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UNITED STATES v. ARTICLES OF DRUG

August 29, 1980

UNITED STATES of America, Plaintiff,
v.
ARTICLES OF DRUG ... HORMONIN, etc., Defendant



The opinion of the court was delivered by: MEANOR

This action was commenced on March 3, 1980 by the filing of a complaint for forfeiture pursuant to the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq. The complaint alleged that the articles of drug Hormonin No. 1 tablets and Hormonin No. 2 tablets were "new drugs", as defined in 21 U.S.C. § 321(p), which had not received approval for marketing pursuant to 21 U.S.C. § 355(b) and, therefore, could not be introduced into interstate commerce under 21 U.S.C. § 355(a). The drugs in question were seized by the United States Marshal at the Cedar Knolls, New Jersey facility of Carnrick Laboratories, Inc. on March 4, 1980. Carnrick filed a notice of claim to the seized drugs on March 14, 1980. On March 26, 1980, Carnrick filed an answer and counterclaim in which Carnrick denied that Hormonin No. 1 and Hormonin No. 2 were "new drugs" subject to premarketing approval by the FDA, counterclaimed for a declaration to that effect and asserted certain affirmative defenses. *fn1"

Thereafter, Carnrick moved for a preliminary injunction against further seizures of the Hormonin products, requested a remand to the FDA for development of an administrative record and deferral of further enforcement proceedings and sought an order quashing the seizure of the Hormonin products and seeking a return of the seized articles. These motions were heard and denied May 27, 1980. Following an expedited discovery and trial schedule, trial was conducted from July 21 to July 24, 1980. The following constitutes this court's findings of fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure.

 A. FACTUAL BACKGROUND

 Hormonin No. 1 is a fixed combination of three unconjugated estrogens-Estrone, Estriol and Estradiol. *fn2" Each tablet of Hormonin No. 1 contains .70 mg. Estrone, .30 mg. Estradiol and .135 mg. Estriol. Hormonin No. 2 contains the same active ingredients in double dosage, i. e., 1.4 mg. Estrone, .60 mg. Estradiol and .270 mg. Estriol. The labeling of Hormonin No. 1 and Hormonin No. 2 states that the drugs are indicated in the treatment of moderate to severe vasomotor symptoms associated with menopause, atrophic vaginitis, kraurosis vulvae, female castration and primary ovarian failure. The history of the marketing of the Hormonin products is largely undisputed and bears recitation.

 Hormonin No. 1 has been marketed by Carnrick since 1964. On June 2, 1964, J. J. Pisik, then Director of Product Development for Carnrick, wrote Mr. Jules S. Orloff of the "Advisory Opinions Branch" of the FDA. Claimants' Ex. N. Mr. Pisik requested an opinion as to the "new drug" status of the product later denominated Hormonin No. 1. Mr. Orloff responded by letter of June 30, 1964 and stated "(t)his article (Hormonin No. 1) would not require clearance under the new drug procedure with adequate labeling." Claimants' Ex. O. Carnrick began marketing Hormonin No. 2 in 1966. It appears that no such opinion letter was obtained from the FDA relative to Hormonin No. 2.

 In order to place the issuance of the 1964 opinion letter in its proper context, it is necessary to briefly recount the salient events in the somewhat convoluted history of drug regulation by the federal government. That history is detailed in Weinberger v. Hynson, Westcott & Dunning, Inc., 412 U.S. 609, 93 S. Ct. 2469, 37 L. Ed. 2d 207 (1973); Ciba Corp. v. Weinberger, 412 U.S. 640, 93 S. Ct. 2495, 37 L. Ed. 2d 230 (1973); Weinberger v. Bentex Pharmaceuticals, Inc., 412 U.S. 645, 93 S. Ct. 2488, 37 L. Ed. 2d 235 (1973); USV Pharmaceutical Corp. v. Weinberger, 412 U.S. 655, 93 S. Ct. 2498, 37 L. Ed. 2d 244 (1973); United States v. Articles of Drug (Lannett), 585 F.2d 575 (3d Cir. 1978); Hoffmann-LaRoche, Inc. v. Weinberger, 425 F. Supp. 890 (D.D.C.1975).

 In 1962, Congress redefined "new drug", 21 U.S.C. § 321(p)(1), to include drugs not generally recognized as effective as well as safe. FDA was directed to refuse approval of a New Drug Application (NDA) or withdraw prior approval if "substantial evidence", as defined in 21 U.S.C. § 355(d), of effectiveness was lacking. All manufacturers having NDA's for safety effective prior to 1962 were given two years in which to develop such evidence of effectiveness. No NDA would be withdrawn due to lack of effectiveness during that period. Weinberger v. Hynson, Westcott & Dunning, Inc., 412 U.S. at 613-14, 93 S. Ct. at 2475.

