Otsuka Pharmaceutical Co., Ltd. et al v. Burwell et al

Filing 100

MEMORANDUM OPINION denying re 77 MOTION for Temporary Restraining Order and/or Preliminary Injunction filed by Alembic Pharmaceuticals Ltd., Apotex Corporation, Apotex Inc., Teva Pharmaceuticals USA, Inc., Zydus Pharmaceuticals (USA) Inc. Signed by Judge George Jarrod Hazel on 4/29/2015. (am2s, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Southern Division
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OTSUKA PHARMACEUTICAL CO., LTD.,
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Plaintiff,

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v.

Case No.: GJH-15-852
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SYLVIA MATHEWS BURWELL, ET AL.,
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Defendants.
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MEMORANDUM OPINION
On April 28, 2015 at 1:30 pm, Defendant Food and Drug Administration (“FDA”)
granted approval of the sale of four generic versions of the prescription brand drug aripiprazole,
which is marketed and sold under the brand name of Abilify® by Plaintiffs Otsuka America
Pharmaceutical, Inc., Otsuka Pharmaceutical Development and Commercialization, Inc., and
Otsuka America Pharmaceutical Inc. (collectively, “Otsuka”). In this action, Otsuka challenges
FDA’s1 approval of these generic drugs pursuant to the Administrative Procedure Act
(“APA”), 5 U.S.C. § 701, et seq. Specifically, Otsuka seeks a temporary restraining order and/or
preliminary injunction to stay the effectiveness of these approvals, to prohibit FDA from
granting any further approvals of generic versions of Abilify®, and to prohibit the recent
recipients of FDA-approvals from selling the generic versions of Abilify®. At 3:15 pm on April
28, 2015, just two hours after FDA approved generic versions of Abilify®, the Court conducted
a hearing on Otsuka’s motion for a temporary restraining order and/or preliminary injunction
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In addition to naming the FDA as a defendant, Otsuka has also named Sylvia Mathews
Burwell, Secretary of the U.S. Department of Health and Human Services, and Drs. Margaret
Hamburg and Stephen Ostroff as defendants. Because the allegations against these four
defendants are the same, the Court will refer to them collectively as the “FDA.”
1

during which Otsuka, FDA, and Defendant-Intervenors2 presented their respective arguments for
or against the issuance of injunctive relief. Based on these arguments, as well as the arguments
presented in the parties’ respective briefs, the Court will DENY Otsuka’s motion for a temporary
restraining order and/or preliminary injunction.
I.

BACKGROUND
This case involves the interplay between statutory exclusivities, particularly orphan drug

exclusivity, statutory and regulatory mandates that require labels of generic drugs to contain the
same information as their brand counterpart, and requirements that pediatric information be
included on drug labels. Specifically, Otsuka, the new drug application holder for Abilify®,
contends that, as a result of FDA’s recent approval of a pediatric indication for Abilify® that is
protected by orphan drug exclusivity, FDA is precluded from approving an ANDA for a generic
version of Abilify® until its orphan drug exclusivity expires in December 2021 because section
505A(o) of the Federal Food, Drug, and Cosmetic Act (“FDCA”) does not permit this type of
pediatric information to be omitted from a generic’s label.
A.

Statutory and Regulatory Framework
1.

New Drug Applications and Supplemental New Drug Applications

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. See 21 U.S.C. § 355(a), (d). A sponsor may thereafter submit a
supplemental new drug application (“sNDA”) seeking FDA’s approval of a new indication of an
2

Defendant-Intervenors include Apotex Inc., Apotex Corp., Teva Pharmaceuticals USA, Inc.,
Alembic Pharmaceuticals Ltd., Alembic Ltd., Alembic Global Holdings S.A., Alembic
Pharmaceuticals, Inc., Zydus Pharmaceuticals (USA) Inc., Torrent Pharma Inc., Torrent
Pharmaceuticals Ltd., and Sandoz, Inc. (although Sandoz’s motion to intervene has not yet been
formally granted).
2

already approved drug. See 21 C.F.R. § 314.70(b). Drug sponsors must justify the labeling
change proposed in the supplement by submitting data supporting the safety and effectiveness of
the drug for the new indication. See 21 U.S.C. § 355(a) and (d); see also 21 C.F.R. §
314.70(b)(3)(iv)-(v). FDA will refuse to approve the sNDA if, among other reasons, the
sponsor’s investigations do not show that the drug is safe or effective for “the conditions of use
prescribed, recommended, or suggested in the proposed labeling.” 21 U.S.C. § 355(d)(1), (2),
(5).
2.

Abbreviated New Drug Applications

The Drug Price Competition and Patent Term Restoration Act of 1984 (the HatchWaxman Amendments), codified at 21 U.S.C. § 355 and 35 U.S.C. §§ 156, 271, & 282, permits
a drug manufacturer to submit an abbreviated new drug application (“ANDA”) requesting
approval of a generic version of an already approved drug product. See 21 U.S.C. § 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 relies on FDA’s previous findings
that the product approved under the NDA is safe and effective. Among other information, an
ANDA must include data showing that the generic drug product is bioequivalent to the innovator
product. See 21 U.S.C. § 355(j)(2)(A)(iv), (j)(4)(F); see also 21 C.F.R. § 314.127(a)(6)(i),
314.94(a)(7).
3.

Orphan Drug Exclusivity

To justify the costly and risky investment of time and money in preparing and submitting
NDAs and sNDAs, Congress has provided these applicants with certain periods of statutory
exclusivity during which they can sell their product without generic competition. One of these
periods of statutory exclusivity is found in the Orphan Drug Act (“ODA”) provisions of the

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FDCA, Pub. L. 97-414, 96 Stat. 2049. There, Congress encouraged drug manufacturers to
develop drugs for the treatment of rare diseases or disorders affecting small patient populations.
One of the incentives that Congress provided in the ODA is a seven-year period of market
exclusivity for approved orphan drugs. See 21 U.S.C. § 360cc(a). FDA’s regulations provide
that, when a drug receives orphan exclusivity, “no approval will be given to a subsequent
sponsor of the same drug for the same use or indication for 7 years.” 21 C.F.R. § 316.3(b)(12).
4.

