Lannett Company, Inc. et al v. United States Food And Drug Administration et al

Cross MOTION for Summary Judgment

D.D.C.February 7, 2017

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ___________________________________ ) LANNETT COMPANY, INC., and ) LANNETT HOLDINGS, INC., ) ) Plaintiffs, ) v. ) Civ. No. 1:16-cv-01350-RBW ) U.S. FOOD AND DRUG ) ADMINISTRATION, and ) UNITED STATES OF AMERICA, ) ) Defendants. ) ___________________________________ ) DEFENDANTS’ CROSS-MOTION FOR SUMMARY JUDGMENT AND IN OPPOSITION TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT Natalie N. Sanders (DC Bar #1003336) Trial Attorney Consumer Protection Branch U.S. Department of Justice, Civil Division P.O. Box 386 Washington, DC 20044-0386 (202) 598-2208 (phone) Natalie.N.Sanders@usdoj.gov Attorney for Defendants Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 1 of 59 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ___________________________________ ) LANNETT COMPANY, INC., and ) LANNETT HOLDINGS, INC., ) ) Plaintiffs, ) v. ) Civ. No. 1:16-cv-01350-RBW ) U.S. FOOD AND DRUG ) ADMINISTRATION, and ) UNITED STATES OF AMERICA, ) ) Defendants. ) ___________________________________ ) DEFENDANTS’ CROSS-MOTION FOR SUMMARY JUDGMENT AND IN OPPOSITION TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT Pursuant to Rule 56 of the Federal Rules of Civil Procedure, U.S. Food and Drug Administration and United States of America (collectively, “Defendants”) respectfully move this Court to deny the motion for summary judgment filed by Lannett Company, Inc., and Lannett Holdings, Inc. (collectively, “Lannett” or “Plaintiffs”), sustain the FDA rescission decision at issue, and enter summary judgment in favor of Defendants. In support of this motion, Defendants rely on the administrative record, the underlying administrative decision, and the accompanying memorandum in support of their cross-motion for summary judgment and in opposition to Plaintiffs’ motion for summary judgment. The Court should grant summary judgment for the Defendants because Lannett has not met—and cannot meet—its burden of demonstrating that FDA lacked authority to, or was arbitrary and capricious in acting to, rescind its own mistaken grant of approval for Lannett’s drug application. In rescinding its mistaken approval, FDA faithfully applied the longstanding requirement that a drug applicant must demonstrate that its manufacturing facilities are in Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 2 of 59 2 compliance with cGMP before FDA will grant approval. FDA correctly interprets the statutory provision governing new drug approval to require such cGMP compliance, and it properly rescinded its approval of Lannett’s application. FDA’s rescission is permitted under its inherent authority to correct its own errors, and the administrative record in this case makes it abundantly clear that FDA’s decision to approve Lannett’s application was made in error. The record shows that, as of the date of approval, Lannett failed to meet its statutory burden to show cGMP compliance for all the manufacturing facilities referenced in its application. Nevertheless, Lannett’s application was approved – obviously in error. It is axiomatic that FDA must possess authority to rescind an approval that it did not have authority to grant (and that Lannett was not entitled to receive) in the first instance. In this case, FDA properly exercised its authority to rescind Lannett’s approval. There is no applicable statute displacing FDA’s inherent authority to correct mistakes such as the one challenged here, and there is no dispute that its correction was timely. Moreover, FDA was not required to follow the statutory procedures in 21 U.S.C. § 355(e) to rescind the erroneous approval in this case. Section 355(e) applies only to the withdrawal of approvals under certain statutorily enumerated circumstances, none of which apply in Lannett’s case. As further set forth in Defendants’ memorandum, Plaintiffs have not carried their burden of demonstrating that Defendants’ actions were arbitrary and capricious, or otherwise not in accordance with the law. Defendants are entitled to judgment as a matter of law that FDA lawfully rescinded approval of Lannett’s application. A proposed order accompanies this motion. Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 3 of 59 3 Dated: November 7, 2016 Respectfully submitted, Of Counsel: MARGARET M. DOTZEL Acting General Counsel ELIZABETH H. DICKINSON Associate General Counsel Food and Drug Division ANNAMARIE KEMPIC Deputy Chief Counsel, Litigation CLAUDIA ZUCKERMAN Senior Counsel Office of the Chief Counsel U.S. Food and Drug Administration 10903 New Hampshire Avenue White Oak 31, Room 4550 Silver Spring, MD 20993-0002 BENJAMIN C. MIZER Principal Deputy Assistant Attorney General JONATHAN F. OLIN Deputy Assistant Attorney General MICHAEL S. BLUME Director ANDREW E. CLARK Assistant Director Consumer Protection Branch /s/ Natalie N. Sanders Natalie N. Sanders (DC Bar #1003336) Trial Attorney Consumer Protection Branch U.S. Department of Justice, Civil Division P.O. Box 386 Washington, DC 20044-0386 (202) 598-2208 (phone) Natalie.N.Sanders@usdoj.gov Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 4 of 59 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ___________________________________ ) LANNETT COMPANY, INC., and ) LANNETT HOLDINGS, INC., ) ) Plaintiffs, ) v. ) Civ. No. 1:16-cv-01350-RBW ) U.S. FOOD AND DRUG ) ADMINISTRATION, and ) UNITED STATES OF AMERICA, ) ) Defendants. ) ___________________________________ ) DEFENDANTS’ MEMORANDUM IN SUPPORT OF CROSS-MOTION FOR SUMMARY JUDGMENT AND IN OPPOSITION TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT Natalie N. Sanders (DC Bar #1003336) Trial Attorney Consumer Protection Branch U.S. Department of Justice, Civil Division P.O. Box 386 Washington, DC 20044-0386 (202) 598-2208 (phone) Natalie.N.Sanders@usdoj.gov Attorney for Defendants Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 5 of 59 i TABLE OF CONTENTS Page INTRODUCTION ...........................................................................................................................2 STATUTORY AND REGULATORY FRAMEWORK .................................................................6 A. FDA’s Authority to Approve Drug Applications under the FDCA ..................................6 B. FDA’s Authority to Revoke Drug Approvals under the FDCA .......................................7 STATEMENT OF FACTS ................................................................................................................9 A. cGMP Deficiencies at Active Ingredient Manufacturer in Lannett’s ANDA ...................9 B. FDA’s Mistaken Issuance of an Approval Letter for Lannett’s ANDA .........................11 C. FDA’s Correction of its Mistaken Approval Letter for Lannett’s ANDA ......................13 STANDARD OF REVIEW ...........................................................................................................15 A. Summary Judgment ........................................................................................................15 B. Judicial Review of Agency Action .................................................................................15 ARGUMENT .................................................................................................................................18 A. FDA Appropriately Rescinded Its Mistaken Approval of Lannett’s ANDA .................18 1. Lannett’s ANDA Did Not Meet the Statutory Drug Approval Requirements and, Therefore, Should Not Have Been Approved ...........................................................18 2. FDA Properly Relied on Its Inherent Authority to Correct Its Mistaken Approval of Lannett’s ANDA .......................................................................................................20 3. Section 355(e) Does Not Displace FDA’s Inherent Authority to Correct Its Mistaken Approval of Lannett’s ANDA...................................................................23 a. Section 355(e) Applies to FDA Withdrawals of Approval Based on New Information Relating to cGMP Compliance, and There Was No Such New Information In Lannett’s Case .........................................................................24 b. In Section 355(e), New Information Relating to cGMP Compliance Means Information Obtained After FDA’s Approval Decision ..................................28 Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 6 of 59 ii B. Lannett Cannot Maintain the Mistakenly Granted ANDA Approval .............................30 1. Section 355(e) Does Not Apply Because Lummy’s cGMP Deficiencies Cannot be Considered “New Information Before [the Secretary]” ............................................30 2. FDA Has Consistently Viewed Section 355(e) as Inapplicable Authority for Correcting its Error ...................................................................................................32 3. Any Subsequent Corrective Action Purportedly Taken by Lannett or its Supplier Cannot Legitimize the Mistaken ANDA Approval ..................................................35 C. Lannett Was Not Deprived of Its Due Process Rights by FDA’s Rescission .................36 D. Lannett Has Failed To Exhaust Its Administrative Remedies and Is Not Entitled to Judicial Relief of This Non-Final Agency Action ..........................................................43 CONCLUSION ..............................................................................................................................45 Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 7 of 59 iii TABLE OF AUTHORITIES Page(s) Cases Alaska Airlines v. C.A.B., 545 F.2d, 194 (D.C. Cir 1976) ........................................................... 42 American Horse Prot. Ass’n v. Yeutter, 917 F.2d 594 (D.C. Cir. 1990) ...................................... 16 American Methyl Corp. v. EPA, 749 F.2d 826 (D.C. Cir. 1984) ................................................... 8 *American Therapeutics Inc. v. Sullivan, 755 F. Supp. 1 (D.D.C. 1990) . 1, 2, 5, 21-23, 25, 38, 39 American Trucking Ass’ns v. Frisco Transp. Co., 358 U.S. 133 (1958) .................................. 9, 21 Andrade v. Lauer, 729 F.2d 1475 (D.C. Cir. 1984) ...................................................................... 45 Avocados Plus Inc. v. Veneman, 370 F.3d 1243 (D.C. Cir. 2004) ............................................... 43 Barnhart v. Walton, 535 U.S. 212 (2002) ............................................................................... 17, 24 Berge v. U.S., 949 F.Supp.2d 36 (D.D.C. 2013) .......................................................................... 44 Boesche v. Udall, 373 U.S. 472, (1963) ............................................................................... 2, 9, 21 Bowen v. New York, 476 U.S. 467 .............................................................................................. 43 Camelot Terrace, Inc. v. National Labor Relations Board, 824 F.3d 1085 (D.C. Cir. 2016) ......... 5 *Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984) 17, 18, 20, 24, 29 Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402 (1971) ...................................... 16 Cnty. of L.A. v. Shalala, 192 F.3d 1005 (D.C. Cir. 1999) ............................................................ 17 Coal. for Common Sense in Gov’t Procurement v. United States, 821 F. Supp.2d 275 (D.D.C. 2011) .......................................................................................................................................... 15 Cumberland Pharms. Inc. v. FDA, 981 F. Supp. 2d 38 (D.D.C. 2013) .................................. 16, 17 Darby v. Cisneros, 509 U.S. 137 (1993) ....................................................................................... 43 Ethyl Corp. v. EPA, 51 F.3d 1053 (D.C. Cir. 1995) ..................................................................... 16 Ewing v. Mytinger & Casselberry, Inc., 339 U.S. 594 (1950) ..................................................... 41 Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 8 of 59 iv Freeman v. FDIC, 56 F.3d 1394 (D.C. Cir. 1995) ........................................................................ 38 Fuentes v. Shevin, 407 U.S. 67 (1970) ......................................................................................... 38 Fund for Animals v. Babbitt, 903 F. Supp. 96 (D.D.C. 1995) ...................................................... 15 Gen. Elec. Co. v. Jackson, 610 F.3d 110 (D.C. Cir.2010) ............................................................ 38 Gun South, Inc. v. Brady, 877 F.2d 858 (11th Cir. 1989) .................................................... 2, 9, 21 Hi-Tech Pharmacal Co. v. FDA, 587 F. Supp.2d 13 (D.D.C. 2008) ............................................ 15 Hodel v. Virginia Surface Mining and Reclamation Ass’n, 452 U.S. 264 (1981) ....................... 41 Howard Sober, Inc. v. ICC, 628 F.2d 36 (D.C. Cir. 1980) ........................................... 9, 21, 30, 37 Ivy Sports Medicine, LLC v. Burwell, 767 F.3d 81 (D.C. Cir. 2014) ................ 2, 8, 20, 21, 27, 28 John D. Copanos & Sons, Inc. v. FDA, 854 F.2d 510 (D.C. Cir. 1988) ...................................... 30 Last Best Beef, LLC v. Dudas, 506 F.3d 333 (4th Cir. 2007) ........................................................ 9 Mathews v. Eldridge, 424 U.S. 319 (1976) ...................................................................... 38, 40, 41 Mazaleski v. Treusdell, 562 F.2d 701 ............................................................................................ 8 Motor Vehicle Mfrs. Ass’n, Inc., v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) .......... 16 Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41 (1938) ...................................................... 43 Mylan Labs. v. Thompson, 389 F.3d 1272 (D.C. Cir. 2004) .......................................................... 8 N.B. ex rel. Peacock v. District of Columbia, 794 F.3d 31 (D.C. Cir. 2015) ............. 37, 38, 41, 42 Natural Res. Def. Council, Inc. v. Browner, 57 F.3d 1122 (D.C. Cir. 1995) ............................... 17 Novartis Pharms. Corp. v. Leavitt, 435 F.3d 3449 (D.C. Cir. 2006) ............................................ 18 Pub. Citizen Health Research Grp. v. Comm’r, FDA, 740 F.2d 21 (D.C.Cir.1984)) ............. 44, 45 R. A. Holman & Co. v. SEC, 299 F.2d 127 (D.C. Cir. 1962), ..................................................... 41 Ranbaxy Labs, Ltd. v. Burwell, 82 F. Supp. 3d 159 (D.D.C. 2015)............................................... 9 Richards v. INS, 554 F.2d 1173 (D.C. Cir. 1977) ........................................................................ 15 Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 9 of 59 v Robinson v. Shell Oil Co., 519 U.S. 337 (1997) .......................................................................... 29 Schering Corp. v. FDA, 51 F.3d 390 (D.C. Cir. 1995) ................................................................. 17 Serono Labs., Inc. v. Shalala, 158 F.3d 1313 (D.C. Cir. 1998). ................................................... 