UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

__________________________________________ ) LANNETT COMPANY, INC. and ) LANNETT HOLDINGS, INC., ) ) Plaintiffs, ) ) v. ) Civil Action No. 16-1350 (RBW) ) UNITED STATES FOOD AND DRUG ) ADMINISTRATION, et al., ) ) Defendants. ) __________________________________________)

MEMORANDUM OPINION

The plaintiffs, Lannett Company, Inc. and Lannett Holdings, Inc. (collectively,

“Lannett”), bring this action against the defendants, the United States Food and Drug

Administration (the “FDA”) and the United States, for judicial review of the FDA’s decision to

rescind “the marketing approval for one of [their] generic drugs[, Temozolomide,] based on the

agency’s argument that the approval was ‘mistakenly granted.’” Complaint (“Compl.”) at 2.

Specifically, Lannett petitions this Court to “[s]et aside the FDA’s rescission of [its]

[Abbreviated New Drug Application (“ANDA”)] approval” of Temozolomide, to “[d]eclare [the]

FDA’s rescission of [its] ANDA approval unlawful,” and to “[e]njoin [the] FDA from revoking

the ANDA approval for [its] Temozolomide Capsules in the future without a hearing, and

without following the procedures established by

(e) [(2012)].”

.

Currently before the Court are the Plaintiffs’ Motion for Summary Judgment (“Pls.’ Mot.”), ECF

No. 16, the Defendants’ Cross-Motion for Summary Judgment and in Opposition to Plaintiffs’

Motion for Summary Judgment (“Defs.’ Summ. J. Mot.”), ECF No. 37, and the Defendants’ Motion to Strike Extra-Record Documents (“Defs.’ Mot.”). After careful consideration of the

parties’ submissions and the administrative record (“A.R.”), 1 the Court concludes for the reasons

set forth below that it must deny the plaintiffs’ motion for summary judgment, grant the

defendants’ cross-motion for summary judgment, and deny as moot the defendants’ motion to

strike.

I. STATUTORY AND REGULATORY BACKGROUND

The Food, Drug, and Cosmetic Act (the “FDCA”) provides that “[n]o person shall

introduce or deliver for introduction into interstate commerce any new drug, unless an approval

of an application filed pursuant to . . . this section is effective with respect to such drug.”

(a). In order to obtain approval, a new drug application (a “NDA”) must include,

among other things, “full reports of investigations which have been made to show whether or not

[the] drug is safe for use and whether [the] drug is effective in use.”

§ 355(b)(1)(A). Because

this process is “costly and time[-]consuming,” Congress amended the FDCA in 1984 to “permit[]

a manufacturer of a generic alternative to a pioneer drug to seek FDA approval by submitting an

[ANDA],” Serono Labs., Inc. v. Shalala,

(D.C. Cir. 1998), which references

and relies on the prior approval of the pioneer drug, Astellas Pharma US, Inc. v. FDA,

, 13–14 (D.D.C. 2009). So, “[r]ather than requiring the [ANDA] applicant to make

an independent showing that the proposed generic is itself safe and effective, the amended statute

requires a showing that the proposed generic operates in the same manner as the pioneer drug on

1 In addition to the filings already identified, the Court considered the following submissions in rendering its decision: (1) the Memorandum in Support of Plaintiffs’ Motion for Summary Judgment (“Pls.’ Mem.”); (2) the Defendants’ Memorandum in Support of Cross-Motion for Summary Judgment in Opposition to Plaintiffs’ Motion for Summary Judgment (“Defs.’ Mem.”); (3) the Plaintiffs’ Opposition to Defendants’ Cross-Motion for Summary Judgment and Reply in Support of Motion for Summary Judgment (“Pls.’ Reply”); (4) the Defendants’ Reply to Plaintiffs’ Opposition to, and in further Support of, Defendants’ Cross-Motion for Summary Judgment (“Defs.’ Summ. J. Reply”); (5) the plaintiffs’ Opposition to Motion to Strike (“Pls.’ Opp’n”); and (6) the defendants’ Reply to the Plaintiffs’ Opposition to Motion to Strike (“Defs.’ Reply”).

