461 F.

2d 223

USV PHARMACEUTICAL CORPORATION, Appellee,

v.
Elliot L. RICHARDSON, Secretary of Health, Education, and
Welfare, and Herbert L. Ley, Jr., Commissioner of
Food and Drugs, Food and Drug
Administration, Appellants.
No. 71-1596.

United States Court of Appeals,

Fourth Circuit.
Argued Dec. 8, 1971.
Decided May 24, 1972.

Howard S. Epstein, Atty., Dept. of Justice (Richard W. McLaren, Asst.

Atty. Gen., Bruce B. Wilson, C. Coleman Bird, and Cheryl S. Karner,
Attys., Dept. of Justice, and Peter Barton Hutt, Asst. Gen. Counsel, Joanne
S. Sisk, Richard S. Silverman, Attys., Food, Drugs, and Environmental
Health Div., Dept. of Health, Education, and Welfare, on brief), for
appellants.
Joel E. Hoffman, Washington, D. C., (Robert L. Wald, Selma M. Levine,
and Wald, Harkrader & Ross, Washington, D. C. on brief), for appellee.
Before WINTER, RUSSELL and FIELD, Circuit Judges.
RUSSELL, Circuit Judge:

Unlike the drug manufacturers in Bentex,1 this plaintiff markets a line of citrus
bioflavonoid drugs,2 of which all but two were covered by NDAs issued at
various times in 1955 and 1956. Like the plaintiffs in Bentex, however, it seeks
by an action for declaratory judgment to secure the benefit of the exemption
available under the "grandfather clause"3 from the enlarged definition of a "new
drug" included in the 1962 Amendments to the Federal Food, Drug, and
Cosmetic Act of 1938. The defendants, who are the Secretary of Health,
Education and Welfare (hereinafter referred to as HEW) and the Commissioner

of the Food and Drug Administration (hereafter referred to as Commissioner),

urge that jurisdiction should be refused on two grounds: 1. Primary jurisdiction
lies with HEW; and 2. Failure to exhaust administrative remedies. They, also,
attack the right of the plaintiff to claim the exemption. The District Court
sustained jurisdiction and, largely on the basis of a Stipulation of Facts, upheld
plaintiff's right to the statutory exemption both for its NDA'd and its nonNDA'd
drugs. We reverse.
2

The threshold question raised by the defendants and overruled by the District
Court may be quickly disposed of. Under similar circumstances in Bentex, we
sustained the right of the District Court to entertain an action for declaratory
judgment. We reach the same result here. Since we dismiss the claim of the
plaintiff for exemption on behalf of its drugs on substantive grounds, it is
unnecessary to consider the additional objection that plaintiff has failed to
exhaust administrative remedies.

The substantive issue posed by this action is the right of the plaintiff to the
exemption provided by section 107 (c) (4) from the revised definition of "new
drug" incorporated in the 1962 Amendments. In resolving that issue, we must
differentiate, even as the "grandfather clause" itself does, between the plaintiff's
drugs, which were covered by an "effective NDA",4 and those, which were
marketed without an NDA. The Act makes a distinction in "grandfather" rights
between a drug marketed under an NDA5 and one marketed without an N DA.
In the case of a drug covered by a previously approved NDA, the 1962
Amendments required the Secretary to withdraw the approved NDAs if after
notice and opportunity of hearing, the applicant failed to file substantial
evidence,6 that the drug previously approved is both safe and effective. 7 For
such drugs, however, a grace period or temporary "grandfather right" was
granted. Under it, the manufacturer was given two years within which to
develop his showing of effectiveness and, during this period, the Secretary was
prohibited from withdrawing or suspending the previously granted NDA.8 On
the other hand, a non-NDA'd drug which met the criteria stated in section
107(c) (4) was exempted permanently from the amended definition of "new
drug" made by the 1962 Amendments and was thereby relieved of securing an
approved NDA as a condition for marketing clearance. The statutory criteria for
this permanent "grandfather" exemption are stated as "any drug which, on the
day immediately preceding the enactment date, (A) was commercially used or
sold in the United States, (B) was not a new drug as defined in section 201(p) of
the basic Act as then in force, and (C) was not covered by an effective
application under section 505 of that Act".

