Patent Docs: Hatch-Waxman

Hatch-Waxman

May 16, 2023

Senate Once Again Tries to Address Drug Pricing

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)

January 01, 2020

June 20, 2018

Supreme Court Denies Certiorari Again in Patent Eligibility and Safe Harbor Cases

By Kevin E. Noonan --

"You consider that to be important?" he asked.
"Exceedingly so."
"Is there any point to which you would wish to draw my attention?"
"To the curious incident of the dog in the night-time."
"The dog did nothing in the night-time."
"That was the curious incident," remarked Sherlock Holmes.

"The Adventure of the Silver Blaze," The Memoirs of Sherlock Holmes, Sir Arthur Conan Doyle

Like Sherlock Holmes' quiet dog, the significance of the Supreme Court's patent eligibility jurisprudence following their decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc. and Alice Corp. v. CLS Bank Int'l is that there hasn't been any. The Court has shown a similar reticence towards wading into the uncertain waters created by the Federal Circuit regarding the safe harbor created by the Hatch-Waxman Act, codified at 35 U.S.C. § 271(e)(1). Last Monday was the most recent instance of the Court's refusal to address how the lower courts have implemented these statutory provisions in denying certiorari in Cleveland Clinic Foundation v. True Health Diagnostics LLC and Classen Immunotherapies, Inc. v. Elan Pharmaceuticals Inc.

The claims at issue in Cleveland Clinic relate to methods for detecting myeloperoxidase (MPO) in a bodily sample (U.S. Patent Nos. 7,223,552, 7,459,286, and 8,349,581) and methods for treating a patient having cardiovascular disease (U.S. Patent No. 9,170,260); the claims of the '522 patent are representative:

11. A method of assessing a test subject's risk of having atherosclerotic cardiovascular disease, comprising comparing levels of myeloperoxidase in a bodily sample from the test subject with levels of myeloperoxidase in comparable bodily samples from control subjects diagnosed as not having the disease, said bodily sample being blood, serum, plasma, blood leukocytes selected from the group consisting of neutrophils, monocytes, subpopulations of neutrophils, and sub-populations of monocytes, or any combination thereo[f]; wherein the levels of myeloperoxidase in the bodily from the test subject relative to the levels of [m]yeloperoxidase in the comparable bodily samples from control subjects is indicative of the extent of the test subject's risk of having atherosclerotic cardiovascular disease.

14. A method of assessing a test subject's risk of developing a complication of atherosclerotic cardiovascular disease comprising: determining levels of myeloperoxidase (MPO) activity, myeloperoxidase (MPO) mass, or both in a bodily sample of the test subject, said bodily sample being blood, serum, plasma, blood leukocytes selected from the group consisting of neutrophils and monocytes, or any combination thereof; wherein elevated levels of MPO activity or MPO mass or both in the test subject's bodily sample as compared to levels of MPO activity, MPO mass, or both, respectively in comparable bodily samples obtained from control subjects diagnosed as not having the disease indicates that the test subject is at risk of developing a complication of atherosclerotic cardiovascular disease.

15. The method of claim 14, wherein the test subject's risk of developing a complication of atherosclerotic cardiovascular disease is determined by comparing levels of my[elo]peroxidase mass in the test subject's bodily sample to levels of myeloperoxidase mass in comparable samples obtained from the control subjects.

The Federal Circuit affirmed the District Court's grant of True Health's motion to dismiss under Fed. R. Civ. Proc. 12(b)(6) for failure to state a claim with regard to the diagnostic method patents, because the claims of these patents were directed to patent-ineligible subject matter (i.e., "laws of nature"). Cleveland Clinic's certiorari petition contained these two Questions Presented:

1. Whether the court below erred in holding, contrary to Mayo, that a method involving natural phenomena is ineligible for patent protection if it claims known techniques that have been adapted for a new use and purpose not previously known in the art.

2. Whether Mayo authorizes a district court to invalidate valuable patent rights on the pleadings when there are disputed questions of fact, a disputed question of claim construction or scope, and/or an undeveloped evidentiary record, notwithstanding the presumption of patent validity and settled procedural and Seventh Amendment safeguards that ordinarily prevent the resolution of such disputed questions on the pleadings.

The Classen case involves whether the § 271(e)(1) safe harbor applies for activities post-FDA approval. According to Petitioners, "[t]he [Federal Circuit] applies the safe harbor to use of a research tool employed for 'non routine' submissions to the FDA but does not apply the safe harbor to uses of the research tool that are deemed 'routine' submission to the FDA" and as a result reaches inconsistent outcomes. The Classen petition sets forth the issue as follows:

The Supreme Court decision in Merck v. Integra, 125 S.Ct. 2372 (2005) left uncertainty as to the enforceability of research tools under 35 U.S.C. §271(e)1. The Supreme Court commented in Footnote 7 on p. 2382, "We therefore need not and do not-express a view about whether, or to what extent, 35 U.S.C. §271(e)1 exempts from infringement the use of "research tools" in the development of information for the regulatory process." The CAFC has come to different conclusions on research tools used after marketing approval. Two CAFC panels arrived at opposite rulings (Momenta Pharmaceuticals, Inc. v. Amphastar Pharmaceuticals, Inc., 686 F.3d 1348 (Fed. Cir. 2012), (Momenta Pharm., Inc. v. Teva Pharm. USA, Inc., 809 F.3d 610, 620 (Fed. Cir. 2015). In the current case the two separate CAFC panels came to a different opinion on the applicability of Telectronics Pacing Sys. v. Ventritex, Inc., 982 F.2d 1520, 1523–24 (Fed. Cir. 1992) to a research tool.

