Cody/Lannett Unapproved Morphine Sulfate Litigation Gets New Legs; But FDA Motion to Dismiss Tries to Pull the Rug Out From Under Them

September 6, 2010

By Kurt R. Karst –   

The dispute between Cody Laboratories, Inc. and Lannett Co., Inc. (collectively “Cody/Lannett”) and FDA over marketed unapproved Morphine Sulfate Solution Immediate-Release 20mg/mL drug products did not end with the July 26, 2010 decision from the U.S. District Court for the District of Wyoming, in which the court denied Cody/Lannett’s Motion for Temporary Restraining Order and Preliminary Injunction requesting that the court enjoin FDA from taking any enforcement action with respect to their marketed unapproved Morphine Sulfate drug products.  Since then, Cody/Lannett filed, FDA opposed, and the court granted, a Motion for Clarification, Amendment, or Reconsideration of Order  raising certain jurisdictional issues.  FDA promptly filed a Motion to Dismiss – and a Proposed Order – arguing for dismissal for lack of jurisdiction or failure to state a claim (or both).

As we previously reported (here and here), the Cody/Lannett lawsuit stems from FDA’s March 2009 Warning Letters to Cody and Lannett (among other companies) to stop manufacturing certain unapproved narcotic drugs, including morphine sulfate oral solutions.  At that time, FDA concluded that marketed unapproved morphine sulfate products are “new drugs [under the FDCA] and not grandfathered and that manufacturing and marketing of these products without an approved application constituted a violation of the Act.”  In subsequent communications with Cody/Lannett, FDA stated that the Agency would exercise enforcement discretion with regard to the shipment and distribution of Cody’s/Lannett’s unapproved Morphine Sulfate Solution Immediate-Release 20mg/mL drug products until July 24, 2010, which is 180 days after FDA approved an NDA for the drug product.  Meanwhile, Lannett submitted its own NDA to FDA for Morphine Sulfate Solution Immediate-Release 20mg/mL in late February 2010.  That NDA is still under review and FDA has not taken any further enforcement action against Cody/Lannett. 

Cody/Lannett’s latest motion does not seek to re-litigate any issue the court decided on in ruling on the TRO/PI Motion.  “Rather, Cody/Lannett seek a clarification as to whether the Court did in fact intend to dismiss the Complaint itself, sua sponte.”  According to Cody/Lannett:

If the Court did in fact intend by its Order to dismiss the case sua sponte, it is not clear to Cody/Lannett from the Order whether the basis (or bases, if alternative grounds exist) for such dismissal was jurisdictional, justiciability, failure to state a claim, or some other grounds.  If the Court in fact intended to dismiss the case, this clarification would be necessary in order for Cody/Lannett to evaluate its options moving forwarding, including whether to file an amended Complaint or to appeal a final judgment. . . .

In addition, Cody/Lannett wish to clarify whether the Court intended by its Order to rule on some of the ultimate issues in the case without discovery or briefing.  This is particularly significant with respect to certain of the Court’s statements in the Order regarding whether Cody/Lannett’s product is a “new drug” for purposes of the Food, Drug, and Cosmetic Act of 1938.  As the grandfathering provisions of the law have been rarely litigated, Cody/Lannett would certainly seek the opportunity to be heard on the substance of its contention that its drug is not a “new drug,” a question about which there was only limited discussion during the July 23, 2010 hearing on the Motion for TRO/PI.

Citing our FDA Law Blog post of July 26, 2010, in which we commented that FDA will likely use the court’s decision (which the Agency submitted to the court as a proposed order) as “Exhibit A” if any company expresses its intent to challenge FDA in court over the Agency’s Unapproved Drugs Initiative enforcement plans, Cody/Lannett also note that:

The Court’s clarification is important not only for this case so that Cody/Lannett may proceed appropriately, but for the Food and Drug industry as well, as the Court’s Order has already been publicized and, to the extent it addresses the merits of the underlying issues (rather than the temporary and preliminary injunctive relief standard), will likely be viewed as breaking new legal ground.  As such, if the Order is not clarified and amended, Cody/Lannett expect that the Order will be frequently cited as some of the only legal authority in this area of law, and it may be regularly relied upon by the FDA as providing legal support for highly controversial positions taken by the agency.

Echoing some of the same arguments FDA previously put forth in this case, the Agency’s  Motion to Dismiss (and Proposed Order) argues that the case should be dismissed for lack of jurisdiction.

The Court lacks jurisdiction for several reasons.  Principal among these is that plaintiffs seek to enjoin a hypothetical enforcement action.  At this point, FDA personnel have done no more than issue warning letters to plaintiffs, and FDA staff has had discussions with plaintiffs about the issues raised in those letters.  Such warning letters and informal discussions do not constitute final agency action that is ripe for judicial review. . . .  If parties could challenge these actions, it would severely hinder FDA in performing its statutory duty to protect the public health and would flood the courts with premature requests for advisory opinions.  Moreover, the Supreme Court long ago established that courts lack jurisdiction to enjoin FDA’s enforcement proceedings under FDCA, the very relief plaintiffs seek here.  See Ewing v. Mytinger & Casselberry, Inc., 339 U.S. 594 (1950).

This Court has no jurisdiction to review unripe, nonfinal agency action or to enjoin a hypothetical enforcement proceeding. The case can be dismissed any of these reasons, or because plaintiffs failed to avail themselves of an administrative procedure available to them that must, under FDA regulations, be used before a complaint may be filed in court.

And even if jurisdiction exists, FDA argues that the case should be dismissed for failure to state a claim:

[P]laintiffs have failed to state a claim on which relief can be granted.  Plaintiffs contend that their drug is not a “new drug” within the meaning of the FDCA because it has “grandfather” status under the Act.  In order for a drug to be “grandfathered,” however, the labeling and composition of the drug in question must be the same as it was before 1938.  Plaintiffs concede that they only began marketing their drug five years ago, and they do not provide any pre-1938 labeling for their product or even make any allegations about the pre-1938 labeling for their product.  Nor do they assert that the composition of their product is the same as it was prior to 1938. . . .  Based on their allegations, it is impossible for plaintiffs’ product to be “grandfathered.”  In fact, if plaintiffs’ argument were accepted, then anyone could market a drug that contains an active ingredient that was on the market prior to 1938, claim that it is “grandfathered,” and thus avoid FDA approval.  This is an absurd – and potentially dangerous – argument.  Nor was FDA required to compile a “record” of this nonfinal agency action. [(citation omitted)]

Cody/Lannett’s response to FDA’s Motion to Dismiss is due by September 14th.  A hearing is scheduled for October 8th in Cheyenne, Wyoming.