June 2004 Bulletin 04-50 If you have questions or would like additional information on the material covered in this Bulletin, please contact one of the authors: Mark R. Shanks 202.414.9201 mshanks@reedsmith.com Toni-Junell Herbert 202.414.9203 therbert@reedsmith.com David J. Bloch 202.414.9209 dbloch@reedsmith.com Patricia A. Johnson 202.414.9333 pjohnson@reedsmith.com or the Reed Smith attorney with whom you regularly work This bulletin is presented for informational purposes and is not intended to constitute legal advice. Reed Smith LLP 2004. All Rights Reserved. Reed Smith refers to Reed Smith LLP, a limited liability partnership formed in the state of Delaware. An ANDA Update Since enactment in 1984 of the Hatch-Waxman Act, which created certain procedural incentives designed to encourage generic drug companies to enter the pharmaceutical market, confusion arose around the interpretation of many of the core provisions involving the FDA approval process and application in a litigation proceeding. In June 2003, in an effort to clarify matters and end some of the confusion, the FDA promulgated its own rules which became effective on August 19, 2003, with a compliance date of December 18, 2003. Congress returned to the generic drug issue when it passed the Medicare Prescription Drug, Improvement, and Modernization Act. 1 It was signed by President Bush December 8, 2003 and became effective January 8, 2004. The law s impact goes beyond the obvious Medicare issues, and makes noteworthy changes to the Hatch-Waxman Act. In particular, Section (j) of the law deals with the portion of Hatch-Waxman governing the approval process for abbreviated new drug applications, commonly known as ANDAs. Since the enactment of the Hatch-Waxman changes, the FDA has rescinded those regulatory provisions that have been covered by Congress recent amendments. From the perspective of the brand drug manufacturers, the most significant changes to the generic drug approval process, and its attendant patent dispute, include: There is no extension of the 30-month period as applicant need no longer make a new Paragraph IV Certification for any patent added to the Orange Book subsequent to filing an ANDA application. Applicant cannot shorten the 30-month period by amending its application to add a different drug. Applicant is required to provide notice to the patent owner of its ANDA filing within 20 days of receiving notice from the FDA of the filing of its application. If applicant amends or supplements its application, it must provide notice even if prior notice was given. Declaratory judgment actions and counterclaims seeking removal of a patent from the Orange Book are now available to the applicant. Declaratory judgment actions are available only to the extent consistent with the Constitution. LONDON NEW YORK LOS ANGELES SAN FRANCISCO WASHINGTON, D.C. PHILADELPHIA PITTSBURGH OAKLAND PRINCETON NORTHERN VA WILMINGTON NEWARK MIDLANDS, U.K. CENTURY CITY RICHMOND HARRISBURG WESTLAKE VILLAGE r e e d s m i t h. c o m
Money damages are not available in a de-listing counterclaim. Applicant can forfeit its 180-day exclusivity period if: applicant fails to market the drug within certain specified time frames; applicant withdraws its application; applicant amends or withdraws its Paragraph IV Certification; applicant fails to obtain tentative approval within 30 months from the application s filing date; applicant enters into an agreement that is found by the FTC or court to have violated antitrust laws; or expiration of all patents listed in the application. If the 180-day exclusivity period is forfeited by the first Applicant, it is not available for any applicant. Only one exclusivity period is available. A court decision is statutorily defined as a decision from which no appeal has been or can be taken (other than a petition to the Supreme Court for a Writ of Certiorari). From the perspective of generic drug manufacturers, the most significant changes include: Give notice to each patent owner whose patent is the subject of the Paragraph IV ANDA within 20 days after the date of the postmark of the FDA s notice of the ANDA filing. ANDA applicant may not amend or supplement an application to reference any other different listed drug. Only one 30-month stay is permitted for each application. A declaratory judgment action ( DJ action ) is available to an applicant who is not sued to the extent consistent with the Constitution within 45 days after the notice of the filing is received by the owner of the patent that is the subject of the application: if applicant offers confidential access to the application to patent owner; or, if because Paragraph IV Certification is only based on invalidity of patent, offer is not required. Counterclaim is available to applicant seeking an order for deletion of patent from the Orange Book on the basis that the patent does not claim the approved drug or approved method of use. Money damages are prohibited in a case seeking Orange Book deletion. 