By Kurt R. Karst –      

Since the enactment of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”), Hatch-Waxman scholars have wondered how FDA might answer the following question: “What is the effect of a forfeiture of 180-day exclusivity eligibility due to the failure of a first applicant to obtain tentative ANDA approval pursuant to FDC Act § 505(j)(5)(D)(i)(IV) when at least one other first applicant remains eligible for 180-day exclusivity?”  FDA’s September 9, 2009 approval of ANDAs for generic versions of STARLIX (nateglinide) Tablets provides the answer to that question. 

FDC Act § 505(j)(5)(D)(i)(IV), as added by the MMA, states the 180-day exclusivity eligibility is forfeited if “[t]he first applicant fails to obtain tentative approval of the application within 30 months after the date on which the application is filed, unless the failure is caused by a change in or a review of the requirements for approval of the application imposed after the date on which the application is filed” (emphasis added).  The term “first applicant” is defined at FDC Act § 505(j)(5)(B)(iv)(II)(bb) 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.”  These and other provisions of FDC Act § 505(j), as amended by the MMA, concerning the scope and effect of 180-day exclusivity effectively create three categories of ANDA applicants relevant to a forfeiture under FDC Act § 505(j)(5)(D)(i)(IV):

(1)  “Eligible first applicants” (i.e., those first applicants who have not forfeited 180-day exclusivity eligibility under FDC Act § 505(j)(5)(D)(i));

(2)  “Ineligible first applicants” (i.e., those first applicants who have forfeited 180-day exclusivity eligibility under FDC Act § 505(j)(5)(D)(i)(IV), but nevertheless remain first applicants because their ANDAs continue to “lawfully maintain” a Paragraph IV Certification); and

(3)  “Subsequent applicants” (i.e., those applicants whose ANDAs contain a Paragraph IV Certification but who are not first applicants, and therefore are subject to an eligible first applicant’s 180-day exclusivity).

In the case of generic STARLIX, we understand that there were multiple first applicants, but that FDA determined that some (but not all) first applicants forfeited 180-day exclusivity eligibility under FDC Act § 505(j)(5)(D)(i)(IV).  This scenario necessarily led FDA to consider several questions, including:

(1) Can an ineligible first applicant obtain approval for its ANDA before commencement and/or expiration of a 180-day exclusivity period triggered by commercial marketing by an eligible first applicant?; and  

(2) If an ineligible first applicant obtains approval and begins marketing of the drug, does that marketing start the 180-day exclusivity period for all eligible first applicants?

FDA’s decision to approve ANDAs for first applicants who forfeited 180-day exclusivity eligibility under FDC Act § 505(j)(5)(D)(i)(IV) by failing to obtain timely tentative ANDA approval affirmatively answers the first question.  And as a result of FDA recognizing that an ineligible first applicant that “lawfully maintains” a Paragraph IV Certification to an Orange Book-listed patent is nevertheless a first applicant, and by operation of FDC Act § 505(j)(5)(B)(iv)(I), which states, in relevant part, that “the first commercial marketing of the drug . . . by any first applicant” (emphasis added) triggers 180-day exclusivity, FDA also answered the second question in the affirmative.

Although FDA has in the past published letters explaining the Agency’s post-MMA 180-day exclusivity decisions, FDA has not yet done so in this case.  FDA could, as the Agency has done in other cases concerning 180-day exclusivity forfeiture under FDC Act § 505(j)(5)(D)(i)(IV), let its approval decisions stand as its explanation and policy. 

UPDATE:

• On September 11, 2009, FDA issued a Letter Decision concerning its determination of 180-day exclusivity for Nateglinide Tablets.

On September 10, 2009, Hyman, Phelps & McNamara’s John R. Fleder and William T. Koustas will speak at a Thompson Interactive audioconference on FDA’s use of criminal search warrants.  The audioconference, titled “Unannounced FDA Raids: Be Ready Before They Appear at Your Door,” will cover the following issues:

• When will the FDA use a search warrant rather than a Form 482?  Can an investigator enter your facility if she doesn’t have a 482 or a search warrant?
• The administrative inspection warrant vs. a criminal search warrant – does one have more power than the other?  How should you prepare for each?
• Can you prevent an investigator from entering, or block them from access to areas not covered by a warrant?  Can you ask for outside counsel to be present without obstructing justice?
• What can you ask investigators?  How should you respond to their questions?  Can you follow them throughout the search?
• How should you manage agent access to other employees?
• Where should documents be filed and stored before a raid to prevent agents from viewing privileged information they don’t have a legal right to see?
• Expect the unexpected – preparing for and managing other raid issues like media attention and employee fears.

Additional information on the audioconference, including registration information, is available here.

For the past couple of years the American Bar Association (“ABA”) has published a list of the top 100 legal “blawgs” in the blogosphere – The ABA Blawg 100!  The ABA is currently soliciting nominations for its 3rd annual list.  Although FDA Law Blog was left off the 2nd annual list, we are determined to make the cut this year.  But we need the help of our loyal blog readers to do that.  There is a lot of competition out there for this coveted honor.  So, please please visit the ABA’s “Blawg 100 Amici” website and nominate FDA Law Blog!  Thank you!  (It will only take a couple of minutes.)

By Ricardo Carvajal –

FDA previously announced that the Reportable Food Registry that the agency is required to establish by section 417 of the Federal Food, Drug, and Cosmetic Act ("FD&C Act") would become operational on September 8, 2009, and that responsible parties would be expected to comply with the reporting obligations imposed under section 417 on that date.  However, the agency has just updated its guidance document on the Registry to make clear that, while responsible parties must comply with their reporting obligations as of September 8, “FDA intends to consider exercising enforcement discretion for a period of 90 days, until December 8, 2009, in circumstances where FDA determines that a responsible party has made a reasonable effort to comply with the requirements of section 417 of the FD&C Act and has otherwise acted to protect public health.”  This is a welcome announcement, given the relative complexity of the reporting obligations under section 417, and the many questions that have already arisen about FDA's implementation of the Registry.

