By Jeffrey K. Shapiro –

On May 3, FDA announced that it has ordered Baxter to recall and destroy an estimated 200,000 Colleague infusion pumps in use, reimburse customers for the “value” of the recalled device, and assist in finding a replacement.  The press release is available here.  (FDA did not release a copy of the order.)

In 2006, FDA obtained a consent decree entered against Baxter forbidding further manufacture of the Colleague infusion pumps.  The consent decree also required Baxter to submit a corrective action plan within 20 days for correcting the deficiencies with the Colleague pumps already in use.

Apparently, Baxter has attempted several rounds of upgrades during the past four years, with unsatisfactory results.  FDA states that Baxter’s most recent proposed plan contemplated a new round of corrections beginning in May 2012 that would be complete in 2013.  FDA found that was simply too long to allow these pumps to remain on the market.

The consent decree (paragraph 15) authorizes FDA to order a recall of the pumps at Baxter’s expense and also to take “any other corrective action” to protect the public health or to ensure Baxter’s compliance.  FDA apparently views the refund / replacement requirement imposed on Baxter as falling within this latter catch all provision.

Baxter’s press release does not really dispute FDA’s rationale for ordering a recall.  However, Baxter signals that it is not entirely in agreement with the details:  “The consent decree permits Baxter to propose alternative actions to achieve the FDA's objectives under the decree, which the company intends to do.  The final nature of the recall and offer to customers remain subject to that ongoing dialogue.”  It does not appear that Baxter is negotiating from a position of strength.

Baxter says it hopes to offer an exchange of Sigma SPECTRUM infusion pumps for COLLEAGUE infusion pumps without charge to customers.  For those who opt for a refund, an interesting question is the formula for determining how much it will be.  FDA’s press release does not address this issue, referring variously to the payment as a “refund” (which implies a return of the original purchase price) and “reimbursement” for the “value” of the recalled pump (which implies a payment less than the original purchase price, perhaps based upon depreciated value).

Baxter says it is taking a pretax charge of $400 to $600 million for the recall.  Given FDA’s high end estimate of 200,000 units in the field, Baxter’s charge implies an average cost of $2,000 to $3,000 per pump.  This figure presumably includes the administrative expense of the recall and destruction of the pumps, some mix of pump exchanges and refund or reimbursement according to some formula, and other costs.

It is worth noting that FDA has authority to order mandatory device recalls and repair, replacement or refunds (and reimbursement of expenses in complying with the order).  This authority is set forth in Section 518 of the Federal Food, Drug, and Cosmetic Act.  The implementing regulations (21 C.F.R. Part 810) specify the procedure for ordering a mandatory recall but does not speak to the repair, replacement or refund authority.  To our knowledge, FDA has never ordered a mandatory device recall under Section 518, much less a recall with an accompanying mandate to provide a refund or replacement.  The Baxter recall, although ordered pursuant to a consent decree, is the closest FDA has come.  Watching this recall play out should provide some interesting data about what a mandatory Section 518 recall might look like.  With FDA's tougher stance on enforcement and heightened focus on postmarket safety, the mandatory Baxter recall may not be the last of its kind.

UPDATE:

• FDA Q&A regarding Baxter pump recall

By Peter M. Jaensch –

On Friday, April 30th, 2010, the U.S. Sentencing Commission sent Congress amendments to the federal Sentencing Guidelines applicable to organizations such as corporations.

On January 21, 2010, we reported on proposed changes to the federal Sentencing Guidelines.  The changes would have apparently required companies, upon detection of any criminal conduct, and prior to any legal determination of guilt, to make restitution to identifiable victims. 

As we noted then, the proposed amendments posed a grave concern for industries regulated by FDA, because the FDC Act imposes criminal liability even for unintentional violations. In February, HPM raised these concerns with the U.S. Sentencing Commission.

We are pleased to report that the Sentencing Commission took account of our concerns (and concerns raised by others). The adopted amendments contain very general language on this topic, and certainly not the draconian language proposed in January.  Assuming that Congress does not overturn the amendments adopted by the Commission, organizations will simply be expected to “take reasonable steps, as warranted under the circumstances, to remedy the harm resulting from the criminal conduct.”  We do not interpret this language to mandate every company regulated by FDA to make restitution each and every time the company learns that it has violated the FDC Act.  Needless to say, this is a welcome change that avoids unfairly burdening food,  drug, and medical device companies.

By Kurt R. Karst –   

Last week’s decision by a 3-judge panel of the U.S. Court of Appeals for the Second Circuit in In re: Ciprofloxacin Hydrochloride Antitrust Litigation affirming 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 CIPRO (ciprofloxacin HCl) or generic versions of CIPRO) in an antitrust challenge to certain patent settlement agreements gave the Federal Trade Commission (“FTC”) a reason to cheer.  The Circuit Court’s decision invites further review of the case by the full Court, and comes on the heels of the publication of the FTC’s annual report, which, as we previously reported, highlights the Commission’s efforts to stop allegedly anticompetitive “pay-for-delay” patent settlement agreements. 

Although the Second Circuit, in its 3-0 decision, affirmed the district court’s 2005 decision in In re Ciprofloxacin Hydrochloride Antitrust Litig., 363 F. Supp. 2d 514 (E.D.N.Y. 2005) (“Cipro III”), it did so because the Court’s 2005 decision in Joblove v. Barr Labs., Inc., (, compelled it 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 Court states in its decison, 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 in banc, and offers four reasons why the case might be appropriate for reexamination by the full Court:

(1) The Court cites amicus briefs (here and here) submitted by the U.S. 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.”

(2) The Court notes that “there is evidence that the practice of entering into reverse exclusionary payment settlements has increased” since the Tamoxifen decision.  In January 2010, the FTC issued a report showing evidence of that increase.

(3) Citing July 30, 2002 remarks from Senator Orrin Hatch (R-UT) that “[a]s coauthor of the [Hatch-Waxman Act], I can tell you that I find these type[s] of reverse payment collusive arrangements appalling,” the Court states that “after Tamoxifen was decided, a principal drafter of the Hatch-Waxman Act criticized the settlement practice at issue here.

(4) Finally, the Court states that “Tamoxifen relied on an unambiguous mischaracterization of the Hatch-Waxman Act.  Tamoxifen was based in no small part on the panel majority’s belief that reverse exclusionary settlements ‘open[] the [relevant] patent to immediate challenge by other potential generic manufacturers . . . spurred by the additional incentive . . . of potentially securing the 180-day exclusivity period available upon a victory in a subsequent infringement lawsuit.’  .  The panel majority’s claim that the statutory exclusivity period cedes to the first ANDA filer to successfully defend was erroneous. . . .  Contrary to our suggestion in Tamoxifen, later ANDA [Paragraph IV] filers are not eligible for the 180-day exclusivity period.”

The FTC quickly issued a press release exclaiming that the Court’s invitation for the plaintiffs-appellants to seek further review “is further evidence that courts are rethinking their approach to pay-for-delay settlements.”  Rutgers University School of Law (Camden) professor Michael A. Carrier commented that “this is the best opportunity for an appellate court to critically review these agreements in quite some time.”

