Authored by John W. Cox and Scott J. Popma
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 ("the MMA") adjusted the delicate balance put into place by the Hatch-Waxman Act in connection with litigation surrounding Abbreviated New Drug Applications ("ANDAs"). A full discussion and analysis of the various provisions of the MMA is not possible in an article of this size. This article provides a brief history of the purpose behind certain provisions of the MMA, the FDA's interpretation of these provisions, and resulting changes in procedure for ANDA litigation.
The Hatch-Waxman Act was designed to strike a balance between innovation, where brand pharmaceutical companies pour money into research and development, and drug price competition, allowing generic drug companies to bring cheaper generic versions of drugs to the market. Patents play a key role in the balance. Innovator companies list patents covering their drug products and methods of using their drug products in the FDA's "Orange Book." Generic drug companies wanting to market copies of those drug products may challenge these patents by certifying via a "paragraph IV certification" that the patents listed in the Orange Book are invalid or will not be infringed. Such a certification often triggers litigation under the Hatch-Waxman Act. If a patent holder brings suit within 45 days of receiving a paragraph IV certification, federal law imposes a 30-month stay that prevents FDA approval of the generic drug company's ANDA. Generally, this stay may be lifted at the end of 30-months or when a court issues a non-appealable decision on the merits of the case, whichever comes first. The Hatch-Waxman Act provides a 180-day market exclusivity period for the first generic company to file a paragraph IV certification directed to a particular drug product.
The availability of multiple 30-month stays was a primary point of contention between generic and innovator drug companies. Under the pre-MMA provisions, generic drug companies complained that innovator companies were abusing the 30-month stay provision delaying or preventing the generic company from utilizing its first-to-file 180-day exclusivity period. An innovator company could list additional patents in the Orange Book after a 30-month stay—stemming from an earlier paragraph IV challenge—had begun to run. With additional 30-month stays for newly-listed patents, the FDA could not approve the generic product until the final 30-month stay had run out or all the litigation had concluded in the generic company's favor. While generic companies and consumer groups sought to abolish the 30-month stay altogether, the FTC instead recommended that only one 30-month stay should be granted "per drug product per ANDA." The FDA followed the FTC's recommendation and on June 18, 2003, its Final Rule went into effect, precluding more than one 30-month stay per ANDA.
The passage of the MMA had the effect of revoking the FDA's Final Rule, but prevented innovator companies from securing additional 30-month stays with "late-listed patents" once the initial 30-month stay was in place.1 In other words, the MMA eliminated additional stays stemming from patents listed after the ANDA had been filed. Additional 30-month stays should be available after filing an initial paragraph IV certification challenging one or more patents covering a drug, if a generic company decides to subsequently file another paragraph IV certification on patents that were listed in the Orange Book when the ANDA was filed, but for whatever reason the generic company had not challenged in its initial certification. The FDA itself has recognized the possibility of this scenario under the MMA. For a more complete discussion of the FDA's interpretation, see here.2
A second major goal of the MMA was to prevent first-to-file applicants from "parking" their 180-day exclusivity period and delaying market entry by the first-to-file applicant and additional generic competitors. To prevent this, the MMA included forfeiture provisions that, if triggered, eliminate any exclusivity period. Specifically, the MMA states that a first-to-file applicant will lose its 180-day exclusivity period if any of six events occurs. The forfeiture provision most often considered in the context of litigation is the "Failure to Market."
The Failure to Market provision eliminates the exclusivity period if the first-to-file applicant fails to begin marketing its product by time periods tied to the ANDA filing or approval, a court decision or entry of settlement holding the challenged patents invalid or not infringed, or withdrawal of the challenged patents from the Orange Book.
This provision may prove problematic for a generic drug company prevented from entering the market due to other patents covering the drug product, e.g., patents for which the generic did not submit a paragraph IV certification. In such situations, the generic drug company may try to park its exclusivity to avoid forfeiting it. One way of parking their exclusivity is to delay the litigation until all other hurdles have passed, either by staying the case or through voluntary dismissal. Whether these strategies eventually succeed remains to be seen.
As with most newly enacted statutes, the precise meaning of the provisions will be determined by the courts through litigation. It will be interesting to see how such litigation is resolved and whether Congress makes any further changes to the Hatch-Waxman Act.
1 Federal Register, 69(47): 2004, 11309-10.
2 Draft Guidance for Industry: Listed Drugs, 30-Month Stays, and Approval of ANDAs and 505(b)(2) Applications Under Hatch-Waxman, as Amended by the Medicare Prescription Drug, Improvement, And Modernization Act of 2003, at 8-9, available at http://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/20Guidances/%20ucm072887.pdf.
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