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Amy S. Manning, Esq.,is an associate in the Intellectual Property Practice Group in the New York office of Coudert Brothers LLP.
Thomas J. Parker, Esq., is a counselor for Intellectual Property Practice Group in the New York office of Coudert Brothers LLP.
The competition for generics' 180-day marketing exclusivity is fierce, and Dr. Reddy's Laboratories filed the first court case calling into question FDA's methods for determining exclusivity on a patent-by-patent basis.
The competition for generics' 180-day marketing exclusivity is fierce, and Dr. Reddy's Laboratories filed the first court case calling into question FDA's methods for determining exclusivity on a patent-by-patent basis. The generics manufacturer recently filed suit against FDA challenging the agency's determination that Dr. Reddy's was not eligible for 180 days of marketing exclusivity for a generic version of AstraZeneca's brand-name proton pump inhibitor Prilosec (omeprazole). Specifically, Dr. Reddy's is challenging the FDA policy that grants eligibility to the first manufacturer that files an abbreviated new drug application (ANDA) certifying against any patent listed for the approved product.
Dr. Reddy's argues that a patent-by-patent approach is contrary to the exclusivity statute established by Hatch-Waxman and that exclusivity must go to the first ANDA file that certifies against all the patents listed for the brand-name drug. If the court finds that a patent-by-patent basis is valid, however, Dr. Reddy's argues that it also should be awarded "co-exclusivity" under the theory that 180-day exclusivity should be awarded to each ANDA applicant that is the first to certify against any listed patent.
This article contends that if FDA's position is upheld, because of the trend of innovator pharma companies to list multiple patents as covering their brand-name drug, the result could be an increase in ANDA filers certifying against a single patent listed for the approved drug and more "co- exclusivity" among generics manufacturers. Under those circumstances, innovative pharmaceutical companies must either prepare for multiple legal battles against different ANDA applicants or consider listing fewer patents for the approved drug.
The process by which a generic version is approved and brought to market was established as part of the Drug Price Competition and Patent Term Restoration Act of 1984 -- also known as Hatch-Waxman -- which amended the Federal Food Drug and Cosmetic Act. The Hatch-Waxman amendments created the section [505(j) 21 U.S.C. 355(j)] that sets forth the ANDA process used to seek FDA approval of a generic version of a pioneer drug. In their new drug application (NDA), pioneer applicants must include information about patents covering the pioneer product. FDA then publishes that patent information as part of the Approved Drug Products with Therapeutic Equivalence Evaluations (the "Orange Book").
An ANDA must have a patent certification, described in section 505(j)(2)(A) (vii) of the Act. The certification must make one of the following statements:
Section 505(j)(5)(B)(iv) of the act provides an incentive for applicants to file Paragraph IV certifications challenging patents that may be invalid, unenforceable, or not infringed. In certain circumstances, the first ANDA applicant with a Paragraph IV certification is granted 180 days of exclusivity. The exclusivity period provides the eligible ANDA applicant with protection against market competition from similar generic versions of the same drug for a 180-day period from either the date on which the first ANDA applicant begins commercially marketing its product or from the date of a court decision.
As originally enacted, provision 21 CFR 314.107(c)(1) required that the "applicant submitting the first application [must have] successfully defended against a suit for patent infringement brought within 45 days of the patent owner's receipt of notice [of the Paragraph IV certification]." Thus, the regulation required that the ANDA applicant filing the Paragraph IV certification must have been sued by the NDA holder and have successfully defended its case. FDA established the "successful defense" requirement to eliminate "an incentive for frivolous claims of patent invalidity or non-infringement" (59 Federal Register 50338, 50353).
In 1998, two appellate courts ruled that the act did not support FDA's interpretation of that section and that the requirement that an ANDA applicant be sued for patent infringement and win before it could qualify for 180-day exclusivity was invalid. (See Mova Pharmaceutical Corp. v. Shalala, 1997 and Granutec v. Shalala, 1998). The courts held that 180 days of marketing exclusivity should be granted to the first ANDA applicant that files a Paragraph IV certification, regardless of whether the applicant is subsequently sued for patent infringement.
