Addressing whether the US Food and Drug Administration’s (FDA) denial of Ferring Pharmaceutical’s application for marketing exclusivity was arbitrary and capricious, the US District Court for the District of Columbia determined the FDA reasonably interpreted the term “drug” to mean “drug product,” rendering Ferring’s fixed-dose combination drug product ineligible for the statutory five-year exclusivity period, despite containing an active ingredient that had not been previously approved. The FDA announced it would change its interpretation of the statutory requirements for fixed-combination drug products containing a novel drug substance. However, the court declined to address the retroactivity effect of this interpretation on Ferring’s application. Ferring Pharmaceuticals, Inc. v. Sylvia M Burwell, et al., 2016 WL 1060199 (D.D.C. March 15, 2016)(J. Contreras).

At issue is Ferring’s new drug application (NDA) for fixed-dose combination drug Prepopik® (sodium picosulfate, magnesium oxide, and anhydrous citric acid). Prepopik is intended for use in colon cleansing prior to undergoing a colonoscopy for adults. Two of the active ingredients—magnesium oxide and anhydrious citric acid—were previously approved in a NDA. However, sodium picosulfate—a stimulant laxative—was a new drug substance that had never been previously approved in any NDA. Picosulfate’s benefit is only realized in combination with the other active substances, which is why Ferring never sought approval for it as a single ingredient drug product.

Ferring sought five-year exclusivity to market based on the fact that picosulfate had never been previously approved in an NDA. The FDA approved Ferring’s NDA in July of 2012, but denied its request for five-year exclusivity, and awarded only three-year exclusivity since Ferring’s drug product contained two active substances that had been previously approved. Pursuant the Hatch-Waxman Amendments, five-year exclusivity is granted when a drug application “for a drug, no active ingredient (including any ester or salt of the active ingredient) of which has been approved in any other application.” Prior to 2014, the FDA interpreted this provision to provide “that only drug products containing no previously approved drug substances were eligible for exclusivity.” If a drug met that requirement, then no application may be submitted “referencing that drug product or any later-approved products containing the product’s drug substances.” This was an attempt by the FDA to preserve the innovator’s exclusivity to the greatest extent possible. The two clauses of this exclusivity provision contain “eligibility” and “bar” clauses, which are relevant to the court’s ultimate decision.

Since 2014, the FDA recognized the recent changes in drug development, particularly with respect to fixed-combination drug products containing new active moieties. Therefore, in order to encourage innovation of fixed-combination therapies, the FDA changed its interpretation of the five-year exclusivity provision to account for fixed combinations containing a novel drug substance, regardless of whether the fixed combinations also include drug substances with previously approved active moieties.

Ferring filed the present action challenging the FDA’s denial of five-year exclusivity as “arbitrary” and “capricious.” Ferring first argued the FDA’s prior interpretation of the statute, under which Prepopik was denied five-year exclusivity, contravened the plain language of the Federal Food, Drug, and Cosmetic Act (FD&CA). Second, Ferring argued even if the language of the FD&CA is ambiguous, the FDA’s interpretive choice to read “drug” in the eligibility clause to mean “drug product” was an unreasonable reading of the statute or was arbitrary and capricious because it treated similarly situated parties differently. Finally, Ferring claims even if the FDA’s prior interpretation was permissible, its decision not to apply the new interpretation retroactively was arbitrary and capricious.

The district court applied the Chevron analysis in determining whether the FDA reasonably interpreted the term “drug” in the context of the five-year exclusivity provision. The court held it did. Since the statute does not specifically define “drug” in the “eligibility” clause, it was reasonable for the FDA to  interpret “drug” to encompass “drug product” because the eligibility clause refers to “an application submitted under subsection (b) of [§355] for a drug….” Since applications are typically submitted for drug products, not drug substances, interpreting “drug” to refer to “drug product” is a logical conclusion based on this language. The court further explained the interpretation was reasonable distinguishing between the article for which an application is submitted—a finished drug product, and what the agency approves—active ingredients or drug substances contained within a finished drug product. Finally, the court noted the FDA’s appears to define “drug substance” as the equivalent of a single active ingredient. Thus, it is not unreasonable to view “drug product’ as including one or more active ingredients.

Once eligible, the FDA interpreted the bar clause to bar all abbreviated new drug applications (ANDAs) and 505(b)(2) applications referencing that drug product or any later-approved products containing the product’s drug substances, in order to preserve the innovator’s exclusivity to the greatest extent possible. The court found this to be a reasonable interpretation since it was consistent with the intent of the statue to incentivize innovation and improve upon approved drug products. The FDA’s pre-2014 interpretation of “drug,” in both the eligibility and bar clauses, was not arbitrary or capricious. Although policy considerations have now persuaded the FDA to modify its interpretation of the statute, based on the statutory ambiguity, the FDA’s definition was neither unreasonable nor arbitrary and capricious.

The court was not persuaded by Ferring’s argument that even if the FDA’s prior reading of the statute was reasonable, it arbitrarily treated similarly fixed-dose combination drug products differently. Ferring argued

[I]f a single-entity drug product containing a new active ingredient is approved before a fixed-dose combination drug product containing the same active ingredient, both products – the single-entity and the combination – receive the benefit of the five-year NCE exclusivity, but if the order of the approvals had been reversed and the fixed-dose combination drug had been approved just hours before the single-ingredient product, none of the products would have been awarded NCE exclusivity.

The court pointed out that the administrative record indicates that single-entity drug products have been submitted long before (six to 18 months) combination products. Moreover, the facts of the present case are unique because Ferring’s novel active ingredient, sodium picosulfate, is not appropriate for a single-entity form.

Finally, the court declined to decide whether the FDA acted arbitrarily and capriciously by not applying the FDA’s post-2014 reinterpretation retroactively, thereby denying new chemical exclusivity (NCE) for Prepopik. Since neither party submitted ample briefing on the retroactive application of a new interpretation by an agency, the court directed the parties to file renewed motions for summary judgment to more fully address the retroactivity issues.