2 which it is based.”

To that end, FDA regulations require that an ANDA include information comparing,

among other things, the proposed generic drug’s “[a]ctive ingredients,” “[r]oute of

administration, dosage form, and strength” to the “reference listed drug.”

(a)(5–6) (2016). The ANDA must also contain “a full description of the methods used

in, and the facilities and controls used for, the manufacture, processing, and packing of such

drug.”

(b)(1)(D); see also

(a)(9)(i). For ANDA approval, the

FDA must find that these requirements, commonly referred to as current Good Manufacturing

Practice (“cGMP”), “are []adequate to assure and preserve [the generic drug’s] identity, strength,

quality, and purity.”

(j)(4)(A). To make this assessment, the

FDA assesses cGMP compliance by inspecting the facility or facilities where the drug will be manufactured. If the finished drug manufacturer will use an active pharmaceutical ingredient manufactured by a different company, [the] FDA will review the compliance status of each named facility and inspect the facilities of both the finished drug manufacture and the active pharmaceutical ingredient manufacturer as needed.

Pls.’ Mem. at 5. Once the FDA approves an ANDA, the ANDA sponsor may begin “market[ing]

its drug lawfully in interstate commerce.”

; see also

.

The FDCA also sets forth the process for the withdrawal of an ANDA approval, outlining

the circumstances in which the FDA is required to rescind an ANDA approval or when it may do

so in its discretion. See

(e). Under either scenario, the FDCA requires “due

notice and opportunity for hearing to the applicant” before the FDA withdraws its ANDA

approval.

Relevant to this case, the FDA may withdraw ANDA approval on the basis of

“new information” regarding non-compliance with cGMP:

The Secretary may also, after due notice and opportunity for hearing to the applicant, withdraw the approval of an application submitted . . . on the basis of new information before him, evaluated together with the evidence before him

3 when the application was approved, the methods used in, or the facilities and controls used for, the manufacture, processing, and packing of such drug are inadequate to assure and preserve its identity, strength, quality, and purity and were not made adequate within a reasonable time after receipt of written notice from the Secretary specifying the matter complained of.

(emphasis added). 2 However, the FDA is not limited to these statutorily provided

circumstances for withdrawing ANDA approval, as it may also rescind an ANDA approval under

its “inherent authority” if done within a reasonable period of time and if Congress has not

otherwise spoken. See Ivy Sports Med., L.L.C. v. Burwell,

(D.C. Cir. 2014)

(“[A]dministrative agencies are assumed to possess at least some inherent authority to revisit

their prior decisions, at least if done in a timely fashion. . . . [However,] an agency may not rely

on inherent reconsideration authority ‘when Congress has provided a mechanism capable of

rectifying mistaken actions.’” (quoting Am. Methyl Corp. v. EPA,

, 835 (D.C. Cir.

1984))).

II. FACTUAL BACKGROUND

Lannett Company, Inc., is a “manufacturer of generic drugs,” and Lannett Holdings, Inc.

“maintains, owns[,] and manages the intangible assets of its parent company Lannett Company,

Inc.” Compl. ¶ 3. Lannett Holdings, Inc. owns “the drug approval at issue in this case, and the

drug is to be manufactured by Lannett Company, Inc.” Id. And the drug, Temozolomide, “is an

oral chemotherapy drug used in the treatment of certain cancers.” Id. ¶ 18.

On February 15, 2011, “Lannett filed an ANDA with [the] FDA, seeking approval to

market generic Temozolomide capsules in a variety of different strengths.” Pls.’ Mem. at 8

2 Congress granted the Secretary of Health and Human Services (“HHS”) authority to approve and withdraw approval of drug applications. See

(b). Because the FDA is part of HHS, the Secretary of HHS is permitted to delegate certain of his congressionally granted powers to the Commissioner of the FDA. See Defs.’ Mem. at 8 n.4 (citing FDA Staff Manual Guide 1401.1 and 1401.10, available at http://www.fda.gov/AboutFDA/ReportsManualsForms/StaffManualGuides/ucm136380.htm). Among the powers the Secretary of HHS has delegated to the FDA Commissioner is the power to approve and withdraw approval of drugs. See

4 (citing A.R. at FDA658). In conjunction with its ANDA, Lannett identified Chongqing Lummy

Pharmaceutical Co. Ltd. (“Lummy”), a company located in Chayuan, China, “as the proposed

manufacturer of the active pharmaceutical ingredient for the finished drug product.” Compl.