16 Skidmore v. Swift & Co., 323 U.S. 134 (1944) ................................................................ 18, 24, 29 UDC Chairs Chapter, Am. Ass’n of Univ. Professors v. Bd. of Trustees of the Univ. of the Dist. of Columbia, 56 F.3d 1469 (D.C. Cir. 1995)............................................................................. 38 United Savings Ass’n v. Timbers of Inwood Forest Associates, 484 U.S. 365 (1988) ................ 29 United States Dep’t of Treasury v. Fabe, 508 U.S. 491 (1993) .................................................... 25 United States v. Mead Corp., 533 U.S. 218 (2001) ................................................................ 18, 24 Washington Legal Clinic for the Homeless v. Barry, 107 F.3d 32 (D.C. Cir. 1997) ............. 38, 39 Statutes and Regulations Administrative Procedure Act 5 U.S.C. § 704 ............................................................................................................................... 43 5 U.S.C. § 706(2)(A)............................................................................................................... 15, 16 Federal Food, Drug, and Cosmetic Act 21 U.S.C. § 331 ......................................................................................................................... 7, 40 21 U.S.C. § 351(a)(2)(B). ......................................................................................................... 7, 40 21 U.S.C. § 355(a) .......................................................................................................................... 6 21 U.S.C. § 355(b). ......................................................................................................................... 6 21 U.S.C. § 355(b)(1)(D) ................................................................................................................ 7 21 U.S.C. § 355(e) ......................................................................... 5-8, 14, 20, 22-25, 28-30, 32-36 21 U.S.C. § 355(h). ................................................................................................................. 23, 45 *21 U.S.C. § 355(j) ................................................................................................................... 6, 44 Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 10 of 59 vi *21 U.S.C. § 355(j)(2)(A)(vi) ......................................................................................................... 7 *21 U.S.C. § 355(j)(2)(A) ............................................................................................................... 7 *21 U.S.C. §355(j)(4) ..................................................................................................................... 7 *21 U.S.C. § 355(j)(4)(A) ......................................................................... 1, 3, 7, 18, 19, 28, 29, 44 *21 U.S.C. § 355(j)(5)(E) ................................................................................................. 22, 23, 39 21 C.F.R § 10.20 ........................................................................................................................... 39 21 C.F.R. Part 12........................................................................................................................... 39 21 C.F.R. § 314.50(d)(1) ............................................................................................................... 36 21 C.F.R. § 314.94 ........................................................................................................................ 25 21 C.F.R. 314.94(a)(7) .................................................................................................................. 36 21 C.F.R. § 314.94(a)(9)(i) ............................................................................................................. 7 21 C.F.R. §314.105 ....................................................................................................................... 25 21 C.F.R. § 314.110 .......................................................................................................... 26, 43, 44 21 C.F.R. § 314.110(b) ................................................................................................................. 23 21 C.F.R. § 314.110(b)(1) ............................................................................................................. 23 21 C.F.R. § 314.110(b)(2). ............................................................................................................ 23 21 C.F.R. § 314.110(b)(3) ........................................................................................... 15, 23, 39, 43 21 C.F.R. § 314.127 ...................................................................................................................... 26 21 C.F.R. § 314.127(a)(1) ................................................................................................... 7, 18, 23 21 C.F.R. 314.127(b)(1) ................................................................................................................ 39 21 C.F.R. § 314.150(b)(2) ......................................................................................................... 8, 24 21 CFR 314.150(d) ....................................................................................................................... 33 21 C.F.R. 314.200 ................................................................................................................... 23, 39 Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 11 of 59 vii Other Authorities FDA Staff Manual Guide 1410.1, available at http://www.fda.gov/AboutFDA/ReportsManualsForms/StaffManualGuides/ucm136380.htm......8 FDA Staff Manual Guide 1410.10, available at http://www.fda.gov/AboutFDA/ReportsManualsForms/StaffManualGuides/ucm136380.htm......8 Guidance for Industry ANDAs: Stability Testing of Drug Substances and Products Questions and Answers, available at http://www.fda.gov/downloads/drugs/guidancecomplianceregulatoryinformation/guidances/ucm 366082.pdf.....................................................................................................................................36 International Council for Harmonisation (ICH) Guidance for industry on Q1D Bracketing and Matrixing Designs for Stability Testing of New Drug Substances and Products, available at http://www.fda.gov/downloads/Drugs/.../Guidances/ucm073379.pdf..........................................36 Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 12 of 59 1 This Administrative Procedure Act (“APA”) suit is an attack by plaintiffs Lannett Company, Inc. and Lannett Holdings, Inc. (collectively, “Lannett”) on the drug approval framework that Congress created in the Federal Food, Drug, and Cosmetic Act (“FDCA”). The FDCA prohibits FDA from approving a drug application if the drug manufacturing operations do not comply with current Good Manufacturing Practice (“cGMP”). See 21 U.S.C. §355(j)(4)(A). FDA erred in approving Lannett’s drug application because, at the time of approval, FDA was aware that a manufacturing facility in the application was engaged in fraudulent manufacturing practices, which self-evidently violated cGMP. Yet due to an inadvertent data entry failure, FDA mistakenly approved Lannett’s application, even though the application did not meet the statutory requirements for approval at the time. FDA caught its error on the very next day, and shortly thereafter rescinded the erroneously issued approval. Lannett is unwilling to accept the rescission, and instead attempts to benefit from the Agency’s “inadvertent and quickly corrected mistake, ignoring entirely FDA’s responsibility to safeguard the public.” See American Therapeutics, Inc. v. Sullivan, 755 F. Supp. 1, 2 (D.D.C. 1990). FDA, like all federal agencies, is not immune from making errors. When errors happen, FDA endeavors to correct them expeditiously; the public, which relies on FDA’s protections from products that affect their lives and health, expects nothing less. In this case, FDA made an error when it approved Lannett’s application, and the Agency has appropriately corrected it. Nevertheless, Lannett seeks an injunction to allow it to maintain the erroneous approval and market a drug that did not meet statutory requirements for approval. The crux of Lannett’s argument is that FDA had no authority to rescind the approval. However, FDA had no authority to issue the approval in the first instance and, therefore, has properly exercised its inherent authority to correct its mistake. Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 13 of 59 2 Courts have long recognized that an agency possesses the inherent authority to correct its own error so long as Congress has not provided otherwise, and the error is corrected in a manner that is timely under the circumstances. See, e.g., Ivy Sports Medicine, LLC v. Burwell, 767 F.3d 81, 86 (D.C. Cir. 2014) (citations omitted) (agency has inherent authority to reconsider prior decisions, if done in timely fashion, unless Congress provides otherwise); American Therapeutics, 755 F. Supp. at 2 (agency’s timely rescission on ground that drug approval had been issued by mistake was not so clearly ultra vires as to justify district court intervention); Gun South, Inc. v. Brady, 877 F.2d 858, 862 (11th Cir. 1989) (agency possessed implied authority to reconsider and rectify erroneous approval although the applicable statute and regulations did not expressly provide for such reconsideration); Boesche v. Udall, 373 U.S. 472, 476–78 (1963) (agency possessed authority to administratively cancel a lease that was invalid at its inception, as such authority had not been withdrawn by statute). Both conditions are satisfied here, and Lannett’s arguments to the contrary have no merit. Accordingly, the Court should deny Lannett’s motion and grant summary judgment for the defendants. INTRODUCTION Lannett seeks FDA approval to market a generic version of Temozolomide capsules, an oral chemotherapy drug used to treat seriously ill and vulnerable cancer patients. To meet the statutory requirements for approval, Lannett was required to show that it was capable of making a generic drug that would be in all pertinent respects the same as that of the brand-name drug and, of relevance to this case, to show that it was capable of manufacturing the drug with consistent quality so that it is safe and effective in patients. The production of quality drug products requires carefully prescribed and maintained procedures that guarantee consistency in the manufacture of the drug. These procedures are Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 14 of 59 3 required by statute, which forbids FDA approval of a generic drug if FDA finds that “the methods used in, and the facilities and controls used for, the manufacture, processing, and packing of the drug are inadequate to assure and preserve its identity, strength, quality, and purity.” 21 U.S.C. § 355(j)(4)(A). The production procedures require, among other things, testing to be done and processes to be documented at each manufacturing step to show that the drug will, in fact, have the characteristics it purports to have. A finished drug product (e.g., Temozolomide capsules) contains an “active ingredient” that provides the therapeutic effect of the drug, combined with other ingredients that deliver the active ingredient to the patient. In many cases, an applicant seeking FDA approval to market a finished drug product does not manufacture the active ingredient, instead contracting with an active ingredient manufacturer to perform that part of the manufacturing process. Nonetheless, the manufacturer of the finished drug product remains responsible for assuring that its contractor provides it with an active ingredient that meets all applicable requirements and specifications for approval. In this case, Lannett contracted with Chongqing Lummy Pharmaceutical Co. Ltd. (“Lummy”), which is based in China, to manufacture the active ingredient for its generic cancer drug. Lannett represented that Lummy would perform part of the manufacturing operations to produce the drug in compliance with cGMP to assure the drug’s safety and effectiveness. FDA conducts inspections of drug manufacturers and their contractors to obtain information concerning their ability to manufacture drugs in compliance with cGMP. In 2013, Lummy had an adequate FDA inspection. Then, shortly prior to the approval of Lannett’s application for Temozolomide capsules on March 23, 2016, an FDA investigator began a routine inspection at Lummy. What the FDA investigator found was alarming. In a March 15, 2016, e- mail to FDA headquarters, the investigator reported multiple cGMP violations, including that: Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 15 of 59 4 “[Active pharmaceutical ingredient] stability data is falsified. During the month of 02/2016 the firm set the GC PC controlling clock back to various dates in 2015 to create numerous fake data packages. The falsified data was related to stability for products distributed to the USA, it appears that this [active ingredient] may not be stable for more than 12 months despite a 24 month retest date.” Administrative Record (“AR”) 1. When FDA receives notice from an FDA investigator of a serious lack of compliance with manufacturing requirements at a facility relied upon by a drug applicant, the drug application cannot be approved unless a subsequent review of the findings leads FDA to conclude that the initial conclusion of the investigator was not supported. If FDA’s process had worked as it should have, FDA headquarters’ receipt of the notice of Lummy’s data falsification on March 15 should have prevented the approval of any pending drug applications that relied on the Lummy facility to manufacture active ingredients. But due to a simple data entry failure, the office responsible for signing off on the final decision to approve Lannett’s application—FDA’s Office of Generic Drugs—was not alerted to the data integrity breaches and manufacturing deviations at Lummy. Therefore, the Office of Generic Drugs erroneously believed that the manufacturing facilities Lannett was relying on complied with cGMP and that Lannett’s application could be approved. On Wednesday, March 23, 2016, FDA mistakenly approved Lannett’s application, as well as an application submitted by another applicant that also relied on the Lummy facility. When FDA discovered its mistake one day later, Thursday, March 24, it quickly contacted the two affected applicants to notify them of the error and to offer to permit them to request withdrawal or agree to rescission of approval of their applications. One of the affected applicants immediately agreed to the rescission option. The other applicant was Lannett. Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 16 of 59 5 Because Lannett declined to request withdrawal or agree to rescission of the approval that was obviously granted by mistake, FDA notified Lannett that it would have 30 days (i.e., until May 14, 2016) to provide any information relevant to the question of whether, at the time of the approval, the Lummy facility had manufacturing procedures that would assure and preserve the identity, strength, quality, and purity of the cancer drug that Lannett proposed to distribute in interstate commerce. Even though Lannett is ultimately responsible for the drugs that it sells, including the manufacture of its active ingredients, Lannett did not provide any information about Lummy’s manufacturing operations, but instead argued that it should be permitted to maintain the approval of its application. Meanwhile, Lummy admitted to both FDA and Lannett that it had falsified its manufacturing records and failed to comply with cGMP. No statute or regulation specifically addresses FDA’s authority to rescind approval of a drug application when that approval was a mistake, and the application did not meet the requirements for approval. See American Therapeutics, 755 F. Supp. at 2. The statutory procedures for withdrawal of an approval under section 355(e) do not apply, as this provision would require FDA to rely on “new information” that, “evaluated together with the evidence before [FDA] when the application was approved” showed that manufacturing procedures were inadequate. See 21 U.S.C. § 355(e). In Lannett’s case, FDA concluded that it could not state that it was relying on new information, because the information that should have prevented the approval was within FDA at the time of the approval. Under these circumstances, FDA found it appropriate to rely on the inherent authority1 that administrative agencies have to rescind actions taken in error. FDA then rescinded approval of Lannett’s application on May 17, 2016. 1 Although the D.C. Circuit has noted that it is more appropriate to call this authority “implicit,” see Camelot Terrace, Inc. v. National Labor Relations Board, 824 F.3d 1085, 1089-90 (D.C. Cir. 2016), the term “inherent” is used herein for consistency with the administrative record. Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 17 of 59 6 Unwilling to accept the rescission, Lannett brought this APA action seeking judicial assistance to circumvent the statutory requirements of the drug approval process. Lannett has moved for summary judgment, and seeks declaratory and injunctive relief declaring FDA’s rescission unlawful and enjoining the Agency from rescinding the approval in the future without holding an evidentiary hearing under § 355(e) procedures. Lannett is entitled to none of the relief it seeks. Rather FDA’s rescission is entitled to deference, both because FDA has reasonably interpreted the governing statute and applicable regulations, and because the Agency’s administrative decision is not arbitrary and capricious and easily satisfies the deferential standards of APA review. Accordingly, Lannett’s motion for summary judgment should be denied, and the defendants’ cross-motion for summary judgment should be granted. STATUTORY AND REGULATORY FRAMEWORK A. FDA’s Authority to Approve Drug Applications under the FDCA Under the FDCA, pharmaceutical companies seeking to market the initial version of a drug (also known as the “innovator” or “pioneer” drug) must first obtain FDA approval by filing a new drug application (“NDA”) containing extensive scientific data demonstrating the safety and effectiveness of the drug product. 21 U.S.C. § 355 (a), (b). The FDCA also contains provisions that permit manufacturers to submit an abbreviated new drug application (“ANDA”) requesting approval of a generic version of an approved drug product. Id. § 355(j). ANDA applicants need not submit clinical data to demonstrate the safety and efficacy of the generic product, as with an NDA. See id. Rather, an ANDA applicant must demonstrate that the generic drug is the same as the previously-approved innovator drug in all pertinent respects, and that it meets the same high standards for drug quality and manufacturing as the innovator product. See id. If the ANDA applicant meets these requirements, the applicant can rely on Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 18 of 59 7 FDA’s previous finding of safety and effectiveness of the innovator drug approved under the NDA, and need not conduct its own clinical investigations to establish the safety or effectiveness of its generic version. The FDCA sets forth in detail the information an ANDA must contain, and lists the deficiencies that prevent approval. See 21 U.S.C. §§ 355(j)(2)(A), 355(j)(4). Among other information, an ANDA is required to contain “the items specified in clauses (B) through (F) of subsection (b)(1).” Id. § 355(j)(2)(A)(vi). The referenced clauses include “a full description of the methods used in, and the facilities and controls used for, the manufacture, processing, and packing of such drug.” Id. § 355(b)(1)(D); see 21 C.F.R. § 314.94(a)(9)(i). Statute prohibits FDA from approving an ANDA if “the methods used in, or the facilities and controls used for, the manufacture, processing, and packing of the drug are inadequate to assure and preserve its identity, strength, quality, and purity.” 21 U.S.C. § 355(j)(4)(A); see 21 C.F.R. § 314.127(a)(1).2 B. FDA’s Authority to Revoke Drug Approvals under the FDCA The FDCA sets forth certain circumstances in which FDA must withdraw approval of a drug application. See 21 U.S.C. § 355(e).3 The statute also permits FDA at its discretion to withdraw approval of a drug application in other situations. See id. For example, with respect to manufacturing issues, Congress has provided FDA with a procedure to withdraw approval of 2 These requirements are also reflected in the FDCA provision that deems a drug to be adulterated, and thus prohibited from traveling in interstate commerce, if: the methods used in, or the facilities or controls used for, its manufacture, processing, packing, or holding do not conform to or are not operated or administered in conformity with current good manufacturing practice to assure that such drug meets the requirements of this Act as to safety and has the identity and strength, and meets the quality and purity characteristics, which it purports or is represented to possess. 21 U.S.C. §§ 331, 351(a)(2)(B). 3 Several documents in the administrative record refer to this provision as section 505(e) of the FDCA, which is codified at 21 U.S.C. § 355(e). Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 19 of 59 8 drug applications in circumstances when there is “new information” relating to failure to comply with cGMP: The Secretary may also, after due notice and opportunity for hearing to the applicant, withdraw the approval of an application submitted under subsection (b) or (j) with respect to any drug under this section if the Secretary finds . . . (2) that on the basis of new information before him, evaluated together with the evidence before him when the application was approved, the methods used in, or the facilities and controls used for, the manufacture, processing, and packing of such drug are inadequate to assure and preserve its identity, strength, quality, and purity and were not made adequate within a reasonable time after receipt of written notice from the Secretary specifying the matter complained of. 21 U.S.C. § 355(e) (emphasis added)4; see 21 C.F.R. § 314.150(b)(2). FDA’s authority to revoke drug approvals is not limited to the circumstances listed in section 355(e) and the procedures that apply when those circumstances exist. See Mylan Labs. v. Thompson, 389 F.3d 1272, 1281 (D.C. Cir. 2004) (Section 355(e) “does not prohibit the FDA from withdrawing approval under other circumstances . . . different from those named in section 355(e).”). Rather FDA possesses inherent authority to correct its mistakes—including to revoke mistaken drug approvals—unless (a) there is specific statutory authority to the contrary, or (b) the Agency’s correction of its mistake was not timely. See Ivy Sports Medicine, 767 F.3d at 86; Mazaleski v. Treusdell, 562 F.2d 701, 720, (D.C. Cir. 1977) (“We have many times held that an agency has the inherent power to reconsider and change a decision if it does so within a reasonable period of time.”); American Methyl Corp. v. EPA, 749 F.2d 826, 835-836 (D.C. Cir. 1984) (“We have held that agencies have an inherent power to correct their mistakes by reconsidering their decisions within the period available for taking an 4 In general, unless statutorily prohibited, the functions that the FDCA vests in the Secretary of Health and Human Services (“HHS Secretary”) have been delegated to the Commissioner of Food and Drugs (“FDA Commissioner”). See FDA Staff Manual Guide 1401.1 and FDA Staff Manual Guide 1401.10, available at http://www.fda.gov/AboutFDA/ReportsManualsForms/StaffManualGuides/ucm136380.htm. Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 20 of 59 9 appeal.”). Courts have long recognized that an agency has inherent authority to correct mistakes from inadvertence or that resulted from action not permitted by the agency’s statutory authority. See, e.g., Boesche, 373 U.S. at 476; American Trucking Ass’ns v. Frisco Transp. Co., 358 U.S. 133, 145 (1958); Howard Sober, Inc. v. ICC, 628 F.2d 36, 41-42 (D.C. Cir. 1980); see also Last Best Beef, LLC v. Dudas, 506 F.3d 333, 340-41 (4th Cir. 2007); Gun South, 877 F.2d at 862-63; Ranbaxy Labs., Ltd v. Burwell, 82 F. Supp. 3d 159, 190-91, 193-94 (D.D.C. 2015). It is under this inherent authority that FDA was entitled—indeed compelled—to rescind its mistaken approval of Lannett’s application. STATEMENT OF FACTS A. cGMP Deficiencies at Active Ingredient Manufacturer in Lannett’s ANDA Lannett’s application for Temozolomide capsules (ANDA 202750) listed Lummy as the proposed manufacturer of the drug’s active ingredient, temozolomide. Compl. ¶ 18, ECF No. 1. On March 14-16, 2016, an FDA investigator at the Agency’s China Office conducted a routine inspection at Lummy to determine whether the firm’s operations complied with cGMP. AR 59, 64. Upon arrival at Lummy’s manufacturing site in Chayuan, China, the FDA investigator discovered that Lummy was in the process of moving its manufacturing operations to another site, located in Changshou, China. AR 66, 68. Although the Chayuan facility was registered with FDA as a drug manufacturing site for active ingredients, the Changshou facility was not FDA-registered. Id. Nevertheless, Lummy had already transferred to the unregistered location all of its analytical instrumentation and ongoing stability testing for temozolomide, including the batches of the active ingredient distributed to the United States. AR 66, 68, 70. FDA’s March 2016 inspection revealed serious data integrity problems that clearly precluded Lummy from meeting cGMP requirements. AR 1, 4-7; see generally AR 70-78, 853- Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 21 of 59 10 54. The inspection revealed that Lummy allowed widespread falsification of data related to stability5 testing of the batches of temozolomide that were shipped to its U.S. customers. See AR 1, 4-5; see also AR 68, 70-74. For example, the FDA investigator found that Lummy rolled back the clocks on analytical equipment to various dates in 2015-2016 to create false long-term stability results that affected several batches of temozolomide. Id. Lummy’s quality control manager admitted to the FDA investigator that the firm “‘forgot’ to perform stability testing, and therefore created falsified results for each missed time-point by manipulating the controlling PC clock.” AR 73; see AR at 34. The investigator also discovered that Lummy performed repeated stability analyses until desirable results were achieved, and permanently deleted the undesirable results for batches that failed to meet specifications. AR 1, 4-5, 70-74. Furthermore, the FDA investigator found that Lummy copied data directly from the firm’s standard templates to create false batch manufacturing records that did not reflect the true timing of manufacturing steps used to process batches of temozolomide. AR 1, 6, 77-78. Batch records must be contemporaneous with the manufacturing – both as a check to ensure all steps were followed and to provide a window into later-discovered discrepancies. Yet Lummy’s production supervisor told the FDA investigator that “the operators most likely did not record the actions at the time they were performed.” AR 78; see AR at 1, 37. At the close of the inspection on March 16, 2016, the FDA investigator issued to Lummy an FDA Form 483: List of Inspectional Observations listing the objectionable practices and conditions observed by the investigator. See AR 4-7, 79. On March 31, 2016, Lummy provided an initial response to FDA and admitted to back-dating stability measurements and rolling back 5 Stability is an important aspect of active ingredient manufacturing because it assures the finished drug product’s ability to maintain its potency over a certain time and under certain conditions. Both super-potent and sub-potent drugs can have dire consequences for patients’ health. Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 22 of 59 11 the PC clock on analytical equipment when repeating analyses. AR 34-35. Accompanying Lummy’s response was a letter, dated March 30, 2016, from the firm to its U.S. customers (e.g., Lannett) informing them of FDA’s inspectional findings, including the firm’s data falsification and other cGMP deficiencies. See AR 37, 57-58. Lummy later provided FDA with a second response, dated April 29, 2016, stating, “We have investigated all batched manufacturing record going back to 12months, and find some batches have the same falsification. The investigation showed the root cause of this observation is same as those for batch production records reviewed by [the FDA investigator].” AR 673. B. FDA’s Mistaken Issuance of an Approval Letter for Lannett’s ANDA On March 15, 2016, the second day of the Lummy inspection, the FDA investigator sent an email issuing an “OAI Alert” to notify personnel in FDA headquarters about the serious breaches in data integrity observed during the inspection. AR 1. “OAI,” or “Official Action Indicated,” is an inspection designation that indicates a finding of significant deviations from cGMP requirements and reflects the fact that “objectionable conditions were found and a regulatory action is recommended.” AR 659. A drug application that references a manufacturing facility with the unacceptable compliance status of “OAI” or “potential OAI” cannot receive FDA approval under the FDCA because manufacturing processes are inadequate to assure and preserve the identity, strength, quality, and purity of the drug. See AR 660. The OAI Alert was emailed to FDA employees in several offices within two higher-level components of the Agency, namely the Office of Global Regulatory Operations and Policy, and the Office of Medical Products and Tobacco. See AR 1-3; see also AR 659. Within the Office of Global Regulatory Operations and Policy, recipients of the OAI Alert email included staff in the Office of International Programs and the Office of Regulatory Affairs. See id. FDA’s Center for Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 23 of 59 12 Drug Evaluation and Research (“CDER”), one of the Centers within the Agency’s Office of Medical Products and Tobacco, also received the OAI Alert, including personnel in the CDER’s Office of Pharmaceutical Quality’s Office of Surveillance (“Office of Pharmaceutical Quality/OS”) and Office of Compliance. See id. On March 18, 2016, the FDA Form 483: List of Inspectional Observations issued to Lummy at the close of the inspection on March 16, 2016, was also circulated to appropriate FDA staff in the Office of Regulatory Affairs, the Office of International Programs, and CDER’s Office of Pharmaceutical Quality/OS and Office of Compliance. See AR 8. The FDA investigator’s OAI Alert was not accompanied by a “field alert” form that would have signaled to staff in the Office of Pharmaceutical Quality/OS that they needed to enter the OAI Alert into CDER’s electronic informatics review platform (the “Platform”). AR 659. Consequently, the Office of Pharmaceutical Quality/OS staff responsible for entering Lummy’s status into the Platform were not immediately aware that such an alert had not yet been entered. AR 659. Had the OAI Alert been entered, the Platform would have flagged Lummy’s compliance status as potential OAI,6 indicating that any drug application referencing such facility should not be approved. Instead, the Platform displayed an acceptable compliance status for Lummy, which was based on the outdated results of the FDA inspection conducted in 2013. See AR 659 & n. 5; see also AR 9-10, 15. Accordingly, FDA approved Lannett’s ANDA for Temozolomide capsules on March 23, 2016. AR 14, 19-20. 