By Kurt R. Karst –
Queue up the dueling banjo scene from the film Deliverance. . . .
Early last month we saw an interesting press release from Veloxis Pharmaceuticals, Inc. (“Veloxis”) announcing FDA’s October 30, 2014 tentative approval of the company’s 505(b)(2) NDA 206406 for ENVARSUS XR (tacrolimus extended-release tablets), 0.75 mg, 1 mg, and 4 mg, for prophylaxis of organ rejection in kidney transplant patients. Why only a tentative approval? According to FDA:
[T]he listed drug product Astagraf XL (NDA 204096), with which you share conditions of approval for which new clinical studies were essential, is subject to a period of exclusivity protection under sections 505(c)(3)(E)(iii) and 505(j)(5)(F)(iii) of the Act. Therefore, final approval of your application under section 505(c)(3) of the Act [21 U.S.C. 355(c)(3)] may not be made effective until that product’s exclusivity period has expired.
FDA approved Astellas Pharma US, Inc.’s (“Astellas’s”) 505(b)(1) NDA 204096 for ASTAGRAF XL (tacrolimus extended-release capsules), 0.5 mg, 1 mg, 5 mg, on July 19, 2013 for prophylaxis of organ rejection in adult patients receiving kidney transplants. In addition to several patents, the Orange Book lists a period of 3-year exclusivity that expires on July 19, 2016 and that is coded “NDF” – defined in an Orange Book addendum to mean “NEW DOSAGE FORM.”
In the company’s press release, Veloxis expressed its discontent with FDA’s decision, saying that “Veloxis disagrees that exclusivity for Astagraf XL, which was not identified as a listed drug or relied upon to support approval of Envarsus XR, should require delay in the formal approval of Envarsus XR.” The company also noted that it “plans to immediately appeal this decision within FDA, and will pursue all options available to it.”
At the time, we thought about posting on the Veloxis tentative approval as part of a broader discussion of the scope of 3-year new clinical investigation marketing exclusivity provided for under the Hatch-Waxman Amendments, including the then-recent announcement that Zogenix, Inc. and Purdue Pharma L.P. entered into an agreement under which the two companies exchanged waivers of 3-year exclusivity applicable to their respective single-entity, extended-release hydrocodone products. But we didn’t. Something told us – perhaps Veloxis’s comment that the company “will pursue all options available to it” – to hold off because the dispute might ripen into a lawsuit against FDA. And that’s exactly what happened.
Earlier this week, Veloxis filed a Complaint and a Motion for Preliminary Injunction in the U.S. District Court for the District of Columbia challenging FDA’s denial of approval of the ENVARSUS XR 505(b)(2) NDA as a result of the exclusivity FDA granted to ASTAGRAF XL. (In a separate motion, Veloxis requests that the district court treat Veloxis’s Motion for Preliminary Injunction as a motion for summary judgment by consolidating the hearing on Veloxis’s Motion for Preliminary Injunction with a hearing on the merits.) Veloxis alleges that FDA’s actions violate the Administrative Procedure Act (“APA”). Specifically, says Veloxis, FDA’s decision is erroneous as a matter of law and a violation of the APA for three independent reasons:
First, according to the unambiguous statutory language of the [FDCA], Astagraf XL was never entitled to three-year exclusivity. For drug products like Astagraf XL, exclusivity is only available if an application for approval was submitted to FDA after October 2008. Because the initial NDA for Astagraf XL was submitted in 2005, FDA’s grant of exclusivity to Astagraf XL exceeded its statutory authority.
Second, even if Astagraf XL is eligible for three-year exclusivity (and it is not), that exclusivity, as a matter of law, cannot block approval of Envarsus XR because the Envarsus XR NDA did not rely upon any of the studies or data supporting approval of Astagraf XL.
Third, even if the reliance requirement was read out of the FDCA, Envarsus XR still would not be subject to the exclusivity granted Astagraf XL because Envarsus XR does not share conditions of approval with Astagraf XL. In this regard, FDA arbitrarily and capriciously concluded that the two drugs share the same conditions of approval, ignoring the significant clinical differences between the two drugs and the material differences in the package inserts, and abandoning more than 20 years of its own precedent.
