By Kurt R. Karst –   

Earlier this week, we reported on the latest in the ongoing saga over a Patent Term Extension (“PTE”) for U.S. Patent No. 5,196,404 (“the ‘404 patent”) covering The Medicines Company’s (“MDCO’s”) ANGIOMAX (bivalirudin) – an order from the U.S. District Court for the Eastern District of Virginia (Alexandria Division) to the U.S. Patent and Trademark Office (“PTO”) to issue a second interim PTE for the ‘404 patent.  We also noted that outside of the current litigation, we understand that MDCO is continuing to push for passage of a bill that will legislatively extend the PTE for the ‘404 patent.  And specifically, that the latest legislative push is to get the bill attached to the Tax Extenders Act of 2009 (H.R.4213).  H.R.4213 is reportedly one of those “must pass” bills, and offers a perfect vehicle to slip in an amendment styled as an “excise tax on patent term extensions.”

Yesterday, Senator John Kerry (D-MA) introduced an amendment (SA4295) to H.R. 4213 that would grant MDCO a PTE for the ‘404 patent for the price of $65 million.  The amendment is similar to other versions of what has been dubbed the “Dog Ate My Homework Act” introduced in previous Congresses (see our previous posts here, here, and here).  The amendment would amend the PTE statute (35 U.S.C. § 156) to add new subsection (i), which states that the PTO Director:

shall accept an application under this section that was filed not later than 3 business days after the expiration of the 60-day period provided in subsection (d)(1) if the owner of record of the patent, or its agent, submits a request to the Director to proceed under this subsection not later than 5 business days after the expiration of that 60-day period.  An application accepted by the Director under this subsection shall be treated as if it had been filed within the [60-day] period specified in subsection (d)(1).

The acceptance of a PTE application pursuant to proposed 35 U.S.C. § 156(i) would be subject to a tax, which for MDCO would be “$65,000,000 with respect to any application for a [PTE], filed with the [PTO] before the date of the enactment of this section, for a drug intended for use in humans that is in the anticoagulant class of drugs” (i.e., ANGIOMAX).  Any other PTE application subject to proposed 35 U.S.C. § 156(i) would be subject to a tax equal to the sum of:

(A) any net increase in direct spending arising from the extension of the patent term (including direct spending of the United States Patent and Trademark Office and any other department or agency of the Federal Government),

(B) any net decrease in revenues arising from such patent term extension, and

(C) any indirect reduction in revenues associated with payment of the tax under this section.

The “effective date” section provides that Sen. Kerry’s amendment shall apply with respect to any PTE application made on or after the enactment of H.R.4213 or “that, on the date of the enactment of this Act, is pending, that is described in section 4491(b)(1)(A) of the Internal Revenue Code of 1986 as added by subsection (a) of this section, or as to which a decision denying the application is subject to judicial review on such date” (i.e., ANGIOMAX).  Moreover, the Kerry amendment provides that the 5-business-day period in proposed 35 U.S.C. § 156(i) “shall be deemed to begin on the date of the enactment of this Act, and, if the original term of the patent to be extended has expired, any extension or interim extension of the term of the patent granted pursuant to a request under [35 U.S.C. § 156(i)] shall be effective from the original expiration date of the patent” (once again, describing the ANGIOMAX PTE situation). 

According to Sen. Kerry’s statement made upon the introduction of the amendment “[t]he purpose of this amendment is to fix a complete anomaly in the patent law that is vital to our State.”  And according to former Surgeon General Dr. Louis Sullivan “[t]he fate of this corrective provision could be a matter of life and death for tens of thousands of patients.  The reality is that stark.  As drug innovators develop pioneering medicines, the benefits available to patients are increasing.  These medical innovators’ ability to conduct lifesaving research should not be thwarted by a confusing filing deadline.”  MDCO claims that if a PTE were applicable to the ‘404 patent, it would extend the patent expiration date until December 2014.  Without a PTE on the ‘404, generic competition is expected later this year.

By Ricardo Carvajal –

FDA has revised its draft guidance on the Reportable Food Registry (“RFR”)  to address the new electronic portal for submission of reports, and in response to recent questions that the agency received from industry.  Among the more significant changes and additions:

• A human food that contains an undeclared allergen “may be a reportable food. . . regardless of how the major food allergen was incorporated into the human food.”

• If a facility receives a bulk trailer shipment (meaning that the trailer is dropped off at the facility and the driver leaves) and the shipment is determined to contain a reportable food, the facility must submit a report even if the shipment is not off-loaded and is rejected.

• A report pertaining to a food later determined by FDA not to be a reportable food will not be entered into the RFR, but does remain in FDA’s records.

• Consumers should not use the RFR.

• The reporting obligation extends to a reportable food even if that food is manufactured solely for export.

• The reporting obligation does not extend to a reportable food in a foreign facility that exports to the U.S. and elsewhere if the reportable food is not shipped to the U.S.

In the Federal Register notice announcing the availability of the guidance, FDA asks for comments on  the meaning of “transfer” as that term is used in section 417(d)(2) of the FDC Act.  As explained by FDA:

Section 417(d)(2) of the act provides an exemption from the requirement that a responsible party submit a reportable food report. In order for the exemption to apply, the adulteration must have originated with the responsible party, the responsible party must have detected the adulteration prior to any transfer to another person of the article of food, and the responsible party must have corrected the adulteration or destroyed the food. However, Congress did not provide a definition for the term “transfer” as it is used in section 417(d)(2)(B) of the act. In Edition 1 of the guidance at Question and Answer numbers 27 and 28, and in the draft Edition 2 guidance at Question and Answer numbers E.4 and E.5, FDA said that a transfer to another person occurs when the responsible person releases the food to another person. In this document, FDA is asking for comment on whether this interpretation of the term “transfer” is appropriate, and if not, what other interpretations of the term “transfer” as it is used in section 417(d)(B)(2) of the act would be more appropriate. Specifically, we are requesting comment on whether the interpretation of the term “transfer” should be dependent upon possession of the food, whether the interpretation should be dependent on ownership of the food, or whether there are other interpretations we should consider, such as a combination of possession and/or ownership.

There have been numerous expressions of concern about FDA’s current broad interpretation of “transfer,” which severely limits the applicability of the statutory exception to the reporting requirement.  Interested parties should submit comments on this and other issues of concern by July 26, 2010 to ensure that they receive full consideration by the agency.

 By John R. Fleder & Ricardo Carvajal –

The Federal Trade Commission ("FTC") has announced a second opportunity for public comment on its proposed issuance of compulsory process orders to 48 food and beverage firms.  If those orders are issued, the FTC will demand information on marketing of food and beverages to children. The FTC is submitting its proposed information collection to the Office of Management and Budget ("OMB"), and is seeking public comment by June 24, 2010 on the proposal.  The FTC will collect data on categories of foods involved and their corresponding nutrition information, types of media techniques used, marketing expenditures, targeting by race and ethnicity, and research on psychological factors that make food advertising appealing to youth.  Among other objectives, these data will help the FTC “evaluate the impact of self-regulatory efforts on the nutritional profiles  of foods marketed to children and adolescents.” 

