# Amicus Curiae Brief — Weinberger v. Hynson, Westcott & Dunning, Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386414_0169%3A19 ## Record - **Collection:** Supreme Court brief - **Document type:** Amicus Curiae Brief - **Published:** January 1, 1973 - **Citation:** 412 U.S. 609 ## Text INDEX MOTION FOR LEAVE TO FILE BRIEF .................... INTEREST OF AMICUS CURIAE © INTRODUCTION AND SUMMARY OF ARGU- Pen acg estes senses ates esiadee eek ARGUMENT I. II. ) Ill. A Manufacturer Is Entitled to a Hearing on any Genuine Issue of Material Fact Before Withdrawal of Approval of a New Drug Appli- ee a ee ee eee Under the Food, Drug, and Cosmetic Act, the Courts Have Exclusive Jurisdiction, in En- forcement and Declaratory Judgment Actions, to Determine Whether a Product is a “New Drug’’.. The Fourth Circuit Improperly Denied “Grand- father” Protection Under Section 107(c) (4) of the 1962 Drug Amendments to Products Which Were Neither ‘““New” nor Covered by an Effective New Drug Application on the Day Be- fore the Enactment Date of the Amendments.... A. The Grandfather Clause Must Be Construed in Light of Congress’ Basic Intention to Apply the Effectiveness Requirement Only to New Products and New Claims for Old DUNES cccispectsh ects Ee ee ie ee B. The Construction Urged by the Government Would Render Section 107(c) (4) Meaning- |. | etanela RIA RE on ae eee BOAT T E nan, PREM emirate: C. The Fourth Circuit Erred in Relying upon the “Surplusage” Argument _......000....0020.... colgp t SSS! (0) 5 Eetneteamnatee ein nsnaie tenet bane nmair ncaa yarn Sears ane 26 41 45 49 51 55 II CITATIONS CASES: Page Abbott Laboratories v. Gardner, 387 U.S. 136 (1967) 2, 30 Adickes v. S. H. Kress & Co., 398 U.S. 144 (1970).. 13 American Home Prods. Corp. v. Finch, 303 F. Supp. 448 (D. Del. 1969) 16 American Public Health Ass’n v. Veneman, 349 F. Sapp. 1SEE 69D. TOT2) nccnccsn eccrine 25 AMP, Inc. Vv. Gardner, 389 F.2d 825 (2d Cir.), cert. denied, 393 U.S. 825 (1968) -.................. 30, 31, 32 Bell v. Burson, 402 U.S. 535 (1971) -...............-.-. 10 Bell v. Goddard, 366 F.2d 177 (7th Cir. 1966) -.... 13 Boddie v. Connecticut, 401 U.S. 371 (1971) -........ 10 Boston & M.R.R. v. United States, 162 F. Supp. 289 (D. Mass.), appeal dismissed, 358 U.S. 68 CT cries 35 Cameron v. Vancouver Plywood Corp., 266 F.2d CG COU Oe TOY cesses 13 Ciba-Geigy Corp. Vv. Richardson, 446 F.2d 466 (2d 51 ae Lf & 5 earn en ve 16 Clayton v. James B. Clow & Se 154 F. Supp. 108 (N.D. Ill. 1957) 2-02-22 12 Dyestuffs & Chemicals, Inc. v. Flemming, 271 F.2d 281 (8th Cir. 1959), cert. denied, 362 U.S. 911 CY cn a cacao trey epee ere eeeeeeevey ee 11 Durovic v. Richardson, 327 F. Supp. 386 (N.D. } || Fae C7 5 nnn ee 30, 31 Flemming v. Florida Citrus Exchange, 358 U.S. 153 (1958) .....-......---.....- 1l FPC v. Louisiana Power & Light Co., 406 U.S. yA Me 6 Lf {2 ae ae eee ea ea nee 39 FPC v. Texaco, Inc., 377 U.S. 33 (1964) -............... 11, 20 Frozen Food Express v. United States, 351 U.S. 40 51, ) ae ae ee ne Pen NPs eer 36 Goldberg v. Kelly, 397 U.S. 254 (1970) ..............-.. 10, 24 Greene V. McElroy, 360 U.S. 474 (1959) ..........--.... 10 Ill CITATIONS—Continued Hornsby v. Allen, 326 F.2d 605 (5th Cir. 1964)... Hynson, Westcott & Dunning, Inc. v. Finch (D. Md., Civ. No. 21112, Sept. 16, 1970) ................... ICC v. Louisville & Nashville R. Co., 227 U.S. 88 (1918) . In re Winship, 397 U.S. 358 (1970) International Harvester Co. v. Ruckelshaus (D.C. Cir. No. 72-1517, Feb. 10, 1973) —...........20022..... Kelly v. Wyman, 294 F. Supp. 893 (S.D.N.Y. 1968) Koepke v. Fontecchio, 177 F.2d 125 (9th Cir. 1949) _. Lemmon Pharmacal Co. v. Richardson, 319 F. Supp. 375 (E.D. Pa. 1970) _.......... 7 Marine Engineers Beneficial Ass’n v. Interlake S.S. Co., 370 U.S. 173 (1962) Merritt Corp. v. Folsom, 165 F. Supp. 418 (D.D.C. 1958) Morgan V. United States, 304 U.S. 1 (1938) -.......... Myers Vv. Bethlehem Shipbuilding Corp., 303 U.S. 41 (1988) _.................. NLRB Vv. Bata Shoe Co., 377 F.2d 821 (4th Cir.), cert. denied, 389 U.S. 917 (1967) - NLRB v. Smith Industries, Inc., 403 F.2d 889 (5th Cir. 1968) Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186 (1946) Pharmaceutical Mfrs. Ass’n V. Gardner, 381 F.2d 271 (D.C. Cir. 1967) Pharmaceutical Mfrs. Ass’n V. Richardson, 318 F. Supp. 301 (D. Del. 1970) 2, 16, Philadelphia Co. v. SEC, 175 F.2d 808 (D.C. Cir. 1948), vacated as moot, 387 U.S. 901 (1949) .... Red Lion Broadcasting Co. v. FCC, 395 U.S. 367 6.) eee a ee ee Ricci v. Chicago Mercantile Exchange, 93 S. Ct. 573 CDOTS ) oo vcnscsntncecnte cepa cecsntinsnenssicasioenensnasadcsiescsanesiecestensenst 12 30, 31 38 18, 19 10 IV CITATIONS—Continued Rosado v. Wyman, 397 U.S. 397 (1970) ..........-...... Silver v. New York Stock Exchange, 373 U.S. 341 CL) ee een ee Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. OT CGY, aio cciscee cisternae nes Tara Industries, Inc. v. Finch, CCH Food, Drug & Cosm. L. Rptr. 7 40,816 (D.D.C. 1970) .......... Toebelman vV. Missouri-Kansas Pipe Line Co., 130 F.2d 1016 (3rd Cir. 1942) 00. Turkel v. FDA, 334 F.2d 844 (6th Cir. 1964), cert. denied, 379 U.S. 990 (1965) 2.22002. Ubiotica Corp. Vv. FDA, 427 F.2d 376 (6th Cir. by) ) ec er ae rer eee United States v. Allan Drug Corp., 357 F.2d 713 (10th Cir.), cert. denied, 385 U.S. 899 (1966) .. United States v. Article of Drug .. . Bentex Uleerine, 469 F.2d 875 (5th Cir. 1972) _........... United States v. Article of Drug ... Excedrin PM, CCH Food, Drug & Cosm. L. Rptr. { 40,486 (E.D.N.Y. No. 70-C-77, March 5, 1971).............. United States v. Article of Drug ... Furestrol, 415 . F.2d 390 (5th Cir. 1969) (per curiam) ......... 31, 32, 33 United States v. Article of Drug ... Line Away, 284 F. Supp. 107 (D. Del. 1968), aff’d on other grounds, 415 F.2d 369 (3d Cir. 1969) —.............. 31, 33 United States v. Article of Drug . . . Magic Secret, 331 F. Supp. 912 (D. Md. 1971) _.........---------.. 31 United States v. Articles of Drug . . . Quick O-Ver, 274 F. Supp. 443 (D. Md. 1967) ....................... 31, 33, 40 United States v. Article of Drug . . . Quinaglute, 268 F. Supp. 245 (E.D. Mo. 1967) _........................ 31 United States v. Article of Drug . . . Sudden Change, 409 F.2d 734 (2d Cir. 1969) ................. 31 United States v. Diebold, Inc., 369 U.S. 654 6 en 13 United States v. 41 Cases ... Myconox & Ferro- Lac, 420 F.2d 1126 (5th Cir. 1970) .......22.000.20...... 31 a V CITATIONS—Continued Page United States v. Lanpar Co., 293 F. Supp. 147 ADD. TOR: 1968 ) icici eee 32 United States v. Seven Cartons .. . Ferro-Lac, 424 F.2d 1864 (7th Cir. 1970) 2.000022 31 United States v. Storer Broadcasting Co., 351 U.S. 192 (1956) eigseeieanseanesvidaneeteee eee 11, 20 United States v. 354 Bulk Cartons ... Trim Re- ducing-Aid Cigarettes, 178 F. Supp. 847 (D.N.J. LS) oe ene 31, 32 Upjohn Co. Vv. Finch, 422 F.2d 944 (6th Cir. 1970) _......... peed ecincwa pes eter pee cenweswedeny peevavreeoneesees 16 Upjohn Co. Vv. Finch, 303 F. Supp. 241 (W.D. Mich. 1969) 2222000022220 eee eee 16 ’ USV Pharmaceutical Corp. v. Secretary of Health, Education & Welfare, 466 F.2d 455 (D.C) Cir. DOTY, oceanic Na .. 14, 16 STATUTES AND REGULATIONS: Administrative Procedure Act, 5 U.S.C. § 551 et seq.: Section 5(d), 5 U.S.C. § 554(d) —..- 14 Section 5(e), 5 U.S.C. §554(e) 0. 34, 35, 36 Section 10(e), 5 U.S.C. § 706(2)(E) —.......... 24 Declaratory Judgment Act, 28 U.S.C. §§ 2201-02.. 36 Drug Amendments of 1962, P.L. 87-781, 76 Stat. 780 et seq.: oe ie 72 en 29 oat Uae LG Coo 8 04 een ne on re 42 Section 107(c) (3) —................. 8, 41, 42, 47, 51, 52, 53 Section 107(c) (4) ~........... 3, 7, 8, 9, 41, 42, 43, 44, 45, 47, 48, 49, 50, 51, 52, 53 a ba TALE LETRA RTI ORE A Pee T ee NT I A TS RS HRY BE METIEN ye ICE eg Se Oe ee LATIN iG PN PA 6 Ce ACPI Wen bs hy VI CITATIONS—Continued "\ Page Fair Labor Standards Act, 29 U.S.C. §§ 209, 211 39 ‘Federal Food, Drug, and Cosmetic Act of 1938, 52 Stat. 1040, et seq.: Section 201(p), 52 Stat. 1041-42... 3, 28, 41, 42, 49 Section 505, 52 Stat. 1052-53 ....2, 3, 42, 43, 48, 49, 50 Federal Food, Drug, and Cosmetic Act of 1938, as amended by P.L. 87-781, 76 Stat. 780, 21 U.S.C. § 301, et seq.: Section 201(p), 21 U.S.C. §321(p) ...3, 5, 26, 29, 34, 42, 44, 45, 49 Section 301(d), 21 U.S.C. § 331(d) ........... 2, 5, 28, 29 Sections 302-04, 21 U.S.C. §§ 332-34 .............. 28, 29 Section 401, 21 U.S.C. § 341 —0000000 0... 29 Section 403(j), 21 U.S.C. § 848(j) 000... 29 Section 502(a), 21 U.S.C. § 852(a) ................ 45 Section 502(n), 21 U.S.C. § 852(n) ................ 29 Section 505(a), 21 U.S.C. § 355(a) ....2, 5, 28, 29, 41 Section 505(d), 21 U.S.C. § 355(d) .........2, 19, 38, 42 Section 505(e), 21 U.S.C. § 355(e) ....2, 3, 10, 11, 12, Section 505(h), 21 U.S.C. § 855(h) —.....000..... 37 Section 507(f), 21 U.S.C. § 357(f) 0... 10, 11, 16 Section 507(h), 21 U.S.C. §357(h) —.............. 33 Section 701(e), 21 U.S.C. §371(e) —............ _ 10,11 Section 702, 21 U.S.C. § 372 ..........0000000000000..-... 29 Food and Drug Act of 1906, 34 Stat. 768 ~............. 28 National Labor Relations Act, Section 10(a), as amended, 29 U.S.C. § 160(a) ~-.......220000000ee. 38 Federal Rules of Civil Procedure, Rule 56 ........ 15, 18, 24 21 C.F.R. § 180.12 2222.22 cccee cece ee eee eee ence ence 19 AT Oe Oa | ne 9, 15, 16 21 C.F.R. § 180.17 .......0....2ccceccecstcscceesscccesncecenceesncees 14 SOR A, |): en ean eee 30 2 ans VII CITATIONS—Continued Page LEGISLATIVE MATERIALS: 108 Conc. REC. 10108 (1962) 0.02 20 108 Conc. REC. 10278 (1962) —......222222ee een 46 108 Conc. REC. 15696 (1962) ......2 ee. 47, 48 108 CONG. REC. 17366 (1962) 00 20, 47 108 CoNnG. REC. 220389 (1962) _..0022 eee 11 108 CoNG. REC. 22045 (1962) 0.0.22... eee 46 Hearings on Present Status of Competition in the Pharmaceutical Industry Before the Subcom- mittee on Monopoly of the Senate Select Com- mittee on Small Business, 92d Cong., 2d Sess., Be Be SG ie vce cetersns ts sees cncteeresteteesncten sens 44 H.R.Rep. No. 2526, 87th Cong., 2d Sess. (1962)... 48 S. 1552, 87th Cong., 2d Sess. (1962) 0.0.0.0. 45 S. Rep. No. 1744, 87th Cong., 2d Sess, (1962)....... 19, 20, 46, 47 MISCELLANEOUS: Administrative Conference of the U.S., Recom- mendation No. 20 (adopted June 1970) ............. 14 Affidavit of John G. Adams, Ph.D., attached to Supplemental Memorandum in Support of Mo- tion of Pharmaceutical Manufacturers Associ- ation for Leave to Intervene, American Public Health Ass’n v. Veneman, Civ. No. 1847-70 (D.D.C., filed Oct. 5, 1972) 20002... eeeeeeeeeeeeeeeeeee 25 Attorney General’s Manual on the Administrative Procedure Act (1947) -20...22...220.22::ccc0:cceeeeeeeeeeeee 35, 36 CHRISTOPHER, CASES & MATERIALS ON Foop & DRUG LAW 461 (1966) _-..-2...22222222222.2eeee cece ee eee eeeeee 40 K. Davis, ADMINISTRATIVE LAW (Supp. 1970) ..... 10, 11 35 Fed. Reg. 7251 (1970) ...0.-2222.0cceceeeeeeeeeeeeeeeeeeeeee 15 38 Fed. Reg. 6305 (1978) .....0.....22..---22.ceeeeeeeeeeeeeeeeeeee 23 Gellhorn & Robinson, Summary Judgment in Ad- ministrative Adjudication, 84 Harv. L. REv. pa 6 |) aoe enna eee Oe 14 Te et oe oc VIII “ee. CITATIONS—Continued Page Hagan, Grandfather Protection Under the Drug Amendments of 1962, 19 FooD DruG COSMETIC Rs RE EMD wicneinetitiantsteiiermsne 44 Letter from C. Joseph Stetler, President, Pharma- ceutical Manufacturers Association, to Charles C. Edwards, M.D., Commissioner of Food and Drugs, dated June 3, 1970, attached as Exhibit 5 to the Complaint in Pharmaceutical Mfrs. Ass’n v. Richardson, Civ. No. 3946 (D. Del., filed July Ry I aescaeconcniintteninneiiebsaicidichcenstnnniinnsinkennesiiisaininin 17 Letter from Charles C. Edwards, M.D., Commis- sioner of Food and Drugs, to C. Joseph Stetler, President, Pharmaceutical Manufacturers As- sociation, dated July 8, 1970, attached as Exhibit 6 to the Complaint in Pharmaceutical Mfrs. Ass’n V. Richardson, Civ. No. 3946 (D. Del., filed FUR Tile. SOO) pickcsresteriseecissiesmmaeemnmncinsinss 17, 18 J. MOORE, FEDERAL PRACTICE (2d ed. 1972) ....11, 12, 18, 21, 24 Transcript of Argument, Pharmaceutical Mfrs. Ass’n V. Richardson, Civ. No. 3946 (D. Del. Oct. ce IN THE Supreme Court of the United States OCTOBER TERM, 1972 Nos. 72-394, 72-414, 72-528, 72-555, 72-666 CASPER W. WEINBERGER, SECRETARY OF HEALTH, EDUCA- TION, AND WELFARE, AND CHARLES C. EDWARDS, CoM- MISSIONER OF FOOD AND DRUGS, . Petitioners, HYNSON, WESTCOTT & DUNNING, INC., Respondent. On Writ of Certiorari to the United States Court of Appeals for the Fourth Circuit AND CONSOLIDATED CASES MOTION FOR LEAVE TO FILE BRIEF FOR PHARMACEUTICAL MANUFACTURERS ASSOCIATION AS AMICUS CURIAE Pursuant to Rule 42 of the Rules of this Court, the Pharmaceutical Manufacturers Association (PMA) here- by moves this Court for leave to file a single brief as amicus curiae in the above-captioned consolidated cases. The Solicitor General and counsel for Ciba Corporation, Bentex Pharmaceuticals, Inc. and USV Pharmaceutical Corporation have all consented to the filing of the at- tached brief at the time respondents’ briefs are due. Ix 4 x Copies of the letters of these counsel consenting to the filing of this brief have been filed with the Clerk of the Court. The consent of counsel for Hynson, Westcott & Dunning, Inc., respondent in No. 72-394 and petitioner in No. 72-414, was requested but refused on the ground that PMA intended to take a position inconsistent with that of Hynson, Westcott & Dunning in No. 72-414. Hynson, Westcott & Dunning will in no way be preju- diced by the filing of PMA’s brief at this time, however, since it will have an opportunity to file a reply brief in No. 72-414. The interest of PMA as amicus curiae is set forth at pages 1-2 of the attached brief. Respectfully submitted, LLOYD N. CUTLER DANIEL MARCUS ‘ 900 - 17th Street, N.W. Washington, D. C. 20006 Attorneys for Pharmaceutical Manufacturers Association, Amicus Curiae April 2, 1973 IN THE Supreme Court of the United States OCTOBER TERM, 1972 Nos. 72-394, 72-414, 72-528, 72-555, 72-666 CASPER W. WEINBERGER, SECRETARY OF HEALTH, EDUCA- TION, AND WELFARE, AND CHARLES C. EDWARDS, CoM- MISSIONER OF FOOD AND DRUGS, Petitioners, Vv. HYNSON, WESTCOTT & DUNNING, INC., Respondent. On Writ of Certiorari to the United States Court of Appeals for the Fourth Circuit AND CONSOLIDATED CASES BRIEF FOR PHARMACEUTICAL MANUFACTURERS ASSOCIATION AS AMICUS CURIAE INTEREST OF AMICUS CURIAE The Pharmaceutical Manufacturers Association (PMA) is a voluntary, nonprofit membership association com- 1 [eee PLL, FLL AL OREO I 7 PAM Se NLL tee aa 2 posed of more than 100 companies which account for approximately 95% of the production of prescription and ethically promoted over-the-counter drugs in the United States. PMA has often represented the interests of its member companies in both administrative and judicial proceedings.’ The cases now before this Court raise important issues about the correct construction and application of the pro- visions of the Federal Food, Drug, and Cosmetic Act dealing with “new drugs.” PMA’s member companies have a direct and vital interest in the resolution of those issues. PMA believes that it can assist the Court by presenting in a single amicus brief the views of the nation’s manuufacturers of prescription and ethically promoted over-the-counter drugs on the complex and im- portant issues at stake in these cases. INTRODUCTION AND SUMMARY OF ARGUMENT The issues presented by the cases now before this Court concern the provisions of the Federal Food, Drug, and Cosmetic Act dealing with “new drugs.” Under the stat- ute, it is illegal to market a “new drug” without approval of a new drug application (NDA) by the Food and Drug Administration (FDA). Sections 301(d), 505(a), 21 U.S.C. §§331(d), 355(a). From 1938 until 1962, this required a showing that the drug was safe for its recommended uses. Section 505, 52 Stat. 1052 (1938). Since 1962, the Act has required an additional showing of efficacy, based on a statutorily defired standard of “substantial evidence of effectiveness.” Sections 505(d) and (e), 21 U.S.C. §§ 355(d) and (e). ‘ 1 See, e.g., Abbott Laboratories v. Gardner, 387 U.S. 186, 156- 57 n.20 (1967); Pharmaceutical Mfrs. Ass'n v. Gardner, 381 F.2d 271 (D.C. Cir. 1967); Pharmaceutical Mfrs. Ass’n v. Richardson, 318 F. Supp. 301 (D. Del. 1970). 8 However, under the statute not all drugs are “new drugs.” From 1938 until 1962 a “new drug” was defined as one that was “not generally recognized as safe” by qualified experts. Section 201(p), 52 Stat. 1041 (1938). Since 1962, a “new drug” has been defined as one “not gen- erally recognized as safe and effective” by qualified ex- perts. Section 201(p), 21 U.S.C. §321(p). Moreover, when Congress in 1962 amended both the “new drug” definition and Section 505 of the Act to include a new efficacy requirement, it enacted a “grandfather” provi- sion permanently exempting certain products then on the market from the amendments to the “new drug” defi- . nition. 76 Stat. 788-89, note following 21 U.S.C. § 321. Thus, the basic scheme created by the statute carefully distinguishes between “new drugs” and drugs that are not “new”—the latter being often referred to as “old” drugs. The cases now before this Court reflect the ef- forts of the FDA to transfer from the courts to the agency authority to determine whether a product is a “new drug,” to sweep virtually all products into the “new drug” category, and to dispense with hearing rights in connection with proceedings to withdraw approval of new drug applications. As we will show in this brief, these efforts by the FDA are flatly inconsistent with the stat- ute and are unnecessary to assure its effective implemen- tation. I. The question of the FDA’s authority to withdraw ap- proval of a new drug application for lack of substantial evidence of effectiveness without providing a hearing on disputed, material issues of fact is presented in Wein- berger v. Hynson, Westcott & Dunning, Inc., No. 72- 397. Section 505(e) of the statute, governing proceed- ings to withdraw approval of NDA’s, provides the affect- ed manufacturer a right to a hearing. A hearing, there- 4 fore, must be held whenever there is a genuine dispute as to material facts—i.e., in this context, whenever a manufacturer sufficiently alleges facts which, if true, would support a finding of substantial evidence of effec- tiveness for the product in question. Where such a fac- tual dispute exists, the Commissioner of Food and Drugs may not resolve that dispute before the hearing and in- voke his resolution of the issue as his reason for denying a hearing. Moreover, under well-established principles of summary judgment procedure, the burden of establish- ing the lack of a material factual dispute is clearly on the Commissioner, as the party moving for summary judgment. The FDA’s hearing regulations purport to embody judicial summary judgment principles, and have been upheld by the courts only on that basis. The Fourth Circuit correctly set forth and applied those principles in its Hynson, Westcott & Dunning decision. In argu- ing that that decision was incorrect, the Government has blurred the distinction between the test for determining the issue of substantial evidence of effectiveness on the merits at a hearing and the test for determining whether the Commissioner is entitled to award himself summary judgment on that issue without a hearing. In so argu- ing, the Government has demonstrated that, despite the language of its regulations, the FDA’s continued in- tention is to decide disputed questions as to the exist- ence of substantial evidence of effectiveness in advance of a hearing and, on the basis of such findings, to deter- mine that no hearing is necessary. Under such a regime, the right to a hearing guaranteed by the statute would be effectively, and illegally, obliterated. II. On the second major issue presented by these cases— whether the FDA has authority to make binding deter- minations whether a product is a “new drug”’—there 5 is a conflict between the circuits. In Ciba Corporation v. Weinberger, No. 72-528, the Third Circuit affirmed the district court’s refusal to issue a declaratory judgment on the “new drug” status of a product on the ground that the issue had been decided by the FDA, sub silentio, in a proceeding to withdraw approval of the NDA for the product. In Weinberger v. Bentex Pharmaceuticals, Inc., No. 72-555, the Fourth Circuit reached the oppo- site result, holding that it was improper for a district court to defer to the FDA’s judgment on the “new drug” question, since the FDA had no authority under the statute to make such determinations. The Fourth Cir- cuit followed its Bentex decision on the same issue in Hynson, Westcott & Dunning, Inc. v. Weinberger, No. 72-414, and in USV Pharmaceutical Corp. v. Weinberger, No. 72-666. This conflict between the circuits should be resolved in favor of the carefully reasoned opinion of the Fourth Circuit in Bentex. The Food, Drug, and Cosmetic Act itself defines the term “new drug” (Section 201(p)), and makes it a prohibited act to market a “new drug” without a new drug application approved by the FDA. Sections 301(d), 505(a). But nowhere in the statute is the FDA given any authority to determine whether a product is a “new drug”; its only authority under the new drug provisions (Section 505) of the statute is to approve or disapprove a new drug application. This does not make for an irrational or ineffective leg- islative scheme. A manufacturer who markets a product without an approved NDA in the face of the FDA’s opinion that the product is “new” does so at his own risk—the very serious risk under Title III of the Act of seizure of the product or an action seeking an injunction against its marketing or even criminal penalties. This is consistent with the general scheme of the statute—re- flected in the basic adulteration and misbranding provi- sions—under which standards of conduct are set forth 6 in the statute itself, with violations of those standards determined in judicial enforcement actions brought by the Government at the behest of the FDA. Moreover, there is no basis for any suggestion that reso- lution of the “new drug” issue by the courts in declara- tory judgment and enforcement actions is either novel or unduly difficult and burdensome. The fact is that the courts have been resolving these issues for many years without any perceptible difficulty or burden. In arguing that the question whether a product is a “new drug’’ is unduly complex and: technical for a court, the Govern- ment ignores the critical distinction between that ques- tion and the question resolved by the FDA in determining whether or not to grant or continue approval of a new drug application. The test for approval of an NDA is actual safety and effectiveness, and requires a careful analysis of all relevant scientific evidence, including clini- cal tests. The question whether the product is a “new drug,” by contrast, turns on whether the product is gen- erally recognized as safe and effective. The latter issue has lent itself well to judicial determination. The Government’s bootstrap efforts to imply FDA au- thority to resolve the “new drug” issue in the course of passing on NDAs or, in other contexts, by issuing dec- laratory orders, founder on the simple and inescapable fact that the statutory scheme created by Congress de- liberately allocates to the courts the decision whether a product is a “new drug.”’ In the last analysis, the Gov- ernment is seeking no less than an amendment of the basic structure of the statute—a result that it should not be permitted to achieve by litigation. III. When Congress enacted the 1962 Drug Amendments to require that “new drugs” be shown to be effective as well as safe, it also enacted a “grandfather” clause per- 7 manently exempting from the new effectiveness require- ment certain products already on the market, so long as they continued to be recommended for the same uses. Sec- tion 107(c) (4) of the 1962 Amendments permanently 4 exempts any such product that “on the day immediately 4 preceding the enactment date (A) was commercially used ‘ or sold in the United States, (B) was not a new drug as defined by section 201(p) of the basic Act as then in force, and (C) was not covered by an effective applica- E tion under section 505 of that Act.” 76 Stat. 789, note t following 21 U.S.C. § 321. E In USV Pharmaceutical Corp. v. Weinberger, No. 72- 666, the Fourth Circuit held that any drug that had ever been the subject of an NDA did not qualify for grand- father protection under Section 107(c) (4), even if it had become generally recognized as safe by 1962—unless the FDA had formally withdrawn approval of the NDA. At the same time, the Fourth Circuit held that so-called “me-too” products of other manufacturers, substantially identical in composition to the NDA’d “pioneer” product z: but never the subject of NDAs themselves, could qualify 3 for grandfather protection. In this Court, the Govern- ment supports the Fourth Circuit’s position on once- NDA’d products but argues that all me-too products should also be deemed to be “covered” by the NDA for é the product to which they are similar. Both the Fourth Circuit and the Government have con- strued Section 107(c)(4) arbitrarily and _ illogically. Properly construed, Section 107(c) (4) grandfathers any product that on the day before the effective date of the 1962 Amendments was generally recognized as safe and therefore no longer a “new drug.” There is no meaningful sense in which a product no longer “new” can be said to be “covered by an effective NDA.” This construction of the grandfather clause gives ef- fect to the fundamental legislative purpose underlying Se a te eee eee OT Te Gee eR Me Oe Sd TERE MYER RY PVN Tere: | 8 the enactment of the new effectiveness requirements in 1962—that entirely new products and new claims for old products were to be subjected to the new effectiveness re- quirement, but that existing claims for old products were to be exempted. The construction urged by the Govern- ment, by contrast, would render Section 107(c) (4) en- tirely meaningless. Every drug first marketed between 1938 (when the “new drug” provisions were first enact- ed) and 1962 must at some time have been a “new drug” which could not lawfully have been marketed without an effective NDA. And under the Government’s view, an NDA once effective is always effective and covers all me- too drugs. Accordingly, if the Government’s position were adopted, no drug first marketed between 1938 and 1962 could meet the test of Section 107(c) (4), and that section would have no function whatever. In its USV decision the Fourth Circuit recognized the plausibility of the argument advanced here that a drug that is no longer “new” should not be considered to be “covered” by an effective NDA. It rejected the argument solely on the ground that it would make surplusage out of the requirement of clause (C) of Section 107(c) (4) that the product not have been covered in 1962 by an ef- fective NDA. This ground for decision cannot stand. For on analysis it becomes clear that clause (C) is equally sur- plusage both under the interpretation of the grandfather clause adopted by the Fourth Circuit and under the in- terpretation proposed by the Government. Since Section 107(c) (3) of the 1962 Drug Amendments makes clear that all drugs covered by an effective NDA are not per- manently grandfathered (but were subjected to the new effectiveness requirement after a two-year grace period), Section 107(c) (4), even without clause (C), could apply only to old drugs not covered by an effective NDA. In short, the “surplusage” objection is equally applica- ble to the positions of the Government and the Fourth Circuit as it is to the argument contended for here. In- 9 deed, since Section 107(c) (3) governs all drugs that are covered by effective NDAs, there is no construction of Section 107(c) (4) under which clause (C) is not sur- plusage. Under the circumstances, this Court should adopt the interpretation of Section 107(c) (4) that gives it a meaningful function, that accords with the funda- mental legislative purpose, and that avoids distinctions between NDA’d and me-too products. It should therefore hold that any drug that was generally recognized as safe on the day before the enactment of the 1962 Amendments cannot be considered to have been covered by an effective NDA on that date and is therefore grandfathered as to pre-1962 claims by Section 107(c) (4). ARGUMENT I. A Manufacturer is Entitled to a Hearing on any Genu- ine Issue of Material Fact Before Withdrawal of Approval of a New Drug Application. Weinberger v. Hynson, Westcott & Dunning, Inc., No. 72-394, raises the question whether the Commis- sioner may withdraw approval of a new drug applica- tion (NDA) for lack of substantial evidence of effec- tiveness, thus halting further marketing of adrug, with- out giving the manufacturer a hearing on disputed, - material factual issues. The Fourth Circuit held that the Commissioner may not apply his “summary judg- ment” regulations? so as to deny a hearing where a manufacturer alleges and offers appropriate proof of facts which, if true, would support a finding of sub- stantial evidence of effectiveness. Hynson, Westcott & Dunning, Inc. v. Richardson, 461 F.2d 215 (4th Cir. 1972) (J.A. 173).* That holding is clearly correct. This Court has recognized as a fundamental aspect of due process of law that a person has’a right to a 221 C.F.R. § 130.14. 3“J.A.” refers to the Joint Appendix filed in these consolidated cases. 