The Food and Drug Law Institute is sponsoring a webinar on the Registry on September 10.  For registration and other information, see here.

By Michelle L. Butler –

On September 1, 2009, the Health Resources and Services Administration (“HRSA”) issued a Final Notice regarding qualified children’s hospitals and the 340B Drug Pricing Program.  See 74 Fed. Reg. 45,206 (Sept. 1, 2009).  Section 340B of the Public Health Service Act (“PHS Act”) lists the types of entities (i.e., Covered Entities) to which manufacturers of covered outpatient drugs are required to extend 340B Ceiling Prices.  See 42 U.S.C. § 256b(a)(4).  Children’s hospitals are not on this list.  Section 6004 of the Deficit Reduction Act of 2005 (the “DRA”) amended the statutory provisions related to the Medicaid Drug Rebate Program to include certain qualified children’s hospitals as Covered Entities for purposes of the Medicaid Drug Rebate Program.  See 42 U.S.C. § 1396r-8(a)(5)(B).  There was no similar change to section 340B of the PHS Act to include children’s hospitals on that list of Covered Entities.  In July 2007, HRSA published in the Federal Register proposed guidelines for children’s hospitals and requested comments on those proposed guidelines.  In the September 1, 2009 Federal Register Notice, HRSA addresses the comments and issues its guidance.

HRSA has determined that despite the fact that qualified children’s hospitals were not listed in the section 340B list of Covered Entities, such hospitals are Covered Entities by virtue of their inclusion in the definition of Covered Entities in the Medicaid Drug Rebate statute.  74 Fed. Reg. at 45,206-07, 45,209.  Accordingly, manufacturers are required to extend 340B Pricing to children’s hospitals that the meet the statutory qualifications.  HRSA has also determined that the terms of the Pharmaceutical Pricing Agreements between manufacturers and the Secretary of the Department of Health and Human Services are broad enough to include qualified children’s hospitals.

The final guidelines describe the process for admission of children’s hospitals into the 340B Drug Pricing Program.  74 Fed. Reg. at 45,209-11.  Prior to entry into the 340B Drug Pricing Program, a children’s hospital will need to provide certifications of compliance with a number of requirements, including the requirement that it will not participate in a group purchasing organization as of the effective date of its entry into the program.  Once a qualified children’s hospital has satisfied the enrollment criteria, HRSA, acting through the Office of Pharmaceutical Affairs (“OPA”), will list any such qualified children’s hospitals on the 340B Drug Pricing Program Database in its standard quarterly updates. 

The final guidelines also state that section 6004 of the DRA authorized entry of qualified children’s hospitals into the 340B Drug Pricing Program as of the effective date of the DRA, which was February 8, 2006.  According to the guidelines, therefore, qualified children’s hospitals are eligible for 340B Drug Pricing back to February 8, 2006, once they are admitted to the 340B Program and listed on the 340B Drug Pricing Program Database.  However, a children’s hospital will be eligible for retroactive discounts only to the extent that it has satisfied all requirements for participation in the 340B Drug Pricing Program back to the date discounts are requested.  The guidelines specify that children’s hospitals may request retroactive discounts directly from pharmaceutical manufacturers when the following requirements are satisfied:

1. The children’s hospital is listed on the 340B Covered Entity Database as eligible to purchase under 340B within one year of publication of this notice;
2. The children’s hospital sent a request in writing to each manufacturer of the drug(s) for which retroactive discounts are sought within 30 days of the children’s hospital having been listed as eligible to purchase under 340B on the Covered Entity Database;
3. The covered outpatient drugs must have been purchased on or after February 8, 2006;
4. The covered outpatient drugs must not have generated Medicaid rebates (the children’s hospital must have appropriate documentation to demonstrate this);
5. The covered outpatient drugs must not have been sold or transferred to a person who was not a patient of the children’s hospital; and
6. The covered outpatient drugs must have been purchased on or after the date on which the children’s hospital satisfied all requirements for participation in the 340B Program as outlined in [the guidance].

74 Fed. Reg. at 45,211.

By Kurt R. Karst –      

On Tuesday, September 8, 2009 (just shy of the 25th anniversary of the September 24, 1984 enactment of the Drug Price Competition and Patent Term Restoration Act – i.e., the “Hatch-Waxman Act”), the U.S. Court of Appeals for the Federal Circuit is scheduled to hear oral argument in two cases – Ortho-McNeil Pharma v. Lupin Pharma, Case No. 2009-1362, and PhotoCure ASA v. Kappos, Case No. 2009-1393 – that, once decided, should solidify as to when a patent covering a drug product is eligible for a Patent Term Extension (“PTE”) under 35 U.S.C. § 156.  We previously posted on these cases here, here, here, and here.

Both cases concern the proper interpretation of 35 U.S.C. § 156(a)(5)(A), which states that the term of a patent claiming a drug shall be extended from the original expiration date of the patent if, among other things, “the permission for the commercial marketing or use of the product . . . is the first permitted commercial marketing or use of the product under the provision of law under which such regulatory review period occurred” (emphasis added).  In recent PTE determinations, the U.S. Patent and Trademark Office (“PTO”) has heavily relied on decisions by the U.S. Court of Appeals for the Federal Circuit in Fisons v. Quigg, 8 U.S.P.Q.2d 1491 (D.D.C.1988), aff’d 876 F.2d 99 U.S.P.Q.2d 1869 (Fed.Cir.1989), and Pfizer Inc. v. Dr. Reddy’s Labs., 359 F.3d 1361 (Fed. Cir. 2004) (“Pfizer II”) to support the Office’s interpretation of the term “product” in 35 U.S.C. § 156(a)(5)(A) to mean “active moiety” (i.e., the molecule in a drug product responsible for pharmacological action, regardless of whether the active moiety is formulated as a salt, ester, or other non-covalent derivative) rather than “active ingredient” (i.e., the active ingredient physically found in the drug product, which would include any salt, ester, or other non-covalent derivative of the active ingredient physically found in the drug product).  In contrast, the Federal Circuit’s 1990 decision in Glaxo Operations UK Ltd. v. Quigg, 894 F.2d 392, 13 USPQ2d 1628 (Fed. Cir. 1990) (“Glaxo II”), construed the term “product” in 35 U.S.C. § 156(a)(5)(A) to mean “active ingredient.”