The FTC states that it will issue information demands to those companies whose "marketing and selling the categories of food and beverage products that appear to be advertised to children and adolescents most frequently."  Because a number of the recipients of the proposed orders are members of the Council of Better Business Bureaus Children’s Food and Beverage Advertising Initiative, the FTC believes that its current study “will account for significantly more than three-fourths of advertising expenditures directed toward children and adolescents.”  Included among the recipients are “several fruit and vegetable producers, distributors and marketers.”  The FTC estimates that each company that receives a demand for information from the FTC will be obligated to spend (on average) approximately 600 hours to comply with the FTC's demands.

Of the 48 firms that will receive the proposed orders, 40 received similar orders issued in 2007.  The FTC used the responses to those orders to prepare its 2008 report to Congress entitled Marketing Food to Children and Adolescents: A Review of Industry Expenditures, Activities, and Self-Regulation, which made a number of recommendations to food and beverage marketers.  The FTC can be expected to use the responses to the proposed orders to assess whether marketers acted on the recommendations made in the 2008 report. 

The FTC's Federal Register notice of May 25, 2010 states that potential recipients of the proposed compulsory process orders must retain potentially responsive documents and information. This position seems somewhat bizarre because it is quite unclear which companies will receive the orders.  Nevertheless, the FTC is taking the position that potential recipients of the proposed orders should retain potentially responsive information, lest they face potential criminal prosecution, according to the FTC.  Although the FTC anticipates that the collected information will become publicly available only in an anonymous or aggregated form, potential recipients should assume that responsive information could nevertheless be disclosed by the FTC (without the company's consent) in a variety of contexts, such as to Congress in response to an official request.

As we have noted in prior postings (here and here), the FTC has repeatedly indicated that it is especially concerned about food advertising directed to children.  The data collected by the FTC in response to the proposed orders can be expected to inform the agency’s decision on what types of additional actions are appropriate to address this issue.

The deadline for submission of comments is June 24, 2010. 

By Kurt R. Karst –   

In a somewhat unusual move, the U.S. Supreme Court has asked the U.S. Department of Justice (Solicitor General of the United States) to weigh in on generic drug preemption.  The move signals that the Court has continued interest in this issue, and comes in the context of two Petitions for Writ of Certiorari in which various generic drug manufacturers have appealed the U.S. Court of Appeals for the Eighth Circuit’s November 27, 2009 decision in Mensing v. Wyeth, Inc.

As we previously reported, Mensing addressed, among other things, whether the FDC Act preempts failure to warn claims against generic drug manufacturers – specifically, generic REGLAN (metoclopramide).  In reversing an October 2008 decision from the U.S. District Court for the District of Minnesota in which the court dismissed certain failure to warn claims against generic manufacturers on the basis of federal preemption, the Eighth Circuit, relying on the Supreme Court’s 2009 decision in Wyeth v. Levine, rejected arguments that failure to warn claims against generic manufacturers are preempted by the FDC Act (and the Hatch-Waxman Amendments in particular) because they create an impermissible conflict with federal law. 

The two Petitions for Writ of Certiorari (here and here) were filed in February 2010 and present almost identical questions for the Supreme Court’s consideration:

Whether the Eighth Circuit abrogated the Hatch-Waxman Amendments by allowing state tort liability for failure to warn in direct contravention of the Act’s requirement that a generic drug’s labeling be the same as the FDA-approved labeling for the listed (or branded) drug.

The first Petition is docketed as Docket No. 09-993 and was filed by PLIVA, Inc., Teva Pharmaceuticals USA, Inc., and UDL Laboratories, Inc.  The second Petition is docketed as Docket No. 09-1039 and was filed by Actavis Elizabeth, LLC.  Opposition and reply briefs have been submitted in both cases (as well as an amicus brief from GPhA) and are available on SCOTUSBlog here (scroll down to the bottom of the page). 

Shortly after the Eighth Circuit issued its decision in Mensing, the U.S. Court of Appeals for the Fifth Circuit came to a similar conclusion in Demahy v. Actavis.  That decision has not (yet) been appealed to the Supreme Court.  (For a nice overview of the current generic drug preemption landscape, see the Washington Legal Foundation’s recent Legal Backgrounder on the topic.)

By Ricardo Carvajal –

FDA announced that Reportable Food Registry ("RFR") reports can now be submitted through the new FDA-NIH Safety Reporting Portal, which will also accept reports about problems with pet food, animal drug adverse event reports, and human gene transfer clinical trial adverse event reports.  Of particular significance to those submitting RFR reports, the new portal will allow submitters to save drafts – a feature that was sorely missing from the RFR electronic portal.

By Kurt R. Karst –   

Late last Friday, in a case that is full of twists and turns, the U.S. District Court for the Eastern District of Virginia (Alexandria Division) added another twist (or turn) and ordered the U.S. Patent and Trademark Office (“PTO”) to issue a second interim Patent Term Extension (“PTE”) for U.S. Patent No. 5,196,404 (“the ‘404 patent”) covering The Medicines Company’s (“MDCO’s”) ANGIOMAX (bivalirudin).  Heeding the court’s order, the PTO granted the second interim PTE. 

The long-running dispute over a PTE for the ‘404 patent, which was originally scheduled to expire on March 23, 2010, and is subject to a 6-month period of pediatric exclusivity, concerns the proper interpretation of the PTE statute at 35 U.S.C. § 156(d)(1).  That provision states that the submission of a PTE application must occur “within the sixty-day period beginning on the date the product received permission under the provision of law under which the applicable regulatory review period occurred for commercial marketing or use.”  FDA approved ANGIOMAX at 5:18 PM on Friday, December 15, 2000 under New Drug Application (“NDA”) No. 20-873, and MDCO submitted its PTE application to the PTO on February 14, 2001 – 62 days after NDA approval (including the December 15, 2000 date of approval).  MDCO had petitioned the PTO to employ a “rule of construction” under which the Office would consider the 60-day PTE application submission period at 35 U.S.C. § 156(d)(1) to commence on the first business day after the day the FDA transmits notice of NDA approval of the drug product if that transmittal occurs after normal business hours.  In the case of the PTE application for the ‘404 patent covering ANGIOMAX, that would mean the 60-day period would have begun on December 18, 2000 and the PTE application would have been timely filed pursuant to 35 U.S.C. § 156(d)(1). 

As we previously reported, the first interim PTE was granted (here and here) on March 18, 2010, and was scheduled to expire on May 23, 2010.  That interim PTE preceded the PTO’s March 19, 2010 denial of a PTE for the ‘404 patent.  That denial led MDCO to file a second lawsuit [insert link] challenging the PTO’s decision.  (In the first lawsuit, in a March 16, 2010 opinion Judge Claude M. Hilton of the U.S. District Court for the Eastern District of Virginia (Alexandria Division) vacated the PTO’s previous denial of a PTE for the ‘404 patent based on MDCO’s “rule of construction” argument and remanded the case to the PTO “for reconsideration as to the date of approval under [35 U.S.C. § 156] and to take such actions as necessary to ensure that the ‘404 patent does not expire pending further resolution of these proceedings.”)  In the latest lawsuit, MDCO and the PTO have filed cross-motions for summary judgment (here and here) and generic applicants Teva and APP Pharmaceuticals have filed amicus briefs (here and here). 

