KV Takes a Hit With the Dismissal of Its Case Against FDA Over Compounded 17PSeptember 6, 2012
By Kurt R. Karst –
In a decision handed down late in the day on Thursday, September 6th, Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia dealt a blow to K-V Pharmaceutical Company’s (“KV’s”) efforts to “restore” orphan drug exclusivity for the pre-term birth drug MAKENA (hydroxyprogesterone caproate) Injection, 250 mg/mL, by granting FDA’s Motion to Dismiss a case filed by KV back in early July.
As we previously reported, KV filed a Complaint and a Motion for Temporary Restraining Order and Preliminary Injunction alleging that FDA and the Department of Health and Human Services violated myriad provisions of the FDC Act, the Administrative Procedure Act (“APA”) § 706(2), and the Due Process Clause of the Fifth Amendment to the U.S. Constitution by failing to take sufficient enforcement action to stop the unlawful competition with Makena by pharmacies that compound hydroxyprogesterone caproate injection, also known as “17P.” (In a July 5th Minute Order, the court consolidated the Motion for Temporary Restraining Order and Motion for Preliminary Injunction with the merits, and later denied both motions as moot.) Specifically, KV alleged that the non-enforcement policy FDA adopted with respect to compounded 17P:
- Violates FDC Act § 527(a) “by effectively nullifying Makena’s statutory seven-year period of market exclusivity by giving de facto approval to compounded versions of 17P that are intended for use to treat the same indication for which Makena is designated as an orphan drug and is approved, and that are not customized to meet the medical needs of individual patients who have the condition for which Makena is indicated but for whom Makena is not medically appropriate” (Count I);
- Is contrary to the express limitations on compounding set forth in FDC Act § 503ª (Count II);
- Violates FDC Act §§ 505(a) and 301(d), which prohibit the marketing of a new drug without an effective approval, by approving, authorizing, inviting, encouraging, and permitting “the introduction, and delivery for introduction, into interstate commerce of unapproved new drugs” (Count III); and
- Violates FDC Act § 801(a), which requires FDA to refuse importation of any drug that appears to be unapproved in violation of the new drug approval requirements at FDC Act § 505 (Count IV).
(KV also raised a Fifth Amendment Due Process claim as part of Count I; however, it was not raised in KV's Temporary Restraining Order and Preliminary Injunction papers, so Judge Jackson treated it as conceded.)
KV sought “a comprehensive regime of temporary, preliminary, and permanent declaratory and injunctive relief,” including that the court order FDA to withdraw certain public statements made by the Agency concerning the exercise of enforcement discretion action against 17p compounders (and in particular, a pair of March 2011 statements by FDA and the Centers for Medicare & Medicaid Services – here and here), to take enforcement action against 17p compounders, and “to bar entry into the United States, and release into domestic commerce, of any future shipments of foreign-manufactured API for use in compounding non-customized 17P except in certain specified instances.”
FDA argued that the Complaint should be dismissed, because, among other things, KV’s claims are not justiciable for lack of standing. And even if KV can establish standing, argued FDA, “FDA’s March 2011 statement is not subject to judicial review under the [APA] because FDA’s decisions not to take enforcement action are committed to the agency’s discretion under Heckler v. Chaney, 470 U.S. 821 (1985).” In Chaney, the U.S. Supreme Court held that “an agency’s decision not to prosecute or enforce, whether through civil or criminal process, is a decision generally committed to an agency’s absolute discretion,” and as such, is presumed to be unreviewable under the APA.
KV argued in its Opposition to FDA’s Motion to Dismiss that the Agency failed to understand what the case is about. “It is not about a mere failure to enforce . . . . This case is about a pair of coordinated public announcements by Defendants, which were intended to, and did, call forth into the market large amounts of unlawful, uncustomized, compounded versions of 17P, which would not have been distributed but for Defendants’ announcements.” KV also argued that Chaney was not at issue in the case, because the March 2011 statements are a “policy” and the FDC Act provides “law to apply.” FDA, in the Agency’s Reply Brief, pressed its case that the March 2011 statements fall “squarely within the Chaney presumption against
After finding that KV alleged sufficient facts to support standing, Judge Jackson addressed the first three counts of KV’s Complaint. She found them unreviewable, because APA § 701 “precludes judicial review of final agency action, including refusals to act, when review is precluded by statute or ‘committed to agency discretion by law,” and because Chaney is controlling:
Here plaintiffs’ claims in Counts I through III fall squarely within the Chaney presumption of unreviewability. Just as in Chaney, plaintiffs allege ongoing violations of substantive provisions of the FDCA, and they request that the Court order FDA to take investigatory and enforcement action to stop them. A review of the extensive prayer for relief demonstrates that this case is fundamentally an effort to get the Court to direct and oversee the FDA’s enforcement activities, and that it cannot do. [(Citation omitted)]
Moreover, wrote Judge Jackson, “[t]he language in the March Statement that animates the plaintiffs – that ‘FDA does not intend to take enforcement action against pharmacies’ – does not constitute an announcement of policy that would differentiate this case from Chaney.”
Addressing Count IV of KV’s Compliant alleging that FDA violated FDC Act § 801(a) by permitting foreign-manufactured active pharmaceutical ingredient to be imported into the United States for compounding into 17P, Judge Jackson found that the Count failed to state a claim:
At the outset, the Court notes that plaintiffs do not point to any reviewable FDA statement of policy that explicitly or implicitly permits unlawful imports, and the complaint contains no non-conclusory allegation that such a policy exists. . . . [E]ven if the Court were to accept the conclusory assertions in the complaint as supporting the existence of a reviewable policy, Count IV fails to state a claim under [FDC Act § 801(a)] because the complaint does not allege that the policy is illegal. . . . [T]he complaint is devoid of the factual allegations needed to support the conclusory assertion in Count IV that the shipments contain a substance that “appears” to violate [FDC Act § 505]. Thus, it fails to state a claim that FDA ever violated [FDC Act § 801(a)].
In early August, KV announced that the company filed for Chapter 11 bankruptcy protection. Accordng to KV, the company “has been unable to realize the full value of [MAKENA] because of a lack of enforcement of the orphan drug marketing exclusivity . . . .” KV has also sued state Medicaid agencies in Illinois, Georgia, and South Carolina to cover MAKENA. In early August, KV won the Georgia case (see here).