                           UNITED STATES DISTRICT COURT
                           FOR THE DISTRICT OF COLUMBIA


                                            )
ACTAVIS ELIZABETH LLC,                      )
                                            )
              Plaintiff,                    )
                                            )
       v.                                   )      Civil Action No. 09-362 (RMC)
                                            )
UNITED STATES FOOD & DRUG                   )
ADMINISTRATION, et al.,                     )
                                            )
              Defendants.                   )
                                            )


                                MEMORANDUM OPINION


              Actavis Elizabeth LLC seeks judicial review of a decision of the United States Food

and Drug Administration awarding five years of market exclusivity to Intervenor-Defendant Shire

Pharmaceuticals Inc. for the manufacture of lisdexamfetamine dimesylate (“LDX”), currently

marketed by Shire’s subsidiary in the United States under the trade name Vyvanse®. Actavis

disagrees with the agency’s conclusion that LDX is a “new chemical entity” within the meaning of

the Federal Food, Drug, and Cosmetic Act (“Act”), 21 U.S.C. § 301 et seq., as amended. Actavis,

FDA, and Shire each moves for summary judgment.1 For the reasons explained herein, the Court

will grant summary judgment to FDA and Shire, and will deny summary judgment to Actavis.

                                          I. FACTS

              On February 23, 2007, FDA approved Shire’s new drug application for LDX to treat



       1
          FDA also moves to dismiss for failure to state a claim. See Dkt. # 30. Because matters
outside the pleadings have been presented to the Court, the motion must be treated as one for
summary judgment. See Fed. R. Civ. P. 12(d). The motion to dismiss will therefore be denied.
Attention Deficit Hyperactivity Disorder. FDA awarded Shire five years of market exclusivity

pursuant to § 355(j)(5)(F)(ii) of the Act and FDA’s interpreting regulations, 21 C.F.R. § 314.108.

FDA determined that LDX is a “new chemical entity” within the meaning of the Act because LDX

contains a previously approved molecule with a covalent, non-ester amide derivative.2 With certain

limited exceptions, FDA’s determination precludes it from accepting abbreviated new drug

applications for generic versions of LDX for five years following February 23, 2007, that is, until

February 23, 2012.

               On January 29, 2009, Actavis submitted an abbreviated new drug application for a

generic version of LDX. FDA declined receipt of Actavis’s application on February 6, 2009, based

on its grant of five years of market exclusivity to Shire. That same day, Actavis submitted a position

paper to FDA arguing that the agency should reconsider its decision that LDX is a “new chemical

entity.” On February 24, 2009, Actavis filed this lawsuit alleging that FDA had erroneously

determined that LDX is a “new chemical entity” and that FDA should not have refused its

application for a generic version of LDX.

               FDA determined that the issues raised by Actavis should be considered

administratively and opened a public docket on April 13, 2009, to receive comments from interested

parties on the relevant legal and regulatory issues. On October 23, 2009, FDA issued a final decision




       2
          A covalent bond is formed when two atoms share a pair of electrons. A noncovalent bond
is a bond between atoms that does not involve the sharing of pairs of electrons. Esters contain a type
of covalent bond, called an ester bond, that links an oxygen atom to a central atom, such as a carbon
atom or a phosphorous atom, wherein the central atom also is double bonded to an oxygen atom.
Amides contain a type of covalent bond, called an amide bond, that links a nitrogen atom to a central
atom, such as a carbon atom or a phosphorous atom, wherein the central atom also is double bonded
to an oxygen atom. See Pl.’s Mem. in Supp. of Mot. for Summ. J. [Dkt. # 18] at 5.

                                                 -2-
affirming its original determination to grant Shire five years of market exclusivity. FDA concluded

that the LDX molecule in Vyvanse® was a “new chemical entity” because:

               Lisdexamfetamine consists of dextroamphetamine bonded covalently
               to lysine through an amide bond. Lisdexamfetamine is a prodrug that
               is metabolically converted to produce dextroamphetamine, which is
               responsible for the drug’s activity. Under FDA’s regulation at 21
               CFR § 314.108, a non-ester covalently bonded molecule is considered
               the active moiety of a drug and, if not previously approved, it will be
               considered a new chemical entity entitled to 5 years of exclusivity.
               A non-ester that requires metabolic conversion to produce a
               previously approved active moiety is considered a new chemical
               entity. Because lisdexamfetamine is a non-ester covalently bonded
               molecule, and because it requires metabolic conversion to produce
               dextroamphetamine, lisdexamfetamine is a new chemical entity and
               is thus entitled to 5 years of exclusivity.

