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Statutory Thirty-Month Stay May Be Extended Based on a Party’s Uncooperative Discovery Practices

February 24, 2009

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Last Month at the Federal Circuit - March 2009

Judges: Michel, Rader (author), Prost (dissenting)

[Appealed from: S.D. Ind., Judge Barker]

In Eli Lilly & Co. v. Teva Pharmaceuticals USA, Inc., No. 09-1071 (Fed. Cir. Feb. 24, 2009), the Federal Circuit affirmed the district court’s extension of the statutory thirty-month stay under 21 U.S.C. § 355(j)(5)(B)(iii) (2003), preventing the FDA from finally approving Teva Pharmaceuticals USA, Inc.’s (“Teva”) ANDA.

Eli Lilly and Company (“Lilly”) is the manufacturer of FDA approved, Evista® brand raloxifene hydrochloride (“raloxifene”) tablets that are used for the treatment and prevention of postmenopausal osteoporosis. In May 2006, Teva filed an ANDA and Lilly subsequently sued Teva for patent infringement. The FDA then stayed approval of Teva’s ANDA for thirty months. Thereafter, the district court set a trial date four months after the end of the thirty-month period. Less than two months before the discovery deadline, Teva amended its ANDA, changing its proposed generic formulation and including a new particle-size measuring methodology. In addition, Teva produced one batch sample before and two batch samples after the discovery deadline. Further, Teva produced 27,000 pages of related documentation after the discovery deadline. Lilly moved the district court to extend the statutory thirty-month stay due to Teva’s alleged discovery violations and contended that Teva “fail[ed] to ‘reasonably cooperate in expediting the action’ . . . as evidenced by Teva’s last-minute alteration of its proposed drug product and its ‘multiple delays in producing critical discovery . . . [which have] adversely affected Lilly’s infringement case and trial preparation.’” Slip op. at 5 (alterations in original). The district court granted the motion to extend the stay until the trial date. Subsequently, Teva filed a motion for an expedited appeal with the Federal Circuit.

On appeal, a panel majority determined that the record contained sufficient evidence to support the order and that the district court did not abuse its discretion in extending the thirty-month stay. In particular, the majority noted that evidence in the record indicated that Teva had altered its proposed generic formulation just eight months before trial, and “then delivered its changed samples to Lilly past the court’s . . . discovery deadline.” Id. at 7. In affirming the district court’s extension of the thirty-month stay, the majority distinguished the decision in Andrx Pharmaceuticals, Inc. v. Biovail Corp., 276 F.3d 1368 (Fed. Cir. 2002), where the Federal Circuit vacated a district court’s decision to shorten the thirty-month stay. In Andrx, the Federal Circuit held that the district court had erred by basing its decision on Biovail’s “positions before the FDA,” instead of determining whether Biovail cooperated in expediting the patent litigation. Id. According to the majority, “[u]nlike Andrx in this case, the district court extended the statutory thirty-month stay based on its findings of Teva’s lack of cooperation in expediting the patent litigation in its court.” Slip op. at 9.

In a dissenting opinion, Judge Prost argued that the majority misapplied the standard of review and granted too much deference to the district court in extending the stay. According to Judge Prost, the district court did not make the necessary findings to extend the stay, but merely provided two insufficient justifications for the order: “(1) to provide Lilly ‘a sufficient opportunity to identify the nature and composition of [Teva’s] raloxifene product . . . , and (2) to give Lilly ‘a reasonable amount of time . . . to test and report on [Teva’s] altered raloxifene samples . . . in preparation for trial.” Prost Dissent at 3-4.