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Case number 15-5166, Spectrum Pharmaceuticals, Inc.

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Appellate vs. Sylvia Matthews Burwell and her official capacity as Secretary, United States Department of Health and Human Services at EL.

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Ms.

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Ellsworth for the Appellate, Mr. O'Connell for Federal Appellees, and Mr. Farquhar for Appellees Sandoz, Inc.

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Good morning.

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Good morning, Your Honors.

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Before I begin, I would like to make clear on the record that all of the parties to this case agree that anything that's in the briefing and administrative record in this case can be discussed on the public record.

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I just wanted to be clear on that.

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Your Honors, I'm Jessica Ellsworth on behalf of Spectrum Pharmaceuticals.

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With me at council table are Susan Cook and Eugene Sokoloff.

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In the audience is Avi Oler, who is the Vice President of Operations and Chief of Staff to the CEO at Spectrum Pharmaceuticals.

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The administrative record before you in this case shows that FDA clearly understood that 175 and 250 milligrams single-use vials of levolucuborin support a specific use of the drug, and that use is colorectal cancer treatment, which often requires doses of 150 milligrams or more.

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As FDA told Spectrum at JA65,

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and tells the court at page 29 of their brief, the other use of levolucovorin, which is for methotrexate rescue, requires no more than a 50-milligram vial because the standard dose for that use is only 7.5 milligrams.

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But aren't there some doses for that indication that can exceed 7.5?

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There is one dose for a fairly rare use of the drug that is mentioned on the label that does require

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75 milligrams to be administered.

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And FDA pointed that out in the citizen petition.

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Even 75 milligrams, though, Your Honor, is significantly less than 175 or 250.

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The question for the Court is whether... It is more than 50.

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It is more than 50.

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That's correct, Your Honor.

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The question for the court, however, is whether FDA was permitted to approve an application for a generic levolucavirin product that is objectively intended for the orphan-protected indication, which is colorectal cancer treatment.

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But they don't accept that phrasing of the question, I think.

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They don't.

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They don't accept the premise, the factual premise behind that question, because they say it's indicated even at the other doses.

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So I want to clarify about who the they is in your sentence.

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Sandoz, in its brief, says at page 32 that it doesn't think its drug is intended for any indication, which, of course, every drug has to be intended for a specific indication.

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Otherwise, the misbranding statute and all of the requirements to have adequate instructions for intended uses would make no sense.

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for its part, I think at page 29 where it says, it acknowledges again that the methotrexate indications do not require anything larger than a 50mg dose, a 50mg vial is inconsistent with its decision to approve the larger vial sizes.

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The answer

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But that doesn't prove the flip side of that, that the larger bile sizes wouldn't be appropriate, safe, effective for the other indication.

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Your Honor, I think if you look at that statement in combination with everything else in the administrative record, which includes FDA's medical review at page 697 of the administrative record, where the medical review team at FDA said that the larger vial sizes were to support the colorectal cancer use, where the smaller 50-milligram vial size was for the methotrexate indication.

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If you look at the Division of Medication Error Prevention and Analysis at pages 703 and 704, that's the division of FDA that is charged with looking at the labeling.

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The report that they issued said, again, that the larger vile strengths were to support colorectal cancer.

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And in fact, they proposed amendments to the labeling to clarify how it should be used in colorectal cancer treatment.

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Again, Spectrum's application itself at JA725 makes the same point.

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It lists the proposed indication for the larger bile strength to be colorectal cancer use.

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So we have a statute here that's supposed to direct the FDA.

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What's your best argument that the text is ambiguous?

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In other words, what's wrong with the Fourth Circuit decision in your view?

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Sure.

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So the text of the statute prohibits FDA from approving an application for such drug, for such disease or condition.

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So the question really is, what is an application?

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How does FDA determine what an application is really for?

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And unlike the Fourth Circuit case, here the application itself contained an inherent mismatch.

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Sandoz and FDA would like you to focus solely on the use listed on the proposed labeling they submitted.

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But of course, FDA does not review an application based solely on the proposed labeling.

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It has to look at what that labeling will be attached to.

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And here, that labeling is proposed by Sandoz to be attached only to these large strength vials.