¶ 18; see also A.R. FDA659. As part of its review of Lannett’s ANDA, the FDA, in July 2013,

“conducted a pre-approval inspection of Lummy’s factory . . . to determine whether Lummy’s

manufacturing was in accordance with cGMP requirements.” Pls.’ Mem. at 9; see also A.R.

FDA659 n.5. The FDA determined that “Lummy[’s] facility had ‘an acceptable compliance

status,’” and this finding was documented in the FDA’s Center for Drug Evaluation and

Research’s electronic platform used in the review and processing of ANDAs. Pls.’ Mem. at 9

(quoting A.R. FDA659 n.5).

From March 14 to 16, 2016, an FDA investigator from the agency’s China office

conducted a routine inspection at Lummy’s facility to confirm that its cGMP compliance

remained acceptable. A.R. FDA59, FDA64. The inspection revealed that Lummy was “in the

process of moving manufacturing operations from the Chayuan site to the newly established

Changshou site located [near] . . . Chongqing city,” A.R. FDA68, and thus, the FDA investigator

inspected both manufacturing sites, A.R. FDA66. Although the Changshou “facility ha[d] not

been registered with the FDA,” Lummy “ha[d] already transferred all analytical instrumentation

and stability samples [for the Temozolomide batches] to the Changshou site.” A.R. FDA70.

Based on his inspection, the FDA “investigator . . . conclude[d] that there were significant cGMP

compliance problems relating to data integrity, including numerous records relating to

manufacturing that [he] determined to have been falsified.” Pls.’ Mem. at 10 (citing to A.R.

FDA4–7); see also Defs.’ Mem. at 9–10 (citing various portions of the A.R.). The investigator

provided Lummy with the list of objectionable practices and conditions he observed, and

5 requested that Lummy provide a response indicating its corrective actions. See A.R. FDA79.

On March 15, 2016, the FDA investigator sent an e-mail “to the Office of Compliance

. . . and to [the Center for Drug Evaluation and Research’s Office of Pharmaceutical Quality’s]

Office of Surveillance,” informing them of his “recommendation that the Lummy facility be

classified as [Official Action Indicated (“OAI”)],” which is an inspection conclusion

“reflect[ing] the fact that ‘objectionable conditions were found and a regulatory action is

recommended.” A.R. FDA659; see also Defs.’ Mem. at 11. However, “[b]ecause the

investigator’s e[-]mail recommendation did not also include the ‘field alert’ form typically used

to trigger entry of an OAI alert into the [electronic p]latform, . . . staff responsible for entering

facility status into the [electronic p]latform were not immediately aware that such an alert had

not yet been entered.” A.R. FDA659. Consequently, the electronic platform still indicated that

Lummy maintained an acceptable compliance status with cGMP requirements, see A.R. FDA659

n.5., and on March 23, 2016, the FDA issued a letter indicating that Lannett’s ANDA had been

approved, see A.R. FDA14 (noting that the “[f]acilities are approve[d] in the [electronic

p]latform”); see also A.R. FDA19–20.

On the following day, March 24, 2016,

employees within [the Office of Surveillance had] became aware of the discrepancy and entered an OAI alert into the [electronic p]latform to flag that the Lummy facility was classified as potential OAI, a designation that should result in [the Office of Pharmaceutical Quality] not recommending for approval or tentative approval any application referencing [that] facility.

A.R. FDA659. On March 31, 2016, Lummy provided the FDA with a corrective action plan

addressing the investigator’s list of observed objectionable practices and conditions. A.R.

FDA32–58.