Before turning to each of these arguments, we have a some background and comments on 3-year new clinical investigation exclusivity.
Under the FDC Act and FDA’s implementing regulations, an applicant (either a 505(b)(1) or a 505(b)(2) applicant) may qualify for a 3-year period of exclusivity if the application is for a previously approved active moiety and if the application contains: (1) “reports of new clinical investigations (other than bioavailability studies);” (2) that were “essential to approval” of the application; and (3) that were “conducted or sponsored by” the applicant. All three criteria must be satisfied in order to qualify for 3-year exclusivity. Each criterion is defined in FDA’s implementing regulations.
Three-year exclusivity, extends to the “conditions of approval [of an] original application” (emphasis added) and prevents FDA from approving a 505(b)(2) application (or an ANDA) for a drug for those new conditions for 3 years. With respect to 505(b)(2) applicants, the law (at FDC Act § 505(c)(3)(E)(iii)) states:
If an application submitted under [FDC Act § 505(b)] for a drug, which includes an active ingredient (including any ester or salt of the active ingredient) that has been approved in another application approved under [FDC Act § 505(b)] is approved after September 24, 1984, and if such application contains reports of new clinical investigations (other than bioavailability studies) essential to the approval of the application and conducted or sponsored by the applicant, [FDA] may not make the approval of an application submitted under [FDC Act § 505(b)] for the conditions of approval of such drug in the approved [FDC Act § 505(b)] application effective before the expiration of three years from the date of the approval of the [FDC Act § 505(b) application] ifthe investigations described in clause (A) of subsection (b)(1) of this section and relied upon by the applicant for approval of the application were not conducted by or for the applicant and if the applicant has not obtained a right of reference or use from the person by or for whom the investigations were conducted. [(Emphasis added)]
FDA explained the limited scope of 3-year exclusivity in the preamble to the Agency’s proposed regulations implementing the Hatch-Waxman Amendments (54 Fed. Reg. 28,872 (July 10, 1989)):
Exclusivity provides the holder of an approved [application] limited protection from new competition in the marketplace for the innovation represented by its approved drug product. . . . If the innovation is a new dosage form or route of administration, then exclusivity protects only that aspect of the drug product, but not the active ingredients. If the innovation is a new use, then exclusivity protects only that labeling claim and not the active ingredients, dosage form, or route of administration. . . .
In explaining what applications would be blocked by 3-year exclusivity, FDA also stated:
If these requirements are met [(i.e., new clinical investigations conducted or sponsored by the applicant that are essential to approval)], approval of an ANDA or of a 505(b)(2) application for a duplicate drug product or an ANDA submitted pursuant to an approved petition under section 505(j)(2)(C) for a similar drug product that relies on the information supporting the new conditions of approval of the first approved application, may not be made effective before the expiration of 3 years from the date of approval of the original new drug application. [(Emphasis added)]
More recently, FDA explained in a Letter Decision the scope of 3-year exclusivity (at least insofar as ANDAs are concerned and in relation to an NDA Supplement). According to FDA:
The statute sets up a relationship between the “new clinical investigations” that are “essential to the approval of the supplement,” and the scope of exclusivity. That is, if an applicant submits a supplement and gets 3-year exclusivity for a change in the use of the drug product supported by new clinical investigations, the FDA may not approve an ANDA referencing that drug product for the “change approved in the supplement” during that 3-year exclusivity period. Because the change in the drug product or use of the drug product that was approved in the supplement was based at least in part on the new clinical investigations, it naturally follows that the scope of any exclusivity also will relate to the scope of those new clinical investigations.
