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Biotechnology Indus. Org. v. District of Columbia

United States Court of Appeals for the Federal Circuit

August 1, 2007, Decided

2006-1593

Opinion

 [***1641]   [*1365]  GAJARSA, Circuit Judge.

This is a pre-enforcement challenge to a statute of the District of Columbia, before this court after transfer from the United States Court of Appeals for the District of Columbia Circuit. Defendants, the District of Columbia and various of its departments and officers (collectively, "the District" or "D.C."), appeal from a judgment of the United States District Court for the District of Columbia declaring the District's Prescription Drug Excessive Pricing Act of 2005, codified at D.C. Code § 28-4551 to 28-4555 ("the Act"), preempted by the federal patent laws and enjoining its enforcement. We affirm the judgment of the district court and the injunction.

I. BACKGROUND

A. The challenged legislation

The D.C. City Council has adopted specific legislation which prohibits any patented drug from being sold in the  [**3] District for an excessive price. The operative section of the Excessive Pricing Act reads:

It shall be unlawful for any drug manufacturer or licensee thereof, excluding a point of sale retail seller, to sell or supply for sale or impose minimum resale requirements for a patented prescription drug that results in the prescription drug being sold in the District for an excessive price.

D.C. Code § 28-4553. The legislation was adopted after the Council determined that:

The excessive prices of prescription drugs in the District of Columbia is threatening the health and welfare of the residents of the District as well as the District government's ability to ensure that all residents receive the health care they need, and these excessive prices directly and indirectly cause economic harm to the District and damage the health and safety of its residents. . . . [I]t is incumbent on the government of the District of Columbia to take action to restrain the excessive prices of prescription drugs.

Id. § 28-4551. The Council's response to that finding was passage of the challenged legislation. Following signature by the Mayor and the expiration of the statutorily prescribed period for Congress  [**4] to review D.C. statutes, see D.C. Code § 1-206.02(c)(1), the Act took effect on December 10, 2005. The statutory term "excessive price" is not specifically defined. The statute states that "[a] prima facie case of excessive pricing shall be established where the wholesale price of a patented prescription drug in the District is over 30% higher than the comparable price in any high income country in which the product is protected by patents or other exclusive marketing rights." Id. § 28-4554(a). If such prima facie excessive pricing is shown, the burden shifts to the defendant to prove:

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496 F.3d 1362 *; 2007 U.S. App. LEXIS 18236 **; 83 U.S.P.Q.2D (BNA) 1639 ***

BIOTECHNOLOGY INDUSTRY ORGANIZATION, Plaintiff-Appellee, and PHARMACEUTICAL RESEARCH AND MANUFACTURERS OF AMERICA, Plaintiff-Appellee, v. DISTRICT OF COLUMBIA, Adrian M. Fenty, MAYOR OF THE DISTRICT OF COLUMBIA, OFFICE OF THE ATTORNEY GENERAL FOR THE DISTRICT OF COLUMBIA, Robert Spagnoletti, ATTORNEY GENERAL OF THE DISTRICT OF COLUMBIA, OFFICE OF DOCUMENTS AND ADMINISTRATIVE ISSUANCES OF THE DISTRICT OF COLUMBIA, Arnold R. Finlayson, ADMINISTRATOR, OFFICE OF DOCUMENTS AND ADMINISTRATIVE ISSUANCES OF THE DISTRICT OF COLUMBIA, Defendants-Appellants.

Subsequent History: Rehearing denied by, Rehearing, en banc, denied by Biotechnology Indus. Org. v. District of Columbia, 505 F.3d 1343, 2007 U.S. App. LEXIS 25351 (Fed. Cir., Oct. 30, 2007)

Prior History:  [**1] Appealed from: United States District Court for the District of Columbia. Judge Richard J. Leon.

Pharm. Research & Mfrs. of Am. v. District of Columbia, 406 F. Supp. 2d 56, 2005 U.S. Dist. LEXIS 37897 (D.D.C., 2005)

Disposition: AFFIRMED.

CORE TERMS

patent, patent law, prescription drug, prices, district court, pharmaceutical, preemption, preempted, excessive price, manufacturers, plaintiffs', federal patent law, innovation, invention, reward, The Act, injunction, regulation, enjoined, necessary element, declaratory, inventors, residents, profits, cases, drugs, well-pleaded

Civil Procedure, Subject Matter Jurisdiction, Jurisdiction Over Actions, General Overview, Constitutional Law, The Judiciary, Jurisdiction, Appeals, Appellate Jurisdiction, Exclusive Jurisdiction, Patent Law, Jurisdiction & Review, Appeals, Declaratory Judgments, Federal Declaratory Judgments, Federal Questions, Well Pleaded Complaint Rule, Supremacy Clause, Federal Preemption, Remedies, Injunctions, Justiciability, Standing, Case or Controversy, Elements, Third Party Standing, Injury in Fact, Antitrust & Trade Law, Regulated Practices, Price Discrimination, Congressional Duties & Powers, District of Columbia & Federal Property, Copyright & Patent Clause, Governments, Police Powers, Consumer Protection