In the current case, in contrast to Momenta, the court ruled use of the research tool was "non-routine" and raises different questions than Momenta:

1. The CAFC has developed a litmus test to determine when 35 U.S.C. §271(e)1 applies to research tools used after marketing approval. The litmus test was introduce[d] in Classen Immunotherapies, Inc. v. Biogen IDEC, 659 F.3d 1057 (Fed. Cir. 2011) "The statute does not apply to information that may be routinely reported to the FDA, long after marketing approval has been obtained. Id at 1070." In subsequent cases including the current case the CAFC has struggled with defining what constitutes "non-routinely" reported and thus protected by the safe harbor. The litmus test classifies something as "routine" if it is FDA required for ongoing FDA approval but "non-routine" if the post[-] marketing use is not required by the FDA. Is the CAFC's litmus test for research tools consistent with the law?

2. In this case, as opposed to Momenta's case, the court granted safe harbor because Elan's submissions to the FDA were deemed "non-routine" because they were necessary to update the Skelaxin product label and to change the FDA-approval process for generic versions of Skelaxin (Appx. 42a). What if the FDA recommends but does not require its use, is use still "routine"? Is this arbitrary?

3. As written and intended by Congress the safe harbor of 35 U.S.C. §271(e)1 is applied when (the whole) "invention" is used to for submission of data to the FDA. Is the CAFC's decision in this case to extend the safe harbor under 35 U.S.C. §271(e)1, to inventions where one or more but not all steps of an invention creates or uses data submitted to the FDA, consistent with the law?

4. Is the CAFC's decision to extend the safe harbor in this case to sale of product, where the product is claimed by process claims and where the process may utilize data submitted to the FDA, consistent with the law?

Denying certiorari petitions cannot be used to interpret the Court's views on whether the lower courts are properly applying its precedent; the Court frequently permits an issue to "percolate" through the courts and then chooses a case that, in their view provides a suitable vehicle for further clarification of the law. The Court has recently used this practice in other contexts (Gill v. Whitford; Benisek v. Lamone). In the meantime, however, patentees and the public await the time when the Court will deign to weigh in on either of these questions.

Posted at 11:59 PM in Hatch-Waxman, Patentable Subject Matter, Supreme Court | Permalink | Comments (7)

May 09, 2017

Par Pharmaceutical, Inc. v. Luitpold Pharmaceuticals, Inc. (D.N.J. 2017)

District Court Awards Attorney Fees for Plaintiff's Use of Discovery to Police Defendants' Future Conduct

By Donald Zuhn --

Last month, in Par Pharmaceutical, Inc. v. Luitpold Pharmaceuticals, Inc., Senior District Judge William H. Walls of the U.S. District Court for the District of New Jersey issued an amended opinion granting the motion for attorney fees of Defendants Luitpold Pharmaceuticals, Inc., Daiichi Sankyo, Inc., and Daiichi Sankyo Co., Ltd. ("Luitpold"). The District Court also awarded Luitpold $207,482.50 in fees and $4,580.93 in costs.

The decision arose out of a patent dispute between Plaintiffs Par Pharmaceutical, Inc., Par Sterile Products, LLC, and Endo Par Innovation Company, LLC ("Par") and Luitpold. Par is the assignee of patents for Adrenalin®, a product containing epinephrine for use in treating allergic reactions. Luitpold filed an ANDA seeking approval to market a generic version of Par's Adrenalin® product, and Par responded by filing suit against Luitpold.

In Luitpold's Answer to Par's Complaint, Defendants sought declaratory relief that, inter alia, it had not infringed Par's Adrenalin® patents and that the case was exceptional under 35 U.S.C. § 285. The District Court granted Luitpold's counterclaim of non-infringement, finding that Luitpold's ANDA formulations did not infringe Par's Adrenalin® patents. Luitpold then moved for attorney fees, contending, in part, that the Court should award fees because Par's theory of infringement was "objectively baseless" and Par had abused discovery to attempt to monitor Luitpold's competitive activities. Par argued that the case was not exceptional because, inter alia, Par had reason to believe Luitpold would change its drug formulation and Plaintiffs did not abuse discovery and received almost no substantive discovery in the case.

The District Court noted that to satisfy 35 U.S.C. § 285, Luitpold had to establish that Defendants were the prevailing party, the case was exceptional, and the requested fees were reasonable. With regard to the first inquiry, the Court noted that it had granted Luitpold's motion for judgment on the pleadings, resulting in the dismissal of Counts I-IV of Par's Complaint, and issued a declaration that Luitpold had not infringed Par's Adrenalin® patents. The Court noted that "[b]ecause Defendants 'receive[d] at least some relief on the merits, which alter[ed] the legal relationship of the parties,' they are prevailing parties under 35 U.S.C. § 285."

With regard to the second inquiry, the Court noted that Luitpold's argument was based on the contention that Par's legal theory was baseless, and that Par abused discovery in an attempt to monitor Luitpold's competitive activities. Par countered that it had good reason to bring the lawsuit because it believed Luitpold would change its formulation, and that it had not abused discovery because it received virtually no substantive discovery. With regard to Par's first contention, the Court indicated that:

Even if Par's intention was limited to anticipated patent infringement by a possible future formulation of Luitpold's product, Par's claims were meritless because Par provided no basis for its allegations that absent declaratory relief, Par faced irreparable harm from Defendants' infringing activities. Par's claims for declaratory relief rested only on its own experience of the FDA approval process and speculation that the FDA would require Defendants to change their drug formulation in a manner that would infringe Par's patents. . . . Par failed to allege that Defendants were engaged in any specific activities to alter their drug formulation to infringe the patents-in-suit and even acknowledged in briefing that the focus of the case was to determine through discovery how Par intended to proceed through the FDA approval process.