The Lupin case is an appeal of the U.S. District Court for the District of New Jersey’s recent ruling that the PTE granted by the PTO with respect to U.S. Patent No. 5,053,407 (“the ‘407 patent”) covering Ortho McNeil-Janssen Pharmaceutical, Inc.’s (“Ortho’s”) LEVAQUIN (levofloxacin) is valid.  Levofloxacin is an enantiomer in the previously approved Ortho racemate drug product FLOXIN (ofloxacin).  Lupin Pharmaceutical, Inc. (“Lupin”) challenged the ‘407 patent PTE in the context of ANDA Paragraph IV Certification patent infringement litigation on the grounds that the PTE is invalid because FDA previously approved levofloxacin when the Agency approved ofloxacin.  Although the PTO was not a party to the district court litigation, the Office submitted an amicus brief in support of Ortho in the Federal Circuit appeal, arguing that ‘407 patent PTE grant was valid and consistent with the Office’s active moiety interpretation of 35 U.S.C. § 156(a)(5)(A).  Copies of the briefs submitted in the Lupin case are provided below:  

• Brief of Defendant-Appellants Lupin Pharmaceuticals, Inc. and Lupin Ltd.
• Brief of Plaintiffs-Appellees Ortho-McNeil Pharmaceutical, Inc., OrthoMcNeil, Inc., and Daiichi Sankyo Co., Ltd.
• Reply Brief of Defendants-Appellants Lupin Pharmaceuticals, Inc. and Lupin Ltd.
• Brief for the United States as Amicus Curiae in Support of the Appellees

The PhotoCure case stems from the PTO’s denial of a PTE for U.S. Patent No. 6,034,267 (“the ‘267 patent”) covering the drug product METVIXIA (methyl aminoevulinate hydrochloride).  Applying the active moiety interpretation of the law, the PTO determined in May 2008 that METVIXIA does not represent the first permitted commercial marketing or use of the product because of FDA’s previous approval of an NDA for Dusa Pharmaceuticals Inc.’s LEVULAN KERASTICK (aminolevulinic acid HCl) Topical Solution, which contains the active moiety aminolevulinic acid (“ALA”).  Thus, according to the PTO, METVIXIA did not represent the first permitted commercial marketing or use of ALA and the ‘267 patent was ineligible for a PTE.  PhotoCure filed a lawsuit in the U.S. District Court for the Eastern District of Virginia challenging the PTO’s decision.
 
Earlier this year, the court ruled in PhotoCure’s favor.  In reaching its decision that the PTO’s decision to deny a PTE was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law” under the Administrative Procedure Act, the court explained that it must determine whether it is required to follow the Federal Circuit’s ruling in Glaxo II or Pfizer II.  The court stated that “[i]mportantly, Pfizer II postdated Glaxo II and was a panel decision that the Federal Circuit declined to hear en banc.  ‘[The Federal Curcuit] has adopted the rule that prior decisions of a panel of the court are binding precedent on subsequent panels unless and until overturned in banc.  Where there is a direct conflict, the precedential decision is the first’” (internal citation omitted).   As a result, the court applied the “active ingredient” interpretation adopted in Glaxo II and determined that “the ‘267 patent covering Metvixia satisfies § 156(a)(5)(A), and that the USPTO’s decision to apply the active moiety interpretation and deny PhotoCute a [PTE] under this provision was contrary to the plain meaning of the statute and thus not in accordance with the law.”  The PTO appealed the decision to the Federal Circuit.

The PTO argues in its Federal Circuit briefs that Pfizer II is controlling, and that even if Pfizer II is not controlling, the PTO persuasively interpreted active ingredient to mean active moiety and correctly denied a PTE for the ‘267 patent.  Copies of the briefs submitted in the PhotoCure case are provided below: 

• Brief for Defendant-Appellant
• Brief for Plaintiff-Appellee PhotoCure ASA
• Reply Brief for Defendant-Appellant

As we have previously noted, the Federal Circuit’s decisions in the Lupin and PhotoCure cases, if they affirm the “active ingredient” interpretation adopted in Glaxo II, could have significant implications on previous and pending PTO PTE decisions.  We will update you as these cases move forward.

By Douglas B. Farquhar –

Pharmaceutical manufacturer Pfizer has agreed to the largest drug marketing settlement yet – $2.3 billion (yes, that is “billion” with a “b”) to resolve claims originally brought by six whistleblowers that the firm illegally marketed four drugs – according to a U.S. Department of Justice announcement.  While the practices underlying the claims have become fairly standard grist for the government penalty mill, the penalties and fines in these cases are anything but standard: the $1.2 billion criminal fine against Pfizer subsidiary Pharmacia & Upjohn, Inc. is claimed by people who should know (the U.S. Department of Justice) to be the largest fine ever levied against a U.S. company, and the six whistleblowers will receive a total of $102 million (one of the whistleblowers will receive more than $51.5 million).
 
First, on the criminal side, Pharmacia agreed to plead guilty to a felony violation of Federal Food, Drug, and Cosmetic Act for misbranding Bextra (valdecoxib), an anti-inflammatory drug, that the company will agree was marketed for uses that FDA specifically declined to approve due to safety considerations.  In addition to the fine of $1.195 billion the company has agreed to pay, the company will forfeit $105 million as part of the criminal settlement.  This settlement is so large that the forfeiture would have made headlines standing on its own, but is merely an afterthought given the size of the fine and the civil settlement.
 
