaintiff has not conducted any testing on

the chemical composition of the Seized Lipitor and

accordingly made no allegations in the Complaint that

the chemical composition of the Seized Lipitor differs

from that ofa similar dosage of Lipitor that Pfizer sells

in the United States.

55: The FDA-approved NDA for Lipitor lists

Lipitor that is destined for sale in the United States to

be packed in 100-tablet boxes containing 10 blister

cards for 10 tablets.

56. The FDA-approved NDA for Lipitor does not

list as packaging for Lipitor that is destined for sale in

the United States 30-tablet boxes containing 3 blister

cards of 10 tablets.

29a

57. On December 16, 2003, the date of the

seizure, the expiration period for the Seized Lipitor

had not run.

58. January 16, 2005, was two years from the

date of manufacture of the 10 mg Seized Lipitor (lot

304-27521), and February 18, 2005, was two years

from the date of manufacture of the 20 mg Seized

Lipitor (lot 304-37528). Blister-packed Lipitor that is

intended for sale or distribution in the United States

is subject to a two-year expiration period.

Imported Zocor

59. The 24,990 tablets of Zocor that are at issue

in this case (“Imported Zocor”) were manufactured by

Merck & Co., Inc. (“Merck”).

60. Genendo placed a purchase order for the

Imported Zocor in Argentina and the Zocor was

shipped from Argentina.

61. The Imported Zocor came from Merck lots

A2411M1, A1954L1, A1953L1, A1661L1, and

A1954L2.

62. The Imported Zocor is of 40 mg dosage

strength.

63. The labeling on the Imported Zocor was in

Spanish.

64. The package inserts for the Imported Zocor

were in Spanish.

30a

65. Zocor is a “new drug” under 21 U.S.C.

§ 321(p) of the Act.

66. Merck submitted an NDA for Zocor to FDA

for approval.

67. FDA assigned the number 19-766 to the

NDA for approval.

68. FDA approved Merck’s NDA for Zocor.

69. The FDA-approved NDA for Zocor identifies

only Merck facilities located in Caguas and Arecibo,

Puerto Rico, as the drug product manufacturing

establishments for 40 mg dosage strength Zocor

intended for sale or distribution in the United States.

70. The FDA-approved NDA for Zocor identifies

the Merck facility in Cramlington, United Kingdom, as

a drug product manufacturing establishment only for

80 mg Zocor.

71. The FDA-approved NDA for Zocor identifies

only the Merck facilities located in Caguas, Puerto

Rico and Wilson, North Carolina as packaging

establishments for Zocor intended for sale or

distribution in the United States.

72. The only labeling identified in the FDA-

approved NDA for Zocor intended for distribution in

the United States is in English.

73. |The FDA took photographs of the Imported

Zocor prior to its delivery to Phil & Kathy’s.

3la

The Agreement with Phil & Kathy’s

74. Phil & Kathy’s, is an Illinois corporation

located in Richton Park, Illinois.

75. Genendo, for some period of time, had a

written agreement with Phil & Kathy’s, regarding the

repackaging and labeling of prescription human drugs

ordered and paid for by Phil & Kathy’s.

76. Genendo has never had an agreement with

any entity other than Phil & Kathy’s regarding

repackaging and labeling of prescription drugs.

77. Joint Exhibit 12 is the Agreement between

Phil & Kathy’s and Genendo.

78. Prior to amending the complaint in this

action to add Genendo as a defendant, and to seek an

injunction against Phil & Kathy’s and certain of its

principals, the United States filed a seizure action

against certain articles of drug located at Phil &

Kathy’s in Richton Park, Illinois. The United States

and certain principals of Phil & Kathy’s entered into a

consent decree resolving the United States’ claims. The

court entered this consent decree on April 8, 2004.

79. 21 C.F.R. § 201.150 was promulgated

pursuant to 21 U.S.C. § 353(a).

Likelihood of Recurrence

80. Genendo denies that a drug that does not

meet all the requirements of the FDA-approved NDA,

32a

including the approved labeling, is an unapproved new

drug.

Supplemental Uncontested Facts’

Seized Lipitor

81. The Seized Lipitor was manufactured (i.e.,

formed into tablets) by Pfizer, in Loughbeg, Ireland.

82. www.pfizer.ie includes links to pages stating

that Lipitor is manufactured at the Loughbeg Drug

Product Plant in Loughbeg, Ireland.

