Republic v. Drugmaker's Laboratories, Inc., G.R. No. 190837, [March 5, 2014]
ISSUE:
May FDA validly issue and implement Circular Nos. 1 and 8,
s. 1997? In resolving this issue, there is a need to determine whether or not
the aforesaid circulars partake of administrative rules and regulations and, as
such, must comply with the requirements of the law for its issuance.
FACTS:
On March 15, 1989, the Department of Health (DOH), thru
then-Secretary Alfredo R.A. Bengzon, issued Administrative Order No. (AO) 67, s.
1989, entitled "Revised Rules and Regulations on Registration of
Pharmaceutical Products." Among others, it required drug manufacturers to
register certain drug and medicine products with the FDA before they may
release the same to the market for sale. In this relation, a satisfactory
bioavailability/bioequivalence (BA/BE) test is needed for a manufacturer to
secure a Certificate of Product Registration for these products. However, the
implementation of the BA/BE testing requirement was put on hold because there
was no local facility capable of conducting the same. The issuance of Circular
No. 1, s. 1997 resumed the FDA's implementation of the BA/BE testing
requirement with the establishment of BA/BE testing facilities in the country.
Thereafter, the FDA issued Circular No. 8, s. 1997 which provided additional
implementation details concerning the BA/BE testing requirement on drug
products.
Respondents manufacture and trade a "multisource
pharmaceutical product" with the generic name of rifampicin branded as
"Refam 200mg/5mL Suspension" (Refam) for the treatment of adults and
children suffering from pulmonary and extra-pulmonary tuberculosis. At the time
of the CPR's issuance, Refam did not undergo BA/BE testing since there was
still no facility capable of conducting BA/BE testing. Sometime in 2001,
respondents applied for and were granted numerous yearly renewals of their CPR
for Refam, which lasted until November 15, 2006, albeit with the condition that
they submit satisfactory BA/BE test results for said drug.
Accordingly, respondents engaged the services of the
University of the Philippines' (Manila) Department of Pharmacology and
Toxicology, College of Medicine to conduct BA/BE testing on Refam, the results
of which were submitted to the FDA. In turn, the FDA sent a letter to
respondents, stating that Refam is "not bioequivalent with the reference
drug." This notwithstanding, the FDA still revalidated respondents' CPR
for Refam 2 more times, effective until November 15, 2008, the second of which
came with a warning that no more further revalidations shall be granted until
respondents submit satisfactory BA/BE test results for Refam.
Instead of submitting satisfactory BA/BE test results for
Refam, respondents filed a petition for prohibition and annulment of Circular
Nos. 1 and 8, s. 1997 before the RTC, alleging that it is the DOH, and not the
FDA, which was granted the authority to issue and implement rules concerning RA
3720. As such, the issuance of the aforesaid circulars and the manner of their
promulgation contravened the law and the Constitution. They further averred
that that the non-renewal of the CPR due to failure to submit satisfactory
BA/BE test results would not only affect Refam, but their other products as
well.
The RTC ruled in favor of respondents, and thereby declared
Circular Nos. 1 and 8, s. 1997 null and void, ordered the issuance of writs of
permanent injunction and prohibition against the FDA in implementing the
aforesaid circulars, and directed the FDA to issue CPRs in favor of respondents'
products.
The RTC held that there is nothing in RA 3720 which granted
either the FDA the authority to issue and implement the subject circulars, or
the Secretary of Health the authority to delegate his powers to the FDA. For
these reasons, it concluded that the issuance of Circular Nos. 1 and 8, s. 1997
constituted an illegal exercise of legislative and administrative powers and,
hence, must be struck down.
RULING:
Administrative agencies may exercise quasi-legislative or
rule-making powers only if there exists a law which delegates these powers to
them. Accordingly, the rules so promulgated must be within the confines of the
granting statute and must involve no discretion as to what the law shall be,
but merely the authority to fix the details in the execution or enforcement of
the policy set out in the law itself, so as to conform with the doctrine of
separation of powers and, as an adjunct, the doctrine of non-delegability of
legislative power.
