Otsuka Pharmaceutical Co., Ltd. v. Burwell, Civil Action No. 2015-1688

Background

Otsuka developed Abilify Maintena (injectable aripiprazole) and received two 3‑year exclusivities: one for the NDA (romanette iii) and one for a supplemental NDA (romanette iv).
Alkermes submitted a 505(b)(2) NDA for Aristada (aripiprazole lauroxil → N‑hydroxymethyl aripiprazole active moiety), relying partly on prior studies but submitting its own clinical data.
FDA approved Aristada in October 2015 during the 3‑year exclusivity windows for Abilify Maintena and its supplement; Otsuka filed a citizen petition and then sued under the APA.
Otsuka contended the FDA violated the FDCA and its regulations by approving Aristada despite overlapping “conditions of approval,” and that the agency unlawfully changed rules without notice‑and‑comment.
FDA interpreted the three‑year bar clauses to block only second‑in‑time applications for drugs with the same active moiety as the exclusivity‑protected drug; it concluded Aristada was not blocked.
The district court (Judge Ketanji Brown Jackson) found the FDCA and implementing regulations ambiguous, upheld FDA deference under Chevron/Auer, and denied Otsuka’s motion while granting defendants’ and intervenor’s motions for summary judgment.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Scope of 3‑year exclusivity (romanette iii): whether it bars approval of a later 505(b)(2) application that has the same "conditions of approval" despite a different active moiety	Otsuka: The statutory bar applies to any 505(b)(2) application "for the conditions of approval" of the protected drug, so Aristada was barred because it treats the same condition in the same way	FDA: The statute is ambiguous; reasonably read, the bar applies only when the later drug is the same "such drug," i.e., shares the same active moiety	Court: Statute ambiguous at Chevron Step One; FDA’s active‑moiety interpretation is reasonable at Step Two — FDA wins
Interpretation of FDA regulations (21 C.F.R. § 314.108(b)(4)–(5)) — whether FDA’s reading conflicts with regulation text	Otsuka: Regulations unambiguously bar approval irrespective of active moiety; agency contradicts its rules	FDA: Regulations mirror statutory ambiguity; its interpretation aligning scope with active moiety is reasonable and entitled to Auer deference	Court: Regulations ambiguous; FDA’s interpretation is not plainly erroneous or inconsistent — Auer deference applies
Notice‑and‑comment rulemaking required?	Otsuka: FDA effectively amended regulations (changed scope) without notice‑and‑comment, so action invalid under APA	FDA: Agency merely interpreted ambiguous statute/regulation in an adjudicative context; no legislative rulemaking occurred	Court: Because statutory/regulatory text ambiguous and FDA provided reasoned interpretation, action was interpretation not a de facto rule change; no notice‑and‑comment required
Alleged arbitrary/capricious decision	Otsuka: FDA’s approval was arbitrary because it ignored exclusivity text and prior statements	FDA: Explained rationale grounded in statutory purpose, regulatory structure, scientific/technical expertise, and Hatch‑Waxman balance	Court: FDA supplied adequate reasoned explanation and policy/scientific basis; not arbitrary or capricious

Key Cases Cited

Chevron U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837 (establishing two‑step test for judicial review of agency statutory interpretation)
Auer v. Robbins, 519 U.S. 452 (deference to agency interpretations of its own ambiguous regulations)
Nat’l Cable & Telecomm. Ass’n v. Brand X Internet Servs., 545 U.S. 967 (agency reasonable construction of ambiguous statute controls)
Vill. of Barrington v. Surface Transp. Bd., 636 F.3d 650 (D.C. Cir.) (Chevron framework discussion)
AstraZeneca Pharm. v. FDA, 713 F.3d 1134 (D.C. Cir.) (supplement/exclusivity ambiguity and review of FDA interpretations)
Takeda Pharm., U.S.A., Inc. v. Burwell, 78 F. Supp. 3d 65 (D.D.C.) (background on Hatch‑Waxman balance and exclusivity purposes)