On April 1, 2016, the FDA sent a letter to Lannett requesting a teleconference to discuss

6 “a commitment by [Lannett] to not distribute any Temozolomide product” and “[a] necessary

withdrawal of [Lannett’s] ANDA.” A.R. FDA649. The FDA and Lannett conducted the

teleconference on April 5, 2016, during which Lannett confirmed that Lummy had notified it of

the FDA’s March 2016 inspection findings and that it had not distributed any Temozolomide

product in the United States. A.R. FDA651–52. Also, Lannett stated that it “would not commit

to withdraw[ing]” its ANDA, but its representatives agreed to discuss with Lannett’s senior

management the FDA’s proposed rescission of its approval of Lannett’s ANDA, returning it

“back to pending status.” A.R. FDA652. Two weeks later, the FDA sent a letter to Lannett

indicating that the FDA had “erred in approving [Lannett’s] ANDA . . . despite the fact that the

information available to the agency at the time indicated that the compliance status of a facility

identified in [Lannett’s] ANDA was not acceptable to support approval.” A.R. FDA662. The

FDA also informed Lannett of the following three options that Lannett could exercise regarding

its ANDA: “request that [the] FDA withdraw approval of the application, . . . agree to immediate

rescission of approval, which would put [its] ANDA back into pending status, or . . . [within

thirty] days . . . provide information . . . on whether the compliance status of the Lummy facility

. . . was acceptable as of the date of approval, March 23, 2016.” A.R. FDA662–63. In response,

on April 21, 2016, Lannett sent a letter to the FDA proposing a fourth option that would permit

Lannett to submit for FDA review “a supplement pursuant to

, and the

Guidelines for Industry-Changes to an Approved NDA or ANDA,” addressing a “move to a

different manufacturing site for the manufacture of the [Temozolomide capsules].” A.R.

FDA667; see also A.R. FDA666–71 (simultaneously asserting legal arguments as to why the

FDA could not rescind its approval without complying with statutorily required procedural

safeguards).

7 Having failed to provide the FDA with the requested information regarding Lummy’s

cGMP compliance status as of the March 23, 2016 ANDA approval date within the allotted

thirty-day period, on May 16, 2016, the FDA sent another letter to Lannett advising Lannett that

it was “correcting its error and rescinding the approval letter for [Lannett’s] ANDA” and placing

Lannett’s ANDA back “in pending status.” A.R. FDA822; see also A.R. FDA818–22 (refuting

the legal arguments asserted by Lannett in its April 21, 2016 letter to the FDA). The FDA also

attached to its rescission letter a cGMP Complete Response letter, outlining the identified cGMP

deficiencies and requiring Lannett to respond in accordance with

(b). See

A.R. FDA824–27.

On June 28, 2016, in light of the parties’ unsuccessful efforts to resolve this dispute,

Lannett simultaneously filed this civil action in this Court, see generally Compl., and a protective

appeal in the District of Columbia Circuit given its exclusive jurisdiction pursuant to § 355(h) to

adjudicate appeals of orders withdrawing ANDA approvals based on § 355(e), see Pls.’ Mem. at

14. At the appellate level, Lannett petitioned the Circuit to stay “the protective appeal pending

the conclusion of the present case,” which the Circuit granted. Id. The parties now both move

for summary judgment in their favor.

III. STANDARD OF REVIEW

In cases seeking judicial review of agency action under the Administrative Procedure

Act (“APA”), “[s]ummary judgment is the proper mechanism for deciding, as a matter of law,

whether an agency action is supported by the administrative record and consistent with

the APA standard of review.” Loma Linda Univ. Med. Ctr. v. Sebelius,

(D.D.C. 2010) (citing Stuttering Found. of Am. v. Springer,

(D.D.C.

2007)), aff’d,

(D.C. Cir. 2010). The APA requires that a court reviewing

8 agency action “shall review the whole record or those parts of it cited by a party.”