By Kurt R. Karst –

Earlier today, the U.S. Court of Appeals for the Federal Circuit ruled 3-0 to affirm a March 2009 decision from the U.S. District Court for the District of Columbia granting summary judgment to FDA and the U.S. Patent and Trademark Office (“PTO”) arising from a June 2008 challenge from Wyeth Holdings Corporation (“Wyeth”) with respect to Wyeth’s request for a Patent Term Extension (“PTE”) for U.S. Patent No. 4,916,154 (“the ‘154 patent”) covering Wyeth’s new animal drug CYDECTIN (moxidectin) Pour-On. 

As we previously reported (here and here), FDA first approved CYDECTIN on January 28, 1998 under New Animal Drug Application  (“NADA”) No. 141-099.  The NADA was submitted under FDA’s Phased Data Review Policy and Administrative NADA process.  An Administrative NADA “is a new animal drug application that is submitted after all of the technical sections that fulfill the requirements for the approval of the new animal drug . . . have been reviewed by [the Center for Veterinary Medicine (‘CVM’)] and CVM has issued a technical section complete letter for each of those technical sections.”  (The human drug and medical device counterparts to the Administrative NADA are the statutory “Fast Track” process and the Modular Premarket Approval Application process, respectively.  Both of these processes permit a type of rolling submission and review of marketing application sections.)

In March 1998, Wyeth timely submitted a PTE application to the PTO with respect to the ‘154 patent.  In that application, Wyeth calculated a PTE based on the date the company submitted the first technical section to its Investigational New Animal Drug (“INAD”) (i.e., August 8, 1995).  Using this date, Wyeth calculated a new expiration date of the ‘154 patent of January 28, 2012.  (The original expiration date of the ‘154 patent was April 10, 2007.) 

Under the PTE statute at 35 U.S.C. § 156(g), certain patents covering animal drugs are eligible for a PTE if patent life was lost during a period when the product was undergoing regulatory review.  As with other FDA-regulated products, such as human drugs and medical devices, the “regulatory review period” is composed of a “testing phase” and a “review phase.”  For animal drugs approved under FDC Act § 512, the “testing phase” begins on the earlier of the effective date of an INAD exemption or the date a major health or environmental effects test on the drug was initiated, and ends on the date a NADA is “initially submitted” to FDA under FDC Act § 512(b).  The “review phase” is the period between the initial submission and approval of the NADA.  FDA’s PTE regulations at 21 C.F.R. § 60.22(f) clarify that a marketing application “is initially submitted on the date it contains sufficient information to allow FDA to commence review of the application.” 

In September 2006, FDA issued a Federal Register notice stating the Agency’s determination that the date NADA No. 141-099 was initially submitted to FDA was on January 13, 1998, when the final NADA component was submitted to the Agency.  In the notice, the Agency also stated that “[i]t is FDA’s position that the approval phase begins when the marketing application is complete.”  In November 2006, Wyeth submitted a request for reconsideration and revision of the regulatory review period.  Wyeth argued that August 8, 1995 is the controlling date for PTE purposes.  On May 7, 2008, FDA denied Wyeth’s request, stating that “it is FDA’s position that the approval phase for purposes of [PTE] begins when the marketing application is complete, including all technical sections and the CVM complete letters.”  Wyeth promptly sued FDA alleging that using the August 8, 1995 date for purposes of calculating the PTE regulatory review period is consistent with Congress’ intent in passing the PTE provisions at 35 U.S.C. § 156 and with FDA’s PTE regulations at 21 C.F.R. 60.22(f), and that a mere 16-day approval period “is unreasonable.”  FDA filed a Motion to Dismiss or Alternatively for Summary Judgment and Wyeth filed a Cross-Motion for Summary Judgment.

The District Court reviewed the case under the familiar Chevron framework, and found that while both FDA and Wyeth had advanced plausible readings of the PTE statute – “FDA contends that there was no ‘application’ until Wyeth submitted its Administrative NADA; and Wyeth contends that the application was ‘initially submitted’ upon its submission of the first technical section” – the statute is ambiguous under a Chevron Step 1 analysis, and that under a Chevron Step 2 analysis:

Wyeth has not met its burden here because the court finds the FDA’s arguments to be more persuasive than those made by Wyeth.  Indeed, the FDA’s construction runs true to the text and defines “initially submitted” in a manner “that is reasonable in light of the legislature’s revealed design.” . . . .  Accordingly, the court cannot say that the FDA’s interpretation is based on an impermissible construction of the statute, nor can the court find that the FDA’s interpretation violates the APA.

Wyeth appealed to the Federal Circuit and argued in its briefs (here and here), among other things, that “an application is initially submitted no later than the date the last technical section is filed because at that point the sponsor has submitted all of the elements listed in the statutory definition of an application,” and that “Congress’s use of the term ‘initially’ [in the PTE statute] indicates that the approval phase in fact begins as soon as an applicant submits the first technical section for review, as Wyeth did in August 1995.”  For example, Wyeth notes that “[t]he House Report on the Hatch-Waxman Act explains that Congress chose the term ‘initially submitted’ rather than the term ‘filed’ because ‘an application is often not considered to be filed, even though agency review has begun, until the agency has determined that no other information is needed.’” (quoting H.R. Rep. No. 98-857, pt. 1, at 44 (1984)).  Alternatively, Wyeth argues that even if PTE statute does not unambiguously support one of its interpretations, FDA’s interpretation is not reasonable and should not be given any deference.

FDA countered in its brief that the statutory text compels the Agency’s interpretation that an application is “initially submitted” when the sponsor files an Administrative NADA and that prior to the submission of an Administrative NADA, a  sponsor has not “initially submitted” an application for purposes of the PTE statute at 35 U.S.C. § 156(g).  Alternatively, FDA asserts that even if the Court concludes that the PTE statute is ambiguous,  the Court should defer to FDA’s interpretation because it is reasonable.

Reviewing the district court’s grant of sumary judgment de novo, the Federal Circuit ruled that 35 U.S.C. § 156(g) is ambiguous, but that FDA’s interpretation of the PTE statute is permissible under a Chevron Step 2 analysis:

Section 156(g) created a range of ambiguity by not explicitly defining the term “application,” leaving that term open to interpretation.  FDA’s interpretation tracks the requirements of 21 U.S.C. § 360b(b).  As explained by FDA, the administrative NADA is the first document containing or referencing all of the parts required by 21 U.S.C. § 360b(b).  Thus, it is permissible to characterize the administrative NADA as the first application submitted for purposes of 35 U.S.C. § 156(g).  Because the administrative NADA is the first application submitted, it is reasonable to interpret the date that it is submitted as the “initially submitted” date.  Prior to the submission of an administrative NADA, no application has been submitted, initially or otherwise.  Thus, FDA’s interpretation “reasonably resolves the ambiguity in applying the relevant statutes to a factual situation not fully foreseen or provided for by the Congress when it enacted the statutes or the FDA when it promulgated regulations.”   Mylan, 389 F.3d at 1284.  It is permissible to interpret § 156(g) to mean that “an application” is “initially submitted” when a sponsor submits an administrative NADA in phased review.