FDA’s regulation similarly emphasizes a relationship between the change in the use of the drug product supported by the supplement and the scope of the exclusivity that the supplement earns. The regulation provides that the agency will not approve an ANDA referencing a drug product for three years if the ANDA “relies on  information supporting a change approved in the supplemental new drug application.” 21 C.F.R. § 314.108(b)(ii)(5). The regulation, in context with the definition for “new clinical investigation,” emphasizes this relationship between the information from the new clinical investigation, the change approved in the supplement, and the scope of what the ANDA seeks to rely on for approval. [(Emphasis added)]
Although the 3-year exclusivity provisions in the FDC Act state that such exclusivity prevents a subsequent 505(b)(2) applicant from being approved for the same protected conditions of approval if the subsequent applicant relies on the previous applicant’s information, and although FDA has stated that 3-year exclusivity prevents the Agency from approving another 505(b)(2) application (or an ANDA) “that relies on the information supporting the new conditions of approval of the first approved application,” one statement in the preamble to FDA’s proposed rules implementing the Hatch-Waxman Amendments suggests that approval of a 505(b)(2) application with exclusivity would prevent approval of a subsequent 505(b)(2) application for 3 years even though the subsequent 505(b)(2) applicant did not rely on data in the first 505(b)(2) application. That statement reads as follows:
The exclusivity provisions of sections 505(c)(3)(D) (iii) and (iv) of the act delay the effective date of approval of any 505(b)(2) application that is for the conditions of use of a previously approved application that contained new clinical investigations essential for approval. Consequently, if two 505(b)(2) applications are under review at the same time and one is approved before the other, the effective date of approval of the second application to be approved will be delayed, regardless of the date of submission, if the first contained new clinical investigations essential for approval and thereby qualified for exclusivity.
This statement, which has been referred to as “FDA’s dueling 505(b)(2) application policy,” has not, to our knowledge, been further publicly discussed by FDA since stating it in 1989. (This policy was raised in 2005 in the context of a citizen petition about the appropriate type of exclusivity to award to 505(b)(2) applicants for hyaluronidase drug products (Docket No. FDA-2005-P-0005); however, because FDA ultimately determined that 5-year new chemical entity exclusivity, instead of 3-year exclusivity, should be granted to each hyaluronidase applicant, the Agency did not address the scope of 3-year exclusivity and whether the first company to obtain 505(b)(2) application approval would block the approval of subsequent 505(b)(2) applicants for the same conditions of use, even where subsequent 505(b)(2) applicants did not rely on data in the first applicant’s 505(b)(2) application.)
The current dispute over FDA’s ability to approve Veloxis’s NDA 206406 for ENVARSUS XR given the 3-year exclusivity FDA granted with respect to NDA 204096 for ASTAGRAF XL does not specifically concern FDA’s dueling 505(b)(2) application policy – because ASTAGRAF XL was approved as a 505(b)(1) NDA and ENVARSUS XR is the subject of a 505(b)(2) NDA – however, it may be functionally equivalent. That might explain, at least in part, why FDA refused to grant final approval of ENVARSUS XR depite no reliance on the ASTAGRAF XL approval. In any case, on to the current dispute . . . .
Veloxis’s first argument that FDA’s decision is erroneous as a matter of law implicates the 2008 QI Act, which, among other things, added Section 505(v) to the statute. FDC Act § 505(v) provides that so-called “old antibiotics” (i.e., antibiotic drugs, like tacrolimus, for which the first application was received before the November 21, 1997 enactment of the Food and Drug Modernization Act of 1997) are not eligible for 3-year exclusivity for any condition of use for which the old antibiotic was approved before October 8, 2008 (i.e., the date of the enactment of the QI Act), but also that an old antibiotic is eligible for 3-year exclusivity for a new condition of use if that application is submitted to FDA after October 8, 2008. As we previously reported, FDA was successful in defending the only challenge to the Agency’s application of FDC Act § 505(v).