(2012). “It is a widely accepted principle of administrative law that the courts base their

review of an agency’s actions on the materials that were before the agency at the time its

decision was made.” IMS, P.C. v. Alvarez,

(D.C. Cir. 1997). Due to the

limited role a court plays in reviewing agency action based on the administrative record, the

typical summary judgment standards of review set forth in Federal Rule of Civil Procedure 56 do

not apply. See Stuttering Found. of Am.,

. Instead, “[u]nder the APA, it

is the role of the agency to resolve factual issues to arrive at a decision that is supported by the

administrative record, whereas ‘the function of the district court is to determine whether or not as

a matter of law the evidence in the administrative record permitted the agency to make the

decision it did.’”

(quoting Occidental Eng’g Co. v. Immigration & Naturalization Servs.,

, 769–70 (9th Cir. 1985)). Thus, “when a party seeks review of agency action under

the APA, the district judge sits as an appellate tribunal,” and “[t]he entire case on review is a

question of law.” Am. Bioscience, Inc. v. Thompson,

(D.C. Cir.

2001) (quotation marks omitted).

The APA “sets forth the full extent of judicial authority to review executive agency

action for procedural correctness.” FCC v. Fox Television Stations, Inc.,

(2009). It requires courts to “hold unlawful and set aside agency action, findings, and

conclusions” that are “arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law.”

(2)(A). However, “[t]he scope of review under the

‘arbitrary and capricious’ standard is narrow and a court is not to substitute its judgment for that

of the agency.” Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co.,

(1983). Nonetheless, the agency must “examine the relevant data and articulate a

9 satisfactory explanation for its action including a ‘rational connection between the facts found

and the choice made.’”

(quoting Burlington Truck Lines v. United States,

(1962)). In any event, courts “will uphold a decision of less than ideal clarity if the agency’s

path may reasonably be discerned.” Pub. Citizen, Inc. v. FAA.,

(D.C. Cir.

1993) (quoting Bowman Transp., Inc. v. Arkansas–Best Freight Sys., Inc.,

(1974)).

Where agency action turns on questions of statutory interpretation, courts must utilize the

two-step process established in Chevron, U.S.A., Inc. v. Natural Resources Defense Council,

Inc.,

(1984). First, courts must determine “whether Congress has directly spoken

to the precise question at issue.”

. In resolving this question, courts must exhaust the

“traditional tools of statutory construction,” including textual analysis, structural analysis, and

(when appropriate) legislative history.

at 843 n.9. “If the intent of Congress is clear, that is

the end of the matter; for . . . court[s], as well as the agency, must give effect to the

unambiguously expressed intent of Congress.”

at 842–43. However, if courts conclude that

the statute is silent or ambiguous on the specific issue after employing these tools, they move on

to step two and defer to the agency’s interpretation, so long as it is based on a permissible

construction of the statute. See

. Indeed, “the whole point of Chevron is to leave the

discretion provided by the ambiguities of a statute with the implementing agency.” Ass’n of

Priv. Sector Colls. & Univs. v. Duncan,

(D.C. Cir. 2012) (quoting Nat’l Cable

& Telecomms. Ass’n v. Brand X Internet Servs.,

(2005)).

IV. ANALYSIS

The FDA argues that “the doctrine of exhaustion of administrative remedies militates

against this Court’s consideration of Lannett’s claims at the present time.” Defs.’ Mem. at 43.

10 Specifically, the FDA contends that it “has not made a final, judicially reviewable decision on

the manufacturing compliance status of the facilities named in Lannett’s ANDA,” id. at 44,

because “[a]fter [it] afforded Lannett due process and properly rescinded the ANDA approval,

the application returned to pending status and was subject to regulatory requirements described

in [its] Complete Response Letter,” id. at 43. Therefore, according to the FDA, “Lannett’s

premature request for judicial ruling ‘amounts to an attempt to bypass the administrative

process.’” Id. at 44 (quoting Pub. Citizen Health Res. Grp. v. Comm’r, FDA,

(D.C. Cir. 1984)). In response, Lannett argues that the FDA’s “rescission action was the

consummation of the agency’s decision-making process to revoke the approval (not a tentative or

interlocutory decision), and definitively adjudicated and revoked Lannett’s legal right to market

Temozolomide capsules,” and thus, “the rescission action meets the test for a ‘final agency

action’ under the APA.” Pls.’ Reply at 27 n.16 (quoting Bennett v. Spear,

, 177–78

(1997)). Additionally, Lannett asserts that it “was not required to exhaust administrative

remedies before filing this case” because the “FDA’s rescission action formally and definitively

deprived [it] of its legal entitlement to market Temozolomide capsules.”

