Patent Docs: Hatch-Waxman

Hatch-Waxman

November 11, 2024

Teva v. Amneal -- Amneal's Responsive Brief

The Federal Circuit has been petitioned by plaintiff Teva Branded Pharmaceutical Products R&D, Inc. to reverse a decision in favor of Defendant Amneal Pharmaceuticals, wherein the District Court entered an injunction ordering Teva to delist five Orange Book-listed patents, in Teva Pharms. Inc. v. Amneal Pharms. LLC. This post concerns Amneal's response to Teva's arguments in its Opening Brief.

To recap, the issues arose in litigation over Amneal's ANDA directed to its generic version of Teva's ProAir® HFA (albuterol sulfate) Inhalation Aerosol product. In this litigation, Teva asserted five Orange Book-listed patents: U.S. Patent Nos. 8,132,712 ("the '712 patent"), 9,463,289 ("the '289 patent"), 9,808,587 ("the '587 patent"), 10,561,808 ("the '808 patent"), and 11,395,889 ("the '889 patent") having these representative claims:

8,132,712:

1. A dose counter for a metered-dose inhaler, the counter comprising: an actuator; a rotary gear; a driver for driving the rotary gear in a step-wise fashion in response to displacement of the actuator, the rotary gear comprising a wheel mounted on a spindle which wheel having a plurality of ratchet teeth around its periphery; a pawl to prevent reverse rotation of the rotary gear; and a display coupled to the rotary gear, the display having a visible array of incrementing integers on a surface thereof indexable by a single integer in response to each step of the step-wise rotary motion of the rotary gear; wherein the pawl comprises at least two ratchet teeth each for engaging with the ratchet teeth of the wheel to prevent reverse rotation of the rotary gear, the at least two ratchet teeth being radially spaced such that one of the at least two ratchet teeth of the pawl engages with the ratchet teeth of the wheel following each step of the step-wise rotary motion of the rotary gear.

18. The use of a dose counter for preventing miscounting in a metered dose inhaler, the dose counter comprising: an actuator; a rotary gear; a driver for driving the rotary gear in a step-wise fashion in response to displacement of the actuator, the rotary gear comprising a wheel mounted on a spindle which wheel having a plurality of ratchet teeth around its periphery; a pawl to prevent reverse rotation of the rotary gear; and a display coupled to the rotary gear, the display having a visible array of incrementing integers on a surface thereof indexable by a single integer in response to each step of the step-wise rotary motion of the rotary gear; wherein the pawl comprises at least two ratchet teeth each for engaging with the ratchet teeth of the wheel to prevent reverse rotation of the rotary gear, the at least two ratchet teeth being radially spaced such that one of the at least two ratchet teeth of the pawl engages with the ratchet teeth of the wheel following each step of the step-wise rotary motion of the rotary gear.

9,463,289:

1. An inhaler for metered dose inhalation, the inhaler comprising:
    a main body having a canister housing,
    a medicament canister, which is moveable relative to the canister housing and retained in a central outlet port of the canister housing arranged to mate with a canister fire stem of the medicament canister, and
    a dose counter having an actuation member having at least a portion thereof located in the canister housing for operation by movement of the medicament canister,
    wherein the canister housing has an inner wall, and a first inner wall canister support formation extending inwardly from a main surface of the inner wall, and
    wherein the canister housing has a longitudinal axis X which passes through the center of the central outlet port,
    the inner wall canister support formation, the actuation member, and the central outlet port lying in a common plane coincident with the longitudinal axis X.

9,808,587:

1. An inhaler for metered dose inhalation, the inhaler comprising:
    a main body having a canister housing,
    a medicament canister, which is moveable relative to the canister housing and retained in a central outlet port of the canister housing arranged to mate with a canister fire stem of the medicament canister, and
    a dose counter having an actuation member having at least a portion thereof located in the canister housing for operation by movement of the medicament canister,
    wherein the canister housing has an inner wall, and a first inner wall canister support formation extending inwardly from a main surface of the inner wall,
    wherein the canister housing has a longitudinal axis X which passes through the center of the central outlet port, and
    wherein the first inner wall canister support formation, the actuation member, and the central outlet port lie in a common plane coincident with the longitudinal axis X such that the first inner wall canister support formation protects against unwanted actuation of the dose counter by reducing rocking of the medicament canister relative to the main body of the inhaler.

10,561,808:

1. A dose counter for an inhaler, the dose counter having a counter display arranged to indicate dosage information, a drive system arranged to move the counter display incrementally in a first direction from a first station to a second station in response to actuation input, wherein a regulator is provided which is arranged to act upon the counter display at the first station to regulate motion of the counter display at the first station to incremental movements.

11,395,889:

1. An incremental dose counter for a metered dose inhaler having a body arranged to retain a canister for movement of the canister relative thereto, the incremental dose counter having a main body, an actuator arranged to be driven and to drive an incremental output member in a count direction in response to canister motion, the actuator being configured to restrict motion of the output member in a direction opposite to the count direction, such that the actuator acts as an anti-back drive member when the actuator is in a non-depressed position, and wherein the incremental dose counter further comprises a second anti-back member configured to restrict motion of the output member in a direction opposite to the count direction when the actuator is disengaged from the output member by a bump surface.

The District Court granted Amneal's motion on the pleadings (asserted in its counterclaims as required by statute) that these patents were improperly listed in the Orange Book as not being directed to an FDA-approved drug nor method of using such a drug for treating a disease or disorder, and granted an injunction compelling Teva to delist these patents. Teva appealed, the Federal Circuit entering a stay on the order to delist during pendency of the appeal.

On appeal, Teva made two arguments: the first is based on a legal and technical definition of how the term "drug product" is defined in the statute, and the second is whether the District Court erred procedurally, including whether claim construction was required to properly determine the first question.

Amneal's Responsive Brief

In its responsive brief, Amneal (unsurprisingly) argues that the District Court made the right decision (and to be fair also has the easier argument, in view of the intrinsic tug of the argument that Orange Book-listed patents should, at a minimum, recite the drug product itself, in this case albuterol sulfate). In its argument, Amneal emphasizes (literally) that FDA's definition of a "drug product" recites "a finished dosage form…that contains a drug substance, generally, but not necessarily, in association with one or more other ingredients," citing 21 C.F.R. § 314.3 (emphasis added) (in contrast to Teva, Amneal cites the FDA rules rather than the statutory language). Amneal contends that "the drug substance" is albuterol sulfate per se and not the combination of the drug and the inhaler that is the subject matter of the claims destined to be delisted if the District Court decision is affirmed. As Amneal states in its argument, "[i]t is undisputed, however, that the Asserted Patent claims do not recite, identify or refer to the drug substance—albuterol sulfate—as a part of the claimed inventions" (at least not expressly). Amneal argues that, to overcome these infirmities Teva and its amici (actually only two of seven amicus briefs filed) "seek in effect to rewrite the Listing Statute" by changing the plain meaning of the term "claims" therein to mean "reads on any part of" (which is an abbreviated but not entirely unfair characterization). Teva does indeed argue in its opening brief that the claims of its asserted patents read on its ProAir inhalation device, but that this is analogous to claims for excipients or generic claims that do not recite the species identified as the active pharmaceutical ingredient. Where Amneal identifies the principle distinction between the parties' positions is in the definition of the term "drug product," as will be set forth herein. Further, Amneal disputes the need for claim construction because "even if the claims were construed as Teva proposes, the Asserted Patents still would not qualify for listing in the Orange Book" as they do not recite albuterol sulfate as an affirmative limitation therein.

Amneal's brief identifies the legal issue in the appeal as being the proper construction of that portion of the statute that sets forth what must be disclosed in any patent listed in the Orange Book (21 U.S.C. § 355(b)(1)(A)(viii)):

(viii) the patent number and expiration date of each patent for which a claim of patent infringement could reasonably be asserted if a person not licensed by the owner of the patent engaged in the manufacture, use, or sale of the drug, and that—

(I) claims the drug for which the applicant submitted the application and is a drug substance (active ingredient) patent or a drug product (formulation or composition) patent; or

(II) claims a method of using such drug for which approval is sought or has been granted in the application.

Amneal's interpretation of this portion of the statute is that it requires any patent listed to be one wherein "there [would] be a reasonable basis to assert that the patent would be infringed by the unauthorized manufacture, use, or sale of the NDA drug" (emphasis added). The brief sets forth the history of this portion of the statute insofar as it was changed in 2021, purportedly due to an appreciation (evinced by a House committee report) of "the proliferation of device patents submitted under the auspices of the Listing Statute for drug device combination products, including, most commonly, inhalers," which delayed generic entry by an average of 3.4 years. Relevant to the issue before the Court, Amneal cites the definition of "drug product" in FDA regulations (but not the statute) to require the presence of the drug substance, citing 21 C.F.R. § 314.3: "Drug product is a finished dosage form, e.g., tablet, capsule, or solution, that contains a drug substance, generally, but not necessarily, in association with one or more other ingredients (emphasis in brief)." The statute, on the other hand, defines the term "drug" broadly (according to Amneal) at 21 U.S.C. § 321(g)(1):

(A) articles recognized in [certain compendia]; and (B) articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals; and (C) articles (other than food) intended to affect the structure or any function of the body of man or other animals; and (D) articles intended for use as a component of any article specified in clause (A), (B), or (C).

and defines "device" at 21 U.S.C. § 321(h)(1) as:

[A]n instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including any component, part, or accessory, which is — (A) recognized in [certain compendia], (B) intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals, or (C) intended to affect the structure or any function of the body of man or other animals, and which does not achieve its primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of its primary intended purposes.

As interpreted by the D.C. Circuit, "FDCA prohibits the FDA from treating a device as if it were a 'drug,'" citing Genus Medical Techs. LLC v. United States, 994 F.3d 631, 644 (D.C. Cir. 2021), "even though [Amneal concedes] the term 'drug' is so broadly defined that it linguistically could include a device." Amneal points out that the District Court held, consistent with the decision by the Second Circuit's decision in United Food v. Takeda Pharm. Co. Ltd., 11 F.4th 118, 134 (2d Cir. 2021), that "the Listing Statute required a drug product patent to claim not just any 'drug,' but specifically 'the drug for which the applicant submitted the application,'" nor did any of the asserted claims to inhaler devices qualify under the statute as a "finished dosage form."

Regarding the requirements for qualifying as a drug product Amneal's brief identifies three:

• "First, it must be a 'patent for which a claim of infringement could reasonably be asserted [against unauthorized] manufacture, use or sale' of the NDA product. 21 U.S.C. § 355(b)(1)(A)(viii). In other words, it must be infringed by the NDA product.

• "Second, the patent must be a 'drug product' patent, which simply means that it must claim a drug product. 21 U.S.C. § 355(b)(1)(A)(viii)(I) [although this seems to beg the question here].

• "Third, the patent must 'claim[] the drug for which the applicant submitted the application.""

Amneal argues that the second and third requirements act in tandem to require that the patents claim not just any drug product but the approved drug product itself. Under this interpretation, the Orange Book-listed claims must recite the drug product (here, albuterol sulfate) and as they undisputedly do not the Court should affirm the judgment of the District Court and lift the stay of the injunction compelling Teva to delist these patents.

Amneal argues that Teva's interpretation of these statutory provisions is erroneous, by being contrary to how the term "claims" is interpreted, inter alia, in Hoechst-Roussel Pharms., Inc. v. Lehman, 109 F.3d 756, 758-59 (Fed. Cir. 1997), and Graver Tank & Mfg. Co., Inc. v. Linde Air Prods. Co., 339 U.S. 605 (1950). Further, Amneal argues that this interpretation would render superfluous the requirement that the patent "claims the drug," contrary to statutory interpretation precedent citing Facebook, Inc. v. Windy City Innovations, LLC, 973 F.3d 1321, 1336 (Fed. Cir. 2020), and Arlington Cent. Sch. Dist. Bd. of Educ. v. Murphy, 548 U.S. 291, 299 n.1 (2006) in support for this argument. Also, Amneal argues, this overbroad reading of the statute would permit listing of patents for "any type of component, regardless of its nature." While conceding that "adjacent" provisions of the NDA statute permits "NDA applicants to submit information and samples of all components of the NDA drug" in Amneal's view what is permitted to be listed in the Orange Book is more narrow (it "does not broadly permit listing of any kind component patents" (emphasis in brief)). What is permitted is listing patents of only one kind, those that claim "a drug substance (active ingredient)" under 21 U.S.C. §355(b)(1)(A)(viii)(I), and Amneal argues that "this implies that patents on other kinds of drug components are not authorized," citing Syngenta Crop Protection, LLC v. Willowood, LLC, 944 F.3d 1344, 1361 (Fed. Cir. 2019) (emphasis added). Amneal objects to Teva's "plug[ging]" the "component" aspect of the definition of the term "drug" into the statute, due to the specificity of the statutory language for "the drug for which the applicant submitted the application." Citing Genus Medical Techs. again Amneal further argues that "the FDCA prohibits the FDA from treating a device as if it were a drug" and thus ("by extension") the statute should prohibit FDA from listing patents that claim only devices from being listed as if they claimed a drug.

Amneal argues that the plain meaning of the Listing Statute does not authorize listing of "any drug product" (emphasis in brief) but only if the patent "claims the [NDA] drug" under 21 U.S.C. § 355(b)(1)(A)(viii)(I) and further that this interpretation is supported by the legislative history (which indicates "congressional intent to curtail the listing of device component patents specifically"). This interpretation, Amneal argues, is also consistent with FDA's definition of a "drug product," the inclusion of which in the Listing Statute necessarily contains the NDA-approved drug product itself. (Amneal points out that in other contexts Teva itself argued that "drug product patents must require the presence of the active ingredient to qualify for listing in the Orange Book," citing Warner Chilcott (US), LLC v. Teva Pharms. USA, Inc., No. 18-1241 (Fed. Cir. 2018)). If a "drug product" requires the presence of an approved drug substance in the product, Amneal argues that a "drug product patent" must also do so (emphasis in brief), and if a drug product patent must also claim the FDA-approved drug, "at a minimum" such a patent "must . . . require the presence of the particular drug substance in the NDA product."

Taken together none of the asserted patents meet these requirements, Amneal asserts.

Turning to Teva's arguments, Amneal asserts they are "both erroneous and problematic" for four reasons: they "stray from controlling black letter patent law" under 35 U.S.C. § 112 and erroneously equating "claiming with being infringed"(emphasis in brief); the interpretation would make superfluous the "claiming the drug" requirement; Teva's arguments "ignore[] FDA's definition of 'drug product'"; and "would open up the Orange Book to patents on any aspect of the NDA product or any component that happens to be found in the NDA product." So doing would be contrary to the existence of the "powerful exclusionary rights bestowed on Orange Book patents" (naming an automatic preliminary injunction, i.e., the 30-month stay, and automatic permanent injunction for the prevailing NDA holder). Amneal also mentions that requiring Orange Book-listed patents to recite the approved drug product "provides a clear rule that will allow stakeholders to more confidently order their affairs when it comes to the listing of patents in the Orange Book" (elsewhere calling this a "commonsense notion").

Specifically, Amneal argues that the claims in an Orange Book-listed patent must recite the NDA-approved drug, not merely by infringed by the accused generic product as Teva contends, if only because Federal Circuit precedent, Hoechst-Roussel Pharms., Inc. v. Lehman, 109 F.3d 756, 758-59 (Fed. Cir. 1997), has acknowledged the statutory requirement that the patent "particularly pointing out and distinctly claiming the subject matter which the inventor . . . regards as the invention" under 35 U.S.C. § 112(b). Amneal makes a simple and straightforward argument, that because "the words of the claim do the claiming," citing Corning Glass Works v. Sumimoto Elec. U.S.A., Inc., 868 F.2d 1251, 1258 (Fed. Cir. 1989) (emphasis in brief), the absence of those words (specifically, of the NDA-approved drug substance, albuterol sulfate) precludes Teva from properly Orange Book listing the asserted claims. Once again, Amneal asserts the legislative history of amendments to the Listing Statute to illustrate Congress's concerns, including a direction to the General Accounting Office "to submit data on claims in listed patents 'that claim a device that is used for the delivery of the drug, but do not claim such device in combination with an active ingredient or formulation of a drug,'" Orange Book Transparency Act of 2020, Pub. L. No. 116-290, 134 Stat. 4889, 4892 (Jan. 5, 2021). This history, Amneal argues, also forms the basis for the Court to narrowly construe the Listing Statute, because it "demonstrates [that] these requirements were introduced expressly to preclude Orange Book listing of the very type of device patents at issue here." This "plain meaning" interpretative analysis is supported by the Takeda case from the Second Circuit and In re Lantus Direct Purchaser Antitrust Litig., 950 F.3d 1, 7-8 (1st Cir. 2020), relied upon by the District Court, Amneal argues. Amneal also cites a 1997 Guidance from FDA "explaining" that "a drug product patent must explicitly 'refer to' the NDA product," where Amneal contends "refer to" be interpreted to mean "recite in the claims" of such a patent. Teva's arguments that "being infringed" is equivalent to "claiming" is contrary to Federal Circuit precedent, Amneal argues, including Hoechst, and is not supported by the Apotex case, relied upon by Teva. In that case, Amneal argues, the Court merely held that infringement is a necessary, but not sufficient condition (emphasis in brief), and in any case Amneal contends, statements relied upon by Teva are merely dicta (because they were directed to whether the Federal Circuit had jurisdiction). Amneal similarly dismisses the relevance of Envirotech Corp. v. Al George, Inc., 730 F.2d 753, 759 (Fed. Cir. 1984), and Teva's proffered interpretation of Takeda.

Amneal further challenges Teva's construction of the Listing Statute as rendering the "claims the drug" requirement to be superfluous and that it is "far more expansive than afforded by a fair reading of the Listing Statute" so as to encompass "any component found in the [approved] NDA product" (emphasis in brief). Amneal challenges Teva's argument that requiring the "NDA drug substance" to be present would render the "drug substance" category superfluous, because the statute contains two categories of patents: "A drug substance patent requires only the drug substance per se, whereas a drug product patent requires both the drug substance and some further aspect(s) of the drug product." And the requirement is not merely for "a" drug but for "the" NDA-approved drug "for which the applicant submitted the application" under 21 U.S.C. § 355(b)(1)(A)(viii)(I), which is also the most unambiguous way of understanding the meaning of the term in the context of the Listing Statute, Amneal argues.

Amneal puts its greatest reliance in this regard on the Genus Medical Techs. LLC case, wherein the Court held that "the FDA is prohibited from regulating as a 'drug' anything that meets the statutory definition of a 'device,' even if that item also meets the definition of a 'drug'" because FDA is prohibited from Orange Book-listing patents that claim only a device, Amneal argues. ("Teva's interpretation cannot be correct, because it would permit precisely what the FDCA prohibits.") Devices are not drug formulation "ingredients" (which can be listed under the category as components of a "formulation" or "composition") in Amneal's view.

Amneal also addresses Teva's attempts to overcome ("decouple") the undisputed absence of any mention of the drug substance, albuterol sulfate, from the asserted claims of the Orange Book-listed patents at issue. Simply put, the proper consequence of this absence is for the Court to recognize that these patents to not "claim" the NDA drug product and thus should be delisted, according to Amneal.

Amneal further argues that its interpretation of the Listing Statute "best aligns" with Hatch-Waxman Act goals regarding the balance between exclusivity for brand drugmaker's NDA-approved drugs (and the "extraordinary" injunctive rights conferred by the statute) and opportunities for generic competition. Adopting Teva's interpretation of the Listing Statute, on the other hand, would permit "patents having nothing to do with the drug development efforts for a given product" to be listed in the Orange Book "as long as the claimed invention, no matter how inconsequential, was found in some part of the NDA product." And Teva (in addition to listing the asserted patents in this litigation in connection with 21 different products) retains the right to assert them against generic drugmakers under other subsections of 35 U.S.C.§ 271, albeit without the extraordinary advantages conferred by 35 U.S.C.§ 271(e)(2).