 FDA had approved over 9,000 NDAs for safety between 1938 and 1962. Additionally, thousands of drugs had been marketed without premarketing clearance. These "me-too" drugs had been marketed by, in effect, "coattailing" on the NDA of the pioneer drug. Some manufacturers had obtained advisory opinion letters from the FDA stating that its product was generally recognized by qualified experts as safe. Id. at 614, 93 S. Ct. at 2475.

 FDA was unable to complete the task of reviewing all marketed drugs for efficacy within the two year period. Thus, FDA retained the National Academy of Science-National Research Council (NAS-NRC) to study and assess the efficacy of drug products by class. This study, denominated "Drug Efficacy Study", was submitted to the FDA for evaluation and was subject to acceptance or rejection by the FDA. Id. at 614-15, 93 S. Ct. at 2475-76; United States v. Articles of Drug (Lannett), 585 F.2d at 578. Pursuant to the NAS-NRC findings, FDA published its assessment as to whether a drug product was considered effective as required by the amended statute. These assessments are known as "DESI" notices. Id. On January 23, 1968, FDA announced that the DESI notices would be applied to all drugs, including "me-too" drugs. Weinberger v. Hynson, Westcott & Dunning, Inc., 412 U.S. at 615, 93 S. Ct. at 2475; Hoffmann-LaRoche v. Weinberger, 425 F. Supp. at 893. Thereafter, on May 28, 1968 the FDA published a notice in the Federal Register under which "all opinions previously given by the (FDA) to the effect that an article is "not a new drug' (were) ... revoked." 33 Fed.Reg. 7758 (May 28, 1968). See Hoffmann-LaRoche v. Weinberger, 425 F. Supp. at 893. This notice also contained a rather ambiguous provision to the effect that, although all such letters were revoked, not all drugs covered by these letters would "be regarded as new drugs," and the FDA would supply current opinions as to when a drug achieved "old drug" status. 33 Fed.Reg. 7758. *fn3" As pointed out in Hoffmann-LaRoche, supra, by virtue of this notice "in 1968, virtually all human prescription drugs were regarded as new drugs." 425 F. Supp. at 893.

 Dr. S. Rao Kolli, Director of Technical Affairs for Carnrick from 1973 to 1976, testified on deposition that he understood the above notice to have operated as a revocation of the June 30, 1964 opinion letter. Govt. Ex. 1001 at 12. Dr. Kolli also testified that he informed Edmond J. Bergeron, president of Carnrick, that an NDA was necessary for Hormonin No. 1 and Hormonin No. 2. Govt. Ex. 1001 at 12-13. Mr. Bergeron indicated, on deposition, his awareness that such letters had been generally rescinded by the FDA. Govt. Ex. 1101 at 39-40. Mr. Bergeron confirmed, at trial, that he was made aware of this notice, but stated that Dr. Kolli had informed him that the notice did not affect Hormonin. Tr. at 592-93.

 In 1975, studies were published in which an association between the prolonged use of estrogens and an increased risk of endometrial cancer in post-menopausal women was reported. 41 Fed.Reg. 43117 (Sept. 29, 1976). This notice proposed regulations concerning labeling of estrogenic drug products and requiring, inter alia, the inclusion of an insert with each prescription providing information to the patient. The notice covered a large list of "drug entities" including Estradiol, Estriol and Estrone. Id. The regulations were promulgated in final form at 42 Fed.Reg. 37636 (July 22, 1977). *fn4" It appears to be undisputed that Carnrick has complied with these and all other regulations concerning the labeling of estrogenic drug products. See Tr. at 191.

 Carnrick filed a proposed NDA for Hormonin No. 1 and Hormonin No. 2 on August 28, 1978. Claimants' Ex. S. According to Carnrick, the purpose of this filing was to ascertain the FDA's opinion of studies done on Hormonin and what, if any, additional clinical work was needed. Tr. at 594; Govt. Ex. 1001 at 47-48.

 By letter of October 4, 1978, the FDA informed Carnrick that its proposed NDA was "not sufficiently complete to merit a critical medical review." The FDA refused to file the proposed NDA. Govt. Ex. 1112.

 On January 11, 1979, Dean M. Graham, President of D. M. Graham Laboratories, Inc., manufacturer of the Hormonin products for Carnrick received "Regulatory Letter BUF 79-1-J" from the FDA. Claimants' Ex. T. That letter informed Dr. Graham that Hormonin No. 1 and Hormonin No. 2 were "not covered by" an approved NDA or Abbreviated New Drug Application (ANDA). The letter went on to inform Dr. Graham of Compliance Policy Guide 7132c.08 which "sets forth FDA's regulatory policy with regard to marketed new drugs without approved NDAs or ANDAs." *fn5" The "Regulatory Letter" noted that the priorities established in the Compliance Policy Guide did not "preclude taking action against drugs outside of the established priorities" ...


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