83. Pfizer shipped the tablets that, when

packaged, became the Seized Lipitor, in bulk

containers to Laboratorios Pfizer Ltda., Guarulhos -

SP, Brazil.

84. The Seized Lipitor was packaged in “blister”

packs and then in boxes of 30 tablets (3 blister sheets

of 10 tablets each) at Laboratorios Pfizer Ltda.,

Guarulhos - Sao Paulo - SP, Brazil.

85. The only Pfizer manufacturing facilities

identified in the FDA-approved NDA for Lipitor are

those located in Loughbeg, Ireland, and Vega Baja,

Puerto Rico.

* These facts have been designated as “Supplemental” because

they were agreed to after the pretrial conference on April 27,

2005, and were then added to the uncontested facts through the

parties’ Agreed Motion to Amend Attachments A, B, C, and E of

the Final Pre-Trial Order (Dkt. No. 155.)

33a

86. Theonly Pfizer packaging facilities identified

in the FDA-approved NDA for Lipitor are those located

in Freiburg, Germany and Vega Baja, Puerto Rico.

87. The FDA-approved NDA for Lipitor does not

identify any packaging facility in Brazil for Lipitor.

88. Theonly labeling listed on the FDA-approved

NDA for Lipitor is English-language labeling.

89. The expiration period in the FDA-approved

NDA for Lipitor in blister packages in the United

States is two years from the date of manufacture.

90. FDA has never inspected any Brazilian

facility with respect to the packaging of Lipitor.

91. The Brazilian facility where the Seized

Lipitor was packaged is not a registered facility

pursuant to 21 U.S.C. § 360i with respect to 10mg and

20mg Lipitor.

92. Plaintiffhas not conducted any testing of the

Seized Lipitor.

93. The United States does not contend the

Seized Lipitor is counterfeit within the meaning of the

Act.

94. The expiration period for the Seized Lipitor

began to run on the day manufacturing was complete.

34a

Imported Zocor

95. In April 2003 Genendo caused tobe

introduced into interstate commerce 24, 990 tablets of

40 mg Zocor.

96. Genendo caused the Imported Zocor to be

imported pursuant an agreement with International

Pharmaceutical Exchange (“IPE”).

97. |Genendo purchased the Imported Zocor in

Argentina.

98. Thetabletsin Zocor lots A2411M1, A1954L1,

A1953L1, A1661L1, and A1954L2 were manufactured

(granulated, pressed, formed and coated) by Merck

(Merck Sharp & Dohme) in Argentina.

99. Thetabletsin Zocor lots A2411M1, A1954L1,

A1953L1, A1661L1, and A1954L2 were packaged in

blister packages and then in 30-tablet boxes by Merck

(Merck Sharp & Dohme) in Argentina.

100. FDA has never inspected any Argentinian

facility with respect to the manufacturing or packaging

of Zocor.

101. The FDA-approved NDA for Zocor does not

identify any manufacturing or packaging facilities in

Argentina for Zocor.

102. The Imported Zocor was delivered to Phil &

Kathy’s.

35a

The Agreement with Phil & Kathy’s

103. In certain circumstances registered firms

may repack and label drug products in compliance

with the Act and associated regulations.

104. Genendo’s intended destination for the

Seized Lipitor, prior to the seizure of the Seized

Lipitor, was a company called Phil & Kathy’s.

105. Genendo introduced the Seized Lipitor in

interstate commerce for repacking and relabeling by

Phil & Kathy’s.

106. Phil & Kathy’s d/b/a Local Repack asa

repacker and labeler is registered with the PDA as a

repacker and labeler and is inspected by the PDA.

107. Registered repackers and labelers routinely

repackage and label oral dosage forms of prescription

drugs.

108. The Seized Lipitor and Imported Zocor are

oral dosage forms of prescription drugs.

Likelihood of Recurrence

109. But for this lawsuit, Genendo would today be

importing into the United States solid oral dosage

forms of prescription human drugs that do not comply

in all respects with FDA-approved NDAs.

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LEGAL ANALYSIS AND CONCLUSIONS

The government puts forth two bases for

condemnation: (1) the Imported Zocor and Seized

Lipitor are unapproved new drugs prohibited by 21

U.S.C. §§ 355(a), 331(d); and (2) the Imported Zocor

and Seized Lipitor are misbraided drugs prohibited by

21 U.S.C. §§ 352(c), 331(a). Genendo responds that

pursuant to the exemption embodied in 21 U.S.C.