Labeling Requirements

FDA has promulgated regulations requiring certain pediatric information to be included
on a prescription drug’s label.3 For example, in the “Indications and Usage” section of the Full
Prescribing Information portion, “[i]f evidence is available to support the safety and
effectiveness of the drug or biological product only in selected subgroups of the larger
population (e.g., . . . patients in a special age group) . . . a succinct description of the limitations
or usefulness of the drug and any uncertainty about anticipated clinical benefits,” must be
included. 21 C.F.R. § 201.57(c)(2)(i)(B) (emphasis added). Elsewhere the regulations explain
that, “[i]f there is a specific pediatric indication different from those approved for adults that is
supported by adequate and well-controlled studies in the pediatric population, it must be
described under the ‘Indications and Usage’ section.” § 201.57(c)(9)(iv)(B).
Likewise, the “Dosage and Administration” section “must state the recommended dose
and, as appropriate,” among other things, “[d]osages for each indication and subpopulation.” §
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A drug’s labeling includes “all labels and other written, printed, or graphic matter upon any
article or any of its containers or wrappers, or accompanying such article.” 21 U.S.C. §
321(m)(1)-(2). The labeling must “contain [a]dequate information for such use, including
indications, effects, dosages, routes, methods, and frequency and duration of administration and
any relevant warnings, hazards, contraindications, side effects, and precautions, under which
practitioners licensed by law to administer the drug can use the drug safely and for the purposes
for which it is intended, including all conditions for which it is advertised or represented.” 21
C.F.R. § 201.100(d)(1).
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201.57(c)(3)(C) (emphasis added). This section must include appropriate pediatric dosage
information “[i]f there is a specific pediatric indication different from those approved for adults
that is supported by adequate and well-controlled studies in the pediatric population.” §
201.57(c)(9)(iv)(B).
The regulations require that the labeling also includes other specific pediatric
information. Where a specific pediatric indication has been demonstrated by adequate and wellcontrolled studies, the pediatric use section “must cite any limitations on the pediatric
indication,” among other things. Id. “If there are specific statements on pediatric use of the drug
for an indication also approved for adults that are based on adequate and well-controlled studies
in the pediatric population, they must be summarized in the ‘Pediatric use’ subsection . . . .” §
201.57(c)(9)(iv)(C).
5.

The “Same Labeling” Requirement

Generally, generic drugs must contain the same information on their labels as the label of
their respective brand-name predicate drug. See 21 U.S.C. § 355(j)(2)(A)(v), (j)(4)(G); 21 C.F.R.
§ 314.94(a)(8)(iv). Nonetheless, there are situations where ANDA applicants may carve out from
proposed labeling patent or exclusivity-protected conditions of use and obtain approval for the
remaining non-protected conditions of use. For example, the FDCA allows for exceptions if “the
new [ANDA] drug and the listed drug are produced or distributed by different manufacturers.”
21 U.S.C. § 355(j)(2)(A)(v); see also 21 C.F.R. §§ 314.94(a)(8)(iv), 314.92(a)(1), 314.127(a)(7).
In such cases, ANDA applicants may, for example, carve out indications protected by patent or
exclusivity in certain circumstances.

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Additionally, Congress enacted section 505A(o) of the FDCA which identifies certain
situations where the FDA cannot deny approval based on the omission of pediatric information
on a brand’s label, from the generic’s label. Section 505A(o) provides:
A drug for which an application has been submitted or approved
under section 355(j) of this title shall not be considered ineligible
for approval under that section or misbranded under section 352 of
this title on the basis that the labeling of the drug omits a pediatric
indication or any other aspect of labeling pertaining to pediatric
use when the omitted indication or other aspect is protected by
patent or by three-year exclusivity under [Section 505(j)(5)(F)(iii)
or (iv)].
21 U.S.C. § 355a(o)(1). According to Otsuka, “[t]he only labeling omissions the statute allows
are those expressly delineated: pediatric indications or information pertaining to pediatric use
protected by patent or by three-year exclusivity under § 355(j)(5)(F).” ECF No. 77 at 22.4 Otsuka
therefore maintains that FDA cannot omit pediatric labeling information that is protected by
orphan drug exclusivity. See id. FDA, on the other hand, contends that section 505A(o) “does not
limit [its] authority to carve out pediatric labeling where a carve-out would otherwise be
appropriate; instead, it provides FDA with additional authority to retain Hatch-Waxmanprotected pediatric information in ANDA labeling where a carve-out would not be appropriate
(because such information is necessary for safe use of the product).” Ltr. from J. Peters to R.
Tyler, Apr. 28, 2015, at 11.
B.

Case-Specific Background

Otsuka is the NDA holder for Abilify®. See ECF No. 77-2 at ¶ 4. FDA first approved
Abilify® on November 15, 2002, then for schizophrenia, and FDA has since approved it for
schizophrenia in adolescents, acute treatment of manic and mixed episodes associated with
4

For the citations in this Memorandum Opinion, the Court uses the page numbers assigned to the
document from CM/ECF or PACER.