According to Veloxis:
The Astagraf XL NDA initially was submitted in 2005 and, in fact, was pending at FDA prior to, during, and after the enactment of the QI Act on October 8, 2008. Accordingly, as a matter of law, Astagraf XL was not entitled to three-year exclusivity when the QI Act was passed. . . . It appears that FDA granted exclusivity to Astagraf XL on the basis that – even though it was the subject of a pending NDA at the time of the enactment of the QI Act – Astellas withdrew its NDA in 2009 and refiled it in 2012. The prohibitions of the QI Act, however, cannot be avoided through such manipulation of the regulatory process. FDA’s grant of exclusivity to Astagraf XL was contrary to Congress’s intent and inconsistent with the incentive structure created by Congress in the QI Act, and therefore in excess of FDA’s statutory authority.
Veloxis argues next that even if ASTAGRAF XL is eligible for 3-year exclusivity, that exclusivity cannot block approval of ENVARSUS XR because the Veloxis NDA did not rely upon any of the studies or data supporting approval of ASTAGRAF XL. As noted above, FDA has, in most circumstances, keyed the applicability of 3-year exclusivity to reliance. Thus, argues Veloxis:
The FDCA provides that if an NDA is approved and awarded three-year exclusivity based upon “reports of new clinical investigations (other than bioavailability studies) essential to the approval of the application and conducted or sponsored by the applicant,” FDA may not approve a pending 505(b)(2) application “for the conditions of approval” of the first drug for a period of three years if the safety and effectiveness studies “relied upon by the [505(b)(2) applicant] for approval of the [505(b)(2)] were not conducted by or for [the 505(b)(2) applicant] and if [the applicant] has not obtained a right of reference or use from the person by or for whom the investigations were conducted.” 21 U.S.C. § 355(c)(3)(E)(iii) (emphasis added). This statutory language unambiguously requires an overlap in the relied upon studies to trigger the period of exclusivity. In the absence of such overlap, exclusivity is inapplicable as a matter of law. . . .
The language, structure, and purpose of the Hatch-Waxman Amendments all establish that Congress intended three-year marketing exclusivity under Section 505(c)(3)(E)(iii) to block approval of only those 505(b)(2) applications that rely upon the data supporting the approval of the drug with exclusivity. As the Envarsus XR NDA does not rely upon the clinical studies conducted by Astellas in connection with the Astagraf XL NDA, FDA’s application of Astagraf XL’s exclusivity to Envarsus XR is contrary to the FDCA’s plain language, in excess of the FDA’s statutory authority, and in violation of the APA
Finally, Veloxis argues that even if the reliance requirement was read out of the statute, ENVARSUS XR still would not be subject to ASTAGRAF XL’s exclusivity because the drug products don’t share conditions of approval. “Consistent with longstanding FDA precedent,” writes Veloxis, “because the two drugs have markedly different (i) dosage forms, (ii) dosing strengths, (iii) dosing regimens, and (iv) pharmacokinetic profiles, they cannot be considered to share conditions of approval.” Citing several FDA approval precedents, Veloxis says that they
confirm that, throughout the twenty years since the Hatch-Waxman Amendments were enacted, FDA repeatedly has approved 505(b)(2) applications for products that share a common active ingredient, indication, dosage form, and dosage frequency with a drug subject to exclusivity. FDA has done so because the later-in-time applications did not rely on data necessary to the approval of the drug with exclusivity. Indeed, Veloxis is not aware of a single instance in which FDA has applied exclusivity to block approval of a product with a different dosage form that did not reference or rely upon the drug with exclusivity.
In a Motion to Stay Proceedings Pending Final Agency Action FDA says that the case is unripe. “On December 12, 2014, FDA informed Veloxis that it intends to issue a final decision on the underlying merits in this matter no later than January 12, 2015. Because the agency is diligently considering the complex scientific and regulatory issues presented by Veloxis’ submissions, Veloxis’ lawsuit is unripe.” As such, FDA requests that the district court stay the proceedings until January 12, 2015 to give FDA time to issue a final decision in the matter. After that decision is issued, FDA “would be happy to discuss an expedited schedule for merits briefing and production of the Administrative Record, if necessary.”
On December 18th, the district court granted FDA’s motion, denied Veloxis’s Motion for Preliminary Injunction without prejudice, and ordered the parties to appear before the court for a status hearing on January 14, 2015 (10:45 AM).