The court’s May 21, 2010 order was prompted by MDCO’s May 20, 2010 Emergency Motion for Miscellaneous Relief in which the company requested “emergency relief to enforce the Court’s prior Order [(i.e., March 16, 2010)] and ensure that [the ’404 patent] does not expire during the pendency of these judicial review proceedings.”  According to MDCO:

The Court has now advised the parties that it will not be issuing a decision in this case by May 23, 2010, the date on which the ’404 patent is now due to expire.  The PTO, however, has taken the position, despite the Court’s Remand Order, that it will not grant any further extensions of the ’404 patent—the result of which would be that the patent would lapse prior to a decision by this Court on the merits of MDCO’s challenge. . . .  [T]his Court should, at a minimum, re-affirm that the PTO is required under the Remand Order to take such actions as necessary to extend the ’404 patent until this Court decides the pending cross-motions for summary judgment. The Court should also clarify that the extension must continue, at the very least, for a reasonable period of time after the Court rules to ensure orderly further proceedings.

The PTO position referred to by MDCO in its emergency motion is that the Office does not have the authority to grant a second interim PTE in this case because the statute and case law does not permit it.  The PTE statute at 35 U.S.C. § 156(e)(2) states:

If the term of a patent for which an application has been submitted under subsection (d)(1) would expire before a certificate of extension is issued or denied under paragraph (1) respecting the application, the Director shall extend, until such determination is made, the term of the patent for periods of up to one year if he determines that the patent is eligible for extension. [(emphasis added)]

In other words, an interim PTE is not available when the PTO has already denied a PTE application, which is what happened in this case when the PTO issued its March 19th denial.  (The first interim PTE was issued on March 18th and was therefore consistent with the statute.)  This is the same conclusion the Federal Circuit came to in its 2007 ruling in Somerset Pharmaceuticals v. Dudas. 

Although the PTO argues in its opposition brief that “a court does not have the ‘equitable power’ to order an agency to violate an Act of Congress by exceeding statutory limits on its authority,” the PTO nevertheless states in closing that “[i]n the event, however, that this Court does decide to grant a temporary restraining order, Defendants contend that this temporary restraining order should only extend until this Court issues a decision on the pending cross-motions for summary judgment and should not encompass any future judicial proceedings.” 

The court’s May 21st order is brief and makes no mention of 35 U.S.C. § 156(e)(2) or the Somerset decision.  It orders the PTO to “take such actions as are necessary to ensure that the ‘404 patent does not expire until at least ten (10) days after this Court issues an Order deciding the pending cross motions for summary judgment.”  And the PTO has apparently obliged and granted a second interim PTE . . . . but presumably without an analysis of 35 U.S.C. § 156(e)(2) or the Somerset decision, and without a specific expiration date (as it is unknown when the court will issue its order).  If this is the case, then MDCO will unlikely be able to amend its Orange Book listing for the ‘404 patent to reflect the second interim PTE. 

Outside of the current litigation, we understand that MDCO is continuing to push for passage of a bill that will legislatively extend the PTE for the ‘404 patent.  A version of the bill – the so-called “Dog Ate My Homework Act” – has been proposed in previous Congresses (see our previous posts here, here, and here).  We understand that the latest legislative push is to get the bill attached to the Tax Extenders Act of 2009 (H.R.4213). 

By Alan M. Kirschenbaum –

The Obama Administration took two steps on Friday to advance the implementation of health care reform, both of which are of interest to drug manufacturers.  First, CMS issued a draft agreement and final guidance on the Part D coverage gap drug discount program.  Second, the IRS issued a guidance on the Qualifying Therapeutic Discovery Project Tax Credit.  Both the discount and tax credit are mandated by the Patient Protection and Affordable Care Act ("PPACA"), which was enacted on March 23, 2010.

The Final Coverage Gap Discount Guidance and Draft Agreement

A CMS memorandum issued on Friday finalizes a draft guidance on how the Part D coverage gap discount program will be implemented.  We described the draft when it was released for comment on April 30.  The final guidance is accompanied by a preamble providing CMS’ responses to comments on the draft.  The most noteworthy change in the final guidance is that CMS has reversed its decision to provide a grace period during CY 2011 during which a manufacturer’s drugs would be covered under Part D even if the manufacturer did not sign a coverage gap agreement.  In the draft, CMS had proposed that, since Part D plans had already established their formularies for 2011, “extenuating circumstances” warranted postponing until 2012 the bar on coverage for manufacturers lacking an agreement.  However, CMS has now decided that it will not apply the “extenuating circumstances” authority in the statute, and the agency expects all manufacturers to sign an agreement by 2011 (see § 50.2 of the guidance).

There are a number of other noteworthy changes and clarifications in the final guidance and its preamble: 

• Relationship with other Part D rebates:  Many drug manufacturers are considering whether to reduce their existing rebate offers to Part D sponsors for 2011 in light of the new coverage gap discount.  The Guidance (§ 30.2) and preamble clarify that the coverage gap discount is not intended to replace drug rebates currently paid to Part D plans.  CMS expects that manufacturers will continue to provide separate rebates on Part D drugs, including in the coverage gap.

• No manufacturer access to discount estimates:  Drug manufacturers are having difficulty estimating their anticipated liability for coverage gap discounts because they do not have access to Part D plan estimates of coverage gap drug expenses or expected coverage gap discounts.  CMS declined a request to give manufacturers access to such estimates contained in Part D sponsor bids, explaining that bid information is proprietary and, in any event, is not specific enough to assist a particular manufacturer in estimating liability.

• Payment deadline not extended:  CMS has so far declined to extend the deadline for payment of coverage gap discounts beyond the 15 day period proposed in the draft.  Indeed, the deadline in the draft agreement has been reduced to 14 days after receipt of an invoice (draft agreement § II(b)).  However, CMS will consider further requests to extend this period when it receives comments on the draft agreement (see below). 

• Direct payment to Part D sponsors retained:  CMS rejected requests to establish a system for manufacturers to send discount payments to CMS or its contractor to distribute to Part D sponsors, rather than sending payments directly to numerous sponsors.  CMS optimistically explains that the direct payment process will not be overly burdensome because CMS’ contractor will help facilitate timely electronic payments to Part D sponsors.

• No withholding of disputed amounts:  CMS also declined to permit manufacturers to withhold disputed amounts when paying an invoice, as is permitted under the Medicaid Drug Rebate and TRICARE retail refund programs.  Presumably, CMS considers withholding of disputed amounts to be too much of a hardship on Part D sponsors.

• Retroactive changes to discount:  Reversing its position in the draft, CMS has decided that retroactive changes will be made to the drug discount where retroactive changes have been made to a beneficiary’s claim or eligibility determination (Guidance § 70.4)

• Authorized generics:  The preamble clarifies that an authorized generic approved under an NDA is subject to the coverage gap discount, even if Part D plans include it in the generic tier of the formulary with a generic copay.

The Draft Agreement and Public Meeting:  Along with the final guidance, CMS released a notice setting forth a draft model coverage gap discount agreement and announcing a public meeting to discuss it.  Among other provisions, the draft agreement contains dispute resolution procedures, a 10-year recordkeeping requirement, authority for HHS to audit manufacturer records, and authority for manufacturers to audit the data used by CMS’s contractor to determine manufacturer discounts.  It also contains a requirement for manufacturers to maintain up-to-date registration and listing with the FDA, which means that a failure to do so will no longer be merely a misbranding violation under the Federal Food, Drug, and Cosmetic Act, but could also expose the manufacturer to termination of the Part D coverage gap discount agreement for breach. 

The public meeting will be held on June 1, 2010, and registration is open until then.  CMS is also soliciting comments on the draft agreement, which are due by close of business on June 21, 2010.