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Bipolar I Disorder in both adult and pediatric patients, irritability associated with autistic
disorder in pediatric patients, and as an add-on treatment for depression in adults. See id. at ¶ 7.
In 2005, Otsuka submitted an application to FDA requesting orphan drug designation for
Abilify® “for the treatment of Tourette Syndrome in children and adolescents.” Id. at ¶ 10.
In 2006, FDA granted Otsuka orphan drug designation for the use of Abilify® for the
treatment of Tourette’s Disorder. See id. at ¶ 11. This designation meant, among other things,
that Otsuka would be entitled to a seven-year period of market exclusivity running from the date
of FDA’s approval of the use of Abilify® for the treatment of Tourette’s Disorder. See id.
During that seven-year period, FDA would be precluded from approving a drug for the same use
or indication. Id. When the FDA awarded Abilify® orphan designation for the treatment of
Tourette’s Disorder, no sNDA had been submitted and no safety and efficacy studies had been
conducted in any population group. As such, Otsuka initiated clinical trials which ultimately
demonstrated the safety and efficacy of Abilify® to treat Tourette’s Disorder in the pediatric
population. See id. at ¶¶ 14-15, 24. Following the conclusion of these trials, Otsuka submitted a
sNDA to FDA seeking approval for the new indication of the treatment of Tourette’s Disorder in
pediatric patients. See id. at ¶ 16. After either changing its mind or dealing with internal
confusion, FDA ultimately approved Otsuka’s sNDA for Abilify® for treatment of Tourette’s
Disorder in the pediatric population. See ECF No. 77-3. As a result of FDA’s decision, Otsuka
obtained approval for a pediatric Tourette’s Disorder indication for Abilify® that is protected by
orphan drug exclusivity.
Otsuka contends that by receiving this pediatric approval, which is protected by orphan
drug exclusivity, it is entitled to a seven-year period of total market exclusivity (until December
2021). During that time, Otsuka argues that the law precludes FDA from approving any generic

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version of Abilify® for any of its FDA-approved indications (absent a license from Otsuka). It is
against this backdrop that Otsuka filed a complaint, along with a motion for a temporary
restraining order and/or preliminary injunction, against FDA seeking to stay the effect of FDA’s
approvals of generic versions of Abilify® that occurred on April 28, 2015, to prevent FDA from
issuing any further approvals prior to the expiration of Otsuka’s seven year period of orphan
drug exclusivity, and to prohibit the recipients of generic approvals from distributing their
respective versions of generic Abilify®.
Just hours after FDA’s approval of four generic versions of Abilify®, the Court held a
hearing on April 28, 2015, on Otsuka’s motion for a temporary restraining order and/or
preliminary injunction. At the hearing Otsuka, FDA, and Defendant-Intervenors were all given
an opportunity to present their respective arguments. Based on those arguments, as well as those
arguments presented in the various briefs, the Court denies Otsuka’s motion for a temporary
restraining order and/or preliminary injunction, for the reasons explained more fully below.
II.

DISCUSSION
A temporary restraining order or preliminary injunction is an “‘extraordinary remedy that

may only be awarded upon a clear showing that the plaintiff is entitled to such relief.’” Dewhurst
v. Cnty. Aluminum Co., 649 F.3d 287, 290 (4th Cir. 2011) (quoting Winter v. Natural Resources
Defense Council, 555 U.S. 7, 22 (2008)). The Fourth Circuit recognizes four requirements in
conjunction with the Supreme Court’s ruling in Winter v. Natural Resources that a party must
show in order to be granted a TRO or a preliminary injunction:
(1) likelihood of success on the merits; (2) likelihood the movant
will suffer irreparable harm in the absence of preliminary relief; (3)
that the balance of equities tips in movant’s favor; and (4) the
injunction is in the public interest.

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The Real Truth About Obama, Inc. v. Fed. Election Comm’n, 575 F.3d 342, 347 (4th Cir. 2009)
(citing Winter, 555 U.S. at 20); see also Dewhurst, 649 F.3d at 290 (reaffirming the four
requirements set forth in The Real Truth About Obama). According to The Real Truth About
Obama and Dewhurst, the Fourth Circuit has determined that all four requirements must be met
in order for a temporary restraining order or a preliminary injunction to be granted.
A.

Likelihood of Success of the Merits

Otsuka claims that section 505A(o) of the FDCA directly addresses the question of when
generics can omit from their labels the pediatric information that is included in the brand’s label.
See ECF No. 77 at 10. According to Otsuka, section 505A(o) permits FDA to approve generic
drugs that omit pediatric labeling in only two circumstances – (1) when that information is
protected by patent; and (2) when that information is protected by three-year new clinical study
exclusivity; it does not, according to Otsuka, allow for the omission of labeling information
protected by pediatric orphan drug exclusivity. See id. By approving Otsuka’s sNDA for
Abilify® to treat Tourette’s Disorder in pediatric patients – an indication which is indisputably
covered by orphan drug exclusivity – Otsuka argues that FDA was precluded from approving an
ANDA for a generic version of Abilify® for any of its approved indications because section
505A(o) does not allow for the omission of this type of pediatric information from the generic’s
label. Thus, when FDA did approve generic versions of Abilify® on April 28, 2015, Otsuka
argues it did so in contravention of section 505A(o). FDA, on the other hand, contends that while
section 505A(o) limits its ability to deny approvals in two specified circumstances, it does not
limit its ability to grant approvals in others. The Court must therefore address the scope of
section 505A(o) of the FDCA. Ordinarily, a court reviews “an agency’s construction of the

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statute which it administers” under the familiar two-step process of Chevron, U.S.A., Inc. v.
Natural Resources Defense Council, Inc., 467 U.S. 837, 842 (1984).
1.

