The opinion of the court was delivered by: PIERCE
The plaintiffs herein, manufacturers and distributors of the prescription drug Alevaire, seek to enjoin the defendants from proceeding to withdraw approval of the New Drug Applications (NDA's) now in effect for Alevaire. Oral argument was heard on this matter on October 10, 1974 at which time the application was consolidated with trial on the merits pursuant to Rule 65 of the Fed.R.Civ.P.
Plaintiffs Sterling Drug, Inc. and Winthrop Products, Inc., a subsidiary of Sterling, are Delaware corporations and the holders of the NDA's. Plaintiff Breon Laboratories, Inc., also a subsidiary of Sterling, is a New York corporation responsible for the marketing of the drug in the United States. Defendants Weinberger and Schmidt are the Secretary of Health, Education and Welfare and the Commissioner of the Food and Drugs Administration (FDA), respectively.
The general background of this litigation is not in dispute. Alevaire is an aerosol prescription drug composed of 0.125% tyloxapol, 2% sodium bicarbonate, 5% glycerine and 92.875% water. It is administered to patients with obstructive lung conditions to aid in the evacuation of broncho-pulmonary secretions. It appears that NDA's for Alevaire were approved by the FDA in 1952. At that time under the controlling statute, that is, the Federal Food, Drug and Cosmetic Act of 1938, 21 U.S.C. § 301 et seq., only the safety factor was considered. In 1962 the Act was amended to allow the FDA to remove from the market drugs with approved NDA's if substantial evidence was lacking that the drug was effective for its intended use. To comply with this legislative mandate, the FDA retained the National Academy of Sciences-National Research Council (NAS-NRC) to review the effectiveness of each drug which had been approved up until then. Such a study was undertaken of Alevaire and the NAS-NRC concluded that the drug was ineffective for its intended use. By notice published in the Federal Register of July 17, 1968 (33 Fed. Reg. 10227) the FDA announced that it concurred with this evaluation.
Pursuant to 21 U.S.C. § 355(e) the FDA published on December 6, 1969 a "Notice of Opportunity for Hearing" in the Federal Register indicating its intention to withdraw its approval of the drug. Apparently it based its conclusion that the drug was ineffective primarily on the criticism of the NAS-NRC that Alevaire was no more effective than water. To refute this finding and to support their request for a hearing
the plaintiffs submitted two studies -- the Miller-Paez Study and the Cohen Study. The former study compared the drug with water and saline and the latter compared it with water alone. Both studies concluded that Alevaire was an effective muco-evacuant.
On August 27, 1971 the FDA found that these studies were not "adequate and well controlled" within the meaning of 21 C.F.R. § 130.12(a)(5)(ii) (1973) and accordingly denied the request for a hearing. Simultaneously the FDA withdrew its approval of the drug. Thereafter the plaintiffs appealed to the court of appeals pursuant to 21 U.S.C. § 355(h). While the appeal was pending in the Second Circuit, the FDA terminated its August 27 order and moved in the court of appeals to remand the case to the FDA for further administrative action. The motion to remand was granted on January 11, 1972.
On March 2, 1973 the FDA issued a second order again denying the request for a hearing and withdrawing approval of the drug on the ground that the Miller-Paez and Cohen Studies were not "adequate and well-controlled". This time, however, the FDA indicated that water was not the proper "control" with which to compare the effectiveness of Alevaire. Instead, the proper "control" was said to be Alevaire minus tyloxapol, that is, Alevaire's vehicle solution of 2% sodium bicarbonate, 5% glycerine and 93% water.
The plaintiffs then petitioned the FDA to reconsider its March 2 order and also appealed to the Second Circuit seeking to have the order set aside. On June 14, 1973 the FDA terminated the March 2 order and reinstated approval of the NDA's for Alevaire. It also moved to dismiss the appeal from the March 2 order.
While a decision on its motion before the court of appeals was pending the FDA on August 7, 1973 again issued another order denying the petition for a hearing and again withdrawing approval of the drug. However, this time the FDA claimed that Alevaire was a "fixed-combination" drug within the meaning of 21 C.F.R. § 3.86 (1974). Accordingly, the FDA maintained that, in order to support the effectiveness of the drug, studies had to be made assessing the contribution each of the three components of Alevaire made to the claimed effectiveness of the drug. Since the Miller-Paez and Cohen Studies were not addressed to this theory, they were rejected as irrelevant. The plaintiffs again appealed to the Second Circuit seeking to set aside the August 7 order.
The appeals from the March 2 and August 7 orders were consolidated (after the FDA's motion to dismiss the appeal from the March 2 order had been denied) and on May 2, 1974 the Second Circuit rendered its decision. It dismissed the appeal from the March 2 order as moot and it set aside the August 7 order because the plaintiffs had not been initially notified of the grounds on which the approval of the NDA's was ultimately withdrawn by that order. Accordingly, the Court reinstated approval of Alevaire.
On August 13, 1974 the FDA published in the Federal Register a new "Notice of Opportunity for a Hearing" indicating its intention to withdraw approval of the drug on two alternative theories: (1) treating Alevaire as a single entity drug the FDA maintained that it had to be compared with its own vehicle, that is, Alevaire minus tyloxapol; (2) treating Alevaire as a fixed combination drug, the FDA contended that Alevaire's effectiveness had to be tested by comparing the effectiveness of each of its components. The plaintiffs were given until September 12, 1974 to file a notice of appearance and request for a hearing and until October 14, 1974 to furnish the FDA with the necessary information supporting the request for a hearing. On August 15, 1974 the plaintiffs sought to have their time extended but this request was denied. On September 10, 1974 the plaintiffs requested a hearing on this matter; however the data to support this request has not yet been provided to FDA.
On September 30, 1974 plaintiffs filed the complaint herein and the application for a preliminary injunction was brought on by an order to show cause dated October 1, 1974. As noted the application was consolidated with trial on the merits and oral argument was held on October 10, 1974. The parties incorporated all the documents submitted to the Court as part of the record in the case.
The plaintiffs attack the legality of the administrative proceedings on two main grounds. First, they allege that the defendants are barred by the doctrines of res judicata or collateral estoppel from maintaining that the effectiveness of Alevaire can only be demonstrated by comparing it to its vehicle. In their view, the May 2, 1974 Second Circuit decision rejected the validity of this contention and accordingly the defendants may not again proceed against plaintiffs on the basis that the proper "control" with which to compare Alevaire is Alevaire minus tyloxapol. Alternatively, the plaintiffs claim that the defendants may not now proceed on this theory since they explicitly abandoned it in briefs submitted to and oral argument before the ...