A.R. 1782.3

               On October 6, 2009, Actavis amended its complaint to challenge FDA’s October 23,

2009, final decision. All parties move for summary judgment. Oral argument on the motions was

held on February 17, 2010.

                                    II. LEGAL STANDARDS

               A. SUMMARY JUDGMENT

               Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment must be

granted when “the pleadings, depositions, answers to interrogatories, and admissions on file, together

with the affidavits, if any, show that there is no genuine issue as to any material fact and that the

moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c); Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 247 (1986). Moreover, summary judgment is properly granted against


       3
         “Prodrugs” are drugs that “are themselves pharmacologically inactive compounds that are
converted into biologically active substances in a variety of ways, including by hydrolysis of ester
or amide linkages, or by other metabolic processes.” A.R. 1798-99.

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a party who “after adequate time for discovery and upon motion . . . fails to make a showing

sufficient to establish the existence of an element essential to that party’s case, and on which that

party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

               In ruling on a motion for summary judgment, the court must draw all justifiable

inferences in the nonmoving party’s favor and accept the nonmoving party’s evidence as true.

Anderson, 477 U.S. at 255. A nonmoving party, however, must establish more than “the mere

existence of a scintilla of evidence” in support of its position. Id. at 252. In addition, the nonmoving

party may not rely solely on allegations or conclusory statements. Greene v. Dalton, 164 F.3d 671,

675 (D.C. Cir. 1999). Rather, the nonmoving party must present specific facts that would enable a

reasonable jury to find in its favor. Id. at 675. If the evidence “is merely colorable, or is not

significantly probative, summary judgment may be granted.” Anderson, 477 U.S. at 249-50

(citations omitted).

               B. APA

               Under the Administrative Procedure Act (“APA”), 5 U.S.C. § 551 et seq., “[a]gency

action made reviewable by statute and final agency action for which there is no other adequate

remedy in a court are subject to judicial review.” 5 U.S.C. § 704. The APA requires a reviewing

court to set aside an agency action that is “arbitrary, capricious, an abuse of discretion, or otherwise

not in accordance with law.” Id. § 706(2)(A); Tourus Records, Inc. v. DEA, 259 F.3d 731, 736 (D.C.

Cir. 2001). However, a reviewing court is “not to substitute its judgment for that of the agency.”

Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416 (1971).

               When reviewing an agency’s interpretation of its own organic statute, a court must

undertake a two-step analysis as set forth in Chevron U.S.A. Inc. v. Natural Resources Defense


                                                  -4-
Council, Inc., 467 U.S. 837 (1984). First, a court must determine whether “Congress has directly

spoken to the precise question at issue” and if so the court must “give effect to the unambiguously

expressed intent of Congress.” 467 U.S. at 842-43. To decide whether Congress has addressed the

precise question at issue, a court must analyze the text, purpose, and structure of the statute.

Ranbaxy Labs. Ltd. v. Leavitt, 469 F.3d 120, 124 (D.C. Cir. 2006).

               If the statute is silent or ambiguous on the question, the court must proceed to the

second step of the Chevron analysis and determine whether the agency’s interpretation is based on

a permissible construction of the statute.      Chevron, 467 U.S. at 843.         When an agency’s

interpretation of a statute is challenged at step two, its “interpretation need not be the best or most

natural one by grammatical or other standards . . . . Rather [it] need be only reasonable to warrant

deference.” Pauley v. BethEnergy Mines, Inc., 501 U.S. 680, 702 (1991). “The court need not

conclude that the agency’s construction was the only one it permissibly could have adopted to uphold

the construction, or even the reading the court would have reached if the question initially had arisen

in a judicial proceeding.” Chevron, 467 U.S. at 844 n.11. If the agency’s statutory construction is

permissible, then the court must defer to the agency’s interpretation. Id.