Chevron—Step One

As the Fourth Circuit has explained, the first step in the Chevron analysis is to ask
whether “Congress has directly spoken to the precise question at issue,” such that “the intent of
Congress is clear.” Nat’l Elec. Mfrs. Ass’n v. Dept. of Energy, 654 F.3d 496, 504 (4th Cir. 2011)
(quoting Chevron, 467 U.S. at 842-43). If the intent of Congress is clear, “that is the end of the
matter; for the court, as well as the agency, must give effect to the unambiguously expressed
intent of Congress.” Chevron, 467 U.S. at 842-43. If, however, “the statute is silent or ambiguous
with respect to the specific issue,” id. at 843, Congress has not spoken clearly, and a permissible
agency interpretation of the statute merits judicial deference. Thus, “[t]he objective of Chevron
step one is not to interpret and apply the statute to resolve a claim, but to determine whether
Congress’s intent in enacting it was so clear as to foreclose any other interpretation.” King v.
Burwell, No. 14-1158, 2014 WL 3582800, at *5 (4th Cir. July 22, 2014) (citing Grapevine
Imports, Ltd. v. United States, 636 F.3d 1368, 1377 (Fed. Cir. 2011)).
Under the first step of Chevron, “a reviewing court is to ‘employ [ ] traditional tools of
statutory construction’ to determine whether Congress addressed ‘the precise question at issue.’”
Nat. Elec. Mfrs. Ass’n., 654 F.3d at 504 (quoting Chevron, 467 U.S. at 842, 843 n. 9). Thus,
courts begin this analysis with the text and structure of the statute. Id. (citing Cabell Huntington
Hosp. Inc. v. Shalala, 101 F.3d 984, 986 (4th Cir. 1996)). After all, “the plain language of the
statute” is “the most reliable indicator of Congressional intent.” Schafer v. Astrue, 641 F.3d 49,
54 (4th Cir. 2011). Additionally, the Fourth Circuit has “described legislative history as one of
the traditional tools of interpretation to be consulted at Chevron’s step one.” Nat. Elec. Mfrs.

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Ass’n., 654 F.3d at 504–05 (citing Elm Grove Coal Co. v. Dir., O. W.C.P., 480 F.3d 278, 293-94
(4th Cir. 2007)).
Thus, the Court begins its Chevron step one inquiry into Congress’s intent, as it must,
from “the fundamental canon that statutory interpretation begins with the language of the statute
itself.” Butler v. West, 164 F.3d 634, 639 (D.C. Cir. 1999). Here, as mentioned, the relevant
statute is section 505A(o) of the FDCA, which addresses certain situations where pediatric
information on a brand’s label may be omitted from the generic’s label. Specifically, section
505A(o) provides, “[a] drug for which an application has been submitted or approved under
section 355(j) of this title shall not be considered ineligible for approval under that section or
misbranded under section 352 of this title on the basis that the labeling of the drug omits a
pediatric indication or any other aspect of labeling pertaining to pediatric use when the omitted
indication or other aspect is protected by patent or by three-year exclusivity under [Section
505(j)(5)(F)(iii) or (iv)].” 21 U.S.C. § 355a(o)(1).
According to Otsuka, this language “directs FDA’s approval authority by limiting the
agency’s ability to disapprove a generic drug based on specific pediatric labeling omissions.”
ECF No. 77 at 22. Because the statute does not expressly permit pediatric labeling protected by
orphan drug exclusivity to be omitted from a generic label, FDA cannot, according to Otsuka,
“approve a generic drug that omits a pediatric indication or any aspect of labeling pertaining to
pediatric use that is protected by orphan drug exclusivity.” Id. To do so, would, according to
Otsuka, “require[] adding text to the statute that Congress adopted.” Id. at 22.
In reaching this conclusion, however, Otsuka ignores the critical fact that section 505A(o)
sets forth circumstances where FDA cannot deny approval for a labeling carve-out; it does not, as
Otsuka contends, address situations where FDA can or cannot grant approval. Otsuka’s effort to

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turn section 505A(o) into a restriction on FDA’s carve-out authority relies primarily on the
principle of statutory construction known as expressio unius est exclusio alterius (the expression
of one thing is the exclusion of another). See ECF No. 77 at 33. According to Otsuka, “[w]hen
Congress expressly identifies specific statutory exceptions (i.e., pediatric labeling protected by
patent or three-year exclusivity), the exceptions so identified are an exclusive list and all other
exceptions are excluded (e.g., pediatric labeling protected by orphan drug exclusivity).” Id. at 23.
The Court does not believe that, under the present circumstances, the expressio unius canon can
be, or should be, applied to find the statute can only be interpreted as Otsuka suggests.
The Supreme Court has “long held that the expressio unius canon does not apply ‘unless
it is fair to suppose that Congress considered the unnamed possibility and meant to say no to it,’
and that the canon can be overcome by ‘contrary indications that adopting a particular rule or
statute was probably not meant to signal any exclusion.’” Marx v. Gen. Revenue Corp., 133 S.
Ct. 1166, 1175 (2013) (internal citations omitted); see also Barnhart v. Peabody Coal Co., 537
U.S. 149, 168 (2003) (“We do not read the enumeration of one case to exclude another unless it
is fair to suppose that Congress considered the unnamed possibility and meant to say no to it.”);
Chevron USA, Inc. v. Echazabal, 536 U.S. 73, 81 (2002) (finding expressio unius is not
absolutely applied; there must be a “sensible inference that the term left out must have been
meant to be excluded”).
Here, Otsuka cites no evidence that Congress even contemplated orphan drug exclusivity
at the time section 505A(o) was proposed and enacted, much less that Congress expressly
considered orphan drug exclusivity and purposefully excluded it. In fact, at the April 28, 2015
hearing, the Court explicitly asked Counsel for Otsuka whether, in his obviously thorough
research of the legislative history surrounding the enactment of section 505A(o), he or his