It is the contention of the plaintiff that all its drugs in question, both those

previously NDA'd and those not, are protected by the permanent "grandfather
clause" (i. e., Section 107(c) (4)). Because the statute seemingly makes a
distinction between the two, it is proper to consider separately the two groups
of drugs: i. e., those having NDAs and those without NDAs.
5

Taking up first plaintiff's NDA'd drugs: There is no dispute that such drugs met
criteria (A) and (B), as set forth in the "grandfather clause", but the defendants
seriously dispute the claim that they meet condition (C). Facially at least, this
contention of the defendants seems unanswerable. These drugs are "covered by
an effective application" or NDA, and are thus specifically barred by condition
(C) from qualifying for exemption from the application of the effectiveness
Amendments of 1962. The District Court found, however, that before "the day
immediately preceding the enactment date", which was October 9, 1962, the
previously granted NDAs had been effectively and practically withdrawn and
that accordingly the drugs were not covered by an effective NDA on the crucial
date of October 9, 1962. The error in this reasoning, however, is that it assumes
that a manufacturer may effect a withdrawal of an effective NDA, either by a
formal notice or by discontinuing compliance with the reporting requirements
for NDA'd drugs. While an applicant may, during the pendency of his
application, withdraw his application, he has no such right after approval of the
application by the Secretary. At that point only the Secretary can withdraw the
approval. As one commentator has accurately summed up, "It is true that a
manufacturer may withdraw a pending NDA. Sec. 21 C.F.R. sec. 130.8 (1971).
However, no provision in the law permits a manufacturer to withdraw an
effective NDA; only the FDA can do so through Section 505(e) procedure".9
Prior to October 9, 1962, there was in this case no proceeding by FDA under
Section 505(e) with reference to plaintiff's NDA'd drugs and there was
accordingly no valid withdrawal of the plaintiff's effective NDAs, on or before
the enactment date of the 1962 Amendments.

The plaintiff, though, presses another theory upon the basis of which it claims
the previously issued NDAs are to be regarded as ineffective on October 9,
1962. Thus it argues that its pre-1962 NDA'd drugs became generally
recognized as safe on or before October 9, 1962. So much the defendants seem
to concede in the Stipulation of Facts submitted to the District Court. From this
fact, it reasons that its NDA drugs ceased to be "new drugs" as defined in the
Act, on or before October 9, 1962, and, ergo, its previously issued NDAs were
no longer needed or "effective" on the critical date of October 9.10 The
difficulty with this argument, plausible though it may be, is that it would make
surplusage of requirement (C) in the exemption statute. Thus, if a drug met the
test set up in (B), that is, was generally recognized as safe on October 9, 1962,
it would not be necessary, under the plaintiff's argument, to consider whether

(C) was applicable or not. Such a construction of the exemption statute, under
which a clearly stated condition to its application is to be treated as a nullity,
offends the well-settled rule of statutory construction that all parts of a statute
are to be given effect if at all possible.11 It is manifestly possible to give effect
to the conditions enunciated in both (B) and (C). There are many drugs that
satisfy both conditions, that is, are generally recognized as safe and effective
and are being marketed without an approved NDA. There is nothing
inconsistent in the two requirements. Moreover, condition (C) represented a
limitation on the right to an exemption that the Congress clearly and
unmistakably intended to apply. The Congress never intended that a drug being
marketed under an approved NDA might qualify under the "grandfather
clause." This is plain from the comment in the Conference Committee Report
that the exemption was to apply "to existing labeling claims of drugs that have
never previously been subject to the new-drug procedure". (Italics added.)
Conference Rep. 2526, 87th Cong., 2d Sess., p. 23. Moreover, the argument of
the plaintiff would run counter to the principle that statutory exemptions,
particularly as applied to statutes concerned with public health and safety, are to
be strictly and narrowly construed.12
7

The plaintiff has, however, two drugs, 13 involved in this proceeding, which
were generally recognized as safe and were14 marketed as "old drugs" without
an approved NDA on October 9, 1962. These drugs, as we earlier indicated,
present separate problems from those drugs for which there are approved
NDAs. They fall into the category of what are generally described in the trade
as "me-too" drugs.15 Such a drug, if generally regarded as safe on October 9,
1962, meets literally the criteria for exemption stated in the "grandfather
clause". To sustain the exemption, however, creates an inequitable result,
provided the pioneer drug was NDA'd. In that event, the pioneer drug would be
subject to withdrawal of marketing privilege absent substantial evidence of
effectiveness, whereas its copy would enjoy immunity from any such
requirement under Section 107(c) (4). Most commentators, while admitting the
incongruity of this result, justify it as one compelled by the literal language of
the statute.16 Their reasoning is similar to that of the Court in Pfizer, Inc. v.
Richardson (2d Cir. 1970) 434 F.2d 536, 542, where speaking to a somewhat
illogical provision in this same Act, Judge Friendly said: "A sufficient answer is
the simple if not altogether satisfying one that Congress said so." 17 The FDA
itself has recognized the vexing problem presented by the "me-too" drugs and
has sought to resolve it by a change in its position on the scope and application
of an NDA.