Second, on the civil side, Pfizer has agreed to pay $1 billion in civil settlements of cases which were brought under the federal False Claims Act (“FCA”) by whistleblowers (called “qui tam relators” under the Act) who seek recovery of reimbursements under federal programs, including Medicare, Medicaid, and health benefits provided  to military personnel, federal employees, and their families.  About $330 million of that amount will go to state governments to reimburse them for Medicaid reimbursements.  The FCA set up a system to reward the whistleblowers if they initiate successful claims that the government investigates.
 
According to government documents publicizing the settlement:

• Bextra was marketed for acute pain and surgical pain, although only approved for certain types of arthritis and menstrual cramps, and for higher dosages than approved.

• Geodon (ziprasidone) was marketed for depression, mood disorder, dementia, and other indications when approved only for schizophrenics and acute episodes experienced by patients suffering from bipolar disorder.

• Zyvox (linezolid) was promoted for infections caused by MRSA (methicilllin-resistant Staphylococcus aureus) while only approved by FDA for other types of infections and certain types of pneumonia.

• Lyrica (pregabalin) was promoted for chronic pain, neouropathic pain, perioperative pain, and migraines, when it was approved only for fibromyalgia and certain other conditions.

Generally, a company signing a settlement agreement under these circumstances does not admit liability for the acts alleged by the whistleblowers or the federal government.  But the marketing acts that allegedly resulted in the false claims for federal reimbursement included the following:

• The marketing team positioned Bextra for uses other than the approved uses, created and tested sales materials promoting those uses.

• The sales force marketed Bextra for unapproved uses, including drafting and distributing physician standing orders and hospital pain “pathways” that called for unapproved uses of Bextra.

• Pfizer and Pharmacia used “so-called” Advisory Boards, consultant meetings, and other forms of remuneration to promote Bextra for unapproved uses (Advisory Boards have been a particularly frequent target for federal government investigations).

• The sales force created sham requests from physicians for off-label information (the requests are supposed to originate from physicians without prompting from sales representatives).

• Distribution of drug samples for unapproved uses.

• Sponsoring supposedly independent CME (continuing medical education programs) that were not independent.

• Initiating, funding, and occasionally drafting articles for medical publications about unapproved uses of Bextra.

Allegations relating to kickbacks also covered several other drugs for which Pfizer has now bought peace with federal and state governments in the civil settlement. 

Pfizer was also required to sign a five-year Corporate Integrity Agreement (“CIA”) with the Office of Inspector General of the United States Department of Health and Human Services.  The Pfizer CIA is available here.  CIAs are discussed generally here.

The Relators, at least some of whom were Pfizer employees, provide further evidence that marketing pharmaceuticals is a tricky business.  In the old days, one needed to worry about competitors, and possibly FDA.  These days, even one's own employees may be the source of liability to a company, particularly when the incentives to sue are as big as in a case like this.  $51 million means one doesn't have to tote a sales rep's bag ever again.   

The settlement documents are available here.

By Kurt R. Karst –      

In a recent opinion, Judge Richard E. L. Strauss of the Superior Court of California, County of San Diego, granted motions for summary judgment ruling that Bayer AG and several generic drug manufacturers, including Barr Pharmaceuticals Inc.,  The Rugby Group, Inc., and Hoechst Marion Roussel, Inc. (“HMR”), did not violate the state’s antitrust law – the Cartwright Act, California’s analogue to Section 1 of the federal Sherman Act – when Bayer settled patent infringement litigation with respect to generic versions of its antibiotic drug CIPRO (cirprofloxacin).  The decision follows in the footsteps of an October 2008 decision by the U.S. Court of Appeals for the Federal Circuit also concerning CIPRO reverse payments. 

The California case, In re: Cipro Cases I & II, JCCP Proceeding Nos. 4154 & 4220, was initiated in late 2000, and is a proceeding of nine coordinated cases brought by indirect CIPRO purchasers (i.e., individuals and not-for-profit entities): McGaughey v. Bayer Corporation (Super. Ct. San Diego County, No. GIC752290); Relles v. Bayer Corporation (Super. Ct. L.A. County, No. BC239083); Samole v. Bayer AG (Super. Ct. S.F. City and County, No. 316349); Garber v. Bayer AG (Super. Ct. S.F. City and County, No. 316518); Lee v. Bayer AG (Super. Ct. S.F. City and County, No. 316670); Patane v. Bayer AG (Super. Ct. S.F. City and County, No. 318457); Moore v. Bayer Corporation (Super. Ct. Sonoma County, No. SCZ228356); Moore v. Bayer Corporation (Super. Ct. Sonoma County, No. 228384); Senior Action Network v. Bayer AG (Super. Ct. S.F. City and County, No. 400750). 

The consolidated complaint alleged three causes of action: (1) per se violation of the Cartwright Act (Bus. & Prof. Code, § 16720 et seq.); (2) unfair competition in violation of the Unfair Competition Act (Bus. & Prof. Code, § 17200 et seq.); and (3) the common law tort of monopolization.  The allegations stem from the 1997 settlement of Hatch-Waxman patent infringement litigation concerning an Orange Book-listed patent covering CIPRO.  Under the terms of those agreements, the validity of the CIPRO patent was acknowledged, and Barr, HMR, and Rugby agreed to refrain from selling or marketing a generic CIPRO in exchange for a lump sum of $49.1 million and quarterly payments to Barr and HMR that have totalled several hundred million dollars.  Essentially, the plaintiffs alleged that in the absence of the CIPRO agreements, a generic version of the drug would have been available no later than January 1997, and that the purpose of the agreements was to allocate to Bayer the entire ciprofloxacin market for at least six years, to restrain market competition, and to grant Bayer an unlawful monopoly with the concomitant ability to charge supra-competitive prices.