It is unclear whether Wyeth will seek en banc review of the unanimous panel decision.  We will update our loyal FDA Law Blog readers if Wyeth seek an appeal of the decision. 

By Alan M. Kirschenbaum –

Five weeks after the enactment of health care reform, CMS has, with surprising alacrity, issued a draft guidance on one of the provisions of the legislation that will be most costly to brand drug manufacturers – the Medicare Part D Coverage Gap Discount.  As explained in our summary of the Patient Protection and Affordable Care Act ("PPACA"), effective January 1, 2011, PPACA requires drug manufacturers, as a condition of having their drugs covered under Part D, to have in effect an agreement with HHS agreeing to offer a discount on brand (i.e., NDA or BLA) drugs dispensed to Part D beneficiaries in the coverage gap who do not receive low-income subsidies.  The amount of the discount is 50 percent of the “negotiated price,” which is defined under current regulations as the price available to beneficiaries at the pharmacy, reduced by any discounts or other price concessions (including those offered by drug manufacturers to the Part D plan) that the Part D plan has elected to pass through to enrollees.  The statute requires that the coverage gap discount be provided to enrollees at the point of sale, but otherwise leaves it largely up to CMS to design the system under which these discounts will be collected from manufacturers and made available to enrollees.  The draft guidance describes the system that CMS is proposing.  Essentially, the discount will be provided to the patient at the point of sale by the pharmacy, which will be reimbursed by the Part D sponsor, which in turn will be reimbursed by manufacturers – all under the oversight of CMS with the help of its coverage gap contractor.

Under the guidance, the Part D sponsor will be the primary administrator of the discount program.  When a drug is dispensed to a Part D beneficiary at the pharmacy and the claim is adjudicated, the Part D sponsor will determine (because, as CMS explains, it is the only entity that is able to determine) whether the beneficiary is eligible for the discount, whether the drug was approved under an NDA or BLA and therefore subject to the discount, whether the claim is wholly or partially in the coverage gap, and the amount of the discount.  For an eligible beneficiary, the Part D sponsor will inform the pharmacy at adjudication of the amount of the discount, and the pharmacy will provide the discount to the beneficiary at the point of sale.  The Part D sponsor will subsequently reimburse the pharmacy for that amount.  The Part D sponsor will also report the discount on the electronic prescription drug event ("PDE") record reported to CMS.  Based on the PDE records, CMS’s contractor will determine the aggregate discount amount owed by each manufacturer to each Part D sponsor for each drug at either the NDC-9 or NDC-11 level (as determined by CMS), and will invoice manufacturers quarterly.  Manufacturers must pay the Part D sponsors directly, and do so within 15 days, including amounts in dispute. 

Presumably to ease the burden on Part D sponsors of having to reimburse pharmacies before receiving manufacturer payments, starting January 1, 2011, CMS will provide a monthly prospective payment to Part D sponsors for the manufacturer discounts that are expected to be provided to beneficiaries in the coverage gap during the month, based on projections in each Part D sponsor’s bid.  At the end of the contract year, CMS will reconcile its monthly prospective payments to each Part D plan to the actual amount of discounts to each of the plan’s enrollees, which CMS will calculate based on the discount amounts reported in the PDE records.  The draft guidance provides that the monthly prospective payments to Part D sponsors will be reduced by discount amounts invoiced to manufacturers, but it is unclear what prior month would be used to determine the amounts invoiced to manufacturers. 

The statute requires manufacturers, absent extenuating circumstances, to have an agreement with HHS in effect by January 1, 2011 in order for their drugs to be covered under Part D.  CMS has determined that extenuating circumstance exist because Part D sponsors have already submitted their formularies for 2011, and that CMS therefore must allow coverage of Part D drugs in 2011 regardless of manufacturer discount agreements.

CMS solicits comments on the draft guidance, and specifically on the proposed approach for collecting manufacturer payments.  Certain issues warrant comments.  For example, although the guidance requires manufacturers to pay disputed amounts when invoiced (unlike the Medicaid Rebate program), it contains no procedures for manufacturers to dispute invoiced claims.  Also, although CMS’s contractor would verify the accuracy of the discounts reported in PDE records, there is no provision for manufacturers or independent third parties to audit PDE records or CMS’s contractor’s calculations.  The sheer administrative burden to manufacturers is also a concern.  While manufacturers have adapted to paying Medicaid Rebates to 50 states, paying quarterly coverage gap discounts to hundreds of Part D plans in addition presents a new level of burden.  Comments on the draft guidance must be received by close of business on May 14, 2010.

By Ricardo Carvajal –

Some smaller cigarette manufacturers have sued FDA to invalidate a provision in FDA’s recently issued final rule that would restrict a manufacturer from using certain product names on the ground that the restriction violates the First and Fifth Amendments, among other grounds.  Section 1140.16(a) of FDA’s final rule restricting the sale and distribution of cigarettes and smokeless tobacco to minors restricts a manufacturer from using the trade or brand name of a nontobacco product as the trade or brand name for a cigarette or smokeless tobacco product, unless the trade or brand name was on both a tobacco product and a nontobacco product sold in the U.S. on January 1, 1995.  Products that violate the restriction are deemed misbranded.

The manufacturers contend that the restriction has a disproportionate negative impact on small cigarette manufacturers because the trade or brand names used by the larger manufacturers are generally excepted by virtue of having been in use prior to 1995.  As examples of the restriction’s far-reaching effects, the complaint cites (among other things) the fact that the restriction:

• applies even where the manufacturer of the nontobacco and the tobacco products are wholly unrelated;
• the nature of the products is such that there is no likelihood of confusion, mistake, or deception;
• no account is taken of whether different geographic markets are in play;
• the restriction applies regardless of which product had first use and trademark registration; and
• the rule includes no grandfather clause, such that a name used well before the rule’s effective date (but after January 1, 1995) would nonetheless be restricted.

Plaintiff’s contend that the rule would result in a loss of commercial speech, as well as a taking and destruction of property interests, in violation of the First and Fifth Amendments.  Plaintiffs seek both a preliminary and permanent injunction, as well as other relief.

By Cassandra A. Soltis –

That’s what the Food and Drug Administration (“FDA”) is hoping anyway.  In a notice expected to be published in the Federal Register on Thursday, April 29, 2010, FDA will announce that it is requesting data and information from “all interested parties,” including the food industry, graphic and package designers, marketing experts, and the nutrition community, both domestic and foreign, on the use of front-of-pack (“FOP”) nutrition symbols on food packages or shelf tags.   This request for information follows FDA Commissioner Margaret Hamburg’s letter to industry last month, in which she urged companies to review their food labels and remove false or misleading claims that prevent consumers from “mak[ing] informed and healthy food choices.”  The notice also follows First Lady Michelle Obama’s recent announcement of her Let’s Move initiative, which has the goal to reduce the prevalence of childhood obesity, in part, by having parents and children choose healthier foods.

