Regulatory Focus™ > News Articles > In Ruling Against KV Pharmaceuticals, FDA's Enforcement Discretion Upheld

In Ruling Against KV Pharmaceuticals, FDA's Enforcement Discretion Upheld

Posted 07 September 2012 | By Alexander Gaffney, RAC 

A lawsuit filed by KV Pharmaceuticals against the US Food and Drug Administration (FDA) was thrown out of court on 6 September 2012 after a judge ruled the company could not challenge activities falling under FDA's enforcement discretion.

KV filed its suit against FDA in July 2012 over FDA's allowance of compounded versions of its anti-premature pregnancy drug Makena (17P / hydroxyprogesterone caproate injection) to remain on the market.

A Long-Running Saga

The long-running saga started in 2011, when FDA approved Makena under an orphan drug designation. While the drug had been used by doctors for years to prevent premature births, KV was the first company to bring Makena through clinical testing. Under the terms of FDA's approval, all other manufacturers would have to take the drug off the market for at least seven years.

In a twist, FDA said in a statement that it would continue to allow small-scale compounders of the drug to continue to make it. KV Pharmaceuticals protested FDA's actions, going as far as to file complaints about the quality of the medicines made by compounders, but the efforts ultimately failed to persuade FDA to reverse its policy.

Out of options-and quickly running out of cash-KV filed a lawsuit against FDA in July 2012, saying the company was facing the prospect of financial ruin due to many hospitals and government agencies opting to pay compounders to make the drug instead of the company. Makena can cost hundreds of dollars per injection, while compounded versions of the drug commonly cost significantly less than $100.

"Unless FDA publicly signals that it will stop the unlawful competition by non-customized compounded drugs … K-V will not be able to attract new capital at a reasonable cost, and is likely to exhaust its working capital within three to six months and be forced to file bankruptcy before then," the company wrote in its lawsuit. "As a result of FDA's Statement, Makena is being, and will continue to be, widely displaced in the market by compounded version of Makena, known as 17P."

At the time, the company told Regulatory Focus that it was requesting that FDA put its existing policies, "Into practice and enforce the law in the best interests of pregnant women."

FDA: Enforcement Discretion Not Reviewable

FDA hit back at the company in a subsequent legal explanation, arguing that the company did not have the authority to force the agency to take enforcement action against a company or companies.

"FDA's decision not to take enforcement action are committed to the agency's discretion under Heckler v. Chaney," argued FDA. Further, FDA stated it did not actually carry out any actions under the enforcement discretion, but merely expressed its intent to do so at a future point in time in its statement.

FDA also said its tests of the compounded versions of Makena found the drugs to be safe and consistent with its quality regulations and guidance.

Judge: FDA's Assessment Correct

In a 6 September 2012 decision authored by DC District Court Judge Amy Berman Jackson, the court agreed with FDA's assessment, concluding KV's complaints, "Challenge FDA's discretionary enforcement activities and therefore assert unreviewable claims."

While Jackson said KV had standing to bring the lawsuit, she found that the Administrative Procedures Act, which KV uses as the basis of its lawsuit, "Precludes judicial review of final agency action, including refusals to act, when review is precluded by statute or 'committed to agency discretion by law.'"

Jackson also agreed with FDA's argument that judicial precedent found in the case Heckler v. Chaney means that, "Agency action is not subject to judicial review because it is committed to agency discretion." In Chaney, the Supreme Court decided that enforcement discretion is immune from judicial review unless specifically expressed in a particular law. As congress made no such expression in this case, KV did not prove that the court had the authority to review its claims against FDA.

"Indeed, in their papers, plaintiffs did not point to any specific language in these statutory provisions that supposedly expressed the legislature's desire to limit the agency's enforcement discretion or that could serve as the guide for a court's review," wrote Jackson. "Moreover, when asked directly at the motions hearing, counsel for plaintiff would not concede the point, but he repeatedly failed to direct the Court to any statutory provision that would satisfy the Chaney test and overcome the presumption."

The case is a further setback for the company, which already filed for bankruptcy protection in August 2012-several months sooner than it expected to run out of cash reserves.

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