With regard to Par's second contention, the Court noted that "upon filing of the Complaint, Par vigorously attempted to engage in overbroad discovery of highly confidential, competition information," requesting, inter alia, "all documents and information relating to Defendants' injectable epinephrine compositions, including past, current, and 'contemplated' formulations whether or not they contained ingredients that would infringe Par's patents." The Court also noted that Par had pursued "this overbroad information" despite Luitpold's testimony that it had not changed its drug formulation. According to the Court, "Par's conduct is not mitigated by Par's argument that it pursued this discovery mostly unsuccessfully." The Court therefore found the case to exceptional, stating that "Plaintiffs' unjustified maintenance of this suit and attempts to use discovery to police Defendants' future conduct makes an award of fees appropriate to the extent Defendants' fee request is reasonable."

The remainder of the opinion concerns the Court's calculation of fees, which were reduced for the reasons outlined in the opinion, and award of costs, which were awarded as requested.

Amended Opinion by Senior District Judge Walls

Posted at 11:59 PM in District Court, Hatch-Waxman | Permalink | Comments (1)

October 03, 2016

Supreme Court Again Refuses to Clarify Scope of Hatch-Waxman Safe Harbor

By Kevin E. Noonan --

The Supreme Court denied certiorari today in Amphastar Pharmaceuticals, Inc. v. Momenta Pharmaceuticals, Inc., thereby leaving intact the Federal Circuit's fractured precedent on the question of whether post-approval activities are properly within the scope of the Hatch-Waxman "safe harbor" (as set forth in 35 U.S.C. § 271(e)(1)). This was the question presented to the Court:

Whether the safe harbor protects a generic drug manufacturer's bioequivalence testing that is performed only as a condition of maintaining FDA approval and is documented in records that must be submitted to the FDA upon request.

The case below, styled Momenta Pharmaceuticals, Inc. v. Teva Pharmaceuticals USA Inc. involved a District Court's determination that U.S. Patent No. 7,575,886 was not infringed by Teva nor by Amphastar and additional defendants in companion cases decided together. The claims at issue were directed to enoxaparin, an anticoagulant drug marketed since 1993 under the brand name Lovenox®. Momenta marketed the first generic version of the drug and sought to block additional generic entrants by asserting the '866 patent, which claimed methods for ensuring that each batch of the drug met quality standards. The District Court held that co-defendant Amphastar's activities alleged by Momenta to infringe the '886 patent fell within the scope of the § 271(e)(1) safe harbor as being "reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs . . ." under the statute.

The Federal Circuit vacated the District Court's grant of summary judgment in Amphastar's favor, in an opinion by Judge Wallach joined by Judge Moore and by Judge Dyk, who also dissented in part on other aspects of the decision. The majority relied on its interpretation of the "purpose" of the statute from the legislative history:

[Section 271(e)(1)] provides that it is not an act of patent infringement for a generic drug maker to import or to test a patented drug in preparation for seeking FDA approval if marketing of the drug would occur after expiration of the patent . . . . This section does not permit the commercial sale of a patented drug by the party using the drug to develop such information . . . . The information which can be developed under this provision is the type which is required to obtain approval of the drug. . . . The purpose of sections 271(e)(1) and (2) is to establish that experimentation with a patented drug product, when the purpose is to prepare for commercial activity which will begin after a valid patent expires, is not a patent infringement [emphasis in opinion].

The opinion noted that while the contours of the safe harbor have been deemed broad (citing, inter alia, Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193, 202 (2005), Classen Immunotherapies, Inc. v. Biogen IDEC, 659 F.3d 1057, 1072 (Fed. Cir. 2011), and AbTox, Inc. v. Exitron Corp., 122 F.3d 1019, 1027 (Fed. Cir. 1997)), the safe harbor is not without boundaries. These exceptions include research tools not subject to FDA approval (Proveris Sci. Corp. v. Innovasystems, Inc., 536 F.3d 1256, 1265–66 (Fed. Cir. 2008)) and information "routinely reported" to the FDA post-approval (citing Classen). Earlier, the Federal Circuit had affirmed denial of Momenta's motion for preliminary injunction on the grounds that the movant was unlikely to prevail, but in light of a fuller record than had been available at the preliminary injunction stage, the Court was convinced that the FDA submissions relied upon by Amphastar were sufficiently "routine" that they fell outside the scope of the § 271(e)(1) safe harbor. The opinion contrasted the routine nature of the submissions made based on the use of Momenta's method with "non-routine submissions that may occur both pre- and post-approval, such as the submission of investigational new drug applications ('INDs'), new drug applications ('NDAs'), supplemental NDAs, or other post-approval research results." Because Amphastar's submissions using Momenta's patented technology were routine, they were not "reasonably related to the development and submission of information" as required by the statute to qualify for the safe harbor, and the District Court's decision to the contrary was clearly erroneous in the Federal Circuit's opinion. This decision was based in part on the panel's apprehension that deciding in Amphastar's favor would "result in manifest injustice" because it would be the first case to have § 271(e)(1) encompass "activities related to ongoing commercial manufacture and sale." The majority's conclusion was supported by the Federal government as amicus, wherein "the government argued that the routine use of a patented testing process in the commercial manufacture of a drug is not 'reasonably related to the development and submission of information to [the] FDA' and thus not shielded from liability by § 271(e)(1).'"