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colleagues encountered any evidence to suggest that Congress expressly considered orphan drug
exclusivity, to which he candidly replied that he had not. See ECF No. 99 at 17:8-15. In the
absence of such evidence, Otsuka cannot rely on the expressio unius canon to turn section
505A(o) into a restriction on FDA’s carve-out authority. See e.g., Barnhart, 537 U.S. at 170
(“The enunciation of two exceptions does not imply an exclusion of a third unless there is reason
to think the third was at least considered.”); Clinchfield Coal Co. v. Fed. Mine Safety & Health
Review Comm’n, 895 F.2d 773, 779 (D.C. Cir. 1990) (“The drafter (here Congress) may simply
not have been focusing on the point in the second context; and, where an agency is empowered
to administer the statute, Congress may have meant that in the second context the choice should
be up to the agency.”); Greene v. United States, 79 F.3d 1348, 1355 (2d Cir.1996) (“The ancient
maxim expressio unius est exclusio alterius . . . cautions us against engrafting an additional
exception to what is an already complex [statutory scheme].”).
To be sure, “the canon’s relevance and applicability must be assessed within the context
of the entire statutory framework.” Adirondack Med. Ctr. v. Sebelius, 740 F.3d 692, 697 (D.C.
Cir. 2014); see Am. Bankers Ass’n v. Nat’l Credit Union Admin., 271 F.3d 262, 267 (D.C. Cir.
2001) (“[W]e must not ‘confine [ourselves] to examining a particular statutory provision in
isolation. The meaning – or ambiguity – of certain words or phrases may only become evident
when placed in context.’”) (quoting FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120,
132 (2000))). Here, when the Court considers the statutory framework, as a whole, it cannot say
that Otsuka’s reading of section 505A(o) reflects Congress’s clear intent in enacting the statute.
First, FDA has broad authority to approve ANDAs carving out exclusivities under the
FDCA, including orphan drug exclusivity. That authority does not appear to be abrogated by
section 505A(o), which, by its terms, constrains FDA’s authority to refrain from approving an

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ANDA, instead of, as Otsuka urges, constraining its authority to approve ANDAs. While it is
generally true that generic drugs must contain the same information on their labels as the label of
their respective brand-name pioneer drug, this principle does not require a generic drug’s
labeling to be identical to that of the listed drug it references in every respect. Instead, the same
labeling rules contained in the Hatch-Waxman Amendments “reflect Congress’s intent that the
generic drug be safe and effective for each condition of use prescribed, recommended, or
suggested in the generic drug labeling but do not require that an ANDA be approved for each
condition of use for which the listed drug is approved.” Ltr. from J. Peters to R. Tyler, Apr. 28,
2015, at 8. Indeed, the legislative history of these amendments demonstrates Congress’s desire to
permit ANDA applicants to carve out from their labels otherwise protected information.
Specifically, Congress acknowledged that “[t]he bill permits an ANDA to be approved for less
than all of the indications for which the listed drug has been approved. . . . [T]he applicant need
not seek approval for all of the indications for which the listed drug has been approved.” H.R.
REP. NO. 98-857(I), at 21 (1984).
FDA’s own regulations also demonstrate the authority granted by the FDCA to permit
labeling changes based on the “omission of an indication or other aspect of labeling protected by
patent or accorded exclusivity under [the FDCA].” 21 C.F.R. § 314.94(a)(8)(iv). The regulations
permit FDA to approve an ANDA that omits “aspects of the listed drug’s labeling [that] are
protected by patent, or by exclusivity [if] such differences do not render the proposed drug
product less safe or effective than the listed drug for all remaining, nonprotected conditions of
use.” 21 C.F.R. § 314.127(a)(7). Additionally, section 314.94(a)(8)(iv) of the regulations also
sets forth specific examples of permissible differences in labeling that may result because the
generic drug product and listed drug product are produced or distributed by different

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manufacturers. These differences include “differences in expiration date, formulation,
bioavailability, or pharmacokinetics, labeling revisions made to comply with current FDA
labeling guidelines or other guidance, or omission of an indication or other aspect of labeling
protected by patent or accorded exclusivity under section 505(j)(5)(F) of the act.” 21 C.F.R. §
314.94(a)(8)(iv) (emphasis added).
Finally, the Orphan Drug Act also confirms FDA’s authority to approve ANDAs carving
out an orphan drug exclusivity. Specifically, 21 U.S.C. § 360cc(a) provides that “for a drug
designated under section 360bb of this title for a rare disease or condition, the Secretary may not
approve another application under section 355 of this title . . . for such drug for such disease or
condition . . . until the expiration of seven years from the date of the approval of the approved
application” (emphasis added). Interpreting this language in Sigma-Tau Pharms., Inc. v. Schwetz,
288 F.3d 141 (4th Cir. 2002), the Fourth Circuit opined:
By using the words ‘such drug for such disease or condition,’
Congress made clear its intention that [section 360cc] was to be
disease-specific, not drug-specific. In other words, the statute as
written protects uses, not drugs for any and all uses. Congress
could have written [section 360cc] more broadly by prescribing
that the FDA ‘may not approve another application . . . for such
drug,’ but it chose not to draft the statute in that way.
Id. at 145. As such, the Fourth Circuit upheld the right of an ANDA to carve out an indication
protected by orphan drug exclusivity as a permissible difference between the generic’s label and
the pioneer’s label due to a difference in manufacturer. The Court noted that if it adopted SigmaTau’s argument, this could mean that once FDA approves an orphan drug for a protected
indication, “generic competitors might be prohibited from the market for almost any use.” Id. at
147. The court further stated that “[Sigma-Tau’s theory] to bar the approval of generic drugs,
even for unprotected indications . . . [would add] a huge evidentiary hurdle to the generic drug

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approval process [and] would be profoundly anti-competitive.” Id. Accordingly, the Court
rejected Sigma-Tau’s argument and concluded that the statutory scheme permitted an ANDA
applicant to carve out the orphan-protected indication at issue. See also Bristol Myers Squibb v.
Shalala, 91 F.3d 1493, 1500 (D.C. Cir. 1996) (recognizing that the Orphan Drug Act “expresses
the legislature’s concern that the new generic be safe and effective for each indication that will
appear on its label; whether the label for the new generic lists every indication approved for use
of the pioneer is a matter of indifference).
Based on the statutory framework as a whole (as opposed to section 505A(o) in
isolation), as well as relevant case law, the Court cannot conclude that section 505A(o) clearly
proscribes FDA’s ability to omit from a generic’s label information pertaining to pediatric
orphan drug exclusivity. Thus, if the Court’s role here was simply to “interpret and apply the
statute to resolve a claim,” the Court would side with the interpretation of FDA and DefendantIntervenors. See Chevron, 467 U.S. at 842. However, the Court cannot find that Congress’s
intent in enacting 505A(o), as it relates to its impact on orphan drugs, if any, is so clear as to
completely foreclose Otsuka’s interpretation.5 The Court must therefore proceed to Chevron step
two.
2.