Noting that “the Cartwright Act is patterned after the federal Sherman Act and both have their roots in the common law, [that] federal cases interpreting the Sherman Act are applicable in construing the Cartwright Act,” and that “there is no California authority evaluating whether a Hatch Waxman reverse payment settlement agreement violates state antitrust law (Cartwright Act or otherwise),” Judge Strauss determined that the court must turn “to federal decisions concerning the Sherman Act as persuasive authority to guide its decision.”  And on this point, Judge Strauss wrote that “Federal case law is not only instructive in this regard, it is dispositive.”  Relying heavily on the Federal Circuit’s 2008 decision in In Re Ciprofloxacin Hydrochloride Antitrust Litigation (“Cipro III”), Judge Strauss stated:

The federal court cases dealing generally with Hatch Waxman settlements, and specifically with this agreement, have uniformly held that settlements within the scope of the patent do not violate antitrust laws. . . .  In Cipro III, the Federal Circuit affirmed the district court's holding that there was no antitrust violation because the settlement agreement fell within the “exclusionary zone” of the patent.  The Federal Circuit Court found that because patents are presumed valid and provide the patentee with the right to exclude others (infringers) from the market, the challenged anticompetitive effects of the agreement at issue here were directly attributable to the patent, and therefore, no antitrust remedy was available. . . .  The Court finds the result should be no different under the Cartwright Act, as we are dealing with the exact same settlement agreement, involving the same type of Plaintiffs (indirect purchasers), and the same theories of liability.

Accordingly, the court granted defendants’ motions for summary judgment finding that the agreements do not violate the Cartwright Act, because “as a matter of law, Plaintiffs cannot establish the agreement unreasonably restrains trade because no triable issue of material fact exists that there are no anticompetitive effects on competition beyond the exclusionary scope of the patent itself.”  Judge Strauss’ finding precluded Plaintiffs’ Unfair Competition Act and common law monopoly claims because they are based on the same factual allegations that supported the Cartwright Act claim.

The Federal Trade Commission (“FTC”), along with the Department of Justice’s Antitrust Division, have opposed reverse payment agreements.  The FTC has has filed complaints (here and here) in the U.S. District Court for the Central District of California and the U.S. District Court for the Eastern District of Pennsylvania opposing reverse payment arrangements concerning generic ANDROGEL (testosterone gel) and PROVIGIL (modafinil), respectively.  Cephalon, the maker of PROVIGIL, filed a motion to dismiss the FTC’s complaint just a few days ago. 

Several drug retailers, including Rite Aid, Eckerd, CVS, Walgreen, Kroger, and Safeway have also decided to take action with respect to the generic ANDROGEL and PROVIGIL reverse payment arrangements by filing their own complaints (see, e.g., here and here) in the U.S. District Court for the Eastern District of Pennsylvania.  Similar complaints have been filed in other courts.

As we previously reported, legislation is pending in Congress that would effectively outlaw reverse payment agreements by making it unlawful for any person from being a party to any agreement resolving or settling a patent infringement claim in which an ANDA applicant receives anything of value, and the ANDA applicant agrees not to research, develop, manufacture, market or sell the generic drug that is the subject of a patent infringement claim.  Congress is expected to further consider the legislation when it reconvenes later this month.

By David B. Clissold & Ricardo Carvajal –

Five tobacco manufacturers including R.J. Reynolds Tobacco Company, Lorillard Tobacco Company, and Commonwealth Brands, Inc. (the second, third, and fourth  largest tobacco manufacturers in the U.S., respectively), and a retailer of tobacco products have sued FDA in a Kentucky district court, alleging that certain provisions of the Family Smoking Prevention and Tobacco Control Act (Tobacco Act) violate their First Amendment right to engage in commercial speech, among other constitutional violations.  (A copy of the complaint is available here.)  Plaintiffs ask the court to enjoin FDA from enforcing the challenged provisions of the Tobacco Act. 

Plaintiffs allege that the Tobacco Act essentially eliminates the few remaining avenues for communication with their adult customers, thereby hampering plaintiffs’ ability to increase market share by convincing customers to switch from competing brands to plaintiffs’ brands (in the case of manufacturers) and hampering their ability to use tobacco advertising to generate sales of tobacco and other products (in the case of retailers).  The provisions of the Tobacco Act that plaintiffs contend are “most egregious” include:

• a prohibition on the use of color and images in advertising (via reissuance of FDA’s 1996 final rule restricting advertising for cigarettes and smokeless tobacco);
• mandated warnings that displace plaintiffs’ communications on packaging;
• restrictions on truthful communications regarding modified risk tobacco products;
• restrictions (if not a ban) on outdoor advertising for cigarettes and smokeless tobacco;
• a prohibition on the sponsorship of certain events in connection with the brand name of any cigarette or smokeless tobacco;
• a prohibition on the distribution of free samples of cigarettes, and restrictions on the distribution of free samples of smokeless tobacco; and
• a prohibition on the marketing of tobacco products in combination with other FDA-regulated products.

Plaintiffs contend that these restrictions are not warranted by a compelling governmental interest, that they do not directly advance the government’s interest,  and that they are more extensive than is necessary.  The challenged provisions thus fail to pass constitutional muster under the test for government regulation of commercial speech that was announced by the Supreme Court in Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557 (1980).

The filing of this suit was predicted during Congressional deliberations on H.R. 1256 (which subsequently became the Tobacco Act).  Given the stakes for both sides, the case is almost certain to end up before the Supreme Court.  That will be a familiar arena for Lorillard and R.J. Reynolds.  They were two of the plaintiffs involved in the last Supreme Court case that examined the government regulation of commercial speech regarding tobacco products.  In Lorillard Tobacco Co. v. Reilly, 533 U.S. 525 (2001), the Supreme Court held that advertising restrictions on cigarettes imposed by the state of Massachusetts were unconstitutional.

By JP Ellison & Ricardo Carvajal –

A Massachusetts district court has ordered marketers of calcium and herbal  supplements touted as effective in preventing, treating, or curing diseases such as cancer, heart disease, and diabetes to pay $70 million in consumer redress.  The court’s order dated August 13, 2009 did not come until more than 6 years after the date of the last sales of the products, but in this case, justice delayed does not seem to have led to justice denied, at least not from the perspectives of the FTC or consumer purchasers of the products.