Denial of certiorari does not connote agreement by the Court, of course, but until the Court decides to address this issue the question of what activities are not within the safe harbor remains unclear, particularly with regard to ones such as safety testing that are performed post-approval (see "Supreme Court Denies Certiorari in Momenta Case").

Posted at 11:36 PM in Hatch-Waxman, Supreme Court | Permalink | Comments (1)

September 07, 2016

Hartig Drug Co. v. Senju Pharmaceutical Co. (3d Cir. 2016)

By Kevin E. Noonan --

Perhaps one of the most influential first year law school classes for the task of learning how to "think like a lawyer" is civil procedure. Particularly when the professor is bold enough to engage students on the intricacies of the topic, those intricacies can make for a challenging final exam. These experiences should come to mind for many antitrust lawyers when considering the Third Circuit's decision in Hartig Drug Co. v. Senju Pharmaceutical Co., where the Court applied subject matter jurisdiction principles to reverse a District Court's dismissal of Hartig's antitrust allegations on the pleadings.

The facts while relevant were not dispositive. At issue were the actions of Senju and its co-defendants, Kyorin Pharmaceutical Co and Allergan Inc. related to ANDA litigation over its medicated eyedrop products, Zymar (a 0.3% gatifloxacin solution) and Zymaxid (a 0.5% gatifloxacin solution). Allergan, pursuant to a license to U.S. Patent No. 6,333,045, filed NDAs for these products in 2003 and 2010, respectively; Hartig was a secondary purchaser of these drugs from Amerisource Drug Corp., who assigned its rights to Hartig.

In its complaint, Hartig alleged several bases for antitrust injury:

[T]he Defendants engaged in a number of illegal practices to prevent or delay the introduction into the market of generic alternatives to Zymar and Zymaxid. First, the Defendants filed a baseless lawsuit against another pharmaceutical company, Apotex, claiming patent infringement and delaying FDA approval of that company's generic version of Zymar. Next, the Defendants engaged in so-called "product hopping" (A35) -- discouraging doctors from prescribing generic alternatives to the original 0.3% Zymar eyedrops by phasing out that product in favor of "new" 0.5% Zymaxid eyedrops. To buy time for that shift in marketing strategy, the Defendants prolonged the Apotex litigation by filing a frivolous motion for a new trial. They also asked the United States Patent and Trademark Office to reexamine claims of the '045 Patent, but failed to disclose material information both from the trial record in the Apotex case and from their own expert that undermined their reexamination claims. After the FDA approved Apotex's 0.3% gatifloxacin eyedrops, the Defendants sued Apotex a second time. Although the courts ultimately held that the Defendants' suit was barred by claim preclusion, Apotex was deterred from launching a generic competitor to Zymar. Since then, the Defendants have filed numerous lawsuits against competing drug manufacturers to bar the market entry of generic equivalents to both Zymar and Zymaxid.

Put more succinctly, Hartig argued that, but for Defendants' actions in violation of the Sherman Antitrust Act, generic versions of these eyedrops would have entered the marketplace after the patent on the drug itself expired in 2010 (specifically, "at least from June 15, 2010 until October 3, 2013"), based in part on Apotex's Paragraph III certification on that base patent and the asserted invalidity of the '045 patent.

Allergan filed a motion to dismiss based on Federal Rule of Civil Procedure 12(b)(1), that the Court did not have subject matter jurisdiction. Co-defendants Kyorin and Senju filed motions to dismiss under Rule 12(b)(6) that Hartig had failed to state a claim (Allergan later joined in this motion). Allergan's motion was based on its Distribution Services Agreement (DSA) with Amerisource that precluded that primary distributor from assigning its rights without Allergan's express written agreement. The Third Circuit's opinion notes that the DSA was not part of Hartig's complaint but was appended to Allergan's motion to dismiss (a factual point relevant to the Court's decision).

The District Court granted Allergan's motion. On appeal, none of the parties challenged the Court's basis for rendering its decision, but several amici did (including Walgreen Co., The Kroger Co., Safeway Inc., Albertson's LLC, HEB Grocery Company LP, CVS Health Corporation, and Rite Aid Corporation). The basis for this challenge is that while the anti-assignment clause in the agreement between Allergan and Amerisource might impact whether Hartig had antitrust standing, it did not affect the question of whether the Court could render a decision under Article III of the Constitution. The Third Circuit first addressed the propriety of considering this issue, on the grounds that under normal circumstances an amicus "cannot expand the scope of an appeal with issues not presented by the parties on appeal," citing Nuveen Mun. Tr. ex rel. Nuveen High Yield Mun. Bond Fund v. WithumSmith Brown, P.C., 692 F.3d 283, 300 n.10 (3d Cir. 2012). However, the Court also noted that the question of subject matter jurisdiction raised by the amici was one that a court has "an independent obligation" to raise in situations where its jurisdiction (and hence institutional competence) are called into question, citing Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006). The Court continued that "federal courts [also] have a strict duty to exercise the jurisdiction that is conferred upon them by Congress," citing Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716 (1996), and "have no more right to decline the exercise of jurisdiction which is given, than to usurp that which is not," quoting Cohens v. Virginia, 19 U.S. (6 Wheat.) 264, 404 (1821). Accordingly, the panel concluded that it had a duty to question the District Court's decision that it did not have jurisdiction regardless of whether this was an issue for the parties. (The opinion also cites a recent, similar case, Group Against Smog and Pollution, Inc. v. Shenango Inc., 810 F.3d 116 (3d Cir. 2016), where the question was whether the proper grounds for a motion to dismiss was Rule 12(b)(1) or 12(b)(6).)