Chevron—Step Two

Finding that Congress has not “directly spoken to the precise question at issue,” the Court
moves to Chevron’s second step. Chevron, 467 U.S. at 842. At step two, the Court asks whether
the “agency’s [action] is based on a permissible construction of the statute.” Id. The Court may
5

There can be no debate that section 505A(o) does not address orphan drug exclusivities.
Whether that was intentional in the manner Otsuka suggests, an oversight, or deemed
unnecessary because of existing authority granted to the FDA to address the issue, is unclear
from the text of the statute and the legislative history provided to the Court. Thus, while the
Court has interpreted section 505A(o) in light of relevant authority, it also recognizes ambiguity
in Congress’s intent.

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overturn the FDA’s interpretation under Chevron step two only if the statute “unambiguously
foreclosed the agency’s statutory interpretation.” Catawba Cnty., N.C. v. E.P.A., 571 F.3d 20, 35
(D.C. Cir. 2009). Thus, the Court will not “usurp an agency’s interpretive authority by
supplanting its construction with our own, so long as the interpretation is not ‘arbitrary,
capricious, or manifestly contrary to the statute.’” Philip Morris USA, Inc. v. Vilsack, 736 F.3d
284, 290 (4th Cir. 2013) (quoting Chevron, 467 U.S. at 844, 845). “A construction meets this
standard if it ‘represents a reasonable accommodation of conflicting policies that were
committed to the agency’s care by the statute.’” Id. Courts have been clear that “[r]eview under
this standard is highly deferential, with a presumption in favor of finding the agency action
valid.” Ohio Vall. Envt’l Coalition v. Aracoma Coal Co., 556 F.3d 177, 192 (4th Cir. 2009).
Moreover, an agency’s construction of its own regulations is entitled to “substantial
deference,” Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994), and is accorded
“controlling weight unless it is plainly erroneous or inconsistent with the regulation.” Id. Broad
deference to an agency is especially appropriate where, as here, “a complex and highly technical
regulatory program” is concerned, requiring “significant expertise” and the “exercise of
judgment grounded in policy concerns.” Id. (citing Pauley v. BethEnergy Mines, Inc., 501 U.S.
680, 697 (1991)).
Here, as discussed above, the Court finds that the statute, case law, and FDA regulations
all support the FDA’s construction of the statute that allows it to carve out an indication or other
information from ANDA labeling when that indication or information is protected by orphan
drug exclusivity as long as the ANDA with that carved out label remains safe and effective for
the remaining non-protected conditions of use. To be sure, Otsuka’s reading of section 505A(o)
would nullify the limitation expressly written into section 360cc – that the exclusivity is given to

17

a drug “for [the orphan] disease or condition” – and instead treat the orphan drug exclusivity as
extending to the drug for any and all diseases and conditions, directly contradicting that
provision’s text and the Fourth Circuit’s holding in Sigma-Tau. If that was Congress’s intent, it is
certainly left unclear by the statute.
Furthermore, the interpretation Otsuka seeks is directly contrary to FDA’s prior decisions
on orphan drug exclusivity carve-outs where that exclusivity incorporated pediatric information.
In fact, FDA has, on multiple occasions over the past decade, approved ANDA drug products
during the NDA-holder’s seven-year period of orphan drug exclusivity, despite the fact that the
orphan indication covered a pediatric use. See ECF No. 82 at 27-28. Because “FDA has been
consistent in how it has interpreted” the carve-out provisions over an extended period of time,
the deference afforded to FDA’s interpretation of its statute is particularly high. Hospira, Inc. v.
Burwell, No.14-02662, 2014 WL 4406901, at *13 (D. Md. Sept. 5, 2014); see also Kasten v.
Saint-Gobain Performance Plastics Corp., 131 S. Ct. 1325, 1336 (2011) (noting that the “length
of the time the agencies have held” their position “suggests that [the position] reflect[s] careful
consideration” and is entitled to deference). The Court therefore would likely find FDA’s
interpretation of the statute to be permissible. As such, the Court concludes that Otsuka is not
likely to succeed on the merits and therefore denies Otsuka’s motion for temporary restraining
order and/or preliminary injunction. For the sake of completeness, the Court will also address the
remaining factors for injunctive relief, which Otsuka also has not satisfied.
B.