Therapeutic Discovery Tax Credit

Also on Friday, the IRS issued a notice and fact sheet explaining how it will administer the Therapeutic Discovery Project Credit authorized by section 9023 of PPACA.  Under this program, firms with 250 employees or fewer will be eligible to apply for a tax credit (or alternatively, a grant) equal to 50 percent of the direct and necessary costs incurred during 2009 and 2010 for a qualifying therapeutic discovery project.  To receive the credit/grant, a project must be “qualified” by HHS and “certified” by the IRS.  First, HHS must qualify the project based on whether it shows reasonable potential to either (1) result in new therapies to treat an unmet medical need or prevent, detect, or treat a chronic or acute disease or condition; (2) reduce long-term health costs; or (3) significantly advance the goal of curing cancer within 30 years.  Next, the IRS will certify qualified projects that have the greatest potential (a) to create and sustain high quality, high-paying jobs in the U.S., and (b) to advance U.S. competitiveness in the life, biological, and medical sciences.

No company may receive more than $5 million in tax credits or grants for 2009 and 2010 combined, and the total amount of credits/grants that may be allocated among certified projects may not exceed $1 billion for the two-year period.  Applications must be submitted during a narrow window that begins on the day the application form is released on www.irs.gov, which will be no later than June 21, 2010, and ends on July 21, 2010.  An appendix to the IRS notice describes the project information that must accompany the application form.

By Kurt R. Karst –   

Last fall, we reported on a decision from Judge Richard E. L. Strauss of the Superior Court of California, County of San Diego, in which he granted motions for summary judgment ruling that Bayer AG and several generic drug manufacturers did not violate the Cartwright Act – California’s antitrust law and an analogue to Section 1 of the federal Sherman Act – when Bayer settled patent infringement litigation with respect to generic versions of its antibiotic drug CIPRO (cirprofloxacin HCl).  The case, In re: Cipro Cases I & II, is a proceeding of nine coordinated cases brought by indirect CIPRO purchasers almost ten years ago. 

In his decision, Judge Strauss determined that the court must turn “to federal decisions concerning the Sherman Act as persuasive authority to guide its decision,” because “there is no California authority evaluating whether a Hatch Waxman reverse payment settlement agreement violates state antitrust law (Cartwright Act or otherwise),” and that  “Federal case law is not only instructive in this regard, it is dispositive.”  Relying heavily on federal court decisions, such as the Federal Circuit’s decision in In Re Ciprofloxacin Hydrochloride Antitrust Litigation, 544 F.3d 1323 (Fed. Cir. 2008), and the U.S. Court of Appeals for the Second Circuit’s decision in Joblove v. Barr Labs., Inc., (, which “uniformly held that settlements within the scope of the patent do not violate antitrust laws,” Judge Strauss concluded that “the result should be no different under the Cartwright Act, as we are dealing with the exact same settlement agreement, involving the same type of Plaintiffs (indirect purchasers), and the same theories of liability.”  Accordingly, Judge Strauss granted the defendants’ motions for summary judgment finding that the agreements do not violate the Cartwright Act, because “as a matter of law, Plaintiffs cannot establish the agreement unreasonably restrains trade because no triable issue of material fact exists that there are no anticompetitive effects on competition beyond the exclusionary scope of the patent itself.” 

Enter the April 29, 2010 decision from a 3-judge panel of the U.S. Court of Appeals for the Second Circuit in In re: Ciprofloxacin Hydrochloride Antitrust Litigation.  As we previously reported, although the Second Circuit affirmed a 2005 decision by the U.S. District Court for the Eastern District of New York to grant summary judgment for defendants (i.e., manufacturers of Ciprofloxacin HCl) in an antitrust challenge to certain patent settlement agreements, the Court did so because it believed it was compelled to do so – “Since Tamoxifen rejected antitrust challenges to reverse payments as a matter of law, we are bound to review the Cipro court’s rulings under the standard adopted in Tamoxifen.” 

The Second Circuit went on to state in its opinion, however, that “because of the ‘exceptional importance’ of the antitrust implications of reverse exclusionary payment settlements of patent infringement suits,” plaintiffs-appellants should petition for rehearing en banc, and cited four reasons why the case might be appropriate for reexamination by the full Court, including that the U.S. has submitted amicus briefs arguing that Tamoxifen “adopted an improper standard that fails to subject reverse exclusionary payment settlements to appropriate antitrust scrutiny,” and proposing that “excessive reverse payment settlements be deemed presumptively unlawful unless a patent-holder can show that settlement payments do not greatly exceed anticipated litigation costs.”

With this backdrop, the indirect CIPRO purchaser plaintiffs in In re: Cipro Cases I & II have appealed Judge Strauss’ decision to the California Court of Appeal, Fourth Appellate District (Division I).  Among other things in the 84-page, 6-part appelllate brief, the indirect CIPRO purchasers argue that the Superior Court adopted a flawed and highly criticized line of federal authority:

Instead of applying the per se rule or the rule of reason under California law, the Superior Court adopted a rule unprecedented in California jurisprudence: the analysis of the Second Circuit Court of Appeals in Tamoxifen.  Not only has this standard been criticized by the United States Department of Justice, the Federal Trade Commission, the majority of state antitrust enforcement agencies including the California Attorney General, numerous professors of law, business and economics, major consumer organizations, and the American Medical Association, but, after the Superior Court adopted this standard, the Second Circuit itself questioned whether Tamoxifen should be reversed in the context of the Cipro Agreements.

The appeal is yet another sign of the reinvigorated effort by opponents of patent settlement agreements – most notably the Federal Trade Commission – to subject such agreements to a high degree of antitrust scrutiny and make them presumptively unlawful.

By Ricardo Carvajal –

FDA’s approach to regulation of nanotechnology has remained essentially unchanged since the issuance of the agency’s Nanotechnology Task Force Report in 2007.  In that report, which was endorsed by then-Commissioner von Eschenbach, FDA declined to adopt a formal definition of nanotechnology, and also declined to recommend nanotechnology-specific regulations – opting instead for the issuance of guidance documents intended to foster predictability and increase transparency.  However, an influx of new blood in the Office of the Commissioner, together with an overall shift to a more muscular exercise of the agency’s existing authorities, suggests that advocates of tighter regulatory oversight might yet get their wish.

Starting at the top, Commissioner Margaret Hamburg previously served on the Advisory Board for the Project on Emerging Nanotechnologies ("PEN").  PEN has consistently questioned whether the government’s oversight of nanotechnology is adequate to anticipate and manage potential human health and environmental risks.  Dr. Jessie Goodman, Deputy Commissioner for Science and Public Health, now serves as the agency’s principal representative on nanotechnology (a role formerly played by Dr. Norris Alderson, former Associate Commissioner for Science and Health Coordination and leader of the Nanotechnology Task Force, who is no longer with the agency).  Michael Taylor has rejoined the agency as Deputy Commissioner for Foods.  Mr. Taylor previously authored a report concluding in part that there are gaps in FDA’s existing legal authorities that could impede the agency’s effective regulation of nanotech-derived products.  Finally, as the agency’s new Chief Counsel, Ralph Tyler has indicated that he is likely to be more supportive of an expansive view of the FDC Act than were his immediate predecessors.  Taken together, this is a leadership team that seems more inclined to venture where the previous administration opted not to tread.