In considering this issue, the opinion sets out the distinctions between the two Rules, noting that "the 12(b)(6) standard affords significantly more protections to a nonmovant." In a Rule 12(b)(6) motion, the court properly considers "only the complaint, exhibits attached to the complaint, matters of public record, as well as undisputedly authentic documents if the complainant's claims are based upon these documents," citing Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010), and also must consider all allegations in the complaint as true as well as all reasonable inferences that can be drawn from them when taken in a light most favorable to the nonmovant. Rule 12(b)(1), on the other hand, provides the defendant the ability to present competing facts (i.e., the defense is not limited to the facts alleged in the complaint). The Plaintiff bears the burden of proof that jurisdiction is proper, and a court can consider all evidence without the presumptions that attach under Rule 12(b)(6); importantly here, a court can also consider evidence "outside the pleadings." Consequently, "a 12(b)(1) factual challenge strips the plaintiff of the protections and factual deference provided under 12(b)(6) review" according to the opinion.

Here, according to the Court, "the District Court should have treated antitrust standing not as an Article III jurisdictional issue, but rather as a merits issue, and thus should have resolved the motion to dismiss under Rule 12(b)(6) rather than Rule 12(b)(1)." But the opinion goes on to explicate its reasoning for this decision in a way informative on the difference between the two grounds for standing (while acknowledging that its discussion is complicated by the varying uses of the term "standing"). First the opinion reviewed the requirements for Article III standing, according to Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992):

First, [a plaintiff] must establish that it has suffered an "injury in fact," meaning a concrete and particularized invasion of a legally protected interest. Id. Second, it must establish a "causal connection between the injury and the conduct complained of -- the injury has to be fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court." Id. . . . Third, it must show a likelihood "that the injury will be redressed by a favorable decision." Id. at 561.

Even if the Article III requirements for standing are satisfied, however, another prerequisite for standing is antitrust standing, which requires that the injury a plaintiff suffered was one "that the antitrust statute was intended to forestall," citing Barton & Pittinos, Inc. v. SmithKline Beecham Corp., 118 F.3d 178, 181 (3d Cir. 1997), quoting Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 538, 540 (1983). The opinion further explained that even if a plaintiff suffered injury as a result of an antitrust violation, if the standing requirement is not satisfied the antitrust laws do nor permit a plaintiff to be a "private attorney general" under the statute. And the opinion set out the distinction plainly: Article III jurisdiction "implicat[es] a court's subject matter jurisdiction" while antitrust standing affects "only the plaintiff's ability to succeed on the merits." Whether or not a plaintiff has antitrust standing does not implicate the subject matter jurisdiction under Article III according to the opinion, citing Ethypharm S.A. France v. Abbott Laboratories, 707 F.3d 223, 232 (3d Cir. 2013). And this distinction, according to the Court, is at the heart of the Supreme Court's explanation of the "direct purchaser rule" in Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), wherein the Court stated that "although indirect purchasers 'may have been actually injured by antitrust violations' through passed-on overcharges, the 'legislative purpose[s]' underlying the antitrust statutes would still be better served by limiting recovery to the direct purchasers paying those overcharges in the first instance." 431 U.S. at 746.

The significance of this distinction in this case stems in part from the Court's appreciation that "Allergan's motion to dismiss under Rule 12(b)(1) was always premised, at bottom, on Hartig's purported lack of antitrust standing," despite Allergan premising its motion on Rule 12(b)(1). This is not the correct question, according to the Court; for a motion to dismiss on an Article III basis the "case or controversy" standards are those enunciated by the Supreme Court in Lujan and the panel held that Hartig had satisfied these requirements.

The opinion closes with a discussion of whether Allergan and its co-defendants properly moved to dismiss Hartig's claims under Rule 12(b)(6) and found that they did not. This judgment turns on the differences in scope of the factual challenges permitted under each of these rules, and the Third Circuit panel recognized that the District Court relied on evidence regarding the DSA that would not be permitted in deciding a motion predicted on Rule 12(b)(6) (where all allegations in the complaint are taken as being true and all inferences drawn in the nonmovant's favor). And finally, while the panel acknowledged that the question of whether the District Court could have (or will in future) properly consider the DSA was not before it, the opinion suggests that this agreement is not sufficient under Pennsylvania law to strip Hartig of its capacity to bring suit under the antitrust laws.

The Court vacated the judgment below and remanded to the District Court, providing perhaps another opportunity for the parties to craft appropriate motions under the rules of civil procedure to effect their aims.

Hartig Drug Co. v. Senju Pharmaceutical Co. (3d Cir. 2016)
Panel: Circuit Judges Ambro, Jordan, and Greenberg
Opinion by Circuit Judge Jordan

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

June 22, 2016

The CREATES Act of 2016: Senate Listens to Generics Industry

By Kevin E. Noonan --

Last week, co-sponsors Senators Leahy (D-VT), Grassley (R-IA), Klobucher (D-MN), and Lee (R-UT) introduced a bill (S. 3056), entitled the "Creating and Restoring Equal Access to Equivalent Samples Act of 2016" or the "CREATES Act of 2016". According to Senator Grassley:

[C]oncerns have been raised that some brand-name companies are misusing an FDA program, known as the Risk Evaluation and Mitigation Strategy, to thwart that process by preventing the sale of samples of their product and refusing to allow generic competitors to participate in their Risk Evaluation and Mitigation Strategy protocol. These tactics result in blocking generic drug approval and keeping drug prices high for consumers. The Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act addresses this anticompetitive behavior by giving generic companies an opportunity to obtain relief in a timely fashion rather than through lengthy antitrust litigation.