180-day exclusivity period begins on the date of first commercial marketing of either the NDA or ANDA drug. Exclusivity period is subject to forfeiture: if first application does not timely market the drug; if FDA approval is not granted within 30 months of filing the application; if applicant withdraws its application; if FDA deems application withdrawn; if applicant amends or withdraws the Paragraph IV Certification; - 2 -
if the patent that is the subject of the application expires; or, the application violates antitrust laws in a settlement agreement. The 180-day exclusivity period is shared by any Applicants who are the first to file and file on the same day. Any agreements between ANDA applicants or applicant and a brand name drug company must be filed within 10 days of execution of the agreement with the Assistant Attorney General and the FTC. Any applicant failing to provide such notification shall be subject to a civil fine of up to $11,000/day. Recent Case Law While no cases have interpreted the amended Statute yet, one case of note has been reported in 2004 dealing with the issues addressed by the changes: Purepac Pharmaceutical Co. v. TorPharm, Inc., 2004 U.S. App. LEXIS 767 (D.C. Cir. 2004) This case turned on two issues: an improper Orange Book listing and the Paragraph IV Certification notice requirement. Although the new Hatch-Waxman amendments would not have affected the outcome of the Court s finding on the Orange Book listing, it could have changed the decision regarding the notice dates. The Purepac case involves a dispute over the award of a 180-day exclusivity period for a generic version of the drug Neurontin, the patent for which was assigned by Warner-Lambert to Pfizer. Initially, the dispute centered on a method-of-use patent for the drug and ANDA applications filed by both Purepac Pharmaceutical Company and TorPharm, Inc. that sought approval for a generic form of the drug to treat epilepsy. After considerable litigation over the matter, Pfizer voluntarily withdrew this initial patent from the Orange Book. This resulted in neither Purepac nor TorPharm receiving the much sought-after exclusivity period from the FDA to market the generic drug. However, in the meantime, another Warner-Lambert/Pfizer patent issued for the composition and formulation of the drug, which, again, was listed in the FDA s Orange Book. Both Purepac and TorPharm amended their ANDA application to include Section IV certifications for the new patent. Purepac sent the statutorily required notice to Pfizer on June 13, 2003, two-and-one-half weeks after it had amended its ANDA application. TorPharm filed its amended ANDA and sent notice on the same day, June 13. However, the FDA considered TorPharm s application to have been filed on June 16, the date the FDA received it. Accordingly, the FDA awarded the 180-day exclusivity period to Purepac, and TorPharm appealed. In upholding the district court s finding that the FDA s award was correct, the U.S. Court of Appeals for the District of Columbia determined that the decision to award Purepac the exclusivity period was neither arbitrary or capricious. While Purepac had not complied with the statutory requirement for simultaneously filing an ANDA with a Section IV certification and giving notice, the FDA found Purepac s ANDA application to be effective on the date it gave the notice, June 13. The Statute now clarifies that there is no independent cause of action for a claim against an NDA holder to correct or delete information submitted to the FDA for an Orange Book listing that the patent does not claim either the drug for which the application was approved or the approved method of using the drug. However, Purepac did not sue the holder. Rather, it sued the FDA for rejection of its Section viii statement. This action would still be permissible with the 2003 changes. However, the issue of the timing of the notices would have been a non-issue for the Court and the applicants as the amended Statute now specifically addresses the timing of certification notices. Notices are timely given if - 3 -