Citing to “[t]he prevalence of diet-related diseases in the U.S. population and the need to accommodate Americans’ increasingly busy lifestyles,” FDA stated that nutrition information needs to be tailored to help consumers make better food choices.  To that end, FDA indicated that voluntary FOP labeling should be “[b]ased on standardized nutrition criteria that are grounded in the Dietary Guidelines for Americans,” “[w]idely adopted by food retailers and manufacturers,” and appear in a standardized format that consumers of varying literacy and educational levels can comprehend and notice.

FDA and the U.S. Department of Agriculture are already working with stakeholders in the public and private sectors to develop a “voluntary” FOP label.  Although it appears that a manufacturer’s use of any FOP label scheme agreed to by FDA would be voluntary, FDA’s stated goal of having a standardized format suggests that manufacturers might not be able to use an alternate FOP label scheme of their own choosing.  Depending on the underlying rationale, such a restriction could invite a First Amendment challenge.   An additional impact on industry could result from the imperative to reformulate products so that there is no loss of market share to competing products that an FOP labeling scheme designates as being more nutritious.

FDA stated that it is currently conducting studies on consumer understanding of nutrition symbols.  However, the Agency is interested in data and information that has not been published, particularly those studies on a wide range of nutrition symbol schemes and on consumer responses to different symbol schemes.  Other data and information requested include:

• whether FOP labeling may cause manufacturers to reformulate their products;
• design considerations, such as color, location, shape, and amount of information; and
• consumer attitudes toward, and use of, such symbols, including whether FOP labeling affects purchasing decisions.

The Agency is also considering issuing a draft guidance on voluntary calorie declarations and a draft guidance or proposed rule on dietary guidance statements. 

Comments on this FOP labeling notice will be due 90 days after publication in the Federal Register.

By Cassandra A. Soltis –

In an advertising challenge brought by the Perrigo Company (“Perrigo”), the National Advertising Division (“NAD”) of the Better Business Bureau recommended that Pharmavite, LLC (Pharmavite) refrain from making several claims for its Nature Made® Prenatal + DHA Liquid Softgel Vitamins until the company completes competent and reliable testing that establishes the bioavailability of the folic acid in the product.  Advertising for the Prenatal Vitamin included FDA’s authorized folic acid/neural tube defects health claim and a statement that the product was formulated for “easy absorption.” 

Perrigo alleged that Pharmavite could not substantiate the claims because the product does not adhere to the U.S. Pharmacopeia (“USP”) standard titled “Disintegration and Dissolution of Dietary Supplements, 2040,” which determines whether a dietary ingredient is bioavailable.  Dietary supplements bearing the folic acid/neural tube defects health claim must meet this standard in order to bear the health claim, unless the standard is not applicable, in which case “the folate in the dietary supplement [must] be shown to be bioavailable under the conditions of use stated on the product label.”  21 C.F.R. § 101.79(c)(2)(ii)(B).

According to Perrigo, it tested Pharmavite’s Prenatal Vitamin using the pertinent USP standard and found less than 12.5% of the labeled amount of folic acid had dissolved after six hours.  (The USP’s standard requires that at least 75% of the labeled amount dissolve within one hour under the intended conditions of use.)  Perrigo explained that fat or oil-based components, such as DHA, are expected to inhibit the absorption of water soluble vitamins, such as folic acid.  Accordingly, Perrigo asserted, it is unlikely that Pharmavite’s product can pass a dissolution test of any kind.

Pharmavite responded that its Prenatal Vitamin product did meet the pertinent USP Standard for softgel dietary supplements, which is the rupture test.  Pharmavite explained that, because its product passed the rupture test, the product was bioavailable and the claims were substantiated.  Even so, Pharmavite conducted more testing by incorporating an additional dissolution step, which used a surfactant to determine the availability of the contents of the softgel.  Pharmavite stated that the results from this testing further supported the bioavailability of the product.

The NAD disagreed with Pharmavite, essentially finding that neither USP standard could show that the product was bioavailable.  NAD based its decision on an article that appeared in the Pharmacopeial Forum, which explained that the rupture test may be inadequate on its own when the contents of a softgel are dispersed as a suspension or emulsion (i.e., an oil).  The article suggested that dissolution conditions that mimic the in vivo environment may be helpful in these circumstances.  Because Pharmavite’s additional testing did not mimic the in vivo environment, NAD concluded that Pharmavite did not show that the folic acid in its softgel Prenatal Vitamin was bioavailable. 

Pharmavite agreed to discontinue the challenged claims until it conducts testing that recreates the in vivo setting.  This case may have repercussion for similar products that combine water soluble vitamins with oil-based components.

By Kurt R. Karst –   

Last Friday, at the American Bar Association’s Section of Antitrust Law Spring Meeting in Washington, D.C., Federal Trade Commission (“FTC”) Chairman Jon Leibowitz issued the FTC’s 2010 Annual Report.  Among other things, including allegedly false or unsupported claims concerning dietary supplements, the 96-page report highlights the Commission’s efforts to stop allegedly anticompetitive “pay-for-delay” patent settlement agreements.

According to the FTC, “[o]ne of the Commission’s top priorities is putting an end to anticompetitive pay-for-delay patent settlement agreements.”  Indeed, the Commission commented in its January 2010 report, titled “Pay-for-Delay: How Drug Company Pay-Offs Cost Consumers Billions,” that there are “multiple investigations underway.”  President Obama’s proposed version of the Patient Protection Affordable Care Act (“PPACA”) included provisions that would have made patent settlement agreements, if challenged, presumptively anticompetitive and unlawful (although some groups wanted more); however, the provisions did not make it into the law.  The FTC expressed its deep disappointment and vowed to press ahead. 

The FTC’s Annual Report focuses on three cases the Commission has been involved in concerning patent settlement agreements:

• King Drug Co. of Florence, Inc. v. Cephalon, Inc. –  In this consolidated case concerning Cephalon, Inc.’s PROVIGIL (modafinil) that is pending in the U.S. District Court for the Eastern District of Pennsylvania, the FTC alleged that Cephalon engaged in anticompetitive conduct when the company paid four firms to refrain from selling generic versions of PROVIGIL until 2012.  In March 2010, the court denied various defendants’ motions to dismiss the case (except for selected counts brought under several state statutes), finding that the agreements may violate antitrust laws.

• In re: AndroGel Antitrust Litigation (No. II) – This case stems from a February 2009 challenge by the FTC and the California Attorney General concerning  Solvay Pharmaceuticals, Inc.’s ANDROGEL (testosterone gel) 1%, in which the FTC alleged that Solvay and generic companies violated various federal antitrust laws when they agreed to dismiss patent infringement litigation in exchange for a profit-sharing arrangement and provided the generic competitors would not launch their generic versions of ANDROGEL until 2015.  As we previously reported, in February 2010, in a setback to the Commission’s battle against patent settlement, the U.S. District Court for the Northern District of Georgia (Atlanta Division) largely dismissed the case.

