When is an Approval Not an Approval? Before 1962.

Priority Review Vouchers (PRV) are incredibly valuable—several have sold for hundreds of millions of dollars.  Which is why it makes sense that Sun Pharma Advanced Research Co. Ltd. and Sun Pharmaceutical Industries, Inc. went to the mat fighting FDA for a PRV for phenobarbital.  And last week, that fight was rewarded by the District Court for the District of Columbia, which found that FDA’s refusal to award a PRV was unlawful under the Administrative Procedure Act based on the definition of the word “approved.”

For the uninitiated, a PRV is a voucher that can be redeemed for Priority Review on a subsequent application.  Use of the voucher therefore reduces the PDUFA goal for a non-Priority Review eligible application from 10 months to 6 months.  A PRV can be awarded for a statutorily-enumerated tropical disease or, relevant here, a rare pediatric disease approved before September 2026 (there used to a Medical Countermeasure PRV, but that has lapsed).  In order to be eligible for a rare pediatric disease PRV, the application must be for the prevention or treatment of a rare pediatric disease, submitted under section 505(b)(1) of the FDC Act, approved between September 30, 2016 and September 30, 2026, based on clinical data from a study evaluating pediatric populations and dosages without an adult indication, and eligible for priority review.   Integral to the issue at hand here, the application also must seek approval for “a drug . . . that contains no active moiety . . . that has been previously approved in any other application under subsection (b)(1), (b)(2), or (j) of section 355 of this title.”

Back to the action: The fight starts in November 2022, when Sun received approval for SEZABY (phenobarbital) to treat neonatal seizures.  But in approving SEZABY, FDA informed Sun that it denied Sun’s request for a rare disease PRV.  FDA denied the PRV on the basis that SEZABY “is not an application for a drug ‘that contains no active moiety . . . that has been previously approved in any other application under subsection (b)(1), (b)(2), or (j) of section 505’ of the FD&C Act.”   FDA pointed to NDA 000597 for phenobarbital and atropine as the basis of denial, noting that the Agency had “identified at least one NDA for a drug product containing phenobarbital as an active moiety that came into effect before 1962 and was deemed approved by the 1962 Amendments.”

Importantly, the phenobarbital NDA referenced by FDA, NDA 000597, was submitted in 1939, when section 505 of the FDC Act provided that an NDA would automatically become effective unless a contrary order were issued; as the Court explained, the NDA “became effective not by any positive agency action but by its inaction.”  In 1962, Congress amended the FDC Act to require affirmative agency approval based on evidence that showed the drug is effective; applications that previously became effective under the Act were “deemed” approved by FDA, allowing them to continue to be marketed unless FDA ordered its removal after two years for lack of efficacy.  In 1972, FDA determined that there was a lack of substantial evidence to support effectiveness of the phenobarbital drug, proposed to withdraw NDA 000597 in 1977, and formally withdrew approval in 1982.

Based on these facts, Sun argued that NDA 000597 was not an application under section 505(b)(1), (b)(2), or (j) of the FDC Act because those provisions did not exist in 1939.  But even if it were an application, Sun argued, the application was not “approved” as Congress contemplated under the plain language of the statute.   The word “approved” requires affirmative review, which did not apply to phenobarbital, as it was automatically approved by FDA inaction and later only “deemed” approved.

FDA, on the other hand, argued that NDA 000597 was an “application under subsection (b)(1)” precisely because it was deemed approved under the 1962 amendments.  And, because it was “deemed” approved, the application is approved, according to FDA.  Thus, since phenobarbital was one of the active moieties in approved NDA 000597, FDA contended that the active moiety had been previously approved by FDA and not entitled to a PRV.

The Court sided with Sun.  Because FDA did not ““sanction officially” phenobarbital, or “confirm [it] authoritatively,” or “accept [it] as satisfactory,” and because it was only “deemed” approved and later withdrawn for lack of efficacy, the Court said, “[i]n no ordinary sense then was NDA 000597 ever ‘approved.’”  By cross-referencing the 1984 Hatch-Waxman Amendments that introduced the modern-day 505(b) and (j) approval pathway, the Court explained that “Congress clearly signaled that any ‘previous approval’ had to have successfully navigated” the modern-day application process.  Finally, the Court found that FDA’s interpretation conflicted with the purpose of the rare pediatric PRV: Congress could not have intended a drug that “was never able to show efficacy and was ultimately pulled from the market to erect an obstacle to future developments in the treatment of rare pediatric diseases.”

This decision is meaningful—both in the context of rare pediatric diseases and beyond.  It opens up grandfathered drugs to be eligible for a very valuable PRV if they are repurposed for a pediatric or tropical disease.  While that is interesting, it is relevant to a very small number of drugs.  Nevertheless, the decision has serious implications beyond the world of PRVs:  effectively, the decision will force FDA to reexamine the definition of a “new” drug in any context in which the active moiety cannot have been previously “approved.”   Specifically, this is important from an NCE context, as FDA previously has interpreted NCE to apply only to drugs that have never been approved, searching its records all the way back to 1938.   Presumably, this leaves FDA’s interpretation vulnerable to challenge, as drugs “approved” between 1938 and 1962 were not necessarily “approved.”   We’re watching to see whether someone—maybe even Sun—takes this to court to obtain an NCE period for a pre-1962 drug.