As we previously reported, K-V Pharmaceutical and its THER-Rx subsidiary (“KV”) sued the FDA in an effort to compel the agency to enforce KV’s market exclusivity for its drug, Makena®. At the center of the case, was the FDA’s decision to allow pharmacies to continue to offer a compounded version of the drug to patients. Shortly after filing the suit, KV filed for protection under Chapter 11 of the Bankruptcy Code.

Last week, the U.S. District Court for the District of Columbia dismissed KV’s suit against the FDA concluding that KV’s “requests that the court order ‘sufficient’ enforcement action to restore plaintiffs’ competitive advantage and that it monitor FDA’s activities by requiring regular reports demonstrate that they are asking the court to get right smack in the middle of agency operations.” See Sep. 6, 2012 Opinion.

FDA Immune from Judicial Review

The Court ruled that KV’s case was controlled by Heckler v. Chaney in which the Supreme Court held that an agency’s decision not to take action “is presumed to be immune from judicial review” unless Congress has both expressed the intent to limit the agency’s enforcement discretion and set forth meaningful standards defining those limits. 470 U.S. at 834–35. According to U.S. District Judge Amy Berman Jackson, “In this case, Congress has done neither.”

The Court also rejected KV’s assertion that its claims fell within a narrow exception to Chaney that allows a plaintiff to challenge an agency’s general policy concerning enforcement. Judge Jackson held that the FDA’s March 2011 statement setting forth its intention not to take action against pharmacies that compound the drug based on a valid prescription for a particular patient was not a broad statement of general enforcement policy.

Hologic’s Interests in Makena

In a related development, KV creditor Hologic Inc. has asked the New York court overseeing the KV bankruptcy to lift the automatic stay so Hologic can immediately exercise of its rights and remedies as the fist-lien holder with respect to the Makena assets. See Hologic Motion.

Holigic claims that KV’s “continuing missteps and its impaired relationships with the [FDA], the Centers for Medicare and Medicaid Services, state Medicaid agencies and the medical community” is likely to cause the value of Hologic’s interests in the Makena collateral to continue to shrink.

Hologic developed and sold Makena to KV in 2008. According to Hologic’s motion, KV owes Hologic $95 million from the sale.

Cases: K-V Pharmaceutical Company and THER-Rx Corp. vs. U.S. Food and Drug Administration, et al., Case No. 1:12-cv-01105-ABJ (D. C.); In re K-V Discovery Solutions, Inc., et al., Case No. 12-13346 (Bankr. S.D. N.Y.)

This article was prepared by Saul Perloff ( / 210 270 7166) and Bob Rouder ( / 512 536 2491) both of Fulbright’s False Advertising Practice.