The bill was referred to the Judiciary Committee, a sub-committee of which has already held a hearing on the subject matter the bill was introduced to address.

After an introductory section, the bill provides in Section 2 "Findings." In addition to encomiums to the effectiveness of the Drug Price Competition and Patent Term Restoration Act of 1984 (Public Law 98-417; 98 Stat. 1585) and the Biologics Price Competition and Innovation Act of 2009 (Subtitle A of title VII of Public Law 111-148; 124 Stat. 804), the bill asserts that "developers of generic drugs and biosimilar biological products [] must be able to obtain quantities of the reference listed drug or biological product with which the generic drug or biosimilar biological product is intended to compete [] for purposes of supporting an application for approval by the Food and Drug Administration." Moreover, the Findings state that, for those drugs subject to a "risk evaluation and mitigation strategy" or REMS, or a REMS with elements to assure safe use ("REMS with ETASU"), the FDA requires the branded/innovator and the generic/biosimilar to have "a single, shared system of elements [pursuant to (21 U.S.C. 355-1)] to assure safe use and supporting agreements, or secure a variance therefrom"

The problem, according to the bill's cosponsors, is that "certain license holders (i.e., branded drug and biologics companies) are preventing generic product developers from obtaining quantities of the covered product necessary for the generic product developer to support an application for approval by the Food and Drug Administration, including testing to show bioequivalence, biosimilarity, or interchangeability to the covered product, in some instances based on the justification that the covered product is subject to a risk evaluation and mitigation strategy with elements to assure safe use." And, according to the Director of the Center for Drug Evaluation and Research (CDER) at FDA, "some manufacturers of covered products have used REMS and distribution restrictions adopted by the manufacturer on their own behalf as reasons to not sell quantities of a covered product to generic product developers, causing barriers and delays in getting generic products on the market." The FTC has voiced similar concerns, and the Findings also allege that "certain license holders are impeding the prompt negotiation and development on commercially reasonable terms of a single, shared system of elements to assure safe use, which may be necessary for the generic product developer to gain approval for its drug or licensing for its biological product." While the antitrust laws provide one avenue for addressing this problem (insofar as it exists; the bill contains allegations but no examples of specific anticompetitive behavior), the bill contains the statement that it would be better to have "a more tailored legal pathway" which this bill is intended to provide. (In this regard, the drafters have included a provision later in the text of the bill that the causes of action and remedies provided by the bill are not intended to foreclose access to such antitrust remedies under appropriate circumstances (Sec. 3(d)(2)).

Section 3 of the bill, entitled "ACTIONS FOR DELAYS OF GENERIC DRUGS AND BIOSIMILAR BIOLOGICAL PRODUCTS," is directed to "covered products" (defined as "any drug approved under subsection (b) or (j) of section 505 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355) or biological product licensed under subsection (a) or (k) of section 351 of the Public Health Service Act (42 U.S.C. 262)") or combination thereof, or device or drug marketed for use thereof. The bill expressly excludes from its ambit any drug or biological product "that the Secretary [of Health and Human Services] has determined to be currently in shortage and that appears on the drug shortage list in effect under [] 21 U.S.C. 356e" provided that the shortage has not been in effect for more than 6 months. The bill then sets forth a new cause of action ("Civil Action") under Sec. 3(b)(1)(A):

An eligible product developer [a generic drugmaker or biosimilar applicant] may bring a civil action against the license holder for a covered product [i.e., the generic or biosimilar drug] seeking relief under this paragraph in an appropriate district court of the United States alleging that the license holder has declined to provide sufficient quantities of the covered product to the eligible product developer on commercially reasonable, market-based terms.

The elements to be proven, by a preponderance of the evidence (Sec. 3(b)(1)(B)), are:

"(I) that --
    (aa) the covered product is not subject to a REMS with ETASU; or
    (bb) if the covered product is subject to a REMS with ETASU--
        (AA) the eligible product developer has obtained a covered product authorization from the Secretary in accordance with clause (ii); and
        (BB) the eligible product developer has provided a copy of the covered product authorization to the license holder;
(II) that, as of the date on which the civil action is filed, the product developer has not obtained sufficient quantities of the covered product on commercially reasonable, market-based terms;
(III) that the eligible product developer has requested to purchase sufficient quantities of the covered product from the license holder; and
(IV) that the license holder has not delivered to the eligible product developer sufficient quantities of the covered product on commercially reasonable, market-based terms--
    (aa) for a covered product that is not subject to a REMS with ETASU, by the date that is 31 days after the date on which the license holder received the request for the covered product; and
    (bb) for a covered product that is subject to a REMS with ETASU, by 31 days after the later of--
        (AA) the date on which the license holder received the request for the covered product; or
        (BB) the date on which the license holder received a copy of the covered product authorization issued by the Secretary in accordance with clause (ii).

The bill also permits an eligible product developer to submit a written request (Sec. 3(b)(1)(B)(ii)(I)) to the Secretary of Health and Human Services to obtain sufficient quantities of a covered product, which request shall be granted by the Secretary "not later than 90 days after the request [] is received for a product subject to a REMS with ETASU." The sample of covered product will be sufficient to perform testing with or without human clinical trials as necessary. The license holder (NDA or BLA) will be absolved of any violation of the REMS for the covered products if the product is supplied under the Secretary's authorization. (Sec. 3(b)(1)(B)(ii)(III)).