Irreparable Harm

Otsuka contends that, as a result of FDA’s recent approvals, ANDA sponsors will flood
the market with generic versions of Abilify® causing immediate and irreparable harm in the
form of price erosion, loss of market share, loss of profits, discontinued or undercut research and
educational opportunities, consideration of layoffs, and lost goodwill. See ECF No. 77 at 34.
18

While it is true that “‘[p]rice erosion, loss of goodwill, damage to reputation, and loss of business
opportunities’” all constitute potential and “‘valid grounds for finding irreparable harm,’” the
Court finds that these harms are not irreparable under the circumstances presented here. Aria
Diagnostics, Inc. v. Sequenom, Inc., 726 F.3d 1296, 1304 (Fed. Cir. 2013) (quoting Celsis in
Vitro, Inc. v. CellzDirect, Inc., 664 F.3d 922, 930 (Fed. Cir. 2012)).
Otsuka’s main argument in support of irreparable harm is that it cannot recover monetary
damages against FDA or Defendant-Intervenors in this action and that, as a result, their damages
are irretrievable and irreparable. See ECF No. 77 at 33-34. That Otsuka is unable to recover
monetary damages from FDA or Defendant-Intervenors does not, however, automatically make
its harm irreparable. See N. Air Cargo v. USPS, 756 F. Supp. 2d 116, 125 n.6 (D.D.C. 2010)
(“[P]rosepective injunctive relief would often cease to be an ‘extraordinary remedy’ in cases
involving government defendants” if it were available whenever the plaintiff cannot recover
damages from the defendant due to the defendant’s sovereign immunity.). Instead, courts that
have evaluated cases involving a company’s irretrievable monetary loses typically find
irreparable harm only where the monetary losses are so severe that they threaten the very
existence of the company. See e.g., Gulf Oil Corp. v. Dep’t of Energy, 514 F. Supp. 1019, 1026
(D.D.C. 1981) (“[I]njury must be more than simply irretrievable; it must also be serious in terms
of its effect on the plaintiff.”); Sociedad Anonima Viña Santa Rita v. Dep’t of Treasury, 193 F.
Supp. 2d 6, 14 (D.D.C. 2001) (“[F]inancial harm alone cannot constitute irreparable injury unless
it threatens the very existence of the movant’s business”); Mylan Labs., Inc. v. Thompson, 139 F.
Supp. 2d 1, 27 (D.D.C. 2001) (recognizing that to satisfy the standard of irreparable injury to

19

justify a preliminary injunction, the movants’ loss must be “more than simply irretrievable”).
Otsuka has not met this burden here. 6
For a long time now, Otsuka has been aware that it would eventually face generic
competition for Abilify® and, like any other sophisticated pharmaceutical company, has
prepared itself for the day when its exclusivity expired. Indeed, just recently at an Otsuka
earnings presentation discussing its 2015 consolidated performance estimate, it was stated: “As
you can see, we estimated the FY15 consolidated net sales JPY1.370 billion; operating income
JPY110 billion; and net income JPY80 billion. Net sales i[s] forecasted to decline significantly
as our overall performance driver, Abilify’s patent will expire in the US.”7 As the company
noted, however, “[n]eedless to say, Abilify is an important product for Otsuka Group. But in the
past several years, sales of products we launched in Japan have been steadily increasing and
contributing to the performance of the pharmaceuticals business.” Id. (explaining “in terms of the
pharmaceuticals business we have long prepared and accumulated assets and they are showing
very good results”). Thus, far from sounding the death knell of Otsuka, the long expected loss of
Otsuka’s exclusivity of Abilify® has simply caused the company to launch other products that
are “steadily increasing and contributing to the performance of the pharmaceuticals business.”
As such, the Court cannot find under these circumstances that Otsuka will suffer irreparable
6

In its brief and at the hearing, Otsuka cited Smoking Everywhere, Inc. v. FDA, 680 F. Supp. 2d
77 (D.D.C. 2010) to support its argument that irretrievable economic harm equates to irreparable
harm in the context of sovereign immunity. But, just like the cases cited above, the Smoking
Everywhere court recognized economic harm as irreparable only because it was substantial
enough to meet the standard adopted by the majority of courts (i.e., because plaintiff’s entire
product line was at stake under FDA’s regulatory decision). On appeal, the D.C. Circuit affirmed
the District Court’s finding of irreparable harm, not because it was per se irreparable due to
sovereign immunity, but because the FDA’s action had “obviously destroyed the firm’s ability in
the United States to cover its costs for purchase or production of e-cigarettes.” Sottera, Inc. v.
FDA, 627 F.3d 891, 898 (D.C. Cir. 2010).
7
See Full Year 2014 Otsuka Holdings Co. Ltd. Earnings Presentation Webcast—Final, FD (Fair
Disclosure) Wire, Feb. 13, 2015 (available in LEXIS Current News file).
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harm from its loss of exclusivity, pending resolution of this lawsuit, since the concomitant
monetary losses are not severe in nature given Otsuka’s business and planning and preparation
for this occurrence.
Nor is the Court convinced that Otsuka will experience irreparable harm with respect to
potential price erosion. Given the expedited nature of this case and the fact that it will likely be
resolved in a matter of weeks, the price erosion that could take place in the interim would likely
be de minimis. If Otsuka prevails, it would be entitled to seven years of full market exclusivity,
during which it would be able to reestablish its price points. Additionally, Otsuka admits that it
can counteract price erosion by offering payers incentives and rebates. See ECF No. 77 at 37.
Otsuka also makes various arguments regarding harm to its sales force, educational and
research efforts, and goodwill. Under the facts of this case, the Court finds that this alleged harm
is not sufficient to support a showing of irreparable harm. The “required ‘irreparable harm’ must
be ‘neither remote nor speculative, but actual and imminent.’” Direx Israel, Ltd. v. Breakthrough
Med. Corp., 952 F.2d 802, 812 (4th Cir. 1991) (quoting Tucker Anthony Realty Corp. v.
Schlesinger, 888 F.2d 969, 975 (2d Cir.1989)); see also ECRI v. McGraw–Hill, Inc., 809 F.2d
223, 226 (3d Cir. 1987) (“Establishing a risk of irreparable harm is not enough. A plaintiff has
the burden of proving a ‘clear showing of immediate irreparable injury.’”). Here, the Court
concludes that the alleged harm to Otsuka’s sales force, educational and research efforts, and
goodwill is too speculative to demonstrate irreparable harm.
C.