• Federal Trade Commission v. Bristol-Myers Squibb Co. – In this first action involving § 1115 of the 2003 Medicare Modernization Act, and which stems from a 2003 FTC Order involving Bristol-Myers Squibb Company (“BMS”) and the reporting of patent settlement agreements, the FTC obtained a $2.1 million fine from BMS for failing to inform the FTC of agreements reached with Apotex, Inc., regarding potential generic competition to PLAVIX (clopidogrel bisulfate).  MMA § 1112(c) requires each party to a settlement of patent litigation to file such settlements with the FTC and the Department of Justice, and MMA § 1115 provides “a civil penalty of not more that $11,000, for each day” a company fails to comply with the submission requirement.  The FTC charged that, among other things, BMS failed to disclose (as part of a patent settlement with Apotex) that the company orally promised that it would not compete with Apotex during the first 180-days that Apotex marketed its generic version of PLAVIX.

Although not among the cases discussed in the FTC’s Annual Report, the U.S. District Court for the District of New Jersey’s recent order in In re K-Dur Antitrust Litigation to adopt a Special Master’s Report and Recommendation in the long-running patent settlement dispute concerning K-DUR (potassium chloride) is also noteworthy.  In that case, direct purchasers of K-DUR alleged that Merck & Co., Inc. (“Merck”) (formerly Schering-Plough Corporation) restricted competition in violation of the Sherman Act by settling patent infringement lawsuits against potential generic K-DUR entrants.  Merck filed a motion for summary judgment and the Special Master appointed to preside over the case recommended that the motion be granted.  The direct purchasers promptly appealed the decision.  The In re K-Dur Antitrust Litigation followed an FTC action against Schering challenging the same settlements.  In 2005, in Schering-Plough Corp. v. FTC, 402 F.3d 1056 (11th Cir. 2005), the U.S. Court of Appeals for the Eleventh Circuit upheld a district court dismissal of that case.

By Nisha P. Shah –

FDA recently issued a white paper revealing that the Agency intends to strengthen its review of medical devices for home use, such as hemodialysis equipment, wound therapy care, intravenous therapy devices, and ventilators, as more hospital patients are being discharged to continue treatment at home.

FDA claims that about “7.6 million individuals in the United States currently receive home healthcare from roughly 17,000 paid providers” with annual U.S. expenditures for home care estimated as high as $57.6 billion in 2007.  Jeffrey Shuren, M.D., J.D., director of the Center for Devices and Radiological Health, stated that “[u]sing complex medical devices at home carries unique challenges … Caregivers may lack sufficient training, product instructions may be inadequate or overly technical, and the home environment itself may pose environmental or safety hazards that can affect the product’s functioning.”

Currently, there is no clear regulatory pathway for devices intended for home use that describes what manufacturers should consider when designing, testing, and labeling such products.  FDA’s Medical Device Home Use Initiative attempts to fill this gap.  Under the Initiative, the Agency will develop guidance for home medical device manufacturers on the premarket approval or 510(k) clearance of these devices, including device testing with at-home caregivers and patients, identify instances under which FDA may exercise its authority to require that certain devices contain a statement in its label that it has not been cleared for home use, and develop educational materials on home use of devices.

The Initiative also contains measures for enhanced post-market oversight through HomeNet, a “subnetwork of the FDA’s Medical Device Surveillance Network” which is an adverse event reporting program that includes more than 350 health care facilities nationwide.  Additionally, beginning this summer, FDA plans to launch a 10-month pilot program in which home medical device manufacturers may voluntarily submit labeling to the Agency for posting on a central website repository to help patients and caregivers access important information about the safe use of the devices. The pilot program will support FDA’s goal of eventually creating an online labeling repository for devices cleared or approved for home use.

A public workshop on May 24, 2010 has been scheduled to discuss measures manufacturers can take to design and test medical devices used at home, and to develop instructions for home care patients and caregivers.

By Kurt R. Karst –   

Last Friday, several days after FDA held a meeting on the public’s assessment of the overall performance of the fourth iteration of the Prescription Drug User Fee Act (“PDUFA”), which was reauthorized as Title I of the 2007 FDA Amendments Act (“FDAAA”), and what aspects of the program should be retained, changed, or discontinued in the next iteration of the program – PDUFA V – when it comes up for reauthorization (PDUFA IV expires at the end of September 2012), FDA quietly made public the Agency’s FY 2008 PDUFA Performance Report.  There was no FDA press release, no notice on FDA’s “What’s New (Drugs)” website – and, in fact, there is not yet any mention of the report on FDA’s PDUFA website (as of publication of this post).  BioCentury (subscription required) reported on the report over the weekend, but other than that, no one else has mentioned the report in print. 

So why has FDA been radio silent on the FY 2008 PDUFA Performance Report, which marks the 16th year of PDUFA and the beginning of PDUFA IV?  After all, industry knew some of what to expect after Office of New Drugs (“OND”) Director Dr. John Jenkins presented some figures at Windhover’s December 2009 FDA/CMS Summit.  Well, there is not much in the FY 2008 Performance Report that FDA can tout as a success – many of the performance goals FDA agreed to under PDUFA IV have not been met.  As FDA Commissioner Dr. Margaret Hamburg states in a preface to the report, “performance in many traditionally strong PDUFA goal areas decreased in FY 2008; and, therefore, this report presents a picture of mixed success.” 

According to FDA, much of the “mixed success” is due to FDAAA, which, among other things, gave FDA increased responsibilities and authorities regarding the post-market safety of drugs (e.g., Risk Evaluation and Mitigation Strategies).  “[T]he changes and challenges that FDA faces in PDUFA IV as a result of the expansion of FDA’s responsibilities under FDAAA place unprecedented demands on FDA reviewer workloads.  These added responsibilities can also have unintended and unexpected impacts on FDA’s short-term abilities to meet PDUFA IV goals,” according to the FY 2008 Performance Report.  Given these increased responsibilities, in November 2007, Dr.  Jenkins granted permission for OND managers to exercise greater flexibility regarding PDUFA goals.  That permission was later documented in a communication to FDAers.  In October 2009, Dr. Jenkins withdrew that permission and instructed OND managers to begin moving back to the “prior posture of meeting PDUFA goals whenever possible.”

Below are some of the facts and figures of note from the FY 2008 Performance Report.  FDA agreed to a “90% on time” goal under PDUFA IV for each item.  Also, in each case, a “highest potential performance” statistic is provided.  This statistic assumes that FDA will meet a pending and not overdue item.  

Original Applications (FY 2008 Submissions)

Resubmitted Applications (FY 2008 Resubmissions)

Efficacy Supplements (FY 2008 Submissions)

Resubmitted Efficacy Supplements (FY 2008 Resubmissions)

 
Manufacturing Supplements (FY 2008 Submissions)

Meeting Management (FY 2008 Performance)

Special Protocol Assessments (FY 2008 Performance)

Responses to Clinical Holds (FY 2008 Performance)

 
Major Dispute Resolution (FY 2008 Performance)

First Cycle Filing Review Notification (FY 2008 Submissions)

By Kurt R. Karst –   

In recent weeks, two advocacy groups have sent letters to FDA requesting that the Agency enhance and accelerate its enforcement activities with respect to marketed unapproved drugs.  FDA began its current Unapproved Drugs Initiative in June 2006 when the Agency published a compliance policy guide explaining the Agency’s risk-based enforcement policy.  Under this approach, FDA gives higher priority to enforcement action against unapproved drugs in the following categories:

• drugs with potential safety risks;
• drugs that lack evidence of effectiveness;
• drugs that present a “health fraud”;
• drugs that present direct challenges to the new drug approval and OTC drug monograph systems;
• unapproved new drugs that are also violative of the FDC Act in other ways (e.g., Current Good Manufacturing Practice regulation violations); and
• drugs that are reformulated to evade an FDA enforcement action (e.g., when a firm, in anticipation of FDA enforcement action, changes its unapproved drug product by, for example, adding an active ingredient, in an attempt to evade such enforcement action).