§ 353(a) and 21 C.F.R. § 201.150 (“§ 353(a)

exemption”), the Seized Lipitor is not an unapproved

new drug, and that neither the Imported Zocor nor the

Seized Lipitor are misbranded. The core dispute in this

case is the government’s first argument: whether the

§ 353(a) exemption excuses full compliance with the

requirements of the FDA-approved New Drug

Application (“NDA”) for the respective drugs. As

explained below, this court rules that the § 353(a)

exemption does not excuse compliance with an FDA-

approved NDA’s requirements. Thus, as relevant to

this case, a new drug’s failure to be manufactured

and/or packaged according to the exact requirements

of an FDA- approved NDA are not exempted by

§ 353(a) of the Act.

A “new drug” is any drug, “the composition of which

is such that such drug is not generally recognized

among experts... as safe and effective for use... .” 21

U.S.C. § 321(p)(1). It is undisputed that the Seized

Lipitor and Imported Zocor are both new drugs for

purposes of the Act. (Facts 79 34, 65.) The Act

prohibits the introduction of a new drug into interstate

commerce unless that new drug is the subject of an

37a

FDA-approved NDA. 21 U.S.C. § 355(a), 331(d).* In

other words, if a party wishes to introduce into

interstate commerce a “new drug,” such as the Seized

Lipitor and Imported Zocor, that party must first “file

with the Secretary” an NDA. 21 U.S.C. § 355(b)(1).

That NDA must contain certain information,

including: “(A) full reports of investigations which have

been made to show whether or not such drug is safe

.. .; (B) a full list of the articles used as components of

such drug; (C) a full statement of the manufacture,

processing, and packaging of such drug; (D) a full

description of the methods used in, and the facilities

and controls used for, the manufacture, processing and

packing of such drug; (E) . . . samples of such drug... ;

[and] (F) specimens of the labeling proposed to be used

for such drug.” 21 U.S.C. § 355(b)(1). Consistent with

§ 355(b)(1)(C), the FDA requires that an NDA include

* 21 U.S.C. § 355(a) states:

(a) Necessity of effective approval application

No person shall introduce or deliver for introduction

into interstate commerce any new drug, unless an

approval of an application filed pursuant to subsection (b)

or (j) of this section is effective with respect to such drug.

21 U.S.C. § 331 states in relevant part:

The following acts and the causing thereof are prohibited:

(a)...

(d) The introduction or delivery for introduction into

interstate commerce of any article in violation of section

344, 355, or 360bbb-3 of this title.

38a

detailed information as to the exact facilities that

manufacture and process the new drug. 21 C.F.R.

§ 314.50(d). Upon receipt of an NDA, the FDA reviews

it and decides whether or not to approve the NDA. 21

U.S.C. § 355(b)(1). If the FDA does not approve the

NDA for the proposed new drug, then that drug is an

unapproved new drug that cannot be introduced into

interstate commerce. 21 U.S.C. § 355(a).

Both Lipitor and Zocor are sold legally in the

United States pursuant to FDA-approved NDAs. The

Seized Lipitor and the Imported Zocor, however, do not

comply in all respects with the FDA-approved NDAs

for the respective drugs. Pfizer Inc. (“Pfizer”)

manufactures Lipitor and it is legally sold in the

United States pursuant to an FDA-approved NDA.

(Facts {9 35-38.) The only Pfizer manufacturing

facilities identified in the FDA-approved NDA for

Lipitor are those located in Loughbeg, Ireland, and

Vega Baja, Puerto Rico. (Jd. | 85.) The Seized Lipitor

was manufactured in Loughbeg, Ireland. Ud. 4 81.)

The only Pfizer packaging facilities identified in the

FDA-approved NDA for Lipitor are those located in

Freiburg, Germany and Vega Baja, Puerto Rico. (/d.

{ 86.) The Seized Lipitor was not packaged in either of

these facilities, it was packaged at Laboratorios Pfizer

Ltda., Guarulhos - Sao Paulo - SP, Brazil. (/d. J 84.)

The FDA-approved NDA for Lipitor does not identify

any packaging facility in Brazil for Lipitor. Ud. ] 87.)