Balance of Hardship

Next, the Court must balance the hardship that Otsuka will suffer if generic versions of
Abilify® continue to be sold against the hardship Defendant-Intervenors would suffer if they
were prohibited from continuing to sell these generic drugs. In resolving this factor, the Court

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need not look any further than Judge Simandle’s recent discussion of this issue in a related case
from the District of New Jersey in which Judge Simandle denied Otsuka’s motion for a
temporary restraining order and/or preliminary injunction against Defendant-Intervenors and
others. See Otsuka Pharm. Co. v. Torrent Pharm. Ltd., Inc., No. 14-1078, 2015 WL 1782653
(D.N.J. Apr. 16, 2015).
Judge Simandle observed that “[t]he hardship on a preliminarily enjoined generic which
has taken affirmative steps to enter the market can be devastating.” Otsuka Pharm. Co., No. 141078, 2015 WL 1782653, at *30. Judge Simandle further recognized that “Defendants8 have all
taken affirmative steps to enter the aripiprazole market, by developing and testing aripiprazole
products, preparing ANDAs, seeking regulatory approval from the FDA, ordering raw materials,
and preparing manufacturing and supply pipelines.” Id. As such, Judge Simandle concluded that
“[t]he issuance of an injunction would seriously erode these and related efforts” and that
“Defendants would face the loss of all of the ‘costly enterprises’ made to prepare their products
‘in readiness of ultimate FDA approval and commercial launch’ on April 20, 2015.” Id. (quoting
Graceway Pharm., LLC v. Perrigo Co., 697 F. Supp. 2d 600, 605 (D.N.J. 2010)). Additionally,
Judge Simandle found that “the issuance of a TRO would deprive these Defendants of the
advantage of being an early market entrant, and may force these Defendants to ultimately launch
with competitors that would otherwise have only been able to launch after these early entrants.”
Otsuka Pharm. Co., No. 14-1078, 2015 WL 1782653, at *30. (emphasis in original); see Bracco
Diagnostics, Inc. v. Shalala, 963 F.Supp. 20, 29 (D.D.C. 1997) (“[T]here is a significant
economic advantage to receiving first approval and being the first company to enter the market,
an advantage that can never be fully recouped through money damages or by ‘playing catch8

The Court notes in that case the “Defendants” included all of the Defendant-Intervenors in this
case, as well as others parties who have not intervened here.
22

up.’”); see also Mova Pharm. Corp. v. Shalala, 140 F.3d 1060, 1066 n.6 (D.C. Cir. 1998)
(finding that party will be “harmed by the loss of its ‘officially sanctioned head start’”); Sandoz,
Inc. v. FDA, 439 F.Supp.2d 26, 32–33 (D.D.C. 2006) (finding that delayed entry to market tilts
the balance of hardships). Based on these findings, Judge Simandle held “that the balance of
hardships tips in favor of these generic Defendants.” Otsuka Pharm. Co., No. 14-1078, 2015 WL
1782653, at *31. The Court sees no reason to depart from this well-reasoned conclusion,
especially given Otsuka’s weak showing of likelihood of success, which tips the balance of
hardships towards Defendant-Intervenors. See Illinois Tool Works, Inc. v. Grip-Pak, Inc., 906
F.2d 679, 683 (Fed. Cir. 1990) (“In the present case, as the district court found, ITW’s weak
showing of likelihood of success tips the balance of hardships toward Grip–Pak.”).
D.

Public Interest

Finally, the Court concludes that Otsuka has failed to demonstrate how the public’s
interest would be served by the issuance of a temporary restraining order. If anything, the
public’s interest would be disserved by such relief. Again, Judge Simandle’s recent discussion on
this factor is on point. Judge Simandle observed that:
In enacting the Hatch–Waxman Act, Congress ‘struck a balance
between two competing policy interests: (1) inducing pioneering
research and development of new drugs and (2) enabling
competitors to bring low-cost, generic copies of those drugs to
market.’ Dey Pharma, LP v. Sunovion Pharm. Inc., 677 F.3d 1158,
1159 (Fed. Cir. 2012) (quoting Andrx Pharm., Inc. v. Biovail
Corp., 276 F.3d 1368, 1371 (Fed. Cir. 2002)).
Otsuka Pharm. Co., No. 14-1078, 2015 WL 1782653, at *31. Here, Otsuka has already benefited
from over twelve years of market exclusivity for Abilify®. As such, Judge Simandle concluded
that:
Otsuka has long enjoyed the exclusive rights to the aripiprazole
market in the United States and has, in turn, been duly rewarded

23

for bringing its innovation to market. In fact, Otsuka’s aripiprazole
exclusivity has generated, in the last eight years alone, over $100
billion in revenue. The public’s interest in encouraging and
rewarding innovation has been well served already. Given this,
Otsuka has had ample opportunity to fully and completely realize a
return on its investment, many times over, and to adjust its
business as it deemed necessary in order to address the loss of
exclusivity it knew, for years, rested upon the horizon.
Id. Again, the Court sees no reason to depart from Judge Simandle’s conclusion. Under these
circumstances then, the Court is not convinced that Otsuka’s desire to obtain an additional seven
years of exclusivity should yield to the public’s interest in bringing lower-cost generic versions
of Abilify® to the market. Nor is the Court persuaded by Otsuka’s argument that “the public
interest [is] best served by ensuring agency compliance with its governing statute” (see ECF No.
77-39), since the Court has already concluded that Otsuka is unlikely to succeed on the merits.
Otsuka has therefore failed to satisfy the fourth prong for injunctive relief. Accordingly, the
Court will deny Otsuka’s request for a temporary restraining order and/or preliminary injunction.
III.

CONCLUSION
For the reasons stated above, the Court will DENY Otsuka’s motion for temporary

restraining and/or preliminary injunction.

Dated: April 29, 2015

/S/
George J. Hazel
United States District Judge

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