FDA’s Holding-on-the-Merits Standard – Will it Apply Post-MMA?

June 14, 2009

By Kurt R. Karst –      

Will FDA apply the Agency’s pre-Medicare Modernization Act (“MMA”) “holding-on-the-merits standard” to the post-MMA “failure to market” 180-day exclusivity forfeiture provisions?  It is a reasonable question, and one that FDA has not yet definitively answered.  Nevertheless, there appears to be some indication that FDA will apply a holding-on-the-merits standard post-MMA.  

Prior to the enactment of the MMA, 180-day exclusivity was triggered by the earlier of: (1) the first commercial marketing of the drug by a first filer; or (2) “the date of a decision of a court in [a patent infringement action] holding the patent which is the subject of the certification to be invalid or not infringed.”  Under the MMA, only the first commercial marketing of the drug by a first applicant triggers 180-day exclusivity.  The pre-MMA court decision trigger was essentially moved to FDC Act § 505(j)(5)(D)(i)(I)(bb), where it serves to calculate a “later of” date under the failure to market forfeiture provisions. 

The issue of whether the pre-MMA court decision trigger requires a decision of a court that on its face evidences a holding on the merits of patent non-infringement, invalidity, or unenforceability was litigated on several occasions.  Historically, FDA interpreted the court decision trigger at FDC Act § 505(j)(5)(B)(iv)(II) (2003) to mean an actual court decision holding on the merits that a patent is invalid, not infringed, or is unenforceable.  Based on two decisions of the U.S. Court of Appeals for the District of Columbia Circuit in 1999 and 2000 concerning generic TICLID (ticlopidine), however, FDA began interpreting the court decision trigger under an estoppel-based standard that required FDA to evaluate whether a patentee is estopped from suing for patent infringement.  Those district court decisions are Teva Pharm. USA, Inc. v. FDA, 182 F.3d 1003 (D.C. Cir. 1999) (“Teva I”) and Teva Pharm. USA, Inc. v. FDA, No. 99-5287, 2000 U.S. App. LEXIS 38667 (D.C. Cir. Nov. 15, 2000) (“Teva II”).  FDA believed that as a result of the Teva I and Teva II decisions, the Agency was compelled to apply an estoppel-based standard, under which the Agency evaluated whether a patentee was estopped from suing for patent infringement for 180-day exclusivity triggering purposes.

Several years later, in Teva Pharm., USA, Inc. v. FDA, 398 F. Supp. 2d 176 (D.D.C. 2005), Teva challenged an FDA decision that a dismissal of a declaratory judgment action brought by Apotex concerning generic PRAVACHOL (pravastatin sodium) triggered Teva’s 180-day exclusivity.  On appeal, the U.S. Court of Appeals for the District of Columbia Circuit held in Teva Pharm., USA, Inc. v. FDA, 441 F.3d 1, 5 (D.C. Cir. 2006) (“Teva III”) that FDA’s decision was arbitrary and capricious because “FDA mistakenly thought itself bound by our decisions in Teva I and Teva II,” and stated that rather than establishing a requirement for FDA to apply an estoppel-based standard, the court in Teva I had simply found FDA’s decision to apply a holding-on-the-merits standard lacking in reasoned decision-making.  In short, the court only found the court decision trigger ambiguous and “left the final decision to FDA” to interpret the statute.  

FDA responded to the Teva III decision in an April 11, 2006 letter to ANDA applicants.  In that letter, FDA states that the Agency:

interprets the language of the court decision trigger provision . . . to require a court decision with an actual “holding” on the merits that the patent is invalid, not infringed, or unenforceable.  The holding must be evidenced by language on the face of the court’s decision showing that the determination of invalidity, noninfringement, or unenforceability has been made by the court.  FDA’s experience in making court decision trigger determinations bears out the difficulty in implementing a broader, estoppel-based standard that requires the agency to evaluate whether the patentee is estopped from suing for infringement.  FDA’s “holding-on-the-merits” interpretation adheres closely to the language of the statute, and will provide a bright line that is more easily administrable by FDA and that will enable industry to make appropriate business planning decisions.

(Although FDA’s pravastatin decision was issued after the enactment of the MMA, because the earliest pravastatin ANDA containing a Paragraph IV certification was submitted to FDA prior to the MMA’s enactment date – i.e., December 8, 2003 – the pre-MMA version of the FDC Act with respect to triggering 180-day exclusivity applied.)

Therefore, FDA decided in the pravastatin case that Teva’s 180-day exclusivity had not been triggered by the dismissal of Apotex’s patent infringement litigation.  Apotex promptly sued FDA and lost – both in the U.S. District Court for the District Columbia and the U.S. Court of Appeals for the District of Columbia Circuit. 

Apotex subsequently sued FDA on the Agency’s application of the holding-on-the-merits standard with respect to generic ZOFRAN (ondansetron) ANDAs.  (As with the pravastatin ANDAs discussed above, the pre-MMA 180-day exclusivity triggers applied.)  In that case, Apotex challenged a November 3, 2006 FDA decision in which the Agency determined that a stipulation of dismissal of patent infringement litigation does not satisfy FDA’s holding-on-the-merits standard.  FDA stated in its November 3, 2006 decision that “[i]t is not enough that the court order reflects the views and commitments of the parties.  The court itself has to have made a substantive determination on the merits of the patent claim.”  Both the U.S. District Court for the District Columbia and the U.S. Court of Appeals for the District of Columbia Circuit denied Apotex’s requested relief. 

FDA has not, to our knowledge, definitively stated whether or not the Agency will apply its pre-MMA holding-on-the-merits standard post-MMA.  Indeed, FDA states in both the pravastatin and ondansetron decisions that “[t]he agency’s determination to apply the ‘holding-on-the-merits’ standard under the pre-MMA statute does not reflect an agency view as to the proper scope or interpretation of . . . any . . . forfeiture provision in the MMA.”  Notwithstanding a definitive decision from FDA, as well as some legislative history (i.e., 149 Cong. Rec. S15885 (daily ed., Nov. 25, 2003)) made at a time when FDA – and presumably Congress – believed that under the pre-MMA version of the FDC Act FDA was compelled by the courts to apply an estoppel-based standard, FDA appears to be leaning towards applying its holding-on-the-merits standard post-MMA. 

In particular, FDA’s May 7, 2008 analysis of the applicability of the MMA’s failure to market forfeiture provisions to generic PRECOSE (acarbose) states that a declaratory judgment action of non-infringement and invalidity voluntarily dismissed without prejudice is not a litigation-related event that factors into a forfeiture analysis under FDC Act § 505(j)(5)(D)(i)(I)(bb)(AA) and (BB).  Specifically, FDA states in the letter that:

To date, no action for infringement of the ‘769 patent has been brought against Cobalt or any subsequent applicant.  As noted in the background on Cobalt’s ANDA above, on October 17, 2007, Cobalt filed an action for declaratory judgment of non-infringement and invalidity of the ‘769 patent.  This case has been voluntarily dismissed without prejudice.  No court has entered a final judgment of invalidity or non-infringement, and no court has signed a settlement order or consent decree entering final judgment of invalidity or non-infringement.  Therefore, neither of the litigation-related events factor into the forfeiture analysis. [(emphasis added)] 

FDA’s statements in the acarbose decision are not dispositive of the Agency’s position on the applicability of the holding-on-the-merits standard post-MMA.  A future court decision or FDA’s long-awaited proposed regulations implementing the MMA’s 180-day exclusivity provisions should provide clearer guidance.

Categories: Hatch-Waxman