not later than 20 days after the date of the postmark on the notice with which the Secretary informs the applicant that the application has been filed. 2 Or, if an application is amended or supplemented to include Paragraph IV Certification, then notice must be given at the time the applicant files the amendment or supplement. 3 Declaratory Judgment Jurisdiction While the new amendments specifically provide that a declaratory judgment (DJ) action is available to the applicant, it also, arguably, leaves applicants in the same position as before. A DJ action is available to the extent consistent with the Constitution. 4 This right has been varyingly interpreted by different courts. In Dr. Reddy s Laboratories, Ltd. v. Pfizer, Inc., 2003 WL 21638254 (D.N.J. 2003), the court found that because the plaintiff was unable to show to a sufficient degree that the defendant intended to enforce its patent, there was no right to a DJ action. In explaining the court s decision, Judge Pisano stated that, to support a DJ action, a plaintiff is required to show (1) an explicit threat or action by the patentee, which creates a reasonable apprehension... that it [the plaintiff] will face an infringement suit, and (2) present activity which could constitute infringement... Id. at 2, citing to Amana Refrigeration, Inc. v. Quadlux, Inc., 172 F.3d 852, 855 (Fed. Cir. 1999). Dr. Reddy was able to only prove the second prong by virtue of the fact that the act of filing an ANDA application is defined in the Hatch-Waxman Act as an act of infringement. 5 The Court found the evidence submitted to prove the first prong a direct communication from the defendant refusing to assure Dr. Reddy that it would not sue was insufficient to prove an intent to enforce its patent. Judge Stearns in Teva Pharmaceuticals USA, Inc. V. Pfizer, Inc., 69 U.S.P.Q. 2d 1791 (D. Mass. 2003) rendered a similar opinion and decision against Teva. Again, in finding that the court had no jurisdiction, the deciding factor was the plaintiff s failure to present adequate evidence for the Court to find that there was an actual controversy. Id. at 1793. However, in Teva Pharmaceuticals USA, Inc., v. Abbott Laboratories, 301 F. Supp. 2d 819 (N.D. Ill. E. Div. 2004), Judge Lefkow found that the Court did have jurisdiction. In this case, Teva argued that it reasonably apprehended a patent infringement suit because: defendant had refused to furnish a covenant not to sue; defendant had filed against a Teva affiliate in Canada where the same drug was at issue; and, defendant had a history of filing infringement actions against Teva regarding its generic marketing endeavors. Judge Lefkow found that this evidence was sufficient to find an actual controversy. It seems unlikely, given these three recent decisions, that the specific grant of the right to file a DJ action in the amendments to the Hatch-Waxman Act will result in any significant changes in court decisions. The requirements for an actual controversy to give a court jurisdiction remain the same. Antitrust Another area with which the courts have been dealing is the issue of what type of settlement is acceptable and what type will constitute a violation of antitrust laws. The recent case law in the area of the antitrust aspect of ANDA settlements warrants an entire paper devoted to the issue. In brief, it seems certain that because of the new Hatch-Waxman requirements to provide notice to the FTC of any settlement agreements, drug companies can expect even closer scrutiny of all such agreements. Importance of Changes The amendments do clarify certain issues that have been raised during the processing and litigation of the ANDA applications. However, it seems that there is still considerable opportunity for the parties to disagree and to seek relief from the courts. It will be instructive to review new cases as they progress through the FDA approval process and through the court system. * * * * * * * - 4 -
Reed Smith, a leading global law firm with nearly 1,000 lawyers located in 16 U.S. and two U.K. cities, represents Fortune 100 as well as mid-market and emerging companies. Clients include technology companies and entrepreneurs, financial services firms, life sciences companies and health care providers and insurers, communications companies, manufacturers, universities, non-profit organizations, real estate developers, and municipalities throughout the United States, the United Kingdom, and in 40 other countries. For more information, please visit reedsmith.com. 1 2 3 4 5 21 U.S.C.S. 355 (2004). Title XI, Subtitle A, Section 1101(a)(1)(B)(ii)(I). Title XI, Subtitle A, Section 1101(a)(1)(B)(ii)(II). Title XI, Subtitle A, Section 1101(d)(5). 35 U.S.C. 271 (e)(2)(a). - 5 -