It is the contention of the FDA that an approved NDA covers not merely the
marketing of the parent but also its "me-too" offsprings and for that reason the

"me-too" drugs have been permitted to be marketed without an NDA.

Accordingly, under this theory, the withdrawal of the approved NDA of the
pioneer operates as a withdrawal of marketing rights for the "me-too", unless
the latter, either individually or in conjunction with its pioneer, provides
substantial evidence of effectiveness. This view has, however, been severely
criticized and with considerable reason. It is, as one critic has observed, "at
variance with the uniform position it (FDA) has taken over the years with
regard to the nature of NDAs." This position, which is termed the "personal
approach" holds that "Section 505 applies to drugs as individual articles, not as
collective groups, and that each manufacturer of a new drug must file his own
NDA." This critic concludes with the observation that it is "an unjustifiable
exercise in semantics to say that a drug legally marketed without an NDA was
'covered' by the NDA of another manufacturer's drug."18
9

That the policy of FDA has heretofore been contrary to the position now taken
by it is further illustrated by the circumstances under which at least one of the
"me-toos" of the plaintiff began marketing. Prior to marketing Bivam, one of its
"me-toos" similar in formula to other drugs previously NDA'd by it, the
plaintiff inquired of FDA whether it was an "old drug" entitled to be marketed
without an NDA. FDA, after reviewing its composition and labeling, advised
the plaintiff it was a product "generally regarded as safe" (and thus an "old
drug") and could be marketed without an NDA. There was no suggestion by the
plaintiff that it sought to market this drug under any previous N DA granted one
of its products nor did the FDA base its advice on that basis. Both the plaintiff
and FDA assumed at that time that a "me-too"' drug, which had become
generally recognized as safe, was entitled to be marketed without an NDA; in
short, that the qualification for marketing a "me-too" drug was general
recognition of safety and not the NDA of its pioneer.

10

It would seem that the consistent construction of the Act by the FDA for thirty
years19 and a construction which accords with the literal language of the Act
itself may only be changed by Congress itself.20 In fact, the General Counsel of
FDA, in testimony before a House Subcommittee Hearing on Drug Efficacy,
Part 2 (91st Cong., 1st Sess., 1969) p. 375, expressed the wish that Congress
would "pass" a clarifying amendment on this issue, conceding that the position
of his agency was in considerable doubt.

11

But even if it be assumed that "me-too" drugs are generally entitled to section
107(c) (4) protection, provided they were generally recognized as safe on
October 9, 1962, that does not resolve the right of the plaintiff's "me-toos" to
exemption. As has been pointed out, the reasoning on which "me-toos" are
regarded as not covered by the NDAs granted the manufacturers of their

pioneers is that an NDA is regarded as "personal" to the manufacturer

submitting the application and to the drug covered. But in this case, the "metoos" are similar in formula and labeling to other drugs for which the plaintiff
itself applied and obtained NDAs. It is true that, in the case of one drug at least,
to which reference has already been made, plaintiff's "me-toos" were regarded
as exempt, not because plaintiff had an approved NDA for a similar drug, but
because FDA was of the opinion that it met the requirements for classification
as an old drug. Nonetheless, it is the "personal" character of the NDA that has
been deemed as the basis on which it is contended that the "me-toos" are not
covered by the NDA granted another manufacturer, albeit the drugs involved
may be similar. That reasoning manifestly cannot sustain a right of exemption
in favor of plaintiff's "me-toos". The plaintiff's NDAs, being "personal" to it,
would cover all its products similar in formula, including those specifically
described in its applications and all others like in formula. The similarity in
formula, between plaintiff's NDA'd drugs and its "me-toos" is stipulated. Under
those circumstances, both the NDA'd and the "me-too" drugs will be treated
alike and neither can qualify for exemption under the terms of section 107(c)
(4). It is recognized that this conclusion places the plaintiff in a less favorable
position than that occupied by others who may have copied its product prior to
October 9, 1962. That inequity is, however, inherent in the law and may only be
redressed by Congress, not by the Courts under the guise of construction.
12

Reversed, with directions to enter judgment for the defendants.

