FDA Prevails in Generic COZAAR/HYZAAR 180-Day Exclusivity Forfeiture LitigationAugust 3, 2009
By Kurt R. Karst –
Judge Rosemary M. Collyer of the U.S. District Court for the District of Columbia ruled in a 27-page opinion issued last Friday that the 180-day exclusivity forfeiture patent information withdrawal provision at FDC Act § 505(j)(5)(D)(i)(I)(bb)(CC) is not ambiguous and that FDA’s interpretation of the statute is reasonable. As we previously reported (here and here), Teva Pharmaceuticals USA, Inc. (“Teva”) filed a Complaint and a Motion for Preliminary Injunctive Relief against FDA concerning 180-day exclusivity forfeiture for generic versions of Merck & Co., Inc.’s (“Merck’s”) blockbuster angiotensin II receptor antagonist drugs COZAAR (losartan potassium) Tablets and HYZAAR (hydrochlorothiazide; losartan potassium) Tablets. Although FDA has made no determination with respect to generic COZAAR and HYZAAR 180-day exclusivity, Teva believes that FDA’s interpretation of the statute will result in a forfeiture of 180-day exclusivity for both products.
Teva’s lawsuit challenged FDA’s interpretation of the “failure to market” 180-day exclusivity forfeiture provisions at FDC Act § 505(j)(5)(D)(i)(I), which were added to the FDC Act in December 2003 by the Medicare Modernization Act (“MMA”), and in particular FDA’s interpretation of the patent information withdrawal provision at FDC Act § 505(j)(5)(D)(i)(I)(bb)(CC). That provisions states that one of the dates for calculating a forfeiture is the date that is 75 days after which “[t]he patent information submitted under [FDC Act § 505(b) or (c)] is withdrawn by the holder of the application approved under [FDC Act § 505(b)].”
According to Teva, FDA’s interpretation of FDC Act § 505(j)(5)(D)(i)(I)(bb)(CC), as stated and applied in two previous 180-day exclusivity forfeiture decisions concerning generic PRECOSE (acarbose) and generic COSOPT (dorzolamide hydrochloride; timolol maleate), is unlawful. Specifically, Teva argues that the mechanism added to the FDC Act by the MMA – i.e., FDC Act § 505(j)(5)(C)(ii)(I) – permitting a cause of action that allows a generic applicant to seek a court order compelling the brand manufacturer to delist a challenged patent must be read together with FDC Act § 505(j)(5)(D)(i)(I)(bb)(CC):
Read together, as statutory provisions must be, it thus is clear that these twin Amendments – the delisting mechanism, on one hand, and the delisting trigger, on the other – were not remotely intended to open the proverbial floodgates to manipulative, exclusivity-divesting patent delistings by brand manufacturers, and thus sub silentio to abrogate the longstanding prohibition against such delistings that Ranbaxy recognized.
(In Ranbaxy Labs. Ltd. v. Leavitt, the U.S. Court of Appeals for the District of Columbia Circuit held in 2006 in a pre-MMA case that FDA may not condition the delisting of a patent on the existence of patent litigation and deprive an ANDA applicant eligible for 180-day exclusivity of such exclusivity.)
FDA filed a Motion to Dismiss the case on several grounds – that Teva is not challenging final agency action, Teva’s claims are not ripe, Teva has not suffered sufficient injury for Article III standing, and Teva has failed to exhaust administrative remedies. Judge Collyer denied FDA’s Motion to Dismiss. With respect to final agency action, the court held that:
FDA’s interpretation of the MMA in the context of the Acrabose [sic] and Cosopt Decisions constitutes a rule of decision made through adjudication, and the FDA’s interpretation of the MMA constitutes “final agency action” that is subject to review under APA §§ 702 and 704. Thus, Teva has stated a claim under the APA seeking to set aside the FDA’s statutory interpretation as arbitrary and capricious under § 706(2).
With respect to FDA’s challenges based on a failure to exhaust administrative remedies, lack of ripeness, and lack of standing, the court ruled that:
Teva has exhausted its remedies by participating unsuccessfully in the Acrabose [sic] litigation and pursuit of administrative remedies would be futile. In these circumstances, the law does not require further administrative exhaustion. . . .
The issue raised by Teva – whether the FDA’s interpretation of subsection (bb)(CC) of the MMA is arbitrary and capricious under the APA – is purely a legal question fit for judicial review. It is a challenge to the FDA’s interpretation of the statute on its face and not as applied to a particular set of facts. There is no need for further factual development as there is no material fact missing from the record that could alter the FDA’s interpretation of the MMA. . . . .
The FDA’s interpretation imminently will cause Teva to lose its right to exclusive marketing, and Teva already has altered its operations due to this imminent loss. . . . Teva has demonstrated standing.
On the substantive issue challenged by Teva – FDA’s interpretation of FDC Act § 505(j)(5)(D)(i)(I)(bb)(CC) – the court ruled in FDA’s favor. The court, analyzing the arguments under the familiar Chevron standard, concluded that, “[a]t Chevron step one this Court must give effect to the clear intent of Congress as reflected in the statute because subsection (bb)(CC) is not ambiguous on its face.” The court went on to state that “Teva is correct that the statute does not address when an Innovator may withdraw a patent, but what is important is that the statute does not limit the Innovator’s right to withdraw patent information. The Court cannot take on the role of the legislature by creating such limitations when they were omitted by Congress.”
As to Teva’s argument that the delisting mechanism at FDC Act § 505(j)(5)(C)(ii)(I) and the delisting trigger at FDC Act § 505(j)(5)(D)(i)(I)(bb)(CC) are linked and must be read together, the court stated that:
[t]he problem with this interpretation is that the MMA contains no language linking the forfeiture provision and the counterclaim provision as Teva would prefer. The provisions simply do not refer to one another.
Moreover, even if subsection (bb)(CC) were construed in the context of the whole statute to be ambiguous, the Court would be required to defer to the FDA’s interpretation under Chevron step two. It is not arbitrary or capricious for the FDA to interpret (bb)(CC) as broadly applying whenever an Innovator withdraws patent information because the statute provides no limitations on withdrawal of patent information and subsection (bb)(CC) makes no reference to the counterclaim provision. The FDA’s interpretation of the statute is reasonable.
The court also dismissed the utility of the Ranbaxy decision in interpreting the 180-day exclusivity forfeiture provisions added by the MMA, noting that “Ranbaxy was decided under the Hatch-Waxman Amendments as they existed prior to the enactment of the MMA,” and concluding that “FDA’s interpretation of the MMA is a reasonable interpretation of the balance Congress struck between these competing goals.”
It is unclear whether Teva will appeal the decision to the U.S. Court of Appeals for the District of Columbia Circuit. We will update you as we learn additional information.