The case, against several corporations and individuals associated with those corporations, alleged false representations about the safety and efficacy of two dietary supplements and related violations of law.  The court granted FTC’s motion for summary judgment last year on six of eight counts. The court found that the defendants had made various claims without any substantiation, and thus had engaged in deceptive advertising in violation of the FTC Act.  Thus, the liability of the defendants had largely been resolved by the court.  The issue that the court resolved earlier this month was the nature and amount of equitable relief to grant.  The court’s two orders, covering different corporate and individual defendants, order restitution in an amount designed to fully deprive the defendants of any funds derived from the sale of these supplements.

In addition to the monetary relief, the court’s orders include injunctive provisions that prevent the defendants from making the same type of representations at issue in this case in connection with other products.  Furthermore, the court’s order contains compliance reporting and monitoring provisions.  Finally, the orders contain “fencing in provisions” that go beyond granting relief with respect to the products at issue in the case and are designed to prevent the defendants from engaging in similar conduct in the future.

The court’s order does not seem likely to be the last word on consumer redress, however.  At several points in the decision, the court suggests that the defendants have not been completely transparent about their finances.  This appears to be, at least in part, a basis for the court rejecting an argument that ability to pay should be considered in ordering restitution.  In addition, the court order permits discovery in aid of the judgment, suggesting that neither FTC nor the court is satisfied that there is a clear picture of the defendants’ finances.

By Ricardo Carvajal –

In an apparent effort to leverage against the scientific resources of other federal agencies, FDA’s National Center for Toxicological Research (“NCTR”) has entered into a Memorandum of Understanding (“MOU”) that provides for the sharing of nanotoxicology information with the Air Force Research Laboratory, 711 Human Performance Wing, Human Effectiveness Directorate, Biosciences and Protection Division (“AFRL”).  According to the MOU, FDA and AFRL “intend to coordinate research efforts so as to identify and expedite research and development of new tools and technologies that can be implemented that promote new understanding of the mechanisms of biological responses to environmental stressors, including toxic injury, and to identify biomarkers of exposure and disease that can be used to improve and protect human health.”  The MOU identifies a number of specific objectives, some of which relate to issues that have been the subject of much  discussion in the scientific and regulatory communities (e.g., toxicity of nanomaterials and the blood brain barrier, and identification of biosignatures of exposure).

NCTR’s mission is to conduct scientific research in support of FDA’s regulatory needs.  Those needs are evident in the area of nanotechnology, as recognized by FDA’s Nanotechnology Task Force.  In its 2007 report on nanotechnology, the Task Force recommended that FDA promote and participate in “research and other efforts to increase scientific understanding, to facilitate assessment of data needs for regulated products.”  The Task Force specifically recommended that FDA leverage against activities of other Federal agencies, and that FDA participate in collaborative efforts “to further understanding of biological interactions of nanoscale materials.”  The MOU with AFRL is clearly in line with those recommendations, and follows the announcement of a similar collaborative effort with the Alliance for NanoHealth (see our prior post here).  These collaborative efforts are likely to be of substantial importance to FDA, given that the agency receives no funding from the National Nanotechnology Initiative.

By Susan J. Matthees –

After years of anticipation, FDA has finally published a final rule establishing a specific small number of animals for each of the seven major species for purposes of the Minor Use and Minor Species Animal Health Act of 2004 (MUMS Act).  The final rule, codified in 21 C.F.R. § 516.3(b), defines a small number of animals as “equal to or less than 50,000 horses; 70,000 dogs; 120,000 cats; 310,000 cattle; 1,450,000 pigs; 14,000,000 turkeys; and 72,000,000 chickens.” 

In the Federal Register notice announcing the final rule, FDA explained that the agency will “periodically reevaluate the definition of ‘small number of animals’” because the number of animals affected by a disease may change over time.  FDA also noted that the agency could change the definition if the development cost versus market value of the drug changes.  FDA will make any changes to the definition through proposed rulemaking.  

By David B. Clissold & Ricardo Carvajal –

As required by the Family Smoking Prevention and Tobacco Control Act (“Tobacco Act”), FDA has established the Tobacco Products Scientific Advisory Committee (“TPSAC”) and is requesting nominations for voting and non-voting members.  The Commissioner will select the chair of the 12-member committee, which will consist of nine voting members (seven scientists, one government official, and one representative of the public) and three non-voting members that represent industry interests (one manufacturing industry representative, one small manufacturer representative, and one representative of tobacco growers). 

Establishment of the TPSAC is critical to FDA’s timely implementation of the Tobacco Act because the TPSAC may (and in some cases must) be involved in a wide range of regulatory activities, including actions on premarket approvals, approvals of modified risk tobacco products, establishment of tobacco product standards, and establishment of good manufacturing practice requirements.  In particular, “immediately upon the establishment of” the TPSAC, FDA must refer to it the politically and emotionally charged  “issue of the impact of the use of menthol in cigarettes on the public health, including such use among children, African-Americans, Hispanics, and other racial and ethnic minorities.”  FDCA Sec. 907(e).  The TPSAC’s report and recommendations on this issue are due back to FDA within one year.  The TPSAC must also consider the impact of dissolvable tobacco products on the public health, including their use by children, and report back to FDA within two years.

Nominations for members of the TPSAC are due on October 13, 2009.  However, industry is being afforded the opportunity to select the three non-voting members of the TPSAC, and that process is moving on a different timetable.  Industry organizations interested in participating in the selection process must confirm their interest in writing and submit nominations by September 25, 2009.  Within 30 days of those submissions, FDA will provide a list of all nominees to participating industry organizations.  Within 60 days of the receipt of that list, industry organizations must confer and select nonvoting members or the Commissioner will do so.