                                          III. ANALYSIS

               The Act awards five years of market exclusivity to drugs “no active ingredient

(including any ester or salt of the active ingredient) of which has been approved in any other

application . . . .” 21 U.S.C. § 355(j)(5)(F)(ii). The term “active ingredient” is not defined in the

statute. By regulation, FDA has interpreted “no active ingredient (including any ester or salt of the

active ingredient) of which has been approved in any other application” to mean a “new chemical

entity.” See 21 C.F.R. § 314.108(a). “New chemical entity” is defined by FDA to mean “a drug that


                                                 -5-
contains no active moiety that has been approved by FDA in any other application . . . .” Id. FDA

defines “active moiety” as “the molecule or ion, excluding those appended portions of the molecule

that cause the drug to be an ester, salt (including a salt with hydrogen or coordination bonds), or

other noncovalent derivative (such as complex, chelate, or clathrate) of the molecule, responsible

for the physiological or pharmacological action of the drug substance.” Id. Accordingly, under

FDA’s interpretation of the Act, a previously approved molecule that differs only by an ester or salt

derivative is not a “new chemical entity” whereas a previously approved molecule with a covalent,

non-ester derivative is a “new chemical entity.” Applying this construction of the Act to LDX, FDA

determined that LDX is a “new chemical entity” because LDX contains a previously approved

molecule with a covalent, non-ester amide derivative.

                Actavis argues that “FDA’s covalent/noncovalent derivative distinction is contrary

to Congressional intent because it effectively reads a structural requirement into the statute” and that

the term “active ingredient” “must be interpreted to be the molecule that actually provides the

therapeutic effect.” Pl.’s Mem. in Opp’n to Mots. for Summ. J. (“Pl.’s Opp’n”) [Dkt. # 32] at 3.

However, Congress did not define “active ingredient” in the statute and Actavis identifies no

statutory language that compels its interpretation of the term. Indeed, the Court of Appeals for the

District of Columbia Circuit already has concluded that the statutory language “no active ingredient

(including any ester or salt of the active ingredient) of which has been approved in any other

application” is ambiguous. See Abbott Labs. v. Young, 920 F.2d 984, 987 (D.C. Cir. 1990) (“The

parenthetical phrase (‘including any ester or salt of the active ingredient’) can refer to either the

active ingredient of the original approved drug or to the active ingredient in the new drug, depending

on how ‘the’ in the parenthetical and the words surrounding the parenthetical — ‘no active


                                                  -6-
ingredient . . . of which has been approved’ — [are] interpreted.”) (emphasis in original). While the

court was concerned with the ambiguity of the language inside the parenthetical, it specifically

recognized that the meaning of the parenthetical phrase depended on how “the words surrounding

the parenthetical — ‘no active ingredient . . . of which has been approved’ — [are] interpreted.” Id.

Thus, the court acknowledged that the words surrounding the parenthetical which are in contest here

also are ambiguous. See, e.g., AFL-CIO v. FEC, 333 F.3d 168, 173 (D.C. Cir. 2003) (“A statute is

considered ambiguous if it can be read more than one way.”). At Chevron step one, this Court’s

review is limited to determining whether “the statute unambiguously forecloses the agency’s

interpretation, and therefore contains no gap for the agency to fill . . . .” Nat’l Cable & Telecomms.

Ass’n v. Brand X Internet Servs., 545 U.S. 967, 982-83 (2005). The Act plainly does not

unambiguously foreclose FDA’s interpretation.

               Having concluded that the phrase “no active ingredient . . . of which has been

approved” is ambiguous, the Court must “defer to [FDA’s] interpretation of the phrase if it ‘is based

on a permissible construction of the statute.’” Nat’l Mining Ass’n v. Kempthorne, 512 F.3d 702, 709

(D.C. Cir. 2008) (quoting Chevron, 467 U.S. at 843). At Chevron step two, all that is “ask[ed] of

the agency is a reasonable interpretation.” Id. FDA’s interpretation easily satisfies this standard.

FDA applied its scientific expertise to identify structural modifications to previously approved

molecules that are likely to change the activity of the drug and represent a significant innovation,

such as non-ester, covalent derivatives, and those that are not likely to reflect a significant change,

such as salts and esters. Actavis faults FDA for creating a bright-line rule on the basis of a chemical

entity’s structure, but the statute itself draws distinctions based on structure — esters and salts —

and the Court cannot say that FDA was unreasonable in also doing so. Nor is FDA’s interpretation


                                                 -7-
unreasonable because Actavis asserts that there are other derivatives in addition to esters and salts,

such as amides, that often do not alter the properties of the active moiety. That determination “rests

on the ‘agency’s evaluations of scientific data within its area of expertise,’ and hence is entitled to

a ‘high level of deference’ from this court.” Serono Labs. v. Shalala, 158 F.3d 1313, 1320 (D.C. Cir.