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Those large strength vials, of course, are the ones that Spectrum and FDA have recognized support colorectal cancer treatments.

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It's in fact, when Sandoz submitted its application, what it initially applied for before it realized there was an orphan drug exclusivity problem with getting that approval.

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So unlike the Fourth Circuit, in the Sigma Tau case, which of course is a case from a different circuit and thus not binding,

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The question that was presented to the court was when there was a disconnect between a proposed label and external marketing data, insurance reimbursement policy.

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But the laws of the statute, for such drug, for such disease or condition, Four Circuit thought that that latter phrase was important, for such disease or condition.

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It did.

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What's ambiguous about that?

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It thought that was important in clarifying that the statute, that the exclusivity that is granted by the statute is a disease-specific exclusivity and not a drug-specific exclusivity.

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And it says such disease.

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Which disease is it referring to?

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It's referring to the disease for which the generic applicant is seeking approval in their application.

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And the application, again, here is where the confusion comes in.

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Because if they had submitted this application for methotrexate rescue and they had proposed to put that label on a 50-milligram file, we wouldn't be here today.

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We wouldn't have any objection to that because it is a plausible intended use of a 50-milligram vial for methotrexate rescue.

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It is not a plausible intended use of methotrexate rescue to use these large vial sizes again.

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But FDA disagrees with that.

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That's why this ultimately boils down in some respects to a factual question of whether what you just said is

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so correct that it would be unreasonable for FDA to conclude otherwise.

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They disagree with us in this litigation, but the statements that are in the administrative record, the statements that they made when they reviewed the proposed larger vial sizes, the statements that they made to us at a meeting in 2009.

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Right, but lots of statements are made during the course of any process, but you come to a final conclusion that may be different from statements made in the course of the process.

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And their final conclusion was,

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inconsistent with what you just said, that the larger vial sizes were still appropriate, safe, effective.

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And you – I think it's your burden to say that they are unreasonable and concluding as much.

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And part of your argument is, well, they said different things before.

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Put that aside, what else would show that they're unreasonable in concluding what they concluded?

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So I think there are a number of things that answer Your Honor's question.

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One of them is that we think the language of the statute focuses on the application as a whole.

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There is no indication in the statute that Congress intended to endorse what are effectively sham labels, where the proposed labeling is interesting.

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But that's, I mean, sorry to interrupt, the essentially sham label

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You got a lot packed in there.

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They would say it's not a sham label.

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I think the agency then would need to show that they engaged in reasoned decision-making to show why a 7.5-milligram dose should be placed into a 250-milligram single-use vial so that 97 percent of the vial is going to be discarded.

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So what kind of test, what I'm worried about, and you make compelling arguments on all of that, but what I'm worried about is trying to set forth a test that would apply in the future to, as you say, essentially sham.

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How do we articulate that in your view?

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The orphan drug exclusivity is intended to protect specific indications, specific uses of a drug.

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That was the core holding, I think, in sigma tau.

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And we don't disagree with that.

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When a specific use, though, has a specific formulation that is really objectively intended only for that use,

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and only makes sense to be used for that indication, then the orphan drug exclusivity protects that formulation as well.

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It's essentially part of... So what I got from you there is objectively intended and only makes sense.

[00:10:19] Speaker 01:
I think that's right, Ron.

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Those are tough standards for us to apply.

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I understand how you would apply them here.

[00:10:25] Speaker 01:
Well, I don't think they're that tough in a sense.

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FDA has already incorporated this, in a sense, through its regulation.

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In 21 CFR 316.3 B14, FDA has specifically said that a generic drug is considered the same drug when it is intended for the same use.

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So FDA itself, outside of this case, has already taken upon itself, when it interpreted and promulgated regulations to implement the Orphan Drug Act, the same analysis that we are saying it should have performed in this case.

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I guess what I'm getting at is when they say that a drug meets that standard, how are we to assess whether FDA is wrong on that?

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That's the hard thing.

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One thing that's interesting, Your Honor, I would suggest if you read the FDA brief and you read Sandoz's brief, there is no statement in that brief in which FDA says, we believe that this 175 and 250 milligram vial are intended for methotrexate residue.

[00:11:29] Speaker 01:
They don't say that.

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In fact, it would be very difficult for them to say that, given everything else they said at other points in the administrative record.