By Kurt R. Karst –      

FDA’s recent response denying and granting in part two citizen petitions submitted by King Pharmaceuticals, Inc. (“King”) to FDA in September 2007 and January 2009 provides helpful guidance for companies developing generic versions of drug products containing a device component, such as a pen, jet, or related injector device.  Among other things, the King petitions requested that FDA decline to approve (or stay the approval of) ANDAs that reference a drug product containing an auto-injector device component – and in particular ANDAs for a generic version of IMITREX (sumatriptan succinate) Injection – unless the auto-injector is “identical” to that in the Reference Listed Drug (“RLD”) in terms of performance, physical characteristics, and labeled instructions.  (A product consisting of drug and device components is considered a “combination product” under FDA’s regulations at 21 C.F.R. § 3.2(e).  In April 2009, FDA issued a draft guidance for industry and FDA staff providing recommendations on the submission of NDAs and BLAs for combination products with an auto-injector component.)

Prior to responding to the King petitions, FDA provided only minimal guidance on how similar the device component in a proposed generic drug must be to that of the RLD.  For example, FDA’s April 2003 “Guidance for Industry: Bioavailability and Bioequivalence Studies for Nasal Aerosols and Nasal Sprays for Local Action” states that “[a]ssurance of equivalence on the basis of in vitro tests is greatest when the test product uses the same brand and model of devices . . . as used in the [RLD].”  In addition, in a February 13, 1996 response to citizen petitions (Docket No. 1994P-0139) submitted to FDA concerning generic albuterol, FDA noted that “the generic delivery device should be functionally equivalent to that of the [RLD].  Although the identical valve and actuator may not be available to the generic firm, the generic drug product incorporating the valve and actuator selected by the generic firm must be similar in its comparative in vitro tests, and result in a product that meets in vivo requirements for bioequivalence.” 

FDA’s response to the King petitions notes that when reviewing an ANDA for a generic version of a combination product with an auto-injector component, the Agency evaluates the auto-injector component “to ensure that its performance characteristics and critical design attributes will result in a product that will perform the same as the RLD.”   FDA clarifies, however, that “[t]his does not mean . . . that all design features of the auto-injector in the ANDA and its RLD must be exactly the same.”  Instead, “[s]ome design differences may be acceptable as long as they do not significantly alter product performance or operating principles and do not result in impermissible differences in labeling.”  FDA further notes that:  

ANDA applicants . . . would be required to provide details on attributes such as auto-injector design, materials, operating principles, and comparative performance tests between the auto-injector constituent of the RLD and the auto-injector constituent of the product described in the ANDA.  If FDA determines that the auto-injector constituent of a product proposed in an ANDA is not equivalent to the auto-injector constituent of the RLD in terms of performance and critical design, FDA will refuse to approve the ANDA for that product.  Similarly, if the labeling is not the same (with the exception of certain pennissible differences due to difference in manufacturer), ANDA approval will be denied.

Importantly, FDA’s petition response highlights the concept of “clinical usability” as a critical factor in assessing product “sameness,” and that could foreclose the ANDA approval route.  FDA states:

For ANDAs for a product with labeling that describes use by patients without physician supervision and further requires training of patients by a physician prior to initial unsupervised use, FDA considers whether patients can be safely switched to a new product without retraining by a physician or health care professional.  For an ANDA for a product intended for emergency use by patients without professional supervision (such as a prefilled auto-injector indicated for emergency treatment of allergic reactions), it is particularly important to ensure that patients in an emergency situation can use the product safely and effectively in accordance with instructions provided for the RLD without additional physician intervention or retraining prior to use.  A similar standard may be applied to certain products not intended for emergency use, if appropriate. . . .

Clinical usability or human factor studies may also be required, depending on the indication and the patient population, the nature of the auto-injector design, and differences from the auto-injector constituent part of the RLD, to ensure that the proposed product is safe and effective.  If required, such studies are beyond the scope of studies that can be reviewed and approved in an ANDA. [(emphasis added)]

In the case of sumatriptan auto-injectors, we note that individuals experiencing migraines (the indication for which sumatriptan auto-injectors are indicated) may experience varying degrees of mental impainnent, and this may affect the usability of an autoinjector, leading to possible errors or misadministration ofthe product. . . .  [I]n reviewing an ANDA referencing this product, FDA will have to consider whether, given the characteristics of the proposed auto-injector constituent, the product can be safely substituted for the RLD without additional physician intervention or retraining prior to use.

Although FDA’s petition response is specific to combination products with an auto-injector component, it is reasonable to conclude that the Agency applies similar requirements and concepts when evaluating applications for generic versions of other device-containing combination products.  As such, companies would be well advised to seek FDA’s input when considering developing and seeking FDA approval for their combination products. 

By Kurt R. Karst –      

The recent controversy over the approval of generic versions of  Sanofi-Aventis U.S. LLC’s (“Sanofi’s”) colon cancer drug ELOXATIN (oxaliplatin) is one for the books and will most certainly go down in Hatch-Waxman lore.  The story begins in 2007 with patent infringement lawsuits filed against several generic drug manufacturers – including  Sandoz, Inc., Mayne Pharma Inc., Teva Pharmaceutical Industries Ltd., and Hospira Inc. – stemming from their Paragraph IV certifications to U.S. Patent No. 5,338,874 (“the ‘874 patent”) listed in the Orange Book as covering ELOXATIN.  Fast forward to June 30, 2009, when the U.S. District Court for the District of New Jersey entered a judgment of non-infringement of the ‘874 patent (based on the court’s June 18, 2009 ruling), and then denied Sanofi’s request for a stay.  See Sanofi-Aventis, et al. v. Sandoz, et al., No. 3:07-cv-2762 (D.N.J. Jun 30, 2009).

Sanofi promptly appealed the decision to the U.S. Court of Appeals for the Federal Circuit, and on July 1, 2009, the Federal Circuit temporarily stayed the district court judgment, pending that court’s consideration of a petition for writ of mandamus and a motion for a stay pending appeal.  See Sanofi-Aventis v. Sandoz, et al., No. 2009-1427.  On July 10, 2009, the Federal Circuit granted Sanofi’s motion for a stay, pending appeal, of the district court’s judgment.