(relying on Darby v.

Cisneros,

(1993)).

It is well established that “a court may not review a non-final agency action.”

Conservation Force v. Salazar,

(D.D.C. 2013); see also Holistic Candlers

& Consumers Ass’n v. FDA,

(D.C. Cir. 2012) (“The APA, however, only

provides a right to judicial review of ‘final agency action for which there is no other adequate

remedy in a court.’” (emphasis in original) (quoting

)). “An agency action is final

if it ‘1) marks the consummation of the agency’s decision making process’ and 2) affects the

‘rights or obligations . . . [or the] legal consequences’ of the party seeking review.”

11 Conservation Force,

(omission and alteration in original) (quoting Bennett,

520 U.S. at 177–78); see also Darby,

(“[T]he finality requirement is concerned

with whether the initial decisionmaker has arrived at a definitive position on the issue that

inflicts an actual, concrete injury.” (quoting Williamson Cty. Reg’l Planning Comm’n v.

Hamilton Bank of Johnson City,

(1985))). “But[,] an agency action is ‘final

for the purposes of [the APA]’ only after a plaintiff has exhausted all administrative remedies

expressly prescribed by statute or agency rule.” Holistic Candlers & Consumer Ass’n v. FDA,

(D.D.C. 2011) (second alteration in original) (quoting Darby,

), aff’d,

.

“Another ‘long-settled rule of judicial administration’ is the principle that a court that has

been asked to compel an agency to act ‘will stay its hand until the plaintiff has exhausted

whatever internal remedies the agency provides[.]” Mackinac Tribe v. Jewell,

(D.D.C. 2015) (alteration in original) (first quoting Myers v. Bethlehem Shipbuilding

Corp.,

, 50 (1938), then quoting Glisson v. Forest Serv.,

, 1326 (7th Cir.

1995)). The purposes of exhaustion include: “giving agencies the opportunity to correct their

own errors, affording parties and courts the benefits of agencies’ expertise, [and] compiling a

record adequate for judicial review[.]” Id. (alterations in original) (quoting Avocados Plus Inc.

v. Veneman,

(D.C. Cir. 2004)). Consequently, “a plaintiff’s failure to

pursue an administrative process that could remedy [the] plaintiff’s claims will preclude judicial

review of agency action, so long as the purposes of administrative exhaustion supports such bar.”

Here, the Court does not find that the FDA’s May 16, 2016 rescission letter and its

accompanying Complete Response Letter constitute a final agency action reviewable under the

12 APA for several reasons. Initially, the Court notes that this issue—whether the FDA’s rescission

of a mistakenly approved ANDA and placement of that ANDA back into the review process

queue is a final agency action—appears to be one of first impression, as the Court was unable to

locate any legal authority addressing this precise issue. Notwithstanding the lack of guidance on

this specific issue, sufficient legal authority supports the Court’s conclusion. As previously

noted, for an agency action to be final, it must first “mark the consummation of the agency’s

decisionmaking process.” Sw. Airlines Co. v. U.S. Dep’t of Transp.,

(D.C.

Cir. 2016) (quoting Bennett,

). To demonstrate that the FDA’s rescission action

satisfies this first prong of the finality doctrine, Lannett argues that the FDA’s action resulted in

the “consummation of the agency’s decision-making process to revoke the approval” of its

ANDA for Temozolomide. Pls.’ Reply at 27 n.16. However, Lannett’s position is too narrow

for the Court to accept, primarily because Lannett’s position focuses solely on the rescission of

the approval, which Lannett equates as a final agency action. See

But, “[i]n assessing

whether a particular agency action qualifies as final for purposes of judicial review, [this Circuit]

and the Supreme Court have looked to the way in which the agency subsequently treats the

challenged action.” Sw. Airlines Co.,

(citing cases). Applying that principle to

what occurred in this case, although the FDA did rescind Lannett’s ANDA approval, the FDA

expressly advised Lannett that its ANDA was “now in pending status.” A.R. FDA822. The

FDA also informed Lannett that if it “submit[ed] an amendment to [its] ANDA, as [Lannett’s

April 21, 2016] letter suggest[ed it was] considering, to substitute an alternative supplier for

Lummy, [the FDA] w[ould] give that amendment . . . prompt attention.”