Finally, in this regard Amneal rebuts Teva's "baseless and hyperbolic" policy arguments (which will be discussed in future posts on the two amicus briefs submitted in support of Teva).

Amneal asserts in a separate section of the brief that the claims of any properly Orange Book-listed claims must recite the presence of the approved drug, albuterol substrate, and further that there is no need for claim construction because, on their face none of the listed patents asserted by Teva satisfy this requirement.

Teva's Reply to Amneal is discussed here.

Posted at 11:59 PM in Federal Circuit, Food and Drug Administration, Hatch-Waxman, Injunction | Permalink | Comments (0)

October 23, 2024

Teva v. Amneal -- Amneal's Responsive Brief & Teva's Reply Brief

By Kevin E. Noonan --

The Federal Circuit has been petitioned by plaintiff Teva Branded Pharmaceutical Products R&D, Inc. to reverse a decision in favor of Defendant Amneal Pharmaceuticals wherein the District Court entered an injunction ordering Teva to delist five Orange Book-listed patents, in Teva Pharms. Inc. v. Amneal Pharms. LLC. This post concerns Teva's Reply brief answering Amneal's Responsive brief to Teva's Opening Brief on appeal.

The District Court granted Amneal's motion on the pleadings (asserted in its counterclaims as required by statute) that these patents were improperly listed in the Orange Book as not being directed to an FDA-approved drug nor method of using such a drug for treating a disease or disorder and granted an injunction compelling Teva to delist these patents. Teva appealed, the Federal Circuit entering a stay on the order to delist during pendency of the appeal.

On appeal Teva made two arguments: the first is based on a legal and technical definition of how the term "drug product" is defined in the statute, and the second is whether the District Court erred procedurally, including whether claim construction was required to properly determine the first question.

Amneal's Responsive Brief

In its responsive brief, Amneal (unsurprisingly) argued that the District Court made the right decision (and to be fair has the easier argument, in view of the intrinsic tug of the argument that Orange Book-listed patents should, at a minimum, recite the drug product itself, in this case albuterol sulfate). In its argument, Amneal emphasized (literally) that FDA's definition of a "drug product" recites "a finished dosage form . . . that contains a drug substance, generally, but not necessarily, in association with one or more other ingredients," citing 21 C.F.R. § 314.3 (emphasis added) (in contrast to Teva, Amneal cites the FDA rules rather than the statutory language). Amneal contended that "the drug substance" is albuterol sulfate per se and not the combination of the drug and the inhaler that is the subject matter of the claims destined to be delisted if the District Court decision is affirmed. As Amneal stated in its argument, "[i]t is undisputed, however, that the Asserted Patent claims do not recite, identify or refer to the drug substance—albuterol sulfate—as a part of the claimed inventions" (at least not expressly). Amneal argued that, to overcome these infirmities, Teva and its amici (actually only two of seven) "seek in effect to rewrite the Listing Statute" by changing the plain meaning of the term "claims" therein to mean "reads on any part of" (which is an abbreviated but not entirely unfair characterization). Where Amneal identified the principle distinction between the parties' positions was in the definition of the term "drug product." Further, Amneal disputed the need for claim construction because "even if the claims were construed as Teva proposes, the Asserted Patents still would not qualify for listing in the Orange Book" as they do not recite albuterol sulfate as an affirmative limitation therein.

Teva's Reply Brief

In Teva's Reply to Amneal initially the brief notes that FDA approved it ProAir HFA as a drug, that the inhaler component is the dosage form, and patents claiming dosage forms must be listed under 21 U.S.C. § 321(g)(1)(D). And this listing does precisely what the Hatch-Waxman regime intended: notifying generic drug applicants of the patents that can be asserted in ANDA litigation (i.e., it provides the intended statutory benefit to them). Teva continues by reasserting the consequences of affirming the District Court, including delisting "any genus patent, any patent that claims some but not all components of a drug product, and any patent that claims one but not all of the active ingredients in a drug product" (emphasis in brief).

Teva further reiterates its positions in its Opening Brief: that the statutory term "claim" should be interpreted to mean "read on" rather than "recite" (clearly a broader construction that resolves Teva's issue regarding the absence of the NDA-approved drug, albuterol sulfate, from the claims of the asserted patents); in this regard, Teva relies on the same precedent (and arguments) asserted in its Opening Brief. Teva rebuts Amneal's arguments regarding the definiteness requirement in the statute (35 U.S.C. § 112(b)) as not requiring express recitation of the NDA-approved drug but rather (citing the statutory language) that the claim "inform, with reasonable certainty, those skilled in the art about the scope of the invention," citing Nautilus, Inc. v. Biosig Instruments, Inc., 572 U.S. 898, 901 (2014). This requirement would not be necessary, Teva contends,"if the entire scope of a patent were explicitly recited in detail in the claims." Properly understood, what the statute entails is providing notice of the boundaries of the right to exclude and to define limits," Teva argues, citing Ariad Pharms., Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1348 (Fed. Cir. 2010) (en banc).

As applied to the Listing Statute, Teva asserts Jazz Pharms., Inc. v. Avadel CNS Pharms., LLC, 60 F.4th 1373, 1379 (Fed. Cir. 2023), for the principle that claims must be construed based on "not just 'the words of the claims themselves'" but also "the remainder of the specification, the prosecution history, and extrinsic evidence concerning relevant scientific principles, the meaning of technical terms, and the state of the art," citing Phillips v. AWH Corp., 415 F.3d 1303, 1314 (Fed. Cir. 2005) (en banc) (citation omitted). Teva, in making this argument, seeks (it appears) to refute Amneal's more straightforward argument that the absence of any recitation of the NDA-approved drug in the asserted claims is dispositive. "'Claim language, standing alone' is not the correct standard of law and is contrary to uniform precedent" Teva asserts, quoting Nature Simulation Sys. Inc. v. Autodesk, Inc., 50 F.4th 1358, 1364 (Fed. Cir. 2022). "Claim language," Teva asserts, "is a boundary, not a laundry list" and "[a] genus claim unambiguously encompasses every species in the genus without mentioning any one of them." This is where Teva asserts Amneal errs in its responsive brief.

Teva first argues that its asserted patents "claim" a drug so long as it claims a component of the FDA-approved drug product. Citing Apotex, Teva argues that "[t]he listing decision thus requires what amounts to a finding of patent infringement [literal infringement, Teva specifies], except that the 'accused product' is the drug that is the subject of the NDA." Amneal doesn't address this, Teva asserts, and thus its attempts to "make something of the modest distinctions between the scope of a claim and the scope of infringement fall flat." This conclusion is supported, Teva asserts, by Teva Pharms. USA, Inc. v. Leavitt, 548 F.3d 103, 106 (D.C. Cir. 2008), and In re Actos End-Payor Antitrust Litig., 417 F. Supp. 3d 352, 369 (S.D.N.Y. Sept. 30, 2019). Teva rebuts Amneal's attempts to distinguish Apotex, construing the language of the statute to support its interpretation (and rebutting Amneal's dismissal of Apotex as dicta because that court's decision was directed to interpreting the Listing Statute to determine whether the case raised a substantial question of patent law for jurisdictional purposes). Teva also asserts the Jazz Pharma case as supporting its interpretation of the Apotex decision.

On somewhat less firm grounds, Teva argues that a patent that claims a component of an NDA drug claims "the drug" based on the express definition of the term "drug" under 21 U.S.C. § 321(g)(D). After distinguishing Amneal's (and the FTC's) analogy to construing claims to car brakes to encompass the car itself, Teva argues that "the term 'drug' is expressly defined to include its components" unlike the hypothetical car. Teva also addresses the distinctions raised by Amneal regarding statutory language to "drugs" and "drug substance" patents and conflicts between them (as well as Congress's amendments to the statute to include as listable drug substance as well as drug patents, citing Helsinn Healthcare S.A. v. Teva Pharms. USA, Inc., 586 U.S. 123, 131-32 (2019). (Indeed, Teva argues that some of these statutory changes were motivated by "a unique requirement to list patents claiming polymorphs" and, accordingly, "not all drug substance patents will also qualify as drug product patents." Teva states that (incorrectly) Amneal argues that "a patent on a component, including a drug substance, cannot be a 'drug product patent'" where according to Teva's interpretation of the statute "FDA recognizes that there is." Teva further argues that there is no "incongruity" between there being a broad definition of the term "drug" and the phrase "claims the drug for which the applicant submitted the application" in the statute because (in Teva's interpretation) this merely ensures that an applicant cannot list patents that claim "a" drug but claims the NDA-approved drug product. But this interpretation "does not rule out patents on the components that are submitted to FDA" which, Teva argues, is the situation here.

Teva also insists that FDA approved its ProAir HFA product as a drug, not a device. If Amneal (or its supportive amici) believe this is not the proper policy then this is an issue for Congress not the courts, Teva argues, because the statute mandates that FDA treat combination products as drugs "in their entirety" (under a single application whenever appropriate" under 21 U.S.C. § 353(g)(1)(B)). Contrary to Amneal's argument, Teva asserts that "FDA does not regulate 'the device part' of a combination product as a device on its own [but r]ather, a combination product in its entirety is regulated either as a drug or as a device, and the statutory scheme expressly contemplates that the device parts will sometimes be regulated as drug under 21 U.S.C. § 353(g)(1). (Indeed, Teva maintains that Congress amended the statute in 1990 to "remove the exclusion of devices and their counterparts to 'facilitate the regulation of combination products,' as drugs," citing Genus Medical Technologies LLC v. FDA, 994 F.3d 631, 644 (D.C. Cir. 2021), and the Safe Medical Devices Act of 1990, Pub. L. No. 101-629, § 16(b), 104 Stat. 4511, 4526 (Nov. 28, 1990).

Teva also disputes Amneal's arguments that its interpretation of the Listing Statute renders come provisions to be surplusage. With regard to the statutory phrase "claims the drug" Teva argues that FDA has excluded "[p]atents claiming packaging, patents claiming metabolites, and patents claiming intermediates." These patents may indeed raise infringement liability under the infringement clause of the Listing Statute but they cannot raise liability under the "claims the drug" clause, citing Hoechst-Roussel Pharms., Inc. v. Lehman, 109 F.3d 756, 759 & n.2 (Fed. Cir. 1997), for patents claiming metabolites, for example. Nor should the Court find persuasive Amneal's arguments regarding other changes in the statute under the Orange Book Transparency Act of 2020, Pub. L. No. 116-290, 134 Stat. 4889 (2021), codified at 21 C.F.R. § 314.53(b)(1) because, Teva argues, "both the text and the legislative history refute the notion that Congress sought to change listing practices in the significant way Amneal hypothesizes." Regarding Congress's motivations and directions to the GAO related to this statutory change, Teva disputes Amneal's implications that Congress intended to prevent device patents from being Orange Book listed. Instead, Teva contends Congress was trying to determine the number of patents claiming the device-drug combination and those claiming the device per se (a heavily nuanced argument that comes perilously close to mimicking Amneal's contentions). Nevertheless, "[c]urrent regulation and practice is to list precisely the types of patents Amneal complains are at issue here," Teva argues, and (turnabout being fair play) Teva notes that "[u]ntil recently, Amneal itself recognized as much with respect to its patents on epinephrine injection products—which likewise did not mention the active ingredient."

Teva devotes a separate section to its arguments that the asserted patents are properly drug product patents. This basis for affirming the District Court asserted by Amneal in its responsive brief was not part of the court's legal reasoning below, Teva states (terming it "an afterthought"). Regardless, Teva argues that the argument "cannot be reconciled with the text of either the Delisting Statute or the Listing Statute" (emphasis in brief), inter alia, because "Congress did not provide for delisting patents on the basis that it does not claim a drug product," citing 21 U.S.C. § 355(j)(5)(C)(ii)(I) (and Teva argues the patents ordered to be delisted did claim a drug product by virtue of being combination patents). (Teva takes the opportunity to disparage the lack of legal reasoning, in its view, the FTC mustered in supporting Amneal's arguments in this regard, explicated in a detailed footnote.) This portion of Teva's argument reaches the important difference between the parties (and amici): while agreeing that a "drug product" is a "finished dosage form, e.g., tablet, capsule, or solution, that contains a drug substance, generally, but not necessarily, in association with one or more other ingredients" under 21 C.F.R. § 314, does this definition include mechanical devices used to administer the drug? Teva's answer is expansive: a patent claims a drug product "if it reads on one or more components of a drug," in this case "whether albuterol sulfate, the propellant, the inhaler device, or the entire inhaler, with its constituent parts." Amneal contends that whatever else is claimed it must include the drug substance itself: "because a drug product contains a drug substance, it insists that every drug product patent must expressly recite a drug substance (i.e., active ingredient)." Teva's argument is bound up with the definitions and legal strictures of the relevant statutes ("the relevant regulation defines a 'drug product' as 'contain[ing] a drug substance, generally, but not necessarily, in association with one or more other ingredients," citing 21 C.F.R. § 314.3(b) (emphasis in brief)). In contrast, Amneal's position is a simple and straightforward one: how can a patent claim a drug product if the claims do not recite the drug substance itself?

Teva also disputes whether its asserted patents are "formulation or composition" patents. Teva claims they are, relying on FDA rules having "expressly recognized" that metered aerosols can be listed as "finished dosage forms." Teva cannot rely on FDA definitions for the term "composition" (Teva's brief concedes there isn't one) and falls back on patent law definitions of "compositions of matter" as "all compositions of two or more substances and all composite articles, whether they be the results of chemical union, or of mechanical mixture, or whether they be gases, fluids, powders, or solids," citing In re Nuijten, 500 F.3d 1346, 1357 (Fed. Cir. 2007), and Jazz Pharms. This language indicates that "composition patents" include patents on "composition articles" which easily (for Teva) includes "multiple physical components," citing, of all things, Ass'n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 591 (2013). Importantly here Teva argues that this use of the term is consistent with how the FDCA statute and FDA regulations use the term "component" with regard to drug products. And Teva points out that what Amneal (and the FTC) define as a composition (i.e., "a mixture of active and inactive ingredients") is more properly termed a formulation, citing HZNP Meds. LLC v. Actavis Lab'ys UT, Inc., 940 F.3d 680, 683 (Fed. Cir. 2019), for this distinction (supported in a footnote by reference to the Hatch-Waxman letter, cited by Amneal, to the effect that "a formulation patent as a subcategory of composition patents" at https://www.fda.gov/media/149035/download?attachment.)

The brief then addresses Teva's assertion that at a minimum claim construction is required, which the District Court pointedly did not perform. Teva maintains its position that "a patent can claim an active ingredient without naming it," citing genus claims as an example (emphasis in brief). Again here Teva takes the opportunity to denigrate the FTC's position (reminding the reader that it is "an agency with no specialized patent knowledge") that "limitations cannot be imported into the claims" (emphasis in brief), stating that claim construction is needed to ascertain properly whether the limitation is present in the claim in the first place.

Finally, Teva restates its contentions that following Amneal's arguments will "destabilize the Hatch-Waxman regime" because the line drawn to balance the rights of branded drugmakers and their generic counterparts is one for Congress, not the courts to set down, citing PDS Consultants, Inc. v. United States, 907 F.3d 1345, 1360 (Fed. Cir. 2018). Here, Congress had drawn the line, Teva argues, so that its patents are properly listed. The brief calls "deeply flawed" arguments by Amneal and certain amici that permitting patents like the ones at issue here to be Orange Book-listed "stifles generic competition." One reason is, Teva maintains, that "FDA typically takes more than 30 months to review an ANDA, meaning that the [statutory 30-month stay] does not actually delay approval" (although to be fair it cannot be said that the ANDA litigation process under §271(e)(2) accelerates approval, either). Teva argues that this case illustrates that the current situation does not prevent generic competition because "[m]ultiple generic versions of ProAir HFA are already on the market; the first [being] approved in 2020" and Teva itself is marketing an authorized generic version of its branded ProAir HFA inhaler. Teva extols the benefits of the Hatch-Waxman regime and its "highly ordered process" in contrast to "chaotic, hurried, and risky preliminary-injunction proceedings" arising from § 271(a) litigation proceedings. Lost will be the notice provisions provided by Orange Book listing Teva asserts, an outcome warned against by the Association for Accessible Medicines in a comment to FDA stating that "[i]nformation on those device-related patents that 'read on' the approved drug product and that is subsequently listed in the Orange Book would be beneficial to the generic drug industry by allowing the normal pre-approval patent resolution to take place . . . ."

The views of several amici will be discussed in future posts.

Posted at 09:44 PM in Federal Circuit, Food and Drug Administration, Hatch-Waxman, Injunction | Permalink | Comments (0)

October 17, 2024

Teva Pharms. Inc. v. Amneal Pharms. LLC (D.N.J. 2024)

By Kevin E. Noonan --

8,132,712:

9,463,289:

9,808,587:

1. An inhaler for metered dose inhalation, the inhaler comprising:
    a main body having a canister housing,
    a medicament canister, which is moveable relative to the canister housing and retained in a central outlet port of the canister housing arranged to mate with a canister fire stem of the medicament canister, and
    a dose counter having an actuation member having at least a portion thereof located in the canister housing for operation by movement of the medicament canister,
    wherein the canister housing has an inner wall, and a first inner wall canister support formation extending inwardly from a main surface of the inner wall,
    wherein the canister housing has a longitudinal axis X which passes through the center of the central outlet port, and
    wherein the first inner wall canister support formation, the actuation member, and the central outlet port lie in a common plane coincident with the longitudinal axis X such that the first inner wall canister support formation protects against unwanted actuation of the dose counter by reducing rocking of the medicament canister relative to the main body of the inhaler.

10,561,808:

11,395,889:

On appeal, Teva makes two arguments: the first is based on a legal and technical definition of how the term "drug product" is defined in the statute, and the second is whether the District Court erred procedurally, including whether claim construction was required to properly determine the first question. That first question is the more difficult one, to the extent to which Teva must convince the Court that the 1st Circuit erred in the Lantus decision and the District Court erred in interpreting the 2nd Circuit's decision in the Takeda case, both of which were decided consistently with the decision against Teva by the District Court.

With regard to its statutory construction argument, Teva maintains that not only did it comply with the listing statute but that it was compelled by the statute to do so. "A drug product patent must be listed in the Orange Book for a specific NDA (i.e., a brand-name product) if the patent 'claims the drug for which the applicant submitted the application'" under 21 U.S.C. § 355(b)(1)(A)(viii)(I) according to Teva's brief. This argument can only be persuasive should "the drug for which the applicant submitted the application" be interpreted to encompass per se the inhaler device (and related administration-related accoutrement and not need to include express recitation of the drug administered thereby). That interpretation further depends on the Federal Circuit being persuaded that the drug itself is impliedly contained in the claims to the "drug product," as interpreted by Teva, analogously to recitations of either genus claims to particular classes of drugs or more broadly to formulation claims reciting excipients and the like. Teva argues that accepting the arguments by Amneal (and their supportive amici) would greatly reduce the number of Orange Book-listed patents in ways that would harm the careful "balance'" struck under the Hatch-Waxman framework in disclosing to generic competitors (and the public) what patents could be asserted against ANDA-seeking drugmakers under 35 U.S.C. § 271(e)(2).

According to Teva, the District Court erred in what it means to claim a drug product, focusing not on that is recited in the claim but what generic drug product would be adjudged to be infringed. In the context of Orange Book listing, Teva argues that under the statute, that definition "includes not just an 'article' that treats an illness or affects the body's functioning, but also any 'component' of such an 'article'" under 21 U.S.C. § 321(g)(1)(B)-(D). This is because "FDA's rulemaking expressly contemplates that patents claiming a 'dosage form' will be listed in the Orange Book and identifies 'metered aerosols' like those at issue here as one example of a 'dosage form.'"

The brief relies on this definition of the term "drug" in the statute:

(A) articles recognized in the official United States Pharmacopoeia, official Homeopathic Pharmacopoeia of the United States, or official National Formulary, or any supplement to any of them; and (B) articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals; and (C) articles (other than food) intended to affect the structure or any function of the body of man or other animals; and (D) articles intended for use as a component of any article specified in clause (A), (B), or (C).