10 : hearing in advance of a decision by an administrative agency resolving disputed factual questions affecting his substantial rights. Due process entitles him to an op- portunity to present his case on disputed issues, to con- front the Government’s case, and to cross-examine its witnesses. “In almost every setting where important decisions turn on questions of fact, due process requires an opportunity to confront and cross-examine adverse witnesses.” Goldberg v. Kelly, 397 U.S. 254, 269 (1970). This is true not only where personal rights are at stake * but also where property rights are involved.° The Food, Drug, and Cosmetic Act recognizes this con- stitutional principle by providing a hearing in a number of contexts to persons whose rights would be substantially affected by Government actions under the Act. E.g.,/°% §§ 505(e), 507(f), 701(e), 21 U.S.C. §$ 355(e), 357 (fF, 871(e). Section 505(e) of the Act, which is involved in this case, guarantees “due notice and opportunity for hearing to the applicant” before the FDA may with- draw approval of an NDA. It reflects Congress’ judg- ment that an opportunity for a hearing is appropriate before the FDA takes the drastic action of halting the manufacturer’s further sale and the public’s continued use of a drug already on the market.° * See, e.g., Bell v. Burson, 402 U.S. 535, 539-42 (1971); Boddie v. Connecticut, 401 U.S. 371, 374-79 (1971). 5 See, e.g., Greene Vv. McElroy, 360 U.S. 474, 496-99 (1959) and cases cited at p. 497; Morgan v. United States, 304 U.S. 1, 14-15, 19 (1938) ; ICC v. Louisville & Nashville R. Co., 227 U.S. 88, 93-94 (1913) ; Hornsby v. Allen, 326 F.2d 605, 608 (5th Cir. 1964) ; Phila- delphia Co. v. SEC, 175 F.2d 808, 817 (D.C. Cir. 1948), vacated as moot, 387 U.S. 901 (1949). See generally K. DAVIS, ADMINISTRATIVE LAW §§ 7.01, 7.04 (Supp. 1970). Indeed, this Court based its hold- ing in Goldberg v. Kelly, supra, on earlier business cases. ® The legislative history of the 1962 Amendments makes plain that Congress regarded an “opportunity for hearing” as required by basic fairness before the drastic action of removal of a drug from the market. Section 507(f), which authorizes removal of anti- 11 A summary judgment procedure does not carve out an exception to this right to a hearing. It merely recog- nizes that/ an evidentiary hearing is unnecessary where the material facts are not in dispute. See, e.g., K. DAVIS, ADMINISTRATIVE Law §§ 7.01, 7.04 (Supp. 1970) ; 6 J. MOORE, FEDERAL PRACTICE {56.06 (2d ed. 1972). The leading decision on hearing rights under the Food, Drug, and Cosmetic Act recognizes that the permissi- bility of denying a hearing hinges on the absence of any disputed issues of material fact. Dyestuffs & Chemicals, Inc. V. Flemming, 271 F.2d 281 (8th Cir. 1959), cert. denied, 362 U.S. 911 (1960). The court held that the FDA might deny\a hearing (under Section 701(e) of the Act) where ufacturer’s allegations, even if true, would be legally insufficient to justify the relief sought. In other words, the factual issues raised by the objections had to be material issues—ones that went to the legality of the FDA’s proposed action.’ biotics from the market for lack of substantial evidence of effective- ness, does not, like Section 505(e), provide for a hearing in unquali- fied terms but pruvides for a hearing if the manufacturer states “reasonable grounds” for one. 21 U.S.C. § 357(f). Yet, in ex- plaining~Section 507(f), Senator Kefauver, chief sponsor of the 1962 Amendments, stated: “There of course would be public procedure with an oppor- tunity for hearings and judicial review afforded the drug manufacturers before the FDA began this type of action.” 108 CONG. REc. 22039 (1962). “In the Dyestuffs case, it had already been established by a Supreme Court decision (Flemming v. Florida Citrus Exchange, 358 U.S. 153 (1958)) that, as a matter of law, color additives that were toxic at any level of concentration were not “harmless” and were legally barred from certification. The manufacturer’s objections to the decertification order in Dyestuffs advanced several reasons for permitting the use of the additives in question, but did not allege that the additives met the legal test of harmlessness. Since it was clear that the manufacturer’s objections were legally irrelevant, the court ruled that the FDA was justified in not holding a hearing that could not affect the FDA’s final decision. See also United States v. Storer Broadcasting Co., 3&1_U.S. 192, 205 (1956) ; FPC v. Texaco, Inc., 377 U.S. 33, 39 (1964). 12 The Dyestuffs decision reflects the basic principle em- bodied in the familiar summary judgment procedure of Rule 56 of the Federal Rules of Civil Procedure and the cases applying that rule: A party’s right to a hear- ing turns on the existence of a disputed issue of fact bearing on his right to relief under applicable law. “The question presented by a motion for summary judgment is whether or not there is a genuine issue of fact, and not how that issue should be determined.” 6 J. MOorE, supra, J 56.11[3], at 2174, quoting Koepke v. Fontec- chio, 177 F.2d 125, 127 (9th Cir. 1949). See also Toebel- man V. Missouri-Kansas Pipe Line Co., 130 F.2d 1016, 1018 (8rd Cir. 1942). The FDA may not, in deciding on the need for a hear- ing under Section 505(e), resolve genuine factual dis- putes concerning the existence of substantial evidence of effectiveness: “Summary judgment procedures . . . do not replace the trial. Genuine and disputed questions are not to be decided on the paper record of affidavits and depo- sitions ....” Clayton v. James B. Clow & Sons, 154 F. Supp. 108, 112 (N.D. Ill. 1957). Professor Moore has stressed this point in summarizing the law under Rule 56: “The court is authorized to examine proffered ma- terials extraneous to the pleadings, not for the pur- pose of trying an issue, but to determine whether there is a genuine issue of material fact to be tried.” 6 J. MOORE, supra, 7 56.04, at 2060. See also id, 7 56.11 [1.-2], at 2145; id., 1 56.15, at 2281. Nor may the FDA place the burden of establishing that there are genuine factual disputes on the manu- facturer. Under well-settled principles, the Commissioner has the burden of establishing that there is no factual issue requiring a hearing, and all doubts about the 13 existence of a factual issue must be resolved against him. This is true regardless of who has the final burden of proof on the issue of substantial evidence of effective- ness of the drug.’ “(T]he burden to show that there is no genuine issue of material fact rests on the party moving for summary judgment, whether he or his Op- ponent would at trial have the burden of proof on the issué concerned; and rests on him whether he is by it required to show the existence or non-existence of facts.” 6 J. MOORE, supra, 56.15(3], at 2342-43 (footnotes omitted). See also id. at 2335. This Court has stressed that, since the burden rests on the moving party, the materials: on which he relies “must be viewed in the light most favorable to the opposing party.” Adickes v. S. H. Kress & Co., 398 U.S. 144, 157, 158-59 (1970) ; United States v. Diebold, Inc., 369 U.S. 654, 655 (1962). “All doubts as to the existence of a genuine issue as to a mate- rial fact must be resolved against the party moving for a summary judgment.”. Cameron v. Vancouver Plywood Corp., 266 F.2d 535, 540 (9th Cir. 1959) ; see 6 J. Moore, supra, {| 56.06[2], at 2080; 9 56.11[3], at 2170 & n.27 : 7 56.15[3]. This rule is particularly important where, as here, the critical decision whether there is a genuine issue of material fact requiring a trial is not made by .a neutral trier of fact (such as an independent hearing examiner or administrative judge) but by one of the antagonists— the Commissioner, who is the very party seeking sum- “The lower federal courts have concluded that the applicant has the burden of establishing the efficacy and safety of his drug when he seeks initial approval of an NDA. See Ubiotica Corp. v. FDA, 427 F.2d 376, 378 (6th Cir. 1970). However, contrary to the Gov- ernment’s assertion (Brief for Petitioners in No. 72-394, at 27), the burden shifts once a drug has begun to be marketed under an approved NDA. Where the FDA seeks to withdraw a previously granted approval, it has the burden of showing that the drug does not meet the statutory tests. Bell v. Goddard, 366 F.2d 177, 181 (7th Cir. 1966). 14 mary judgment. The Commissioner, under his proce- dural rules, is allowed to award summary judgment to himself. Under these circumstances, courts have a special duty to review most carefully how the Commissioner, acting as both movant and judge, decides his own mo- tion in his own favor.° The courts have confirmed that this elementary burden- of-proof rule applies when summary judgment is sought in an administrative proceeding as well as in a court action. See, e.g., NLRB v. Smith Industries, Inc., 403 F.2d 889, 892-95 (5th Cir. 1968). Indeed, the Court of Appeals for the District of Columbia Circuit has ap- plied the rule to proceedings for withdrawal of NDA approvals. In USV Pharmaceutical Corp. v. Secretary of Health, Education & Welfare, 466 F.2d 455, 461 (D.C.. Cir. 1972), it held that the rule is “basic to ad- * Indeed, a strong argument could be made that, in adapting the summary judgment procedure to the context of an administrative proceeding, the FDA ought to have a neutral hearing examiner initially decide whether there is a genuine issue of material fact. Under the FDA’s regulations, hearings on withdrawals of approval of NDAs are conducted not by the Commissioner but by an inde- pendent hearing examiner appointed pursuant to Section 5(d) of the Administrative Procedure Act, 5 U.S.C. §554(d). 21 C.F.R. § 180.17. Fairness would dictate that the function of deciding whether a triable issue of fact exists should also be assigned initially to the hearing examiner. The Administrative Conference of the United States has recom- mended that agencies adopt a summary judgment procedure under which the decision to grant summary judgment would be made by the “presiding officer,” not by the moving party. Administrative Conference of the United States, Recommendation No. 20 (adopted June 1970). A commentary prepared by the draftsmen of the recommendation does not even consider entrusting the authority to grant summary judgment to anyone but the hearing officer. Gellhorn & Robinson, Summary Judgment in Administrative Ad- judication, 84 Harv. L. REv. 612 (1970). If the FDA’s procedure followed the Administrative Conference recommendation, it would avoid the evident unfairness of permitting the Commissioner, as an interested party, to pass in the first instance on his own motion for summary judgment. 15 ministrative fairness” and is fully applicable to with- drawal proceedings under Section 505(e). In that case, “the: court invalidated the FDA’s withdrawal of approval of three NDAs because, inter alia, the Commissioner had failed to meet his “obligation to present at least a prima facie case for denial of a hearing.” Jd. The Gov- ernment, which did not seek review of that decision by this Court,’ now takes issue with this aspect of the de- cision, or at least suggests that the Commissioner should have been permitted to rely on the NAS-NRC reports to make out his prima facie case. Brief for Petitioners in No, 72-394, at 32 n.22." However, even assuming that a negative NAS-NRC report is sufficient in some cir- cumstances to shift the burden to the manufacturer to come forward with the evidence on which he relies, that does not affect the burden of persuasion on summary judgment. The Commissioner retains the burden of show- ing that the facts alleged by the manufacturer—if true —could not support a finding of substantial evidence of effectiveness. The regulations involved in the Sonsie. Westcott & Dunning case are expressly modeled after Rule 56 of the Federal Rules of Civil Procedure. See 35 Fed. Reg. 7251 (1970) (preface to adoption of rules). They permit a hearing to be denied only if the manufacturer’s factual claims are facially incapable of meeting the legal test for continued approval—that is, only “lwihen it clearly appears from the data in the application and from the reasons and factual anal- ysis in the request for the hearing that there is no genuine and substantial issue of fact which pre- Memorandum for Respondents on Petition for etna in No. 72-666, at 4. “The D. C. Circuit noted that the NAS-NRC reports relied upon by the Commissioner in that case were “cryptic and conclusory, without any statement of supporting facts.” 466 F.2d at 461. That defect is typical of the reports of the NAS-NRC panels. See, e.g., J.A. 196-97. 16 cludes . . . the withdrawal of approval of the ap- plication. . . .” 21 C.F.R. § 180.14(b) (emphasis added). The lower federal courts have upheld these regulations only after construing them to incorporate the basic sum- mary judgment principles discussed above. Ciba-Geigy Corp. Vv. Richardson, 446 F.2d 466, 468 (2d Cir. 1971) ; USV Pharmaceutical Corp. v. Secretary of Health, Edu- cation & Welfare, 466 F.2d 455, 460-61 & n.5 (D.C. Cir. 1972); Pharmaceutical Mfrs. Ass’n v. Richardson, 318 F. Supp. 301, 311-13 (D. Del. 1970); cf. Upjohn Co. v. Finch, 422 F.2d 944, 955, 960 (6th Cir. 1970). Indeed, the regulations had their genesis in two federal court decisions which condemned previous attempts by the Com- missioner to require a manufacturer to prove the merits of its factual contentions in order to obtain a hearing. American Home Prods. Corp. v. Finch, 303 F. Supp. 448, 454 (D. Del. 1969); Upjohn Co. v. Finch, 303 F. Supp. 241, 257-58 (W.D. Mich. 1969). When the regulations were issued, PMA wrote to the Commissioner, attempting to obtain assurance that he intended to apply the regulations in accord with: their apparent recognition that a manufacturer is entitled 12In American Home, the Commissioner had revoked his ap- — proval of an antibiotie under Section 507 of the Act without a hearing, even though the manufacturer had made factua) asser- tions which the court found were “not ‘frivolous,’ ‘inconsequential’ or ‘legally insufficient,” 303 F. Supp. at 454, 456. The court enjoined the Commissioner’s action, stating: “It appears to this Court that the Commissioner may have made the test of substantial evidence of effectiveness—the showing required to’ justify continued certification of the drug —the test of whether the [manufacturer] is entitled to a hearing. ... “My reading of the Dyestuffs case and interpretation of the statutory scheme provided by § 507(f) of the Act indicates that ‘reasonable grounds’ [for a hearing] should be understood as meritorious, non-frivolous objections, which could most ap- propriately be resolved finally after a full hearing.” Jd. at 454. 17 . to a hearing on any genuine issue of material fact. PMA’s letter posed the question whether, under the regulations, a manufacturer would be granted a hearing if he pre- sented one or more affidavits by qualified experts, sum- marizing the clinical tests and concluding that some of them met the criteria in the regulations for “adequate and well-controlled” tests and that, either alone or to- gether with other clinical evidence, they sufficiently es- tablished the effectiveness of the drug. The Commis- sioner’s answer was noncommittal and unclear.