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They go on to say they think it's safe and effective,

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And on that point, what they're really saying is you could withdraw 7.5 milligrams, and that 7.5 milligrams could be used just as 7.5 milligrams could be withdrawn from a smaller size.

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What if it's intended for both, and it's primarily intended for the one that it can't be intended for, but it's still secondarily intended for one that is permissible?

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How are we supposed to parse that?

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That is, I think, the situation that was the case in sigma tau.

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There, there was a plausibly intended use that was on the label, and the pioneer company was arguing there was actually, if you looked outside of FDA's record, there was other material that showed there was another intended use.

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In our case, you don't get past that threshold question, because the labeling is simply not plausibly intended to be applied in the methotrexate.

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rescue use.

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And that's really our point, that this is a case where the agency is asking the court to allow it to indulge in this willful blindness so that it doesn't need to look at material in its own files that suggests that there is an inconsistency.

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That mismatch between the labeled use

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and the product on which it is placed makes this case different from the other ones.

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The colorectal cancer indication also explains FDA's lack of concern with the overfill that would be in this drug product.

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FDA has guidance documents that direct

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parties as to its view on how much extra drug there should be.

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And FDA brushes that guidance document aside here.

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The reason it's easy for them to brush it aside is because if this is used for colorectal cancer, there won't be... Aren't you asking us to adopt a foreseeability standard here?

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And isn't that going to be hard to implement?

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When right now there's an enforcement scheme where if someone has misrepresented, FDA can come after them afterwards.

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But when we're at the front end of it,

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It seems to me you're asking us to do something that is very difficult, whereas... We're not asking for a foreseeable use test.

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And again, that is what makes this case quite different from Sigma Tau.

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A foreseeable use test would depend on things that FDA can't actually analyze in a pre-approval context.

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like the marketing data that was at issue in Sigma Tau, like how insurance companies will reimburse this drug.

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The things that we are pointing to and saying that FDA can't choose to disregard are things that FDA already knows that are already part of the review process FDA has to undertake in order to approve the application for Sandoz's drug.

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And the application is what is the focus of the statute.

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The intended use comes in through 316.3B14.

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in FDA's interpretation of what that exclusivity covers.

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And when you put those together, FDA simply didn't do an adequate job of explaining why it was not arbitrary and capricious to approve this drug in the very large vial size for an indication that requires a very small use.

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I might just note one thing.

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Sandoz has expressed some concern that this case presents an evergreening concern, which this court was faced a little bit in the BMS case, which was a challenge

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to the labeling carve-out regulation.

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And we want to be clear that there is no evergreening concern present here because, of course, there is a 50-milligram vial that is appropriate for the methotrexate indication, intended for the methotrexate indication, likely also intended for colorectal cancer, but at least plausibly intended for one indication that would be on its label.

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And so this is not an attempt

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as in BMS of a pioneer company to block competition.

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This is an attempt to ensure that any competition that FDA authorizes to come on the market is lawful competition.

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If I can reserve the remainder of my time for rebuttal.

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Good morning.

[00:15:52] Speaker 06:
Morning, Your Honor.

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It's Chris O'Connell from the Department of Justice with me at council table.

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It's Shoshana Hutchinson from the FDA and Doug Farquhar on behalf of the intervener defendant, Sandoz.

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Let me start by saying this.

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As the FDA's website proudly states, the FDA is responsible for protecting the public health by ensuring the safety, efficacy, and security of, among other things, human drugs.

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Conceptually, FDA's efforts to protect the public from unsafe drug products can be broken into two distinct regulatory phases, as Judge Griffith just recognized a few minutes ago.

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The first phase is FDA's pre-marker review process, during which the FDA has the opportunity to be proactive by carefully assessing whether proposed new drugs and medications are safe and effective, not reasonably sized, for the public by evaluating, among other things, scientific data, studies, pre-clinical and clinical data, and things of that sort.

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The second phase, which commences after a drug is approved for market, is FDA's post-market regulatory compliance and surveillance activities.

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Spectrum, in this case, seeks to conflate the two phases and essentially asks this court to charge the FDA with conducting a prospective prognostication of potential uses of drugs which are submitted for approval.

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This is something that finds no support.