1998) (quoting A.L. Pharma, Inc. v. Shalala, 62 F.3d 1484, 1490 (D.C. Cir. 1995)). Courts are not

“scientists independently capable of assessing the validity of the agency’s determination — beyond

holding it to the standards of rationality required by the Administrative Procedure Act, 5 U.S.C. §

706(2)(A).” Id. at 1327. Actavis has failed to show that FDA’s interpretation of the Act is

impermissible under this standard. “As long as the agency stays within Congress’ delegation, it is

free to make policy choices in interpreting the statute, and such interpretations are entitled to

deference.” Ariz. Pub. Serv. Co. v. EPA, 211 F.3d 1280, 1287 (D.C. Cir. 2000) (quotation marks and

alteration omitted).

                Actavis also argues that FDA’s interpretation of the Act is unreasonable because it

is contrary to FDA’s implementing regulations, which, according to Actavis, “require[] that ‘active

moiety’ be construed to refer to the molecule that travels to and acts on the site of drug action.” Pl.’s

Opp’n at 8. Actavis argues that while LDX “is comprised of dextroamphetamine bonded to lysine

through an amide covalent bond, . . . the molecule providing the therapeutic effect of

lisdexamfetamine at the site of drug action — its active moiety — is previously approved

dextroamphetamine.” Id. But that is not how FDA interprets its implementing regulations, and the

Court “must give substantial deference to an agency’s interpretation of its own regulations.” Thomas

Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994). As FDA itself explained:




                                                  -8-
                FDA interprets and applies 21 CFR § 314.108 so that the relevant
                inquiry addresses the structure of the molecule that forms the drug
                substance, and whether that molecule has been previously approved
                as an active moiety. Whether a molecule will be considered to be
                responsible for the physiological or pharmacological action of the
                drug substance depends upon the chemical structure of that molecule,
                which in turn depends on certain reasonable assumptions FDA had
                adopted about the activity of these classes of molecules. If the
                molecules in the drug substance are salts or esters or other non
                covalent derivatives, the active moiety will be the molecule minus the
                appendage. If the drug substance is composed of non-ester covalently
                bonded molecules, the covalently bonded molecule is considered the
                active moiety.

A.R. 1792. Deference to FDA’s interpretation of “active moiety” within the meaning of its

implementing regulations “is all the more warranted when, as here, the regulation concerns ‘a

complex and highly technical regulatory program,’ in which the identification and classification of

relevant ‘criteria necessarily require significant expertise and entail the exercise of judgment

grounded in policy concerns.’” Thomas Jefferson Univ., 512 U.S. at 512 (quoting Pauley, 501 U.S.

at 697). Indeed, FDA noted the “difficulty in determining precisely which molecule, or portion of

a molecule, is responsible for a drug’s effects” and that “Actavis and Shire make conflicting claims

regarding which in vivo effects are meaningful and which molecules or portions of molecules are

responsible for those effects.” A.R. 1797-98. In light of the difficulty in identifying the precise

chemical component responsible for a drug’s effects and the hotly disputed scientific data with

respect to that issue in this case, the Court finds that FDA reasonably applied its interpretation of its

implementing regulations and the Act to conclude that LDX was the “active moiety.”

                Finally, the Court can quickly dispose of Actavis’s contention that FDA’s decision

was arbitrary and capricious because an outdated draft version of FDA’s Manual of Policy and

Procedure 7500.3 purportedly contradicts the structure-based approach reflected in the agency’s


                                                  -9-
formal regulations. It is beyond cavil that “neither an unreasoned statement in the manual nor

allegedly long-standing agency practice can trump a formal regulation with the procedural history

necessary to take on the force of law.” Cent. Laborers’ Pension Fund v. Heinz, 541 U.S. 739, 748

(2004). Actavis would have this Court set aside FDA’s decision for not complying with an outdated

draft of an internal document not having the force of law and superseded by formal regulation. The

Court declines to do so. Actavis complains that FDA relied on the draft manual provision with

respect to another drug application, but any force that argument otherwise might have had is entirely

sapped by the fact that FDA recognized its error in that case and reversed itself. Actavis makes too

much of the draft manual provision and FDA’s alleged flip-flopping. The official policy of the

agency is expressed in the formal regulations, not in any draft manual provision that precedes the

promulgation of the regulations.

                                      IV. CONCLUSION

               For the foregoing reasons, the Court will grant FDA’s and Shire’s motions for

summary judgment [Dkt. ## 28 & 30], and will deny Actavis’s motion for summary judgment [Dkt.

# 18]. FDA’s motion to dismiss [Dkt. # 30] will be denied. A memorializing Order accompanies

this Memorandum Opinion.


Date: March 4, 2010                                        /s/
                                                  ROSEMARY M. COLLYER
                                                  United States District Judge




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