“ For 18 The full text of PMA’s question was as follows: “Assume that a party affected by a proposed withdrawal of a new drug application or repeal of an antibiotic regulation pre- sents, in his request for a hearing, one or more affidavits by experts qualified by scientific training and experience to eval- uate the\ effectiveness of the drug involved. These affidavits summarize. the clinical tests conducted and conclude that some of them meet the criteria set forth in Section 180.12 (a) (5) (ii) (a) and that, either alone or together with other clinical evi- dence, they adequately establish the effectiveness of the drug. If you were to disagree as to either point, would you still rule that there is a genuine and substantial issue as to the existence of substantial evidence and, therefore, that a hearing was re- quired?” Letter from C. Joseph Stetler, President, Pharma- ceutical Manufacturers Association, to Charles C. Edwards, M.D., Commissioner of Food and Drugs, dated June 38, 1970, attached as Exhibit 5 to the Complaint in Pharmaceutical Mfrs. Ass'n V. Richardson, Civ. No. 3946 (D. Del., filed July 22, 1970). *The Commissioner responded as follows: “First, opinion evidence in an affidavit could not provide a basis for determining whether there is substantial evidence derived from adequate and well-controlled clinical investigations. This determination would have to be made upon the basis of an examination of the medica] documentation offered. What the regulations require is that the request for a hearing contain a well-organized factual discussion of the available data, in sufficient detail to allow a medical judgment as to the con- clusions that may properly be drawn from the data. If the medical documentation contains no substantial evidence, even when accepted at face value, there is no issue of fact for a hear- ing. But if this factual analysis identifies studies meeting the criteria for adequate and well-controlled studies which appear 4 18 that reason, PMA brought suit, arguing that the regula- tions were invalid if construed to permit the Commis- sioner to resolve disputed issues of fact as a basis for denying a hearing. Pharmaceutical Mfrs. Ass’n v. Rich- ardson, supra. During the oral argument in that suit, counsel for the Commissioner gave the district court the assurances that the Commissioner failed to give in response to PMA’s letter. He stated that, under the regulations, “where there are legitimate differences of opinion about adherence to those criteria then you have dis- puted issues of fact which call for a hearing..... “, . The problem is and all the problem is that we are dealing here with applications which fail to show on their face that they gave attention to these issues.” ** After receiving these assurances, the district court up- held the regulations on the ground that they followed the principles of Rule 56. The court held that the regula- tions “simply provide that a request for an evidentiary hearing will be denied when it clearly appears that the medical documentation, which the hearing applicant is required to submit, shows on its face that there is no to support the promotional claims, a hearing may be unneces- sary because the claims are proven, or a hearing may be re- quired to test the validity of what has been reported by the investigator and the significance of his observations in provid- ing a basis of fact upon which it could reasonably be concluded by experts that the drug will have the effectiveness claimed for it.” Letter from Charles C. Edwards, M.D., Commissioner of Food and Drugs, to C. Joseph Stetler, Picsident, Pharma- ceutical Manufacturers Association, dated July 8, 1970, at- tached as Exhibit 6 to the Complaint in Pharmaceutical Mfrs. Ass’n V. Richardson, Civ. No. 3946 (D. Del., filed July 22, 1970). 15 Transcript of Argument at 33, 26, Pharmaceutical Mfrs. Ass'n v. Richardson, Civ. No. 3946 (D. Del., Oct. 2, 1970) (emphasis added). A copy of the full transcript is being lodged with the Clerk of this Court. 19 genuine and substantial issue of fact which precludes withdrawal of the new drug approval... .” 318 F. Supp. at 312. The court further observed: “Of course, if a given request for an evidentiary hearing were to raise an issue of genuine fact with- in the regulations, and the Commissioner were to misapply the rules, that would be subject to correc- tion by the Courts.” Jd. at 313. What facts must a manufacturer offer to prove to es- tablish his right to a hearing? Under Section 505(e), the test for continued approval of an NDA is whether there is “substantial evidence” supporting the drug’s efficacy. 21 U.S.C. § 855(e). “Substantial evidence” is defined in Section 505(d) to mean “evidence consisting of adequate and well-controlled investigations, including clinical investigations, by experts qualified to evaluate the effectiveness of the drug involved, on the basis of which it could fairly and responsibly be concluded by such experts that the drug will have the effect it purports or is rep- resented to have under the conditions of use pre- scribed, recommended, or suggested in the labeling or proposed labeling thereof.” 21 U.S.C. § 355(d). Whether the evidence supporting a particular NDA satis- fies each element of this definition is a question of fact. See S. REP. No. 1744, 87th Cong., 2d Sess. pt. 2, at 6 (1962). The Commissioner’s regulations elaborate on the statu- tory definition, setting forth criteria for determining whether an investigation is “adequate and well-con- trolled.” 21 C.F.R: § 130.12(a) (5) (ii). However, vir- tually all of those criteria are imprecise and judgmental. They call, inter alia, for “adequate assurance” that “suit- able” subjects were chosen for the study; grouping of subjects “in such a way as to minimize” bias; comparison with a control “in such a fashion as to permit” quanti- tative evaluation; and determination of whether placebo NESE IS 8 RIE RUG RE ENR rt RRS PRESS IRON Ratner rane RECAP RIN ce eee Ys AITO. OPI Cea EE SAT et PA SRR RIM Rat He 20 effect is “negligible”. These are not “bright line” tests whose satisfaction will always be as readily apparent as whether the license applicant in United States v. Storer Broadcasting Co., 351 U.S. 192 (1956), already owned five radio stations. Expert opinions may differ about whether any one of the criteria is met in a particular case.** Experts may differ also about whether particular studies form a basis for a conclusion of effectiveness. In- deed, the judgmental nature of these questions is the very reason for the “substantial evidence” test: Congress intended to allow for subjective differences of opinion among qualified experts and to permit a drug to be mar- keted even though a minority of the experts judge that its effectiveness has been appropriately demonstrated.” Where the manufacturer offers the opinion of a qualified expert that a certain study or group of studies meets the criteria for an “adequate and well-controlled investiga- tion” and establishes the effectiveness of a product, a genuine factual dispute is presented. That dispute can be resolved only through confrontation and cross-exami- nation at an evidentiary hearing. The Commissioner may not weigh the manufacturer’s documentation against the views of his own experts and decide the merits of the 16Tt is possible to conceive of a situation in which even the “bright line” test involved in Storer might give rise to a factual dispute—for example, where the parties disagree whether the license applicant’s relationship to an existing station amounts to ownership. However, the five-station rule obviously leaves little room for differences of opinion, and no factual dispute was even alleged to exist-in Storer. Similarly, in FPC v. Texaco, Inc., 377 US. 33 (1964), the agency’s rules specifically forbade certain price clauses in natural gas contracts, and the companies did not deny that their contracts contained the forbidden clauses. Therefore, the Government’s heavy reliance on Storer and Texaco (Brief for Petitioners in No. 72-394, at 22-24, 26) simply misses the point of those cases. 17§. REP. No. 1744, 87th Cong., 2d Sess. 16 (1962); id., pt. 2, at 5-6, 56-58; 108 Conc. REc. 10108 (1962) (remarks of Sen. Hruska) ; id. at 17366 (remarks of Sen. Eastland). 21 manufacturer’s claims as the basis for granting himself summary judgment.** The decision below in the Hynson, Westcott & Dunning case correctly set forth and applied these principles. The court of appeals held that the Commissioner’s summary judgment in favor of himself could be supported “only if it can be fairly said that the clinical tests and medical studies and investigations submitted by the applicant, if credited and accepted, will not sup- port a finding that they provide ‘substantial evi- dence’ of effectiveness [under the statute and regu- lations} .... ... Manifestly, the applicant does not have to sati or convince the Commissioner by his evidence that product is effective as a predicate for securing hi right to a hearing. If that were his burden, a hear- ing would never be necessary or appropriate.” 461 F.2d at 220 (J.A. 178). 1*Of course, the necessary content and specificity of the ex- pert’s affidavit will depend on the facts of a particular case. The courts in cases under Rule 56 have developed a body of standards governing the adequacy of affidavits for use on summary judgment. See 6 J. MOORE, supra, § 56.22. ’* While the court of appeals’ opinion is imprecise at points, we believe that this passage and the opinion as a whole make clear that the court applied the correct test. The Government criticizes the court of appeals for at one point characterizing the issue to be resolved at the hearing as “the effectiveness of Lutrexin.” 461 F.2d at 221 (J.A. 180). The Government seizes upon this one phrase to argue that the court disregarded the test of “substan- tial evidence” as defined in the Act and regulations. Brief for Petitioners in No. 72-394, at 26-27. However, the remainder of the opinion makes clear that the court used the phrase “the effec- tiveness of Lutrexin” as a shorthand description of the statutory test. The test for approval of an NDA is the actual effectiveness (and safety) of a drug, as contrasted to the test for the applica- bility of the “new drug” provisions, which is general recognition of effectiveness (and safety). (See pp. 32-34, infra.) The sub- stantial evidence requirement merely defines the type and quantity of evidence on which the determination of effectiveness depends. . The Fourth Circuit’s opinions in Hynson, Westcott & Dunning and 22 The court examined the materials submitted by Hynson, Westcott & Dunning with its request for a hearing and concluded that they did not clearly show on their face a lack of substantial evidence. Jd. at 221 (J.A. 179-80). In its attack on the Fourth Circuit’s opinion, the Gov- ernment blurs the vital distinction between deciding whether there is a factual dispute that necessitates a hearing and deciding the merits of the factual dispute. The Government argues that the court of appeals should have upheld the denial of a hearing because the Commis- sioner, ex parte, had made “a reasonable determination that the studies fail to conform to the regulations.” (Brief for Petitioners in No. 72-394, at 35 (emphasis added).) But that determination is one that the Com- missioner could lawfully make only after a hearing; in making it here he decided the very factual questions that the hearing would address. This is revealed by the Government’s discussion of the reasons given by the Commissioner for rejecting the studies relied upon by Hynson, Westcott & Dunning. (Jd. at 37-39.) For example, the Commissioner rejected one of the studies for the stated reason that “(t]he historical controls employed are inappropriate” (J.A. 76), even though the regulations permit the use of historical con- trols (J.A. 488-89) and the manufacturer offered the opinions of several experts that historical controls are the only possible type of control where the life or death - of a fetus is involved. (J.A. 33-34, 37, 41, 44, 51, 55, 59.)*° If the Commissioner disagreed with those experts Bentex show that it fully understood these aspects of the statutory scheme. 2° The Government criticizes the affidavit of Dr. Sadusk, former Medical Director of the FDA, for failing to state whether he con- sidered the studies relied upon by Hynson, Westcott & Dunning to be “well-controlled.” The court of appeals apparently misread his affidavit as addressed to that specific question. 461 F.2d at 221 23 that tests of Lutrexin using historical controls could be “well-controlled,” obviously that disagreement framed a factual issue requiring a hearing. Perhaps recognizing this, the Government now rechar- © acterizes the Commissioner’s objection as going to the ade- quacy rather than the appropriateness of the historical controls. (Brief for Petitioners in No. 72-394, at 38 n. 27.) But the Commissioner’s action is no more defensible on that ground. Neither the regulations nor the Commis- sioner’s decision shows in what way the use of historical controls was inadequate. Since the experts performing the studies obviously thought their controls were adequate, that question can be decided only after full exploration through cross-examination at a hearing. If the Commis- sioner is permitted to decide such disputes ex parte, with- out a hearing, the Government’s statement that “formal hearings are not likely to be needed in many instances” (Id. at 20 n.15) will certainly prove true.** The Government’s argument concerning the standard of review of the Commissioner’s denial of a hearing con- firms that it believes the Commissioner can decide genu- (J.A. 180). In fact, the Sadusk affidavit was addressed to the important question of the appropriateness of historical controls in tests of drugs intended to prevent premature labor and threatened abortions. (J.A. 59.) In attacking it, the Government disregards the other affidavits dealing with the specific studies, several of them by the authors of the studies themselves. “1 Indeed, so far as we are aware, the FDA has not granted a hearing in any case since its “summary judgment” rules were promulgated in 1970. For a recent example of the lengths to which the FDA will go to avoid holding a hearing, see 38 Fed. Reg. 6305, 6308 (March 8, 1973), denying a request for a hearing and withdrawing approval of Winthrop Laboratories’ NDA for Alevaire notwithstanding the submission of seven affidavits of experts concluding that studies relied upon by the manufacturer constituted adequate and well- controlled studies as defined by the FDA’s own regulations and proved the effectiveness of the product. ae Oe re Mn a A ae MINT SERRA EY pra aace mers.” 24 ine disputes on material issues of fact without a hearing, and then invoke this decision to support his determina- tion that there is no need for a hearing. The Govern- ment argues that the Commissioner's summary judg- ment in favor of himself should be upheld if “supported by the evidence.” (Jd. at 34.) However, that is the test to be applied to a finding of fact made on the record of a hearing, not to a summary determination that no genuine issue of fact exists. See Administrative Procedure Act §10(e), 5 U.S.C. § 706(2) (E). After the Commissioner has heard conflicting scientific testimony, with the bene- fit of cross-examination,” his conclusions are entitled to the judicial deference embodied in a restricted scope of review. However, the question for the Commissioner in determining whether a hearing is needed is simply wheth- er a material factual dispute exists. That question is one of law. E.g., NLRB v. Bata Shoe Co., 377 F.2d 821, 826 (4th Cir.), cert. denied, 389 U.S. 917 (1967). Once the Commissioner has decided it, “the appellate court in reviewing must determine whether there is any genu- ‘ine issue of material fact underlying the adjudication.” 