District Court Grants FDA Motion to Dismiss in Unapproved Morphine Sulfate Litigation

By Kurt R. Karst –      

In a November 16th decision that might not mark the end to the dispute between Cody Laboratories, Inc. and Lannett Co., Inc. (collectively “Cody/Lannett”) and FDA over marketed unapproved Morphine Sulfate Solution Immediate-Release 20mg/mL drug products, Judge Alan Johnson from the U.S. District Court for the District of Wyoming granted FDA’s Motion to Dismiss the case.  Judge Johnson ruled that the court “does not have jurisdiction over any of the agency actions [Cody/Lannett] ask this Court to review, as the FDA has yet to complete a final agency action.  Any attempt to review such actions would be premature and contrary to law.”

As we previously reported, the Cody/Lannett lawsuit stems from FDA’s March 2009 Warning Letters to Cody and Lannett (among other companies) to stop manufacturing certain unapproved narcotic drugs, including morphine sulfate oral solutions.  At that time, FDA concluded that marketed unapproved morphine sulfate products are “new drugs [under the FDCA] and not grandfathered and that manufacturing and marketing of these products without an approved application constituted a violation of the Act.”  In subsequent communications with Cody/Lannett, FDA stated that the Agency would exercise enforcement discretion with regard to the shipment and distribution of Cody’s/Lannett’s unapproved Morphine Sulfate Solution Immediate-Release 20mg/mL drug products until July 24, 2010, which is 180 days after FDA approved Roxane’s NDA for the drug product.  Meanwhile, Lannett submitted its own NDA to FDA for Morphine Sulfate Solution Immediate-Release 20mg/mL in late February 2010.  That NDA is still under review and FDA has not taken any further enforcement action against Cody/Lannett.

Cody/Lannett sued FDA arguing that the Agency should be enjoined from taking enforcement action after July 24, 2010 if such enforcement action is based on the Agency’s contention that Morphine Sulfate Solution Immediate-Release 20mg/mL is an unapproved “new drug,” and that the court should issue a declaratory judgment that FDA violated the Administrative Procedure Act in determining that the product is a “new drug.”  In a July July 26th decision, the district court denied Cody/Lannett’s Motion for Temporary Restraining Order and Preliminary Injunction.  Cody/Lannett then filed, FDA opposed, and the court granted, a Motion for Clarification, Amendment, or Reconsideration of Order  raising certain jurisdictional issues.  FDA promptly filed a Motion to Dismiss arguing for dismissal for lack of jurisdiction or failure to state a claim (or both).

In a short, 11-page decision, Judge Johnson granted FDA’s Motion to Dismiss and quickly dispensed with the three issues raised by Cody/Lannett – (1) FDA’s alleged determination that Cody/Lannett’s product is a “new drug;” (2) FDA’s alleged failure to develop an administrative record for its determination that Cody/Lannett’s Morphine Sulfate Solution Immediate-Release 20mg/mL is a “new drug;” and (3) FDA’s alleged disparate treatment of Cody/Lannett compared to its competitor Roxane. 

Judge Johnson whittled the issue list down to two, treating Cody/Lannett’s claim that  FDA failed to develop an administrative record as a prayer for relief concerning the review of the FDA’s new drug determination.  The remaining issues were examined in the context of whether FDA’s actions in this case were final.  With respect to FDA’s alleged “new drug” determination, Judge Johnson ruled that FDA’s Warning Letters to Cody/Lannett do not constitute final agency action:

Because the warning letters. . . indicate the FDA’s intention in the future to institute enforcement action against [Cody/Lannett], this Court finds those letters do not constitute final agency action as they do not mark the consummation of the agency's decisionmaking process.  Had the FDA made its determination about the product at the conclusion of an enforcement action or in response to a citizen petition, that determination would constitute a final agency action. Such is not the case here. [(internal quotation and citation omitted)]

As to FDA’s alleged disparate treatment of Cody/Lannett compared to its competitor Roxane (specifically, that FDA granted priority NDA review to Roxane but refused to do so for Cody/Lannett), the court ruled that:

it does not have jurisdiction to review this agency action. . . .   In addition to the action marking the consummation of the agency's decisionmaking process, the agency action must be one by which rights or obligations have been determined or from which legal consequences will flow.  This agency action fails the second requirement, because no rights or obligations are determined based on the type of review given to an NDA.  It is not the type of review given – but the culmination of the application process – that determines an applicant’s rights to market a drug. [(internal quotation and citation omitted)]

Despite Cody/Lannett’s loss yesterday, we think there is a good chance that the district court’s decision will be appealed.  Only time will tell, of course.  And we’ll be there to tell you all about it.