Shortly after, the agency published an interim rule revoking the "successful defense" requirement. In August 1999, FDA proposed a rule for implementing 180-day exclusivity consistent with the Mova and Granutec decisions. Since then, there has been extensive litigation involving ANDA approvals and 180-day exclusivity, much of it relating to whether 180-day exclusivity begins with the first district or other court decision finding the patent invalid, unenforceable, or not infringed -- or with a final court decision from which no appeal can be taken. (See TorPharm, Inc. v. Shalala, 1997 and Mylan Pharmaceuticals, Inc. v. Shalala, 2000.)
On November 1, 2002, in response to multiple court decisions and to comments received from various government and private parties, FDA withdrew the August 1999 rule and announced that it would regulate directly from section 505(j) of the act in awarding 180-day marketing exclusivity.
In February 1999, Dr. Reddy's submitted an ANDA for a 40-mg generic version of Prilosec (omeprazole). Three other generic companies -- Andrx, Gen-Pharm, and Kremers Urban Development Company -- also filed ANDAs to market generic omeprazole. When Dr. Reddy's filed its ANDA, the Orange Book listed seven patents covering Prilosec. Dr. Reddy's submitted Paragraph IV certifications for all seven patents, including the '499 patent and the '431 patent.
Within 45 days of receiving notice of Dr. Reddy's Paragraph IV certifications, AstraZeneca filed suit against Dr. Reddy's in the U.S. District Court for the District of New Jersey alleging infringement of all seven of the certified patents. Thus, a 30-month stay began during which FDA could not approve Dr. Reddy's ANDA application, unless a court ruled that the patents were either invalid or not infringed, in which case approval would become effective on the date of the court decision.
On May 31, 2001, the district court granted Dr. Reddy's motion for summary judgment that it did not infringe the '499 patent. About a month later, Dr. Reddy's received a tentative approval letter from FDA indicating that there were no additional requirements to its ANDA approval other than the resolution of the remaining patent litigation issues. The 30-month stay period subsequently expired on September 28, 2001.
On October 5, 2001, the '431 patent against which Dr. Reddy had been the first to file a Paragraph IV certification, expired. Shortly after, Dr. Reddy's requested final approval for its ANDA covering 40-mg generic omeprazole capsules.
An FDA letter dated November 16, 2001, stated that Dr. Reddy's had lost its eligibility for exclusivity on the 40-mg capsule when the '431 patent expired before the drug was commercially marketed or a court had ruled that the patents were either invalid or not infringed. The letter also disclosed that Andrx was the first applicant to file a Paragraph IV certification regarding the listed patents other than the '431 and, therefore, that Andrx was entitled to 180-day generic exclusivity for the 40-mg omeprazole capsules.
In support of its position, FDA referenced a 1999 decision in which it determined that the first ANDA applicant to file a Paragraph IV certification for the drug cisplatin had lost its eligibility for 180-day exclusivity when the patent expired before commercial marketing or a court ruling that the patent was invalid or not infringed.
In the cisplatin case, FDA adopted a patent-by-patent approach in determining eligibility for 180-day exclusivity. In August, 1999, in a response to petitions filed by two ANDA applicants for exclusivity for generic cisplatin, FDA stated that eligibility would be based on whichever manufacturer was the first to file a Paragraph IV certification for any listed patent for the relevant drug. As such, multiple applicants could be eligible for periods of exclusivity for a single product.
FDA has recognized, however, that if eligibility for exclusivity is patent-based, without regard to the facts and circumstances of each matter, then FDA could be paralyzed in approving ANDAs referencing a particular product by conflicting multiple exclusivities, because if FDA awards exclusivity to one manufacturer, it cannot approve any other ANDAs until the exclusivity period expires.
For example, Andrx and Genpharm both filed ANDA applications for generic 10-mg and 20-mg omeprazole capsules, and both were the first to file Paragraph IV certifications for different Prilosec patents listed in the Orange Book. When the last patent blocking approval of generic omeprazole expired on October 5, 2001, there were no longer any 30-month stays barring approval of Andrx or Genpharm's ANDAs.