21 U.S.C. § 321(g)(1) (italics emphasizing the portion of the statute expressly relied upon by Teva). This definition is both "express" and "expansive," Teva argues, and applies to the listing statute as well, according to the brief. Teva acknowledges that mere packaging cannot be listed but contends that its inhalers are part of the approved "finished dosage form" of the approved product and therefore the asserted patents to such inhalers et al. were properly listed. Inclusion of subsection (D) above "ensures that the term 'drug' will reach the entirety (any 'component') of any drug product (any 'article[]' used to treat disease)," Teva argues.

Relying on FDA regulations (68 Fed. Reg. 36,676, 36,680 (June 18, 2003)), the brief asserts that metered aerosols are "expressly categorized" as a dosage form, wherein 'drug delivery systems used and approved in combination with a drug'—a category that includes 'metered dose inhalers'—are distinguishable from the type of 'packaging and containers' that are not properly listed in the Orange Book," Teva citing Orange Book, Appendix C, at C- 1 (44th ed. 2024) in support for this argument. Moreover, Teva argues that "FDA classifies MDIs [metered dose inhalers] like ProAir as "single-entity combination products," meaning a drug and a device "combined or mixed and produced as a single entity," wherein "[c]ombination products 'constitute a combination of a drug, device, or biological product'" under 21 U.S.C. § 353(g)(1)(A)" that are "regulated either as a drug or a device" under 21 U.S.C. § 353(g)(1). Regarding MDIs, Teva argues that FDA has classified them as "drug-device combination products for which 'the primary mode of action . . . is attributable to the drug component,'" citing FDA guidance from 1993 (which states that "an aerosol delivery device will be considered a drug product . . . when the primary purpose of the device is delivering or aiding in the delivery of a drug and the device is distributed with the drug"). (This determination also applies to dose counters according to the brief.). In this way Teva contends the Court must treat the inhaler as it would an excipient or other component of a drug formulation covered under the statute and relevant FDA regulations because that is how FDA approved the combination.

The District Court, in Teva's telling, erred in ruling that the asserted claims must be delisted because none of those claims expressly recited the active ingredient of the drug product, albuterol sulfate, and did so without claim construction (despite the decision depending on whether the drug was claimed in any of the asserted claims). The brief also asserts that the District Court apparently vacillated "between stating that the claims must recite the active ingredient and stating that the claims must recite the full product itself," finally resting on the purported need for the claims to recite expressly albuterol sulfate. But Teva asserts another interpretation of the District Court's holding would require a properly Orange Book-listed patent would need to "recite every aspect of a drug (active ingredients, inactive ingredients, excipients, etc.)" which would permit listing only of "claim[s] with limitations explicitly directed to every part of the drug product [that] would satisfy the opinion," which would be "a dramatic narrowing of the scope of the Listing Statute and contrary to established law, citing in this regard Cadence Pharms. Inc. v. Exela PharmSci Inc., 780 F.3d 1364, 1369 (Fed. Cir. 2015), as an example.

Teva asserts that the statute requires that its claims must, under 21 U.S.C. § 355(b)(1)(A)(viii), claim "the drug for which the applicant submitted the application" and the test for whether this is the case is if the accused product would infringe the asserted claims ("The scope of what a patent 'claims' is effectively coterminous with the products that infringe a patent."). "Critically," the brief asserts (and this is the crux of whether Teva will be successful before the Federal Circuit), a "patent need not read on the entirety of a product to 'claim[]' the product," citing SunTiger, Inc. v. Sci Rsch. Funding Grp., 189 F.3d 1327, 1336 (Fed. Cir. 1999)("[i]f a claim reads merely on a part of an accused device, that is enough for infringement"), "[n]or, in the case of pharmaceuticals, must a patent recite the active ingredient by name in order to claim the drug" (basing this assertion on generic claims "whose active ingredient is one species within the genus," citing In re Omeprazole Patent Litig., 536 F.3d 1361, 1365-66 (Fed. Cir. 2008), and Indivior Inc. v. Dr. Reddy's Lab'ys, S.A., 930 F.3d 1325, 1349-50 (Fed. Cir. 2019)). Thus, Teva argues that the Federal Circuit has held that a patent that "'claims the drug for which the applicant submitted the application'—and therefore 'must be listed'— if it contains a product claim that reads on the drug that is the subject of the NDA,'" citing Apotex, Inc. v. Thompson, 347 F.3d 1335, 1343-44 (Fed. Cir. 2003). And under 21 U.S.C. § 321(g)(1)(D), that would include the claims Teva asserted before the District Court (because the term "drug" "covers the entirety of the drug product and any component thereof—not just the active ingredient"). This is because, Teva argues, the FDA-approved "drug product" is the ProAir HFA (the device in combination with albuterol sulfate) -- and "[t]he statutory scheme treats combination products like ProAir HFA as drug products where—as is the case with ProAir HFA—the product's 'primary mode of action' is that of a drug" under 21 U.S.C. § 353(g)(1)(D)(i).

The two "out-of-circuit" cases the District Court relied upon for its contrary determination -- United Food & Commercial Workers Local 1776 v. Takeda Pharmaceutical Co., 11 F.4th 118 (2d Cir. 2021), and In re Lantus Direct Purchaser Antitrust Litigation, 950 F.3d 1 (1st Cir. 2020) – either actually supported Teva's position (Takeda) or were wrongly decided (Lantus), the brief asserts. In the former case the court used an "infringement-type [judicial] analysis," which Teva argues was required but not performed by the district court. And the latter case (as did the District Court here) equated "claims" for a drug with "mention[ing]," the drug in the claims, which is Teva's basis for asserting error. The brief also notes that these were both antitrust cases, not patent cases, and as such did not address patent-specific issues important in this case. In Takeda, according to Teva, the Second Circuit adopted the approach Teva espoused, that "a patent claims any product that falls within the bounds of the claim—a determination that must be made through an infringement-type analysis." And that case was directed to a combination product, with the Second Circuit holding that a patent on only one component of the combination did not "read on" the approved drug comprising the combination. Regarding Lantus, which held that "if a patent 'do[es] not mention the drug for which the sNDA was submitted, the patent does not "claim the drug" under the Listing Statute,'" the District Court also did not perform claim construction. Moreover, Teva's brief contends "Lantus's reasoning is inapplicable by its own terms to Teva's claims directed to the entire inhaler product [because the] patent at issue in Lantus did 'not include a claim for an injector pen more broadly,' but rather 'mention[ed] that the drive mechanism is intended for use in a "drug delivery device"'" and in that case the listed claim, despite claiming "a device intended for use as an injector pen [did] not claim any injector pen" (rather it claimed merely a component part of the injector pen). In this case, "three of the Asserted Patents plainly claim the entire inhaler . . . and thus claim the equivalent of the injector pen—precisely what the court in Lantus thought was missing."

At a minimum, Teva argues, the District Court's decision was error because it was decided on the pleadings and not properly supported by claim construction, because the listing question is one of patent law needing "ordinary claim construction principles" to be applied in making a determination whether an accused infringing product infringes (and there is more to this analysis than "whether a claim name-checks the active ingredient or the drug" according to the brief). The brief cites several Federal Circuit decisions and those from other circuit courts, including Jazz Pharms., Inc. v. Avadel CNS Pharms., LLC, 60 F.4th 1373 (Fed. Cir. 2023); Biogen Int'l GmbH v. Mylan Pharms. Inc., 18 F.4th 1333, 1336 (Fed. Cir. 2021); Teva Pharmaceuticals USA, Inc. v. Leavitt, 548 F.3d 103 (D.C. Cir. 2008); Am. Bioscience, Inc. v. Thompson, 269 F.3d 1077, 1080 (D.C. Cir. 2001), for the primacy of this principle. Teva argues that the asserted claims in fact contain terms that encompass the active drug -- albuterol sulfate -- including "[a]n inhaler for metered dose inhalation" recited in the '289 and '587 patents; "medicament canister" recited in the '289, 587, and '712 patents; "an inhaler" recited in the '808 patent; "a metered dose inhaler" recited in the '889 and '712 patents; and "cannister" recited in the '889 patent.

These errors by the District Court require the Federal Circuit to vacate the judgment and remand for further consideration, Teva argues. Further Teva asserts that this would pose no burden on the District Court, which is construing claims in these patents during the litigation that has proceeded on other grounds not affected by the order to delist. And doing so would help clarify circumstances like this under the Hatch-Waxman framework, Teva argues, which is beneficial because it "facilitate[s] a scheme that allows the parties to obtain patent certainty before the launch of a drug, thereby supporting the development of both brand and generic medicines" (emphasis in brief); without doing so the consequence of the District Court's decision will result in "significant uncertainty and risk" because "many more infringement disputes would be resolved only after launch of a generic product, including preliminary injunction proceedings, a post-launch jury trial, and an award of money damages."

Teva concludes these arguments by imploring the Federal Circuit not to "disrupt" the balance struck by Congress that "[a]ll drug product patents must be listed in the Orange Book for every drug they claim, for as long as a claim of infringement can reasonably be made under those patents," and that "[t]raditional Paragraph IV invalidity and noninfringement challenges to those listed patents provide an expeditious pathway toward patent certainty." It must be said that the highest burden towards that end will be the ineluctable lure of the more simple-minded concept that claims not reciting the drug product should not be Orange Book listed, regardless of the nuances found in Teva's explication of the statute and FDA ruled implementing its provisions. The arguments against such statutory interpretations, by Amneal and almost all the amici, will be set forth in later posts.

Posted at 11:59 PM in District Court, Food and Drug Administration, Hatch-Waxman, Injunction | Permalink | Comments (0)

June 16, 2024

CVS Pharmacy Inc. v. Forest Laboratories Inc. (2d Cir. 2024)

By Kevin E. Noonan --

In a decision characterized (somewhat remarkably) by the Circuit Court as being one of first impression, the Second Circuit affirmed dismissal with prejudice of an antitrust allegation by a class of plaintiffs* against Forest Laboratories and several generic drug companies** for settlement agreements in ANDA litigation, in CVS Pharmacy Inc. v. Forest Laboratories Inc.

The litigation arose over the generic drugmakers' ANDA filings involving Forest Laboratories' Bystolic (nebivolol hydrochloride) product, which is a beta blocker used for treating high blood pressure:

The patent asserted in the litigation was U.S. Patent No. 6,545,040 (expired December 17, 2021), claim 1 thereof reciting:

1. A composition consisting of the compound [2R,αS,2′S,α′S]-α,α′-[iminobismethylene]bis[6-fluoro-3,4-dihydro-2H-1-benzopyran-2-methanol] having the formula:
or a pharmaceutically acceptable acid addition salt thereof.

The parties settled the ANDA litigations, with settlement terms including delayed generic entry (until 3 months before patent expiry) and payments to generics for "goods and services" "such as ingredient supply and product development" (which the antitrust plaintiffs alleged were pretextual).

Plaintiffs, consisting of direct purchasers, retail purchasers, and end-payor purchasers alleged violation of Sherman Act Sections 1 and 2, Clayton Act Section 16, and state antitrust and unfair competition laws. The District Court granted defendants' motion to dismiss under Fed. R. Civ. Proc. 12(b)(6), first without prejudice (permitting the complaint to be refiled) and then with prejudice when the procedural defects identified by the District Court under Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), Ashcroft v. Iqbal, 556 U.S. 662 (2009), were not rectified. This appeal followed, wherein the Second Circuit affirmed dismissal with prejudice. The opinion notes that the FTC filed an amicus brief but did not file an action against Forest and the generic defendants.

The Court's basis for affirming dismissal of the complaint was that plaintiffs did not plausibly allege that "any of Forest's reverse payments were unjustified or unexplained, instead of constituting fair value for goods and services obtained as a result of arms-length dealings." The opinion relies upon the Supreme Court's decision in FTC v. Actavis which mandates that courts apply the antitrust "rule of reason" to reverse payment settlement agreements that "depends upon its size, its scale in relation to the payor's anticipated future litigation costs, its independence from other services for which it might represent payment, and the lack of any other convincing justification," including "fair value for goods and services exchanged as part of a bona fide commercial relationship." The reverse payments in the settlement agreements at issue ranged from $200,000 and $2,000,000, and each settling defendant was granted a "non-exclusive, royalty-free license to market its version of generic Bystolic beginning on September 17, 2021" (but with provisions that, if any of the seven entered the market earlier then the others were permitted to do so). In addition, the settlements contained various supply agreements for goods and services (termed the "Commercial Transactions"), which plaintiffs argued were "side agreements" having large ($15 million) values.

Appellate review was de novo, under Second Circuit law; as set forth in the opinion under Iqbal the facts alleged must support a "facially plausible claim" that would permit a court "to draw the reasonable inference that the defendant is liable for the misconduct alleged." "Mere possibility" isn't enough, nor are allegations that are "merely consistent with" liability if they don't plausibly suggest liability under Twombly; further "labels and conclusions" are insufficient nor are "naked assertions" unsupported by "further factual enhancements."

The Court focused on Twombly's plausibility requirement, the opinion noting that this standard does not permit a court to dismiss an antitrust complaint based on a "plausible version of the events merely because the court finds a different version more plausible" under Anderson News, L.L.C. v. Am. Media, Inc., 680 F.3d 162, 185 (2d Cir. 2012), because "plausibility" is a lower standard than "probability."

The opinion provides a succinct synopsis of Supreme Court's Actavis decision: "the Supreme Court made clear that reverse-payment settlements are not per se or presumptively illegal--rather, they may violate the antitrust laws only 'sometimes' . . . [requiring courts to] navigate the 'tension between the antitrust laws' objective of enhancing competition by preventing unlawful monopolies and patent laws' objective of incentivizing innovation by granting legal patent monopolies,'" citing New York ex rel. Schneiderman v. Actavis PLC, 787 F.3d 638, 659 (2d Cir. 2015).

Here, the Second Circuit found parallels between the circumstances and provisions in Actavis and in this case -- "an agreed-upon date [of market entry] earlier than the expiry of [the branded company's patents]" and payment to the generic companies ("millions of dollars") as compensation for services. The Supreme Court calculus the Second Circuit considered particularly applicable in this case involved the rule of reason wherein: (1) the plaintiff has the initial burden to show that the challenged restraint of trade has actual anticompetitive effects; (2) if the plaintiff makes out a prima facie case, the burden shifts to the defendant to demonstrate the restraint's procompetitive benefits or justifications; and (3) if the defendant does so, the burden shifts back to the plaintiff to establish that there were less restrictive means for obtaining the procompetitive benefits." Further, the opinion sets forth the Court's analysis of the rubrics the Second Circuit relied upon from Actavis: first, that the rule of reason is applied because reverse payment agreements have the "potential for genuine adverse effects on competition" and second that these agreements only violate the antitrust laws "sometimes" and thus "[t]he 'relevant antitrust question' is why the reverse payment was made," i.e., to cause anticompetitive harm, which is assessed using the analytical framework set forth by the Supreme Court in Actavis ("large," based on absolute size and relationship to avoided litigation costs, and "unjustified" or unexplained reverse payments based on "traditional settlement considerations" such as "fair value"), in the context of a general preference for settling lawsuits.

The Second Circuit agreed with the District Court that plaintiffs did not "plausibly allege" that the settlements were unjustified and raised an antitrust violation, and had "properly applied the general pleading principles established in Twombly [and] Iqbal." Regarding the justification standard, the Court held that "[t]here is no allegation plausibly showing that any of the six Commercial Transactions reflected anything other than 'fair value' for goods and services obtained as a result of good-faith business dealings," the plaintiffs rather relying ("mostly") on "speculation and supposition," terming them "atmospheric allegations" (heretofore rather more often the province of the FTC's rhetoric).

Importantly, the Court asserts that "Actavis does not stand for the proposition that parties must reach the most procompetitive settlements possible," citing King Drug Co. of Florence, Inc. v. Smithkline Beecham Corp., 791 F.3d 388, 408–09 (3d Cir. 2015), nor does the Court's decision "compel antitrust scrutiny of a settlement regardless of whether its terms could reasonably be interpreted as a large and unjustified reverse payment," citing In re Actos End Payor Antitrust Litig., No. 13-cv-9244, 2015 WL 5610752, at *15 (S.D.N.Y. Sept. 22, 2015).

The opinion recites as "overarching" the following reasons supporting dismissal in the terms of the Commercial Transactions that the Court opines reflect bona fide business considerations:

• The size of payments is not sufficiently contextualized or compared to enable [the Court] to infer that the payments are plausibly unjustified.

• Forest's need for alternative supplies of active pharmaceutical ingredients ("API") or finished pharmaceutical products was consistent with what Forest previously disclosed to investors.

• A lack of public disclosures about business plans or investments does not necessarily bear upon whether those ventures are truly legitimate or genuine.

• It is sensible for counterparties to enter into condensed term sheets with the expectation of subsequently negotiating definitive agreements that are more detailed.

• Payments for developmental or commercial milestones, or research-and-development expenses, bespeak rational commercial incentives.

• Provisions in the Commercial Transactions that are designed to ensure price competition do not fit with Forest's alleged intention to funnel secret overpayments to the Generic Defendants.

• Agreements between Forest and other counterparties need not be identical to Forest's agreements with the Generic Defendants, or even closely resemble them.

• The agreements' provisions trump allegations of unsupported speculation about nefarious motives.

The opinion then illustrates how each of the six Commercial Agreements satisfy a sufficient combination of these considerations for the Court to affirm the District Court's decision to dismiss plaintiff's complaint with prejudice (calling one set of plaintiff's allegations "at once complicated and threadbare").

Despite active support by the FTC, plaintiffs here failed to establish sufficient likelihood of an antitrust violation arising from any of the ANDA settlements at issue illustrating the burden such plaintiffs face and the dependence of that burden on the factual underpinnings of the settlement agreements at issue.

* Plaintiffs included CVS Pharmacy, Inc.; Rite Aid Corporation and affiliates; J M Smith Corporation and affiliates; KPH Healthcare Services, Inc. and Kinney Drugs, Inc., Mayor and City Council of Baltimore, UFCW local 1500 Welfare Fund, Teamsters Western Region & Localv177 Health Care Plan, Fraternal Order Of Police Miami Lodge 20, Insurance Trust Fund, Law Enforcement Health Benefits, Inc., Teamsters Local No. 1150 Prescription Drug Benefit Plan, Teamsters Local 237 Welfare Fund and Teamsters; Local 237 Retirees Benefit Fund, Albertsons Companies, Inc., H-E-B L.P., The Kroger Co., Walgreen Co.

** Defendants included Forest Laboratories Inc. (innovator) and Allergan, Inc. and affiliates; Abbvie Inc.; Watson Pharma, Inc. and affiliates; Actavis, Inc.; Teva Pharmaceuticals USA, Inc.; Torrent Pharmaceuticals Ltd. and affiliates; Amerigen Pharmaceuticals Ltd and affiliates; Glenmark Generics Inc., USA and affiliates; Hetero Labs Ltd. and affiliates; Andchemie Health Specialties Private Ltd.; Alkem Laboratories Ltd.; Ascend Laboratories, LLC; and ANI Pharmaceuticals, Inc. (generic drugmakers), wherein Alkem, Amerigen, Glenmark, Indchemie, Hetero, Torrent and Watson were all first-filers.

Posted at 11:28 PM in Hatch-Waxman, Patent Litigation | Permalink | Comments (0)

April 24, 2024

Salix Pharmaceuticals, Ltd. v. Norwich Pharmaceuticals Inc. (Fed. Cir. 2024)

By Kevin E. Noonan --

The Federal Circuit handed down an opinion earlier this month that invalidated several asserted claims and found infringement under 35 U.S.C. § 271(e)(2) of the claims, while refusing to modify its judgment on infringement after Defendant Norwich submitted a revised ANDA containing a Section viii "carveout" in Salix Pharmaceuticals, Ltd. v. Norwich Pharmaceuticals Inc. The majority opinion raises issues in its invalidity analysis regarding the extent to which the prior art should be required to disclose the recited administered dose to satisfy the "reasonable expectation of success" prong for obviousness for pharmaceutical claims (wherein the standard adopted by the majority motivated Judge Cunningham to dissent in part). The reasoning provided by Judges Lourie and Chen appeared to be rooted in the broader scope of creativity imparted to the skilled artisan under KSR v. Teleflex as discussed below.