As the deck was being reshuffled at FDA, other jurisdictions and agencies have been moving to establish more comprehensive oversight of nanotech-derived products.  For example, earlier this year, Health Canada adopted a “working definition” of nanotechnology that “will be applied in specific regulatory contexts across the Department to support the assessment of nanomaterials and to provide assistance to manufacturers and other stakeholders in meeting their respective statutory obligations.”  Further, Health Canada made clear that it considers its existing authorities adequate “to require the submission of information that is essential to the assessment of potential risks to the health and safety of Canadians,” and that the Department intends to “apply the appropriate precautionary approaches as may be warranted.”  Closer to home, PEN reports that EPA has adopted its own “working definition” of nanotechnology, and has indicated that it expects to publish a Federal Register notice in June that will address nanotechnology.  The notice will announce a new interpretation of FIFRA and its implementing regulations, under which “the presence of a nanoscale material in a pesticide product” will be considered reportable under that statute.  Given these developments, it would not be surprising to see FDA’s new leadership also move to assert tighter control over nanotech-derived products that fall under its jurisdiction. 

By Kurt R. Karst –   

Late on May 17th, the U.S. Court of Appeals for the District of Columbia Circuit denied, in separate orders (here and here), FDA’s petition for panel rehearing and rehearing en banc of the D.C. Circuit’s March 2, 2010 decision in Teva Pharms USA, Inc. v. Sebelius, 595 F.3d 1303 (D.C. Cir. 2010).  In that case, a 3-judge panel of the D.C. Circuit ruled, in the context of Teva’s ANDAs for generic versions of Merck’s COZAAR/HYZAAR, that the patent delisting counterclaim provision at FDC Act § 505(j)(5)(C)(ii)(I) added by the 2003 Medicare Modernization Act must be read together with the patent delisting forfeiture provision at FDC Act § 505(j)(5)(D)(i)(I)(bb)(CC), and that there is “no reason to conclude that the 2003 addition of forfeiture provisions meant to give the brand manufacturer a right to unilaterally vitiate a generic’s exclusivity.”  FDA’s approved Teva’s ANDAs (here and here) on April 6, 2010 with 180-day exclusivity.

FDA’s petition argued, among other things, that the panel’s decision was “essentially an advisory opinion” because a forfeiture event other than patent delisting “has, in fact, occurred” (i.e., patent expiration through failure to pay maintenance fees), and that the panel lacked jurisdiction on the date it issued its opinion because Teva’s ANDAs for generic COZAAR/HYZAAR had not yet received final approval.  Teva, in the company’s opposition brief, vigorously defended its position that there is no basis for granting en banc review.  In denying FDA’s petition, the D.C. Circuit has ended one battle in the fight over generic COZAAR/HYZAAR 180-day exclusivity.  But another battle wages on . . . .

Roxane Laboratories, Inc. and Apotex, Inc. have appealed to the D.C. Circuit the D.C. District Court’s (Judge Rosemary M. Collyer) April 2, 2010 ruling denying Roxane’s and Apotex’s preliminary injunction motions (here and here).  Those motions challeged FDA’s March 26, 2010 letter decision concluding that Teva did not forfeit 180-day exclusivity eligibility under FDC Act § 505(j)(5)(D)(i)(VI).  That provision states that 180-day exclusivity eligibility is forfeited if “[a]ll of the patents as to which the applicant submitted a certification qualifying it for the 180-day exclusivity period have expired.”  FDA issued its response after soliciting public comment on whether Teva forfeited 180-day exclusivity eligibility because the only exclusivity-qualifying patent – U.S. Patent No. 5,608,075 – “expired” in March 2009 after Merck ceased paying certain patent maintenance fees.  As we previously reported, although FDA concluded that Teva did not forfeit 180-day exclusivity, the Agency spilled a lot of ink in its letter decision repudiating its own decision (essentially inviting a court challenge). 

Judge Collyer agreed that FDA properly followed the logic of the D.C. Circuit’s March 2, 2010 decision in Teva:

The Court cannot find that the FDA was arbitrary or capricious when it politely expressed its disagreement with a D.C. Circuit decision that had ruled against the agency, but nonetheless applied the reasoning of the Circuit to a different but, on these facts, closely related question.  Given the facts and law in this record, the Court finds that Plaintiffs have a very slim chance of success on the merits.  This factor does not support issuance of a preliminary injunction.

Apotex and Roxane, in their combined brief to the D.C. Circuit, argue that the “Court should conclude that the plain language of the statute requires a finding that Teva forfeited its 180 days of exclusivity,” and that “FDA’s decision to the contrary was not based on the plain language, or any other tools of statutory interpretation, but on the ‘reasoning’ in . . . [Teva],” under which, according to Apotex and Roxane, FDA falsely believed it was required “to reach a result with which it disagreed.”  FDA, in its May 18th brief, replies that:

FDA agrees with Apotex and Roxane that, based on the plain text of the statute, 21 U.S.C. § 355(j)(5)(D)(i)(VI), (ii), expiration of a patent for any reason should result in the forfeiture of 180-day exclusivity.  However, although FDA disagrees with the reasoning and holding of the Court in Teva, the agency must abide by that decision and consider its inescapable effect on the closely related issue involved here. Taking that ruling into account, FDA properly concluded that the expiration of a patent for nonpayment of fees does not trigger a forfeiture event. Thus, Apotex and Roxane are not likely to succeed on the merits.

Teva, in its May 18th Appellee brief, takes a more firm position:

At bottom, this is not a close case, and FDA’s decision only underscores how clear it is. While that decision sharply criticizes Teva, FDA nonetheless found itself compelled to conclude that unilateral patent delistings and unilateral patent terminations are two sides of the same coin—and thus equally foreclosed by Teva’s analysis of the statute’s incentive scheme. If there were a sensible way to split that coin in half, the tenor of FDA’s letter decision makes clear the Agency would have found it. But FDA did not do so—because it could not do so—and the district court’s decision should be affirmed.

By Kurt R. Karst –   

FDA’s recent issuance of its annual “Dear Colleague” letter, sent in anticipation of the Fiscal Year 2011 Prescription Drug User Fee Act (“PDUFA”) user fee invoices for product and establishment fees, is a good reminder for companies to review their product portfolios to determine whether or not they should be paying annual user fees for the PDUFA products they manufacture and market.  The FY 2011 user fee invoices (payable on or before October 1, 2010) will be mailed out in August 2010 once the FY 2011 user fee rates are set (which often occurs in early August).  If history is any indicator (see our previous posts here and here), the FY 2011 product and establishment user fee rates will increase from FY 2010, which were set at $79,720 (product) and $457,200 (establishment). 

As you peruse and update your product and establishment lists included in the “Dear Colleague” letter, a response to which is due to FDA by June 15, 2010, you should keep in mind several points . . . . 

Under FDC Act § 735(3), the term “prescription drug product” is defined to mean, in relevant part, “a specific strength or potency of a [prescription] drug in final dosage form” approved under FDC Act § 505 (or, for a biological product, licensed under PHS Act § 351) “which is on the list of products described in section 505(j)(7)(A) (not including the discontinued section of such list) or is on a list created and maintained by the Secretary of products approved under human drug applications under section 351 of the Public Health Service Act (not including the discontinued section of such list).”