The bill further contains, as an affirmative defense (Sec. 3(b)(1)(C)) to the cause of action created by the Act, provisions that absolve the NDA or BLA holder from liability where neither the license holder or any of its "agents, wholesalers, or distributors was engaged in the manufacturing or commercial marketing of the covered product"; and that none of the license holder or any of its "agents, wholesalers, or distributors otherwise had access to inventory of the covered product to supply to the eligible product developer on commercially reasonable, market-based terms.'' Alternatively, it will be an affirmative defense if the license holder or its "agents, distributors, or wholesalers" sells the product, without restrictions "explicit or implicit" against selling to an eligible product developer, and an eligible product developer could purchase the covered product "in sufficient quantities on commercially reasonable, market-based terms from the agents, distributors, or wholesalers of the license holder."

The bill also contains (Sec. 3(b)(1)(D)(i)) the following remedies for the eligible product developer: an order from the Secretary that the license holder must provide the eligible product developer with "sufficient quantities of the covered product on commercially reasonable, market-based terms" without delay; an award of attorneys' fees and costs; and a monetary award "sufficient to deter the license holder from failing to provide other eligible product developers with sufficient quantities of a covered product on commercially reasonable, market-based terms," provided that the license holder either delayed in providing the covered product "without a legitimate business justification" or the license holder failed to comply with an order by the Secretary under the statute. The amount of the monetary award is capped (Sec. 3(b)(1)(D)(ii)) at the revenue the license holder earned on the covered product (in its entirety) during a period beginning 31 days after the date the license holder received the request for the product or, for a product covered by a REMS with ETASU, 31 days after the later of when the license holder received the request or the Secretary's authorization order. The statutory term for calculating the maximum extent of the monetary award ends on the date the license holder provides the sufficient amount of the covered product. Thus, the bill provides incentives for the license holder to provide the sufficient quantities either upon request by the eligible product developer or as soon thereafter as possible.

In addition, the bill has provisions (Sec. 3(b)(2) et seq.) relating to failure of the license holder and the eligible product developer to reach agreement on "a single, shared system of elements to assure safe use with respect to the covered product" or where the license holder has refused to permit the eligible product developer to "join a previously approved system of elements to assure safe use with respect to that product." In order to prevail the eligible product developer must show that she has sought approval of a drug under Section 505(b)(2) or (j) or Section 351(k) referencing a covered product subject to a "REMS with ETASU that requires a single, shared system of elements to assure safe use with respect to the covered product"; that at least 120 days have elapsed from the date on which the eligible product developer "first initiated an attempt to reach an agreement with the license holder that would allow the product developer to participate in a single, shared system of elements to assure safe use"; and the license holder and eligible product developer have not reached agreement. Recovery is also dependent on the Secretary not waiving the requirement that the covered product be part of "a single, shared system." As in other parts of the statute, the remedy is an order from the Secretary to the license holder to "enter into a single, shared system of elements to assure safe use with the eligible product developer on commercially reasonable terms" or that the eligible product developer "join a previously approved system of elements to assure safe use with respect to the covered product on commercially reasonable terms." Recovery is also allowed if the Secretary waives the requirement. The remedies contained in the bill (Sec. 3(b)(2)(C)) include attorneys' fees and costs, as well as a monetary amount "sufficient to deter the license holder from failing to reach agreements that would allow other eligible product developers to participate in a single, shared system of elements to assure safe use on commercially reasonable terms." These remedies are available only upon a showing by the eligible product developer, by a preponderance of the evidence, that the license holder, not having any legitimate business justification, delayed entry of the eligible product developer into the "single, shared system of elements to assure safe use with respect to the covered product," or delayed securing a waiver from the Secretary, or failed to comply with the Secretary's order pursuant to the provisions of the bill. This portion of the bill (Sec. 3(b)(2)(C)(ii)) also contains maximums the eligible product developer can be awarded, which comprise no more than entirety of the revenue the license holder makes on the product from a time that is 121 days "after the date on which the product developer first initiated an attempt to reach an agreement with the license holder that would allow the product developer to participate in a single, shared system of elements to assure safe use with respect to the covered product" and ending on the date "on which the eligible product developer and license holder reached an agreement that would allow the product developer to participate in a single, shared system of elements to assure safe use with respect to the covered product." The final provisions of the bill (Sec. 3(c)) include a limitation on liability for the license holder, wherein "[a] license holder shall not be liable for any claim arising out of the failure of an eligible product developer to follow adequate safeguards to assure safe use of the covered product during development or testing activities described in this section, including transportation, handling, use, or disposal of the covered product by the eligible product developer."

Again according to Senator Grassley, the bill is supported by "consumer groups, generic drug manufacturers, antitrust experts, physicians, pharmacists, hospitals, insurers and other groups that advocate for lower-cost drugs, including: the Generic Pharmaceutical Association, AARP, the National Coalition on Healthcare, Consumers Union, Families USA, the Center on Medicare Advocacy, Public Citizen, the American College of Physicians, the American Hospital Association, the Healthcare Supply Chain Association, the National Association of Chain Drug Stores, the Pharmaceutical Care Management Association, Express Scripts, Blue Cross Blue Shield Association, the Premier Healthcare Alliance, the AFL-CIO, the American Federation of Teachers, the Public Sector Healthcare Roundtable and the UAW Retiree Medical Benefits Trust. With the exception of the GPhA these are all patient, consumer, or physicians' groups, all of which have a personal, economic and vested interest in getting generic or biosimilar drugs to market, without necessarily being overly concerned with the realities of producing any of these drugs or getting them to market (much less the commercial considerations involved). The Senators are doing what our system expects them to do, listen to their constituents. And while it is not impossible that sometimes it may look like branded and biologics companies are being obstructionist against their generic or biosimilar counterparts it is not always so, and Congress has the responsibility to ensure the litigation and sanctions envisioned by the statute are necessary to forestall any unnecessary delay that may occur (and are not excused by the express provisions of the bill). In view of the impending summer recess, followed by the Presidential and Congressional elections, it is unlikely that this bill will make it to the President's desk before November. But it is certainly a bellwether for what we can expect from the 115th Congress when it convenes early next year.