The case arose in ANDA litigation over rifaximin, the active ingredient in Salix's commercial product Xifaxan^®, which the opinion informs has been used as an antibiotic for 40 years. The use at issue was FDA-approved treatment of irritable bowel syndrome with diarrhea (IBS-D) and hepatic encephalopathy (HE), specified in each instance by treatment with 550 mg doses three times per day (TID) for a total of 1650 mg administered dose. Salix asserted three "groups" of patents:

• U.S. Patent Nos. 8,624,573, 9,421,195, and 10,335,397 directed to HE treatment;
• U.S. Patent Nos. 8,309,569 and 10,765,667 directed to treating IBS-D using the 550 mg TID administration protocol; and
• U.S. Patent Nos. 7,612,199 and 7,902,206 directed to rifaximin polymorph b

The District Court held* that claim 2 of U.S. Patent No. 8,309,569, claim 3 of U.S. Patent No. 10,765,667, claim 4 of U.S. Patent No. 7,612,199, and claim 36 of U.S. Patent No. 7,902,206 were obvious, and that claim 8 of U.S. Patent No. 8,642,573, claim 6 of U.S. Patent No. 9,421,195, and claims 11 and 12 of U.S. Patent No. 10,335,397 were not invalid and infringed, and entered judgment that the FDA not approve Norwich's ANDA for HE indications until the final patent in this group expired in October 2029. Norwich amended its ANDA to provide a Section viii "carveout" of indications related to HE treatment and filed a motion to modify the judgment under Fed. R. Civ. Pro. 60(b) which the District Court denied. This appeal by both parties of the adverse decisions below followed.

The Federal Circuit affirmed, in an opinion by Judge Lourie joined by Judge Chen in toto and by Judge Cunningham in part, who also dissented in part. Regarding obviousness of claims to IBS-D treatment, the opinion sets forth claim 2 of the '569 patent as being representative:

1. A method of providing acute treatment for diarrhea-associated Irritable Bowel Syndrome (dIBS) comprising: administering 1650 mg/day of rifaximin for 14 days to a subject in need thereof, wherein removing the subject from treatment after the 14 days results in a durability of response, wherein the durability of response comprises about 12 weeks of adequate relief of symptoms.

2. The method of claim 1, wherein the 1650 mg is administered at 550 mg three times per day.

The District Court's decision was based on the combination of a Phase II clinical trial protocol disclosing twice-daily dosing of IBS patients with 550 mg doses (1100 mg total) or 1100 mg doses (2200 mg total) of rifaximin (the opinion noting that "the Protocol does not include any efficacy or safety data, nor does it mention a 1,650 mg/day dose or TID dosing"), taken in view of a scientific journal article to Pimentel that disclosed treating IBS with administration of 400 mg of rifaximin TID (for a total of 1,200 mg); significantly for the Federal Circuit's decision, this reference contained a speculative statement that "optimal dosage of rifaximin may, in fact, be higher than that used in our study." These references were used by the District Court to provide a motivation to combine them with a reasonable expectation of success, and the majority agreed (Judge Cunningham adducing here disagreement on this point in her dissent). Salix argued that the District Court erred in the reasonable expectation of success prong of this analysis, which as a question of fact required a showing of clear error on appeal. Curiously, Salix (according to the opinion) did not dispute the District Court's finding that all limitations of claims to IBS-D treatments were "effectively disclosed" in the cited art, despite there being no express disclosure of administering 550 mg rifaximin TID (for a total of 1650 mg) (other than the speculation in the scientific reference that higher doses may be optimal).

The Federal Circuit majority restricted the application of its conclusion that this prior art disclosure supports a finding that there is a reasonable expectation of success under these circumstances by asserting that:

Although we have rejected the idea that "efficacy data [are] always required for a reasonable expectation of success," OSI Pharms., LLC v. Apotex Inc., 939 F.3d 1375, 1385 (Fed. Cir. 2019), we are hesitant to conclude as a general matter that the disclosure of a Phase II clinical trial plan, standing alone, provides an expectation of success sufficient to render obvious a dosage that was not included within the planned clinical trial.

However, the majority distinguished the situation here by the combination of the clinical trial protocol with the Pimentel reference. For the majority, that speculative sentence, that "[r]ecent data suggest that the optimal dosage of rifaximin may, in fact, be higher than that used in our study" was sufficient to create in the skilled artisan sufficiently reasonable expectation of success to satisfy the requirement for finding obviousness (emphasis in opinion), at least in view of the clear error standard of review. The majority's reasoning was that Pimentel expressly disclosed 400 mg rifaximin TID and that "the next higher dosage unit from the Protocol was 550 mg" combined with the unsupported suggestion that higher doses may be optimal. This conclusion was supported in the majority's view by the Court's earlier precedent that "certainty and absolute predictability are not required to establish a reasonable expectation of success, citing Almirall, LLC v. Amneal Pharms. LLC and Acorda Therapeutics, Inc. v. Roxane Lab'ys, Inc. The majority also cited several "references establishing the background knowledge of a person of ordinary skill in the art" consistent with their finding of no clear error in the District Court's obviousness determination (although, as explicated in the dissent these references were not considered by the District Court). The majority appeared to have been satisfied that ex post facto verification of the skilled artisan's purported expectation of success using increased dosage amounts supports its reasonableness beforehand. The majority similarly used this reasoning to credit the skilled artisan of apprehending that administering increased dosages would not create "an intolerable increase in negative side effects." And the majority also asserted that there had been "[w]idespread off-label use" of rifaximin for treating IBS-D that supported this safety expectation.

Similarly the Court (Judge Cunningham not dissenting from this aspect of the judgment) affirmed the District Court's determination that claims to the β-polymorph of rifaximin would have been obvious. Claim 4 of the '199 patent was set forth in the opinion as representative:

4. Rifaximin in polymorphic form β, wherein the rifaximin has x-ray powder diffraction pattern peaks at about 5.4°; 9.0°; and 20.9°2θ and wherein the rifaximin has a water content of greater than 5%.

The prior art disclosed preparations of crystalline rifaximin (albeit not the β-polymorph expressly) and methods for preparing such crystalline forms including in particular solvents used to prepare them (it being recognized that in the arcane rituals of crystallization such solvent choice frequently determines the resulting crystalline product). The panel noted that the District Court's factual determinations supporting its obviousness conclusions were supported by expert testimony that "(1) a skilled artisan would have had good reason to characterize the crystalline rifaximin obtained by following the Cannata protocols, (2) that such characterization was routine and could have been performed 'in one day,' and (3) that doing so would have led the skilled artisan to have 'detected rifaximin β.'" The Federal Circuit also distinguished prior precedent including Grunenthal GmBH v. Alkem Laboratories Ltd., 919 F.3d 1333 (Fed. Cir. 2019), and Pharmacyclics LLC v. Alvogen, Inc.; regarding Grunenthal, the panel asserted that the prior art produced one particular polymorph and that the art disclosed no evidentiary basis to expect that a second form would be produced using prior art guidance regarding "what particular solvents, temperatures, agitation rates, etc., were likely to result" in the claimed polymorphic form, which conclusion the Federal Circuit held was not clear error. The panel here maintained that this precedent merely showed the reliance on particular factual aspects involved in such decisions, citing Sanofi-Synthelabo v. Apotex, Inc. and Pfizer, Inc. v. Apotex, Inc. A particular distinction persuasive to the Court was that in Grunenthal there was a question of whether the skilled artisan could produce a crystalline form of the claimed compound, which was not the case here (the parties agreeing that methods for preparing crystalline rifaximin were established in the prior art, as well as there being an appreciation in the art that "polymorph β is a commonly produced polymorph and the most stable form of rifaximin"). While abjuring a conclusion that there would always be a reasonable expectation of success in producing the β-rifaximin polymorph the panel found no clear error in the District Court's fact finding here and thus affirmed.

(Regarding Pharmacyclics its status as a non-precedential decision put squarely within the District Court's discretion its decision not to follow its conclusions, as well as stating that the Court's "later affirmance of the factual findings in Pharmacyclics did not retroactively override the district court's analysis here.")

The panel assessed Norwich's appeal of the District Court's decision that, as a consequence of its ANDA constructively infringing Salix's claims to methods for treating HE it was correct in ordering that a final approval of Norwich's ANDA could not be effective before the HE patents expired under 35 U.S.C. § 271(e)(4)(A) as a question of statutory interpretation. In this regard, the opinion notes that the statute instructs that "the court shall order the effective date of any approval of the drug or veterinary biological product involved in the infringement to be a date which is not earlier than the date of the expiration of the patent which has been infringed." Norwich contended that this mandate includes the requirement that the order take into consideration (and is limited to) the indication for which an ANDA applicant seeks approval. The basis for this argument was that Norwich's original ANDA had indications for both HE and IBS-D and the District Court's infringement determination was limited to the HE indication. While Norwich voiced its concern that this Order would "unfairly preclude[] it from receiving final approval of a new non-infringing ANDA" the opinion flatly rejects this concern ("The district court did no such thing")(arguably thus receiving the Federal Circuit's imprimatur for any such filing of such an ANDA successfully). The statutory construction bases for this conclusion by the panel is that FDA approves drugs for specific and particular indications and thus proper construction is "directed to approval of particular infringing uses of the drug, not all uses of the drug including non-infringing uses." This limits the scope of infringement to submission of an ANDA to the infringing use under 35 U.S.C. § 271(e)(2)(A). But "[t]he order appropriately said nothing that would prevent approval of a new non-infringing ANDA."

Regarding the panel's affirmance of the District Court's denial of Norwich's Rule 60(b) motion, the Federal Circuit asserted that the question was whether that denial was an abuse of discretion under Third Circuit law, citing Amstar Corp. v. Envirotech Corp., 823 F.2d 1538, 1550 (Fed. Cir. 1987). The opinion states that a district court can reconsider its infringement finding when a defendant files an amended ANDA but is not compelled to do so, citing Ferring B.V. v. Watson Lab'ys, Inc. Fla. Here, the Federal Circuit appreciated that "[i]t is not a simple matter to determine whether an ANDA applicant has successfully carved out language from a label to turn infringement into non-infringement" and Norwich's motion would amount to "essentially" a second litigation. Because under Third Circuit law there is no obligation to grant such a motion the panel discerned no abuse of that discretion in this case.

Judge Cunningham's dissent was limited to the Court's affirmance that the asserted claims in the '569 and '667 patents were invalid for obviousness. In Judge Cunningham's opinion, Norwich has satisfied its burden to convince the Judge that she is "'left with the definite and firm conviction that a mistake has been committed' regarding these findings," citing Pfizer, Inc. v. Apotex, Inc. (quoting United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948)). The basis of this conviction is the disconnect the Judge apprehends regarding the disclosure of the cited art (400 mg TID, 1200 mg/day in Pimentel or 550 mg BID or 1100 mg/day) and the scope of the claims (550 mg TID, 1650 mg/day). There was just as great a likelihood in the Judge's mind that the 1100 mg/day dose would have implied that higher doses would not lead to more successful results, inter alia because the tested 2200 mg/day dose did not. And the citations of the later-arising references don't cure these analytical deficiencies on the merits because they teach 1200 mg/day wherein the claimed invention recited dosages "almost 40% higher." Anecdotal reference to off-label use was also unavailing in the Judge's opinion to support the purported reasonable expectation of success because there was no disclosure of dosages therein. Requiring a correspondence between the recited dosages and the cited prior art is consistent with other Federal Circuit precedent including In re Cyclobenzaprine Hydrochloride Extended-Release Capsule Pat. Litig. and Ferring B.V. v. Watson Lab'ys, Inc.-Fla. The single sentence in the Pimentel reference also drew the Judge's attention, wherein "the lack of discussion of any actual dosage that may be optimal, the use of the word 'may,' and the fact that the RFIB 2001 Protocol discloses a specific dosing regimen of 2,200 mg/day rather than 1,650 mg/day all call into question the majority's finding" in Judge Cunningham's opinion. It had also not escaped the Judge's attention that this sentence was considered by the District Court for the motivation to combine requirement and not the reasonable expectation of success prong of the obviousness analysis. Finally, Judge Cunningham would decline to assess the significance and content of the after-arising art in the first instance, because none of this art provided any basis for the District Court's decision and thus had made no findings of fact regarding it, citing Golden Bridge Tech., Inc. v. Nokia, Inc., 527 F.3d 1318, 1323 (Fed. Cir. 2008). The first order of business for the district court on remand (if Judge Cunningham's views had prevailed) would be to consider the significance of this art, see, ACS Hosp. Sys., Inc. v. Montefiore Hosp., 732 F.2d 1572, 1578 (Fed. Cir. 1984).

* The totality of these claims at issue were:

U.S. Patent No. 8,309,569

2. A method of providing acute treatment for diarrhea-associated Irritable Bowel Syndrome (dIBS) comprising: administering 1650 mg/day of rifaximin for 14 days to a subject in need thereof, wherein removing the subject from treatment after the 14 days results in a durability of response, wherein the durability of response comprises about 12 weeks of adequate relief of symptoms, wherein the 1650 mg is administered as 550 mg three times per day.

U.S. Patent No. 10,765,667

3. A method of treating one or more symptoms of irritable bowel syndrome (IBS) in a subject 65 years of age or older, said method comprising administering, 550 mg of rifaximin TID for 14 days to the subject, thereby treating one or more symptoms of IBS in the subject 65 years of age or older, wherein the IBS is diarrhea-predominant IBS.

U.S. Patent No. 7,612,199

4. Rifaximin in polymorphic form β, wherein the rifaximin has x-ray powder diffraction pattern peaks at about 5.4°; 9.0°; and 20.9°2θ and wherein the rifaximin has a water content of greater than 5%.

U.S. Patent No. 7,902,206

36. A solid pharmaceutical composition comprising rifaximin in polymorphic Form β and a pharmaceutically acceptable excipient or carrier, wherein the rifaximin Form β has x-ray powder diffraction pattern peaks at about 5.4°; 9.0°; and 20.9° 2-θ, wherein the rifaximin Form β has a water content of between about 4.5% to about 40%.

U.S. Patent No. 8,642,573

8. A method of maintaining remission of hepatic encephalopathy (HE) in a subject in need thereof comprising administering between about 1000 mg to about 1200 mg rifaximin daily to the subject for a period of 12 months or longer, thereby maintaining remission of HE, wherein remission is defined as a Conn score of 0 or 1.

U.S. Patent No. 9,421,195

6. A method of reducing the risk of hepatic encephalopathy (HE) recurrence in an adult subject in need thereof comprising:
    orally administering between about 1000 mg to about 1200 mg of rifaximin daily to the adult subject for a period of 12 months or longer, thereby reducing the risk of hepatic encephalopathy (HE) recurrence,
    comprising orally administering about 1100 mg of rifaximin per day to the adult subject,
and
    orally administering about 550 mg of rifaximin twice daily to the adult subject.

U.S. Patent No. 10,335,397

11. A method of reducing a subject's risk of experiencing a breakthrough overt hepatic encephalopathy (HE) episode, comprising administering to the subject between about 1000 mg to about 1200 mg of rifaximin daily for a period of about 12 months or longer, wherein the subject has a Conn score of 0 or 1, wherein the rifaximin is administered orally, wherein 1100 mg of rifaximin is administered per day, and wherein 550 mg of rifaximin is administered twice daily.

12. A method of reducing a subject's risk of experiencing a breakthrough overt hepatic encephalopathy (HE) episode, comprising administering to the subject between about 1000 mg to about 1200 mg of rifaximin daily for a period of about 12 months or longer, wherein the subject has a Conn score of 0 or 1, further comprising administering lactulose.

In each instanced italics denotes independent claims from which the asserted claims depend.

Salix Pharmaceuticals, Ltd. v. Norwich Pharmaceuticals Inc. (Fed. Cir. 2024)
Panel: Circuit Judges Lourie, Chen, and Cunningham
Opinion by Circuit Judge Lourie; opinion dissenting-in-part by Circuit Judge Cunningham

Posted at 11:27 PM in Federal Circuit, Hatch-Waxman, Obviousness | Permalink | Comments (0)

April 03, 2024

Edwards Lifesciences Corp. v. Meril Life Sciences Pvt. (Fed. Cir. 2024)

By Kevin E. Noonan --

A fractured affirmance of a district court decision to dismiss an infringement action under 35 U.S.C. § 271(e)(1) was the occasion for the Federal Circuit to illustrate the continued debate over the scope of the safe harbor enacted as part of the Hatch-Waxman Act in Edwards Lifesciences Corp. v. Meril Life Sciences Pvt.

The case arose over a brief (one week) importation of two transcatheter heart valve systems (Class III medical devices, subject to regulatory approval by FDA) by Meril in conjunction with attendance by their representatives at a medical conference. These representatives were instructed not to engage in any sales activities for U.S sales (and indeed their activities did not include any ex-U.S. sales either) nor did the infringing article ever leave the bag in which they were carried. The purported purpose of Meril's attendance at the medical conference was to attract interest from doctors who would be willing to be involved in clinical trials required by the FDA for regulatory approval of the devices, which involved displays and presentations regarding those devices. The opinion notes that Meril had performed clinical trials in India and obtained approval for its devices in that country as well as obtained CE certification for marketing in Europe. Further evidence before the District Court showed that Meril had begun work on a premarket submission and planning for a three-arm clinical trial that could be part of future submissions to FDA, had contacted FDA regarding such trials, and had worked with a medical device consulting company (CardioMed LLC) to assist in preparing its premarket submission documents.

Based on these activities, Edwards filed suit against Meril for patent infringement, i.e., importing the devices into the U.S. without a license. The District Court granted summary judgment in favor of Meril based on their activities falling within the scope of the § 271(e)(1) safe harbor, and this appeal followed.

The Federal Circuit affirmed, in an opinion by Judge Stoll joined by Judge Cunningham; Judge Lourie dissented. The majority opinion was based on the broad scope of the safe harbor tailored by the Supreme Court in Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661, 670–71, 674 (1990) (which expanded the safe harbor to include medical devices like the ones Meril imported into the U.S.), and Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193, 202 (2005) (which held that it "provides a wide berth for the use of patented [inventions] in activities related to the federal regulatory process"), as it has been further developed by several Federal Circuit cases (which Judge Lourie maintained in his dissent had been, at least in part, wrongly decided). The majority emphasized the scope of the application of the statute, to include "all uses of patented inventions that are reasonably related to the development and submission of any information under the [FDA]," that this scope was not limited in when the activities occurred, and that it applied "even if the information is never ultimately submitted to the FDA" under Merck. The majority opinion sets forth the Federal Circuit's explication of the evolution of the doctrine at its hands, illustrated by three cases: AbTox, Inc. v. Exitron Corp., 122 F.3d 1019, 1027 (Fed. Cir. 1997); Momenta Pharm., Inc. v. Teva Pharm. USA Inc., 809 F.3d 610, 619 (Fed. Cir. 2015); and Amgen Inc. v. Hospira, Inc., 944 F.3d 1327, 1338 (Fed. Cir. 2019), which merit brief consideration here as characterized by the majority.

"Starting with Abtox," the opinion asserts that the statute "does not look to the underlying purposes or attendant consequences of the activity . . . as long as the use is reasonably related to FDA approval." This statutory construction is supported, according to the majority, because the language therein is that otherwise infringing acts were in the safe harbor provided they were performed "'solely for uses reasonably related to' FDA approval" (emphasis in opinion; this emphasis on uses rather than the solely requirement is the major philosophical distinction between the majority and Judge Lourie in dissent). The rationale asserted by the Court in Abtox was that "intent or alternative uses" were "irrelevant" to the invocation of § 271(e)(1) because "the statutory language allows [defendant] to use its data from the tests for more than FDA approval," citing Telectronics Pacing Sys., Inc. v. Ventritex, Inc., 982 F.2d 1520, 1524–25 (Fed. Cir. 1992). Turning to Momenta, the majority asserts that activities such as "routine record retention" associated with "post-approval, commercial production" was not protected under § 271(e)(1). Finally, in Amgen the Court affirmed jury instructions to the effect that "additional underlying purposes [for alleged safe harbor activity] do not matter as long as [defendant] proved that the manufacture of any given batch of drug substance was reasonably related to developing information for FDA submission" under circumstances where 7 of 21 otherwise infringing batches were found to fall under the safe harbor because they were used for "pre-approval inspection" while the others, used for "various types of [commercial] testing" did not.