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And I agree with you, that would be wrong, but I don't think that's what your opponent's saying happened here.

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It didn't have to engage in prognostication, right?

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have strong evidence of intended use?

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I think the record here reflects that at times the higher bile sizes were linked to the colorectal indication, but the record also reflects that the higher bile sizes were

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completely appropriate for treatment of the methadone indications for which they were proposed by Sandoz.

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The FDA carefully analyzed safety concerns and other issues brought up by Spectrum in its citizen petition, dispensed of these issues in a thorough and comprehensive response, and

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But aren't we supposed to look at the real world?

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In the real world, we all know what's happening.

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or will happen.

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At the pre-market phase, the FDA's regulatory charge is just to evaluate the safety and efficacy of a proposed drug, not to engage in

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But if something's intended, we all know, let's hypothesize, intended for use for something it can't be because of the exclusivity.

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And so it's a sham to suggest that it's being

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marketed for another or being approved for another use.

[00:19:11] Speaker 05:
Yes, technically that vile size can be for the other indication, but we all know that it's going to be prescribed for the other indication as to which they have exclusivity.

[00:19:23] Speaker 05:
What are we supposed to do with that in a case like that?

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It's not the FDA's burden under its governing statute here to make this sort of what you termed a real world investigation of proposed uses.

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I would further state that this is not the case here.

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We don't have a case where it was clear and unambiguous that the

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proposed drug was only intended to be used for off-label indications.

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But to the extent that- If it were clear, if it were clear- If it were clear, we might have a case of misbranding if it was a complete sham.

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And in any event, the post-market surveillance activity by the FDA could be, there could be enforcement action taken if the FDA determines that's the case.

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I think these are- That's only if there's marketing, right?

[00:20:22] Speaker 05:
I think, I mean... That doesn't get to the doctors, right?

[00:20:26] Speaker 05:
The... Correct, the...

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The post market, or the other words.

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In other words, correct me if I'm wrong, doctors are allowed to prescribe the higher vial size for the use as to which they have exclusivity.

[00:20:43] Speaker 06:
That's correct.

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And the FDA wants to be careful not to infringe upon that.

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It's well established that the FDA does not regulate the practice of medicine and the prescription of off-label drugs.

[00:20:53] Speaker 05:
But that really defeats their exclusivity rate, at least in practice.

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It's a value that defeats the value of their exclusivity rate.

[00:21:04] Speaker 06:
I think it's impossible to say at this point because we can't.

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speculates that what doctors might prescribe going forward in the future.

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But Congress has made a decision that the FDA is not to regulate the price of medicine.

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If Spectrum is unhappy with that, I think that they're seeking a legislative solution, not a judicial one.

[00:21:23] Speaker 04:
But what facts did the FDA rely upon to say that this higher bile size

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was appropriate for spectrum when it only approved a 50-milligram biosize for, I'm sorry, for sandals when it only approved a 50-milligram biosize for spectrums?

[00:21:45] Speaker 06:
Among other things, the FDA's response noted that there are at least two indications which go beyond 50 milligrams.

[00:21:53] Speaker 06:
There's one, I believe, that's a 75-milligram indication, and another which ranges from 85 to 90 milligrams.

[00:22:00] Speaker 06:
In addition, that's far short of 175 to 225, but larger than the 50 milligram size.

[00:22:10] Speaker 06:
In addition, the FDA does not want to determine that the

[00:22:18] Speaker 06:
larger vial sizes were safe and effective for this indication.

[00:22:24] Speaker 06:
It doesn't necessarily go beyond that to determine the ideal vial size that should be manufactured.

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They don't get into business manufacturing processes and the like.

[00:22:36] Speaker 03:
Is it the FDA's view that the statute is unambiguous here, or is it ambiguous and you provided a reasonable interpretation?

[00:22:44] Speaker 03:
Which is it?

[00:22:47] Speaker 06:
The FDA's view is that the statute is unambiguous.

[00:22:50] Speaker 06:
Unambiguous.

[00:22:52] Speaker 06:
And the FDA's view is

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on all fours with the decision of the Sigma Tau versus Schwartz Court in the Fourth Circuit, which similarly found the statute was unambiguous.