13

Reversed.

Bentex Pharmaceuticals, Inc. v. Richardson, 463 F.2d 363 (4th Cir., 1971)

"Bioflavonoid" is defined in Dorland's Illustrated Medical Dictionary, 2d

Edition, as follows: "a generic term for a group of compounds which are widely
distributed in plants and animals and which are concerned with maintenance of
a normal state of the walls of small blood vessels." Stipulation of Facts, #4

Section 107(c) (4), Pub.L. 87-781 (1962), 21 U.S.C., 1972 Supplement, pp.
191-2

"Effective", as used in this phrase, means simply approved. Hagan, Grandfather

Protection Under the Drug Amendments of 1962, 19 Food Drug Cosm.L.J.,
119, p. 121

This is the term used to describe an approved preclearance application under

Section 355
6
7

"Substantial evidence" is defined in the Act (21 U.S.C. Sec. 355(d))

Section 355(e), 21 U.S.C

Section 107(c) (3) (B), 21 U.S.C., note foll. Section 321

Note, Drug Efficacy and the 1962 Drug Amendments, 60 Georgetown L.

Journal, 185 at p. 198, n. 77 (1971)

10

See Barth, Following the NAS-NRC Effectiveness Review, What?, 22

Business Lawyer, 1185, 1187 (1967)

11

Jarecki v. G. D. Searle & Co. (1961) 367 U.S. 303, 307, 81 S.Ct. 1579, 6 L.Ed.
2d 859; Ginsberg & Sons v. Popkin (1932) 285 U.S. 204, 208, 52 S.Ct. 322, 76
L.Ed. 704

12

United States v. Allan Drug Corporation (10th Cir. 1966) 357 F.2d 713, 718,
cert. denied 385 U.S. 899, 87 S.Ct. 203, 17 L.Ed.2d 131

13

Duo-C.V.P. with Vitamin K Capsules and Bivam

14

Stipulation of Facts, Number 17

15

A "me-too" drug is generally defined as "one which is equivalent to another,

pioneer drug, which preceded it on the market." Note, Drug Efficacy and the
1962 Drug Amendments, 60 Georgetown L. Journal, 185, at p. 198, n. 78
(1971)

16

See, Note, Drug Efficacy and the 1962 Drug Amendments, 60 Georgetown L.
Journal, 185, at p. 203 (1971):
"Surely, me-too drugs never processed through the new drug procedures satisfy
all the requirements of section 107 (c) (4)."
To the same effect is Hagan, Grandfather Protection Under the Drug
Amendments of 1962, 19 Food Drug Cosm.L.J., 119, at pp. 125-6; D'Andrade,
The Effect of NAS-NRC Review on Me-Too and Post-'62 Drugs, 25 Food,
Drug, Cosm.L.J., 330, 334 (1970).

17

This, of course, is not the only inequity in the Amendments. There are other
inequities, as FDA freely conceded at a House Hearing before a Subcommittee
of the Commission on Government Operations on Drug Efficacy, Part 2, 91st
Cong., 1st Sess. (1969), pp. 384-5

18

Note, Drug Efficacy and the 1962 Drug Amendments, 60 Georgetown L.

Journal, 185, at p. 203, n. 111 (1971)

19

See, Hagan, supra, at p. 125:

"Furthermore, the concept that new drug clearance by one manufacturer affects
the rights of subsequent manufacturers is inconsistent with the established
doctrine that new drug clearance is personal to the applicant, and does not
embrace the drug per se."

20

Cf., comment in Note, Drug Efficacy and the 1962 Drug Amendments, 60
Georgetown L. Journal 185, at pp. 206-7 (1971):
"Ultimately the issue of the status of me-too drugs will have to be squarely
faced, and the FDA interpretation of section 107(c) (4), holding that they
follow the pioneer's fate, should be repudiated by the courts. In that event the
agency will undoubtedly ask Congress for new legislation to remedy the
situation. In view of the obvious inequities in the present situation, this would
seem to be the most desirable solution."