With regard to the term "solely" in the statute, the majority states that it modifies the phrase "for uses," and thus that "the safe harbor is available only for acts or uses that bear a reasonable relation to the development and submission of information to the FDA," relying on Merck. Importantly, the majority went on to say that the statute does not require "that the use must only be reasonably related to the development and submission of information to the FDA" (emphasis in opinion, and somewhat ironic insofar as "solely" and "only" are synonymous).

Using this explication as prelude, the majority determined that "the relevant inquiry is not why Meril imported the two transcatheter heart valve systems, or how Meril used the imported transcatheter heart valve systems, but whether the act of importation was for a use reasonably related to submitting information to the FDA" (emphases again in the opinion). Accordingly, the majority affirmed the District Court grant of summary judgment in view of the undisputed facts (set forth above).

The majority rejected Edwards's three arguments on appeal. First, Edwards argued that there were genuine issues of material fact disregarded by the District Court, that the actions of Meril's representatives were commercially driven. The majority rejected this contention in light of the evidence that the representatives were expressly told not to pursue commercial goals for U.S. sales and while they were under no such strictures regarding non-U.S. sales no such sales-directed activity occurred. That the representatives did not bring their devices with them to dinners and other activities with clinical scientists to be recruited to direct clinical trials was also not probative to the majority of intent outside the scope of the safe harbor. The majority also rejected Edwards's contention that Meril's disregard of some of the advice given by its FDA consultant and guidance from FDA was evidence that Meril did not intend to enter clinical trials for FDA submission, finding no basis in the undisputed evidence before the District Court. In an interesting twist of emphasis, the majority rejected Edwards's arguments because, in their view, "no reasonably minded juror" would have inferred that "Meril's sole purpose for importing [its devices] was to support its commercial sales efforts, and the importation was wholly unrelated to recruiting clinical investigators and wholly unrelated to any FDA submission," turning the question of "sole" purpose on its rhetorical head (emphasis in opinion).

The majority also rejected Edwards's second argument, that Meril's failure to use the imported devices stripped them from the protection of the safe harbor as a matter of law because the District Court "deem[ed] Meril's intent irrelevant in the absence of evidence of a protected use." This argument failed for two reasons, according to the majority: first, that there was nothing in the statute that required such a use to provide safe harbor protection and that importation itself was so eligible (as the District Court held). Second, and relevant to the dissent's position, the majority asserted that:

[O]ur interpretation of § 271(e)(1) applies the safe harbor regardless of the defendant's intent or purpose behind the otherwise infringing act (citing Amgen, 944 F.3d at 1338–39; and AbTox, 122 F.3d at 1030). Nothing in our jurisprudence suggests that the availability of the safe harbor turns on the party's subjective intent behind an act. And that remains true regardless of whether there are additional uses by defendant.

Finally, Edwards argued that the District Court had improperly relied on declaration evidence from one of Meril's representatives, which argument the majority rejected because the District Court relied on other evidentiary bases for its decision.

Judge Lourie's dissent went straight to the point:

I [dissent] because the majority perpetuates the failure of this court and others to recognize the meaning of the word "solely" in interpreting § 271(e)(1). The majority also errs in following the error of AbTox, Inc. v. Exitron Corp., 122 F.3d 1019 (Fed. Cir.), opinion amended on reh'g, 131 F.3d 1009 (Fed. Cir. 1997), and its progeny that the purposes of the infringing act do not matter in evaluating the safe harbor.

I believe that "solely" creates a safe harbor only for uses, sales, and importations that solely are for, as the statute says, development of information for the FDA. The purpose of the infringing act is meaningful and important to determining the safe harbor. And attempts to tie the word "solely" to be modifying one or another subsequent term does not change that meaning.

Judge Lourie recognized that the District Court "reasonably followed" these earlier decisions and that the error was in the Court's earlier safe harbor precedent, due to their decisions having given "short shrift" to the word "solely" in the statute. Using the proper interpretation of that statute, Meril's activities would have raised a genuine issue of material fact (precluding summary judgment) regarding whether importing the devices was "solely for uses reasonably related to the development and submission of information" (emphasis in dissent). In view of the legislative history and intent of the Hatch-Waxman Act (wherein the safe harbor abrogated the Court's decision in Roche Prods., Inc. v. Bolar Pharm. Co., 733 F.2d 858, 861 (Fed. Cir. 1984), rendering infringing any activity prior to patent expiry), Judge Lourie opines that "[t]he word 'solely' was included in the statute to ensure that infringing activity that was performed for purposes other than the development and submission of information under a federal law regulating drugs would not be exempt" (citing portions of that legislative history). Relying on the Oxford English Dictionary, Judge Lourie distinguished the meaning of "solely" ("a single person (or thing); without any other as an associate, partner, sharer, etc.; alone; occasionally, without aid or assistance" or "[a]part from or unaccompanied by others; solitary") from "partially," "slightly," "jointly," or have "any other ambiguous meaning." Judge Lourie also noted that it was well recognized by commentators at the time that the legislative history precluded the safe harbor from "permit[ting] the commercial sale of a patented drug by the party using the drug to develop [federal regulatory] information," i.e., commercial sales were not exempt even if they resulted in such information (the Judge further stating that importation was similar prohibited unless the exemption applied).

The consequence of the Federal Circuit's improper interpretation of the statute, according to the dissent, was that by following it "the district court here wholly ignored the presence of the word 'solely' in the statute," noting that the word was completely absent from the District Court's analysis and holding, something that "was not merely a harmless omission." Judge Lourie called out in particular the statement, relegated to a footnote in the District Court's opinion, that "[b]ecause intent and alternative uses are not relevant to the application of the safe harbor once it is determined that the allegedly infringing acts were reasonably related to FDA approval, the Court need not reach the issue of Meril's alleged commercial intent," which cited AbTox and Amgen for support of this principle. Judge Lourie sets forth in this regard his own explication of Abtox, Momenta, and Amgen (as well as Telectronics Pacing Systems) in assessing the responsibility for this error to properly be placed at the Federal Circuit's doorstep. In this analysis, he noted instances where the word "solely" did not appear in the Court's reasoning (Telectronics), where intent was specifically disregarded (Abtox, which stated that the safe harbor "does not look to the underlying purposes or attendant consequences of the activity . . . , as long as the use is reasonably related to FDA approval"), Momenta (which expanded the scope of the safe harbor), and Amgen. To be sure, Judge Lourie found at least the impetus for this trend in the Supreme Court's expansive interpretation of the statute in Merck (wherein the Court included activities resulting in experimental evidence that was not for whatever reason submitted to FDA), but asserts that the Court's decision did not mandate the disregard of the statutory restrictions imposed by the word "solely" that the Federal Circuit's case law had sanctioned. In particular, Judge Lourie finds support in the Merck decision for his thesis regarding the error in Federal Circuit's interpretation, wherein the Court stated that "[b]asic scientific research on a particular compound, performed without the intent to develop a particular drug or a reasonable belief that the compound will cause the [desired physiological effect], is surely not 'reasonably related to the development and submission of information' to the FDA."

Judge Lourie's remedy is en banc review, to permit the full Federal Circuit to reconsider its precedent. While it is somewhat remarkable that such a fundamental interpretation of the statute is necessary forty years after enactment it is consistent with a judicial philosophy generally in favor of interpreting narrowly exemptions to patent law protections for innovators. Whether Judge's Lourie's brethren recognize the distinctions he has drawn shall be seen.

Edwards Lifesciences Corp. v. Meril Life Sciences Pvt. Ltd. (Fed. Cir. 2024)
Panel: Circuit Judges Lourie, Stoll, and Cunningham
Opinion by Circuit Judge Stoll; dissenting opinion by Circuit Judge Lourie

Posted at 10:18 PM in Federal Circuit, Hatch-Waxman, Infringement - Contributory or Induced | Permalink | Comments (0)

September 19, 2023

FTC Announces Efforts to Police Pharmaceutical Companies' Patent Behavior

By Kevin E. Noonan --

A decade ago the Federal Trade Commission engaged in a crusade against reverse settlement payment agreements in ANDA litigation (which they termed, Madison Avenue-like, "pay for delay" settlements), arguing that such agreements were per se antitrust violations, despite almost universal rejection of their position by most Courts of Appeal prior to the Supreme Court's decision in Actavis v FTC. While failing to convince the Court to give its imprimatur to a complete ban, the Commission did persuade the Justices that because such agreements could raise antitrust concerns they should be reviewed under the rule of reason (a more fulsome account of these cases can be found in earlier Patent Docs posts and in Antitrust Issues in Intellectual Property Law, The Intellectual Property Law Association of Chicago Antitrust Committee, Lyerla, B., ed., American Bar Association Publishing Co., 2016).

The FTC's latest foray into policing pharmaceutical companies and their patent behavior was set forth in a policy statement promulgated earlier this month, entitled "Statement Concerning Brand Drug Manufacturers' Improper Listing of Patents in the Orange Book," in a classic example of begging the question and one viewed through the Commission's prism of purported patent malfeasance by branded drug companies.

As it did with the reverse settlement issue, the Commission's attitude seems to be that something might be happening and then to proceed as if it is. This is evident from the first sentence, where the statement asserts that "[b]rand drug manufacturers may be harming generic competition through the improper listing of patents in the Food and Drug Administration's ("FDA") Approved Drug Products with Therapeutic Equivalence Evaluations, known as the 'Orange Book'" (emphasis added). The statement then extols the benefits of generic competition (which is fine as far as it goes, but of course there needs to be something to copy in the first place for generic copiers to have anything to copy that can be sold at lower prices due to the benefits of their copying). There is a generic allegation in the midst of this rhetoric -- the statement asserts that "certain manufacturers have submitted patents for listing in the Orange Book that claim neither the reference listed drug nor a method of using it" (and if so of course the Commission is empowered to and intends to pursue such manufacturers who are indeed "abus[ing] the regulatory processes set up by Congress to promote generic drug competition" under the power to investigate unfair trade practices under 15 U.S.C. §§ 45(a), (n)).

The justification for the Commission's concerns stems apparently from the results of a 2002 study (FED. TRADE COMM'N., GENERIC DRUG ENTRY PRIOR TO PATENT EXPIRATION: AN FTC STUDY 39-52 (2022), that purportedly involved improper listing, further citing an enforcement action in that year against Biovail (In re Biovail Corp., FTC Dkt. No. C-4060 (Oct. 2, 2002)). Also cited are a total of four instances where the Commission filed amicus briefs in cases where there may have been improper listing, such as patents for a system to implement a REMS. The consequence of such a listing, the statement asserts, is to invoke the 30-month stay in approval attendant upon the NDA holder (or her licensee) filing suit against an ANDA applicant, because "even small delays in generic competition can generate substantial additional profits for brand companies at the expense of patients." Patients would be harmed because they would be "deprived of the ability to choose between competing products and may be forced to pay inflated prices." Of course the 30-month stay while statutory is not mandatory; should the infringement action be dismissed (for example, on motion that the patent asserted were improperly listed in the Orange Book), the FDA would be able to expeditiously approve the ANDA and the generic company enter the marketplace (with its own 180-day exclusivity if a first filer; under these circumstances the extent to which patients would pay deflated prices would be itself delayed).

Having established at least to its own satisfaction the basis for the Commission's attention to this issue, the statement then announced the FTC's intention to "enforce the law against those companies and individuals who continue to improperly list patents in the Orange Book" using "its full legal authority to protect patient and payors . . . from business practices that tend to negatively affect competitive conditions." This threatened exercise of the Commission's legal authority finds its basis in "the FTC's historical use of Section 5" based on improperly listing a patent in the Orange Book being an unfair method of competition. The statement goes on to speculate that improperly listing a patent in the Orange Book "may . . . constitute illegal monopolization," perhaps evincing a recognition that agency overreach was not greeted warmly by the Supreme Court in Actavis with regard to the FTC's position that reverse settlement agreements were a per se antitrust violation. Treading cautiously, the statement further warns that "improperly listing patents in the Orange Book may also be worthy of enforcement scrutiny from government and private enforcers under a monopolization theory" and calls out the possibility (or likelihood) that it "may also scrutinize a firm's history of improperly listing patents during merger review" (emphasis added). Finally, the statement suggests that "individuals" (presumably corporate officers) who "submit or cause the submission" of patents improperly to the Orange Book may be held liable individually, and that a finding of a false certification under 21 C.F.R. § 314.53(c)(2)(ii)(R) could be sent to the Department of Justice for investigation of criminal liability. Should all else fail, the Commission also states that it "may" dispute individual Orange Book listings through the FDA process set forth in 21 C.F.R. § 314.53(f)(1) that permits "any interested person" to request patent information in the Orange Book be corrected.

Mostly in footnotes, the statement identifies no more than 10 cases in support of the statement (and one of those, Fed. Trade Comm'n v. Shkreli, 581 F. Supp. 3d 579, 637 (S.D.N.Y. 2022), involved the infamous "Pharma Bro" whose shenanigans can hardly be held up as a standard under which ethical branded drug companies conduct their businesses). In view of the powers the Commission can wield, the assertions, allegations, and promises of future activities set forth in the statement cannot be ignored, but it also cannot help but raise the question of whether this tempest should not have remained in the teapot from whence it sprung, at least without further evidence that improper listing occurs frequently enough to significantly impact drug prices paid by the patients and payors the FTC is attempting to serve and protect from (in the Commission's view, apparently) predatory branded drug companies.

Posted at 10:34 PM in Hatch-Waxman | Permalink | Comments (1)

May 16, 2023

Senate Once Again Tries to Address Drug Pricing

By Kevin E. Noonan --

Over the past several years Congress has tried to address high drug prices, with variable success (see "FTC to the Rescue Regarding High Drug Prices and Patents"; "Even More Ill-Conceived Remedies from Congress Regarding Prescription Drug Costs"; "More Ill-conceived Remedies from Congress Regarding Prescription Drug Costs"; and "A Solution in Search of a Problem"). Indeed, Executive Orders stemming in part from the COVID pandemic have garnered more success on this score. But the Inflation Reduction Act reduced the monthly cost of insulin to $35 while other initiatives have had less success passing or having the desired effect even when enacted.

Not to be deterred, the U.S. Senate's Health, Education, Labor & Pensions (HELP) Committee this past week passed out of committee five bills in this vein: the Ensuring Timely Access to Generics Act of 2023 (S. 1067); the Expanding Access to Low-Cost Generics Act of 2023 (S. 1114); the Retaining Access and Restoring Exclusivity Act (S. 1214); and the Increasing Transparency in Generic Drug Applications Act (S. 775). These will be discussed seriatim below.

1. The Ensuring Timely Access to Generics Act of 2023 (S. 1067)

This bill was introduced by Sen. Jeanne Shaheen (D-NH) on March 29, 2023, co-sponsored by Sen. Susan Collins (R-ME), Michael Bennet (D-CO), Marco Rubio (R-FL), Tammy Baldwin (D-WI) and Mike Braun (R-IN). The bill would amend Section 505(q) of the Food, Drug, and Cosmetic Act (21 U.S.C. § 355(g)) to give the Secretary of Health and Human Services the ability to determine whether a Citizen's Petition was filed "for the primary purpose of delaying an ANDA application," and recites a number of factors to be considered in making this determination. These include:

(aa) Whether the petition was submitted in accordance with paragraph (2)(B), based on when the petitioner knew or reasonably should have known the relevant information relied upon to form the basis of such petition.

(bb) Whether the petitioner has submitted multiple or serial petitions or supplements to petitions raising issues that reasonably could have been known to the petitioner at the time of submission of the earlier petition or petitions.

(cc) Whether the petition was submitted close in time to a known, first date upon which an application under subsection (b)(2) or (j) of this section or section 351(k) of the Public Health Service Act could be approved.

(dd) Whether the petition was submitted without relevant data or information in support of the scientific positions forming the basis of such petition.

(ee) Whether the petition raises the same or substantially similar issues as a prior petition to which the Secretary has responded substantively already, including if the subsequent submission follows such response from the Secretary closely in time.

(ff) Whether the petition requests changing the applicable standards that other applicants are required to meet, including requesting testing, data, or labeling standards that are more onerous or rigorous than the standards the Secretary has determined to be applicable to the listed drug, reference product, or petitioner's version of the same drug.

(gg) The petitioner's record of submitting petitions to the Food and Drug Administration that have been determined by the Secretary to have been submitted with the primary purpose of delay.

As well as an omnibus provision relating to "other relevant and appropriate factors" to be set forth in an FDA Guidance.

The bill also adds a provision directing ("The Secretary shall") any such petition "that the Secretary determines was submitted with the primary purpose of delaying approval of an application" be referred to the Federal Trade Commission for investigation.

The bill adds provisions requiring filing of a Citizen Petition "before filing a civil action" to prevent FDA from approving an application under Section 505(b)(2) or 505(j) wherein the petition provides "all information and arguments that form the basis of the relief requested in any [such] civil action." A Citizen Petition must (again, "shall") be filed within 60 days from when the petitioner "knew, or reasonably should have known, the information that forms the basis of the request made in the petition or supplement." Failure to file the petition prior to filing a civil action will result in the court ("shall") dismissing the action without prejudice for failure to exhaust administrative remedies. The court shall dismiss on the same basis any civil action filed against the Secretary before the Secretary has taken action on the petition.

The bill also removes the exception under current law for biologic drugs and biosimilar equivalents.

Often when Congress proposes to amend a statute is appears that such amendments are to provide clarity or to limit or prevent practices deemed to be abuses. Motivation for these amendments can be understood perhaps with reference to remarks by Senator Collins, one of the co-sponsors, on YouTube.

2. The Expanding Access to Low-Cost Generics Act of 2023 (S. 1114)

This bill was introduced by Sen. Tina Smith (D-MN) and co-sponsored by Sen. Mike Braun (R-IN). The bill would amend Section 505(j)(5)(B)(iv) of the Food, Drug, and Cosmetic Act to provide a 75-day window for a "first filer" generic company to market its product or lose the 180-day exclusivity, which could then go to another generic drug company. The conditions for this substitution require that the alternative filer are set forth to require satisfaction of these factors:

(aa) The approval of such application could be made effective, but for the eligibility of a first applicant for 180-day exclusivity under this clause.

(bb) The applicant of such application has submitted a certification to the abbreviated new drug application that there are no conditions that would prevent the applicant from commercial marketing within 75 days after the date of approval and that the applicant intends to so market the drug.

(cc) At least 33 months have passed since the date of submission of an application for the drug by at least one first applicant.

(dd) Approval of an application for the drug submitted by at least one first applicant is not precluded under clause (iii).

(ee) No application for the drug submitted by any first applicant is effectively approved on the date that the conditions under items (aa), (bb), (cc), and (dd) are all met and maintained.

The bill also amends Section 505(j)(5)(D)(which provides for forfeiture of the 180-day exclusivity period ANDA first-filers to add a Special Approval Status Rule For Certain Subsequent Applicants, that recites:

An application that is approved pursuant to subclause (III) of subparagraph (B)(iv) is deemed to be tentatively approved and to no longer have an effective approval pursuant to such subclause (III) on the date that is 76 days after the date on which the approval has been made effective pursuant to such subclause (III) if the applicant fails to commercially market such drug within the 75-day period after the date on which the approval is made effective. If the applicant of an application approved pursuant to such subclause (III) submits a notification that it can no longer commence commercial marketing within 75 days after the date of approval, as required under subparagraph (B)(iv)(III)(bb), its application is deemed to be tentatively approved and to no longer be effectively approved on the date that such a notification is received. If an applicant does not commence commercial marketing within the 75-day period, it shall not be eligible for a subsequent effective approval for the application under subclause (III) of subparagraph (B)(iv) unless, in addition to meeting each of the conditions in such subclause (III), it submits a certification to its abbreviated new drug application that an event that could not have been reasonably foreseen by the applicant prevented it from commencing commercial marketing and that it has fully resolved this issue. The applicant shall submit notification to the abbreviated new drug application confirming that such applicant has commenced commercial marketing of the drug not later than one business day after commencing such marketing.

