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Executive Summary

A recent Drug Enforcement Administration administrative law judge ruling involving Houba and MD Pharmaceutical partially shifts the burden of proof to applicants seeking DEA registration to prove that they meet applicable regulatory requirements in the face of a challenge brought by another firm. In a May 5 opinion, Administrative Law Judge Mary Ellen Bittner recommended that DEA grant registration of Houba as the second manufacturer of generic bulk methylphenidate (Ciba-Geigy's Ritalin). The hearings were held at the request of Santa Ana, Calif.-based MD Pharmaceutical, the only currently DEA-registered generic maker of methylphenidate. Houba is required to be registered with the DEA before it can produce methylphenidate to conduct studies required for ANDA approval by FDA. Ciba-Geigy did not participate in the hearing. Judge Bittner noted that the dispute constituted "the first case since 1985" in which a manufacturer's application was subject to a hearing requested by another manufacturer. The opinion overturns a precedent established by the 1985 case, McNeilab, by deeming that Houba had the burden of proving that it satisfied the regulatory requirements for registration with DEA. The opinion cites regulations that stipulate "the applicant for a registration" with DEA must prove it can meet requirements for registration, while other hearing participants must prove "any propositions of fact or law" they assert during the hearing. Relying on the McNeilab precedent, Houba had argued "that an objector who requests a hearing has the burden to show by a preponderance of the evidence why the application should not be granted," the opinion states. Bittner concluded that "McNeilab wrongly allocated the burden of proof" in the 1985 hearing and recommended that DEA "overrule McNeilab's holding on this issue." She determined that Houba was required to prove that it had met the agency's registration requirements. The opinion argues that such a policy "promotes judicial economy by avoiding multiple hearings," whether arising from the objection of a third party or a show-cause order from DEA, when the agency is likely to deny an application. Although Houba obtained a recommendation for DEA registration as a result of the hearing, MD's request for a hearing to challenge Houba's application effectively has delayed development of another generic methylphenidate by at least two years. Houba plans to manufacture bulk methylphenidate for sale to its parent company Halsey, which will produce finished dosage forms. Houba applied for DEA registration as a manufacturer of bulk methylphenidate on March 1, 1991. The agency published a notice of the application on May 28 in the Federal Register, and on June 18 MD Pharmaceutical requested a hearing. Three days of hearings were held in February and March of 1992. DEA is expected to act on Houba's application later this year; if it is approved, the company must obtain a quota from DEA before beginning studies to support an ANDA submission. The administrative law judge decided that DEA's consideration of the registration application should not be affected adversely by the past regulatory problems experienced by Halsey. The Brooklyn, N.Y. generic firm is under investigation by the Justice Department ("The Pink Sheet" April 5, In Brief). In recommending that DEA register Houba as a manufacturer of bulk methylphenidate, the judge stated "there is no evidence that either Houba or Halsey has failed to comply with applicable state and local law." The opinion adds that Houba "met its burden of showing that it has implemented adequate controls against [potential] diversion." FDA issued a regulatory letter in 1988 to Houba regarding "false claims for a product," and inspections found Houba to have GMP deviations in 1990 and "some problems with validation procedures in 1991," Bittner noted.

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