Since June 2006, FDA has taken scores of enforcement actions affecting hundreds of drug products.  And, as we previously reported, along the way, FDA has begun using new mechanisms, such as drug listing information, to guide enforcement activity.

The National Minority Quality Forum (“NMQF”), a “research and educational organization dedicated to ensuring that high-risk racial and ethnic populations and communities receive optimal health care,” recently announced that the organization sent a letter to FDA expressing concern that marketed unapproved drugs “may compromise the health of patients, and create increased liability for the physicians who prescribe them” and requesting that FDA enhance its enforcement of the Agency’s Unapproved Drugs Initiative.  To support FDA’s enhanced enforcement, NMQF also announced that it is launching a public information campaign called “Did You Know?”  The campaign is intended to “serve as an educational resource to consumers, physicians and policymakers who want to learn more about risks associated with unapproved drugs in the marketplace.”

Another advocacy group, MANA, a self-described national Latina organization, has also joined the fray and has asked FDA to accelerate its efforts to remove unapproved drugs from the marketplace.  According to MANA’s letter, “removal of all unapproved drugs from the marketplace is an important and commendable goal that must be achieved as soon as possible.  Doing so will not only encourage other companies to pursue the proper measures necessary to win FDA approval for their own products, but more importantly, will assure that no more unnecessary harm is brought to the unknowing purchasers of unapproved drugs in this country.”  MANA is also concerned that “even well-meaning physicians continue to write scripts for unapproved drugs falsely characterizing these drugs as ‘generics’ and leaving the patients they care for at risk.”  MANA offers its assistance to FDA to accelerate the removal of marketed unapproved drugs, but the organization’s letter offers no details on what assistance MANA could provide to FDA to achieve this goal. 

By Kurt R. Karst –   

The U.S. District Court for the District of Delaware’s recent decision in Millennium Pharmaceuticals, Inc. v. Teva Parenteral Medicines, Inc., denying a stay of patent infringement proceedings concerning generic versions of Schering’s INTEGRILIN (eptifibatide) Injection is (to our knowledge) the latest case in which a court has been asked to “toll” the 30-month stay of ANDA approval provided under FDC Act § 505(j)(5)(B)(iii) in an effort to preserve 180-day exclusivity eligibility.  As we previously reported, last year the U.S. District Court for the Northern District of Illinois (Eastern Division) in Abbott Labs. v. Matrix Labs., Inc., No. 09-cv-1586 (N.D. Ill. Nov. 5, 2009) ordered the tolling of the 30-month stay in the context of patent infringement litigation over generic KALETRA (lopinavir; ritonavir) Tablets. 

Under FDC Act § 505(j)(5)(B)(iii), the 30-month stay may be “for such shorter or longer period as the court may order because either party to the action failed to reasonably cooperate in expediting the action . . . .”  FDA commented in the preamble to the Agency’s 1994 final regulations implementing the Hatch-Waxman Amendments that “[t]he statute leaves the issue of extending the 30-month period (based on a lack of cooperation between the parties in patent litigation) to the discretion of the trial court.  The agency believes that the trial court should make determinations of cooperation on a case-by-case basis.”  FDA also commented, without qualification, that “[u]nder the statute, the reduction or enlargement of the 30-month period is left to the trial court’s discretion.” 

In the latest case, Teva filed a Motion to Stay requesting an order from the court “(1) staying the present actions until May 11, 2012 (subject to a showing of good cause by any party that the stay should be lifted earlier), and (2) tolling the [FDA] thirty-month stays of approval of Teva's [ANDAs] for the drug at issue here, eptifibatide.” 

INTEGRILIN is covered by five Orange Book-listed patents.  Two of the patents, to which one of Teva’s ANDAs reportedly contains Paragraph III certifications, are scheduled to expire in 2014.  The three other patents, to which one of Teva’s ANDAs reportedly contains Paragraph IV certifications, are scheduled to expire in 2015.  As we previously discussed, this sets up a scenario whereby an early court decision on the Paragraph IV certification patents – that is, a decision well before the Paragraph III certification patents expire – could trigger the 75-day period under FDC Act § 505(j)(5)(D)(i)(I)(bb)(AA), such that, if Teva is a first applicant eligible for 180-day exclusivity, that eligibility could be forfeited under the “failure-to-market” forfeiture provisions.  Those provisions provide that 180-day exclusivity is forfeited based on the “later of” two events – (aa) the earlier of “75 days after the date on which the approval of the application of the first applicant is made effective under [FDC Act § 505(j)(5)(B)(iii)]” or “30 months after the date of submission of the application of the first applicant,” and (bb) 75 days after a final court decision finding certain patents invalid or not infringed with respect to a “first applicant or any other applicant (which other applicant has received tentative approval)” or patent delisting.   

Citing the court’s three-factor stay standard articulated in In re Brimonidine Patent Litig., No. 07-md-1866 (D. Del. Oct. 31, 2008), in which an NDA sponsor requested (and was denied) a stay and tolling of the 30-month stay, Teva argued that: (1) the company would be “greatly prejudiced if the requested stay is not granted;” (2) a “stay could simplify the issues or render litigation unnecessary;” and (3) although the INTEGRILIN patent infringement litigation is in its infancy, case law supports granting a stay at this early stage of litigation.  

Schering and Millennium opposed Teva’s motion arguing that the three factors in In re Brimonidine Patent Litig. are not met.  Most significantly, they argued that:

Teva’s motion is grounded in the incorrect assertion that this Court has complete discretion to extend the FDA’s thirty-month stay.  Although a district court often has broad discretion to stay litigation to control its own docket, there is no such discretion here because Teva is asking this Court to extend the FDA’s statutory thirty-month stay. [(italics in original)]

. . . Congress has expressly provided that the thirty-month stay can not be altered unless a “party to the action failed to reasonably cooperate in expediting the action.” 21 U.S.C. § 355(j)(5)(B)(iii).  The Federal Circuit has made it clear [in Eli Lilly & Co. v. Teva Pharm. USA, Inc., 557 F.3d 1346 (Fed. Cir. 2009) and Andrx Pharm., Inc. v. Biovail Corp., 276 F.3d 1368, 1376 (Fed. Cir. 2002)] that failure to reasonably cooperate in expediting litigation is the sole ground for which a court may extend the thirty-month stay in an ANDA litigation.