The only labeling listed on the FDA-approved NDA for

Lipitor is English-language labeling. (Jd. J 8.) The

Seized Lipitor was not labeled in English, it was

labeled in Portugese. (Jd. 7 50-51.)

39a

Merck & Co., Inc. (“Merck”) manufactures Zocor

and it is legally sold in the United States pursuant to

an FDA-approved NDA. (Ud. 4 59, 61.) The FDA-

approved NDA for Zocor identifies only Merck facilities

located in Caguas and Arecibo, Puerto Rico, as the

manufacturing facilities for the 40 mg dosage strength

Zocor intended for sale in the United States. (Jd. J 69.)

The Imported Zocor is of 40 mg dosage strength. (/d.

{ 62.) The Imported Zocor was manufactured by Merck

in Argentina. (/d. Supp. 14 98, 99.) The FDA-approved

NDA for Zocor does not identify any manufacturing or

packaging facilities in Argentina for Zocor. (Jd. ¥ 101.)

The only labeling identified in the FDA-approved NDA

for Zocor intended for distribution in the United States

is English. (Id. | 72.) The labeling on the Imported

Zocor was not in English, but in Spanish. (/d. { 63.)

The failure of the Seized Lipitor and the Imported

Zocor to comply with the requirements of the FDA-

approved NDAs means that those drugs cannot be

introduced into interstate commerce under the cover of

the respective FDA-approved NDAs. An FDA-approved

NDA is in effect an approved “recipe” for making a

drug. See United States v. Baxter Healthcare Corp.,

901 F’2d 1401, 1412 (7th Cir. 1990). That recipe

includes not only the chemical composition of the drug,

but also the procedure used in creating the drug. As

the Seventh Circuit stated, the detailed requirements

of the new drug approval process of § 355 reflect “a

Congressional view that the way in which drugs are

mixed and packaged is no less important than the

chemical makeup of the drugs.” Jd. at 1411. Therefore,

it is not enough that the Imported Zocor and Seized

Lipitor share the same chemical makeup of FDA-

approved Zocor and Lipitor sold in the United States.

40a

To be introduced into interstate commerce under the

cover of an FDA-approved NDA, the drugs must

comply with all requirements of that NDA. Id. The

drugs at issue here do not. The Imported Zocor was

manufactures at a facility not listed on the FDA-

approved NDA for Zocor. The Seized Lipitor was

packaged at a facility not listed on the FDA-approved

NDA for Lipitor. Accordingly, the FDA has not

approved the conditions under which the Imported

Zocor was manufactured, and, similarly, the FDA has

not approved the conditions under which the Seized

Lipitor was packaged. The failure to comply with the

requirements of the FDA-approved NDAs means that

the Imported Zocor and Seized Lipitor cannot be

introduced into interstate commerce pursuant to the

FDA-approved NDAs for Zocor and Lipitor. The result

is that the Imported Zocor and Seized Lipitor are

unapproved new drugs that cannot lawfully be

introduced into interstate commerce. 21 U.S.C.

§ 355(a), 331(d).

Genendo concedes, as it must, that the Imported

Zocor is an unapproved new drug because it was

manufactured at a location not listed on the FDA-

approved NDA.°* As to the Seized Lipitor, however,

Genendo argues that its failure to comply with the

FDA-approved NDA’s packaging requirement is

excused by the § 353(a) exemption, and, that if the

Seized Lipitor had been allowed to be repackaged at a

* As stated in its Closing Argument, “Genendo does not contend

that the imported drugs need not be manufactured, as opposed to

packaged or labeled, in a facility listed on the NDA.. .” (Dkt. No.

172, at 14 n. 10.)

4la

facility (regardless of whether that facility is listed on

the relevant FDA-approved NDA) “it would have been

in complete compliance with the Act.” (Dkt. No. 172 at

22.) This court disagrees. The § 353(a) exemption

states, in relevant part:

The Secretary is directed to promulgate

regulations exempting from any labeling or

packaging requirement of this chapter drugs

and devices which are, in accordance with the

practice of the trade, to be processed, labeled, or

repacked in substantial quantities at

establishments other than those where

originally processed or packed ....

21 U.S.C. § 353(a). The PDA promulgated 21 C.F.R.

§ 201.150 in response to the § 353 exemption.