In addition, the

FDA’s cGMP Complete Response letter submitted along with the rescission letter specifically

outlined the regulatory options available to Lannett and the procedures that Lannett was required

13 to satisfy to reacquire approval of its ANDA. See A.R. FDA826 (“Within one year after the date

of this letter, you are required to respond by taking one of the actions available under

(b)). Thus, the FDA’s rescission action did not represent the conclusion of its

decision-making process regarding the review process for Lannett’s ANDA or its ultimate

decision to either approve or deny Lannett’s ANDA. See Rhea Lana, Inc. v. U.S. Dep’t of

Labor,

(D.C. Cir. 2016) (“[This Circuit has] repeatedly held that agency

action is not final if the adverse effects of the action depend ‘on the contingency of future

administrative action.’” (quoting DRG Funding Corp. v. Sec’y of Hous. & Urban Dev.,

(D.C. Cir. 1996))).

Nonetheless, even if the FDA’s rescission action could be perceived as the consummation

of its decision-making process, the Court is not convinced that this action satisfies the second

prong of the finality doctrine, i.e., an action “by which [Lannett’s] rights or obligations have

been determined.”

at 1026 (quoting Bennett,

). As support for its position

that the second prong is satisfied, Lannett argues that the FDA “definitively adjudicated and

revoked Lannett’s legal right to market Temozolomide capsules.” Pls.’ Reply at 27 n.16.

However, Lannett “pictures itself, quite incorrectly, as having been deprived of a vested right.

[Rather, i]t had no right to put on the market a drug when facts were available indicating that the

public health might be injured.” Am. Therapeutics, Inc. v. Sullivan,

(D.D.C.

1990) (denying the plaintiff’s motion for judgment on the pleadings because the FDA, which had

rescinded its approval of the plaintiff’s new drug application, was “entitled to some deference,”

as it made “a good faith mistake [that was] promptly discovered and corrected, nothing more”).

Additionally, the FDCA expressly precludes the FDA from approving an ANDA if it finds that

“the methods used in, or the facilities and controls used for, the manufacture, processing, and

14 packing of the drug are inadequate to assure and preserve its identity, strength, quality, and

purity.” See

(j)(4)(A). Therefore, based on the facts available to the FDA at the

time it mistakenly approved Lannett’s ANDA, the FDA expeditiously rescinded Lannett’s

authorization to market the Temozolomide capsules because that authorization was not legally

valid, a conclusion that Lannett does not challenge. See Pls.’ Mem. at 21–41 (primarily arguing

that the FDA was required under § 355(e) to provide Lannett with notice and a pre-rescission

hearing because the information regarding Lummy’s failure to comply with cGMP requirements

were not before the FDA personnel who actually made the approval decision). Thus, as Lannett

did not have a validly vested legal right given the incomplete information that had been made

available to the FDA, it appears that Lannett “seeks only to profit from [the] FDA’s inadvertent

and quickly corrected mistake.” Am. Therapeutics, Inc.,

. 3

Furthermore, the FDA’s rescission action cannot be considered final because Lannett has

yet to exhaust all of its available administrative remedies. See Woodford v. Ngo,

,

88–89 (“The doctrine [of exhaustion of administrative remedies] provides ‘that no one is entitled

to judicial relief for a supposed or threatened injury until the prescribed administrative remedy

has been exhausted.’” (quoting McKart v. United States,

(1969))). As

explained in the FDA’s cGMP Complete Response Letter, Lannett was obligated to comply with

the procedures provided in the FDA’s regulations by either resubmitting or supplementing its

ANDA, withdrawing its ANDA, or requesting an opportunity for a hearing. See A.R. FDA826;

see also

(b). Instead of pursuing one of these administrative remedies,

Lannett opted to file this action seeking judicial review. See generally Compl.; Pls.’ Mem.