As a result of this definition, companies are assessed a separate product fee for each approved strength of a drug product (i.e., each listed drug in the “Prescription drug Product List” section of the Orange Book).  Some older parenteral drug products may be subject to only a single product fee, even thought multiple strengths are approved and marketed, while some newer parenteral drug products may be subject to multiple product fees.  This is the result of a change made to the Orange Book a few years ago.  As explained in the current Orange Book Preface:

With the finalization of the Waxman-Hatch amendments that characterized each strength of a drug product as a listed drug it became evident that the format of the Orange Book should be changed to reflect each strength of a parenteral solution.  To this end the [Office of Generic Drugs, where the Orange Book Staff is housed,] has started to display the strength of all new approvals of parenteral solutions.  Previously we would have displayed only the concentration of an approved parenteral solution, e.g. 50mg/ml.  If this drug product had a 20 ml and 60 ml container approved the two products would be shown as 1Gm / 20ml (50mg/ml) and 3Gm / 60ml (50mg/ml).

FDA considers on a case-by-case basis whether older parenteral drug products bundled under a single concentration should be split up.  Thus, a company billed for a single product fee in one fiscal year could be billed for multiple product fees in a subsequent  fiscal year. 

The reference to “discontinued” drugs in the “prescription drug product” definition was added to the FDC Act under PDUFA IV in 2007 and codified FDA’s longstanding policy not to assess product fees for discontinued drug products.  Therefore, if a company is not currently marketing its approved drug product and does not anticipate that it will do so in the near future, FDA’s Orange Book Staff should be notified and the product should be placed in the “Discontinued Drug Product List” section of the Orange Book.

FDC Act § 736(a)(3)(B) states that “[a] prescription drug product shall not be assessed a [product fee] if such product . . . is the same product as another product approved under an application filed under section 505(b) or 505(j). . . .”  In other words, if a listed drug product is identified in the Orange Book with a therapeutic equivalence rating to another listed drug product (i.e., is listed in the Orange Book with either an “A” or “B” rating), a product fee is not assessed for that fiscal year (or in any subsequent fiscal years as long as there is a therapeutic equivalence rating).  So check your Orange Book listings to determine whether or not your products are correctly identified with a therapeutic equivalence code.  A correct Orange Book listing might not only save you a product fee, but an establishment fee as well, as FDC Act § 736(a)(2)(A) provides that if the drug product approved under the NDA is not assessed a product fee, then an establishment fee is not assessed for that fiscal year. 

Under FDC Act § 735(5), the term “prescription drug establishment” is defined to mean “a foreign or domestic place of business which is at one general physical location consisting of one or more buildings all of which are within five miles of each other and at which one or more prescription drug products are manufactured in final dosage form.”  (The definition also clarifies that “the term ‘manufactured’ does not include packaging.”)  A single establishment user fee – billed to the application holder, not the establishment –  is assessed for each establishment listed in an approved NDA as an establishment that manufactures the drug product identified in the application.  “In the event an establishment is listed in a human drug application by more than one applicant, the establishment fee for the fiscal year shall be divided equally and assessed among the applicants whose prescription drug products are manufactured by the establishment during the fiscal year and assessed product fees” (FDC Act § 736(a)(2)(A)).  In other words, the more PDUFA products manufactured at a single establishment, the less the share of the establishment fee will be in relation to the number of applicants.  

FDC Act § 736(a)(2)(A) also states that “[t]he annual establishment fee shall be assessed in each fiscal year in which the prescription drug product named in the application is assessed a fee under paragraph (3) unless the prescription drug establishment listed in the application does not engage in the manufacture of the prescription drug product during the fiscal year.” Companies who do not intend to engage in the manufacture of a PDUFA drug product during the next fiscal year (but nevertheless want to maintain an active Orange Book listing), can send a letter to FDA’s User Fee Staff informing the Agency of its plans to disconcontinue manufacturing for the next fiscal year.  If manufacturing is resumed during the fiscal year, then an establishment fee would be assessed during FDA’s “clean-up” billing cycle.  (“Clean-up” invoices are issued after the end of a fiscal year for fees not captured in FDA’s August billing cycle for that fiscal year.) 

By Kurt R. Karst –   

FDA’s recent decision to approve Sandoz Inc.’s (“Sandoz’s”) ANDA No. 40-445 for a generic version of King Pharmaceuticals, Inc.’s (“King’s”) SKELAXIN (metaxalone) Tablets, 800 mg, with a period of 180-day exclusivity is one of the few cases in which the Agency has ruled that a forfeiture of exclusivity did not occur even though the application sponsor failed to obtain tentative approval within 30 months of ANDA submission.  But the story does not end there.  As with so many Hatch-Waxman 180-day exclusivity cases, it’s complicated.  And this case is no exception.  It is a story of exclusivity gained, exclusivity lost, exclusivity regained, exclusivity lost again, and regained yet again.

As we recently discussed, FDC Act § 505(j)(5)(D)(i)(IV) – “Failure to obtain tentative approval” – is one of the six 180-day exclusivity provisions added to the FDC Act by Title XI of the Medicare Modernization Act (“MMA”) and provides that 180-day exclusivity eligibility is forfeited if “[t]he first applicant fails to obtain tentative approval of the application within 30 months after the date on which the application is filed. . . .”  The provision also contains a saving clause, however, stating that failure to obtain tentative approval within 30 months of ANDA submission will not result in a forfeiture of 180-day exclusivity if “the failure is caused by a change in or a review of the requirements for approval of the application imposed after the date on which the application is filed.”  In addition, the 2007 FDA Amendments Act (“FDAAA”) clarified FDC Act § 505(j)(5)(D)(i)(IV), such that if “approval of the [ANDA] was delayed because of a [citizen] petition [subject to FDC Act § 505(q)], the 30-month period under such subsection is deemed to be extended by a period of time equal to the period beginning on the date on which the Secretary received the petition and ending on the date of final agency action on the petition (inclusive of such beginning and ending dates) . . . .” (FDC Act § 505(q)(1)(G)). 

SKELAXIN was first approved (based on safety) on August 13, 1962 under NDA No. 13-217 and was reviewed under the Drug Efficacy Study Implementation program.  See 39 Fed. Reg. 29,396 (Aug. 15, 1974).  Under that review, FDA determined SKELAXIN to be effective for the relief of painful musculoskeletal conditions. 

In the case of ANDA No. 40-445, FDA received an amendment to Sandoz’s pending application as of November 4, 2004 for Metaxalone Tablets, 800 mg, containing a Paragraph IV Certification to the two Orange Book-listed patents covering the Reference Listed Drug (“RLD”), SKELAXIN – U.S. Patent Nos. 6,407,128 (“the ‘128 patent”) and 6,683,102 (“the ‘102 patent”).  (ANDA No. 40-445 was initially submitted to FDA on August 31, 2001 for a 400 mg strength, which was later withdrawn.)  Both of the patents are directed to methods of informing patients about and administering metaxalone with food and are listed in the Orange Book with a “U-189” patent use code, defined as “ENHANCEMENT OF THE BIOAVAILABILITY OF THE DRUG SUBSTANCE.”  U.S. Patent No. 7,122,566 (“the ‘566 patent”), a method-of-use patent covering the treatment of musculoskeletal conditions, was later added to the Orange Book for SKELAXIN, and Sandoz amended its pending application to include a Paragraph IV Certification to that patent as well. 