The applicability of these provisions is limited to applications under Section 505(j) after enactment of the legislation.

3. The Retaining Access and Restoring Exclusivity (RARE) Act (S. 1214)

This bill was introduced by Sen. Tammy Baldwin (D-WI) and co-sponsored by Sen. Mike Braun (R-IN). The bill would amend Section 527 of the Food, Drug, and Cosmetic Act (21 U.S.C. § 360cc) to close a loophole in orphan drug designation, regarding applicants developing newer versions of an orphan drug and getting undeserved exclusivity to such drugs. The exclusivity provision is amended to be limited to "the same approved use or indication within such rare disease or condition" and a new subsection added that "defines the term 'approved use or indication' [to mean] the use or indication approved under section 505 of this Act or licensed under section 351 of the Public Health Service Act for a drug designated under section 526 for a rare disease or condition." These limitations shall apply to any drug designated as an orphan drug "regardless of the date on which the drug was so designated" or approved.

The bill was motivated, according to Sen. Baldwin, by a decision in the 11th Circuit, Catalyst Pharms., Inc. v. Becerra, that provides incentives for pharmaceutical companies to seek the broadest orphan drug designation they can obtain but to pursue narrow clinical studies for approval. A consequence of these stratagems is that the orphan drug exclusivity holder can preclude competitors from obtaining orphan drug designation for alternative conditions or other patient populations. The bill was introduced in the last Congress (S. 4185) but was not brought to a vote.

4. The Increasing Transparency in Generic Drug Applications Act (S. 775)

This bill was introduced by Sen. Margaret Wood Hassan (D-NH) on March 14, 2023, co-sponsored by Sen. Rand Paul (R-KY), John Hickenlooper (D-CO), and Mike Braun (R-IN). The bill would amend the Section 505(j)(3) of the Food, Drug, and Cosmetic Act by adding that "upon request," the Secretary shall inform an ANDA applicant whether a generic drug is "qualitatively and quantitatively the same as the listed drug." If not, on the other hand, the Secretary shall identify to the person requesting the information ". . . the ingredient or ingredients that cause the drug not to be qualitatively or quantitatively the same as the listed drug; and . . . for any ingredient for which there is an identified quantitative deviation, the amount of such deviation." The Secretary is precluded from changing or rescinding such a determination after submission of the ANDA unless the formulation of the listed drug has changed and "the Secretary has determined that the prior listed drug formulation was withdrawn for reasons of safety or effectiveness; or . . . the Secretary makes a written determination that the prior determination must be changed because an error has been identified." The bill also requires the Secretary to produce a Guidance, within one year of enactment, "describing how the Secretary will determine whether a drug is qualitatively and quantitatively the same as the listed drug . . ." wherein this clause expressly includes "assessing pH adjusters." These provisions will take effect on the date of enactment.

The motivation for this bill is to "streamline the approval process for generic medications" and "lower prescription drug prices for consumers" according to Sen. Hassan's website. The enemy is purportedly "unnecessary red tape" which the Senators perceive to arise because:

[T]he FDA requires certain generic drug manufacturers to demonstrate that they have the same active and inactive ingredients in the same concentration as the reference brand name drug. However, when a generic drug contains the wrong amount of inactive ingredient, the FDA cannot disclose the exact error, forcing manufacturers to engage in an often lengthy guessing game to reach the right balance. This legislation would require the FDA to more clearly identify the specific differences between the generic and brand name drug, thereby streamlining the approval process, helping more generics reach the market faster, and lowering prescription drug prices overall.

5. The Fair Accountability and Innovative Research Drug Pricing Act of 2023 (S. 935)

This bill was introduced by Sen. Tammy Baldwin (D-WI) and co-sponsored by Sen. Mike Braun (R-IN) and Sen. Tina Smith (D-MN). This bill would amend Title III of the Public Health Service Act (42 U.S.C. 241 et seq.) with regard to drug price reporting. The relevant provisions of the bill are a requirement that the manufacturer of a qualifying drug (defined as any drug approved by FDA under Sections 505(c) or 505(j) or licensed under Subsection 351(a) or 351(k) that is not vaccine, has a wholesale acquisition cost of $100 or more per month supply or course of treatment, or is "commonly administered by hospitals") must submit a report to the Secretary if there is an increase in the price of the drug that results in an increase in the wholesale acquisition cost that is a) 10 percent or more over a 12-month period beginning on or after January 1, 2024; or b) 25 percent or more over a 36-month period beginning on or after January 1, 2024; or (for drug costs for a year or per normal cost of treatment) "exceeds United States median household income beginning on or after January 1, 2024). The report is due not later than 30 days prior to the "planned effective date of the price increase." The report must disclose (A) the percentage of the planned increase; (B) a justification for the increase; (C) an explanation for the cost; (D) the identity of the initial developer of the drug; (E) a description of the history of the manufacturer's price increases since approval; (F) the drug's current list price; (G) the total expenditures for materials, manufacturing, and acquiring and/or licensing patents for the drug; (H) the percentage of total expenditures on research and development for the drug "derived from Federal funds" less (I) total expenditures for research, development, basic and preclinical research, clinical studies, new drug development, pursuing "new or expanded" indications through supplemental applications under Section 505; (J) total revenue and net profit for each calendar year; and (K) costs associated with marketing and advertising for the drug.

Also required for manufacturers "total revenue and the net profit of the manufacturer for each of the 12-month or 36-month periods"; all stock-based performance used to determine executive compensation; and any additional information the manufacturer chooses to provide related to drug pricing decisions.

Failure to comply is subject to a civil penalty of $100,000 for each day the violation continues.

Such reports shall be posted on a public Department of HHS website no later than 30 days after the report is submitted, subject to the restrictions of laws for protecting trade secrets and confidential commercial information.

Finally, the Secretary will provide an Annual Report to Congress, also posted on a public Department of HHS website.

The extensiveness of the financial disclosures mandated by the bill suggest passage will not be easy or without significant opposition.

Posted at 11:06 PM in Hatch-Waxman | Permalink | Comments (0)

January 16, 2023

February 15, 2022

GlaxoSmithKline LLC v. Teva Pharmnaceuticals USA (Fed. Cir. 2022)

Federal Circuit Denies En Banc Review in GlaxoSmithKline LLC v. Teva Pharmaceuticals USA

By Kevin E. Noonan --

The matter arose in litigation over GSK's Coreg^® product (carvedilol) for treatment of hypertension (the initial approved indication; U.S. Patent No. 4,503,067), congestive heart failure (CHF) (the subject of U.S. Patent No. 5,760,069), and left ventricular dysfunction following myocardial infarction (LVD-MI). The '069 patent recites a method of treating CHF with a combination of carvedilol and "one or more of an angiotensin-converting enzyme ("ACE") inhibitor, a diuretic, and digoxin."

Teva's ANDA was filed with a Paragraph III certification over the '067 patent and a Paragraph IV certification over the '069 patent. The FDA tentatively approved Teva's generic product for "treatment of hypertension and heart failure" which Teva launched on expiration of the '067 patent. Teva's label indicated that the product was approved for treatment of LVD-MI and hypertension and announced that the FDA had given its product an "AB rating" (which the opinion explained "allow[s] users to determine quickly whether the Agency has evaluated a particular approved product as therapeutically equivalent to other pharmaceutically equivalent products"). Thereafter, the FDA required Teva to amend its label to be identical to the GSK label for Coreg®, which introduced treatment of heart failure into the approved treatments recited in Teva's label.

GSK filed for reissue of the '069 patent which was duly granted by the U.S. Patent and Trademark Office as Reissue Patent No. RE40,000; claim 1 is representative of the invention as claimed in the '000 reissue patent:

1. A method of decreasing mortality caused by congestive heart failure in a patient in need thereof which comprises administering a therapeutically acceptable amount of carvedilol in conjunction with one or more other therapeutic agents, said agents being selected from the group consisting of an angiotensin converting enzyme inhibitor (ACE), a diuretic, and digoxin,
wherein the administering comprises administering to said patient daily maintenance dosages for a maintenance period to decrease a risk of mortality caused by congestive heart failure, and said maintenance period is greater than six months.

(Where the italicized portion of the claim represents the modifications introduced in prosecution of the reissue application.)

GSK filed suit against Teva for inducement of infringement based on the Teva label, based on direct infringement by physicians prescribing the drug for the label indications. Teva argued that it had "carved out" the indication for CHF pursuant to 21 U.S.C. § 355(j)(2)(A)(viii), resulting in a "skinny label" with regard to this indication. Thereafter, the FDA compelled Teva to amend its label to include that indication. In addition, Teva argued that it could be liable for inducement only if GSK could show that Teva had "directly communicated with the direct infringers and 'caused' them to directly infringe the method in the '000 patent." In a jury instruction, the District Court informed the jury that circumstantial evidence could be used to satisfy this burden.

The jury found that Teva induced infringement of the '000 reissue patent both before and after the label amendment (albeit infringing several claims after but not before that change). The District Court granted Teva's motion for judgment as a matter of law (JMOL) on the basis that GSK had not "caused" physicians to prescribe their product for the infringing uses. Because proof of such causation was required, according to the District Court, its absence precluded the jury from basing its decision on substantial evidence. The Court relied on the "many sources of information available to prescribing physicians" other than Teva's label (including paradoxically GSK's label and promotion of its Coreg® product) in finding this evidentiary deficiency. Also, the Court based its decision on physician testimony that their prescribing behavior relied on "guidelines and research, as well as their own experience" and not Teva's label. "In sum," the Court said, "substantial evidence [did] not support the jury's finding on causation, and therefore [did] not support its verdict that Teva is liable for induced infringement, during both the skinny and full label periods."

On appeal the Federal Circuit reversed, in an opinion by Judge Newman joined by Judge Moore; Chief Judge Prost provided a lengthy, comprehensive dissent. The panel majority relied on the Supreme Court's decision in Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754 (2011), that copying is evidence of inducement, and also found compelling evidence from Teva's website regarding its product's AB rating with GSK's Coreg® product and other promotional content, as well as testimony from GSK's witnesses regarding physician reliance on information from generic drug makers.

The panel majority opined that the District Court erred in applying the incorrect legal standard, stating that "precedent makes clear that when the provider of an identical product knows of and markets the same product for intended direct infringing activity, the criteria of induced infringement are met." Considering this precedent, the majority held that "[t]here was ample record evidence of promotional materials, press releases, product catalogs, the FDA labels, and testimony of witnesses from both sides, to support the jury verdict of inducement to infringe the designated claims for the period of the '000 reissue patent."

Then-Chief Judge Prost dissented based on her objections to the quanta of evidence adduced and policy consequences should the majority's position be sustained. In the then-Chief's view, the majority's decision undermined the policy goals, embodied in the provisions of the law regarding skinny labels, for balance between the incentives patents provide for pharmaceutical innovation and the public's need for access to that innovation once the patent term has expired. In her view, the majority's decision undermined these policy goals by finding Teva induced infringement by marketing its generic drug produce for unpatented uses (emphasis in dissent) using its skinny label. The dissent not only disagreed with the majority's decision, but apprehended it to "nullify[y] Congress's statutory provision for skinny labels—creating liability for inducement where there should be none," contrary to Congressional intent and "slowing, rather than speeding, the introduction of low-cost generics."

The original majority opinion occasioned an outpouring of outrage from industry groups (particularly generic ones) who latched onto the then-Chief Judge's rhetoric in her dissent to the effect that the opinion eviscerated the congressional sanctioning of skinny labels. The Court granted panel rehearing in February that resulted in the second opinion that was the subject of the Court's denial of en banc review.

The outcome did not change in that second opinion (although the explication of the process aspects of the majority, per curiam opinion were perhaps more explicit). After reciting the procedural posture of this decision (as a panel rehearing), the majority addressed amici's concerns (amply represented in eleven amicus briefs, including a brief by one of the architects of the generic's law former Representative Henry Waxman). The opinion recited with approval the behavioral distinctions underpinning the majority's decision based on the law with regard to skinny labels:

Generics could be held liable for actively inducing infringement if they marketed a drug with a label describing a patented therapeutic use or if they took active steps to encourage doctors or patients to use the drug in an infringing manner. But generics could not be held liable for merely marketing and selling under a 'skinny' label omitting all patented indications, or for merely noting (without mentioning any infringing uses) that FDA had rated a product as therapeutically equivalent to a brand-name drug [emphasis in original].

Stating that the panel (or at least the majority) agreed to rehear arguments "to make clear how the facts of this case place it clearly outside the boundaries of the concerns expressed by amici, the opinion stated that the basis for their decision that the jury correctly found Teva liable for inducing infringement was "by marketing a drug with a label encouraging a patented therapeutic use (emphasis in opinion). The opinion also stated more precisely the procedural basis for their opinion: "[t]his is a case in which substantial evidence supports a jury finding that the patented use was on the generic label at all relevant times and that, therefore, Teva failed to carve out all patented indications." The majority also emphasized that their decision was a "narrow, case-specific review of substantial evidence [that] does not upset the careful balance struck by the Hatch-Waxman Act regarding section viii carve-outs." The remainder of the majority opinion set forth (extensively) the evidentiary basis for their opinion that there was sufficient evidence (including expert testimony and marketing efforts occurring both before and after FDA-mandated changes to Teva's label) to satisfy the substantiality standard, and that the District Court erred in granting Teva JMOL to the contrary (inter alia including specific errors in treating factual questions as legal ones that the majority state were "not this court or the district court, to resolve").

Former Chief Judge Prost remained unconvinced, in large part because this outcome (in her view) undermined the congressionally sanctioned skinny label regime (if only by rendering it much more case- and fact-specific than she perceived Congress intended). The outcome-based philosophy of the dissent was presaged in its first sentence, where Judge Prost reminded the reader that "GSK's patent on carvediol expired in 2007" followed by the statement that "[b]ecause the FDA cannot authorize a generic version of a drug that would infringe a patent, this one remaining patented use could have prevented a less-expensive, generic carvedilol from coming to market altogether—even though the drug itself and other uses of it were unpatented." The skinny label regime was Congress's solution to the "problem" it "saw coming" in Judge Prost's view. The majority's decision thwarted this intent, according to Judge Prost, based on evidence of inducement that was "thin to nonexistent." The District Court had properly exercised its supervisory role in remedying a situation where a jury came to the wrong conclusion Judge Prost concluded, based on her evaluation of the evidence before it. The Judge sets forth her motivation for writing (once again) in dissent (and that the majority's attempt to provide a comforting standard falls short in her opinion):

I write in this case because far from being a disagreement among reasonable minds about the individual facts, this case signals that our law on this issue has gone awry. I am particularly concerned with three aspects of the majority's analysis. First, even setting aside the majority's willingness to glean intentional encouragement from a label specifically designed to avoid encouragement, the majority further weakens the intentional-encouragement prong of inducement by effectively eliminating the demarcation between describing an infringing use and encouraging that use in a label. Second, the majority defies basic tort law by eviscerating the causation prong of inducement. The upshot of these two moves is that a plaintiff now has to show very little for a jury to speculate as to the rest. Third, the majority creates confusion for generics, leaving them in the dark about what might expose them to liability. These missteps throw a wrench into Congress's design for enabling quick public access to generic versions of unpatented drugs with unpatented uses.

The decision by the full Court was announced in a simple Order to that effect, noting that Judges Lourie and Cunningham did not participate in the decision. The Order was accompanied by three written dissents: one by Judge Prost, joined by Judges Dyk and Reyna; another by Judge Dyk writing alone, and the third by Judge Reyna. The majority of Chief Judge Moore and Judges Newman (who was the third member of the original panels), O'Malley, Taranto, Chen, and Stoll. Judge Prost's dissent calls the decision not to rehear the case en banc "disappointing," insofar as the issues "affect[] millions of Americans," and she terms the Court's refusal to rehear en banc an "abdication of [the] responsibility [to review issues at the intersection of patent law and pharmaceutical regulation]." The dissent characterizes the majority's treatment of the regulatory and statutory processes involved in obtaining skinny label regulatory approval as "quite unsatisfactory," saying the majority "refuses to confront the obvious question: how could this label, which faithfully followed what the brand said about its own patents and which the FDA required Teva to use, itself be evidence that Teva intentionally encouraged something it knew would infringe?" As a consequence of the majority decision, "no skinny-label generic is safe" in Judge Prost's view. This is because "most skinny labels contain language that (with clever expert testimony) could be pieced together to satisfy a patent claim," as asserted by several amici (one of whom, Mylan Pharmaceuticals, termed this the "Where's Waldo" approach). This outcome is contrary to Congressional intent, in Judge Prost's view, which was for generic companies to avoid inducement liability under skinny-label circumstances (emphasis in dissent). Generic drug companies who follow FDA guidelines for skinny labels are "play[ing] by the skinny-label rules" she writes, and "[e]ven if remaining label language might be pieced together to 'meet' the elements of a patent claim, the extent to which that's true is an unreliable gauge of a generic's 'intent' in this highly regulated area; it can't meaningfully separate the liable from the lawful." And she notes the consequences stemming from the generic drug maker's economic model by illustration: Teva's revenues ("having made no profit," which is a bit curious), according to the dissent, were $74 million but the judgement below for inducing infringement was $234 million. Under these circumstances, "generics simply won't play." Judge Prost concludes her dissent by addressing what she considers inaccuracies in the majority's concurrence regarding arguments she believes were made but that the concurrence asserts were not, and its characterizations of her concerns to be fairness, when Judge Prost maintains those concerns are based on "what inducement law permits in view of the Hatch-Waxman Act.

Judge Dyk's dissent writes "to further elaborate why there cannot be infringement liability for using a label required by the FDA during the partial label period at issue in this case." These elaborations are based on the extent to which Teva was obligated under law to accept the label mandated by the FDA in making it's Section viii carve-out which is did (". . . FDA provided Teva with a redline for its skinny label, carving out the patented indication for congestive heart failure from GSK's branded label and keeping the remaining uses in the label"). Judge Dyk points out that, "[i]n In similar circumstances where states have sought to impose tort liability on generic drug manufacturers for using the label required under federal law, the Supreme Court has made clear that federal law preempts tort liability on the part of the manufacturers," citing Mutual Pharm. Co. v. Bartlett, 570 U.S. 472, 476 (2013), and PLIVA, Inc. v. Mensing, 564 U.S. 604, 609 (2011). There is, in Judge Dyk's view a conflict between "FDA-required labeling" and the law of infringement, and using "[c]anons of statutory construction" concludes that the "more specific and later-enacted provisions of the Hatch-Waxman Act override the general infringement provisions of the Patent Act," citing United States v. Estate of Romani, 523 U.S. 517, 532 (1998); Morton v. Mancari, 417 U.S. 535, 550–51 (1974); Bulova Watch Co. v. United States, 365 U.S. 753, 758 (1961); and Rodgers v. United States, 185 U.S. 83, 87–89 (1902). And Judge Dyk disagrees with the concurrence substantially along the same lines as Judge Prost does in her dissent.

Finally, Judge Reyna in a brief dissent asserts that "the briefs, the majority opinion, the dissent, and the number of amicus briefs filed to date" satisfy the provisions of the Court's Internal Operating Procedure No. 13(2)(b) for rehearing en banc issues of "exceptional importance."