And with respect to the decision in Abbott Labs. v. Matrix Labs., Inc., Schering and Millennium commented that:

Even apart from the fact that a decision from a district court in Illinois is not binding in the District of Delaware, Abbott Labs does not justify Teva’s proposed stay. Most critically, the Abbott Labs court improperly did not recognize that the “failed to reasonably cooperate” restriction in section 355(j)(5)(B)(iii) limits the court’s discretion to enlarge the thirty-month period. . . .  As such, the Abbott Labs decision plainly runs afoul of the Federal Circuit’s holdings in Eli Lilly and Andrx and Chief Judge Sleet’s decision in Brimonidine.

Teva replied that the court does, in fact, have the authority to toll the 30-month stay, and that the patent infringement actions “should be stayed regardless of whether the Court also tolls the stays at the FDA.  Tolling at the FDA is not a prerequisite to a stay here” (italics in original).  

Finding, among other things, that “Plaintiffs would be prejudiced in not being able to timely ‘clear the cloud’ that has been cast over the validity of their patents,” Judge Joyner ruled in his brief opinion that:

Although it would be permissible to grant a stay at this stage of the proceedings, given the balancing of the other factors discussed above, we do not believe that it would be appropriate to exercise our discretion to do so at this time.  Granting a stay would cause a hardship to Plaintiffs and any hardship caused to Defendants was the foreseeable result of Defendants’ choice to file their ANDAs when they did.

With respect to the court’s ability to toll the 30-month stay of ANDA approval, Judge Joyner decided to sidestep the issue, commenting that “we do not find it necessary to address these arguments as we have decided against staying the present action, and, therefore, there is no reason to extend the FDA’s stay.”

The March/April 2010 issue of FDLI Update contains an article by Hyman, Phelps & McNamara, P.C.’s Peter M. Jaensch and John R. Fleder that addresses the increasing number of cases brought under the federal Lanham Act law where plaintiffs have arguably sought to privately enforce the FDC Act.  In particular, the article analyzes Schering-Plough Healthcare Products, Inc., v. Schwarz Pharma, Inc. et al., 586 F.3d 500 (7th Cir. 2009).  The Court of Appeals ruled that the plaintiff was improperly seeking to enforce the FDC Act, and was treading on FDA’s primary jurisdiction over drug labeling issues.

Just after this article was published, the Ninth Circuit issued a similar ruling on April 14, 2010, in PhotoMedex, Inc. v. Irwin. The plaintiff commenced a Lanham Act case based on allegations of misrepresentations made by defendants regarding: (1) clearance by FDA to market their laser device, (2) the anticipated date their laser would be available for purchase, and (3) Irwin’s role as inventor of the device. 

The Court ruled that the first alleged misrepresentation would have required the Court to address whether a medical device manufacturer which is not permitted to bring a private action to enforce the FDC Act may nevertheless maintain a suit under the Lanham Act based on a claim that a competitor misrepresented that its product had received FDA clearance, when the FDA had declined to make such a finding or bring an enforcement action. The Court concluded that because the FDA permits Defendants to determine in the first instance whether their laser device was covered by an FDA clearance previously given to a similar device and to market their device without an affirmative statement of approval by the FDA, the Lanham Act claim could not proceed.  The Court did, however, allow the other two alleged misrepresentations.

The Court of Appeals cautioned that it was not suggesting that the Lanham Act can never support a claim involving FDA approval or clearance of drugs or medical devices.  It stated that if a company makes “an affirmative statement of approval by the FDA was required before a given product could be marketed and that no such FDA approval had been granted,” a Lanham Act claim could be pursued.

By Kurt R. Karst –   

Earlier this week, the U.S. Court of Appeals for the Federal Circuit issued its decision in Novo Nordisk A/S v. Caraco Pharmaceutical Laboratories, Ltd., No. 2010-1001, interpreting the patent delisting counterclaim provisions at FDC Act §505(j)(5)(C)(ii)(I), as added by the Medicare Modernization Act (“MMA”) – and specifically addressing whether the counterclaim provisions may be used to correct or delete an Orange Book-listed patent use code.  As we previously reported, last year the U.S. District Court for the Eastern District of Michigan (Southern Division) ruled and issued an Order and Injunction requiring Novo Nordisk, Inc. (“Novo”) to change an Orange Book-listed patent use code for a patent (U.S. Patent No. 6,677,358 (“the ’358 patent”)) on its drug product, PRANDIN (repaglinide) Tablets.  Novo appealed and the Federal Circuit reversed and vacated the district court’s judgment in a 2-1 decision. 

As we noted in our previous post, this case stems from a patent infringement action Novo brought against Caraco Pharmaceutical Laboratories, Ltd. (“Caraco”) and Sun Pharmaceutical Laboratories, Ltd with respect to the ’358 patent, and two related citizen petitions Novo and Caraco initially submitted to FDA in 2008 concerning generic drug labeling carve-out and split patent certification issues.  Novo submitted a  petition to FDA after the Agency required the company to amend PRANDIN’s labeling to reflect a new Indications and Usage statement.  Specifically, FDA required a unitary indication statement stating: “PRANDIN is indicated as an adjunct to diet and exercise to improve glycemic control in adults with type 2 diabetes mellitus.”  (Previously, the PRANDIN Indications and Usage labeling statement discussed both monotherapy and combination therapy.)  Novo ultimately amended its Orange Book patent listing for the ’358 patent with a new use code: “U-968,” which is defined as “A METHOD FOR IMPROVING GLYCEMIC CONTROL IN ADULTS WITH TYPE 2 DIABETES MELLITUS.”   (Previously, the ’358 patent was listed in the Orange Book with a “U-546” code, which is defined as “USE OF REPAGLINIDE IN COMBINATION WITH METFORMIN TO LOWER BLOOD GLUCOSE.”)

The district court deciding the patent infringement action stated that “[a]s a result of the revised use code, the FDA will no longer permit Caraco to file a ‘section viii statement’ carving out the patented repaglinide-metformin combination therapy as a predicate for securing approval of Caraco’s ANDA to market its generic repaglinide for non-infringing uses.”  That is, FDA is apparently requiring a “full” Paragraph IV Certification from Caraco as to the ‘358 patent as a result of the use code change.

Caraco challenged Novo’s use code change in an FDC Act §505(j)(5)(C)(ii)(I)  counterclaim seeking an order from the court requiring Novo to amend the ‘358 Orange Book patent listing to revert back to the U-546 use code.  FDC Act §505(j)(5)(C)(ii)(I) states:

If an owner of the patent or the holder of the approved application under [FDC Act § 505(b)] for the drug that is claimed by the patent or a use of which is claimed by the patent brings a patent infringement action against the applicant, the applicant may assert a counterclaim seeking an order requiring the holder to correct or delete the patent information submitted by the holder under [FDC Act § 505(b)] or (c) on the ground that the patent does not claim either – (aa) the drug for which the application was approved; or (bb) an approved method of using the drug.