King timely sued Sandoz for infringement of the ‘128 and ‘102 patents in the U.S. District Court for the Eastern District of New York (King Pharmaceuticals, Inc. v.Eon Labs, Inc., Civil Action No. 04-5540), triggering a 30-month stay of ANDA approval.  King also timely sued Sandoz for infringement of the ‘566 patent in the U.S. District Court for the District of New Jersey (King Pharmaceuticals Inc., King Pharmaceuticals Research and Development Inc., Pharmaceutical IP Holding Inc. v. Sandoz Inc., Civil Action No. 08-CV-05974-GEB-JJH); however, that lawsuit did not result in a separate 30-month stay under provisions added to the FDC Act by the MMA that except amendments adding a Paragraph IV Certification from a new 30-month stay.  In January 2009, the U.S. District Court for the Eastern District of New York ruled that the ‘128 and ‘102 patents are invalid.  King has appealed that decision to the Federal Circuit (Case Nos. 09-1437 & 09-1438).  Litigation on the ‘566 patent is also ongoing. . . . but more on that later.

As the first applicant to submit an ANDA containing a Paragraph IV Certification to the 800 mg strength of SKELAXIN, Sandoz became eligible for 180-day exclusivity.  But Sandoz failed to obtain tentative approval within 30 months of ANDA submission (i.e., May 4, 2007), thereby setting the stage for a forfeiture of exclusivity.  Nevertheless, FDA determined that the failure:

was caused by a change in or a review of the requirements for approval of the application imposed after the date on which the application was filed.  Namely, Sandoz submitted its amendment for the 800 mg strength on November 4, 2004, and during the entire time the ANDA was under review, the agency had pending before it a citizen petition that created a review of the appropriate labeling for generic metaxalone in light of certain patent-protected language in the labeling of the RLD.

The citizen petition identified by FDA in the Sandoz ANDA approval letter was submitted to the Agency in March 2004 (FDA Docket No. FDA-2004-P-0426) and requests that FDA rescind a March 1, 2004 “Dear Applicant” Letter in which the Agency invited generic SKELAXIN applicants to submit a “section (viii)” statement to carve out of their proposed labeling “information on fed-state bioavailability claimed by the ‘128 patent because metaxalone products with such labeling will be no less safe or effective for all of the remaining conditions of use,” require generic applicants to certify to the ‘128 patent, and prohibit the carve out of certain pharmacokinetic information from the SKELAXIN labeling.  FDA never substantively responded to the petition . . . allowing it to effectively die on the vine and become moot once the U.S. District Court for the Eastern District of New York ruled that the ‘128 and ‘102 patents are invalid.  (FDA’s failure to substantively respond to the petition presumably means that the Agency had some concerns with permitting a labeling carve-out.)

The March 2004 petition is the one in a line of citizen petitions (not all of which have been substantively responded to) concerning various issues about generic SKELAXIN approval requirements.  The petitions include FDA-2003-P-0081, FDA Docket No. 2001P-0117, FDA Docket No. 2001P-0481, and FDA-2009-P-0223.  Because the March 2004 petition is a pre-FDAAA petition (and therefore not a 505(q) petition), FDC Act § 505(q)(1)(G), which extends the 30-month tentative approval forfeiture provision under FDC Act § 505(j)(5)(D)(i)(IV), did not come into play.  Instead, FDA’s decision of a non-forfeiture appears to be based solely on its review of generic SKELAXIN approval requirements raised in the March 2004 petition and made moot by the New Jersey district court’s patent invalidity decision. 

The story does not end there, however.  Despite having been saved from a forfeiture of 180-day exclusivity, Sandoz “lost” its exclusivity again in the ongoing ‘566 patent infringement litigation, but then quickly “regained” it. 

In early April 2010, shortly after FDA approved Sandoz’s ANDA No. 40-445 and after the company triggered its 180-day exclusivity with an at-risk launch, King sought and obtained a Temporary Restraining Order (“TRO”) in the ‘566 patent infringement litigation.  FDA’s longstanding statutory interpretation is that once 180-day exclusivity is triggered, it “will continue to run during the pendency of a stay or injunction.”  (A few years ago, Apotex challenged this interpretation at FDA and in court, but the issue was eventually dropped without a decision.)  Thus, once the TRO was entered, Sandoz was unable to take advantage of its 180-day exclusivity and had effectively lost it.  But the TRO was quickly vacated, effectively restoring Sandoz’s 180-day exclusivity.  (Meanwhile, King is litigating another dispute over the marketing of an authorized generic version of SKELAXIN – King Pharmaceuticals Inc., et al v. CorePharma LLC, Civil Action No. 10-CV-01878-GEB-DEA.)

By Wes Siegner –

FDA recently posted a compliance program for dietary supplements that provides useful insights on where the agency is likely to focus its enforcement resources in the coming year.  Illustrating FDA’s institutional biases, the agency prioritizes inspections to focus more on "non-traditional" products and less on vitamins and minerals.  The document also lists deviations from GMP requirements (among others) that can be expected to result in the issuance of a warning letter, quoted verbatim below:

• Lack of master manufacturing records or significant requirements not included;
• Lack of finished product release criteria or failure to test (all or subset of finished batches) or meet finished product release criteria critical to product safety and quality;
• For significant dietary ingredients, e.g. those that make up the bulk of the product, failure to establish specifications for incoming material or failure to conduct identity testing;
• No quality control review procedures or significant quality control procedures not implemented;
• No batch records;
• Significant physical plant deficiencies.

FDA also states that it will not examine labeling claims for the purpose of determining whether they include the disclaimer provided in FDCA section 403(r)(6) because "there are unresolved policy issues regarding the use of the disclaimer" – perhaps an oblique reference to the fact that there is a pending citizen petition that was filed in February 2000 that addresses this issue as well as the issue of claim notification.

In addition to addressing enforcement priorities, the document contains some new interpretations of regulatory requirements that should have first been communicated to industry through the issuance of guidance in compliance with the agency's Good Guidance Practices regulation in 21 C.F.R. Part 115.  For example, the document states that a new dietary ingredient notification "only applies to the specific product of the manufacturer/distributor who submits the notice."  This means that an NDI notification would have to be submitted even if the dietary ingredient that is the subject of the notification is identical to a dietary ingredient that has been the subject of a prior notification.  This position directly conflicts with FDCA section 413 and is therefore unauthorized by law.

As an additional example, the document appears to acknowledge that the statement of identity requirement can be fulfilled simply by the term “dietary supplement” or by statements other than "dietary supplement" (e.g., "herbal supplement").  (For a discussion of FDA’s acknowledgement that previous guidance on this issue is incorrect, see our previous post here.)  Given the agency's willingness to address these issues in a compliance program, it would not be surprising if the agency soon issues guidance for industry that explains the agency's thinking in greater detail.

Industry should remember that guidance such as this is not legally binding on FDA or industry.  Nonetheless, the new guidance is further evidence of a much stronger focus on dietary supplement inspections and imports, and signals increased FDA enforcement in this area.

By Susan J. Matthees & Alan M. Kirschenbaum –

The state and federal regulatory and legislative focus on drug marketing shows no signs of abating.  Yesterday, we reported on FDA’s “Bad Ad” initiative to get health care practitioners to report to FDA violative drug promotion that occurs in the doctor’s office.  The Department of Veterans Affairs ("VA") is also proposing to turn the screws on drug detailing.  A proposed regulation published on May 5 would impose limits on the promotion of drug and drug-related products to health care professionals working at VA facilities.  Under the proposed rule, sales representatives would be permitted to promote their products in VA facilities if the promotion is consistent with any VA clinical criteria for use and has not been placed on the VA’s “non-promotable” list.  If a drug is not on the VA National Formulary and has no criteria for use, it may not be promoted absent authorization from the Veterans Integrated Service Network ("VISN") Pharmacy Executive and the Chief of Pharmacy of the VA facility.