Chief Judge Moore's concurring opinion illustrates an interpretation of Judge Prost's dissent that the majority and the dissenting judges interpreted very differently what had gone on below and before the Federal Circuit in the two prior appearances before the panel. Judge Moore begins by the simple assertion that the dissent's basis for en banc review were "legal positions that Teva has not asserted or developed," reciting a litany. The argument, according to the Chief, was simply "whether, considering all the facts, substantial evidence supports the jury's verdict that Teva actively encouraged infringement." But Chief Judge Moore affirmatively asserts that "Teva never argued that there was a conflict between the FDA regulatory framework and patent law (as the dissents now claim); nor did it argue that the partial label was not evidence relevant to or otherwise impermissible for deciding inducement (as the dissents now suggest). She characterizes the majority's opinion as being "narrow and fact dependent," supported by how one district court has interpreted the opinion, see Amarin Pharma, Inc. v. Hikma Pharma. USA Inc., No. 1:20-cv-1630 (D. Del. Jan. 4, 2022). But the "cobbling together" argument made in Judge Prost's dissent was considered by the panel because Teva made that argument, which in a footnote the Chief terms "a non-starter" based on instances where the Court "regularly allow claim elements to be found in different portions of a label" and citing as an example Sanofi v. Watson Lab'ys Inc., 875 F.3d 636, 646 (Fed. Cir. 2017). The concurrence apprehends the dissents arguments to be grounded in fairness (a characterization Judge Prost's dissent directly rejects), based on the label not supporting the intent required by the statute (quoting extensively from Judge Prost's rhetoric about "playing by the skinny-label rules"). While expressing concern that "GSK's representations to the FDA are at odds with its enforcement efforts in this case" and "[i]t would be troubling to hold Teva liable for relying on GSK's representations to the FDA," "that concern does not readily fit the standards governing inducement." The concurrence sees a possible solution in the doctrine of equitable estoppel, which provides a possible remedy on remand in the Chief's view. And while Judge Prost thinks little of this use of equitable estoppel in this or any skinny-label instance, Chief Judge Moore asserts that the principles of equitable estoppel ("misleading conduct, reliance, and prejudice") "track this three-element framework precisely" and provide an analysis of this argument (saying "[t]his theory fits the textbook structure of an equitable estoppel argument"). Chief Judge Moore believes it better to permit this argument to be asserted on remand and then, under appropriate circumstances, return to the Court for review.

These considerations on remand suggest that for the parties it isn't over. And to the extent that the Chief is correct that district courts (albeit using a N=1) have interpreted the panel decision parsimoniously perhaps Judge Prost's concerns about the effect the panel opinion will have on generic manufacturers' use of skinny labels are overblown. And perhaps also these sentiments, although not binding will help define the contours of the District Court's application of the opinion and its effect on skinny-label practices. Provided the panel decision does not significantly inhibit skinny-label practice these issues are sure to recur and be the subject of additional Federal Circuit decisions which will make the consequences of this decision, and the Federal Circuit's decision not to review the panel opinion en banc, more evident.

GlaxoSmithKline LLC v. Teva Pharmnaceuticals USA (Fed. Cir. 2022)
Per curiam order
Chief Judge Moore, joined by Circuit Judges Newman, O'Malley, Taranto, Chen, and Stoll, concurs in denial of petition for rehearing en banc; Circuit Judge Prost, joined by Circuit Judges Dyk and Reyna, dissents from denial of petition for rehearing en banc; Circuit Judge Dyk dissents from denial of petition for rehearing en banc; Circuit Judge Reyna dissents from denial of petition for rehearing en banc

Posted at 11:03 PM in Federal Circuit, Hatch-Waxman | Permalink | Comments (1)

November 09, 2021

Celgene Corp. v. Mylan Pharmaceuticals Inc. (Fed. Cir. 2021)

By Kevin E. Noonan --

The question of the proper court for a branded pharmaceutical maker to bring suit against an Abbreviated New Drug Application filer under the Hatch-Waxman Act is surprisingly unsettled seeing as the Act was enacted in 1984. The Federal Circuit brought some measure of clarity to the question recently when it affirmed a District Court dismissal of an ANDA action on improper venue grounds, in Celgene Corp. v. Mylan Pharmaceuticals Inc.

The case arose over Celgene's multiple-myeloma drug pomalidomide (Pomalyst). Celgene filed suit in the District of New Jersey, where none of the named defendants (Mylan Pharmaceuticals Inc. (MPI), Mylan Inc., or Mylan N.V.) have their headquarters. These actions involved separate ANDA litigations initiated by Celgene in response to the Mylan defendants' Paragraph IV certifications (21 U.S.C. § 355(j)(2)(A)(vii)(IV)). The first of these litigations commenced in 2017 involving four Orange Book-listed patents, the second in 2018 involving one of a separate five OB-listed patents and the third action commencing in 2020 involving yet another of the five separate OB-listed patents. All these actions were consolidated. Celgene also asserted the remaining three of the five separate OB-listed patents in an action commenced in 2019; it is this last case on appeal here. The relevance of these other litigations is that the parties stipulated that the District Court's decision on Rule 12 motions in the earlier cases would be binding on them in this case. The District Court's decision dismissing the action for improper venue was based on the Federal Circuit's holding in In re Cray, that to satisfy the venue statute (28 U.S.C. § 1400(b)) a plaintiff must show the defendant had "committed acts of infringement and has regular and established place of business" in the district. (Celgene did not appeal on the merits the District Court's ruling that they had failed to state a claim against Mylan N.V. under Fed. R. Civ. Pro. 12(b)(6) on the basis that the ANDA had been filed only in the name of MPI, but rather argued the adequacy of its pleadings and that the District Court had abused its discretion in denying Celgene's motion for leave to amend its complaint, as discussed below.)

The Federal Circuit affirmed, in an opinion by Judge Prost joined by Judges Chen and Hughes. The opinion recites the plaintiff's burden to show that a defendant "resides" in the district or "has committed acts of infringement and has a regular and established place of business" there. The first option is clearly not satisfied, according to the Court ("No one argues that the defendants-appellees reside in New Jersey"). The questions then devolved into whether the defendants committed acts of infringement in the district and had a regular and established place of business in New Jersey. The basis for Celgene's infringement action was that filing an ANDA itself constitutes an act of infringement under 35 U.S.C. § 271(e)(2) and that this was sufficient for proper venue. The panel rejected Celgene's argument that this act has a nationwide consequence and effect and thus the effects will be "felt" in New Jersey. Unfortunately for Celgene, venue is "predicated on past acts of infringement" under Valeant Pharms. N. Am. LLC v. Mylan Pharms. Inc., 978 F.3d 1374, 1381–82 (Fed. Cir. 2020), and thus this argument was precluded according to the Court. (The opinion further recites that Supreme Court precedent requires venue determinations to be "specific and unambiguous" and not "given a liberal construction," citing Andra Grp., LP v. Victoria's Secret Stores, L.L.C., 6 F.4th 1283, 1287 (Fed. Cir. 2021).) Moreover, submission of an ANDA does not occur in New Jersey, nor does the destination of the Paragraph IV letter (Celgene's New Jersey headquarters) make venue proper as an act of infringement in the district according to the opinion. Citing Valeant, the opinion limits the act of infringement under § 271(e)(2) to be the ANDA submission itself, which does not occur in the district. And while the Paragraph IV letter is a necessary part of the ANDA process, the panel stated that "the statute and regulations treat the infringing ANDA submission and the notice letter as different things," in part based on timing of filing the ANDA followed by sending the notice letter to the NDA holder (and not the FDA) in rejecting Celgene's argument (also noting that it is the ANDA filing that raises a cause of action not the notice letter).

Next the Court turned to the question of whether MPI and Mylan had a "regular and established place of business" in the district, concluding (as had the District Court) that they did not. The opinion cites the Federal Circuit's Cray decision for the requirements that "(1) there must be a physical place in the district; (2) it must be a regular and established place of business; and (3) it must be the place of the defendant" and notes that the absence of any of these requirements fails to satisfy the standard. The panel found the third requirement to be "particularly relevant," to the extent that it is not limited to places where a defendant's employee happen to be located. Resorting once again to Cray, the opinion recites the four "non-exhaustive relevant factors, specifically"

(1) "whether the defendant owns or leases the place, or exercises other attributes of possession or control over the place"; (2) "whether the defendant conditioned employment on" "an employee's continued residence in the district" or "the storing of materials at a place in the district so that they can be distributed or sold from that place"; (3) "a defendant's representations" about that place, including advertisements; and (4) "the nature and activity of the alleged place of business of the defendant in the district in comparison with that of other places of business of the defendant in other venues."

The opinion recognizes that no party has argued that either MPI or Mylan Inc. have a physical presence in New Jersey. Rather, Celgene relied on New Jersey as being the situs of "places associated with Mylan employees" or "places associated with Mylan affiliates." For the former, the Court noted the distinction between an employee "owning or leasing" a place of business and a defendant doing so, stating that the former does not support proper venue (it also being significant to the extent the opinion mentions it that "MPI and Mylan Inc. have tens of thousands of employees. Seventeen live in New Jersey."). Defendants rebutted this Celgene argument by noting that none of these employees were required by MPI or Mylan Inc. to live in New Jersey, nor did the companies pay for these homes nor store materials there or provide support staff there. Nor said the Court was there any evidence that MPI or Mylan identified these residences as places of their business (and the evidence that they in fact may be is "too speculative" to establish the residences as places where MPI or Mylan business is conducted). Nor did job postings "asking that candidates live in New Jersey or 'within reasonable driving distance'" suffice according to the panel. In these regards the Court saw a clear parallel with the factual predicate in Cray, the opinion drawing those similarities expressly. The panel also rejected Celgene's assertion that a "now-defunct" related corporate entity, Mylan Laboratories Inc., had once had a physical presence in New Jersey, agreeing with the District Court that Celgene had not established that "a subsidiary's presence isn't imputed to a parent for venue unless the parties 'disregarded the corporate form in their dealings with their respective subsidiaries and affiliates,'" which Celgene had not shown was the case here. Nor was Celgene's assertion that venue should be proper on a corporate "alter ego" theory that would justify piercing the corporate veil any more persuasive before the Federal Circuit than it had been before the District Court.

Having dispensed with the venue question, the Court next addressed an issue of sufficiency of the pleadings in the District Court's dismissal of Celgene's complaint against Mylan N.V. On the Rule 12(b)(6) question, the panel found persuasive, in reviewing the decision de novo, that MPI and not Mylan N.V. had signed the ANDA and that MPI had not acted as Mylan N.V.'s corporate alter ego (as had the District Court). In coming to this conclusion, the Court relied heavily on the procedural principles underlying the Supreme Court's decisions in Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), and Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007), regarding Celgene's failure to establish either ground for Mylan N.V.'s liability based on assertion of insufficient facts. The opinion summarizes Celgene's asserted litany of possible liability-inducing facts as being "too conclusory" and "[j]ust not enough." The Court expressly rejected Celgene's attempt to analogize the situation in this case with that in In re Rosuvastatin Calcium Pat. Litig., 703 F.3d 511 (Fed. Cir. 2012), where, according to the opinion, "the entity that signed the ANDA sought to escape liability because it claimed that it was only filing the ANDA as the agent of a Canadian company" (emphasis on opinion). In this case all that Celgene had asserted was "unadorned suspicion" of defendants "working in concert" for an ANDA where only MPI submitted the ANDA in question.

On the leave-to-amend question, the Court held the District Court had not abused its discretion on the facts before them. In addition, the opinion states that Celgene had not complied with the District Court's local rules (based on a deadline for filing amendments to the complaint). Celgene unsuccessfully argued that the District Court applied the wrong deadline based on a difference in such deadlines in other related cases as set forth above. Unfortunately for Celgene, however, the parties had stipulated that resolution of Rule 12 motions in this case would be governed by the decision in the earlier case, and the Federal Circuit applied this stipulation to the question before it under Rule 15. And further, the opinion notes that Celgene had not made this argument before the District Court, further dooming its efforts before the Federal Circuit.

The Court's precedential decision establishes the principle that a notice letter under Paragraph IV cannot form the basis for establishing venue and reinforces the primacy of the principles enunciated in Cray in patent venue cases, here as applied in ANDA cases. For those reasons alone the decision is a significant advance in certainty regarding the requirements for establishing venue.

Celgene Corp. v. Mylan Pharmaceuticals Inc. (Fed. Cir. 2021)
Panel: Circuit Judges Prost, Chen, and Hughes
Opinion by Circuit Judge Prost

Posted at 11:31 PM in Federal Circuit, Hatch-Waxman, Venue | Permalink | Comments (0)

April 15, 2021

FTC Prevails in Reverse Payment Case

By Kevin E. Noonan --

The Federal Trade Commission (FTC) spent the better part of a decade attacking the practice of innovator drug companies settling ANDA litigation by providing payments to generic applicants challenging the validity of Orange Book-listed patents (see "The FTC's Thinking Does Not Make It So Regarding Reverse Payment Agreements"; "Federal Trade Commission Issues Report on Reverse Settlement Agreements in FY2010"; "FTC Releases Another Report on Reverse Payment Settlement Agreements in ANDA Litigation"; "The FTC Is at It Again"). These agreements were termed "reverse payment" settlements because unlike in most patent suits, the defendant secured a payment from the patentee (as part of its campaign, the FTC termed these "pay-for-delay" agreements). The Commission persisted in its efforts despite most Federal Courts of Appeal deciding that, rather than being anticompetitive, the agreements frequently resulted in generic drugs coming to market much earlier than would be expected (see Valley Drug Co. v. Geneva Pharmaceuticals, Inc., 344 F.3d 1294 (11th Cir. 2003); Schering-Plough Corp. v. Federal Trade Commission, 402 F.3d 1056 (11th Cir. 2005); In re Tamoxifen Citrate Antitrust Litigation, 466 F.3d 187 (2d Cir. 2006); In re Ciprofloxacin Hydrochloride Antitrust Litigation, 544 F.3d 1323 (Fed. Cir. 2008); Arkansas Carpenters Health & Welfare Fund v. Bayer AG, 604 F.3d 98, 105 (2d Cir. 2010); and Federal Trade Commission v. Watson Pharmaceuticals, Inc. (11th Cir. 2012)). One basis for the FTC's persistence was the belief that branded drug companies settled because they were aware that their patents were invalid and thus improperly tried to extend their "monopoly"; of course this position supposed not only that innovator drug companies were willing to contravene the antitrust laws but perhaps more importantly that the Commission's bureaucrats had a better understanding of the pharmaceutical industry than the executives making the decisions. Persistence being what it is, the FTC finally prevailed in finding a Circuit Court (the Third) to accept its arguments (see "The Federal Trade Commission Finally Wins One"), leading to the Supreme Court deciding the issue in FTC v. Actavis.

That decision was anything but a complete victory for the Commission's position. Indeed, Justice Breyer wrote a relatively nuanced opinion holding, most importantly, that such settlements were not a per se antitrust violation (the FTC's original position). Rather, the Court held that such agreements must be evaluated under the "rule of reason." However, reasonableness (i.e., how tightly tethered to reality) of any such determination depends in larger part on the reasoner, and this characteristic (or flaw) is illustrated in the first full-fledged appellate affirmance of the FTC in a reverse payment settlement case, Impax Laboratories v. FTC, decided earlier this week.

The case arose over a settlement between branded drug maker Endo against Impax over its extended-release oxymorphone opioid drug product, Opana ER. The agreement, entered into before the Supreme Court's Actavis decision, included a number of facts that the FTC used to support its position that the agreement was anticompetitive. Impax was the first filer, and thus its settlement created a "bottleneck" against later-filing generic competitors due to its 180 exclusivity period to which Impax was entitled as first filer. In addition, Endo engaged in "product hopping," wherein it substituted out another Opana ER formulation (a "crush-resistant" form less amenable to abuse) and withdrew its original FDA approved drug from the market, which would have severely limited Impax's market share from sales of a generic version of the original formulation. According to the 5th Circuit's opinion:

But extending the period in which it could sell Opana ER without competition was just one of Endo' s priorities. The drug maker had something else in the works: It planned to move consumers to a new brand name drug that would not face competition for years. Endo would remove the original Opana ER from the market, replace it with a crush-resistant version of the drug, and obtain new patents to protect the reformulated drug. While Impax's generic would still eventually reach the market, it would not be therapeutically equivalent to Endo' s new branded drug and thus pharmacists would not be able to automatically substitute the generic when filling prescriptions. This automatic substitution of brand drug prescriptions, promoted by state laws, is the primary driver of generic sales. So, if Endo succeeded in switching consumers to its reformulated drug, which would be just different enough from the original formulation to preclude substitution, the market for Impax' s generic would shrink dramatically, preserving Endo's monopoly profits.

The timing of the agreement was also a factor: Endo and Impax were not able to come to an agreement until right before the expiration of the Hatch-Waxman 30-month stay of FDA approval (although it must be said that the 5th Circuit's opinion seemed not to appreciate the risks for Impax of "launching at risk" prior to a final determination in its favor in the ANDA lawsuit).

Under the terms of the settlement agreement, Impax delayed its launch until January 1, 2013, 30 months later than any "at risk" launch scenario without the agreement. Endo agreed not to bring its own branded generic to market in competition with Impax's product until after the 180-day exclusivity period had passed (July 1, 2013). Endo also agreed to pay Impax a "credit" should its own Opana ER sales fall by 50% or more after the parties entered into the agreement and before Impax's generic entered the market (as a result, inter alia, of Endo's product hop). Endo also broadly licensed its relevant patents to Impax, and entered into an agreement to co-develop a Parkinson's disease drug, funded in part by a $10 million payment to Impax with provisions for up to an additional $30 million depending on development of the new product. As a consequence of Endo's product hop, Impax was entitled to and received $102 million in credits due to the shrinking market share of the original Opana ER formulation. The product hop formulation proved to have its own safety concerns, however, and Endo withdrew it from the market in 2017. The result is that "Impax's generic is the only extended-release oxymorphone available to consumers today."

The FTC brought actions separately against Endo and Impax; Endo settled and Impax put up a fight. While the Administrative Law Judge found that the agreement's procompetitive benefits outweighed any anticompetitive effects the Commission decided otherwise, leading to this appeal (in the form of a petition for the Court to overrule the Commission).

The Fifth Circuit unanimously affirmed the Commission's decision and denied Impax's petition. In doing so, it set forth and followed Justice Breyer's formula for applying the rule of reason to the facts provided in the agreement. The Court gave deference to the Commission's factual findings and reviewed any legal judgments de novo. The panel recognized the burden shifting inherent in applying the rule of reason. First, the burden was on the Commission to show that the agreement had an anticompetitive effect. Then Impax was empowered to demonstrate any procompetitive effects, and if so the Commission had the opportunity to establish that those procompetitive effects could have been achieved "through less anticompetitive means" (which provides at least some of the potential for mischief illustrated by this decision). Finally, if the FTC should fail in this step a court is empowered to balance the anticompetitive effects against the procompetitive benefits. Of course, if this balance rests on the anticompetitive side of the comparison the agreement is illegal.

In applying these rubrics, the Court held that the FTC had established anticompetitive effects (or that the agreement "created the potential for anticompetitive effects," citing Doctor's Hosp. of Jefferson, Inc. v. Se. Med. All., Inc., 123 F.3d 301 (5th Cir. 1997)) of the agreement. The Court considered "increased prices, decreased output, or lower quality goods" specifically or "[e]liminating potential competition" to be "by definition, anticompetitive," citing United States v. Falstaff Brewing Corp., 410 U.S. 526, 532-33 (1973). Here, the size of the payment ($102 million) was sufficiently large that Impax did not challenge the FTC's determination that this aspect of the agreement was anticompetitive, and the Court agreed (the opinion also values Endo's agreement not to market a branded generic version of Opana ER to have provided an additional $24.5 million in "projected profits" to Impax). Unlike other cases where such benefits as "avoided litigation costs" justified the reverse payment in view of the small sums of such payments ($3 million for example) here the significant amount of the direct payment ($102 million) was itself sufficient to satisfy the anticompetitive effect prong of the Supreme Court's analytical framework for the Commission and the Court. Importantly, the Court rejected Impax's argument that it should consider the "strength" of the patent (i.e., the likelihood that it would have not been invalidated had the lawsuit gone to trial) based in part of the Supreme Court's rejection of this argument in its Actavis decision (although the decision is replete with the unjustified argument that the size of a reverse payment is an accurate gauge ("a strong inference") of the "weakness" of the underlying patent). But the fact that, as it turned out, Impax is the only marketed generic version of extended release Opana is not relevant according to the opinion, based on the principle that "the impact of an agreement on competition is assessed as of 'the time it was adopted,'" citing Polk Bros. v. Forest City Enters., 776 F.2d 185, 189 (7th Cir. 1985).