In addressing the question of how to administer 180-day exclusivity -- under the patent-based approach -- because both Andrx and Genpharm were the first ANDA applicants to file Paragraph IV certifications for different Prilosec patents, a stand-off would result. Andrx could not be given final approval until Genpharm's exclusivity for certain patents had expired, but Genpharm could not be given final approval until Andrx's exclusivity for other patents had run out.
The stand-off would prevent the ANDA applicants from benefiting in any meaningful way from the 180-day exclusivity period and would substantially and indefinitely delay the availability of lower-cost drugs for consumers. Thus, Andrx and Genpharm would be hamstrung by the very provision intended to benefit them, and competition would be stifled by the provision intended to encourage it.
On January 31, 2002, Dr. Reddy's sued FDA, arguing that exclusivity must be awarded to the first ANDA applicant to file a Paragraph IV certification against all the innovator drug's patents listed in the Orange Book. (See Dr. Reddy's Laboratories, Inc. v. Thompson). Dr. Reddy's argues that it is entitled to exclusivity because, in addition to being the first to certify against the '431 patent (covering the omeprazole compound), the company also certified against the other six patents listed in the Orange Book for 40-mg omeprazole capsules.
On the other hand, if the court upholds patent-by-patent exclusivity, then Dr. Reddy's argues that it should receive "co-exclusivity" with Andrx because exclusivity should be awarded to all "applicants that were the first to file Paragraph IV certifications as to any of the applicable patents." The co-exclusivity would start "on the date that the last of the first-to-file ANDAs" are approved or the date of a final court judgment on the patents.
Recently, FDA decided to award "shared exclusivity" to Andrx and Genpharm regarding 10-mg and 20-mg omeprazole to resolve the stand-off generated by its patent-by-patent decisions. FDA stated that the shared exclusivity approach is more consistent with both the statutory language of the 180-day exclusivity provision and the intent of the Hatch-Waxman amendments. Consequently, once FDA approved both Andrx and Genpharm's omeprazole ANDAs, the companies shared a 180-day exclusivity period during which they were the only generics companies permitted to market 10-mg and 20-mg omeprazole products.
Obviously, shared exclusivity deprives any one applicant of the chance to be the sole competitor to the brand-name manufacturer. But FDA points out that exclusivity is already structured in such a way that it does not guarantee a product 180 days as the sole marketed generic drug. Thus, a court decision could trigger exclusivity before the ANDA is approved, and uncertainty over the patent could result in no marketing of the drug until the decision is affirmed by the Federal Circuit Court.
FDA reasons that shared exclusivity gives each first ANDA applicant some reward in return for removing one or more of the listed patents as a barrier to generic approval. According to FDA, there is also a clear benefit to consumers: multiple ANDA approvals are more likely to trigger the exclusivity period and at least one of the generic drugs will likely reach the market during that time. In support of that position, FDA noted that generics manufacturers that are the sole applicants often find it in their interest not to begin the exclusivity period.
In the event that the court denies Dr. Reddy's claim for shared exclusivity, the company argues that its ANDA "should be approved because exclusivity has already expired." Dr. Reddy's contends that it became eligible for 180-day exclusivity after the May 31, 2001 court decision that it did not infringe the '499 patent. Because the May 31 court decision satisfies one requirement for triggering exclusivity, the complaint states, FDA's decision not to award exclusivity was arbitrary, capricious, and contrary to law.
Given the potential value of 180-day exclusivity to a generics drug manufacturer, FDA determinations regarding eligibility for exclusivity have undergone significant scrutiny. Dr. Reddy's case challenges the agency's approach of determining exclusivity on a patent-by-patent basis. If FDA's position is upheld, then it is likely that the agency will increasingly award more shared exclusivity because brand-name companies continue to list multiple patents in the Orange Book for their approved drugs. Under such circumstances, brand-name drug companies must consider or balance the benefits of listing multiple patents versus the cost of litigating against multiple ANDA applications filing paragraph IV certifications.
On the other hand, if Dr. Reddy's prevails, then to qualify for 180-day generic exclusivity an ANDA applicant would have to file a Paragraph IV certification for all patents listed. In that case, brand-name manufacturers would likely list more patents in the Orange Book as covering their approved drug, thus deterring generic companies from filing ANDAs challenging all of the listed patents.