Under the Hatch-Waxman Act, a drug manufacturer must file a New Drug Application (“NDA”) in order to obtain FDA approval of a new drug. Along with the NDA, the drug company must inform the FDA of any patents that cover the drug so the FDA can list the patents in a publication known as the “Orange Book.” If such patents are listed in the Orange Book, a generic manufacturer, must make a certification with respect to the listed patents in its Abbreviated New Drug Application (“ANDA”). One certification is that the listed patents are either unenforceable or not infringed by the generic drug (“Paragraph IV certification”). The generic must give notice of the Paragraph IV filing to the NDA company, which has 45 days to file an infringement suit. If no suit is filed, the ANDA may be approved immediately. If suit is filed, that delays approval for 30 months. Either way, any subsequent generic making a similar Paragraph IV certification may not receive approval until 180 days after the earlier of either (1) the first ANDA applicant that submitted a Paragraph IV certification begins commercial marketing, or (2) a court decision holding that the relevant patent is invalid or not infringed.
An FDA regulation prohibits delisting of a patent that is the subject of an infringement suit under 314.107(c) until the FDA determines either that no delay in effective dates of approval is required by the lawsuit, that the patent has expired, or that any such period of delay in effective dates of approval is ended. Section 314.107 (c) implements the 180 day exclusivity and initially required the first ANDA to successfully defend an infringement lawsuit. This requirement was invalidated in Mova Pharm. Corp. v. Shalala, 140 F.3d 1060 (D.C. Cir. 1998). The FDA later amended Section 314.107 (c) to drop any reference to a lawsuit, but, inadvertently or otherwise, left in the lawsuit language in the regulation prohibiting delisting. This obviously resulted in an incongruity in the FDA regulations in that a lawsuit was not required for 180 day exclusivity, but was required to prevent delisting the patent challenged by the Paragraph IV certification.
In 1991, Merck filed an NDA for a cholesterol medication popularly known as Zocor and listed several patents in the Orange Book. In 2000, IVAX, a generic drug company, filed an ANDA containing a Paragraph IV certification with respect to two of these patents. Merck did not sue IVAX, but IVAX apparently did not begin commercial marketing its generic version to trigger the start of its 180 day exclusivity. In August 2003 the FDA revised its regulations to limit the listing of patents by an NDA to those claiming the active ingredient of the drug, not a metabolite or intermediate version of the active ingredient. Thereafter, the FDA removed the two Merck patents from the Orange Book.
Since the removal of the patents meant that generic applicants could file ANDA’s without Paragraph IV certifications and possibly get immediate approval, IVAX filed a citizen petition with FDA arguing that FDA could not delist the patents. To do so, said IVAX, violated the FDA’s own regulation prohibiting delisting and would deprive IVAX of its statutory right to 180 days of exclusive marketing. According to IVAX, in light of the Mova decision and the later amendment eliminating the lawsuit requirement, the 180 day exclusivity vests when the first ANDA files its Paragraph IV certification regardless of whether there is a lawsuit. To correct this, IVAX requested that the FDA not approve subsequent ANDA’s for 180 days from the date of IVAX’s first commercial marketing and that the FDA relist the removed Merck patents in the Orange Book.
On April 5, 2005, the FTC filed a response to IVAX’s citizen petition with the FDA opposing IVAX’s contention that the FDA could not delist the patents. It first argued that, since no lawsuit was filed, the delisting ban in the regulations didn’t apply. The FTC also argued that the 180 day exclusivity period is merely an “incentive” to induce generic drug manufacturers to challenge weak patents or design around patents, rather than a right. The FTC stated that the applicable regulations do not guarantee that the first ANDA filer will enjoy the benefit of the 180 day exclusivity period once the FDA approves its generic product. For example, said the FTC, subsequent ANDA’s need not make Paragraph IV certifications if the patent has expired. Adopting the IVAX view would, in the words of the FTC, mean that an NDA holder could no longer delist a patent due to a change, as occurred here, in the listing requirements.
The FTC has long objected to the listing of erroneous patents in the Orange Book as well as the use of 180 day exclusivity period to create a “bottleneck” blocking further generic entry. In particular, the FTC has brought several enforcement actions where patent holders allegedly listed questionable patents in the Orange Book and then reached “settlements” of litigation based on those patents with the first ANDA filer wherein the patent holder pays the first ANDA filer to stay off the market thus effectively blocking entry by subsequent ANDA indefinitely. While the 2003 amendments to Hatch-Waxman prohibiting multiple 30 month stays and requiring the filing of such agreements with the FTC alleviated some of these concerns, possible abuses of Hatch-Waxman remain at the forefront of the Commission’s agenda. Hence, it is not surprising that the FTC opposes the notion that the 180 day exclusivity period is a right.
One issue not addressed by either IVAX or the Commission, however, is whether, regardless of whether it is a “right” or an “incentive,” the 180 day exclusivity is a “property interest” subject to the procedural due process protections of the Fifth Amendment. It is now well established that, for purposes of the Fifth Amendment, “‘property interests subject to procedural due process protections are not limited by a few rigid, technical forms. Rather, ‘property’ denotes a broad range of interests that are secured by ‘existing rules or understandings.'” Perry v. Sinderman, 408 U.S. 593, 601 (1972). A property interest exists in a benefit made available by a particular statute if a person has a “legitimate claim of entitlement to it.” Board of Regents v. Roth, 408 U.S. 564, 577 (1972). In addition to statutory sources, property interests can arise from duly promulgated regulations. Kizas v. Webster, 707 F.2d 524, 539 (D.C. Cir. 1990).
Measured by these standards, it may well be that the 180 day exclusivity is a property interest sufficient for protection under the Fifth Amendment regardless of whether it is conditioned on a lawsuit. FDA’s regulation granting it to the first ANDA may be sufficient justification for it to fall within the definition of property interest under the foregoing case law. The fact that the 180 day exclusivity may be lost in certain circumstances may mean that it is not a “right”, as the FTC chooses to employ that term, but it may still qualify as a property interest. If it is a property interest, then due process would presumably require a notice and hearing before it is lost by delisting the patent. This would also give the Commission the opportunity to show that the listing was erroneous, or otherwise improper.
The D.C. Circuit has recently held, in Teva Pharmaceutical Industries v. Crawford, No. 05-5004 (D.C. Cir. June 3, 2005), that a brand-name drug manufacturer may market a generic version of its own drug even during the 180 day period that the holder of an approved Paragraph IV ANDA would otherwise enjoy market exclusivity. The Circuit found that no provision of the Hatch-Waxman Act barred such action. It remains to be seen whether this ruling will be relied upon to support an argument for patent delisting. Any such argument, however, would have to address the explicit requirement in 21 U.S.C. 355(j)(6)(A) that the FDA publish a list of all drugs for which ANDA certification is possible. The relevant legislative history (H.R. Rep. No. 98-857) clearly states, “the FDA is required to publish and make available a list of drugs eligible for consideration in an ANDA.” The list must include all relevant patents “as that information becomes available.” Though the House Report never explicitly states that a drug manufacturer is barred from delisting their patent, such action would seem to run contrary to Congress’ desire to promulgate a comprehensive list from which the generic drug manufacturers could decide what, if any, entries to challenge.
Authored by:
Mark E. Nagle
202-218-0014
mnagle@sheppardmullin.com
and
Anik Banerjee1
213-617-4124
abanerjee@sheppardmullin.com
- The authors wish to thank Robert Ziff, a law clerk in the Washington, D.C. office of Sheppard Mullin, for his assistance.