6 J. MOORE, supra, § 56.27[1], at 2973. Finally, the Government raises the spectre that it may have to hold thousands of hearings, thus bogging down the implementation of its review ‘of the effectiveness of 22The Court of Appeals for the District of Columbia Circuit has recently reaffirmed the “unique potential” of cross-examination “as an ‘engine of truth’—the capacity given 9 diligent and re- sourceful counsel to expose subdued premises, to pursue evasive witnesses, to ‘explore’ the whole witness, often traveling unex- pected avenues.” International Harvester Co. v. Ruckelshaus (D.C. Cir. No. 72-1517, Feb. 10, 1973), slip op. at 22. 23 Summarizing the law under Rule 56, Professor Moore further stated: “The trial court cannot draw upon any discretionary power to grant summary judgment where [the] adjudication involves any genuinely disputed issue of material fact.” Id. at 2976. 25 pre-1962 drugs. (Brief for Petitioners in No. 72-394, at 19, 30, 35.)* There are several answers to this argu- ment. First, faithful application of summary judgment principles will mean no more than that a manufacturer will receive a hearing when it makes a concrete offer of proof on a material factual issue. The Government’s fear that summary judgment will never be possible (id. at 35) disregards the years of successful use of summary judgment in the federal courts to weed out cases in which no factual dispute really exists. Second, though it would be faster and cheaper for FDA to proceed ex parte, Con- gress in providing for hearings obviously was willing to pay the price of guaranteeing the fairness that only hear- ings can provide.” Finally, the Government greatly ex- aggerates the size of the problem. In the recent American Public Health Ass’n litigation to which the Government refers,* the evidence indicated that a substantial majori- ty of the drugs rated less than “effective” by the NAS- NRC panels have been voluntarily removed from the mar- ket and that many of the remainder are duplicates of each other, containing the same active ingredient.” The *It is particularly ironic that this “burden” argument is ad- vanced in a group of cases in which the Government is also asking this Court to vest the FDA with new authority to determine whether °° This Court has gecently noted the constitutional underpinning for that judgment: “While the problem of additional expense must be kept in mind, it does not justify denying a hearing meeting the ordinary standards of due process.” Goldberg vy. Kelly, supra, 397 US. at 261, quoting Kelly v. Wyman, 294 F. Supp. 898, 901 (S.D. N.Y. 1968). ** American Public Health Ass’n Vv. Veneman, 349 F. Supp. 1311 (D.D.C. 1972), discussed in Brief for Petitioners in No. 72-894, at 30 n.20. *? Affidavit of John G. Adams, Ph.D., attached to Supplemental Memorandum in Support of Motion of Pharmaceutical Manu- facturers Association for Leave to Intervene, American Public 26 number of cases requiring hearings can be expected to be a small fraction of the number of drug claims reviewed by the NAS-NRC panels, In its Hynson, Westcott & Dunning decision, the Court of Appeals for the Fourth Circuit correctly set forth and applied the standard for determining whether a hearing must be held before approval of an NDA is withdrawn for lack of substantial evidence of effectiveness. That ruling should be affirmed by this Court. II. Under the Food, Drug, and Cosmetic Act, the Courts Have Exclusive Jurisdiction, in Enforcement and De- claratory Judgment Actions, to Determine Whether a Product is a “New Drug.” Three of the cases before the Court are declaratory judgment actions brought by drug manufacturers seeking a judicial determination that certain of their products are not “new drugs” as that term is defined in the Act— either because the products are not “new” within the meaning of amended Seetion 201(p), 21 U.S.C. § 321(p), or because they were exempted from amended Section 201(p) by the “grandfather” provisions of the 1962 Drug Amendments. The Government has challenged the manufacturers’ right to have a court make that determi- nation, arguing that the decision is more properly made by the Commissioner, subject to normal judicial review of agency actions. Health Ass’n v. Veneman, Civ. No. 1847-70 (D.D.C., filed Oct. 5, 1972). Specifically. Dr. Adams stated that in a survey of 681 drugs, manufactured by 47 PMA member companies, which had received no “effective” ratings. 428 had already been removed from the market. Thirty-six others had been accepted as “effective” by the FDA for one or more claims based on additional studies. The remaining 217 include only 152 distinct products, with the others being “obvious duplicates representing either different dosage forms or different strengths of the same active ingredient.” /d. A copy of Dr. Adams’ affidavit is being lodged with the Clerk of this Court. 27 In the Bentex case (No. 72-555), the Court of Appeals for the Fourth Circuit upheld the manufacturers’ right to obtain a declaratory judgment on the “new drug” status of their products and rejected the Government’s argu- ment that FDA has concurrent jurisdiction to decide that question. Bentex Pharmaceuticals, Inc. v. Richard- son, 463 F.2d 363 (4th Cir. 1972) (J.A. 258). The same court followed that ruling in the USV case (No. 72-666), decided the next day. USV Pharmaceutical Corp. v. Rich- ardson, 461 F.2d 223, 226 (4th Cir. 1972) (J.A. 466). However, the Third Circuit reached the opposite re- sult in No. 72-528. Ciba Corp. v. Richardson, 463 F.2d 225 (3d Cir. 1972) (J.A. 215). In a per curiam opinion which cited no authorities, the Third Circuit held that the question of “new drug” status had been decided sub silentio by the FDA when it withdrew approval of Ciba’s previously approved NDA and by a court of appeals in upholding the FDA’s action. Therefore, the Third Circuit concluded that Ciba was barred from obtaining a declara- tory judgment on the question.” *8In USV, since there has been a trial in the district court and there are now no disputed issues of fact, the Government does not oppose this Court’s reaching the legal issues governing the “new drug” status of the products involved. However, it does indicate its disagreement with the Fourth Circuit’s ruling, based on Bentex, that those issues are for the courts, not FDA, to decide. See Mem- orandum for Respondents on Petition for Certiorari in No. 72-666 at 6 n.9. **The remaining case before the Court (Nos. 72-394, 72-414) arises from the FDA’s withdrawal of approval of an NDA, of which review was obtained directly in the court of appeals. Hynson, West- cott & Dunning, Inc. v. Richardson, 461 F.2d 215 (4th Cir. 1972) (J.A. 173). In that case, the manufacturer, having previously been refused a declaratory judgment on the status of its product (Hynson, Westcott®& Dunning, Inc. v. Finch (D. Md., Civ. No. 21112, Sept. 16, 1970)), was also refused a hearing before the FDA on its claim of exemption from the “new drug” require- ments. PMA believes that the district court’s decision refusing to adjudicate the status of Hynson, Westcott & Dunning’s product was erroneous. SagAF notes onairinean OPA ee pit . AES TM Re SPA Ta MENS HEA, PAE SN yo AE So 28 For the reasons discussed below, we submit that this conflict between the circuits should be resolved in favor of the Fourth Circuit’s carefully reasoned construction of the Act in Bentew. As the Bentex opinion demonstrates, Congress has struck a balance in the Act between judicial and admin-/ istrative authority for its implementation. This balance is reflected in the two major amendments of the federal drug laws since the original enactment of the Food and Drug Act of 1906. Act of June 30, 1906, 34 Stat. 768. The 1906 Act did not provide for any premarketing review of drugs by an administrative agency. It pro- hibited the interstate sale of adulterated or misbranded drugs, and statutorily defined what acts constituted adul- teration and misbranding. Jd. §§ 7, 8, 34 Stat. 769-71. The agency was assigned the prosecutorial role of proceeding against violators in court.** When the Food, Drug, and Cosmetic Act replaced the tarlier law in 1938, it carried forward these self-executing prohibitions—triable in the first instance by district courts—and added a require ment of premarketing administrative clearance for “new drugs.” It defined “new drugs” as drugs “not generally recognized as safe” by qualified experts. Act of June 25, 1938, §$ 201(p), 52 Stat. 1041-42. The Act left manv- facturers free to market drugs other than “new drugs” without the prior approval or acquiescence of an admin- istrative agency, subject to the judicial sanctions of in- junction, seizure, or criminal penalty if they violated ev of the Act’s commands—including the specific pro- ition against marketing a “new drug” without an ef- fective NDA. ‘See Sections 301(d), 302-04, 505(a), 21 3° Enforcement actions are actually brought in the name of the United States, by the Department of Justice. The administrative agency investigates possible violations and refers cases to the De- partment for prosecution. The term “prosecutorial role of the agency” is used in this brief to denote the agency’s role in insti- gating enforcement suits. — 29 U.S.C. §§ 331(d), 332-34, 355 (a).° Except for the FDA’s authority to screen “new drugs” before marketing, the function of the agency under the Act remained prosecu- torial. The 1962 Amendments to the Act, whith expanded the definition of “new drugs” to include drugs “not generally recognized as safe and effective” and elaborated on FDA’s controls over “new drugs” under Section 505 of the Act, did not change the balance between the self-executing and the premarketing clearance aspects of the Act. Pub. L. 87-781, §§ 102-04, amending Sections 201(p), 505, 21 U.S.C. §§ 821(p), 355. The FDA was given no authority to require premarketing review of products falling outside the expanded “new drug” catégory or exempted by the “grandfather” provisions. Where Congress has wanted to give the FDA decision- making authority, it has known how to do it. See, e.g., Sec. tions 401, 403(j), 502(n), 21.U.S.C. §§ 341, 348(j), 352 (n). But the Act makes no provision for FDA adjudica- tion of whether a drug being marketed without an ap- proved NDA is a “new drug” for which the manufacturer should have sought premarketing clearance. It contains no authority for administrative proceedings by which the marketing of a product that lacks an approved NDA. The FDA is authorized to investigate such a suspected viola- tion of the Act, just as it may investigate a possible violation of the adulteration or misbranding provisions applicable to “new” and “old” drugs alike. Section 702, 21 U.S.C. § 372. It may, in its prosecutorial role, reach a conclusion that a particular product is a “new drug” requiring premarketing approval. But, as the Fourth Circuit observed in Bentex, “that opinion is not adjudicatory, it is only the basis on which the FDA, as the prosecutor or initia- tor of either a seizure or injunctive action in the District Court, may invoke the jurisdiction of that FDA can order the filing of an NDA or order a halt in thea PAR RSH RRR tg! SEN an! armen enM Rect eT a MMM al hi ay 30 Court to determine, among other issues, whether the drug challenged is a ‘new drug’.” 463 F.2d at 370 (J.A. 266). In fact, enforcement suits under the “new drug” provi- sion commonly present the courts with a disagreement be- tween the FDA and the manufacturer over a product’s status as a “new drug.” “New drug” status is “an is- sue that must be and is resolved . . . in practically every injunctive, seizure, or criminal proceeding under the Act.” ‘Bentex, supra, 463 F.2d at 372 (J.A. 269) (citing cases). This does not, as the Government asserts, make for an irrational or ineffective legislative scheme. To the con- trary, a manufacturer who entertains some doubt about the “new drug” status of his product need not await FDA enforcement action to remove the uncertainty. The FDA’s regulations have long provided that a manufac- turer may request the FDA to give an informal opinion on the “new drug” status of a product. See 21 C.F.R. § 130.39. The courts have held—and the FDA has con- ceded—that the FDA’s expression of opinion is a suf- ficiently final “agency action” to permit the manufacturer to sue for a declaratory judgment under Abbott Labora- tories v. Gardner, 387 U.S. 136 (1967). E.g., AMP, Ine. v. Gardner, 389 F.2d 825, 826 & n.2 (2d Cir.), cert. denied, 393 U.S. 825 (1968). Thus, where the manu- facturer and the FDA differ on the “new drug” status of a product, each has an orderly way under the Act to obtain an impartial judicial resolution of the issue. Until very recently, the FDA did not resist a manufac- turer’s declaratory judgment suit on the ground that the ~ agency itself was empowered to adjudicate the issue sub- ject only to limited judicial review. See, e.g., AMP, Ine. v. Gardner, supra; Durovic v. Richardson, 327 F. Supp. 386 (N.D. Ill. 1971); Tara Industries, Inc. v. Finch, CCH Food, Drug & Cosm. L. Rptr. {40,816 (D.D.C. 1970); Lemmon Pharmacal Co. v. Richardson, 319 F. Supp. 375 (E.D. Pa. 1970) ; cf. Merritt Corp. v. Folsom, 31 165 F. Supp. 418 (D.D.C. 1958) (“new drug” status de- termined in suit to enjoin further Government seizure actions). Nor does this scheme make it difficult to enforce ef- fectively the “new drug” provisions of the Act. The man- ufacturer who markets a drug without an approved NDA does so at his own risk—the considerable risk of seiz- ure, injunction, or even criminal punishment if a court rules in an enforcement suit that he was wrong in be- lieving his product not to be a “new drug.” The Government suggests that the Fourth Circuit’s rul- ing in Bentex will “transfer to the courts” an “enormous volume” of litigation (Brief for Petitioners in No. 72-555, at 34, 58), and that such litigation will involve complex technical questions difficult for the courts to decide. (Jd. at 34, 39, 43, 44, 55-57.) Both suggestions are wrong. The Bentex decision does not create any new caseload for the courts, because the courts have always been re- sponsible for deciding “new drug” status, either in an enforcement action ™ or in 4 declaratory judgment suit.