6 The “potential” OAI designation reflects the fact that the investigator’s finding of significant cGMP deviations justifying regulatory action could ultimately be revised after review by CDER’s Office of Compliance. See AR 659 & n. 4. Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 24 of 59 13 C. FDA’s Correction of its Mistaken Approval Letter for Lannett’s ANDA The day after approval of Lannett’s ANDA, staff within CDER’s Office of Pharmaceutical Quality/OS became aware of the discrepancy in the Platform and updated the system to flag the Lummy facility as potential OAI. AR 659. By letter dated April 1, 2016, FDA requested a teleconference with Lannett to (a) get the company’s commitment not to distribute any Temozolomide capsules, and (b) discuss withdrawal of its ANDA. AR 649-650. During an April 5, 2016 teleconference, FDA confirmed that Lummy had informed Lannett of FDA’s March 2016 inspectional findings, and Lannett noted that no Temozolomide product had been distributed in the U.S. market. AR 651-652. Although Lannett would not commit to requesting FDA’s withdrawal of approval of its ANDA, it did agree to consider FDA’s proposed option of rescinding approval to put the ANDA back to pending status. See AR 652. In a memorandum dated April 13, 2016, CDER described the circumstances underlying FDA’s preliminary determination that Lannett’s ANDA was “approved in error because the information available to the Agency at the time indicated that the compliance status of a facility referenced in the ANDA was not acceptable at the time that the Agency approved the ANDA.” AR 658. The memorandum explained that the failure of staff in the Office of Pharmaceutical Quality/OS to timely enter the OAI Alert in the Platform caused the staff to rely on the system’s outdated compliance data and mistakenly recommend to the Office of Generic Drugs that the Lummy facility’s compliance status was acceptable for approval of Lannett’s ANDA. See generally AR 658-661. The memorandum referenced an internal document dated April 6, 2016, noting that CDER’s Office of Pharmaceutical Quality/OS and Office of Compliance had reviewed the “potential OAI” inspection classification and supported a final classification of “OAI” based on Lummy’s serious data integrity breaches. AR 659 n. 4, 660-61. Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 25 of 59 14 An April 14, 2016 letter from FDA to Lannett reiterated the Agency’s preliminary determination that ANDA 202750 was approved in error and offered the company three options with respect to the application: Lannett could (a) request that FDA withdraw approval of the ANDA; (b) agree to immediate rescission of approval, putting the ANDA back to pending status; or (c) within 30 days (until May 14, 2016) provide written information relevant to FDA’s preliminary decision to rescind the approval, i.e., whether Lummy’s compliance status was in fact acceptable as of the date of ANDA approval (March 23, 2016). See AR 662-665. The letter noted that it was appropriate to offer option (c) because “[n]o statute or regulation specifically addresses FDA’s authority or appropriate process to rescind approval of an application when that approval appears to have been a mistake, and the application does not appear to have met the requirements for approval.” AR 663. Lannett responded on April 21, 2016, rejecting all three options and claiming that it was entitled to an opportunity for a hearing under 21 U.S.C. § 355(e) before FDA could rescind the erroneously granted ANDA approval. See generally AR 666-671. On May 16, 2016, after Lannett declined to make any submissions within the 30-day window to address whether Lummy’s compliance status was acceptable as of March 23, 2016, the Office of Pharmaceutical Quality/OS and the Office of Compliance confirmed their preliminary determination set forth in the April 13, 2016 memorandum. See AR 816-817. The next day, FDA sent two letters to Lannett: (a) an ANDA Approval Rescission and (b) a cGMP Complete Response. See AR 818-823 and 824-828, respectively. In the rescission letter, the Agency explained to Lannett that “FDA has concluded that the potential OAI status of the facility should have resulted in FDA withholding approval of ANDA 202750,” and therefore with this letter, “FDA is correcting its error and rescinding the approval letter issued for ANDA 202750 on March 23, 2016.” AR 822. The Complete Response letter informed Lannett that its Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 26 of 59 15 ANDA cannot be approved in its present form, described the deficiencies in the application, and notified Lannett of its options to administratively respond under 21 C.F.R. § 314.110, which includes the option to request the opportunity for a hearing on whether there are grounds for denying approval of the ANDA. See AR 824, 826; see also 21 C.F.R. § 314.110(b)(3). STANDARD OF REVIEW A. Summary Judgment Courts grant a motion for summary judgment under Rule 56(a) of the Federal Rules of Civil Procedure when the moving party has shown “that there is no genuine dispute as to any material fact and [it] is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). In a case involving review of final agency action under the APA, “the agency resolves factual issues to arrive at a decision that is supported by the administrative record,” and summary judgment is “the mechanism for deciding whether as a matter of law the agency action is supported by the administrative record and is otherwise consistent with the [Administrative Procedure Act] standard of review.” Coal. for Common Sense in Gov’t Procurement v. United States, 821 F. Supp.2d 275, 280 (D.D.C. 2011), aff’d, 707 F.3d 311 (D.C. Cir. 2013); see also Hi-Tech Pharmacal Co. v. FDA, 587 F. Supp.2d 13, 18 (D.D.C. 2008) (same). Summary judgment is “an appropriate procedure for resolving a challenge to a federal agency’s administrative decision” when, as here, “review is based upon the administrative record.” Fund for Animals v. Babbitt, 903 F. Supp. 96, 105 (D.D.C. 1995 (citing Richards v. INS, 554 F.2d 1173, 1177 n. 228 (D.C. Cir. 1977). B. Judicial Review of Agency Action FDA’s administrative decisions are subject to review under the APA, and may be disturbed only if “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 27 of 59 16 with law.” 5 U.S.C. § 706(2)(A). The APA review standard is “a narrow one,” Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971) (citations omitted), and “highly deferential” to the agency. American Horse Prot. Ass’n v. Yeutter, 917 F.2d 594, 596 (D.C. Cir. 1990). The reviewing court must ensure that the agency “examine[d] the relevant data and articulate[d] a satisfactory explanation for its action including a rational connection between the facts found and the choice made.” Motor Vehicle Mfrs. Ass’n, Inc., v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (citations and quotation marks omitted); see also Overton Park, 401 U.S. at 416. At the same time, however, the Court must “presume the validity of agency action,” American Horse Prot., 917 F.2d at 596, and may not “substitute its judgment for that of the agency.” Motor Vehicle Mfrs., 463 U.S. at 43. Indeed, as this Court has explained, “[t]he proper inquiry is not . . . whether there is sufficient evidence in the record to support the opposing conclusion, but rather whether the choice made by the agency has a rational basis in the evidence.” Cumberland Pharms. Inc. v. FDA, 981 F. Supp. 2d 38, 51 (D.D.C. 2013) (internal quotes and citations omitted). If the agency has “acted within its delegated statutory authority, considered all of the relevant factors, and demonstrated a reasonable connection between the facts on the record and its decision,” the agency’s decision is entitled to deference and must be upheld. See Ethyl Corp. v. EPA, 51 F.3d 1053, 1064 (D.C. Cir. 1995). Moreover when, as here, the agency’s decision is based on the evaluation of scientific information within the agency’s area of technical expertise, the arbitrary and capricious standard of review is extremely deferential. Cumberland Pharms., 981 F. Supp. 2d at 48; see also Serono Labs., Inc. v. Shalala, 158 F.3d 1313, 1320 (D.C. Cir. 1998). This is so because “courts review scientific judgments of the agency not as the chemist, biologist, or statistician that [they] are qualified neither by training nor experience to be, but as a reviewing court exercising [their] Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 28 of 59 17 narrowly defined duty of holding agencies to certain minimal standards of rationality.” Cumberland Pharms., 981 F. Supp. 2d at 48 (internal quotes and citations omitted). In the D.C. Circuit, it is “well established that FDA’s judgments as to what is required to ascertain the safety and efficacy of drugs fall squarely within the ambit of the FDA’s expertise and merit deference” by this Court. Id. (quoting Schering Corp. v. FDA, 51 F.3d 390, 399 (D.C. Cir. 1995)). Finally, if the agency’s decision turns on the interpretation of a statute, judicial review is governed by the familiar two-step analysis of Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984). The first question under Chevron is “whether Congress has directly spoken to the precise question at issue.” Id. at 842 (“Chevron step one”). If, after this Court “exhaust[s] the ‘traditional tools of statutory construction,’” Natural Res. Def. Council, Inc. v. Browner, 57 F.3d 1122, 1125 (D.C. Cir. 1995) (quoting Chevron, 467 U.S. at 843 n. 9), the intent of Congress is clear, “that is the end of the matter.” Chevron, 467 U.S. at 842. Put another way, the Court must initially decide “whether the statute unambiguously forbids the Agency’s interpretation.” Barnhart v. Walton, 535 U.S. 212, 218 (2002). If, however, the statute “is silent or ambiguous with respect to the specific issue,” the Court proceeds to the second prong of Chevron, under which “the question for this court is whether the agency’s answer is based on a permissible construction of the statute.” Chevron, 467 U.S. at 843; Cnty. of L.A. v. Shalala, 192 F.3d 1005, 1012-13 (D.C. Cir. 1999) (“Chevron step two”). The Court need not find that the agency’s construction was the only one it permissibly could have adopted or even the reading the Court would have reached; rather, so long as the agency’s reading is permissible, it must be sustained. See Chevron, 467 U.S. at 843– 44 & n. 11; Cnty. of L.A., 192 F.3d at 1012-13. The Supreme Court has “long recognized that considerable weight should be accorded to an executive department’s construction of a statutory Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 29 of 59 18 scheme it is entrusted to administer.” United States v. Mead Corp., 533 U.S. 218, 227-28 (2001); Novartis Pharms. Corp. v. Leavitt, 435 F.3d 344, 349 (D.C. Cir. 2006) (“We have held on a number of occasions that FDA interpretations of the FDCA receive deference.”). Moreover, under Mead, an agency’s interpretation may still merit some deference, even if that interpretation is not entitled to Chevron deference. Here, FDA is, at a minimum, entitled to deference under Skidmore v. Swift & Co., 323 U.S. 134, 139-40 (1944), under which courts give “considerable and in some cases decisive weight” to statutory interpretations “made in pursuance of official duty, [and] based upon more specialized experience and broader investigations and information” than a court is likely to have, provided that the administrative decision is carefully and thoughtfully made. FDA’s interpretation of the various statutory provisions relating to new drug approval involve a “highly detailed” regulatory scheme to which the Agency has brought its “specialized experience” to bear.” Mead, 533 U.S. at 235. Therefore, at minimum, the agency action Lannett challenges in this case is entitled to deference under Skidmore. Id. ARGUMENT A. FDA Appropriately Rescinded Its Mistaken Approval of Lannett’s ANDA 1. Lannett’s ANDA Did Not Meet the Statutory Drug Approval Requirements and, Therefore, Should Not Have Been Approved Under the plain terms of the FDCA, drug approval requires a showing of cGMP compliance. Section 355(j)(4)(A) precludes approval of an ANDA if FDA finds that “the methods used in, or the facilities and controls used for, the manufacture, processing, and packing of the drug are inadequate to assure and preserve its identity, strength, quality, and purity.” See 21 U.S.C. § 355(j)(4)(A); see also 21 C.F.R. § 314.127(a)(1). Applying this provision to the facts of this case, the statute, on its face, clearly barred FDA’s approval of Lannett’s ANDA. Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 30 of 59 19 Lannett’s ANDA designated Lummy to supply temozolomide, the active ingredient that Lannett would use to manufacture Temozolomide capsules to be used to treat certain cancers. Compl. ¶ 18. FDA’s March 14-16, 2016 inspection at Lummy revealed that the firm was fabricating its manufacturing data. See AR 1, 4-7; see generally AR 70-78. It was evident that, as of that time, Lannett was unable to demonstrate that the facilities referenced in its ANDA had manufacturing processes that were adequate “to assure and preserve [the drug’s] identity, strength, quality, and purity.” See 21 U.S.C. § 355(j)(4)(A); see generally AR 658-661 and 818- 823. Under these facts, FDA was bound by its own statute and regulations to deny approval of Lannett’s ANDA. Thus, FDA erred when it approved Lannett’s ANDA on March 23, 2016. There can be no question that the March 14-16 inspection at Lummy documented a serious lack of cGMP compliance. See, e.g., AR 819, 822. On March 15, 2016, the FDA investigator issued an “OAI Alert” to notify various components within FDA about the data integrity breaches uncovered during the inspection. AR 1. The OAI Alert stated that Lummy was falsifying data, that its temozolomide should be prevented from entering the United States, and that any finished product containing the ingredient should not reach patients. Id. The March 15 OAI Alert was sent by email to several offices in FDA headquarters. See AR 1-3; see also AR 659. Upon receipt of an OAI Alert, employees in CDER’s Office of Pharmaceutical Quality/OS are responsible for electronically filing the Alert in the Agency’s Platform to document that a facility inspection found an unacceptable compliance status. See AR 659. In this case, the OAI Alert was inadvertently not accompanied by a “field alert” form that would have triggered the entry of the OAI Alert in CDER’s Platform. Id. Because the Lummy OAI Alert was not entered into the Platform, the system failed to display that Lummy’s inspection classification status was “potential OAI” as of March 15, 2016. See id. Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 31 of 59 20 A simple yet critical data entry failure was the ultimate missing link. Because the Platform was not updated in a timely fashion, it did not reflect Lummy’s unacceptable cGMP compliance status. See AR 819. Instead, it contained outdated and inaccurate information showing that Lummy’s manufacturing operations were adequate. See AR 659 & n. 5. On March 21, 2016, CDER’s Office of Pharmaceutical Quality completed its final quality endorsement for ANDA 202750. AR 9-10; see also AR 660. Based on outdated information in the Platform, the quality endorsement incorrectly noted that “all facility inspections [are] acceptable” and contained an “Overall Manufacturing Inspection Recommendation” of “Approve.” AR 9-10. CDER’s Office of Generic Drugs relied on that endorsement in issuing the letter approving ANDA 202750 on March 23, 2016. See AR 14 (“Facilities are approve in the Platform. This ANDA is eligible for immediate Full Approval.”); see also AR 660 & n. 6; AR 819. One day later, the data discrepancy was discovered and the Platform was updated to include the Lummy OAI Alert that had been issued the previous week. AR 659. 2. FDA Properly Relied on Its Inherent Authority to Correct Its Mistaken Approval of Lannett’s ANDA The D.C. Circuit has repeatedly recognized that agencies have inherent authority to revisit their administrative decisions. See, e.g., Ivy Sports Medicine, 767 F.3d at 86. Such inherent authority is limited only where the applicable statute includes a prescribed mechanism for reconsideration or revocation. See generally id. The FDCA does not limit FDA’s authority with respect to reconsideration or revocation of an ANDA approval that was granted in error, however. Section 355(e), if not clear on its face is, at most, ambiguous as to whether it could or should apply to the rescission of an unlawfully and mistakenly granted approval, warranting Chevron step two deference to FDA in its Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 32 of 59 21 interpretation. Thus, FDA’s inherent authority to reconsider and rescind an erroneous ANDA approval remains intact, and is vital to the Agency’s operation and the public’s safety.7 Here, FDA was authorized and obligated to correct its erroneous approval of Lannett’s ANDA. FDA properly exercised its inherent authority to correct the mistaken approval because there is no specific statutory authority to the contrary, and the Agency’s correction of its mistake was timely. See Ivy Sports Medicine, 767 F.3d at 86; see also Boesche, 373 U.S. at 476; American Trucking Ass’ns, 358 U.S. at 145; Howard Sober, Inc., 628 F.2d at 41-42; Gun South, Inc., 877 F.2d at 862-863. In voiding an ANDA approval that was statutorily prohibited ab initio, FDA exercised its inherent authority in the manner that Congress intended. FDA has on at least one other occasion rescinded a final approval of a drug application for a mistake. In American Therapeutics, the court upheld FDA’s rescission of a mistakenly approved application. 755 F. Supp. at 1. The court identified “authority that suggests an agency must be given some leeway to remedy mistakes” and noted that “[n]o precedent from [the D.C. Circuit] has been cited that indicates a contrary approach.” Id. (internal citations omitted). There is still no D.C. Circuit precedent that requires a contrary approach to upholding FDA’s rescission of an ANDA approval granted in error. Contrary to Lannett’s assertion, and as discussed below, Ivy Sports Medicine does not control here. The underlying facts in American Therapeutics are strikingly similar to the circumstances here. In that case, as here, there was a failure to adequately communicate information about the applicant’s unacceptable compliance status to the FDA official who signed the approval letter. Id. When the communication breakdown was discovered, FDA did not invoke the notice and 7 Indeed, Lannett’s argument that FDA lacks authority to correct its error in this case, if accepted by the Court would severely handicap FDA in carrying out its public health mission. Having been granted an erroneous approval for an ANDA that it did not quality for at the time, Lannett would have FDA—and this Court—turn an inadvertent data entry error at FDA into a vehicle for sidestepping the statutory requirements for ANDA approval. Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 33 of 59 22 hearing provisions in 21 U.S.C. § 355(e). Id. Instead, the Agency quickly rescinded the erroneous approval. After according deference to the agency, the court observed that FDA’s error “was a good faith mistake promptly discovered and corrected, nothing more.” Id. That observation is equally applicable here. FDA’s inherent authority to correct errors is particularly important when, “[i]n reality, [Lannett] seeks only to profit from FDA’s inadvertent and quickly corrected mistake, ignoring entirely FDA’s responsibility to safeguard the public.” See id. The court in American Therapeutics set out the competing arguments starkly. FDA contended that rescission of the mistaken approval was the appropriate step and that, if the Agency should subsequently refuse to approve the application, the applicant would then have the right to seek an administrative hearing. See 755 F. Supp. at 1-2; see 21 U.S.C. § 355(j)(5)(E). The applicant argued that FDA’s rescission (rather than its approval) was ultra vires and should be overturned by the district court. See American Therapeutics, 755 F. Supp. at 1. The court, while noting that the case presented “an unresolved issue of statutory interpretation and administrative law within the exclusive jurisdiction of the Court of Appeals,” agreed with the government’s view that rescission was not so ultra vires as to justify district court intervention. Id. at 2. Regarding the Court of Appeals’ exclusive jurisdiction,8 the court explained: (a) under the regulatory framework, an administrative hearing would be available in the event that FDA decides to refuse approval of the application; and (b) if FDA then affirmed its refusal to approve after the administrative hearing process culminated, a challenge to that refusal order would be 8 On June 28, 2016, the same day that it brought this action, Lannett filed a petition for review in the D.C. Circuit. Lannett v. FDA, No. 16-1211 (D.C. Cir.). Lannett’s filings in the Court of Appeals challenge the same FDA action at issue in this case and seek substantially the same relief. After filing what it characterized as a “protective appeal” relating to “review of section 355(e) withdrawal orders,” Lannett moved to hold the appellate suit in abeyance pending the conclusion of the present case. By merely agreeing not to oppose the relief sought in Lannett’s abeyance motion, the government expressed no opinion regarding the merits of Lannett’s jurisdictional argument, and it certainly did not “concede tacitly that the American Therapeutics jurisdictional ruling is wrong.” Contra Pls.’ Br. Summ. J. 34. Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 34 of 59 23 reviewed pursuant to 21 U.S.C. § 355(h) in the Court of Appeals. See id.; see also 21 U.S.C. § 355(h). The outcome of American Therapeutics allowed FDA’s rescission to stand. See 755 F. Supp. at 2. In Lannett’s case, on the same day that FDA rescinded its mistaken approval, the Agency issued a Complete Response letter to inform Lannett that its application could not be approved in its present form, and the company was required to respond by taking one of the actions available under 21 C.F.R. § 314.110(b). See AR 824-828. One such option was to request an opportunity for a hearing on whether there are grounds for denying approval of the application (e.g., a failure to meet cGMP requirements). 21 C.F.R § 314.110(b)(3). Alternatively, Lannett could withdraw its application or resubmit it, addressing all deficiencies identified in the Complete Response letter. Id. §§ 314.110(b)(1), (b)(2). If, for instance, Lannett had requested a hearing and, at that hearing, failed to convince FDA that its ANDA should be approved, then the Agency would have rendered a final decision reviewable in the court of appeals. See 21 U.S.C. §§ 355(h) and (j)(5)(E); see also 21 C.F.R. §§ 314.110(b)(3) (noting the opportunity for an administrative hearing under 21 C.F.R. § 314.200 if FDA refuses to approve an ANDA under 21 C.F.R. § 314.127); 314.127(a)(1) (requiring FDA to refuse to approve an ANDA if manufacturing operations are noncompliant); 314.200 (notice of opportunity for hearing). Thus, following American Therapeutics, this Court should appropriately conclude that FDA’s rescission of the approval of Lannett’s ANDA was not only proper, but compelled. 3. Section 355(e) Does Not Displace FDA’s Inherent Authority to Correct Its Mistaken Approval of Lannett’s ANDA Lannett claims, incorrectly, that section 355(e) displaces FDA’s inherent authority to correct its mistake by rescinding the ANDA approval. However, the language, context, and intent of section 355(e) clearly show that the provision does not fit the circumstances presented Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 35 of 59 24 here. But even if the Court were to conclude that the text is ambiguous, FDA’s interpretation is deserving of deference as a permissible construction of the statute, and should be sustained under Chevon step two and Skidmore. See Chevron, 467 U.S. at 843-44 & n.11; Barnhart v. Walton, 535 U.S. at 218; Mead, 533 U.S. at 229. a. Section 355(e) Applies to FDA Withdrawals of Approval Based on New Information Relating to cGMP Compliance, and There Was No Such New Information In Lannett’s Case Under section 355(e), FDA may withdraw approval of an ANDA after notice and an opportunity for hearing to the applicant, when the Agency finds that, “on the basis of new information before [FDA], evaluated together with the evidence before [FDA] when the application was approved,” the manufacturing methods or facilities for the drug are inadequate to ensure its identity, strength, quality, and purity.9 21 U.S.C. § 355(e) (emphasis added); see 21 C.F.R. § 314.150(b)(2). That this provision applies only where there is new information, obtained by FDA after the approval decision, is evidenced by the additional criterion that such withdrawal be based on a finding that the manufacturing inadequacies “were not made adequate within a reasonable time after receipt of written notice from [FDA] specifying the matter complained of.” 21 U.S.C. § 355(e). This second prerequisite to withdrawal plainly applies when FDA’s decision to withdraw approval is based on new information before the Agency. Because there is no such new information here, FDA’s rescission of its mistaken approval of Lannett’s ANDA cannot be shoehorned into the section 355(e) framework. Because Section 355(e) does not apply to these circumstances, it is not “capable of rectifying” the mistake in this case, see Ivy 9 Congress has granted authority to withdraw approval based on cGMP noncompliance to the HHS Secretary, who has delegated that authority to the FDA Commissioner. In turn, the FDA Commissioner has re-delegated certain aspects of that authority to other FDA officials. Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 36 of 59 25 Sports Medicine, 767 F.3d at 86, and does not displace FDA’s inherent authority to correct its error. The starting point for construing section 355(e) is the language of the statute itself. See United States Dep’t of Treasury v. Fabe, 508 U.S. 491, 500 (1993) (citation omitted). Regarding the reference to “new information before [FDA],” the statutory meaning is clear: information that was new to the Agency is information that FDA did not have at a particular point in time (in this case, at the time of approval).10 Conversely, information that FDA had at the time of approval was not new information at that time. By at least March 15, 2016, the date the FDA investigator issued the OAI Alert, FDA had the facts of Lummy’s non-compliance with cGMP. Therefore, that information was not new to FDA on March 23, 2016, the date of ANDA approval. Under the FDCA, information does not become “new” merely because a particular FDA official may not have been in possession of the information. Taking such a narrow view would be incompatible with the complexity of the drug approval process. ANDAs contain data from several different expert disciplines, and no one person within FDA reviews and decides on the data submitted in an application. Instead, for example, the bioequivalence testing submitted by the applicant is reviewed and evaluated by experts in bioequivalence testing. Similarly, toxicologists review the formulation’s safety, chemistry experts review the chemistry information, and labeling experts review the labeling in the application. Of importance in this case, both FDA investigators and experts in manufacturing processes review the information on the manufacturing methods, facilities, and controls for the finished drug product and its active ingredient. If any one of these disciplines concludes that the application is not approvable, the application will not be approved. See generally 21 U.S.C. § 355; 21 C.F.R. §§ 314.94, 314.105, 10 See, e.g., American Therapeutics, 755 F. Supp. at 2 (noting that the circumstance of FDA’s withdrawal under section 355(e) is “often caused by receipt of new information”) (emphasis added). Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 37 of 59 26 314.110, and 314.127. Thus, the task of the FDA official who ultimately signs the application approval letter is not to independently review every part of the application and judge whether it is worthy of approval. Rather, that person’s responsibility is to determine whether each specialized group of experts, having performed the appropriate review in their own discipline, has agreed that the approval can proceed. If the application has met the approval requirements in each of those disciplines, then the approval will proceed. The review of the adequacy of the drug manufacturing methods, facilities, and controls is critical for determining whether the drug for which approval is being sought can be consistently manufactured in a way that will make it safe and effective for patients. In assessing manufacturing compliance, FDA experts rely in part on the evidence gathered when FDA investigators inspect the facilities named in the application. To avoid the approval of an application that fails to show that the drug can be manufactured properly, the FDA process might be analogized to a factory assembly line in which any employee can stop the line when the employee identifies a problem. If an FDA investigator finds conditions that he believes would require official regulatory action during an inspection and recommends that the facility be classified as “potential OAI,” the compliance experts will not sign off on approval of the application until there has been further review of that recommendation. See AR 819. They may, after further review, not accept that recommendation, but until that issue is resolved, any recommendation of approval is put on hold. Thus, for the manufacturing compliance review of a drug application, the front-line FDA investigator is an integral part of the review team. The fact that documented inspectional findings of Lummy’s cGMP noncompliance were “before” the FDA investigator prior to March 23, 2016, is sufficient to show that FDA’s decision to rescind Lannett’s approval did not rely on information that was “new” on the rescission date Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 38 of 59 27 (or any date after the approval). The FDA investigator had issued an OAI Alert prior to the approval date to apprise the appropriate personnel at FDA headquarters (e.g., CDER’s Office of Compliance and Office of Pharmaceutical Quality/OS) of the conditions and practices revealed during the Lummy inspection. In light of the structure that FDA has set up (which, admittedly, did not function properly here), it is clear that the appropriate parties in FDA had received the Lummy inspectional information before approval of Lannett’s ANDA. To be sure, plaintiffs are correct that “new” information can include a reevaluation of information that the Agency had at the time of the decision, see Pls.’ Br. Summ. J. at 25, but that did not happen here. CDER staff simply missed the compliance information that the Agency had at the time of approval. A reevaluation was not needed, as no reasonable reviewer knowing that the manufacturer of the active ingredient was creating falsified data would have recommended approval of the ANDA in the first place. For that reason, Lannett’s situation is distinguishable from the circumstances in Ivy Sports Medicine, where FDA sought to reverse its decision because a new decision-maker concluded that decision was wrongly made by his predecessor, not because the original decision was based on a failure to communicate dispositive information within FDA when the decision was made. See 767 F.3d at 84-85. In Ivy Sports Medicine, an internal investigation of the FDA clearance of a medical device recommended a reevaluation of the initial clearance decision. Id. at 85. The reevaluation of the prior decision provided an opportunity for the Agency to view the evidence differently to determine whether the device met the standards for FDA clearance and thereby could be marketed. See id. at 84-85. The D.C. Circuit held that FDA was required to follow an applicable statutory procedure to reclassify the device, rather than rely on its inherent authority to rescind a clearance for the device because the FDCA’s device reclassification Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 39 of 59 28 provision provided a mechanism for FDA to achieve the same result as reconsidering its initial decision. Id. at 87. The statutory reclassification procedure at issue in Ivy Sports Medicine, which requires that FDA first give notice and opportunity to comment, is predicated on “new information respecting a device.” Id. at 86, 87. The Court’s opinion necessarily concluded that the requirement for “new information” was met based on the agency’s reevaluation of existing information. In contrast, there was no new information or reevaluation of existing information in the case of FDA’s rescission of approval of Lannett’s ANDA. Therefore, for that reason among others, Ivy Sports Medicine is wholly distinguishable from and provides no meaningful guidance in Lannett’s case. b. In Section 355(e), New Information Relating to cGMP Compliance Means Information Obtained After FDA’s Approval Decision As noted, the fact that section 355(e) refers to new information relating to cGMP obtained after the approval decision is apparent from the requirement that the applicant must be given the opportunity to correct the noncompliance in an effort to avoid withdrawal of approval. The statutory reference to the inadequate manufacturing operations to be “made adequate within a reasonable time after receipt of written notice from [FDA]” clearly means manufacturing inadequacies that occurred after approval. The ANDA approval framework that Congress has established would be turned on its head if FDA were required to give an applicant the opportunity to avoid withdrawal by curing cGMP noncompliance that existed but was inadvertently missed by FDA at the time of approval. The FDCA prohibits FDA from approving an ANDA if “the methods used in, or the facilities and controls used for, the manufacture, processing, and packing of the drug are inadequate to assure and preserve its identity, strength, quality, and purity.” 21 U.S.C. § 355(j)(4)(A). This provision would become meaningless if an Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 40 of 59 29 application that was erroneously approved because it failed to meet the FDCA’s approval requirements for manufacturing could nevertheless be maintained so long as the applicant took corrective action post-approval. FDA has properly interpreted section 355(e) and determined Congress’s intent under Chevron step one,11 by examining not just the language of one FDCA subsection in isolation, but also the interrelated provisions that govern ANDA approval, the purposes and structure of those provisions, past agency practice, and the policy consequences of different outcomes. See United Savings Ass’n v. Timbers of Inwood Forest Associates, 484 U.S. 365, 371 (1988); Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997); United Savings Ass’n, 484 U.S. at 371 (citations omitted). Under its plain meaning, section 355(e) only applies when FDA has new (post-approval) information that the current compliance status is not acceptable. This reading gives effect to 21 U.S.C. § 355(j)(4)(A), which bars ANDA approval ab initio if cGMP compliance is inadequate. This reading also ensures that all ANDA applicants are subject to the same approval requirements. Otherwise, applicants like Lannett would experience a windfall and obtain an unfair advantage over other applicants that diligently select and audit the facilities referenced in their ANDAs to ensure cGMP compliance is achieved at the time of approval. Surely Congress did not intend that the opportunity under section 355(e) to cure deficiencies and request a hearing could be used to determine whether an applicant can retain an unlawfully granted approval. Under a proper reading of the statute, the sole 11 FDA believes that Congress has clearly spoken on this issue. But to the extent this Court finds any ambiguity in the statutory provision at issue and its interaction with other relevant portions of the FDCA, the Court should still defer to FDA’s longstanding and well-considered interpretation of its own statute under Chevon step two. See Chevron, 467 U.S. at 843-44 & n. 11. Alternatively, FDA is at minimum entitled to Skidmore deference where FDA has used its scientific and technical expertise to make appropriate determinations about the adequacy of Lannett’s drug manufacturing operations and cGMP compliance status. Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 41 of 59 30 purpose of section 355(e) is to determine whether there are grounds to withdraw approval of a lawfully granted application. See, e.g., John D. Copanos & Sons, Inc. v. FDA, 854 F.2d 510, 523-26 (D.C. Cir. 1988) (upholding FDA’s withdrawal of firm’s applications based on new information demonstrating repeated, flagrant violations of cGMP after approval and where applicant failed to adequately address its post-approval compliance issues). Although Lannett asks this Court for an order that would require FDA to approve a drug application that is not eligible for approval, Congress explicitly allocated to FDA the power to decide whether an ANDA meets approval requirements. Here, FDA reasonably determined that the statutory conditions for approval did not exist at the time FDA mistakenly approved Lannett’s ANDA. In rescinding the mistaken approval, FDA acted to ensure that the public is not exposed to drugs that Congress prohibited from the market (i.e., drugs manufactured under deficient cGMP practices). Such action cannot be considered arbitrary and capricious. Cf. Howard Sober, Inc., 628 F.2d at 42 (“To err is both human and inevitable in a large agency . . . . That the error occurred is regrettable; that the Commission is now correcting it is laudable, and this court should not interfere.”) B. Lannett Cannot Maintain the Mistakenly Granted ANDA Approval 1. Section 355(e) Does Not Apply Because Lummy’s cGMP Deficiencies Cannot be Considered “New Information Before [the Secretary]” Lannett’s extensive arguments about whether the evidence of Lummy’s noncompliance was “before” the agency’s decision-maker at the time of approval of its application, see Pls.’ Br. Summ. J. 23-30, reflects a fundamental misunderstanding of how an administrative agency reviews and approves an application in a complex regulatory regime integrating multiple expert disciplines. Lannett would have this Court hold that, no matter how widespread the knowledge Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 42 of 59 31 of Lummy’s noncompliance was within FDA, it cannot be considered “information before [the Secretary]” under the statute, unless it was personally before the few Office of Generic Drugs officials who have been delegated the authority to sign an application approval letter. See Pls.’ Br. Summ. J. 23-25. Such a cramped and forced interpretation reads “new information” right out of the statutory provision. As described above, various FDA employees with different areas of expertise are involved in the ANDA review process. The FDA official who ultimately signs the application approval letter is responsible for ensuring that the necessary technical and scientific reviews have been completed and that each reviewer has recommended approval of the application. During the manufacturing compliance review, the findings of FDA inspections play an important part in determining whether a facility is complying with cGMP requirements. If an FDA investigator observes serious cGMP deficiencies at an inspection and issues an OAI Alert (thereby causing the facility be classified as “potential OAI”), FDA compliance experts will not recommend approval of the application. Lannett cannot credibly argue that knowledge of its active ingredient manufacturer’s data fabrication was not “before” the FDA investigator who discovered it on March 15. That investigator’s findings of falsified records and cGMP deficiencies were transmitted to the appropriate FDA compliance experts more than a week before Lannett’s ANDA was approved. It was only a technical glitch, which FDA resolved as soon as it was discovered, that prevented the correct recommendation to withhold approval from being transmitted to the FDA official who signed Lannett’s approval letter. Because that signing official would not be expected to have any personal knowledge of the information that formed the basis for the compliance recommendation, it is of no moment whether the specifics of Lummy’s data falsification were Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 43 of 59 32 also “before” that person at the time of the decision. To conclude otherwise would give no effect to the “new information” requirement of section 355(e), as the official signing the letter is not expected to have the underlying information before him or her, but only the recommendations of the expert groups in the various disciplines involved with the review. Lummy’s cGMP compliance information was indisputably before the relevant personnel at FDA whose recommendations inform the approval decision. In addition, Lannett’s distinction between the use of the terms “before” and “available” has no basis in the statute, case law, or prior FDA interpretations. See Pls.’ Br. Summ. J. 27-30. According to Lannett, Congress allegedly used “information ‘before’ the Secretary” to mean “information actually considered by FDA officials” and “information ‘available’ to the Secretary” to mean information that “FDA officials had access to.” Id. at 30. However, a close reading of section 355(e) reveals that Congress used “before” and “available” in a variety of contexts.12 Neither the statutory text nor the legislative history provides insight into why Congress selected one term or pair of terms over the other options. However, Lannett’s contrived construction of the statute is both unsupported and unsupportable. 2. FDA Has Consistently Viewed Section 355(e) as Inapplicable Authority for Correcting its Error Lannett claims that the information conveyed in FDA’s April 14 letter (notifying Lannett of FDA’s preliminary conclusion regarding rescission) conflicts with FDA’s May 17 letter (rescinding the approval). See Pls.’ Br. Summ. J. 17-20. However, FDA’s determination that section 355(e) was inapplicable to Lannett’s ANDA has not wavered. 12 The statute alternates, at times choosing “before” (as in “on the basis of new information before him, evaluated together with the evidence before him”), at times choosing “available” (as in “new evidence . . . not available to the Secretary . . . evaluated together with the evidence available to the Secretary”), and at times choosing “before” and “available” (as in “on the basis of new information before him . . . evaluated together with the evidence available to him”). (emphases added.) The statute also alternates between “evidence” and “information.” Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 44 of 59 33 First, Lannett argues that FDA changed positions on whether the Agency’s section 355(e) withdrawal authority and its inherent rescission authority are mutually exclusive. See Pls.’ Br. Summ. J. 17-19. Although it is true that FDA’s April 14 letter offered Lannett the option to request withdrawal of its application under the Agency’s regulations, 21 C.F.R. § 314.150(d), that offer was not an indication that section 355(e) could apply under circumstances where the threshold factor was not met. Rather throughout the rescission process, FDA has maintained the view that the Agency’s inherent authority to rescind would be displaced only if section 355(e) were applicable, which it was not. Because the criteria for the opportunity for a hearing under section 355(e) were lacking in Lannett’s case, FDA’s inherent authority was not displaced. Perhaps Lannett assumes that FDA’s willingness to allow it to request withdrawal is evidence that, if Lannett did not agree to withdrawal, FDA would nevertheless have new information on which to base a withdrawal of approval under section 355(e). If so, Lannett misses the point. FDA asked Lannett to agree to withdrawal under this FDA regulation: FDA may notify an applicant that it believes a potential problem associated with a drug is sufficiently serious that the drug should be removed from the market and may ask the applicant to waive the opportunity for hearing otherwise provided for under this section, to permit FDA to withdraw approval of the application or abbreviated application for the product, and to remove voluntarily the product from the market. If the applicant agrees, the agency will not make a finding under paragraph (b) of this section, but will withdraw approval of the application or abbreviated application in a notice published in the Federal Register that contains a brief summary of the agency’s and the applicant’s views of the reasons for withdrawal. 21 CFR 314.150(d) (emphasis added). At the time that FDA offered Lannett the option of withdrawal, FDA stated candidly that it did not have new information that would form a basis for withdrawal of approval under section 355(e). See AR 662-663. It only had the information that was before it at the time of the approval. If, however, Lannett had agreed, consistent with the cited regulation, that there was “a Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 45 of 59 34 potential problem associated with [its] drug . . . sufficiently serious that the drug should be removed from the market” (e.g., the active ingredient manufacturer falsified data such that there could be no assurance that the drug product would be safe or effective), the situation would change significantly. That admission by the ANDA applicant would have been new evidence that had not been before FDA at the time of approval. Particularly in a situation in which the applicant was not contesting the withdrawal and agreed to waive its hearing rights, that would certainly provide a sufficient basis for withdrawal of approval under section 355(e). If, however, as was the case with Lannett, the applicant did not admit the violation, FDA would be left with no more information than it had had at the time of approval. In those circumstances, section 355(e) would not apply. Next, Lannett claims that FDA reversed itself on whether the Agency’s inherent rescission authority could be used to rescind an ANDA approval based on new information that was not before FDA at the time of approval. See Pls.’ Br. Summ. J. 19-20. Although it is true that FDA’s April 14 letter gave Lannett 30 days to provide information relevant to the Agency’s preliminary decision to rescind the approval, FDA afforded Lannett the opportunity to be heard as a matter of fairness. The Agency was careful, however, to limit the type of information that Lannett could submit in this context to information about whether Lummy’s compliance status was acceptable as of the date of approval. See AR 663. FDA was not seeking new information of noncompliance to justify rescinding the mistaken approval. Id. On the contrary, the Agency wanted to be sure that there was no basis on which rescission could be avoided. Id. Lannett had ample opportunity to show that there was something FDA missed that would prevent rescission. Had Lannett produced information that convinced FDA of Lummy’s compliance at the time of approval, then rescission could have been avoided. Lannett declined to submit anything to the Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 46 of 59 35 Agency within the 30 day period, leaving no doubt that FDA’s rescission decision relied only on the information available the Agency at the time of approval. 3. Any Subsequent Corrective Action Purportedly Taken by Lannett or its Supplier Cannot Legitimize the Mistaken ANDA Approval Lannett demands that FDA hold a hearing under section 355(e) so that the company has an opportunity to present information on corrective actions taken to address FDA’s cGMP concerns. See Pls.’ Br. Summ. J. 30-31. Lannett’s argument fails because FDA’s section 355(e) withdrawal authority is not implicated here, and the opportunity to avoid withdrawal by curing deficiencies is unavailable to Lannett. Corrective actions taken after the date of approval, while laudable, cannot turn the clock back to make an application that did not meet requirements on the date of approval into an application that did.13 Had Lannett elected to focus its efforts on corrective actions to remedy cGMP noncompliance rather than on this litigation, perhaps it could have furthered the process toward obtaining a valid ANDA approval. Lannett also proposed that it be allowed to keep its erroneously approved application in effect and substitute a different active ingredient manufacturer in its ANDA. See Pls.’ Br. Summ. J. 13. Notwithstanding that Lannett cannot properly retain an ANDA approval issued in error, Lannett misjudges the specific type of supplement it would have to submit to substitute an ingredient supplier in this situation. Even if FDA had not rescinded approval of the ANDA, Lannett would not have been able to substitute a new active ingredient supplier without FDA review and approval of qualifying data. Lannett could not avoid qualifying the new active ingredient source, which involves submitting supporting information, such as new 13 We further note that the condition of the temozolomide that Lummy purportedly manufactured in 2013 (a) is not germane to the question of whether the Lummy facility was in cGMP compliance at the time Lannett’s application was approved, and (b) cannot mitigate the seriousness of Lummy’s ongoing data integrity problems discovered in March 2016. See Pls.’ Br. Summ. J. 31 & n. 22. Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 47 of 59 36 bioequivalence data as well as stability data generated from the manufacture of pilot-scale batches using the new active ingredient. See, e.g., 21 C.F.R. §§ 314.50(d)(1) and 314.94(a)(7)); see also Guidance for Industry ANDAs: Stability Testing of Drug Substances and Products Questions and Answers and International Council for Harmonisation (ICH) guidance for industry on Q1D Bracketing and Matrixing Designs for Stability Testing of New Drug Substances and Products. These requirements are outside the scope of the type of supplement that would permit application changes to be effectuated in 30 days. While Lannett is free to seek a new active ingredient source and amend its pending application accordingly, such action provides no basis for overturning rescission of an approval that was mistakenly granted in the first place. C. Lannett Was Not Deprived of Its Due Process Rights by FDA’s Rescission Lannett argues that, even if section 355(e) were inapplicable to FDA’s rescission, the Due Process clause of the Fifth Amendment entitled the company to the opportunity for a hearing prior to FDA’s rescission of approval. See Pls.’ Br. Summ. J. 41-44. This Court need not reach this constitutional question, however, because there are no pending issues related to FDA’s March 23, 2016, application approval. In its due process claim, Lannett asserts the right to present evidence to FDA on the adequacy of corrective actions that were implemented after the approval date. See id. at 43-44 & n. 27. In so arguing, Lannett effectively concedes that Lummy was not in compliance with cGMP at the time of approval. If Lannett did not agree that Lummy had cGMP deficiencies as of the March 23 approval, Lannett would have no need to advocate for a chance to prove that any noncompliance was successfully addressed. Lannett’s admission, in turn, leaves it with no room to dispute the facts that it failed to meet the statutory approval requirements when its ANDA was approved, and that FDA had no statutory authority to approve its ANDA in the first instance. An evidentiary hearing under these circumstances is Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 48 of 59 37 wholly unnecessary and wasteful of FDA’s limited resources. The Agency should not be forced to revisit an action that was already acknowledged by both parties to be improper. See Howard Sober, Inc., 628 F.2d at 41-42; see also id. at n. 16 (“Here the error is apparent without the need for a hearing.”) Even if the Court should reach the constitutional issue, Lannett has failed to justify its claim that procedural due process required a pre-rescission hearing (on post-approval corrective actions) that would have allowed the company to retain the erroneous approval of its ANDA in the interim. As a preliminary matter, Lannett’s goal in making this argument is unclear. Perhaps Lannett believes that it would be possible to distribute Temozolomide capsules based on the March 23, 2016 approval.14 Or perhaps Lannett focuses on the purported corrective actions because it believes that an erroneously granted approval can be legitimized after the fact. Neither of these objectives is attainable from the process that Lannett is asking this Court to impose. Moreover, the demand for such process evidences a misunderstanding of Due Process clause protections. The Fifth Amendment’s Due Process clause prohibits the government from depriving persons of “property, without due process of law.” U.S. CONST. amend. V. A procedural due process claim has three elements: “(i) deprivation of a protected . . . property interest; (ii) by the government; (iii) without the process that is ‘due’ under the Fifth Amendment.” See N.B. ex rel. Peacock v. District of Columbia, 794 F.3d 31, 41 (D.C. Cir. 2015) (internal citations omitted). “The first inquiry in every due process challenge is whether the plaintiff has been deprived of a 14 Lannett suggests that, in lieu of relying on the FDCA’s drug approval process to ensure prior to distribution that a drug can be manufactured in compliance with cGMP, FDA should use the statute’s enforcement mechanisms to remove violative drugs from the stream of commerce after distribution. See Pls.’ Br. Summ. J. 8. Not only is this strategy unrealistic and infeasible, it disregards the FDCA’s statutory requirement that a product satisfy cGMP before application approval. Enforcement authority is no substitute for FDA’s and Lannett’s obligations to adhere to the statutorily required drug approval framework. Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 49 of 59 38 protected interest in ‘liberty’ or ‘property.’ Only after finding the deprivation of a protected interest do we look to see if the government’s procedures comport with due process.” Gen. Elec. Co. v. Jackson, 610 F.3d 110, 117 (D.C.Cir.2010) (citation omitted); see N.B. ex rel. Peacock, 794 F.3d at 41; accord Washington Legal Clinic for the Homeless v. Barry, 107 F.3d 32, 36 (D.C. Cir. 1997). If it is determined that there is a protected property interest at stake, courts review the process provided in light of the following three factors: (1) the private interests affected by the official action; (2) the risk of erroneous deprivation of such interest through the procedures used and the value, if any, of additional or substitute procedural safeguards; and (3) the government’s interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirements would entail. Mathews v. Eldridge, 424 U.S. 319, 335 (1976); Gen. Elec. Co., 610 F.3d at 117. Although the process that is due will vary in form “appropriate to the nature of the case,” Freeman v. FDIC, 56 F.3d 1394, 1405 (D.C. Cir. 1995), procedural due process requires sufficient notice and opportunity to be heard at a meaningful time and in a meaningful manner. Fuentes v. Shevin, 407 U.S. 67, 80 (1970); see also UDC Chairs Chapter, Am. Ass’n of Univ. Professors v. Bd. of Trustees of the Univ. of the Dist. of Columbia, 56 F.3d 1469, 1472 (D.C. Cir. 1995). In its opening brief, Lannett claims that it had a protected property interest in FDA’s mistaken ANDA approval. See Pls.’ Br. Summ. J. 42-43. Lannett also claims that it was constitutionally entitled to a pre-rescission evidentiary hearing to, “at a minimum,” address “the adequacy of corrective actions and the cGMP compliance status of the active ingredient actually received by Lannett (in 2013).” Id. 43-44 & n. 27. Lannett is wrong on both accounts. Lannett had no protected property interest in an ANDA approved in error. See American Therapeutics, 755 F. Supp. at 2 (“Yet [the applicant] pictures itself, quite incorrectly, as having Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 50 of 59 39 been deprived of a vested right. It had no right to put on the market a drug when facts were available indicating that the public health might be injured.”); Washington Legal Clinic, 107 F.3d at 38 (“[A]dministrative actions may not create property rights where that result would contravene the intent of the legislature.”) (internal quotes and citation omitted). But even assuming, arguendo, that Lannett had such a protected interest, Lannett’s due process claim still fails because Lannett cannot demonstrate that FDA’s procedures were deficient. To be sure, FDA does not dispute that a drug applicant is entitled to an opportunity to be heard on the question of whether there are grounds for denying approval of an ANDA, including for failure to comply with manufacturing requirements. The FDCA and its implementing regulations provide for a hearing opportunity under those circumstances. See 21 U.S.C. § 355(j)(5)(E); 21 C.F.R. §§ 314.110(b)(3), 314.127(b)(1), and 314.200. A hearing held in accordance with these statutory and regulatory authorities is a formal evidentiary hearing under 21 C.F.R. Part 12, which is the top-flight procedure that Lannett demands in this suit (see Pls.’ Br. Summ. J. 44 n. 27). See 21 C.F.R § 10.20. Yet Lannett has had an opportunity to request a Part 12 hearing since May 17, 2016, which is the date of the rescission and the date that FDA issued a Complete Response letter notifying Lannett that its ANDA cannot be approved because of cGMP deficiencies. As stated in the letter, Lannett was provided with three options and asked to choose among them; one of those options involved a request for an evidentiary hearing. See AR 826. Even though Lannett has not elected to proceed with a hearing request (or any other regulatory option) to date, it has received all of the procedural due process to which it is entitled under FDA’s established procedures. See, e.g., American Therapeutics, 755 F. Supp. at 2 Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 51 of 59 40 (finding in a factually analogous case that the drug applicant “was not deprived of a factual hearing to prove its qualifications to make and sell the drug, and, given the circumstances, the post-denial hearing offered easily met due process requirements.”). The rescission process that FDA afforded Lannett easily satisfies the three-factor test in Mathews. Regarding the first Mathews factor, FDA has assumed—for the purpose of argument—that Lannett had a private interest in the mistaken approval. Even so, such an interest would be negligible (if not non-existent) because the ANDA would not permit Lannett to distribute any product, as doing so would violate the law. See 21 U.S.C. §§ 331, 351(a)(2)(B) (prohibiting a drug from being commercialized if it was manufactured in violation of cGMP). Next, applying the second Mathews factor, the risk of erroneous deprivation of Lannett’s purported interest was also negligible, if not non-existent, as FDA rescinded an approval mistakenly granted because of a data entry failure, not a problem in judgment. There is no dispute that, at the time of approval, Lannett failed to meet cGMP requirements. Lannett has not argued to FDA, or in this Court, that the falsification of important manufacturing data and records by its active ingredient manufacturer—which the latter admitted—did not happen, and it cannot credibly argue that it is entitled to approval of its ANDA in light of that fraud. Moreover, FDA further minimized the risk of erroneous deprivation by providing Lannett with notice and an opportunity to be heard before the rescission. See AR 662-665. To be certain that there was no basis on which rescission could be avoided, FDA issued a letter on April 14, 2016, to notify Lannett of its opportunity to provide, within 30 days, written information relevant to FDA’s preliminary decision to rescind the approval. Id. In response, Lannett declined to submit any information relevant to the issue of whether Lummy’s compliance status was in fact acceptable as of the date of approval, effectively declining to take advantage of the pre-rescission Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 52 of 59 41 opportunity to be heard. It is hard to give credence to Lannett’s claim that FDA should have provided more process when Lannett did not take advantage of the process FDA did provide. As for the third Mathews factor, any purported property interest of Lannett’s is vastly outweighed by FDA’s interest in promptly rescinding approval and returning to the status quo ante without delay in order to protect the public health. The Supreme Court has explained: “Protection of the health and safety of the public is a paramount governmental interest which justifies summary administrative action. Indeed, deprivation of property to protect the public health and safety is ‘[o]ne of the oldest examples’ of permissible summary action.” Hodel v. Virginia Surface Mining and Reclamation Ass’n, 452 U.S. 264, 300 (1981) (quoting Ewing v. Mytinger & Casselberry, Inc., 339 U.S. 594, 599 (1950)); see also R. A. Holman & Co. v. SEC, 299 F.2d 127, 131 (D.C. Cir. 1962), cert. denied, 370 U.S. 911 (1962) (“In a wide variety of situations, it has long been recognized that where harm to the public is threatened, and the private interest infringed is reasonably deemed to be of less importance, an official body can take summary action pending a later hearing.”). In short, under each of the factors identified in Mathews, FDA’s rescission action passes constitutional muster. The post-rescission opportunity for a formal evidentiary hearing afforded by FDA’s Complete Response letter amply satisfies constitutional requirements, as it gives Lannett “the opportunity to be heard at a meaningful time and in a meaningful manner,” which is all that due process requires. Mathews, 424 U.S. at 333 (internal quotation marks and citation omitted). Additionally, FDA also afforded Lannett another opportunity to be heard – fg prior to the rescission. That Lannett failed to avail itself of either procedure does not make the process afforded constitutionally deficient. The two cases that Lannett relies upon its it briefing, namely N.B. ex rel. Peacock v. Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 53 of 59 42 District of Columbia, 794 F.3d 31 (D.C. Cir. 2015) and Alaska Airlines, Inc. v. CAB, 545 F.2d 194 (D.C. Cir. 1976), do not call for a contrary result. See Pls.’ Br. Summ. J. 44-45. First, the adequacy of process was not even reached in N.B. ex rel. Peacock, as the case was remanded to the district court “to conduct an inquiry in the first instance into what process is due.” 15 See 794 F.3d at 44. Moreover, both N.B. ex rel. Peacock and Alaska Airlines are distinguishable from Lannett’s situation for a number of reasons, the most significant of which is that neither case involved the type of governmental interest at issue here: the statutory charge to protect public health and safety. To be sure, defendants recognize the importance of the parties’ interests in N.B. ex rel. Peacock, which involved Medicaid coverage for (lawfully approved) prescription drugs. In that case, a controversy existed over the recipients’ entitlement to coverage. Here, however, Lannett has admitted that its ANDA did not meet the statutory requirements at the time of approval. Thus, unlike the plaintiffs in N.B. ex rel. Peacock who sought process to prove that they complied with the law, Lannett’s claim hinges on keeping that which the company has already conceded was received by mistake. In Alaska Airlines, the D.C. Circuit’s analysis rested in large part on the petitioners’ extended reliance on their purported claim of entitlement. 545 F.2d at 199. That court also discussed cases addressing the impact of such reliance when analyzing procedural due process requirements for property interest claims. See id. Here, Lannett can hardly assert any material reliance on the March 23, 2016 approval, considering that, nine days after approval, FDA sent a letter to Lannett notifying it that its approval could not be retained. (A follow-up meeting by telephone occurred four days after issuance of the April 1, 2016 letter.) Within this short period 15 It is noteworthy that the plaintiffs in N.B. ex rel. Peacock sought exactly the due process that Lannett already has, “written notice of the opportunity to request a hearing” when the government concluded that the right that they claimed was not justified. 794 F.3d at 44. Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 54 of 59 43 of time, as Lannett represented, it had not begun to distribute any product in the United States. Pls.’ Br. Summ. J. 11. Finally, the process offered to Lannett is also consistent with FDA’s approach to other applicants with facilities that fail to meet cGMP requirements, and how FDA should have treated Lannett originally: such applicants have no right to a hearing on the question of approvability before FDA issues a complete response letter stating that the facility is not cGMP compliant. All applicants may request a hearing after such a letter has issued under 21 C.F.R. § 314.110(b)(3). FDA has afforded Lannett the same opportunity. In these circumstances, no additional process is necessary, and this Court should reject Lannett’s due process claim. D. Lannett Has Failed To Exhaust Its Administrative Remedies and Is Not Entitled to Judicial Relief of This Non-Final Agency Action After FDA afforded Lannett due process and properly rescinded the ANDA approval, the application returned to pending status and was subject to regulatory requirements described in FDA’s Complete Response letter. Inasmuch as Lannett has not taken any of the actions pursuant to the Complete Response letter and set forth in FDA’s regulations, 21 C.F.R. § 314.110, the doctrine of exhaustion of administrative remedies militates against this Court’s consideration of Lannett’s claims at the present time. It is well established that exhaustion is generally required before a party may proceed to federal court. See, e.g., Bowen v. New York, 476 U.S. 467, 484 (1986); Avocados Plus Inc. v. Veneman, 370 F.3d 1243, 1246 (D.C. Cir. 2004); Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 50-51 (1938). In addition, the APA authorizes judicial review only with respect to “final agency action,” 5 U.S.C. § 704, which requires a plaintiff to “exhaust[] all administrative remedies expressly prescribed by statute or agency rule . . . .” Darby v. Cisneros, 509 U.S. 137, 146 (1993). The reason for the exhaustion doctrine is clear: Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 55 of 59 44 When Congress has allocated to an agency the power to decide certain questions in the first instance, it is normally desirable to let the agency develop the necessary factual background upon which decisions should be based. And since agency decisions are frequently of a discretionary nature or frequently require expertise, the agency should be given the first chance to exercise that discretion or to apply that expertise. Berge v. U.S., 949 F.Supp.2d 36 (D.D.C. June 5, 2013) (internal quotes omitted) (citation omitted). The court’s reasoning applies with full force to the present case. Congress has explicitly allocated to FDA the power to decide in the first instance whether an ANDA is approvable. 21 U.S.C. § 355(j). To exercise its discretion in evaluating whether to approve or not approve an ANDA for a particular drug, FDA must determine, inter alia, the adequacy of “the methods used in, and the facilities, and controls used for the manufacture, processing, and packing of the drug.” Id. § 355(j)(4)(A). In this case, FDA has not made a final, judicially reviewable decision on the manufacturing compliance status of the facilities named in Lannett’s ANDA. The Complete Response letter is not the culmination of the regulatory process for determining whether grounds exist for issuing a final refusal to approve an ANDA. Scientific and technical issues that FDA may have to decide, depending on which option Lannett chooses under 21 C.F.R. § 314.110, have yet to be identified, let alone evaluated. These questions are within the particular expertise of FDA, and the Court should allow the procedural steps to play out and any necessary scientific and technical evaluations to be completed. In this case, Lannett’s premature request for judicial ruling “amounts to an attempt to bypass the administrative process.” Public Citizen, 740 F.2d at 29. In Public Citizen, the D.C. Circuit explained that the exhaustion doctrine serves “four primary purposes:” [I]t ensures that persons do not flout established administrative processes and thereby advances Congress’ intent in establishing the processes; it protects the autonomy of agency decisionmaking; it aids judicial review by permitting factual development in an agency proceeding; and it serves judicial economy by avoiding Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 56 of 59 45 the necessity of any judicial involvement if the parties successfully vindicate their claims before the agency.” Id. (citing Andrade v. Lauer, 729 F.2d 1475, 1484 (D.C. Cir. 1984). Requiring Lannett to exhaust its administrative remedies in this case will further each of these purposes. Allowing Lannett to obtain review in this Court of FDA’s actions to date “would encourage disregard for the procedures Congress has established to resolve such questions and would undermine the autonomy of the administrative decisional process.” Id. Moreover, only if FDA affirms a decision to refuse to approve an application (which could happen only after Lannett requested the hearing for which FDA has provided it the opportunity), would there be a final agency order subject to judicial review. Any challenge to that order would be reviewed by the court of appeals. See 21 U.S.C. § 355(h). Requiring Lannett to exhaust its administrative remedies will aid any judicial review that may ultimately be had. At a minimum, the court of appeals will have the benefit of FDA’s review of all current information in the possession of the Agency regarding Lannett’s manufacturing practices. And if Lannett takes advantage of the opportunity for a hearing, the court will have further benefit of facts developed through the administrative hearing process. Lastly, it is possible that, if it pursued the administrative process, Lannett could persuade FDA that Lummy’s manufacturing practices were not deficient and that Lannett’s ANDA is approvable. In that event, no judicial review would be necessary. Therefore, “considerations of judicial economy militate against judicial resolution of the dispute at this point.” Public Citizen, 740 F. 2d at 29. CONCLUSION For all the foregoing reasons, Lannett’s motion for summary judgment should be denied and the Court should grant defendants’ motion for summary judgment in this action. Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 57 of 59 46 Dated: November 7, 2016 Respectfully submitted, Of Counsel: MARGARET M. DOTZEL Acting General Counsel ELIZABETH H. DICKINSON Associate General Counsel Food and Drug Division ANNAMARIE KEMPIC Deputy Chief Counsel, Litigation CLAUDIA ZUCKERMAN Senior Counsel Office of the Chief Counsel U.S. Food and Drug Administration 10903 New Hampshire Avenue White Oak 31, Room 4550 Silver Spring, MD 20993-0002 BENJAMIN C. MIZER Principal Deputy Assistant Attorney General JONATHAN F. OLIN Deputy Assistant Attorney General MICHAEL S. BLUME Director ANDREW E. CLARK Assistant Director Consumer Protection Branch /s/ Natalie N. Sanders Natalie N. Sanders (DC Bar #1003336) Trial Attorney Consumer Protection Branch U.S. Department of Justice, Civil Division P.O. Box 386 Washington, DC 20044-0386 (202) 598-2208 (phone) Natalie.N.Sanders@usdoj.gov Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 58 of 59 CERTIFICATE OF SERVICE I hereby certify that on this 7th day of November, 2016, I served, by hand, the sealed Defendants’ Cross-Motion for Summary Judgment and In Opposition to Plaintiffs’ Motion for Summary Judgment, supporting Memorandum, and Proposed Order, on the following counsel for Plaintiffs, with corrected courtesy copies by email: Daniel G. Jarcho ALSTON & BIRD LLP 950 F Street, N.W. Washington, DC 20004 /s/ Natalie N. Sanders Natalie N. Sanders (DC Bar #1003336) Trial Attorney Consumer Protection Branch U.S. Department of Justice, Civil Division P.O. Box 386 Washington, DC 20044-0386 (202) 598-2208 (phone) Natalie.N.Sanders@usdoj.gov Case 1:16-cv-01350-RBW Document 37 Filed 02/07/17 Page 59 of 59 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ___________________________________ ) LANNETT COMPANY, INC., and ) LANNETT HOLDINGS, INC., ) ) Plaintiffs, ) v. ) Civ. No. 1:16-cv-01350-RBW ) U.S. FOOD AND DRUG ) ADMINISTRATION, and ) UNITED STATES OF AMERICA, ) ) Defendants. ) ___________________________________ ) ORDER GRANTING DEFENDANTS’ CROSS-MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT Having considered the parties’ respective motions for summary judgment, the memoranda in support of and in opposition thereto, and the relevant portions of the administrative record in this case, the Court hereby ORDERS that: 1. Defendants’ motion for summary judgment is GRANTED; 2. Plaintiffs’ motion for summary judgment is DENIED; and 3. This case is DISMISSED with prejudice. IT IS SO ORDERED. Entered this ____ day of ____________, 201_. HONORABLE REGGIE B. WALTON United States District Judge Case 1:16-cv-01350-RBW Document 37-1 Filed 02/07/17 Page 1 of 1