CASE DIGEST: Republic v. Drugmaker's Laboratories

 

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.