On July 16, 2009 Hospira and Teva submitted an emergency motion to the Federal Circuit seeking clarification of the July 10, 2009 stay order – specifically, whether the July 10th order was intended to: (1) enjoin FDA from granting final approval to their applications; or (2) to enjoin Mayne and Teva from launching their products upon FDA approval during the pendency of appeal, even though Sanofi did not request or obtain an injunction.  Hospira and Teva noted in their emergency motion papers that a stay of judgment is “ambiguous on these topics,” and that Sanofi had earlier stated that the company was seeking a writ of mandamus vacating the district court’s judgment of non-infringement because “a stay . . . may not result in maintaining the status quo.”  The emergency motion, which Sanofi did not oppose, also requested that if the court intended for the stay order to function as an injunction, then the matter should be remanded to the district court to fix an appropriate bond to compensate for delay in market entry.  On July 24, 2009, the Federal Circuit denied the motion for clarification and ordered that “the motion for a limited remand is deemed moot.”  The Federal Circuit did not explicitly clarify its intent regarding the effect of the stay of judgment on FDA approval of the pending applications or on Hospira’s/Teva’s ability to market any approved product.

Meanwhile, FDA was considering whether the district court’s entry of judgment that the ‘874 patent is not infringed permitted the Agency to approve applications pursuant to FDC Act § 505(j)(5)(B)(iii)(I) (ANDAs) and § 505(c)(3)(C)(i) (505(b)(2) applications) notwithstanding the Federal Circuit’s subsequent stay of the district court’s judgment.  Under these statutory provisions, which were enacted in 2003 by the Medicare Modernization Act (“MMA”), approval of an ANDA or 505(b)(2) application is made effective upon the expiration of the 30-month stay, except that “if before the expiration of such [30-month] period the district court decides that the patent is invalid or not infringed . . . the approval shall be made effective on (aa) the date on which the court enters judgment reflecting the decision. . . .” (emphasis added).  Pre-MMA, the comparable statutory provisions provided that “if before the expiration of such [30-month] period, the court decides that such patent is invalid or not infringed, the approval shall be made effective on the date of the court decision.” (emphasis added)

In a March 2000 guidance document interpreting the pre-MMA statute, FDA stated that the term “court” would mean “the first court that renders a decision finding the patent at issue invalid, unenforceable, or not infringed,” and that when the district court renders such a decision, “FDA may approve the ANDA as of the date the district court enters its decision.”  Importantly, the guidance document further states that:

Neither a stay nor a reversal of a district court decision finding the patent invalid, unenforceable, or not infringed will have an effect on the approval of the ANDA or on the beginning, or continued running, of exclusivity.  Should the NDA holder or patent owner wish to prevent an applicant with an approved ANDA from marketing its product during the course of an appeal, it must obtain an injunction from the court.

Although the post-MMA statutory provisions cited above are silent as to the effect of a stay or appeal of a district court’s judgment on the timing of approval of an ANDA or 505(b)(2) application, we understand that FDA, consistent with its pre-MMA statutory interpretation, determined that nothing in the text or structure of the FDC Act suggests that a stay of the district court’s decision finding the patent invalid or not infringed requires that the Agency delay approving an otherwise approvable ANDA or 505(b)(2) application until the stay is lifted or until there is additional finality to the district court's decision regarding invalidity or non-infringement.  As such, on Friday, August 7, 2009, FDA approved several applications for generic ELOXATIN.

On Monday, August 10, 2009, Sanofi filed an emergency motion with the Federal Circuit to enforce the court’s July 10, 2009 stay order, arguing that FDA lacked the legal authority to lift the 30-month stay and approve generic applications in light of the Federal Circuit’s stay of the New Jersey district court’s judgment giving FDA approval authority.  On that same day, Sanofi filed a complaint (under seal) in the U.S. District Court for the District of Columbia against FDA seeking a Temporary Restraining Order (“TRO”) and a Preliminary Injunction (“PI”) that would require FDA to rescind generic ELOXATIN approvals.  See Sanofi-Aventis et al. v. Food & Drug Admin. et al, No. 2009-1495.  As with its emergency motion filed with the Federal Circuit, Sanofi argued that FDA should not have approved any generic applications because the 30-month stay was still in effect.  The district court denied Sanofi’s motions from the bench during an emergency hearing held on the same day the complaint was filed, and later issued a memorandum opinion explaining its ruling.  Sanofi appealed the decision to the U.S. Court of Appeals for the District of Columbia Circuit (again, in a case under seal).  See Sanofi-Aventis et al. v. Food & Drug Admin. et al, No. 2009-5278. 

On August 11th, the Federal Circuit denied Sanofi’s August 10th emergency motion.  Sanofi moved for panel review and for reconsideration of that order, and on August 13th, the court issued an order granting panel review, but denying the motion for reconsideration.  Circuit Judge Moore, in his concurrence in the denial of reconsideration took issue with FDA’s decision to approve generic applications in light of the Federal Circuit’s stay, stating that “FDA’s position is dubious at best,” but also stating that despite this “our inability to rectify the problem is due to Sanofi’s failure to file for a preliminary injunction against the generics seeking to prevent them from entering the market.”  Oral argument in the Federal Circuit is scheduled for September 2, 2009.

Meanwhile, in Sanofi’s lawsuit against FDA, the D.C. Circuit issued an order on August 13th suspending the approvals of generic ELOXATIN.  According to the court order, “[t]he purpose of this administrative injunction is to give the court sufficient opportunity to consider the merits of the motion for injunctive relief pending appeal . . . .”  Accordingly, we understand that FDA issued letters formally suspending application approvals and removed the drugs from from the Orange Book.

Finally, on August 18th, the D.C. Circuit ruled that Sanofi et al. “have not demonstrated the requisite likelihood of success on the merits to warrant either injunctive relief pending appeals or expedition, . . . nor have they shown that summary reversal is warranted” and  denied Sanofi’s emergency motion for an injunction and ordered the dissolution of the court’s August 13th administrative injunction suspending the approvals of generic ELOXATIN.  FDA promptly reinstated the approvals. 

So for now, it appears that this saga over FDA approvals is effectively over.  But who knows what surprises the coming weeks might bring . . . .