Sen. Nelson Introduces Bill to Amend ANDA “First Applicant” Definition that Would Effectively Gut 180-Day Exclusivity; “Reverse Payments” Also Back in the News

By Kurt R. Karst –      

On June 22nd, Senator Bill Nelson (D-FL) introduced S. 1315, the “Drug Price Competition Act of 2009.” (At this point we have a copy of the discussion draft; however, we understand that it is the same as the version of the bill introduced yesterday.)  The bill would amend the definition of “first applicant” at FDC Act § 505(j)(5)(B)(iv)(II)(bb) with respect to 180-day exclusivity eligibility so that certain subsequent ANDA applicants could trigger and also be eligible for such exclusivity. 

FDC Act § 505(j)(5)(B)(iv)(II)(bb) currently defines the term “first applicant” to mean:

an applicant that, on the first day on which a substantially complete application containing a [Paragraph IV] certification . . . is submitted for approval of a drug, submits a substantially complete application that contains and lawfully maintains a [Paragraph IV] certification . . . for the drug.

180-day exclusivity is triggered by the first commercial marketing of the drug product by a first applicant, and prevents FDA from approving ANDAs submitted by subsequent applicants until the expiration or forfeiture of such exclusivity.

S. 1315 would maintain the current “first applicant” definition (as FDC Act § 505(j)(5)(B)(iv)(II)(bb)(AA)), but would also define a “first applicant” (in proposed FDC Act § 505(j)(5)(B)(iv)(II)(bb)(BB)) to mean “an applicant for the drug not described in item (AA) that satisfies the requirements of subclause (III).”  Under proposed FDC Act § 505(j)(5)(B)(iv)(III), a “first applicant” described in proposed FDC Act § 505(j)(5)(B)(iv)(II)(bb)(BB) must:

(aa) submit and lawfully maintain a [Paragraph IV] certification . . . or a statement described in paragraph (2)(A)(viii) for each unexpired patent for which a first applicant described in item (AA) had submitted a [Paragraph IV] certification . . . on the first day on which a substantially complete application containing such a certification was submitted;

(bb) with regard to each such unexpired patent for which the applicant submitted a [Paragraph IV] certification . . . , no action for patent infringement was brought against the applicant within the 45-day period specified in paragraph (5)(B)(iii), or if an action was brought within such time period, the applicant has obtained the decision of a court (including a district court) that the patent is invalid or not infringed (including any substantive determination that there is no cause of action for patent infringement or invalidity, and including a settlement order or consent decree signed and entered by the court stating that the patent is invalid or not infringed); and

(cc) but for the effective date of approval provisions in subparagraphs (B) and (F) and sections 505A and 527, be eligible to receive immediately effective approval at a time before any other applicant has begun commercial marketing. [(emphasis added)]

In other words, an applicant that is today considered a subsequent applicant subject to a first applicant’s 180-day exclusivity eligibility could qualify as a “first applicant” under S. 1315, and could obtain approval and apparently trigger 180-day exclusivity for all first applicants if there is no timely filed patent infringement lawsuit arising from its Paragraph IV certification, or if there is a timely filed lawsuit and there is a court decision (including a district court decision) of patent invalidity or non-infringement or a “substantive determination that there is no cause of action for patent infringement or invalidity.” 

Even more intriguing, however, is the reference in proposed FDC Act § 505(j)(5)(B)(iv)(III)(aa) to FDC Act § 505(j)(2)(A)(viii), which concerns so-called “section viii” statements.  A “section viii” statement is submitted when a generic applicant is not seeking approval for a particular method of use covered by an Orange Book-listed patent.  As such, there is no patent infringement challenge arising out of such a statement.  Under current law, only certain generic applicants whose ANDAs contain a Paragraph IV certification challenging an Orange Book-listed patent can be eligible for 180-day exclusivity.  Under S. 1315, any subsequent ANDA applicant that submits a “section viii” statement to an Orange Book-listed patent would be considered a “first applicant” eligible for 180-day exclusivity.  And because no notice of a “section viii” statement is provided to the NDA holder or patent owner, and there is no patent infringement lawsuit, nobody would be aware that such a generic applicant could be eligible for and trigger 180-day exclusivity. 

If enacted, S. 1315 would apply with respect to ANDAs subject to the 2003 Medicare Modernization Act (“MMA”) amendments to the FDC Act; however, the bill does include a “transitional provision” with respect to certain pre-MMA ANDAs. 

The amendments proposed in S. 1315 appear to be consistent with a paper Apotex, Inc. issued earlier this year, titled “Patent Settlements Between Brand and Generic Pharmaceutical Companies: Parked Exclusivity & Lack of Incentive for Subsequent Generic Filers to Fight On Are the Problems, Not ‘Reverse Payments.’”  In that paper, Apotex recommends that Congress work for legislation “that gives shared (if not sole) exclusivity to a generic challenger who, although not first to file a paragraph iv certification, is first to succeed in addressing the listed patents.”

And while on the topic of “reverse payments” (also known as “pay-for-delay” settlements), earlier today, the Federal Trade Commission (“FTC”) announced that in a speech before the Center for American Progress, FTC Chairman Jon Leibowitz said that “an internal FTC analysis projects that stopping collusive ‘pay-for-delay’ settlements between brand and generic pharmaceutical firms would save consumers $3.5 billion a year and also reap significant savings for the federal government, which pays approximately one-third of all prescription drug costs.”  Chairman Leibowitz’s speech was given as part of a Center for American Progress program, titled “Removing Obstacles to Generic Drug Competition.”  The Center for American Progress also issued a report authored by David Balto with the same title. 

Congress is currently considering “reverse payment” legislation (H.R. 1706 – the “Protecting Consumer Access to Generic Drugs Act of 2009”) that would prohibit such arrangements.  That bill was recently passed out of the Subcommittee on Commerce, Trade and Consumer Protection of the House Committee on Energy and Commerce, and the U.S. Senate is expected to mark up legislation very soon. 

Yesterday, the U.S. Supreme Court declined to hear a “reverse payment” case involcing ciprofloxacin – Arkansas Carpenters Health and Welfare Fund, Paper, A.F. of L. v. Bayer AG and Bayer Corp. – in which the question presented for the Court’s consideration was:

Are pharmaceutical “reverse payment” agreements – whereby the manufacturer of a brand-name drug (and patent holder) pays a generic manufacturer (and alleged patent infringer) to not launch a generic version of the brand-name drug – per se lawful without regard to the amount of cash paid or the strength of the underlying patent challenge?

In October 2008, the U.S. Court of Appeals for the Federal Circuit affirmed a lower court ruling “holding that any anti-competitive effects caused by the settlement agreements between Bayer and the generic defendants were within the exclusionary zone of the patent, and thus could not be redressed by federal antitrust law.”