However, Lannett “must exhaust [all available administrative remedies] before proceeding to

3 But, even if Lannett did have “a right [that] had vested, [Lannett] was not deprived of a factual hearing to prove its qualifications to make and sell the [Temozolomide capsules], and, given the circumstances, the post-denial hearing offered easily met due process requirements.” Am. Therapeutics, Inc.,

.

15 federal court.” Conservation Force,

(granting summary judgment because

the plaintiffs failed to exhaust the administrative remedies available to them under the agency’s

regulations).

Moreover, the Court agrees with the FDA that requiring Lannett to exhaust the agency’s

administrative remedies fulfills the purposes of the exhaustion doctrine. See Defs.’ Mem. at 44–

45. As the Supreme Court observed, “[e]xhaustion gives an agency ‘an opportunity to correct its

own mistakes with respect to the programs it administers before it is haled into federal court,’

and it discourages ‘disregard of [the agency’s] procedures.’” Woodford,

(second

alteration in original) (quoting McCarthy v. Madigan,

(1992)) In addition,

“exhaustion promotes efficiency.” Id.; see also

(“Claims generally can be resolved much

more quickly and economically in proceedings before an agency than in litigation in federal

court. In some cases, claims are settled at the administrative level, and in others, the proceedings

before the agency convince the losing party not to pursue the matter in federal court. And even

where a controversy survives administrative review, exhaustion of the administrative procedure

may produce a useful record for subsequent judicial consideration.” (internal quotation marks

and citation omitted)). In this case, permitting Lannett to proceed with this litigation in its

current posture would disregard the procedures provided by the FDA in

(b)

and undermine the FDA’s ability to correct, if appropriate, the mistakes alleged by Lannett. See

Garlic v. FDA,

(1992) (“[B]ypass[ing] the administrative remedies would

undermine the entire regulatory process.”).

Also, requiring Lannett to exhaust the available administrative remedies would aid

judicial review in several respects. For example, Lannett could persuade the FDA that its ANDA

should be approved through its anticipated supplement to its ANDA, wherein it intimates that

16 another manufacturer may be substituted to supply the Temozolomide capsules, and this could

possibly eliminate the need for judicial review. See Defs.’ Mem. at 45. Alternatively, Lannett

could request a hearing on “whether there are grounds for denying approval of . . . [its ANDA].”

(b)(3). The FDA would then be required to either approve or deny Lannett’s

ANDA and provide Lannett with a hearing. See

And, this would amount to a final agency

action that would be subject to review by the Circuit. See

(h) (granting the

Circuit exclusive jurisdiction over appeals of an order refusing or withdrawing approval of an

ANDA application). Consequently, judicial review would benefit from Lannett exhausting the

administrative remedies available to it under

(b).

V. CONCLUSION

For the foregoing reasons, the Court concludes that the FDA’s rescission action is not a

final agency action subject to judicial review under the APA. Furthermore, Lannett failed to

exhaust all of its available administrative remedies pursuant to

(b) prior to

bringing this case to federal court. Accordingly, the Court must grant summary judgment in

favor of the defendants. 4

SO ORDERED this 25th day of October, 2017. 5

REGGIE B. WALTON United States District Judge

4 Having concluded that the FDA’s rescission action is not a final agency action within the meaning of the APA and that Lannett failed to exhaust all of its available administrative remedies, the Court need not address the merits of Lannett’s claims under the APA. Additionally, the Court’s conclusion is applicable to Lannett’s constitutional claim, which, as Lannett asserts, “should be adjudicated . . . with the other four integrally-related [APA] claims.” Pls.’ Reply at 27 n.16 (noting that Darby and the exhaustion doctrine explained therein should apply to its constitutional claim). Moreover, given that the Court finds it unnecessary to address the merits of Lannett’s claims, the Court will also deny as moot the defendants’ motion to strike extra-record documents. 5 The Court will contemporaneously issue an Order consistent with this Memorandum Opinion.

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