According to Genendo, the FDA must recognize the

Seized Lipitor as exempted from the FDA-approved

NDA’s “packaging requirement,” because the Seized

Lipitor will be “repacked” at an establishment “other

than [that] where originally . . . packed” pursuant to

the § 353(a) exemption. 21 U.S.C. § 353(a).

It is clear, as the government argues, that to accept

Genendo’s argument regarding the § 353(a) exemption

would necessarily lead to the evisceration of the

protections afforded by the new drug approval process.

The Seized Lipitor was not packaged at a facility listed

on the FDA-approved NDA, and Genendo has no

intention of having the Seized Lipitor, or any other

similar drug that it might import, packaged at

facilities listed on the relevant FDA-approved NDA.

Genendo’s position is that because of the § 353(a)

exemption, the labeling and packaging requirements

42a

of the FDA-approved NDA are “irrelevant.” (Dkt. No.

172 at 21.) In support, Genendo argues that to rule

otherwise would eviscerate the § 353(a) exemption.

Thus, the issue this court is presented with, as

Genendo frames it, is to either side with the

government, thereby eviscerating the § 353(a)

exemption, or to side with Genendo, thereby

eviscerating the new drug approval process.

If compelled to choose, this court would eviscerate

the § 353(a) exemption and leave the new drug

approval process unscathed. As the Supreme Court

has recognized, the Act “touches phases of the lives

and health of peopie which, in the circumstances of

modern industrialism, are largely beyond self-

protection,” United States v. Dotterweich, 320 U.S. 277,

280, 64 S. Ct. 134, 88 L. Ed. 48 (1943), and as such it

is a “well-accepted principle that [the Act] is to be

given a liberal construction consistent with the Act’s

overriding purpose to protect the public health.”

Baxter, 901 F.2d at 1408 (quoting United States v. An

Article of Drug . . . Bacto-Unidisk . . ., 394 U.S. 784,

798, 89 S.Ct. 1410, 1418, 22 L.Ed.2d 726 (1969)).

Maintaining the panoply of the new drug approval

process at the expense of the § 353(a) exemption is

more consistent with protecting the public health than

avoiding interfering with certain commercial activity

at the expense of the new drug approval process.

Therefore, if necessary, the § 353(a) exemption must

give way to the new drug approval process.

This court, however, has an “obligation to construe

the two statutory provisions at issue in this case in

such a way as to avoid conflicts between them, if such

a construction is possible and reasonable.” Precision

43a

Indus., Inc. v. Qualitech Steel SBQ, LLC, 327 F.3d 537,

544 (7th Cir. 2003). As the Supreme Court observed,

and the Seventh Circuit reiterated:

We ‘are not at liberty to pick and choose among

congressional enactments, and when two

statutes are capable of co-existence, it is the

duty of the courts, absent a clearly expressed

congressional intention to the contrary, to

regard each as effective.’ Morton v. Mancari,

417 U.S. 535, 551, 94 S.Ct. 2474, 2483, 41

L.Ed.2d 290 (1974). We should read federal

statutes ‘to give effect to each if we can do so

while preserving their sense and purpose.’ Watt

v. Alaska, 451 U.S. 259, 267, 101 S.Ct. 1673,

1678, 68 L. Ed. 2d 80 (1981); see also United

States v. Fausto, 484 U.S. 439, 453, 108 S.Ct.

668, 676-77, 98 L.Ed.2d 830 (1988).

Precision Indus., Inc., 327 F.3d at 544 (citations

omitted). The new drug approval process embodied in

§ 355 and the § 353(a) exemption can be construed in

a way “to give effect to each . . . while preserving their

sense and purpose.” Jd. This requires distinguishing

between general “labeling” and “packaging”

requirements and the “labeling” and “packaging”

requirements of an FDA-approved NDA. The former

are regulated in various ways by the Act, 21 U.S.C.

§ 352, but the latter are given special treatment under

the Act in that they are ingredients of an FDA-

approved recipe as provided for in § 355. As the

government correctly argues, the “packaging” and

“labeling” ingredient of an FDA-approved NDA

includes more than just a type of packaging with

descriptive terms. It also includes the “methods used

44a

in, and the facilities and controls used for, the. . .

processing and packing of such drug.” 21 U.S.C.

