Not So Retro: FDA Says IRTNMTA Cannot Be Retroactively Applied

Market exclusivities—patent or otherwise—are a critical part of the Hatch-Waxman compromise, intended to encourage continued innovation in spite of the introduction of generic competition.  Even a month of market exclusivity is financially lucrative enough to fight for, so it is no surprise that a company would go to the mat for an extra 13 months of patent exclusivity.  And that’s exactly what Eisai did back in 2016 when it submitted a supplement to its request for a patent term extension (PTE) asking FDA to revise its “date of approval” calculation for purposes of PTE calculation for its anti-epileptic drug product, Fycompa (perampanel), after Congress passed the “Improving Regulatory Transparency for New Medical Therapies Act” (IRTNMTA).

IRTNMTA, as we explained back in 2016, amended the FDC Act, the PHS Act, the PTE statute, and the Controlled Substances Act (CSA) to provide, among other things, that the “date of approval” of an NDA, NADA, or Section 351(a) BLA for a controlled substance awaiting a scheduling determination by the DEA (or the “covered date” for PTE submission purposes) is the later of the date of NDA, NADA, or Section 351(a) BLA approval, or “the date of issuance of the interim final rule controlling the drug.”  This provision was necessary because controlled substances approved by FDA could not be marketed until the DEA issued a final determination scheduling the controlled substance, which sometimes takes years.  Such a delay can eat away at exclusivity and patent life periods, undercutting the incentives to innovate.  IRTNMTA served to correct that issue by pushing the date of approval—and the start of exclusivity—to the date of DEA scheduling.

Nearly 6 years after Eisai asked FDA to recalculate its PTE using its controlled substance scheduling date as date of approval rather than its actual date of approval, FDA flatly denied its request.  Though Eisai’s Fycompa was initially approved in October 2012, it wasn’t scheduled until January 2014, meaning that Eisai lost a little more than a year of patent life awaiting scheduling—in addition to the time spent in regulatory development and review.  Because IRTNMTA pushed the approval date for controlled substances back to the date of DEA scheduling, Eisai argued that the Fycompa date of approval should be pushed back, as its PTE application was pending at the time of the November 25, 2015 IRTNMTA enactment.  After all, Eisai argued, IRTNMTA was a remedial statute, designed to address the inequitable loss of exclusivity—including patent term—while the DEA controlled the product; retroactive application of the statute makes sense to remediate said issue in any outstanding PTE application, regardless of when the relevant product had already been scheduled or approved.

In what reads like a Motion for Summary Judgment, FDA dismissed every argument that Eisai made with respect to the retrospective application of IRTNMTA.  The crux of FDA’s point was that “Like the PTO, FDA concludes . . . that IRTNMTA does not apply to a patent term extension application for a drug approved by FDA and scheduled by DEA before IRTNMTA was enacted.”  Plain language, FDA explained, “evinces clear intent that it applies only to drugs scheduled after enactment.”  Because the statute “change[d] the process by which DEA makes a scheduling decision that identifies the controls under which a new drug with abuse potential can be marketed and sets a date by which that process must take place,” it logically follows that it applies only to scheduling decisions that have not yet occurred.   Eisai’s proposed reading of the statute would “yield absurd results,” as the Regulatory Review Period, and therefore the appropriate extension, could not be calculated.

FDA next looked to legislative intent.  Citing the presumption against retroactivity, FDA saw no evidence that Congress intended retroactive application.  In fact, legislative history showed the exact opposite: The Congressional Budget Office had interpreted the provision to affect drugs approved and scheduled after enactment, so Congress “could have amended the text to avoid ambiguity and foreclose this interpretation.”  Looking again to the plain language, FDA stated “Congress was aware that Fycompa and other already-scheduled drugs were impacted by the non-inclusion of post-approval DEA scheduling activities in the regulatory review period as the statutorily defined, and yet Congress did not draft IRTNMTA so as to apply to those drugs.”  On the same basis, FDA also denied Eisai’s argument that IRTNMTA should apply to pending applications.

Most interestingly, FDA rejected all of Eisai’s policy arguments.  Though Eisai argued that, as an innovator, it was entitled to the benefit of the Hatch-Waxman compromise, and the delay in scheduling wiped out a year of patent protection, FDA could not accept Eisai’s argument that IRTNMTA should be “construed liberally” simply because it was intended as a remedial statute—or at least as liberally as Eisai requested.  This is because, FDA explained, “liberal does not mean unfettered.”  Further, FDA countered with a policy argument of its own: Eisai argued that no generic reasonably could have relied on the patent expiration dates currently listed in the Orange Book—more than nine years away—and thus would not be hurt by a further patent term extension; in response, FDA stated that that position “seems to overlook that enabling and encouraging generic development to begin before expiration of innovator patents was a purpose of the Drug Price Competition and Patent Term Restoration Act of 1984 that created the patent term extension provisions at issue here.”  Two ANDAs referencing Fycompa had been submitted to FDA by October 2016, and the relevant patent listing in the Orange Book was directly relevant to the decision each applicant made to submit an ANDA referencing Fycompa.  Further extension of the patent would upset that reliance.

Consequently, FDA concluded “that application of IRTNMTA to Fycompa would be retrospective, that IRTNMTA should not be applied retrospectively, and that . . . applying IRTNMTA in these circumstances would have an impermissible retrospective effect.”  Ultimately, FDA denied Eisai’s request to change the date of approval, and the calculation of the extension remains the same, as does the expiration of the relevant patent listed in the Orange Book.  The decision does not have an impact on too many products, but the Agency’s position on retroactive application of statutes—particularly those statutes that would extend a market exclusivity—can probably be extrapolated to many situations.  And from the thoroughness of this decision, it seems like FDA is prepared to defend the presumption against retroactivity in court.  We have to wait to see if that happens, but exclusivity is always fodder for some interesting litigation.