An administrative regulation may be classified as a legislative
rule, an interpretative rule, or a contingent rule.
Legislative rules are in the nature of subordinate
legislation and designed to implement a primary legislation by providing the
details thereof. They usually implement existing law, imposing general,
extra-statutory obligations pursuant to authority properly delegated by
Congress and effect a change in existing law or policy which affects individual
rights and obligations.
Meanwhile, interpretative rules are intended to interpret,
clarify or explain existing statutory regulations under which the
administrative body operates. Their purpose or objective is merely to construe
the statute being administered and purport to do no more than interpret the
statute. Simply, they try to say what the statute means and refer to no single
person or party in particular but concern all those belonging to the same class
which may be covered by the said rules.
Finally, contingent rules are those issued by an
administrative authority based on the existence of certain facts or things upon
which the enforcement of the law depends.
In general, an administrative regulation needs to comply with the requirements laid down the "Administrative Code of 1987," on prior notice, hearing, and publication in order to be valid and binding, except when the same is merely an interpretative rule. This is because "when an administrative rule is merely interpretative in nature, its applicability needs nothing further than its bare issuance, for it gives no real consequence more than what the law itself has already prescribed. When, on the other hand, the administrative rule goes beyond merely providing for the means that can facilitate or render least cumbersome the implementation of the law but substantially increases the burden of those governed, it behooves the agency to accord at least to those directly affected a chance to be heard, and thereafter to be duly informed, before that new issuance is given the force and effect of law."
In the case at bar, it is undisputed that RA 3720, as
amended by Executive Order No. 175, s. 1987prohibits, inter alia, the
manufacture and sale of pharmaceutical products without obtaining the proper
CPR from the FDA. In this regard, the FDA has been deputized by the same law to
accept applications for registration of pharmaceuticals and, after due course,
grant or reject such applications. To this end, the said law expressly
authorized the Secretary of Health, upon the recommendation of the FDA
Director, to issue rules and regulations that pertain to the registration of
pharmaceutical products.
In accordance with his rule-making power under RA 3720, the
Secretary of Health issued AO 67, s. 1989 in order to provide a comprehensive
set of guidelines covering the registration of pharmaceutical products. AO 67,
s. 1989, required, among others, that certain pharmaceutical products undergo
BA/BE testing prior to the issuance of CPR, contrary to respondents' assertion
that it was Circular Nos. 1 and 8, s. 1997 that required such tests.
A careful scrutiny of the foregoing issuances would reveal
that AO 67, s. 1989 is actually the rule that originally introduced the BA/BE
testing requirement as a component of applications for the issuance of CPRs
covering certain pharmaceutical products. As such, it is considered an
administrative regulation a legislative rule to be exact issued by the
Secretary of Health in consonance with the express authority granted to him by
RA 3720 to implement the statutory mandate that all drugs and devices should
first be registered with the FDA prior to their manufacture and sale.
Considering that neither party contested the validity of its issuance, the
Court deems that AO 67, s. 1989 complied with the requirements of prior
hearing, notice, and publication pursuant to the presumption of regularity
accorded to the government in the exercise of its official duties.
On the other hand, Circular Nos. 1 and 8, s. 1997 cannot be
considered as administrative regulations because they do not: (a) implement a
primary legislation by providing the details thereof; (b) interpret, clarify,
or explain existing statutory regulations under which the FDA operates; and/or
(c) ascertain the existence of certain facts or things upon which the
enforcement of RA 3720 depends. In fact, the only purpose of these circulars is
for the FDA to administer and supervise the implementation of the provisions of
AO 67, s. 1989, including those covering the BA/BE testing requirement,
consistent with and pursuant to RA 3720. Therefore, the FDA has sufficient
authority to issue the said circulars and since they would not affect the
substantive rights of the parties that they seek to govern as they are not,
strictly speaking, administrative regulations in the first place no prior
hearing, consultation, and publication are needed for their validity.
In sum, the Court holds that Circular Nos. 1 and 8, s. 1997
are valid issuances and binding to all concerned parties, including the
respondents in this case.
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