* 31 See, e.g., United States v. Article of Drug . . . Sudden Change, 409 F.2d 734 (2d Cir. 1969) ; United States v. Article of Drug ... Furestrol, 415 F.2d 390, 392 (5th Cir. 1969) (per curiam) ; United States V. 41 Cases .. . Myconox & Ferro-Lac, 420 F.2d 1126, 1128 (5th Cir. 1970); United States v. Seven Cartons . . . Ferro-Lac, 424 F.2d 1364, 1365 (7th Cir. 1970); United States v. 354 Bulk Cartons . . . Trim Reducing-Aid Cigarettes, 178 F. Supp. 847, 852- 53 (D.N.J. 1959) ; United States v. Article of Drug . . . Quinaglute, 268 F. Supp. 245, 248-49 (E.D. Mo. 1967) ; United States v. Articles of Drug . . . Quick-O-Ver, 274 F. Supp. 448, 445-46 (D. Md. 1967) ; United States v. Article of Drug .. . Line Away, 284 F. Supp. 107, 112-13 (D. Del. 1968), aff'd on other grounds, 415 F.2d 369 (3d Cir. 1969) ; United States v. Article of Drug . . . Magic Secret, 331 F. Supp. 912, 914-17 (D. Md. 1971); United States v. Article of Drug . .. Excedrin PM, CCH Food Drug & Cosm. L. Rptr. § 40,486 (E.D.N.Y., No. ‘70-C-77, Mar. 5, 1971). See also United States v. Allan Drug Corp., 357 F.2d 718 (10th Cir.), cert. denied, 385 U.S. 899 (1966). % See, e.g., AMP, Inc. v. Gardner, supra; Durovic v. Richardson, supra; Lemmon Pharmacal Co. v. Richardson, supra; cf. Merritt Corp. v. Folsom, supra. The Government has made no showing that the courts have been burdened with too many cases of either type. As the Fourth Circuit noted, there is nothing novel about judicial resolution of “new drug” status—what is novel is the Commissioner’s assertion that he has the power, nowhere conferred by the Act, to adjudicate the need for a manufacturer to file an NDA for a particular product. 463 F.2d at 370-71 (J.A. 266-67). Also incorrect is the suggestion that determining “new drug” status requires “resolution of technical issues of fact, requiring highly specialized knowledge, training and experience of a kind not ordinarily possessed by judges.” (Brief for Petitioners in No. 72-555, at 43.) In making that argument, the Government blurs the distinction be- tween the legal test of “new drug” status (whether a product is “generally recognized” by experts as safe and effective) and the test for approval of an NDA for a “new drug” (whether the drug is safe and effective in fact). Determining whether a drug is actually safe or effective may require the resolution of difficult scien- tific questions, and that determination is made by the FDA in the first instance when it passes on an NDA or when it later decides whether to withdraw its ap- proval.** But where “new drug” status is the question, “the safety of the products is not what is at issue .... The question is whether there is general recognition among qualified experts of the products’ safety and ef- fectiveness.” AMP, Inc. v. Gardner, supra, 389 F.2d at 33 Even the issue of actual safety or effectiveness is decided by the courts where the FDA challenges statements of safety or effec- tiveness in a drug’s labeling as a violation of the misbranding provisions of the Act. The courts have not shown any inability to decide that issue when required. See, e.g., United States v. Lanpar Co., 2938 F. Supp. 147, 151-54 (N.D. Tex. 1968); United States v. 354 Bulk Cartons ... Trim Reducing-Aid Cigarettes, supra, 178 F. Supp. at 851-52. 33 831. The courts unanimously recognize this distinction.” To decide “new drug” status, a court need only determine *the nature of a drug’s reputation among persons with relevant expertise, not whether that reputation is scien- tifically accurate. The courts can readily decide that question on the basis of expert testimony about the drug’s reputation. See United States v. Articles of Drug... Quick-O-Ver, supra. “General recognition” is, as the court in Bentex observed, “manifestly a justiciable issue.” 463 F.2d at 372 (J.A. 269). The Government goes so far as to argue that there is no difference whatever between the test of substantial evidence of effectiveness and the test of general recogni- tion of effectiveness. (Brief for Petitioners in No. 72-555, at 55-57.) We believe that this issue need not be de- cided by the Court in these cases.** Moreover, there is no basis whatever for the Government’s remarkable con- tention. The statutory definition of substantial evidence of effectiveness appears in Section 505(d) of the Act and is explicitly made applicable only to that subsection and 4 See, e.g., United States v. Article of Drug .. . Bentex Ulcerine, 469 F.2d 875, 878-79 (5th Cir. 1972); United States v. Article of Drug .. . Furestrol, supra, 415 F.2d at 392, aff’g 294 F. Supp. 1307, 1310-11 (N. D. Ga. 1968); United States v. Article of Drug . Ezcedrin PM, supra, CCH Food, Drug & Cosm. L. Rptr. {| 40,486, at 41,226; United States v. Article of Drug . . . Line Away, supra, 284 F. Supp. at 112; United States v. Articles of Drug . . . Quick- 0-Ver, supra, 274 F. Supp. at 445-46. %sThe Government apparently believes that the question is pre- sented in No. 72-414, Hynson, Westcott & Dunning, Inc. v. Wein- berger. (Memorandum for Respondents on Petition for Certiorari in No. 72-414, at 5-7; Brief for Petitioners in No. 72-555, at 57 n.83.) But the question is not addressed in the petitioner’s brief, or in the lower courts’ opinions, in that case. In any event, if the Court affirms the Fourth Circuit’s decision in Bentez, holding that the FDA has no authority to determine the “new drug” issue, there would be no occasion to reach this question in the Hynson, Westcott & Dunning case. 34 to Section 505(e).** There is nothing in the legislative history of the 1962 Amendments to indicate that Con- gress intended the substantial evidence test to have a broader application, or that it intended in enacting the new test to obliterate entirely the distinction between “old” and “new” drugs. The Government’s position would effectively deprive the careful definition of “new drugs” in Section 201(p) of the Act of any function, and would sweep all drugs under a requirement of proof of effective- ness by “adequate and well-controlled investigations.” The Commissioner, unhappy with the structure of the Act granting him jurisdiction only to approve, disapprove, or withdraw approval of NDAs filed with him, has now attempted to substitute a regulatory system under which manufacturers would have to submit all drugs to the FDA for administrative determination of their “new drug” status. His substitute system rests on two assertions: first, that as a matter of law every filing of an NDA raises for the FDA’s determination the issue whether the NDA should have been filed at all; and second, that, where an NDA is not filed, Section 5(e) of the Adminis- trative Procedure Act (which authorizes all agencies to issue declaratory orders where necessary “to determine a controversy or remove uncertainty”)*’ requires resort to an administrative “declaratory judgment” proceeding be- fore the FDA to determine whether a product is a “new drug.” Thus, the “new drug” status of every drug would come before the FDA for adjudication in one way or another. This jerrybuilt construct falls of its own weight. The filing of an NDA simply does not under the Act place at issue the “new drug” status of the product covered. To the contrary, it indicates that the manufacturer has 8¢ Section 507(h) also applies the substantial evidence definition to certain antibiotics. 21 U.S.C. § 557(h). 575 U.S.C. § 554(e). 35 chosen not to seek resolution of the issue.** The FDA’s regulations nowhere suggest that “new drug” status is an issue to be decided in NDA approval or withdrawal pro- ceedings. And we are aware of no case in which the filing of an NDA has been regarded by either the FDA or a reviewing court as raising the “new drug” issue for decision.** To read Section 5(e) of the APA as transferring the determination of “new drug” status from a judicial to an administrative forum is equally unsound. That section authorizes an agency to decide by declaratory order only questions which it is otherwise authorized to adjudicate on the record of a hearing. Boston & M.R.R. v. United States, 162 F. Supp. 289, 293-94 (D. Mass.), appeal dismissed, 358 U.S. 68 (1958). In this respect, it mir- 38 The Fourth Circuit in Bentez said that the filing of an NDA is a “concession” of the “new drug” status of a product. 463 F.2d at 371 (J.A. 268). Whatever the court meant by that, we would not agree that such a filing “concedes” anything about what the status of a drug may be years after the filing. Since a drug that is initially “new” may cease to be so by becoming generally recog- nized as safe and effective, the original filing of an NDA has no bearing on the status of the drug at a later date. 3° The Government raises the spectre of abuse of the adminis- trative process by a manufacturer who unsuccessfully challenges a withdrawal of NDA approval before the FDA and on review in the court of appeals, and then seeks “to litigate afresh in a dis- trict court the question whether the drug involved required an NDA _in the first place.” Brief for Petitioners in No. 72-555, at 35, 55. This is an illusory problem. If a manufacturer failed to bring a declaratory judgment suit until after the withdrawal of approval was upheld by the court of appeals, that failure might well justify a district court’s refusal in its equitable discretion to en- tertain a request for declaratory judgment. *°The Attorney General’s Manual on the APA makes this point perfectly clear: “This grant of authority to the agencies to issue declaratory orders is limited by the introductory clause of Section 5 so that such declaratory orders are authorized only with respect to matters which are required by statute to be determined ‘on 36 * rors the Declaratory Judgment Act, 28 U.S.C. §§ 2201-02, which authorizes the federal courts to issue declaratory judgments but confers no new jurisdiction on them." In both of the cases cited by the Government in which Section 5(e) was invoked, it was conceded that the agency had authority to adjudicate the question it was attempting to decide by declaratory order. Frozen Food Express v. United States, 351 U.S. 40, 41, 44 (1956); Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 372-73 _ n.3 (1969). As we have shown, the Food, Drug, and Cosmetic Act does not authorize the FDA to adjudicate “new drug” status. Therefore, Section 5(e) is of no help to the Government at all. The Government’s theory that Section 5(e) confers such jurisdiction, moreover, proves too much. It would logically apply not only to the determination of “new drug” status but also to any question under the Act now the record after opportunity for an agency hearing.’ .. . For example, where an agency is authorized after hearing to issue orders to cease and desist from specified illegal conduct, it may, under Section [5(e)], if it otherwise has jurisdiction, issue a declaratory order declaring whether or not specified facts constitute illegal conduct. On the other hand, while the Securi- ties and Exchange Commission has long issued informal ad- visory interpretations through its principal officers as to whether a proposed issue of securities would be exempt from the registration requirements of the Securities Act, there is no statutory agency hearing procedure in which this question can be determined; if sectirities are sold without registration and the Commission believes that registration was requiréd, it can only institute civil or criminal proceedings. Accordingly, Section [5(e)] does not authorize the Commission to issue declaratory orders as to whether particular securities must be registered under the: Securities Attorney General’s Manual on the Administrative Proc Act 59 (1947). The situation of the FDA with respect to questions of “new drug” status is identical to that of the Securities and Exchange Commis- sion in the Attorney General’s example. 41 E.g., Skelly Oil-Co. v. Phillips Petroleum Co., 339 U.S. 667, 671- 72 (1950) ; see Attorney General’s Manual, supra, at 59-60. 37 decided by the courts. The theory would transform the Act from one enforced largely in the courts, with the Government as prosecutor, to one in which every “contro- versy” or “uncertainty” is decided in an administrative proceeding where the Commissioner is both prosecutor and judge, and where his decisions are conclusive except for limited judicial review. Whatever the merits of such a change as a matter of policy, it can be effected only by an act of Congress. The patchwork nature of the Government’s argument is further demonstrated by its attempt to find authority for judicial review of the declaratory orders on “new drug” status it claims the FDA has authority to make. The Act authorizes review of the Commissioner’s disapproval or withdrawal of approval of an NDA in the courts of appeals, § 505(h), 21 U.S.C. § 355(h), but provides for no other appellate review of decisions under Section 505. See Turkel v. FDA, 334 F.2d 844, 845-46 (6th Cir. 1964), cert. denied, 879 U.S. 990 (1965). Thus, declaratory orders on “new drug” status would not be reviewable in the courts of appeals. The Commissioner suggests that this gap can be closed by permitting the district courts to review his declaratory orders under the gen- eral review provision in the APA. The result would be that the Commissioner’s rulings on “new drug” status would be reviewable sometimes in the courts of appeals (when approval of an NDA has been refused or with- drawn) and sometimes in the district courts. There is nothing to indicate that Congress contemplated such an incongruous result. The Government relies on a number of decisions of this Court to establish the broad proposition that an agency always has implicit authority to adjudicate the question of its own jurisdiction. (See Brief for Petitioners as REITER TLL ESS AIT THES NITE RN A aE SMS te ar pan peta inse 38 in No. 72-555, at 57-60.) However, those cases are clearly not in point. In Ricci v. Chicago Mercantile Ex- change, 98 S,Ct. 578 (1978),/this Court dealt with a statute containing an express grant of authority to the Commodity Exchange Commission to “adjudicate and remedy” any violation of the statute or regulations under it. Acting on the “premise” that the question before the Court fell within the agency’s adjudicatory power, the Court ruled that the agency should be permitted to de- cide it first. Zd. at 581-82. The Court was careful to distinguish its earlier decision in Silver v. New York Stock Exchange, 378 U.S. 341 (1963), where the Court had refused to require judicial deference to an agency which “had no authority to deal with” the question pre- sented. Id. at 579-80. Thus, Ricci and Silver together stand only for the proposition that where an agency has authority to decide a question, the courts will often defer to it to decide the question in the first instance. Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41 (1988), and Marine Engineers Beneficial Ass’n v. Inter- lake S. S. Co., 870 U.S. 178 (1962), both involved ap- plications of the National Labor :Relations Act, which conferred “exclusive” jurisdiction on the National Labor Relations Board to adjudicate “any unfair labor practice affecting commerce.” Act of July 5, 1935, §10(a), 49 Stat. 453, as amended, 29 U.S.C. §160(a). In Myers the Court held that, since the Board was authorized to decide whether commerce is affected in a particular case, subject to judicial review, an employer could not take that question to court before the Board proceedings were com- pleted. In Interlake, the Court held that the Board’s exclusive jurisdiction to determine what is a “labor organization” within the Act precluded the state courts from entertaining a suit to determine that question at the same time the Board proceedings were going on. « 39 Similarly, in FPC v. Louisiana Power & Light Co., 406 U.S. 621 (1972), the FPC had unquestioned authority to determine whether a natural gas system was interstate and therefore subject to federal control, and the agency was conducting proceedings to decide that question. This Court simply held that the federal courts should not de- termine the question for themselves “when the precise issue . . . is in the process of litigation through pro- cedures originating in the [agency].” Jd. at 647. In each of these cases, the statute itself gave the agency the authority to decide the question involved. They have no application in this context, where the Act does not.” The Government purports not to argue that the exist- ing jurisdiction of the courts to determine “new drug” status should be cut off, but only that the FDA should be given concurrent jurisdiction to decide the issue. In Bentex the Government argued in the district court that the Commissioner should be given “primary jurisdiction” and that the declaratory judgment suit should, therefore, be dismissed. The district court rejected that argument, ruling that it has jurisdiction “concurrent” with the FDA; however, it then proceeded to defer to the FDA for an initial determination of “new drug” status. The Government, having failed to appeal the rejection of its primary jurisdiction theory, now acquiesces in the dis- trict court’s ruling. (Brief for Petitioners in No. 72-555, 42 Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186 (1946), is even farther afield. In that case, the Federal Wage and Hour Administrator was seeking to exercise his authority to investigate possible violations of the Fair Labor Standards Act, 29 U.S.C. §§ 209, 211. Certain corporations being investigated tried to de- feat judicial enforcement of subpoenas on the ground that the Act did not apply to them. The Court held that the Administrator was free to investigate the question of coverage, in the performance of his job of “searching out violations with a view to securing enforcement of the Act.” 327 U.S. at 216. The power of the FDA in its prosecutorial role to investigate the coverage of the “new drug” provisions is not disputed in the cases now before the Court. 40 at 46 n.76.) But it is clear that there is no functional difference between the primary jurisdiction theory and the district court’s notion of concurrent jurisdiction. As the district court’s action in Bentex demonstrates, defer- ence to the agency under a concurrent jurisdiction rule would be virtually automatic. The result would be to transfer the determination of “new drug” status in all instances from the courts to the FDA. Both the primary and concurrent jurisdiction theories share a common de- fect: Both ignore the basic fact that “[t]he only adjudi- catory right vested by the Act in the Secretary relates to approval, or withdrawal of approval, of a ‘new drug’ ap- plication.” Bentex, 463 F.2d at 371 (J.A. 267). The Commissioner may have reason to wish he had the jurisdiction he asserts. As both prosecutor and judge, he could sweep drugs into the “new drug” category subject only to limited appellate review in the courts. Under the Act as Congress wrote it, on the other hand, the Commissioner has the burden of proving in court in an enforcement action that a product falls within the “new drug” provision.“ The Commissioner is attempting to shift this burden by assigning himself the right of de- cision and then requiring the manufacturer to convince | a reviewing court that the decision is not supported by substantial evidence in the record. Moreover, the Govern- ment appears to argue that the Commissioner’s decision would be conclusive in a later enforcement proceeding. (Brief for Petitioners in No. 72-555, at 45 n.74.)~ Not only would that stand the~Act on its head, but by shifting 43 F.g., Bentex, 468 F.2d at 371-72 (J.A. 268-69) ; United States v. Article of Drug . . . Bentex Ulcerine, supra, 469 F.2d at 878-79; United States v. Articles of Drug .. . Quick-O-Ver, supra, 274 F. Supp. at 445-46. FDA officials have recognized that the burden of proof in an enforcement action is on the Government. See United States v. Allan Drug Corp., supra, 357 F.2d at 718 (quoting state- ment by HEW Secretary) ; CHRISTOPHER, CASES & MATERIALS ON Foop & Druc Law 461 (1966) (quoting statement by FDA Deputy Commissioner) . 41 the burden of proof in a criminal enforcement action, it would raise obvious constitutional issues. See In re Winship, 397 U.S. 358 ( 1970). In sum, as the Fourth Circuit in Bentex concluded, the Act gives the Commissioner no authority to adjudicate the “new drug” status of a manufacturer’s product. Where the Commissioner believes a manufacturer has wrongly failed to file an NDA, the Act gives him “cer- tain potent judicial remedies, available exclusively in the District Court.” “ The decision of the Fourth Circuit to that effect should be affirmed. III. The Fourth Circuit Improperly Denied “Grandfather” Protection Under Section 107(c)(4) of the 1962 Drug Amendments to Products Which Were Neither “New” nor Covered by an Effective New Drug Application on the Day Before the Enactment Date of the Amend- ments. USV Pharmaceutical Corp. v. Weinberger, No. 72-666, and Hynson, Westcott & Dunning, Inc. v. Weinberger, No. 72-414, raise questions concerning the scope of pro- tection, under the “grandfather” clauses of the 1962 Drug Amendments, P.L. 87-781, 76 Stat. 780, 788-89, afforded to drugs which were no longer “new” drugs on the day before the enactment date of the Amendments but which had previously been covered by effective new drug applications. Under Section 505(a) of the Food, Drug, and Cos- metic Act, 21 U.S.C. § 355(a), it is unlawful to market a “new drug” unless there is an effective NDA for such drug on file with the FDA. Before the enactment date of the 1962 Drug Amendments, a “new drug” was defined _in Section 201(p) of the Act as one “not generally recognized, among experts qualified by scientific training and experience to evaluate the “463. F.2d at 366 (J.A. 260) (emphasis in original). 42 7 safety of drugs, as safe for use under the conditions prescribed, recommended, or suggested in the labeling thereof ....” 52 Stat. 1041 (1938). The FDA was required under Section 505 to deny or suspend the effectiveness of an application if it appeared that the drug was unsafe or the application incomplete or inaccurate. 52 Stat. 1052-53 (1938). . The Amendments added einen of effectiveness to the existing requirement & safety. This change was reflected in two basic ways. First, the category of “new drugs” subject to the application requirements was ex- panded to fete any drug the safety and effectiveness of which is not generally recognized by qualified experts. Section 201(p), 21 U.S.C. § 321(p). Second, Section 505 was amended to require the FDA to deny or withdraw approval of an NDA if it appears that there is not “sub- stantial evidence” that the drug will have the effect claimed for it. Sections 505(d) and (e), 21 U.S.C. $§ 355 (d) and (e). The Amendments included two grandfather provisions providing exemptions for drugs already on the market. Section 107(c)(3) provides that any drug for which ~ there was an effective NDA on the day before the en- actment date ** may continue to be marketed, even with- out substantial evidence of effectiveness, so long as ap- proval of the NDA is not withdrawn. And approval of the NDA could not be withdrawn, pursuant to Section 505(e), on the ground of lack of substantial evidence of effectiveness, until two years after the enactment date. In addition, Section 107(c) (4), which ‘is at issue here, provides a permanent exemption for certain other drugs, so long as there is no change in their recommended uses: *5 Section 107(c)(2) provides that an application which was “effective” on the day before the enactment date shall be deemed “approved” by the FDA. And Section 107(c)(3) applies to all drugs whose applications are thereby deemed approved. — 43 “In the case of any drug which, on the day immedi- ately preceding the enactment date, (A) was com- mercially used or in the United States, (B) was not a new drug as defined by section 201(p) of the basic Act as then in force, and (C) was not covered * by an effective application under section 505 of that Act, the amendments to section 201(p) made by this Act shall not apply to such drug when intended solely for use under conditions prescribed, recom- mended, or suggested in labeling with respect to such drug on that day.” The Fourth Circuit ** construed Section 107(c) (4) not to exempt drugs which had at any time prior to the day before the enactment date been covered by an effective NDA the approval of which had not been withdrawn pursuant to Section 505(e), 52 Stat. 1058 (1938). It also held that the so-called “me-too” drugs *’ were not cov- ered by the NDAs of other manufacturers’ “pioneers” and, thus, that they were entitled to exemption under the statute if they had become old, even though the pio- neers were not exempt.** The Government also takes the position that the exemp- tion provided by Section 107(c) (4) does not apply to any drug for which there was at-any time an effective NDA . on file with the FDA, even if the drug had become gen- j “ The court articulated its views in the USV case, 461 F.2d 223, 226-27 (J.A. 468-70), and it relied without elaboration upon that j opinion for its holding on the grandfather issue in the Hynson, j Westcott & Dunning case. 461 F.2d 215, 219 (J.A. 176). “A “me-too” drug is one which is substantially identical in composition and claims to an NDA’d, “pioneer” drug. 461 F.2d at 228 n.15 (J.A. 470). Such drugs typically were marketed with- out NDAs because the NDA’d products had become generally recognized as safe. ** However, the court held that me-too drugs produced by the manufacturer of the NDA’d drug were covered by the NDA and, thus, were not grandfathered under Section 107(c) (4). 461 F.2d at 229-30 (J.A. 473). 44 erally recognized as safe before the 1962 Amendments and therefore did not need an NDA, unless the FDA had formally suspended the effectiveness of the NDA.“ As will be demonstrated below, this position flies in the face of the legislative history of the 1962 Drug Amend- ments, would make Section 107(c) (4) meaningless, and depends upon a wooden reading of the literal language of that section in isolation, without regard even to the rest of Section 107(c) itself. Properly construed, Section 107(c) (4) exempts from the amendments to Section 201(p) those drugs which had been commercially marketed prior to the day before the enactment date and had by then become generally rec- ognized as safe for their indicated uses. Swth drugs were not “new drugs” on the day before the enactment date, and thus were not then subject to the statutory require ment of an NDA as a condition of lawful marketing. Their NDAs had clearly become obsolete and superfiu- ous.” Accordingly, such drugs could not be said to have 49 See Memorandum for Respondents in No. 72-666, at 8. The Government parts company with the Fourth Circuit in maintaining that the me-too drugs were covered by the pioneers’ NDA’s. Id. at 9-11. 5° This was recognized as recently as last year in testimony by the General Counsel of the FDA, who stated that NDA’s are “obsolete or inactive” when “the drug has become an old drug.” Hearings on Present Status of Competition in the Pharmaceutical Industry Before the Subcommittee on Monopoly of the Senate Select Committee on Small Business, 92d Cong., 2d Sess., Part 22, at 8530. Similarly, a commentator has noted: “It just doesn’t seem to make any sense to argue that such {old} drugs remained ‘covered by’ their earlier NDA clear- ance when the manufacturing procedure, formulation, claims, and so forth, could have been (and often were) changed with- out the necessity of submitting a supplemental NDA unless the change was such that it caused the drug to become again a new drug, and when any newcomer could market the same drug without any NDA clearance.” Hagan, Grandfather Pro- tection Under the Drug Admendments of 1962, 19 Foop DrucG CosMETIc L.J. 119, 123 (1964). 45 < been covered by an effective application and, thus, are grandfathered, as to pre-1962 claims, by Section 107(c) (4).** These products, of course, are still fully subject to the adulteration and misbranding sections of the stat- ute, so the FDA is assured of ample power to protect the public health.