The proposed rule would impose a number of additional restrictions on sales detailing.  Sales representatives would not be permitted to provide drug samples or free drug-related supplies unless approved by the medical facility.  They would be prohibited from providing food of any type or value to VA staff.  Contacts with practitioners would be by appointment only, and facilities could develop a list of practitioners who do not want to be called on by representatives.  No detailing of professionals-in-training would be permitted unless approved by the clinical staff member.  Sales representatives would be prohibited from waiting or making any presentations in patient-care areas.  In addition, all educational programs and materials would have to be approved by the facility in advance of the program, and no promotional activities would be permitted during an educational program. 

Violations of the rule could result in suspension or revocation of visiting privileges at one or more facilities, or at the VISN or VA-wide level, for a particular sales representative, or even the entire sales force where there is widespread misconduct.

At the state level, Connecticut has joined California, Nevada, and Massachusetts in requiring drug and device manufacturers to adopt a compliance program.  A bill passed by the legislature on May 5 requires pharmaceutical and medical device manufacturers, before January 1, 2011, to adopt and implement a code conforming with the PhRMA code or AdvaMed code on interactions with health care professionals (as applicable), and a comprehensive compliance program in accordance with the HHS OIG’s 2003 Compliance Program Guidance for Pharmaceutical Manufacturers.  The bill authorizes the Department of Consumer Protection to investigate and impose a civil penalty of $5,000 for a failure to adopt and implement a code and compliance program, or a failure to conduct training or regular audit for compliance with the code.  The bill is on its way to Governor Rell’s office for signature.

By Kurt R. Karst –   

The growing application backlog and median time for ANDA approval by FDA’s Office of Generic Drugs (“OGD”) has been a thorn in the side of the generic drug industry for quite some time now.  As we previously reported, the ANDA backlog earlier this year was poised to top 2,000 applications and the median ANDA approval time in Fiscal Year 2009 was 26.70 months.  This is up from 21.65 months in Fiscal Year 2008 and up from 17.3 months in Fiscal Year 2003, shortly after which the Medicare Modernization Act (“MMA”) was enacted.  Today, the ANDA backlog has surpassed the 2,000 application mark and is reportedly growing at about 100 applications per month; and we understand that the median ANDA approval time is edging closer to 30 months from application submission. 

Although a median approval time that hits or exceeds 30 months is concerning in and of itself, it is especially concerning for those companies that are “first applicants” who qualify for 180-day exclusivity for a particular drug product.  One of the six 180-day exclusivity provisions added to the FDC Act by Title XI of the MMA – i.e., FDC Act § 505(j)(5)(D)(i)(IV) – “Failure to obtain tentative approval” – provides that 180-day exclusivity eligibility is forfeited if:

The first applicant fails to obtain tentative approval of the application within 30 months after the date on which the application is filed, unless the failure is caused by a change in or a review of the requirements for approval of the application imposed after the date on which the application is filed.

The 2007 FDA Amendments Act clarified FDC Act § 505(j)(5)(D)(i)(IV), such that if “approval of the [ANDA] was delayed because of a [citizen] petition, the 30-month period under such subsection is deemed to be extended by a period of time equal to the period beginning on the date on which the Secretary received the petition and ending on the date of final agency action on the petition (inclusive of such beginning and ending dates) . . . .” (FDC Act § 505(q)(1)(G)).  FDA explained in the Agency’s Acarbose Exclusivity Letter Decision that the reference to “approval” in FDC Act FDC Act § 505(q)(1)(G) means that “section 505(j)(5)(D)(i)(IV) also applies when the first applicant is eligible for a final approval, but not for a tentative approval.  The absence of patent or exclusivity protection that would necessitate a tentative – rather than final – approval, does not exempt a first applicant from the requirement that it show that its application meets the scientific and technical requirements of 505(j) within 30 months of filing.” 

Although FDC Act § 505(j)(5)(D)(i)(IV) includes an exception where the failure to obtain timely approval will not result in a forfeiture of 180-day exclusivity eligibility if “the failure is caused by a change in or a review of the requirements for approval of the application imposed after the date on which the application is filed,” FDA believes this is the only circumstance supported by the statute.  As FDA explained in the Agency’s Dorzolamide-Timolol Maleate Ophthalmic Solution Exclusivity Letter Decision, “[t]his express description of the circumstances in which exclusivity will not be forfeited for failure to obtain tentative approval makes it clear that, under other circumstances in which an applicant has failed to obtain tentative approval, regardless of what party might be responsible for that failure, the first applicant will forfeit exclusivity” (emphasis added).  In other words, if OGD fails to take an approval action by the 30-month date described in FDC Act § 505(j)(5)(D)(i)(IV) because, for example, of other priorities that require the Office to shift its scarce resources, or simply because the 30-month date was not on the Office’s radar, 180-day exclusivity eligibility is forfeited. 

As we previously reported (here, here, and here), there have been myriad cases in which FDA has already applied FDC Act § 505(j)(5)(D)(i)(IV) and determined that 180-day exclusivity was forfeited (or that the savings clause applied).  A quick look at FDA’s Paragraph IV Certification List and FDA’s drug approval database shows that there are  cases for post-MMA applications in which FDA did not make an approval decision within 30 months of ANDA submission; however, until FDA makes a final approval decision in those cases it will not be clear if 180-day exclusivity was actually forfeited.  Nevertheless, the possibility of a forfeiture based on a failure on FDA’s part to meet the 30-month approval timeframe is certainly a possibility.

One upcoming case that could serve as a test case for FDA’s interpretation of FDC Act § 505(j)(5)(D)(i)(IV) is generic OPANA ER (oxymorphone HCl) Extended-release Tablets, 5 mg, 10 mg, 20 mg, and 40 mg.  According to FDA’s Paragraph IV Certification List, the first ANDA containing a Paragraph IV certification was submitted to the Agency on November 23, 2007.  Thirty months after that date is May 23, 2010.  IMPAX Laboratories, Inc. (“IMPAX”) is believed to be a “first applicant” eligible for 180-day exclusivity.  According to statements made during a recent earnings conference call, IMPAX is “pretty confident” that FDA will grant tentative ANDA approval by May 23rd; however, IMPAX President & CEO Larry Hsu commented during the call that “we do look at the plan B just in case.  If we do not get the approval, we have some actions there that we have to take.”  Among those actions under plan B consideration is presumably a lawsuit against FDA. 

If FDA meets the May 23rd date for generic OPANA ER, then forfeiture under FDC Act § 505(j)(5)(D)(i)(IV) is moot and a lawsuit will have to wait for another day.  But the broader generic drug industry concern with FDA’s implementation of FDC Act § 505(j)(5)(D)(i)(IV) remains.  In 2003, when the MMA was enacted and the median ANDA approval time was around 17 months, a 30-month approval time probably seemed reasonable.  It does not appear to be as reasonable today.  Perhaps 30 months will appear reasonable once again in a future world where there are generic drug user fees that allow OGD to significantly decrease median ANDA approval times.  Until that time, however, companies will have to work with OGD to ensure timely approval actions, or consider plan B options, such as litigation or pressing Congress for a legislative solution.