Posted at 11:59 PM in Biosimilars, Hatch-Waxman | Permalink | Comments (7)

June 06, 2016

BIO International Convention 2016 Preview

U.S. Patent Practice – the PTAB, Federal Courts, and Patent Eligibility

By Andrew Williams --

The 2016 BIO International Convention has already begun in San Francisco, but most of the sessions and forums get underway beginning on Tuesday, June 7, 2016. Patent Docs has been highlighting a few sessions or other opportunities, in thematic fashion, to help you navigate your way through the convention. For example, today, we focus on issues surrounding the use of inter partes reviews ("IPRs") at the Patent Trial and Appeal Board ("PTAB"), and on issues surrounding patent eligibility for biotechnology inventions. Of course, Patent Docs authors and contributors will be present at BIO as part of the MBHB contingent, and Patent Docs readers are encouraged to stop by the MBHB booth (#504) to discuss these sessions (or whatever other topic is of interest to you).

In the past three and a half years, IPR proceedings have been available for accused infringers, and just about anyone else, to challenge issued patents at the PTAB. Not surprisingly, their use has been a popular topic at recent BIO conventions. This year is no exception. First up in the Intellectual Property track is "Will the PTAB be a Road Block for Biotech? Lessons Learned from the First Three Years of Inter-Partes Review and Future Prospects." This session will take place at 2:15 PM on June 7 in Room West 3008. The description for the session notes that the PTAB has been invalidating claims and entire patents with a frequency that is alarming to those relying on patent protection in the Biotech space. Of course, most affected patents are in other fields, but this does not mean that biotech and pharma are being ignored. The panel will explore the various practices established by the PTAB, including claim construction and claim amendment practice, and the recent proposals for change to these procedures. In addition, the session will explore the intersection of PTAB and the BPCIA to see how IPRs are being used in the biosimilar context. The speakers on the panel are Teresa Stanek Rea, partner at Crowell & Moring LLP, former Acting Under Secretary of Commerce for Intellectual Property and former Acting Director of the U.S. Patent and Trademark Office; Michael Tierney, Lead Administrative Patent Judge at the PTAB, and Kevin Noonan, partner at McDonnell Boehnen Hulbert & Berghoff LLP (and Patent Docs co-author). The session will be moderated by William Kubetin, Managing Editor of Bloomberg BNA.

The Intellectual Property track has a second session that will address the issues of the PTAB and the BPCIA, but will also include issues related to the Hatch-Waxman statute. This session, entitled "Piecing Together the Hatch-Waxman, BPCIA and PTAB Puzzle: Revealing the Big Picture in Patent Challenges Brought in Multiple Fora," will take place in Room West 3008 at 3:30 PM on June 7, 2016. The description of this session notes that in 2015, there was a sizable increase in the number of IPR challenges to pharmaceutical and biotechnology patents. At least a part of this rise stems from the use of IPRs by generic drug companies and those preparing biosimilar drugs. IPRs can be seen as a parallel to district court litigation under the Hatch-Waxman Statute and as an alternative to the "patent dance" under the BPCIA. The session was "[d]esigned for corporate decision makers and practicing IP professionals," and promises to address the interplay between the PTAB and district court. The speakers for this session are Claire Vasios, Vice President of Intellectual Property for Alkermes Inc. and Lori Wolfe, Associate General Counsel, Specialty IP Litigation for Teva Pharmaceuticals USA, Inc. The session will be moderated by Nicholas Mitrostas of Goodwin Proctor.

A final session we will highlight in the Intellectual Property track will address how the Patent Office and U.S. Court system has been handling patent eligibility issues for biotechnology inventions. Entitled "Protecting Biomedical Innovation in a Shifting Patent-Eligibility Landscape," this session will take at 2:15 PM on June 8 in Room West 3008. The description of the session notes that the patent eligibility doctrine is not new, but that the Patent Office and Supreme Court have recently been invoking it to deny patent protection for otherwise "breakthrough" inventions. The judicially created subject matter exceptions of abstract ideas, laws of nature and natural phenomena are being used to exclude patents that are new and not obvious over the prior art. The panel promises to "discuss how stakeholders can maneuver the still-changing landscape in this challenging area and where it may be heading moving forward." The speakers on this panel include Robert Armitage, Consultant on IP strategy and policy matters (and former Senior Vice President and General Counsel at Eli Lilly and Company); Robert Bahr, Deputy Commissioner for Patent Examination Policy at the U.S. Patent Office, Gerard Devlin, Managing Counsel for IP Litigation, Office of General Counsel at Merck & Co., Inc., and Arthur Gajarsa, retired Federal Circuit Judge currently at Wilmer Hale. The session will be moderated by Teige Sheehan of Heslin Rothenberg Farley & Mesiti, P.C.

We look forward to seeing you this week at BIO 2016.

Posted at 09:15 PM in Conferences & CLE's, Hatch-Waxman, Patent Trial and Appeal Board, Patentable Subject Matter | Permalink | Comments (0)

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