§ 355(b)(1)(D). Thus, according to the plain language

of the statute, the packaging of a new drug does not

just refer to the material that encases a drug, but also

includes the method by which the drug is packaged

and the facility where the drug is packaged. Genendo,

through its repacker, may be able to replicate the type

of packaging material, but it cannot replicate the

combination of the FDA-approved facility and method

for packaging as to a specific drug.

Nothing in the plain language of the exemption, or

in the legislative history provided to the court by the

parties, suggests any intent on the part of Congress to

allow any drug importer to make changes to the FDA-

approved NDA for a drug.® In fact, the Act has detailed

provisions for approving changes to an already

approved NDA. 21 U.S.C. § 356a; 21 C.F.R. § 314.70.

In other words, nothing in the § 353(a) exemption

suggests an intent to exempt changes in the FDA-

approved recipe for a new drug, and this court will not

construe the statutory provisions to allow Genendo to

make such changes. Spokane & Inland Empire RR Co.

v. United States, 241 U.S. 344, 350, 36S. Ct. 668, 60 L.

° The First Circuit has explained that the purpose of the § 353(a)

exemption was to “avoid unwarranted interferences with certain

legitimate commercial operations, such as the canning of food at

branch canneries and delivery to a central pliant for labeling, or

the bulk shipment of crude drugs for processing and repacking

before distribution to consumers.” Arner Co. v. United States, 142

F.2d 730, 734 n.3 (1st Cir. 1944) (citing Sen. Rep. No. 493, 73rd

Cong., 2d Sess., 1934).

45a

Ed. 1037 (1916) (“[elxceptions from a general policy

which a law embodies should be strictly construed;

that is, should be interpreted as not to destroy the

remedial process intended to be accomplished by the

enactment.”) Reading the § 353(a) exemption to apply

to “labeling” and “packaging” requirements, but not to

the detailed requirements of an FDA-approved NDA,

which admittedly include labeling and packaging

requirements, gives the exemption effect without

intruding on the new drug approval process.

This conclusion is not affected by United States v.

Kaybel, 430 F.2d 1346 (3d Cir. 1970) as Genendo

argues. In Kaybel, the defendants were charged with

criminal violations of the Act for introducing into

interstate commerce unapproved new drugs, or, in

other words, the defendants were charged with

distributing new drugs for which no FDA-approved

NDA was effective. Jd. at 1347. Specifically, the

defendants were distributing into interstate commerce

Enovid 5 mg. Jd. As the Third Circuit explained, that

Enovid 5 mg. was sold legally in the United States

pursuant to an FDA-approved NDA:

Before placing [the Enovid 5mg.] on the market,

{the original manufacturer] filed a new drug

application with the Food and Drug

Administration as required by the Food, Drug,

and Cosmetic Act. 21 U.S.C. § 355. The

application was approved and became effective

on March 9, 1961. While this approvai was in

effect, [the defendants] repackaged Enovid 5

mg. tablets from the manufacturer’s original

500-unit bottles into its own 100-unit bottles,

46a

and sold the repackaged drug in interstate

commerce.

Id. at 1347. What is important to note from this

excerpt is that the defendants in Kaybel were

repackaging drugs that were compliant with an FDA-

approved NDA. The Third Circuit eventually held that

the repackaging of drugs that were compliant with an

FDA-approved NDA did not violate § 355. But in this

case, the Seized Lipitor was not compliant with an

_ FDA-approved NDA, and Genendo has no intention of

making the Seized Lipitor compliant because Genendo

did not intend to have the drug packaged or

repackaged at a facility listed on the FDA-approved

NDA for Lipitor. Thus, Kaybel is distinguishable from

this case. And even if Kaybel supported the proposition

that a new drug need not be packaged according to the

requirements of an FDA-approved NDA, this court

believes that view would be inconsistent with that

espoused by the Seventh Circuit. Baxter, 901 F.2d at

1412 (explaining that § 355 “reflects a Congressional

view that the way in which drugs are mixed and

packaged is no less important than the chemical

makeup of the drugs).

Accordingly, as to the Seized Lipitor, this court

rules that it is subject to condemnation as an

unapproved new drug.’ 21 U.S.C. §§ 334, 355(a). The

Seized Lipitor is a new drug. It is not the subject of an

FDA-approved NDA because it does not comply with

' The court rules, even though Genendo has already conceded it,

that the Imported Zocor is also an unapproved new drug. 21

ULS.C. §§ 355(a), 331d).