The panel then turned to Impax's evidence of procompetitive benefits. While the Commission had conceded that certain provisions could have procompetitive effects, the fact that the agreement permitted Impax's generic drug to come to market nine months prior to patent expiry and that Endo licensed its other relevant patents did not outweigh the anticompetitive effect of the reverse payment. The Court avoided ruling on this aspect of the Commission's decision because alternatively the Commission decided that any procompetitive benefits could have been achieved by a less restrictive alternative. The concept is clear: "[a] restraint [of trade] is unreasonable when any procompetitive benefits it produces 'could be reasonably achieved through less anticompetitive means,'" under Ohio v. Am. Express, 138 S. Ct. 2274, 2284 (2018). The policy justification is that this rule permits courts to "smoke out" anticompetitive practices or "pretextual justifications" for an unlawful restraint (a concept the Court finds in an academic paper rather than a judicial decision). Following this logic, the opinion poses the question of whether "the good [could] have been achieved equally well with less bad." The Commission based its decision that the parties could have come to a "less bad" agreement on "industry practice, economic analysis, expert testimony, and adverse credibility findings discounting the testimony of Impax's lead settlement negotiator." The "less bad" alternative would have been, predictably, an earlier generic market entry date without the credits that led to the $102 million reverse payment (It should be kept in mind that this figure was not specifically contemplated when the agreement was negotiated; indeed, under different factual circumstances unlinked to the terms of the agreement there might have been no payment.) The factual predicate for the Commission's determination included that "most settlements between brand and generic makers do not include reverse payments" (30% in settlements between 2004-2009; ironic in view of the FTC's purple prose regarding the scope of the "pay-for-delay" problem during those years). In addition to adverse credibility determinations for Impax's chief negotiator, the Commission performed an ex post facto economic analysis that it would have been reasonable for Endo to permit earlier Impax market entry "if it could have kept the more than $100 million it ended up paying Impax." Indeed that may have been the case, but at the time of the agreement (which the Court earlier in its opinion established as the timeframe for evaluating the competitiveness vel non of the agreement) this eventual payment may have been recognized as a risk but was not a certain cost of later Impax market entry. Nevertheless, because this is a question of fact, the Court granted the Commission deference and thus found that Impax had not overcome the grounds the Commission asserted in favor of this conclusion.

And this illustrates the analytical limitations of the Actavis inquiry into ANDA settlement agreements having reverse payment provisions. Ultimately, far after the fact the FTC and its cadre of economists impose their conclusions on the parties' behavior which, as in this case, can be a mixture of ex ante and ex post analyses focused on the Commission's goal of preventing any agreement that can be cast as "pay-for delay." While a worthwhile goal of influencing generic earliest generic drug entry, the Commission now as then has a blind spot to the economic realities under which parties in Hatch-Waxman litigation exist and come to these agreements. The benefit in such agreements is almost always that a generic drug comes to market earlier than it would have if the parties had continued ANDA litigation to its outcome. Sometimes the branded innovator will prevail in such litigations and sometimes they will not. But the fact that sometimes the parties come to a commercially reasonable settlement reflects their considered evaluation of the risk under which each party operates and the consequences of prevailing or not. Not all patents that are invalidated objectively should be nor are all patents that are upheld. And there have been instances (remarkably few) where just what the Commission fears has come to pass (a true "pay for delay"), but in at least one instance even pre-Actavis that agreement was struck down as being anticompetitive. The principal consequence of the Supreme Court's Actavis decision has been parties to ANDA litigation coming to settlement agreements less easily challenged by FTC or consumer groups (see "The Effects of the Actavis Decision on Reverse Payment Settlement Agreements in ANDA cases -- Four Years After"), and in that way this decision is an anomaly due to the timing that the agreement was entered into prior to the refinement in the law by Actavis. But this decision illustrates the sometime consequences of FTC's crusade against settlement agreements in ANDA litigation, which is not and has not always been in the public's interest.

Posted at 11:58 PM in Hatch-Waxman | Permalink | Comments (3)

August 20, 2020

Takeda Pharmaceuticals U.S.A., Inc. v. Mylan Pharmaceuticals Inc. (Fed. Cir. 2020)

By Kevin E. Noonan --

ANDA litigation, pursuant to the Hatch-Waxman Act, has become more complicated over the years since enactment of the statute in 1984, with more patents being asserted and more parties participating over the opportunity to market a generic version of a branded, innovator drug. Particularly under circumstances where there are several ANDA litigants, and where most of them are not the sole "first filer" entitled to 180-day market exclusivity should they prevail in invalidating the innovator's patent(s) or (less often) showing that their generic product will not infringe, there is an incentive for the branded drug maker and at least some of the competing generic companies to enter into a settlement agreement. (It should be noted that these settlements are not in the manner of "pay-for-delay" agreements; that is a separate topic). One feature of these settlement agreements is that, absent any first filer garnering exclusivity status, each settling generic company seeks an agreement granting them the right enter the market when any non-settling generic company succeeds in invalidating the branded drug patent(s) or proving non-infringement. The Federal Circuit's decision over such a settlement agreement in Takeda Pharmaceuticals U.S.A., Inc. v. Mylan Pharmaceuticals Inc. illustrated the impossibility of crafting an agreement that encompasses all contingencies, the difficulty in foreseeing all contingencies, and the efforts a patentee will expend to enforce provisions of an agreement despite the agreement not being satisfied (as well as the toxic effect even the hint of gamesmanship can produce, even where the fact of a party engaging in gamesmanship may be very much in doubt).

This case arose over Takeda's Colcrys® product, involving 0.6 mg tablet formulations of colchicine for treating gout flares. Takeda asserted 17 Orange Book-listed patents in that litigation and the parties settled, specifying a date certain in future (later than the date of the settlement but prior to the expiration date of the last-to-expire of the asserted patents). The Settlement Agreement contained this provision for accelerating the date Mylan could bring its generic version of Colcrys® to market and the events that could trigger such an accelerated date:

[Mylan would become entitled to launch its generic product on t]he date that is [a specified time period] after the date of a Final Court Decision (as defined in Exhibit A) holding that all unexpired claims of the Licensed Patents that were asserted and adjudicated against a Third Party are either (i) not infringed, or (ii) any combination of not infringed and invalid or unenforceable[.]

(Section 1.2(d); emphasis added). Exhibit A defines a Final Court decision as "entry by a federal court of a final judgment from which no appeal . . . has been or can be taken." Another relevant passage, Section 1.10, provides that any breach of this agreement would cause Takeda irreparable harm.

Concurrently, Takeda was also pursuing patent infringement litigation against another generic drug maker, Hikma, in a litigation styled as Takeda Pharm. USA v. West-Ward Pharm. Corp. In that litigation, defendant Hikma did not file an ANDA application but rather a § 505(b)(2) New Drug Application which the FDA approved for Hikma's Mitigare® product. In that litigation, Takeda asserted 8 patents against Hikma, but during the course of the litigation the parties agreed to dismiss the complaint with prejudice as to 5 of the 8 asserted patents and litigate only the remaining 3 patents. The district court ultimately granted summary judgment in Hikma's favor over the claims of these 3 remaining patents. Takeda did not appeal that judgment.

As a consequence of that outcome, Mylan informed Takeda that it was invoking the provisions of Section 1.2(d) and planned on immediate market entry. In response. Takeda filed suit and sought a preliminary injunction against the proposed Mylan launch; in the interim the parties agreed that Mylan would voluntarily cease sale and distribution of Mylan's Colcrys® generic product.

The District Court denied Takeda's motion, on the grounds that Takeda had "failed to show it is likely to succeed on the merits or that it will suffer irreparable harm." With regard to the likelihood of success prong, the District Court agreed with Mylan that the decision in Hikma's favor without an appeal triggered the provisions of Section 1.2(d). The Court rejected Takeda's argument that the decision in Hikma did not do so because of the five initially asserted patents that were withdrawn from that litigation; according to the Court the three remaining patents that the parties had litigated satisfied the "all unexpired claims of the Licensed Patents that were asserted and adjudicated against a Third Party" provision because those were the patents that had been "asserted and adjudicated." (In addition to basing its decision on this exercise of contract interpretation, a question of law, the District Court noted that "Takeda's proposed interpretation would prevent Mylan from ever relying on the clause to enter the market because Takeda could always 'withdraw one patent (or one claim on one patent),' whether through gamesmanship or through the normal course of litigation, to avoid triggering Section 1.2(d)"). The District Court also rejected Takeda's contention that this provision was only triggered by litigation against a Colcrys® generic which excluded application for Mitigare®. The Court's decision was based on the parties' use of terms like "Generic Equivalent" or "Authorized Generic Products" elsewhere in the agreement but not in Sections 1.2(d), (e), or (f).

Turning to the question of inequitable harm, the District Court rejected Takeda's contention that the circumstances here invoked the inequitable harm provisions of Section 1.10, which required Takeda to show that Mylan had breached the settlement agreement. Accordingly, the District Court found that Takeda would not be able to successfully contend irreparable harm but rather should be satisfied with money damages. This appeal followed.

The Federal Circuit affirmed, in an opinion by Chief Judge Prost joined by Judge Hughes; Judge Newman dissented. The panel majority construed the terms of Section 1.2(d) and held that the Hikma decision triggered the provisions of Section 1.2(d), and as a consequence Takeda would not be able to prevail on the merits under Delaware law (which controlled under an express provision in the Settlement Agreement). The panel rejected Takeda's argument that the term "all" in Section 1.2(d) required adjudication of the five patents the parties dismissed in addition to the three patents that went to trial. The panel majority held that this interpretation was not consistent with the plain language of the agreement, based on use of the phrase "asserted and adjudicated" in this section of the Agreement. One basis for this decision is that Takeda's interpretation would render the word "adjudication" meaningless in the panel majority's view. Perhaps equally persuasive was the panel majority's recognition that Takeda's construction would "lead[] to the absurd result that Takeda could prevent Mylan from ever relying on the clause by simply asserting and then withdrawing a claim from a proceeding," which the opinion characterized as "gamesmanship."

The panel majority also rejected Takeda's contention that the intent of the parties was to permit Mylan's "early" entry into the colchicine market based on a change in the status quo (or the status of the licensed patents) for the entire market, because the Agreement did not have terms reciting this intention. And the panel majority rejected Takeda's further contention that the Agreement did not contemplate Hikma's Mitigare® product, saying that considering the Hikma litigation as a triggering event was "exactly a circumstance Takeda asserts Section 1.2(d) was intended to cover" (and in a footnote, notes that the Hikma litigation was ongoing when the Settlement Agreement with Mylan was being negotiated).

With regard to the question of whether Takeda would be irreparably harmed, the panel majority held that Takeda's reliance on Section 1.10 is fatal to its claim, because that provision requires Mylan to have breached the provisions of Section 1.2(d) in order for that provision to apply. Absent that, the panel majority states that Takeda made "no credible assertion" of irreparable harm or that it could not be recompensed with money damages. The panel majority recognizes that "price erosion and loss of market share may in some cases be irreparable injuries" but that Takeda's "bare assertion" of irreparable harm is insufficient to support this prong of the preliminary injunction standard. Accordingly, the Federal Circuit affirmed the District Court's denial of Takeda's motion for preliminary injunction.

Judge Newman saw things differently in her dissent. For this Judge, the Settlement Agreement contained an "explicitly agreed provision" regarding when Mylan was entitled to accelerate its market entry date, and it breached that agreement by informing Takeda it would begin selling its generic Colcrys® after the Hikma decision was final. In addition to violating "fundamental principles of contract law and commerce," the Judge also believed there were strong public policy concerns raised by the majority's decision. In Judge Newman's view, Mylan was not entitled to invoke the acceleration provisions of Section 1.2(d) because "the cited event [finality of the Hikma decision] relates to a different product of a different provider having a different FDA approval for different uses, and is not a generic counterpart of Colcrys®" (emphasis added). Showing that different judges can come to different conclusions on the same facts, the same coincidence of the Settlement Agreement negotiations cited (albeit in a footnote) by the majority to support their conclusion that the parties could have expressly included the Hikma litigation in the Settlement Agreement is cited by Judge Newman to support her interpretation, i.e., that the parties could have and should have included the outcome of the Hikma litigation in Section 1.2(d) if they intended it to provide a triggering event for Mylan's acceleration of its marketing date. In addition, using a "balance of the harms" analysis Judge Newman believes is contained in Section 1.10 of the Settlement Agreement, her dissent states that "if it were to turn out that the requested injunction were wrongfully granted, Mylan could be made whole by the injunction bond required by Fed. R. Civ. P. 65(c); whereas if the injunction were wrongfully denied Takeda could not be made whole from the market impact of Mylan's entry." Under Delaware law, "contractual stipulations as to irreparable harm alone suffice to establish that element for the purpose of issuing preliminary injunctive relief" Judge Newman contends, citing Cirrus Holding. Co. v. Cirrus Indus., Inc., 794 A.2d 1191, 1209 (Del. Ch. 2001), and TP Group-CI, Inc. v. Vetecnik, No. CV 16-00623-RGA, 2016 WL 5864030, at *2 (D. Del. Oct. 6, 2016). Judge Newman also sees a violation of the public's interest in settlements and upholding the integrity of contracts in the majority's decision as another basis for her dissent.

Takeda Pharmaceuticals U.S.A., Inc. v. Mylan Pharmaceuticals Inc. (Fed. Cir. 2020)
Panel: Chief Judge Prost and Circuit Judges Newman and Hughes
Opinion by Chief Judge Prost; dissenting opinion by Circuit Judge Newman

Posted at 11:59 PM in Federal Circuit, Hatch-Waxman | Permalink | Comments (0)

April 29, 2020

Biogen Int'l v. Banner Life Sciences LLC (Fed. Cir. 2020)

By Kevin E. Noonan --

In 1984, Senator Orrin Hatch (R-UT) and Rep. Henry Waxman (D-CA) shepherded a grand legislative compromise through Congress that balanced the rights and solved inefficient regulatory consequences for both branded and generic drug makers. Forever known as the Hatch-Waxman Act (formally, the Drug Price Competition and Patent Term Restoration Act), certain of the provisions created a safe harbor for generic drugs to be tested for purposes related to regulatory approval without incurring infringement liability (codified at 35 U.S.C. § 271(e)(1)) as well as a pathway for generic drug makers to challenge patents listed by branded drug makers as being non-infringed, invalid, or unenforceable and litigation (ANDA litigation) to resolve these allegations (codified at codified at 35 U.S.C. § 271(e)(2)). For branded drug makers, the Act provided for extension of patent term (PTE) to make up for regulatory delay in obtaining marketing approval (codified at 35 U.S.C. § 156 et seq.). Litigation has ensued robustly under § 271(e)(2) and PTE's obtained by numerous branded drugs in the 35+ years since enactment of the Hatch-Waxman Act, but the proper application of the Act with regard to PTE provisions continues to be litigated, most recently in Biogen Int'l v. Banner Life Sciences LLC (ANDA litigation is almost a patent law specialty, for good or ill; see "Yet Another Study Suggesting Changes in Hatch-Waxman Regime").

The case arose in an infringement action by Biogen asserting U.S. Patent No. 7,619,001 against Banner over Banner's application under 21 U.S.C. § 355(b)(2) (a § 505(b)(2) application) for its generic version of Biogen's Tecfidera® (dimethylfumarate), a drug for treating multiple sclerosis. As set forth in the Federal Circuit's opinion, DMF is metabolized to the monomethyl form (MMF), as illustrated in this figure:

Claim 1 of the '001 patent was considered representative by the Court:

1. A method of treating multiple sclerosis comprising administering, to a patient in need of treatment for multiple sclerosis, an amount of a pharmaceutical preparation effective for treating multiple sclerosis, the pharmaceutical preparation comprising
at least one excipient or at least one carrier or at least one combination thereof; and
dimethyl fumarate, methyl hydrogen fumarate, or a combination thereof.

Importantly for the issues before the Court, Banner obtained its approval for the monomethyl form, which would be infringing as being recited in the '001 patent claims if and only if the '001 was entitled to extension of term for this drug. As set forth in more detail below in the context of the Federal Circuit opinion, PTE is limited to claims that encompass the approved drug and extended claims can be asserted only against infringement for drugs subject to FDA approval.

The District Court granted Banner's motion to dismiss under Fed. R. Civ. P. 12(c) on the grounds that the PTE did not apply to Banner's product because, while encompassed by the '001 patent claims, those claims were not entitled to PTE because MMF was not the drug approved by the FDA for which Biogen was entitled to PTE for regulatory delay. The District Court rejected Biogen's argument that, for method claims, the extension applied to any approved drug that fell within the scope of the claim. This appeal followed.

The Federal Circuit affirmed, in an opinion by Judge Lourie joined by Judges Moore and Chen. The Court based its affirmance on its interpretation of the statute, specifically that "the scope of a patent term extension under 35 U.S.C. § 156 only includes the active ingredient of an approved product, or an ester or salt of that active ingredient, and the product at issue does not fall within one of those categories." The issue for the Court was the proper interpretation of § 156(f), which "defines "product" as "the active ingredient of . . . a new drug . . . including any salt or ester of the active ingredient." § 156(f)(2)(A).

Biogen in arguing against the District Court's decision cites Pfizer Inc. v. Dr. Reddy's Labs., Ltd., 359 F.3d 1361 (Fed. Cir. 2004) for the proposition that "product" encompasses "the de-esterified form [here, MMF], particularly where 'a later applicant's patentably indistinct drug product . . . relies on the patentee's clinical data'" (which was the case for Banner's application under § 505(b)(2)). Biogen contended the term "active ingredient" meant "active moiety" and the proper interpretation was not governed by Glaxo Ops. UK Ltd. v. Quigg, 894 F.2d 392, 395 (Fed. Cir. 1990), which Banner argued excluded de-esterified forms of an active ingredient.

The Federal Circuit rejected both parties' recourse to case law and relied on the plain meaning of the statute. According to the Court, the term "active ingredient" has a specific definition as "any component that is intended to furnish pharmacological activity or other direct effect," citing 21 C.F.R. § 210.3(b)(7). It also "must be present in the drug product when administered," citing Hoechst-Roussel Pharm., Inc. v. Lehman, 109 F.3d 756, 759 n.3 (Fed. Cir. 1997), and is itself defined by what the FDA approved and is specified on the drug label under 21 U.S.C. § 352(e)(1)(A)(ii); 21 C.F.R. § 201.100(b)(4).

Here, MMF is not the approved product and is not specified on the label, and thus Banner's activities (which would have been infringing before expiry of the unextended term of the patent) were not infringing because, as to its embodiments, the '001 patent had expired.

Interestingly, while the statute expressly encompasses esters in the definition of an active ingredient, de-esterified active ingredients like MMF are not. Thus the Federal Circuit established a well-defined (perhaps arising to a "bright line") rule that:

All these precedents, and now this case, rest on the same holding: the term "product," defined in § 156(f) as the "active ingredient . . . including any salt or ester of the active ingredient," has a plain and ordinary meaning that is not coextensive with "active moiety." It encompasses the active ingredient that exists in the product as administered and as approved—as specified by the FDA and designated on the product's label—or changes to that active ingredient which serve only to make it a salt or an ester. It does not encompass a metabolite of the active ingredient or its deesterified form.

Biogen Int'l v. Banner Life Sciences LLC (Fed. Cir. 2020)
Panel: Circuit Judges Lourie, Moore, and Chen
Opinion by Circuit Judge Lourie

Posted at 11:59 PM in Federal Circuit, Hatch-Waxman, Infringement - Literal or DOE | Permalink | Comments (0)

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