* A. The Grandfather Clause Must Be. Construed in Light of Congress’ Basic Intention to Apply the Effectiveness Requirement Only to New Products and New Claims for Old Drugs. The legislative history of the 1962 Amendments bear- ing directly upon Section 107(c) (4) is admittedly sparse. But an examination of the legislative history of the basic effectiveness amendments to which this grandfather pro- vision relates sheds considerable light on its meaning. That history makes it clear that Congress did not intend to subject existing claims for “old” drugs to the new effectiveness requirements. The amendment to Section 201(p) of the basic Act expanding the definition of “new drug” to include any drug not generally recognized as effective, as well as safe, was included in the original version of the 1962 Drug Amendments, S. 1552. However, when the bill was *t This construction of Section 107(c) (4) obviates resolution of the question of whether the so-called me-too drugs should be deemed to be “covered” by NDAs issued to pioneer products. Because of a divergence of interest among its member companies, PMA expresses no view on the question of whether—if the con- struction of Section 107(c)(4) urged here is rejected—me-too products can nonetheless qualify for grandfather protection, as USV maintains in No. 72-666. ‘2 For example, manufacturers who make extravagant claims for the effectiveness of their products have rendered the products misbranded under Section 502(a) of the Act, 21 U.S.C. § 352(a), and have, therefore, committed a prohibited act subjecting them- selves to the full range of enforcement actions under Title III of the Act. : 46 first reported out of the Senate Judiciary Committee on July 19, 1962, this provision was eliminated, and the existing definition of “new drug” was left unchanged. The Committee feared that changing the definition would have the effect of causing old, “established drugs,” which were generally recognized as safe and, thus, not “new drugs,” to be deemed “new drugs” required to go through the new drug clearance procedure. S. REP. No. 1744, 87th Cong., 2d Sess. 17 (1962). Several members of the Committee, including the bill's sponsor, Senator Kefauver, dissented from this decision and argued that the definition of a “new drug” should be amended to include a requirement of effectiveness. Such a change was necessary, they reasoned, in order that each new claim for drugs lawfully marketed would he subject to the effectiveness requirement. See id. at 34 (separate statement of Sens. Kefauver, Carroll, Dodd, Hart and Long). In other words, the dissenters did not take issue with the Committee’s objective of exempting old drugs from the effectiveness requirement, except in the case of new claims. See also remarks of Senator Kefauver, 108 CoNnG. REc. 10278 (1962). Ultimately, Senator Kefauver prevailed, and the defini- tion of “new drug” was changed in amendments to the bill which were reported out of the Judiciary Committee on August 21, 1962. The Committee Report which acconm- panied the amendments described the change as intended to eliminate ambiguity concerning “the circumstances and extent to which a new claim or change of claim” could be made without supporting evidence of effectiveness sub- mitted to the FDA. S. Rep. No. 1744, 87th Cong., 2d Sess. 53 The focus upon new claims for existing drugs was reflected later in the legislative history as well. See, e.g., remarks of Senator Kefauver, 108 CONG. REC. 22045 (1962) (arguing that the defi- nition of “new drugs” should me amended to close the “loophole” which would permit the manufacturer of an existing drug to avoid the new drug application procedure for new claims). 47 pt. 2, at 5 (1962). And Senator Eastland, chairman of the Judiciary-Committee, introduced the new amendments with a lengthy discussion of the bill’s provisions on the floor of the Senate: “The term ‘new drug’ is presently defined as one not generally recognized to be safe for the claimed uses or one, which while so recognized, has not been used for a material time or to a material extent for such uses. The bill would expand this definition so that the term ‘new drug’ would also include [a drug] not generally recognized to be effective for the claimed uses or one, which while so recognized, has not been used for a material time or to a material extent for such uses. Thus, every brandnew product, and every new claim for an existing product, would be subject to the tests and procedures established in section 505 of the act.” 108 Conc. REC. 17366 (1962) (em- phasis added). The amendments reported out of the Judiciary Com- mittee also included, for the first time, the grandfather _ provisions of Section 107(c). Section 107(c) (3) provided a limited, two-year grace period for drugs covered by effective NDAs, and Section 107(c) (4) provided a perm- anent exemption to certain other drugs. Evidently, this latter provision was included in the bill in order that the change in the “new drug” definition might serve its pro- ponents’ purposes without at the same time ignoring the repeated concern of Congress that established old drugs should not be required to go through the new drug proce- dure and demonstrate “substantial evidence” of effective- ness for existing claims. Senator Kefauver had antici- pated the inclusion of this grandfather provision two weeks earlier. In arguing for the new definition of “new drugs,” he was careful to note: “{T]he amendment to the definition of ‘new drugs’ would not require resubmission of all the thousands of ‘new drugs’ hitherto cleared for 48 the market in order to obtain reclearance for efficacy.” 108 Conc. REc. 15696 (1962) .™ In sum, the new definition of “new drugs” was intended — only to assure that new products and new claims for exist- ing old drugs would require substantial evidence of ef- fectiveness. Neither the proponents nor the opponents of this change sought to require old drugs to demonstrate efficacy for existing claims as a prerequisite to continued marketing. Section 107(c) (4), which provides an ex- emption from the change in the definition of “new drugs,” must be construed in furtherance of this purpose. The construction of Section 107(c) (4) urged by the Goverr- ment, which would have the result of causing the thov- sands of drugs already lawfully on the market and gen- erally recognized as safe to be subject to the amended new drug clearance procedure, flies in the face of’ this clear and overriding legislative purpose. 54 In light of this repeated concern in the legislative history that not all drugs previously on the market should be required to demon- strate effectiveness for existing claims, the language in the Confer- ence Report, H.R. Rep. No. 2526, 87th Cong., 2d Sess. 23 (1962), that Section 107(c) (4). applies to drugs that have “never pre viously been subject to the new-drug procedure” should properly be construed as a partial description of the class of drugs grand- fathered by the provision, and not as a limitation upon the scope of the provision. Nothing in the quoted language or the history of the section suggests that Congress intended it to be such a limita- tion. Moreover, if construed as a limitation, the language proves too much, for it would be inconsistent with the concession by both the Fourth Circuit (461 F.2d at 219, 227 (J.A. 176, 469)) and the Government (Memorandum for Respondents on Petition for Cer- tiorari in No. 72-666, at 8) that, under some circumstances, an effective NDA could have ceased to be effective before 1962. See 52 Stat. 1053 (19388). What is more, as will be seen below, such a construction, when combined with the Government's position that me-too drugs are covered by NDAs for pioneer products, would render Section 107(c) (4) entirely meaningless. 49 B. The Construction Urged by the Government Would Render Section 107(c)(4) Meaningless. The reading of Section 107(c) (4) urged by the Gov- ernment not only is fundamentally inconsistent with the legislative history, but also would result in a strained and senseless construction of the statute. Indeed, in the last analysis, the Government’s construction wo-'d as a practical matter render Section 107(c) (4) entirely mean- ingless. All drugs which were sold prior to 1988 are exempted from the new drug application procedure by Section 201 (p) of the Act, 21 U.S.C. § 321(p). Since a drug could not become an old drug without having been marketed for a time (Section 201(p) (2)), every drug first mar- keted between 1938 and 1962 must have at some time : been a “new drug.” See 52 Stat. 1041 (1938). And no E such drug could lawfully have been marketed without an : effective NDA. 52 Stat. 1052 (1938). If, as the Gov- ernment maintains, an NDA which is once effective is ; always effective and if the so-called me-too drugs are : deemed to be “covered” by the NDA for the pioneer : drug, then every drug which was at any time “new” would have been covered by an effective application on the day before the enactment date.** Thus, other than those drugs already exempted by Section 201(p), no drug would qualify for exemption under Section 107(c) (4), 53In spite of the fact that both the Fourth Circuit in USV (461 F.2d at 226 (J.A. 468) ) and the Government (see Memorandum for Respondents in No. 72-666, at 7-8) purport to recognize that a “new drug” may have become old when, as a result of widespread experience and use, it became generally recognized as safe, their claim now—that a drug remained covered by an effective NDA no matter how obsolete or superfluous the NDA may have become— amounts to saying that every drug which was once “new” before the enactment date of the Amendments, and thus subject to the NDA requirements, was always “new.” a i a Ae as TE I ST SS SOE NP 50 and that provision would serve no purpose at all.” This Court should not construe Section 107(c) (4) in such a way as to render it entirely meaningless, when a sensible alternative construction is available. See, e.g., Rosado vy. Wyman, 397 U.S. 397, 415 (1970). In order to avoid having to defend a construction _of the statute which would render Section 107(c) (4) en- tirely meaningless, the Government argues that a drug may have ceased to be covered by an effective NDA if the effectiveness of the NDA had been formally suspended by the FDAwpursuant to Section 505(e). See Memorandum for Respondents on Petition for Certiorari in No. 72-666, at 8. The Fourth Circuit took the same position in the USV decision. 461 F.2d at 227 (J.A. 469). But Section 505(e) simply required the FDA to suspend the effective- ness of an NDA when it found that the drug was unsafe. On its face, it is clear that section was intended, not to restrict the circumstances under which an NDA may be come ineffective, but only to limit the circumstances un- der which a manufacturer could have required continued FDA approval. In construing the statute as precluding termination of the effectiveness of an NDA under any other circumstances, the Government would have this Court believe that Congress intended suspension of effec- tiveness of an NDA for lack of safety to be a prereg- *% Surely, Congress did not intend to exempt only those drugs which were never covered by effective NDAs and yet were marketed unlawfully, and we assume the Government does not suggest that Section 107(c) (4) grandfathers such drugs. The Fourth Circuit’s view of Section 107(c) (4) would pre- serve a limited purpose for it—to grandfather me-too products tht were generally recognized as safe on the day before the en- accment date of the Amendments. However, nothing in the legis- lative history of the statute suggests that this grandfather pro- vision was intended to apply only to those drugs. This Court can avoid this distinction between pioneers and me-toos, without reach- ing the me-too question or prejudicing the status of me-too drugs under the grandfather clause, by holding that the Section 107 (c) (4) exemption applies to all old drugs, pioneers and me-toos as well. iti s_— 51 uisite to exemption under the grandfather clause. Surely Congress could not have intended such an absurd result. Thus, the position of the Government would compel an irrational construction of Section 107 (c) (4): it would render that grandfather provision substantially useless. C. The Fourth Circuit Erred in Relying upon the “Surplusage” Argument. In its USV decision, the Fourth Circuit rejected, for one reason only, the argument advanced here that an old drug could not be “covered by an effective” application and that Section 107(c) (4) therefore served to exempt existing claims for old drugs from the amended “new drug” definition. “The difficulty with this argument, plausible though it may be,” reasoned the court, “is that it would make surplusage of requirement (C) in the ex- emption statute.” 461 F.2d at 227 (J.A. 469). In other words, the Fourth Circuit maintained that if every drug which satisfied clause (B) of Section 107(c) (4) (ze., every old drug) thereby met the requirements of clause (C) (i.e., ceased to be covered by an effective NDA), then clause (C) would be redundant, mere surplusage. The view that the construction of Section 107(c) (4) adopted by the Fourth Circuit was necessary in order to prevent clause (C)’s being unnecessary was the only basis for the court’s holding. Although this reasoning has some superficial appeal when Section 107(c) (4) is read in isolation, its plausi- bility as a basis for decision vanishes when that provision is read in conjunction with the remainder of Section 107 and, in particular, Section 107(c) (3). For when those two provisions are read together, it is apparent that , clause (C) is unnecessary surplusage under the Fourth Circuit’s and the Government’s construction of Section 107 PRE ee, Se eT Te 52 (c) (4)—based upon the premise that a no longer “new” drug may still be covered by an effective NDA—as well as the construction urged here. Under the circumstances, this Court should disregard the surplusage issue and adopt that construction which gives the most sensible meaning to Seetion 107(c) (4) as a whole. Section 107(c) (3) provides, in effect, that a drug whose application is deemed approved, 7.e., one whose ap- plication was effective on the day before the enactment date of the Amendments, may have its application with- drawn after two years on account of inefficacy. With- out clause (C), Section 107(c) (4) provides that. drugs which were “old” on the day before the enactment date are forever exempted from the requirement of showing efficacy as to existing claims. Obviously, Section 107 (c) (4), even without clause (C), could apply only to old drugs ‘not covered by an effective NDA, because Section 107 (c) (3) makes it clear that all drugs covered by an effective NDA are not permanently grandfathered. If Section 107 (c) (4), even without clause (C), were read to perma- nently grandfather old drugs covered by effective NDAs, then Sections 107(c) (3) and (4), read together, would stand for the inconsistent propositions that a drug which is old but which is covered by an effective NDA (1) may have its new drug application withdrawn on grounds of inefficacy after two years (§ 107(c) (8)), and (2) is exempt from the efficacy requirements of the Act (§ 107(c) (4)). In order to avoid this patent contra- diction, Section 107(c) (4), even without clause (C), would have to be read to apply only to drugs not covered by effective applications. Thus, the purpose assigned to clause (C) by the Government and the Fourth Cir- cuit—distinguishing old drugs covered by effective ap- plications from those not so covered—is actually served by Section 107(c) (3). In short, even under the Fourth 53 Circuit’s and the Government’s view, clause (C) is super- fluous.” The error in the court’s analysis stems from its ask- ing what purpose clause (C) serves, given clauses (A) and (B). The more logical way to interpret Section 107 (c) (4) is to begin at the end of Sectio [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386414_0169%3A19. Public record. Not legal advice.