[00:23:03] Speaker 06:
And he said if the statute is ambiguous, the FDA's interpretation to allow carve-outs is entitled deference in any event.

[00:23:18] Speaker 06:
I'm sorry.

[00:23:18] Speaker 06:
I should have stayed up front.

[00:23:19] Speaker 06:
I wanted to reserve five minutes for, uh, Sanders's counsel.

[00:23:23] Speaker 06:
So okay.

[00:23:28] Speaker 06:
Any other questions?

[00:23:29] Speaker 06:
Your honor.

[00:23:29] Speaker 06:
Thank you.

[00:23:37] Speaker 02:
Thank you and good morning, Judges Kavanagh, Griffith, and Wilkins.

[00:23:40] Speaker 02:
My name is Doug Farquhar.

[00:23:41] Speaker 02:
May I please the court?

[00:23:43] Speaker 02:
I represent Sandoz.

[00:23:45] Speaker 02:
I want to start out by addressing a little bit differently the question that Judge Wilkins asked about what facts do we rely upon or did FDA rely upon in determining that the 175-250 size vials are appropriate and safe and effective for the methotrexate indications.

[00:24:03] Speaker 02:
And the primary thing that FDA relied upon is the fact that they had already approved those vials for spectrum, for the methotrexate indications.

[00:24:15] Speaker 02:
Before the colorectal indication was even approved, FDA had already approved those vial sizes for the methotrexate indications.

[00:24:24] Speaker 02:
And when you're going to look at objective intent, which is the standard that Ms.

[00:24:28] Speaker 02:
Ellsworth is suggesting,

[00:24:30] Speaker 02:
If you look at the objective intent of what was intended, the proposed labeling that Spectrum submitted for the drug included the methotrexate indications on the 175-250.

[00:24:46] Speaker 02:
As we pointed out in our brief,

[00:24:48] Speaker 02:
When FDA was finalizing the draft labeling, they sent the labeling that included the methotrexate indications to Spectrum, and Spectrum did not respond with any objections, wait a minute, you're not supposed to include the methotrexate indications.

[00:25:03] Speaker 02:
So even if you adopt the objective intent standard that Spectrum is suggesting, if you look at this record and you see what FDA did and you see what Spectrum did, the 175-250 milligram size was approved, was submitted for the methotrexate indications as well as the colorectal indications.

[00:25:27] Speaker 02:
The other thing that I wanted to address to Judge Kavanaugh's question about, don't you look at, don't we need to be concerned about the real world?

[00:25:34] Speaker 02:
What's going to happen in the real world?

[00:25:36] Speaker 02:
That's not what Congress intended.

[00:25:38] Speaker 02:
The plain language of the statute says it cannot be approved for such drug, for such use, or such disease or condition, which FDA then translated in its regulation to

[00:25:53] Speaker 02:
for such use or indication, basically the same language.

[00:25:58] Speaker 02:
And Ms.

[00:26:00] Speaker 02:
Ellsworth's commentary about 316.36, I'm sorry, 316.3B14 and the definition.

[00:26:08] Speaker 02:
The intended use is in that definition, but it's the definition of what is the same drug.

[00:26:15] Speaker 02:
It's not the definition of what is the use or condition or disease or indication.

[00:26:20] Speaker 02:
It's the same drug.

[00:26:21] Speaker 02:
There's no question this is the same drug.

[00:26:24] Speaker 02:
Our drug is the same drug as their drug.

[00:26:27] Speaker 02:
But what Congress says is you cannot approve the same use of disease indication condition for the second drug.

[00:26:36] Speaker 02:
And that's the exclusivity that Spectrum has gotten and has received and has not been violated.

[00:26:42] Speaker 02:
And for the same reason, because that

[00:26:45] Speaker 02:
restriction has not been excluded or exempted or waived, there was no need for FDA to give notice and opportunity for comment to Spectrum before they made the decision to expedite our reveal of our application.

[00:27:03] Speaker 02:
The other thing I wanted to point out is there's an additional difference between the 50 milligram vial and the 175 milligram vial, and besides just the size of the vial.

[00:27:17] Speaker 02:
As the record makes clear, the 175-250 vial is a ready-to-use vial.

[00:27:25] Speaker 02:
In other words, there's no mixing that's required by the clinic in order to administer the drug.