47a

all the requirements of the relevant FDA-approved

NDA. Finally, its lack of compliance with an FDA-

approved NDA is not excused by § 353(a), because that

statutory provision does not provide an exemption

from the new drug approval requirements of § 355.

The government has also requested injunctive relief

pursuant to § 332(a), which this court finds

appropriate and necessary with regard to Genendo’s

activity of introducing into interstate commerce drugs

prohibited by § 355. When the government seeks an

injunction pursuant to a statute protecting the public

health, the government need only show that the

defendant has violated the statute and that there is

some “cognizable danger of recurrent violations.”

United States v. W.T. Grant Co., 345 U.S. 629, 633, 73

S. Ct. 894, 97 L. Ed. 1303 (1953); SEC v. Holschuh,

694 F.2d 130, 144 (7th Cir. 1982). Genendo has at least

twice introduced or caused to be introduced into

interstate commerce drugs that violate § 355 of the

Act. Such past misconduct is “highly suggestive of the

likelihood of future violations.” CFTC v. Hunt, 591

F.2d 1211, 1220 (7th Cir. 1979) (citation omitted). It is

also significant that Genendo has continued to assert

that its conduct does not violate the Act. Id. Finally, it

is an uncontested fact, that “but for this lawsuit,

Genendo would today be importing into the United

States solid oral dosage forms of prescription human

drugs that do not comply in all respects with FDA-

approved NDAs.” (Facts { 109.) Given this admission

from Genendo that absent legal action it will continue

to import drugs that violate 3 355, it is clear that

injunctive relief is necessary to prohibit Genendo from

48a

introducing into interstate commerce unapproved new

drugs prohibited by § 355.°

CONCLUSION

Accordingly, the Seized Lipitor is subject to

condemnation, and, therefore, the government may

proceed to condemn the Seized Lipitor under 21 U.S.C.

§ 334(a) because it is an unapproved new drug that

has been introduced into interstate commerce as

prohibited by § 355(a). Genendo violates 21 U.S.C.

§ 331(d) by introducing into interstate commerce and

causing the introduction and delivery for introduction

* The court’s ruling makes it unnecessary to rule on the other

issues presented by the parties. As Genendo’s activities at issue

here do not fall within the § 353(a) exemption, it is unnecessary

to determine whether the agreement Genendo had with Phil &

Kathy’s satisfies the requirements of 21 C.F.R. § 201.150.

Furthermore it is unnecessary for this court to determine the

overlapping issue of whether the drugs in this case are also

misbranded pursuant to 21 U.S.C. § 352(c). The injunction this

court is issuing barring Genendo from introducing into drugs into

interstate commerce that violate § 355 will prohibit the

introduction of drugs like the Imported Zocor and Seized Lipitor.

There are no facts in the record indicating that Genendo has or

will violate § 352(c) without also violating § 355, and the

uncontested facts establish only that Genendo, absent this

lawsuit, intended to continue to import drugs that “don not

comply in all respects with FDA-approved NDAs.” (Facts { 109.)

This court has enjoined that activity. Therefore, any drugs

Genendo imports must be NDA compliant, which means the

drug’s labeling must comply with the relevant FDA-approve NDA.

21 U.S.C. § 355(bK 1) F).

49a

into interstate commerce “new drugs” within the

meaning of 21 U.S.C. § 321(p), which do not comply

with the specifications of a New Drug Application

approved by FDA that meets the requirements of 21

U.S.C. § 355(b) and (d). Defendant Genendo, its

officers, agents, servants, employees, and attorneys,

and those persons in active concert or participation

with them who receive actual notice of this order by

personal service or otherwise are hereby permanently

enjoined from introducing into interstate commerce

unapproved new drugs in violation of 21 U.S.C.

§§ 331(d); 355.

ENTER:

JAMES F. HOLDERMAN

United States District Court Judge

Date: August 12, 2005.

50a

JUDGMENT IN A CIVIL CASE

Decision by Court. This action came to trial before

the Court. The issues have been tried and a decision

has been rendered.

IT IS HEREBY ORDERED AND ADJUDGED that

Permanent Injunction is granted in favor of plaintiff

United States of America and against defendant

Genendo Pharmaceutical N.V.

Date: 8/12/2005

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.