Under FDC Act §§ 505(b) and (c), an NDA holder must submit with its application and after NDA approval “the patent number and the expiration date of any patent which claims the drug for which the applicant submitted the application or which claims a method of using such drug and with respect to which a claim of patent infringement could reasonably be asserted if a person not licensed by the owner engaged in the manufacture use, or sale of the drug.”

The district court issued an Order and Injunction requiring Novo to submit to FDA a revised Form FDA 3542 reinstating the former U-546 listing for PRANDIN within twenty days from the date of the Order and Injunction.  Novo promptly appealed the decision to the Federal Circuit, which stayed the district court’s Order and Injunction.

In (soon-to-be Chief) Judge Rader’s April 14th majority opinion, the Court ruled that Caraco “does not have a statutory basis to assert a counterclaim requesting” a court to enter an order to replace Novo’s U-968 patent use with the former U-546 use code.  First, “the Hatch-Waxman Act authorizes a counterclaim only if the listed patent does not claim any approved methods of using the listed drug” (emphasis added).  Second, “the terms of the counterclaim provision do not authorize an order compelling the patent holder to change its use code narrative.” 

Judge Rader sets up the dispute in the case as follows:

Novo and Caraco agree that the ’358 patent claims only one of the three approved methods of using PRANDIN (i.e., repaglinide in combination with metformin).  Novo asserts that the counterclaim is available only if the ’358 patent does not claim any approved methods.  Caraco argues that it is entitled to the counterclaim because the ’358 patent does not claim two of the approved methods of PRANDIN use.  In other words, Novo reads “an approved method” in the counterclaim statute as “any approved method” while Caraco reads it as “all approved methods.”

Detecting “no ambiguity in the statutory language,” Judge Rader notes that “when an indefinite article is preceded and qualified by a negative, standard grammar generally provides that ‘a’ means ‘any.’”  As such, for a counterclaim to be available, the Orange Book-listed patent cannot claim any approved methods of using the drug.  Judge Rader goes on to note that:

a broad use code covering all uses of a pharmaceutical could require generic manufacturers to prove specifically that their use will not overlap with and infringe the patented use.  This proof, under Hatch-Waxman procedures, will take the form of a Paragraph IV lawsuit.  In that context, the generic may provide proof that their use will not cause infringement of the patented use.  This court perceives that the Hatch-Waxman Act will thus ensure that a generic drug for non-patented purposes will not be used for patented purposes via a simple section viii certification.  Instead, the generic manufacturer will need to alleviate the risk of infringement or induced infringement in a proceeding that fully tests for infringement and its implications, including potential health and safety risks.  Thus, the Act again facilitates efficient resolution of disputes concerning potential overlapping of protected and unprotected uses.  The Act seeks to strike a balance of the pioneering and generic manufacturers’ interests.

To be sure, Judge Rader states that “the terms of the counterclaim provision do not authorize an order compelling the patent holder to change its use code narrative.”  The counterclaim provision refers to “patent information” submitted by the NDA holder under FDC Act § 505(b) or § 505(c).  And both of these provisions refer only to “the patent number and the expiration date of any patent . . . which claims a method of using such drug” (emphasis added).  Thus, “the counterclaim provision only authorizes suits to correct or delete an erroneous patent number or expiration date.  The authorization does not extend to the use code narrative.”  This “careful use of language” suggests to Judge Rader that the Hatch-Waxman Act “facilitates efficient resolution of disputes over the potential overlap of patented and unpatented uses in the form of a Paragraph IV suit.”

Judge Clevenger, who agreed with Judge Rader’s analysis, filed a concurring opinion expressing skepticism that “the ongoing Paragraph IV litigation will cleanly resolve the dispute between the parties.”  He also fingered FDA as the culprit for for complicating the PRANDIN patent infringement litigation:

If not for FDA’s request that Novo change its labeling to the present broad indication, everything would have worked properly under the relevant statutes. . . .  Caraco was [] set to get FDA approval to bring its generic drug to market and to defend itself in Novo's Paragraph IV suit.

But FDA, acting independently, gummed up the works.  By requiring a single broad indication for repaglinide as part of the approved labeling, FDA created a situation where Caraco can no longer assert that its proposed labeling does not infringe the '358 patent.  It remains to be seen what impact FDA's action will have on Caraco's ability to defend itself in the ongoing Paragraph IV litigation, but FDA's regulatory action threatens to impair Caraco's ability to disprove infringement.  FDA thus may have inadvertently upset the careful balance of interests represented by the efficient dispute resolution mechanism Congress created in the Hatch-Waxman Act.

According to Judge Dyk, who lodged a 28-page dissent, “the majority’s crabbed view of the statute sanctions an unjustified manipulation of the Orange Book.” 

The statute does not require the listing of patent numbers and expiration dates in the abstract.  It contemplates the description of the scope of the patent and of the relationship between the patent and the drug or the method of use; the description of that scope and relationship is itself “patent information” . . . .  Other provisions of the statute also contemplate that the ANDA filer will be able to understand the scope of the patent and to relate the patent information to the drug or drugs being claimed and the method or methods of use being claimed. [(emphasis in original)]

The statute thus must allow correction of a misdescription of patent scope that includes a drug not covered by the patent and erroneous information about the relationship between the patent and the drug, even if the patent is properly listed elsewhere in the Orange Book.  In other words the scope of the patent and its relationship to the drug must be “patent information” . . . .

There is no basis in the statutory language or statutory purpose for distinguishing between drug information and method of use information. Either both must be “patent information,” or neither must be patent information.  In my view, all Orange Book information is “patent information.”

Judge Dyk’s dissent harkens back to the recent decision in Teva Pharms USA, Inc. v. Sebelius, 595 F.3d 1303 (D.C. Cir. 2010), in which the D.C. Circuit was convinced by Teva’s structural argument that the patent delisting counterclaim provision at FDC Act § 505(j)(5)(C)(ii)(I) must be read together with the patent delisting 180-day exclusivity forfeiture provision at FDC Act § 505(j)(5)(D)(i)(I)(bb)(CC).  In Teva, the Court stated that FDA was unable to offer “a single cogent reason why Congress might have permitted brand manufacturers to trigger [FDC Act § 505(j)(5)(D)(i)(I)(bb)(CC)] by withdrawing a challenged patent, outside the counterclaim scenario identified by Teva,” and ruled 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.” 

The import of the Teva decision is no lost on Judge Dyk:

In holding that the counterclaim provision is unavailable, the majority’s approach is notably inconsistent with the approach adopted by our sister circuit in another recent Hatch-Waxman Act case, [Teva]. . . .  Here the majority reaches a result that is unsupported by any cogent reason for leaving an ANDA applicant without a remedy to correct an erroneous Orange Book listing with respect to a method of use patent, and is directly contrary to the congressional purpose.

It is unclear whether Caraco will seek a review of the decision.  In the meantime, it will be interesting to see what effects the Federal Circuit’s decision might have on other related litigation – namely, in another patent infringement action concerning PRANDIN, and with respect to a patent delisting counterclaim recently filed in patent infringement litigation concerning ACTOS (pioglitazone) (here and here), but that does not concern patent use codes – and whether Congress will take interest in the issue and further amend the Hatch-Waxman Amendments.