[00:27:31] Speaker 02:
The 50 milligram, on the other hand, is a lyophilized powder, which does have to be reconstituted.

[00:27:37] Speaker 02:
So it could well be that the reason that the market is interested in the larger size vial is not because of the size of the vial, but because of the convenience of being able to administer a ready-to-use drug.

[00:27:50] Speaker 02:
And that would support people wanting to use the larger size vial for the methotrexate indication, as well as the fact that the 50 milligram, under some circumstances, may be too small.

[00:28:02] Speaker 03:
Does your reading of the statute allow for the FDA ever to consider the intended use

[00:28:09] Speaker 02:
Not under the Orphan Drug Act.

[00:28:12] Speaker 02:
As Your Honor found in the U.S.

[00:28:14] Speaker 02:
against regenerative science case, intended use is important for enforcement actions.

[00:28:19] Speaker 02:
But of course, FDA has the ability to bring enforcement actions, not private parties.

[00:28:25] Speaker 02:
They don't have a cause of action to enforce the Food, Drug and Cosmetic Act.

[00:28:30] Speaker 02:
And in fact, if you look at the cases that were cited by Spectrum in support of 201.128, that's the regulation that talks about intended use, they are all enforcement cases where FDA invoked that against the private party.

[00:28:44] Speaker 02:
Unless the Court has further questions.

[00:28:46] Speaker 02:
Thank you very much.

[00:28:53] Speaker 01:
Just a few points, Your Honors, in rebuttal.

[00:28:56] Speaker 01:
Judge Kavanaugh, you asked about the real world, and we think that what is required under this statute is that FDA has to consider the real world as FDA knows that it exists.

[00:29:06] Speaker 01:
So while FDA isn't required to do extra research into what foreseeable uses might be out there, what it can't do is put its head in the sand and ignore things that are in its own records.

[00:29:19] Speaker 01:
Here in particular, among other things, there was a drug shortage that was affecting treatment for colorectal cancer.

[00:29:25] Speaker 01:
And FDA was very concerned with remedying that shortage.

[00:29:28] Speaker 01:
That's why it improperly expedited review of Sandoz's product.

[00:29:33] Speaker 01:
It's why FDA here could ignore the overfill issue.

[00:29:36] Speaker 01:
The overfill guidance from the agency says vial fill.

[00:29:39] Speaker 01:
should match the labeled dosing information.

[00:29:42] Speaker 01:
FDA could ignore that here because again, FDA knew that the use this product was going to be put to was colorectal cancer indication.

[00:29:51] Speaker 01:
Second point is that it's always FDA's burden to offer reasoned decision-making that accounts for all of the evidence in the record.

[00:29:59] Speaker 01:
That's what they have not done here.

[00:30:01] Speaker 01:
That's where they fell short.

[00:30:03] Speaker 01:
In response to Mr. Farquhar's point about the proposed labeling that Spectrum submitted for the larger vial sizes, at the time that supplemental NDA was submitted, the only approved

[00:30:16] Speaker 01:
the only approved indication was the methotrexate rescue indication.

[00:30:21] Speaker 01:
So Spectrum included that as well as making clear that the labeling was based on the then pending colorectal cancer supplemental NDA.

[00:30:31] Speaker 01:
That doesn't show any intent by Spectrum to approve the drug for the methotrexate indication.

[00:30:36] Speaker 01:
And lastly, I'd like to reiterate that all statutes must be read in the context of the broader statutory scheme.

[00:30:43] Speaker 01:
Here, 360CC is part of

[00:30:45] Speaker 01:
the FDCA.

[00:30:47] Speaker 01:
And the FDCA is premised on the notion that when manufacturers come to FDA and seek approval for a product, that approval that they're seeking is for the use they intend to put the product to.

[00:30:59] Speaker 01:
When that is not met, what you have is a label that is a mismatch for a product, and that's where there's simply no way that Congress could have

[00:31:08] Speaker 01:
intended unambiguously for FDA to approve labels that are not reflective of an intended use of a product.

[00:31:16] Speaker 01:
Thank you very much, Your Honors.

[00:31:17] Speaker 03:
Thank you all very much.

[00:31:18] Speaker 03:
The case is submitted.